Visual Works Inquiry: Aggregators, Orphans, Infringers & Expropriators

July 23, 2015 – The Association of Medical Illustrators filed comments with the U.S. Copyright Office in response to their April 24, 2015 Notice of Inquiry regarding Copyright Protection for Certain Visual Works. This is the first time the Copyright Office has studied visual art (photographs, graphic arts, and illustrations) specifically and acknowledges that these creators face monetization and enforcement disadvantages in the marketplace compared to text authors and musicians. The Office sought comments to five questions:

1. What are the most significant challenges related to monetizing and/or licensing photographs, graphic artworks, and/or illustrations?
2. What are the most significant enforcement challenges for photographers, graphic artists, and/or illustrators?
3. What are the most significant registration challenges for photographers, graphic artists, and/or illustrators?
4. What are the most significant challenges or frustrations for those who wish to make legal use of photographs, graphic art works, and/or illustrations?
5. What other issues or challenges should the Office be aware of regarding photographs, graphic artworks, and/or illustrations under the Copyright Act?

AMI’s Legislative Counsel, Bruce Lehman, wrote a 19-page comment addressing the five questions and suggesting legislative actions that could improve artists’ ability to license and protect their works. Download a PDF of the comment.

MOST SIGNIFICANT CHALLENGES TO MONETIZING / LICENSING ILLUSTRATIONS

The challenges facing AMI members are the same as those for all graphic artists, particularly professional illustrators. However, the market for medical publications is smaller than for mass market publications with the result that purchase prices and subscriptions are especially high in comparison with the publishing industry in general. Further, the business environment for medical illustration has experienced two especially significant changes in recent years that create a much more hostile environment for licensing and monetization than in the past. These are: (1) the consolidation of the Scientific, Technical and Medical (STM) publishing industry with the result that a handful of giant multinational publishing companies control the conditions of licensing for medical illustration, and (2) the disproportionately extensive and rapid migration from print distribution to electronic distribution, often through site licenses offered by publishers and content aggregators to physicians, hospitals, clinics, universities and medical research institutions.

During most of the 20th century STM publishing was characterized by a plethora of journals, many of which were published by nonprofit entities with a primary interest in dissemination of scientific information rather than maximizing shareholder profits. Concentration and consolidation within the industry has meant that relationships with customers and content suppliers have been determined less by the desire to disseminate knowledge than by the need to generate the largest profit possible in order to bolster stock prices for large, multinational corporations. In these circumstances the very purpose of the copyright law is often overlooked: namely, that it is for the purpose of incenting and rewarding authorship.

In the current publishing environment the four most significant challenges to AMI members and other professional illustrators who create works for publication are: (1) the inability to obtain secondary licensing revenue collected by publisher-dominated copyright management organizations, both domestically and internationally; (2) the practice of publishers using their market power to demand that freelance artists sign work-made-for-hire contracts in spite of a long record of Congressional intent to the contrary; (3) the burden of registration and its impact on the ability of artists to initiate infringement actions; and (4) the costs of bringing infringement actions in federal courts.

Inability to access secondary licensing royalties from publisher-dominated collective management organizations (CMOs)

Until recent decades STM publishers received nearly all of their revenue from the sale of printed books and subscriptions to printed medical and other scientific journals. A large percentage of the market for sale of these publications consisted of corporate and institutional libraries. Given the specialized nature of these books and journals, the universe of purchasers was relatively small in comparison with other publishing markets such as popular periodicals and trade books. Therefore, recovery of costs and generation of profits required high prices for individual copies. Typically, the number of copies of medical books and periodicals purchased by libraries depended on the number of users served by each library. The larger the institution served by the library the greater the number of copies purchased, since hard copies had to be lent to users individually. The advent of photocopying machines in the mid-20th century began to change the market by enabling libraries to serve large numbers of users through the ability to photocopy individual articles while leaving the original book or journal on the library shelf.

After many years of litigation over library lending practices, the scope of fair use in photocopying became clearer and publishers established the Copyright Clearance Center (CCC), a CMO that issues non-title specific licenses to institutions and libraries to cover reprography beyond the limits of fair use. Similar to the long-used practices of music collecting societies, the CCC distributes the licensing revenue received to affiliated publishers on the basis of estimated market share. Regretfully, in spite of many years of trying, medical illustrators and other graphic artists have not been able to persuade the CCC to share non-title-specific licensing revenue with artists whose copyrighted images are a significant part of the publications licensed by the CCC, even though illustrators typically have not transferred to publishers the right to keep such revenue. While the CCC’s marketing materials give the impression that CCC licenses give users very broad discretion in making secondary copies of published works, the fine print suggests that users have only the right to copy the portions of publications covered by the publishers’ copyrights.

