Copyright troll litigation – some considerations for practitioners Quarter 1 2022

By LENNARD COWAN AND JAMES HORN, Published in Intellectual property/litigation

Recently, there has been a spate of so-called 'copyright troll litigation' in South Africa, in terms of which outrageous sums of money are claimed for alleged copyright infringements for photographs posted online.

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This type of litigation was first popularised in the United States and would often relate to pornographic material. This was deliberate, because the alleged infringers would be too embarrassed to oppose legal proceedings and, accordingly, would hastily settle disputes ( AF Holdings LLC v. Does 1-1058, 752 F.3d 990, 998 (D.C. Cir. 2014)). It has now expanded globally to a host of other copyrighted material, including photographs posted online.

American jurisprudence on copyright troll litigation has been somewhat inconsistent. Certain courts have placed emphasis on the prevalence of widespread copyright abuse as justification for mass copyright litigation ( Strike 3 Holdings, LLC v. John Doe 187188 (D.C. Cir. 2020)).

Other courts have decried unscrupulous companies which engage in predatory litigation purely for profit ( Righthaven LLC v. Hill Civil Action No. 1:11-cv-00211-JLK and Righthaven LLC v. Hoehn, No. 11-16751 (9th Cir. 2013)). One American District Court described such litigation tactics as follows:

"As I have previously noted, there is substantial evidence that Righthaven has engaged in a pattern of filing copyright infringement suits against naïve bloggers in order to secure settlement agreements, often with a minimal investment of time and effort. These lawsuits act as an effective bargaining chip in the negotiation of settlement agreements, because the cost of settlement is often less than the cost a defendant would incur in defending against Righthaven's suit…" ( Righthaven LLC v. Hill Civil Action No. 1:11-cv-00211-JLK)

For a variety of reasons, including the success of copyright troll litigation internationally and the wide-ranging relief available to copyright holders, assignments and licensees in terms of the Copyright Act (98 of 1978), as amended (the Copyright Act), similar litigation has become popular in South Africa. There are also several companies that are in the business of scouring the internet to identify the unauthorised use of photographs and, thereafter, offering to fund litigation in exchange for a share in the profits.

There are certain common features to copyright troll litigation in South Africa:

  • Claims are typified by outrageously high demands which have no bearing on any reasonable royalty and/or damages that may have been suffered by the copyright owner. They are, in essence, designed to intimidate and/or compel defendants to settle matters for amounts significantly higher than the value of the photographs concerned;
  • The plaintiffs and/or their representatives are aware that defending any legal proceedings will be significantly more expensive than a nuisance value settlement (even one which exceeds any reasonable royalties that may be due). Consequently, defendants are compelled to settle rather than defend matters;
  • In the vast majority of cases, the plaintiffs and/or their representatives have no intention of bringing the claims before court, lest a judge enquire why a plaintiff should receive hundreds of thousands of rands for a photograph of dubious artistic and/or commercial value; The photographs that are the subject of such claims are often used inadvertently and typically do not contain any indication that they are subject to copyright in the first place (i.e. in the form of a copyright mark or watermark). Claims are also often brought years after the fact and only after being identified by automated internet searches;
  • Litigation is regularly funded by external third parties, in terms of champerty agreements (i.e. no win/no fee agreements), meaning that the actual copyright owner has little risk if the litigation fails. Large photographic licensing companies and/or stock photography websites also regularly issue such demands in the normal course of business;
  • In many cases, the photographs are not published in South Africa. Local businesses and South African residents can nevertheless be held liable because of the Berne Convention, which permits foreign persons to bring actions in South Africa, notwithstanding the publication of the photographs in other jurisdictions; and
  • Small businesses, NGOs and individuals are often deliberately targeted because they lack the funds and/or the legal wherewithal to defend the actions.

Given the rise of copyright troll litigation in South Africa, we set out below some considerations for consumers and legal practitioners who are faced with these claims. These are not intended to be exhaustive or prescriptive, but rather to give an indication of the options available. The following may be relevant:

