The Economics of Copyright Infringement in Robert Caplin vs Perez Hilton

The Economics of Copyright Infringement in Robert Caplin vs Perez Hilton

Freelance photographer Robert Caplin filed a copyright infringement and DMCA violation complaint on June 26, 2013 against Mario Armando Lavandeira, Jr., aka Perez Hilton. Hilton is best described as an Internet gossip blogger, who has been known to appropriate copyrighted images and then “transform” them by drawing captions, tears, or other scribbles, and thereby claiming “fair use.” His well-trafficked entertainment blog sells advertising to support itself. Caplin is a regular contributor to the New York Times, Wall Street Journal, Los Angeles Times. He also runs The Photo Brigade, is a prolific Instagrammer, and is an all around great guy. And we don’t like to see Perez Hilton stick it to great guys.

In this particular case, Caplin had posted thirty-two photos of Glee’s Darren Criss on his PhotoShelter website that also accompanied a New York Times story concerning Mr. Criss’ Broadway debut. But unlike the photos that accompanied that article, Caplin had posted a copyright notice AND watermarked each image with his logo. In other words, it was unambiguous that the images were not in the public domain, and would require permission to use them elsewhere. Further, Caplin had enabled PhotoShelter’s “Image Theft Guard” feature which disables right+click or dragging of images to copy them to the desktop.

Lavandeira circumvented these controls by screen grabbing fourteen of the images, removing the copyright notices and applying his own watermark to the images. So Lavandeira:

  • Committed copyright infringement by publishing the images without permission
  • Willfully infringed by continuing to publish the images even after he was notified
  • Committed a DMCA violation by removing the copyright management information from the images

Rather than immediately taking a litigious position, Caplin called Lavandeira and spoke to him directly as alleged in the complaint. Lavandeira allegedly apologized and agreed to remove the offending images from his website. A reasonable tact with a quick and friendly resolution, except Lavandeira didn’t take down the images. So Caplin hired the Law Office of Carolyn E. Wright, LLC (aka photoattorney.com) to represent him. Caplin told us, “We attempted to resolve the matter prior to filing suit. While Mr. Lavandeira’s attorney acknowledged our effort, we received no other response. My goal with this litigation and with all of my actions is to protect my intellectual property.”

A screenshot showing one of the offending uses.

There has been a lot of speculation over what Caplin could gain by taking it to the courts. So what is Caplin due?

The “value” of the damages can be either “actual” or “statutory.” But an actual damage can be notoriously hard to calculate. So let’s start with the statutory.

According to US Copyright law, 17 USC § 504 (c) 1 allows for between $750 – $30,000 per infringed work. So 14 images x $30k = $420,000.

But given that Lavandeira was notified of the infringement and failed to act upon it, and that there are at least 4 previous complaints filed against him, he may be found a willful infringer, which would expose him up to $150,000 per infringed work (17 USC § 504 (c) 2). 14 images x $150,000 = $2.1 million.

Additionally, Lavandeira violated the DMCA 17 USC § 1202 by removing copyright management information from the image. The DMCA provides for $25,000 per infringed work. 14 images x $25,000 = $350,000.

Thus, Lavandeira could be exposed to statutory damages of up to $2.45 million dollars.

That is FANTASTIC, except no judge in his right mind would ever award that amount. Why? Because even with willful infringement, it’s hard to justify this amount as “reasonable.”

I spoke with Fordham University Professor of Intellectual Property Britton Payne about copyright and DMCA infringement. While it’s impossible to guess at the probable outcome, he does point out that cases like these are usually settled out of court for the simple reason that litigation is expensive. When I asked him to hypothesize on settlement amounts, he posed the following as a way to estimate actual damages for the purposes of coming up with a settlement amount.

  1. What would the licensing fees have been?
  2. What is the value of any single post on PerezHilton.com?

Calculating licensing fees:
A 3-month web license for getty runs $49/image. So without even considering a bulk discount, the value of 14 images would be $686. A court might triple the lost license fee as a disincentive for further infringement, so let’s call it $2,058.

Calculating the value of a single post:
Let’s assume Lavandeira 1) generates $10 million in gross revenue per year through the sale of advertising, 2) posts 100 times per day every day. The value that each post brings is $10m / 365 days * 100 posts per day = $274. Even at $20 million in revenues, the value is only doubled to $548, which is pretty close to the calculated licensing fee.

Tack on $30,000 in legal fees, and we’re talking about a total value that’s far from $2.45 million.

Payne points out that it would be surprising if the case was settlted strictly on the calculated value. All the time and headache to pay off your lawyer and put a few hundred bucks in your pocket makes no sense. A doubling of the amount, say $60,000, would make more sense, but it’s still a far cry from millions. So what’s the end game?

Lavandeira’s inaction made the legal remedy somewhat of a necessity to protect Caplin’s IP rights. And if Caplin is successful in recovering damages, it makes an example of Hilton. But there is no certainty around the award amount, and unless Caplin is really willing to go to court and paying enormous legal fees (which he may or may not recoup), it’s really a gamble. A negotiated settlement is still the likely outcome, and the party with more patience (and perhaps deeper pockets) stands to “win.” The publicity is great for the industry, but it’s unlikely to translate into more business for Caplin (unless he’s suddenly bombarded with speaking engagements).