The CCC was created for the purposes of issuing copyright licenses in the era of mechanical reprography such as photocopying. However, with stunning speed CCC licenses have become one of the primary mechanisms for users to obtain permission for digital distribution, downloading and copying. These comments primarily are directed at CCC’s “Annual Copyright License” which is a blanket license marketed to institutional users that, according to CCC’s marketing materials, permits licensees to “share content from millions of journals, blogs, newspapers, e-books and more.” The annual license is a blanket license similar to those offered by music collecting societies for an entire repertory of works without differentiating specific works. This is best described as “non-title-specific licensing.” This Annual Copyright license is sold to users as a sort of back-up license to provide assurance that they will be free of liability for copyright infringement for secondary copying that is neither covered under a title-specific license or fair use. To our knowledge revenue from the annual license accounts for the largest share of all licensing revenue collected by the CCC, currently in the neighborhood of $300 million per year.

If users are to obtain the safe harbor that CCC advertises to its customers, it should include all rights in the publications covered by the license. However, that is not in-fact what happens because unless the publisher of a work has acquired the rights to authorize CCC to license separately copyrighted components of a collective work, the user remains liable for infringement when copying the entire work. That is the case with regard to visual components such as medical illustration. CCC attempts to limit its liability for these gaps in its licenses by fine print advising the user that they must seek separate clearance for content not covered in the annual license. Were institutions using a CCC license aware that they must strip out all illustrations from works they wish to copy, such as medical journals, the CCC license undoubtedly would attract far fewer customers.

It would be easy for the CCC to close this gap in its annual license. AMI members would be happy to provide authorization for inclusion of rights to their works if CCC would agree to acknowledge their rights and to share revenue collected from the annual license with them. It also would be easy for CCC to clear use of AMI members’ works – as well as the works of over 50,000 other artists – simply by making an agreement to share a percentage of total licensing remittances with the Artists Rights Society (ARS).

ARS is a bonafide CMO but like every other licensing mechanism tried by AMI members, also has been shut out by publishers, the CCC and digital content aggregators (e.g., ProQuest, EBSCO, ScienceDirect, SpringerLink, LexisNexis, and Ovid) and does not receive secondary use licensing revenue. ARS’ royalty collections on behalf of artist/authors currently are restricted to primary, title-specific licensing of works licensed for initial publication.

Currently, distributions of annual license revenue go only to publishers. This would mirror the practice of most foreign counterparts to CCC, especially in Europe, which set aside a percentage of blanket license revenue estimated to cover visual components that is transferred to artists’ CMOs like ARS who, in turn, are authorized by their affiliated rights holders to disperse each artist’s share according to commonly agreed methodologies similar to those currently in use by music CMOs. However, after repeated attempts by AMI leadership and ARS management to discuss this approach, the CCC simply refuses to talk. AMI has concluded that the reason for CCC’s refusal to consider inclusion of their members’ works in their annual license is most likely that CCC was created by and for publishers, not individual authors. A majority of CCC’s board of directors consists either of current or retired executives of publishing companies who have little interest in sharing the pie with individual authors.

For over 15 years illustrators have attempted to create a functioning CMO of their own, but have lacked the financial resources to do so. Because of the CCC’s refusal to discuss inclusion of the illustration component in the Annual License, an illustrator CMO would have to repeat the costly process, involving years of infringement litigation, necessary to compel users to recognize their obligation to separately clear rights in visual images. Partly because of the misappropriation of existing royalty income by the Authors’ Coalition of America (ACA) and its member organizations the Graphic Artists’ Guild (GAG), Society of Illustrators in New York (SINY), and Society of Children’s Book Writers and Illustrators (SCBWI), AMI members and other professional illustrators have lacked the financial resources necessary to undertake such an effort. Medical and other illustrators also are hindered by their inability to comply with the registration formality that is a pre-condition for infringement litigation. Publishers’ failure to share secondary licensing revenue has an exaggerated impact on medical and scientific illustrators since, as described above; their works are far more likely to be reproduced in institutions comprising the primary market for STM publications.