  • There are several exceptions to copyright protection applicable in terms of the Copyright Act. In the first instance, an assessment should be made as to whether any of those exceptions apply, as this may immediately absolve a defendant from any liability. By way of example, a 'fair dealing' exception exists in relation to photographs used for the purposes of reporting on current events;
  • If a defendant was not aware that the photograph was subject to copyright and had no reasonable grounds to suspect that it was, this constitutes an absolute defence to any claim for damages. This will limit the plaintiff to claiming a 'reasonable royalty' in lieu of a claim for damages;
  • To determine what would constitute a 'reasonable royalty', a search of the specific photographs should be conducted (this can be done with a Google Image Search). Frequently, photographs forming the subject matter of a claim are still available for licensing through online stock photography websites. This will give an indication of what constitutes a reasonable royalty for their use;
  • Where the photograph in question is not available for licensing, it may be useful to search for similar photographs that are available online through online stock photography websites such as Shutterstock or Getty Images;
  • Where the photograph was taken by a professional photographer with a well-known body of work and reputation, it is also advisable to check whether that photographer licenses the use of other images online (i.e. is there a generic licensing fee applicable to all of his/her work);
  • In the unlikely event that a claim for damages is available at all (i.e. where a defendant knowingly breached copyright), it should be remembered that it is brought under the common law in terms of the Aquilian Action and, therefore, all elements of a delict must be present in order for the claim to be good in law;
  • It may be possible, for example, to defend a claim for damages on the basis that the posting of an image was not wrongful, inter alia, because it caused negligible harm to the plaintiff and/or the relationship between the parties and ethical issues weigh in favour of the defendant (especially in a case where litigation is funded by a third-party for profit);
  • It may also be possible to defend a claim for damages on the basis that the harm caused was not 'reasonably foreseeable' by the defendant and, therefore, the fault element has not been met;
  • The quantification of damages in such delictual claims will also be assessed with reference to ordinary delictual principles. This will typically be limited to a loss of profits in the form of the value for which the pictures are normally licensed (see Priority Records (Pty) Ltd v Ban-nab Radio and Tv1; Gramophone Record Co (Pty) Ltd v Ban-nab Radio and TV 1988 (2) SA 281 (D)). In the vast majority of matters, enormous claims for damages accordingly have no legitimate legal basis and will not be sustained in court;
  • Clients should be advised to utilise website analytics to determine how many times the blog/post in question was read and/or the picture utilised was viewed. This data may undercut any quantification of damages in relation to the use of the image;
  • If the particulars of the specific photographer (i.e. the plaintiff) are not contained in a letter of demand, require that those details be provided. A 'representative' has no locus standi to step into the shoes of the plaintiff. Knowing the details of the specific plaintiff is necessary to determine whether the plaintiff is a foreign peregrinus (which is relevant to security for costs);
  • Where the claim is brought by an assignee or licensee of the work, a written agreement signed by the copyright holder/licensor is required. The date of this agreement may also be relevant, depending on when the image was posted online;
  • Enquire in which jurisdiction the image was first published. If the image was first published outside of a country that is a signatory to the Berne Convention, the plaintiff will have no claim in South Africa;
  • If the plaintiff is a foreign peregrinus, enquire whether the plaintiff has property (movable or immovable) in South Africa which can serve as security for any adverse costs order against him/her;
  • In the event that the plaintiff does not have sufficient property, consider filing a Rule 47(1) notice requiring the plaintiff to furnish security for costs. For litigation funded on a no win/no fee basis, claiming security for costs often brings an immediate end to the litigation;
  • If the amount of security is contested by the plaintiff, a draft bill of costs should be prepared, and the matter should be enrolled before the taxing master for a determination. If the plaintiff refuses to provide any security, consider an application for an order that such security be paid and that the proceedings be stayed until such security is provided;
  • If the matter proceeds to trial, consider making a 'with prejudice' tender based on what a reasonable royalty for the use of the photograph would be. If the plaintiff takes the matter to trial and can prove no damages beyond the reasonable royalty, the plaintiff will become liable for the costs.

In general terms, clients should be comforted by the fact that proving any damages whatsoever in relation to the use of photographs without permission is difficult, if not impossible (i.e. because there are none), and further, that any reasonable royalties claimable will be substantially limited in terms of the Copyright Act.

Thus, any settlement should be minimal, and often, the persons pursuing such claims are prepared to settle at a tiny fraction of the amount initially claimed (typically in the region of a few thousand rand).

Where a plaintiff refuses to settle for a reasonable amount, however, it remains open to a defendant to drive the litigation process and to place the matter before court (often together with a 'with prejudice' tender of reasonable royalties). The court is unlikely to be impressed by claims that are grossly exaggerated with a view to extorting settlements from unwitting defendants. Substantial punitive costs may follow against the plaintiffs concerned.

Finally, in relation to the conduct of the legal practitioners pursuing such claims, the Code of Conduct applicable to attorneys contains a prohibition against making statements calculated to mislead or intimidate other persons on behalf of clients, including statements "which materially exceed the legitimate assertion or the rights of entitlement of the attorney's client".

Where it can be demonstrated that attorneys have made excessive demands with no basis in fact or law, those attorneys should be referred to the Legal Practice Council for investigation. These complaints should include a request that the Legal Practice Council investigate legal compliance to the extent that any contingency fee arrangement has been concluded, given the substantial non-compliance in relation to the conclusion of those agreements by attorneys.

Ultimately, copyright troll litigation will likely continue until it is addressed by either an amendment to the Copyright Act which bolsters the statutory fair use provisions in the context of online social media, or a sufficiently punitive judgment against a copyright troll litigant for abuse of the court (and perhaps even their attorneys, in the form of an order of costs de bonis propriis).

Cowan is an Executive Consultant and Horn a Consultant with Cowan-Harper-Madikizela.