We are rooting hard for Caplin in this situation, but given an explanation of the economics, you can see why even seemingly clear cut copyright infringement cases are a financial gamble for individual photographers.

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There are 19 comments for this article
  1. Lionel at 11:06 am

    Very interesting, I hope you can keep us informed of developments as and when appropriate; in the meanwhile:
    1. Do you know if Caplin registered his images with the ECO? The fact that Carolyn Wright is representing Caplin suggests he was smart enough to do so, but now I’m guessing….
    2. Does Getty have comparable images, and if not, is their web pricing an appropriate basis for estimating the value of Caplin’s images?

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  4. Ellen Boughn at 12:51 pm

    I think that a statement above is overly pessimistic: “That is FANTASTIC, except no judge in his right mind would ever award that amount. Why? Because even with willful infringement, it’s hard to justify this amount as “reasonable.” In my opinion it is likely that Plaintiff Caplin would request a jury trial…in which case the judge has much less to say about the final award. In my knowledge and experience, juries understood that copyright violation is a theft of valuable property. And that changes how they feel about awards.

  5. August at 9:40 am

    I would hope that a judge would recognize that this is a keystone case not only for Mr. Caplin, but for copyright law in general. When people like “Perez Hilton” run roughshod over copyright law, they are not just hurting the photographer, but also the entertainment industry as a whole.

    Part of the reason we have such fantastic photographers (and indeed, any artists) today is because our courts have respected their rights to ownership of their work. While to some extent, corporations have gone overboard chasing people who infringe copyrights… but using unowned images for a commercial website is a whole different animal than downloading a few songs illegally for personal use.

    Neither one is legal, but there are huge differences between private use and publicly profiting because of something protected by copyright.

    I can hope that there are fairly substantial fines levied against “Perez Hilton,” and while I’m sure it won’t be in the millions of dollars, a $100,000 fine, all told, would not be the least bit unreasonable, and several times that would be quite appropriate.

  6. Murph at 9:42 am

    Unfortunately, in todays disposable society, people like Lavandeira who create or produce absolutely nothing of value for humankind, but “Copy and Paste” from the missteps or talent and hard work of others will rarely get what they deserve. Mr. Caplin has more talent in his pinkie than Lavandeira would hope to have in 5 lifetimes.
    @Ellen B, that would be the preferred outcome with a jury. Then justice may be upheld.

  7. Searching at 10:06 am

    He left the watermarks on the photos that he posted. He put his logo on them as well but the watermark was still clearly visible , giving the photographer credit for his photos. All tho i dont agree with him “stealing” them and using them on his site. This is what happens on the internet! .. I can understand as a photographer myself, I would not want to be affiliate with a site like that, at the same time its huge exposure. just playing devils advocate. I can only hope it gets resolved for the photographer quickly!

  8. Rachel E. at 10:16 am

    If people are awarded crazy settlements for silly things every day whose to say he wouldn’t be granted the same privilege. I understand the economics of it but saying his images and the out right thief of them isn’t worth the 2.4 million dollars that is possible doesn’t really support the value of our industry. I think that it’s not going to be a fast moving case but I think in the end it’s not about more than it is about the fact this guy has abused photographers right to make a living for the last time.

  9. Steve Bryan at 10:29 am

    It is because the punishments are not stiff enough that people feel they have a right to steal. This gentleman is a proven thief and should be treated as such. The fact that he removed watermarks proves that he knew what he was doing and did not care.

    As a repeat offender he is not willing to learn his lesson and obviously has not received any punishment that would deter him to date. I hope that he is sued into bankruptcy.

  10. Robert G. at 10:31 am

    Further, it’s not a stretch to assume that “Mr. Hilton” could have made significant moneys associated with the usage of the stolen images.

    That he willfully did so, after having the opportunity to have corrected the problem without legal issue, or public knowledge of the problem only shows his selfish and liklely financially driven decision.

    I hope the judge takes into consideration the “vast size” of the financial resources Mr. Hilton could have, and chose not to utilize to properly license the photos, and punishes him in a manner appropriate. Maybe if he gets hit with 2.45 million, he’d be more cautious in the future.

  11. Michael E at 11:33 am

    “That is FANTASTIC, except no judge in his right mind would ever award that amount. Why? Because even with willful infringement, it’s hard to justify this amount as “reasonable.”
    Why is this so unbelievable? Recording industry lawyers have been awarded absurd judgements in simple file-sharing cases for years now.

  12. Thomas C at 2:01 pm

    Allen – Perhaps your learned consultant at Fordham hasn’t quite given you the most complete analysis, or perhaps you have made a HUGE mistake in assuming that all photographers are somehow bound by what those low-balling idiots at Getty give things away for!

    Unless Robert Caplin is a Getty photographer who regularly sells usage at a low value, the Getty analogy means diddly-squat.

    Damages are based on Mr. Caplin’s past sales in the marketplace and NOT on what someone else sells their images for. Plus, the copyright laws provide attorney fees to be paid by the infringing party, so it’s always well worth the effort to stop these types of abuses.

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  15. Gert at 11:21 pm

    Why in the world would you ask a law prof ? Ask a real live practitioner if you want to know what a real case is worth.

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