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StockFood demanding excessive settlement for a photo

Posted: Thu Feb 02, 2017 10:35 am
by chris16v

I have had several letters from StockFood demanding a settlement for unauthorised use of a single photo (of a jacket potato) on our website. Their original demand back in June 2016 was for £2330.
I acknowledge and accept we did use one of their photos, naively found from a google photo gallery search 6 years ago. The photo bared no watermark and back then i had no idea i was doing anything wrong.
We very quickly removed the photo after we realised their demand was genuine. So in terms of liability i dont really think i can argue on this point but the issue i have is obviously with the value they are demanding.
I contacted them via email (because they had already emailed, phoned and posted their demand to us) and told them the photo had been removed and there is no way we could agree to a wholly disproportionate settlement figure and i would contest them all the way
if they wanted to seek legal action.

At this point they had reduced their settlement to:
Standard license fee £233
VAT for fee £ 46.60
Post use licence surcharge £233
surcharge for not crediting image £233
Infringement detection fee 20% £139.80
TOTAL £885.40

Then 5 months went by and then this week we heard from them again. This time they worded their settlement like this
However in hope to bring this matter to a close and do so amicably, I would be inclined to reduce the charges recoverable by StockFood and make a revised offer without prejudice.

Our detection fees are calculated based on the resources used to detect the infringement. StockFood use an image tracker partner company who searches the web for use of StockFood imagery and presents reports to StockFood on images used without a license.

REVISED settlement figure:
Standard license fee £233
VAT for fee £
Post use licence surcharge £
surcharge for not crediting image £233
Infringement detection fee 20% £93.30
TOTAL £559.20

So where do i go from here. I have read the other threads on this forum relating to StockFood and i am inclined to dig deep and seek a minimal settlement figure but i need some advice if this is the right course of action.
Can they really demand a detection fee (which is 20% of the claim value (amount claimed is £466 + 20% detection fee)), is this enforceable?

Can they really charge a surcharge for not crediting the image when i had no contract with them and i didn't know who the owner was?

Any advice would be most welcome.

Posted: Thu Feb 02, 2017 3:11 pm
by AndyJ
Hi Chris,

Obviously at some stage you will have to settle this matter with Stockfood. I think it unlikely that they will just go away, leaving the matter unresolved.

But as you say, the claims they are making are still at the unreasonable end of the spectrum, albeit certainly rather better than the original £2330.

It is difficult to say if the usage fee is reasonable, since it may depend on for how long you actually used the image and at what resolution. However looking at Stockfood's website, there are several pictures of baked potatoes, for which the one-off fee for a royalty free, medium quality image (1MB - 683 x 511px) for web use is £99 (before VAT). On that basis £266 seems excessive. Clearly you may have used a different image to the ones I looked at and at a higher resolution, although none of the fees I saw for higher resolution images matched the £266 you have been quoted. Of course VAT at 20% is a fact of life, but if the surcharge is excluded, VAT should only be applied to the basic fee. The surcharge for not providing a credit is not reasonable because based on your version of events there was no way for you to know who was the author of the image or whether they had asserted their right to a credit*. Unless this assertion had been made to you or you might reasonably have expected that the author was asserting his/her right to a credit, then you will not have infringed that right (see section 78(4) of the Copyright Designs and Patents Act 1988). To that extent such a surcharge would not be enforcible in court.

A detection fee based on 20% of the fees claimed seems completely arbitrary. And should the matter ever to go to court, the court would not accept a general 20% rate as a legitimate detection fee, even if they were minded to accept that in principle, a detection fee was a recoverable expense at all. I suspect that regardless of whether Stockfood carry out the detection process in-house or whether they employ a third party to do this on their behalf, the actual cost of the detection service is a fixed overhead which is part and parcel of operating a picture agency, and this is why I think the 20% of the fee due is an arbitrary and unjustifiable sum in you case.

If you were to make a counter offer, I suggest that the figure of £118.80 (ie the £99 fee typically applied to such images, plus VAT) would be a more realistic amount.

I hope this helps.

* Note that the CDPA only confers the right to a credit upon the author of the image, not any other person or agency to whom copyright has been assigned. Therefore, Stockfood have no riigt to a credit in copyright law. At most it may be a condition of using their service that a credit is given, but that of course does not apply in this case because you were not a client of the agency.

Posted: Fri Feb 03, 2017 8:40 am
by chris16v
thanks for the in-depth reply AndyJ.

In StockFoods most recent reply to me (where they offered the revised settlement of £559.20) their attempt to justify their fees was supported with the following sentence:

The retrospective license + surcharge for not crediting the photographer + detection fees is the minimum that can be recoverable when a matter is taken to court. Whereas if any cases are filed at court - there are various court fees, interest and costs which can be awarded in addition to the claim value.

Then they support their demand of a surcharge for not crediting the image with this sentence:

In respect of the surcharge for not crediting the image, we seek to recover the amount of compensation that the photographer is entitled to receive as a result of an infringement of their moral rights resulting from unauthorised uses. This is to put the photographer in the position that they would have been in had the infringement not occurred. The surcharge for not crediting the photographer correlates with the standard price of the image. Please find this at III.7 of the StockFood terms and conditions

If i am interpreting your analysis correctly AndyJ I can therefore assume this to be more a scare tactic rather than a reality. Would you tend to agree?

