While copyright law can be a strong protector of intellectual property, once in a while, it elicits a response that reminds me of a child refusing to share their toys. We have all gone through it. Brian takes one of Josh’s long-neglected toys, yet suddenly, that toy becomes Josh’s most prized possession that nobody is ever allowed to touch. Josh knows, in the back of his mind, that there is nothing really wrong with Brian playing with the toy. He also knows that fighting for it will probably end up with him being punished, but he just can’t help himself. Unfortunately, copyright holders sometimes act like selfish children, leading them to be sent to their rooms for an internet shaming.
The Pokémon Company vs. the Pokémon Party.
A case in point – Pokémon v. the Pokémon Party. In our story, Brian is played by Ramar Larking Jones and Zach Shore, the owners of Ruckus Productions. As self-described Pokémon fanatics, they had organized their “5th Annual Unofficial Pokémon PAX Kickoff Party.” To promote the event, Jones and Shore created posters featuring the Pokémon characters, Pikachu and Snivy. They also used Pikachu’s image to promote the event on Facebook. According to the posters, the event would have featured, “Pokémon themed shots and drinks, Smash Bros. Tournament with cash prize, Dancing, Giveaways, Cosplay Contest and more,” as well as an “AMAZIN POKEMON MASHUP.”
Enter Little Josh, played here by The Pokémon Company International, Inc., the copyright holder of all the Pokémon characters. Had the story involved adults, The Pokémon Company would have let Brian play with their Pokémon stuff, but Josh didn’t want to share. Despite knowing that Brian has lots of friend who love Pokémon and is always bringing them over so they can all play, today, Josh didn’t want Brian touching his Pokémon. Normally, even acting selfishly, we would expect Josh to ask Brian nicely to stop playing with his toys, which he would do with a cease-and-desist letter. Maybe Josh would ask Brian for a small fee for his use up until that point. Since Josh is much bigger than Brian, the only recourse would be to give Josh what he wants.
Unfortunately, Josh wasn’t in the mood, going straight to the tantrum. The Pokémon Company sued Jones, Shore and Ruckus for copyright infringement. When Jones and Shore were served the lawsuit, they immediately canceled the party and removed the infringing materials and agreed verbally not to use Pokémon materials in that way anymore. Jones and Shore’s response wasn’t enough. The Pokémon Company continued the lawsuit, seeking damages. It first asked the court for a permanent injunction, which is a normal first step when infringing material remains available. At this point, Jones and Shore are still innocent. The Pokémon Company has to prove that Jones and Shore are guilty of infringement. In rare cases, the court can issue an injunction, stopping any infringement immediately.
Because the defendant hasn’t been given due process (which is guaranteed by the 5th amendment) for full defense, injunctions are difficult to get. Due process must be weighed against the immediacy of the harm done. In this case, there was little doubt Jones and Shore were guilty of infringement. Copyright infringement is a strict liability law, which basically means that if you do it, you are guilty: no excuses. For example, let’s say that Jones bought the Pokémon characters images from a stock photo site. They have receipts showing the legitimate purchase. However, the stock site didn’t have the rights to sell the images. In that case, Jones and Shore are still guilty of copyright infringement. The image was used in a poster and online without the Pokémon Company’s permission. The fact that they bought the images legitimately doesn’t matter. However, Jones and Shore would have a case against the stock house for selling them an image they didn’t have the right to sell and the stock house would have a case against the person that sold them the image.
Had they been allowed to continue using the characters until the case was completed, Jones and Shore could have had the party, which is what the lawsuit was trying to stop. But with little doubt that Jones and Shore were infringing, the court issued the injunction and a fee of $5400 for the legal fees the Pokémon Company incurred up until that point.
So, the Pokémon company sued one of its biggest fans for having a party promoting its brand because they used a picture without permission, costing the defendant $5400. It seems like Brian not only had to return Josh’s toy, but also give Josh his lunch money, plus his future lunch money for the next year or more.
