In 1989, Rod Stewart was at the top of his game with his song, Forever Young, #12 on the Billboard charts, and his albums Out of Order, Rod Stewart’s Greatest Hits, and his anthology, Storyteller, all going Double-Platinum. Storyteller featured the now iconic photo Stewart, showing the back of his head and shoulders with his “signature bouffant hair style.” Stewart had been gearing up for a comeback with a regular show at Ceasar’s Palace in Las Vegas. The photo would be the perfect image for his resurgence, but it required licensing the photo from the original photographer, Bonnie Shiffman. Arnold Steifel, Stewart’s agent, offered Schiffman $1500 for a license, but Schiffman rejected the low offer. Instead, Stewart had a photographer recreate the photo, which he used to promote his new Las Vegas show. Schiffman filed a lawsuit against Stewart for $2.5 million, claiming copyright infringement for creating a derivative work without her authorization.
Copyright law is designed to preserve the incentives for the creative artist to produce artistic work. Given the competing interests of the various parties, such as the creator, the licensee, or the purchaser, the Copyright Act attempts to provide balance, giving a copyright holder certain rights that are offset by the population at large. We want to encourage creativity in one group while at the same time, not stifling creativity in another group, sich as those creating derivative works. To further that end, the Act provides the copyright holder with the exclusive right to copy, distribute, display, or make derivatives of his or her work, unless the derivative work falls within the prescribed exceptions of “fair use.” If Stewart’s is using a derivative work in his new Las Vegas show, unless he can show that the use is a fair use then he will be liable for copyright infringement.
Unfortunately for Stewart, proving fair use in this case will be difficult, leaving him with few ways to extricate himself from this situation. The actions allegedly taken by Stewart are exactly the type that copyright law is designed to stop. Were Stewart to prevail, his actions would be copied by others as a means of getting around high licensing fees. The implications of legitimizing Stewart’s actions are too far-reaching; making it hard to imagine a lower court judge wanting to be the architect of such a dramatic change.
Stewart’s actions seem so egregious, why would he have gone down this road just to save a few thousand dollars on a licensing fee. Maybe his actions were willful and intentional as a result of facts yet to be discovered. Or perhaps Stewart and his advisors misunderstood the rules surrounding copyright infringement, which is all too common especially regarding what constitutes fair use. Since the Copyright Act and associated case law, don’t provide a bright line for determining what constitutes a fair use, misinterpretations abound. That is not surprising as A four-part balancing test guides the judiciary as to whether the work is fair use, but even the courts have trouble leaving us with several contrasting decisions to follow. I have talked about fair use quite a bit on this blog, so for more in depth discussion on what constitutes fair use, click the link here. In short, however, one way to think about fair use, (although lacking the depth of legal analysis necessary for a true determination,) is whether the derivative work is transformative; different enough from the original that it will appeal to a new audience? Additionally, consider whether the audience of the original Work could easily replace it with the derivative, moving profits destined for the creator to the derivative author instead. In Stewart’s case, the photo is a replacement for the license he could not obtain, allowing for little room to push a fair use argument.
Schiffman’s attorney, William Hochberg, agrees saying that this is an easy case of copyright infringement. “Bonnie Schiffman’s picture of Rod’s back announces his comeback better than any other. That’s why they’re using it,” Hochberg told reporters, but turning their back on their obligation to license the picture before splashing it all over Caesars Palace and elsewhere is not a pretty story, and it’s unlawful.”
However, being branded an infringer does not mean that Stewart will be required to pay the $2.5 million as demanded in the complaint. Schiffman will only be entitled to the profits derived from the photo’s use, not necessarily profits from the entire Vegas show. The question for the court is how much of the Las Vegas show revenue is received due to the use of the photo? Whatever that number turns out to be, Stewart is only responsible for the profit, not gross revenue, so will be allowed to add certain allowable expenses to the calculation to find the net-profit. A case, like this one, often ends up with the defendant admitting infringement; leaving the legal battle solely to the amount of damages available to the plaintiff.
Although Stewart has the deck stacked against him here, one bright spot for him is the fact that, despite being such an important photo, Schiffman never registered the work with the U.S. Copyright Office. Had she done so, Stewart would have received statutory damages, in particular, Stewart would have been required to pay Schiffman’s legal fees, changing the entire dynamic of the case. Without statutory damages, receiving legal fees from the opposing party is very difficult although it is more likely for those defendants who willfully commit an infringement. However, we will probably never know the damage award total as this case will most likely be settled out of court and the final award not made public. Regardless, you can be pretty sure that whatever the final settlement, Rod Stewart will pay more in a settlement than any licensing fee Schiffman would have accepted.