Best Business Practices for Photographers [217]
Back in November of 2007, the Second Circuit Court of Appeals ruled that all retroactive copyright transfers and licenses are invalid. The case at hand was Davis v. Blige, where the finding of the court was that "retroactive transfers violate the basic principles of tort and contract law, and undermine the policies embodied by the Copyright Act." This case involved musical compositions, not photography, but the concepts are similar. The court, in this case, determined the retroactive licenses and assignments to be categorically impermissible.
This is differentiated from circumstances where a retroactive license is part of a settlement agreement. Thus, it is imperative that when you are considering the offer of a retroactive license to settle a matter, that it be done within the boundaries of what is legally set forth as an "Offer in Settlement." The terms of an Offer in Settlement, rules of evidence, are not admissible in a trial. For example, if you would have licensed an image for $2,500 to a client, and the work was registered with the copyright office, and the client earned $50,000 directly attributable to your image's contribution to the product or service, you would potentially be entitled not just to that $50,000, but also punitive damages that could reach as high as $150,000 for a single infringement. However, if you suggest to the client you will take $7,500 for the license as a retroactive licensing fee, and you do so specifically outside of the boundaries of settlement talks, you may be limiting your remedies.
I strongly recommend you consult with a knowledgeable attorney in cases such as this. While I certainly am not a lawyer, nor am I offering legal advice, it might give you some protection if language that appears at the beginning of a letter to an infringer to whom you might want to offer a retroactive license or some other form of settlement included: "This offer is conveyed without prejudice and presented solely with the intent of discussing non-judicial avenues for a settlement of this matter."
When that language or something similar to it is not included, you could be limiting your opportunities. Respected copyright attorney Nancy Wolff comments on the Masterfile copyright infringement case, where Masterfile won $46,816.91, about how the court considered the amount of the retroactive license when awarding damages. Wolff wrote, in part:
"Before finally bringing a lawsuit, Masterfile offered to enter into a retroactive license agreement with J.V. Trading for the three years that J.V. Trading infringed. Although J.V. Trading did not respond, the courts used this offer as guidance in assessing whether the damage award requested by Masterfile was reasonable."
In this case, which was precedent setting, the court upheld the concept of using multiples of an original licensing fee as the basis for an award. In this case, the amount was five times what would have been the original fee to license the images.
Although here we have been discussing a retroactive license, there is no lawful way to execute a document that would create a retroactive "work made for hire." If you produce an image and then sign a document after the image has been created that says the work is a "work made for hire," that contract will be found to be invalid. If you contemplate backdating the contract, you are giving a false impression, and your acts could be deemed to be a criminal offense under the 1968 Theft Act or the 1913 Forgery Act, or you could find yourself being charged with conspiracy to defraud. The only justifications for backdating are when both parties agreed to the obligations of the contract knowing fully and completely the terms of the contract, but for practical reasons were unable to execute the contract or, for example, are