Before finishing our story, let me make something clear. While I am making the Pokémon Company out to be the bad guys here, they haven’t done anything wrong from a legal perspective. However, you don’t have to sue people just because you can. There are other ways of handling infringements that don’t involve suing your biggest fans. The reality is that we don’t have the full story. That is why we have court cases; to tease out all the facts and legal issues before making a judgment. For the sake of entertainment and education, I am making a case based on the information available. Yet, the available information is likely not complete. The complaint, for example, is heavily biased in favor of the Pokémon Company, by virtue of the fact that they wrote it. The complaint tells the story of what happened and why they are suing, in the best light for them. Jones may respond with an “answer,” where we get his side of the story, but we don’t have that yet. Plus, there are several unanswered questions. For example, in the Final Judgment and Permanent Injunction, it states that “the Pokémon Company has dismissed its claims against Shore without prejudice.” Why is Shore no longer responsible? Is there a reason why Pokémon Company sued instead of only asking them to stop using the images? Would the bias against Pokémon Company change if we found out that they had sent several cease-and-desist letters over the years, but Jones and Shore didn’t respond, forcing a suit to get a response?
Always remember when reading copyright or any other cases, that they are usually written when the news is hot, which is when the complaint is filed. But that is all bloggers and the media have unless reporters somehow gotten additional information. Usually the parties cannot talk about the case, so any information would be second-hand hearsay. That being said, if there was any part of the story that would make the Pokémon company look good, like if Jones had continuously ignored the Pokémon Company letters, it should have been in the complaint.
Actual vs. Statutory Damages.
Most cases of copyright infringement don’t end up in court, primarily because there isn’t enough damage to warrant a lawsuit. At least when it comes to actual damages. When a copyright is violated, the copyright holder is entitled to the profits the infringer made from the infringement, or any losses they might have incurred as a result of the infringement. The idea is that the thief should not profit from the theft, nor should the copyright holder lose any money. Unfortunately, most infringements are not very harmful and don’t generate any profit. Let’s say someone uses an image in a blog post without permission. In order to make a lawsuit worthwhile, the infringer’s profits from the theft must be greater than the legal fees the copyright holder would incur to get those profits. That is probably not going to happen from the use of an image in a blog post.
In Jones’ case, the use of the Pokémon images in posters and Facebook posts generated no profit themselves. The only net profit would be from the sale of food and drink at the party. But that profit has to be attributable to the images, so the food and drink would have to come from people who came to the restaurant solely because they saw the poster or the ad. Even then, the picture may not be the whole reason the person came to the party. Some may have come because of the text on the poster, or maybe they knew Jones, or perhaps they had been to a previous party. Calculating those sales would be difficult. Additionally, profits are basically calculated as sales minus costs. So Jones cold subtract costs, like purchasing food or hiring staff for the party. Ultimately, the profit would be small, not enough to warrant a lawsuit. Plus, the party was canceled, so there was no income generated, although the Pokémon Company could sue over the prior years’ parties.
So, why was this suit worthwhile and why is Jones required to pay $5400? Because the Pokémon Company was eligible to receive Statutory Damages.
As of 1989, registration with the Copyright Office is not required to receive a copyright. Copyright is automatic, received as soon as you create the work. However, if a work is registered prior to an infringement, or if the registration is made after an infringement but within 3 months of publishing the work, then the copyright holder can elect statutory damages.
Before I discuss what a copyright holder gets if they are eligible for statutory damages, let’s quickly go over what “within three months of publishing” means, as it’s not as straightforward as it sounds. The Copyright Office puts it this way:
Publication” is the distribution of copies of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending.
Publication doesn’t mean published in a magazine or an online portfolio. The key to publishing is the offer for sale. So, a public performance or public display of a work does not necessarily mean that a work has been published. For example, if you are a painter and have one of your own works in your living room, it has probably not been published. You didn’t sell, rent, lease or lend it to anyone. Here’s another example. You have recent photos on your laptop, which have not been registered with the copyright office. In fact, nobody has seen them yet. Your laptop is stolen and a year later you see one of your photos in an advertisement. You register the work within three months of the recent publication, and can still receive statutory damages.