In recent years publishers have been using content aggregators to license re-use of works in cases where the specific work, portion of a work and visual images contained in the work are known. In some cases the aggregator is an entity independent of the publisher that functions as the publisher’s agent. In other cases, publishers have established in-house aggregators (e.g., ScienceDirect, SpringerLink, Ovid) to license content from multiple publications that it owns and markets. Consolidation in the publishing industry has made it easier for a single company to offer re-use rights in large, aggregated collections under the control of the company. An example, of such an in-house aggregator used by one of the largest STM publishers, Netherlands-based Elsevier, is Science Direct / Scopus offering a consolidated database covering a myriad of Elsevier published journals, books and e-books.

A leading independent aggregator currently licensing to a large share of the STM and medical market is ProQuest, which enables subscribers to search and ostensibly obtain permission for over 1000 medical publications. ProQuest’s business model is particularly damaging to medical illustrators. ProQuest promotes its use of images as the most accurate and efficient search tool on the market: “Many databases within the field of Health & Medicine are enhanced with the ProQuest Deep Indexing providing access to more than 6.1 million figures and tables. Many Science & Technology* databases are enhanced with the ProQuest Deep Indexing providing access to more than 12.4 million figures and tables.” Marketing materials for the ProQuest product, Illustrata™ deep indexing, contain the following representation.

ProQuest Illustrata™ offers a new approach – by searching for papers that feature images (tables, graphs, figures etc.) that have been indexed by the key terms, the result is that the articles the images appear in are likely to be highly relevant. The images within an academic paper represent the core aspects of that paper – therefore articles that feature images indexed to match the search terms are likely to be highly relevant to the search. (Italics supplied).

ProQuest’s database of thousands of medical journals includes a very large number of images authored by AMI members. While AMI takes the position that use of such an image as a search tool itself requires copyright clearance, ProQuest’s use of AMI member images destroys the illustrator’s market for licensing images directly for secondary use such as presentations, online streaming and PowerPoint presentations. Unlike the journal article containing the AMI member illustration, ProQuest provides access and permits unlicensed re-use of the entire illustrated image without payment of a licensing fee. In fact, users are encouraged to download and use without permission. For example, the Illustrata™ marketing brochure boasts – that for purposes of “teaching” – unlicensed images used as a search tool can be “export[ed] directly to MS PowerPoint.” The brochure asks the reader “what better tool to prepare for a class on style & format for graphics in science papers?”

Content aggregator’s use of medical illustrators’ copyrighted images as a search tool and its invitation to invite users to download their images for re-use destroys the artist/author’s capacity to separately license his or her work. Even in situations where use of the image might arguably be fair use, the cat has been let out of the bag. Any user of an aggregator’s database can obtain tens of thousands of medical illustrations, strip out attribution and any copyright, and use it commercially with a nearly non-existent chance of getting caught. Therefore, medical illustrators are shut out of what should be a vibrant new market that would make up for commissions and royalties lost because of declining print sales. Since aggregators are dependent on large publishing conglomerates for material to include in its database it is careful not to enable unlicensed use of these publishers’ copyrights. Sadly, neither the publishers nor aggregators seem to have the slightest interest in seeing that the copyright owner of the illustration is made whole.

It is not surprising that publishing conglomerates should have little interest in respecting the copyrights of providers of visual content in their publications. An egregious example of STM publishers’ bold expropriation of an illustrator’s copyrighted work was recently documented by one of AMI’s members. The highly prominent AMI illustrator investigated Elsevier’s infringing use of her copyrighted work by purchasing a license for her own work using Elsevier’s online ScienceDirect/Scopus database. She was able to search the Elsevier database by image, find her works and download high resolution jpgs and PowerPoint reproductions with the condition that she obtain a license through CCCs title-specific Rights Link upon payment of a fee of $363. Of course, CCC never made any attempt to notify the illustrator of this use, to obtain her permission or share the licensing royalty fee.

Regretfully, Elsevier, like other CCC publishers, makes no attempt to obtain rights for CCC licensing of any portion of a work where Elsevier does not own the copyright. The fine print of the RightsLink Elsevier’s “General Terms” accompanying its digital license states:

“Acknowledgement: If any part of the material to be used (for example, figures) has appeared in our publication with credit or acknowledgment to another source, permission must also be sought from that source. If such permission is not obtained that material may not be included in your publication/copies….” (Italics supplied.)