If i read between the lines and put aside the additional fees i think it be reasonable to make an offer for the image license only. Would it be reasonable to assume i should demand the right to then use the photo again now that i have agreed to pay the license?

Posted: Fri Feb 03, 2017 5:51 pm
by AndyJ
Hi again Chris,

Taking your second point first, yes I would describe the inclusion of and justification for the surcharge as a scare tactic. As I explained, if you have no knowledge that the author (photographer) wishes to assert his right to a credit, you cannot be liable for infringing that right by not providing a credit. Whatever Stockfood's terms may say on the matter, since you were not in a contractual arrangement with them at the time of the alleged infringement, you cannot be held to those terms.

Next is matter of what might be taken into account by way of damages and allowable expenses if the matter went to court. Damages are intended to put the claimant in the position that he/she would have been in had the photograph been licensed in the normal way. So on that basis, obviously, you would not have been charged extra for crediting the author and so the surcharge would not be an admissible part of the damages. Stockfood are right to say that it is possible you might be ordered to pay some element towards their administrative costs, the court fee and certain other expenses such as travel costs of the claimant in order to attend the court. But these costs are awarded at the discretion of the court, and if the court was sympathetic to your defence they might decide not to make a costs order, or limit it to just the court fee (£80 as at today, for a claim in the range £500-£1000).
Here's what the rules for costs in the Small Claims Court say:
Costs Recovery
The general principle that an unsuccessful party will pay the legal costs of a successful party does not apply to IPEC small claims track claims. In the IPEC small claims track there are only very limited circumstances in which the court will order one party to contribute to the costs of another (CPR 27.14). These include:
  • . fixed sums in relation to issuing the claim;
    . court fees (including the hearing fee);
    . expenses which a party or witness has reasonably incurred travelling to or from a hearing or staying away from home for the purpose of attending the hearing;
    . loss of earnings or loss of leave evidenced by a party or witness caused by attending a court hearing, limited to £90 per day for each person (PD 27 para 7.3);
    . in proceedings which include a claim for an injunction, a sum for legal advice and assistance relating to that claim, not exceeding £260 (PD 27 para 7.2);
    . such further costs as the court may decide at the conclusion of the hearing should be paid by a party who has behaved unreasonably. A party’s rejection of an offer of settlement will not of itself constitute unreasonable behaviour but the court may take it into consideration (CPR 27.14 (3))
And lastly, if your offer to settle is accepted, then yes I think you would be entitled to resume use of the image in question, since effectively you will have purchased a licence which is not limited by time, under Stockfood's terms and conditions. However I am not sure they would agree with this interpretation given their earlier demands which were decidedly punitive in nature - something which will count against them if the matter went to court (note the remark about unreasonable behaviour in the quote above).

Posted: Sun Feb 05, 2017 1:22 pm
by chris16v
Thanks again for clarifying my points of concern..

Posted: Sun Feb 05, 2017 2:38 pm
by AndyJ
Hi Chris,

First a word of caution. As I am not your solicitor I am barred from providing legal advice which is advice you then act on in litigation. This is to protect you (and me - I don't wish to be sued!). And secondly you are now seeking to discuss tactics in an open forum which may well be monitored by Stockfood. That is not a sensible way forward. I know I probably started this by making the suggestion about a offer to settle, but that doesn't mean we should continue to make matters worse.

What I can do is provide general advice about how the law and the rules of the court work so that you can form you own judgement on the way ahead. That might involve speaking to your own solicitor, but as that could cost more than the current fee demanded by Stockfood, I expect that is something you might decide to defer for now.

All that having been said, Part 36 offers are really only relevant if you think the matter is definitely going to go to court. As the matter stands at the moment, I think it is highly likely that a case such as the one you describe would go on the Small Claims Track of the IPEC, and if so then Part 36 offers do not apply (see CPR 27.2)

For the sake of completeness, let's assume that the case is allocated to the IPEC and not the Small Claims track. Then a Part 36 offer will be relevant. Gauging the amount of a Part 36 offer made by a defendant is tricky. There has to be a reasonable chance that the claimant may lose his case (in which case your costs would be paid by the claimant if he refused to accept your Part 36 offer) and even if he wins, he must be relatively confident of being awarded considerably more in damages than the offer, to compensate for the overall expense of going to court, bearing mind that he will not necessarily be able to recover all of his legal costs whatever the outcome, because of the capping mechanism which applies in the IPEC. And making too low an offer (as against the claimant's expectations) will probably not have the effect of making him think seriously about cutting his losses. Along with this you have to look at the advantages for the claimant if he wins in court: he can then write to other alleged infringers in the future saying that he has had a good success rate in the courts (I understand that Stockfood have had at least one default judgment in their favour in the past). If he loses, it is unlikely many people will get to hear of this. For some litigants, getting a reputation as a strong defender of their intellectual property rights is an important strategy, despite the cost this may incur.

Then if you feel confident about making such an offer, you need to be sure to get the details right, as failure to do so may invalidate the offer. You should use the form N242A provided on the website in conjunction with following Part 36 itself. Check the part about timings and the Relevant Period.

The aim of Part 36 offers is to avoid costly court cases where possible.

As I can't really go into the specifics of your case, I can recommend this useful and easy to understand guide to Part 36 offers which may assist you. And if you haven't already seen them, check the HMCTS guides to the IPEC and the IPEC Small Claims Court. (both are pdfs)