Ok, Back to Pokémon.
The Pokémon company registers their character years before the infringement, so they are eligible for statutory damages. First, the copyright holder is entitled to anywhere from $750 – $30,000 per infringement, or up to $150,000 for willful copyright infringement. Willfulness is a high bar to meet. The copyright owner has to show either deliberate conduct, such as a clear knowledge that they were trying to make money by using these characters, or reckless disregard for the infringement after being notified that they were infringing. That probably didn’t happen here so the statutory damage range would be $750-$30,000 per infringement. Where Jones falls along that range is hard to tell. There are no clear rules. But as a guide: someone putting a copyrighted image on a blog post that nobody reads would be $750, and $30,000 would be selling Pokémon products without permission.
For our purposes, let’s use $8000 per infringement as the damage award for Jones. With two cases of infringement; the Facebook post and the Party Poster, we can double the damages for an estimated total of $16,000.
Now comes the kicker: along with guaranteed monetary awards, legal fees are also available at the discretion of the court. For all practical purposes, legal fees are almost always given in statutory damage cases. It’s kind of the point. No matter how small the award, even if it is the lowest level of $750, the copyright holder can still afford to sue, since any of the copyright holder’s legal fees will be paid by the infringer. Otherwise, the legal fees are likely to be too high to warrant a suit. Conversely, the plaintiff cannot receive legal fees reimbursement form the defendant unless the damages are statutory.
The legal fees provision allowed the Pokémon Company to be reimbursed for the legal fees incurred for preparing and prosecuting the injunction. As the suit goes on to determine the damage award, every hour The Pokémon Company spends on legal fees will be paid for by Jones, along with Jones’ own legal fees, and eventually the damages too. Based on our earlier calculations, the Pokémon Company would receive $16,000 for the two infringements plus the legal fees, which could total $25K or more in a case like this.
The Pokémon Company’s Change of Heart
After Josh’s stole Brian’s lunch money, leaving Brian to worry about lunch for the rest of the year, Brian was saved by his classmates. At least, that is what seems to have happened. After a series of taunts against Josh, he offered Brian a truce, although he kept Brian’s lunch money and Brian still couldn’t play with Josh’s Pokémon stuff. A small victory, but a victory nonetheless.
For the Pokémon company, its seems their antic backfired on them. Despite the Company’s guaranteed damage, they dropped the case, offering the $5400 legal fees award as the final settlement offer. This is a major tactical shift as well as a confusing one. After all, Jones had already agreed to remove the infringing material and cancel the party. By filing the lawsuit, pursuing the injunction and legal fees, the Pokémon Company received only what they already had gotten from Jones, when he agreed to cancel the party and remove the infringing material. The $5400 is going to the lawyers, not the Pokémon Company.
Why the change of heart? We will never know for sure. However, if I had to make an educated guess, I would say it was probably the result of internet shaming. Not quite to the level of Cecil the Lion’s Killer or the hedge fund manager who raised and AIDS drug price by 6000%, but a shaming nonetheless. The internet spoke out and articles by bloggers and the new media created a Public Relations backlash that had to be stopped. For a large company like Pokémon, the potential damage award wasn’t enough to warrant the bad press. The Pokémon Company may have started the case thinking it would be easy and under the radar, but then it blew up. Of course, the reasons could have been more altruistic. Perhaps upper management wasn’t aware of the situation, and it was being handled by someone incompetent on the lower rung. Maybe it was just a practical decision; the company realized that Jones didn’t have the money to pay so why bother moving forward. I would like to think the whole thing is a big misunderstanding, but since the Pokemon Company still wants Jones to pay $5400 he can’t afford, my hopes are slim.
What do you think? Who do you think is the bad guy here, Jones for using the material without permission or Pokémon Company for suing him? Let us know in the comments section below.