Elsevier is not an unsophisticated user of copyrighted works. It is a large foreign-based conglomerate that routinely employs an army of lawyers to guarantee that its copyrights are protected and that its copyright-based profits are maximized. By contrast, the vast majority of AMI members are either sole proprietors of their business or members of a very small studio where they share expenses with a handful of others. The median net income of a freelance illustrator in 2013 was $58,384. This is very modest compensation for professionals with a Master’s Degree and cross disciplinary training in art, medicine and science. Medical illustrators simply lack the resources to defend themselves against abuse by multi-billion dollar publishing conglomerates.

While the majority of AMI members are self-employed freelance illustrators, a significant percentage are employed by medical research institutions. The works of these artists genuinely are works-made-for-hire in the sense intended by Congress in the copyright statute. Their employers pay their Social Security payroll tax and provide benefits such as paid vacation, sick leave and family leave, and contribute meaningfully to employees’ retirement plans. Therefore, AMI does not dispute these employer’s rights to be considered the authors of copyrighted works. However, that does not mean that employed illustrators are not harmed by the diversion of secondary licensing revenue entirely to publishers. The research institutions that employ AMI member rely on copyright royalty revenue to offset the costs associated with employing illustrators in-house. Diminishing royalty revenue from the publisher-centric licensing schemes impedes the ability of these institutions to compensate fairly their illustrator employees. That is all the more the case in that these research institutions are overwhelmingly nonprofit organizations lacking profits to support employee benefits.

International Issues and Concerns

Unlike rights that are discretionary such as resale rights, the rights of public performance and reproduction are guaranteed national treatment under Berne Convention on Literary and Artistic Works. Further, implementation of national treatment obligations is required of member states of the World Trade Organization under the TRIPS Agreement. Failure to meet this obligation exposes a member state to a complaint by another member state under the dispute resolution provisions of TRIPS and retaliatory sanctions by the complaining state or states.

The principal of national treatment is widely respected with regard to the exclusive right of public performance and also is widely applied with regard to primary licensing of reproduction of literary works.

Overwhelmingly, the right of public performance of musical works is administered by author/composer controlled national collective management organizations (CMOs) commonly referred to as music rights collecting societies. Each national CMO offers a blanket collective license to broadcasters and performance venues where music is publicly performed. Since the system is based on use of blanket licenses, each CMO tracks public performance of individual works and distributes a share of the total revenue received according to the author’s approximate share of the market. In the United States there are two major music CMOs, ASCAP and BMI, that each generate licensing revenue of more than $1 billion annually. The Copyright Office has extensive knowledge of the workings of these music CMOs because they are regularly involved in Office rule makings and proceedings of the Copyright Royalty Board.

National music CMOs collect royalties not only for public performance of works of its own nationals and domiciliaries, but also for foreign authors. Periodically, national CMOs exchange revenue which then is distributed to authors domiciled in the territory of the receiving CMO. This system, which in many countries makes use of extended collective licensing, provides fair compensation to individual authors who would find it impossible to administer their rights individually.

The administration of national treatment for authors’ exclusive rights covering public performance of non-musical works is typically handled by contract between the rights holder and performance entity and does not involve collective licensing. However, collective licensing is used for contributors to sound recordings and audiovisual works, such as singers and actors who are not authors but who in many countries are protected under the Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations. While the United States does not adhere to the Rome Convention, it utilizes a similar system of “neighboring rights” through residual royalties paid by producers of audiovisual works and phonograms pursuant to collective bargaining with labor organizations representing performers.

Mechanisms for granting national treatment for secondary uses of authors’ literary works, and the visual art included in such works, are largely non-existent. Primary licensing of the reproduction right, as in the case of audiovisual works described above, utilizes contracts between authors and publishers and does not involve collective or blanket licenses. (Primary licensing is the term used to describe the contractual agreements between authors and publishers for the initial publication of works and subsequent editions of the work. The term secondary licensing is used to describe licenses for reprography and digital copying of already published works by users.) While CMOs currently exist in many countries that offer blanket or collective licenses for reprography and digital copying, the principal of national treatment is not widely observed. National CMOs keep royalties collected at home and, after expenses, distribute the entire amount either directly to domestic authors or to funds, such as health care or pension funds, established for the benefit of domestic authors. With the exception of a small number of countries no attempt is made to distribute royalties collected to foreign nationals even though their works are included in the licenses administered by the CMOs. While an AMI representative has raised the issue over the course of many years with European CMOs during periodic meetings at the International Federation of Reproduction Rights Organizations (IFRRO) — where the AMI rep could engage with the international artists’ collecting societies – the Europeans insist that reciprocity is required as a condition of distributing a share of their royalty pool with Americans.

A few small European CMO’s distribute a share of licensing revenue to the Authors Coalition of America (ACA) and its member organizations the Graphic Artists’ Guild, The Society of Illustrators in New York (SINY) and the Society of Children’s Book Writers and Illustrators (SCBWI). However, these organizations have repeatedly refused to redirect those distributions to AMI members even though these rights holders have organized themselves into a licensing society by joining with other illustrators organizations in an attempt to establish a reciprocal artists’ CMO in this country – the American Society of Illustrators’ Partnership (ASIP) – and authorized ASIP to seek their share of European licensing revenue. However the European members of IFRRO steadfastly refuse to alter their practices even though the Berne Convention is clear that authors are entitled to national treatment and that reciprocity is not a condition for withholding royalties for the share of licensing revenue attributable to the use of works of Americans.

It is our understanding that while in the past the CCC has exchanged blanket license royalty revenue with some large foreign counterpart CMOs, it no longer does so. In fact, it has set up operations in Europe to directly license its repertoire in that market. Royalty income collected is shared only with publishers and not with authors who retain copyright ownership of visual or other components included in the licensed publications. Since the leading medical publishers are European companies, they are very familiar with the European system because they receive payments directly from European CMOs for blanket licensing of secondary use of works. However, in contrast to their practice at home, European-based multinational publishers have never cooperated in sharing CCC licensing income with subsidiary visual artists’ CMOs.

In at least 29 countries royalty revenue is directed not only to publishers but is shared among categories of rights holders, including visual artists. Typically, a percentage of the money collected is distributed to a national visual artists’ CMO that in turn pays artists, either directly or to funds established for their benefit. Only a handful of these countries attempt to meet their national treatment obligations to any other country. Unlike the music societies, these CMOs do not even exchange blanket licensing royalties with countries where there are equivalent organizations that could provide reciprocity.

The failure to receive national treatment is particularly significant for medical illustrators because even though foreign companies dominate the STM publishing industry, American authors account for a disproportionately large percentage of works published and distributed internationally. Not only is the U.S. the world leader in medical research and innovation, the English language is predominately used by authors in all countries. It is not uncommon for a foreign author of a journal article to utilize an AMI illustrator for the visual representations incorporated into the author’s work.

Because attempts to create through ASIP a functioning artists’ CMO that would actually grant licenses, collect and distribute copyright royalties have been unsuccessful, AMI members have assigned to the Artists’ Rights Society (ARS) the right to represent them. However, the failure to receive national treatment from foreign societies eliminates a major income stream that could, in part, be used either to establish their own CMO or to support ARS in attempts to collect royalties for secondary use of works.

Expropriation of Foreign Copyright-Based Distributions from Rights Holders Without Authorization

Unlike fine artists whose market consists of collectors who purchase original paintings, drawings, and sculpture, medical illustrators create works for the primary purpose of publication in multiple copies. While AMI supports the American Royalties Too Act currently pending in Congress, that legislation would have little practical impact on their ability to receive income from their work. Therefore, the exclusive right of reproduction contained in § 106 (1) of the Copyright Act lies at the heart of their ability to earn a living. Unlike fine artists who need new rights such as the resale right as a mechanism to provide equitable remuneration, visual artists already possess the legal rights that should provide them with the means to earn a living. The paramount challenge facing medical illustrators today is their inability to enforce their rights when dealing with large organizations.

As explained above the market for medical illustration has fundamentally shifted from creation of works intended for sale in printed copies to works digitally accessed and reproduced by end users. The only means of authorizing such reproductions are: title-specific licenses granted to end users or non-title specific blanket licenses administered by CMOs that distribute to each author a reasonable royalty based on the amount of use of their works by users – a method successfully used to license public performances of music for over a century. In a fair and efficient market both authors and users should have the ability to use these mechanisms for authorizing reproduction. Both methods of licensing require the cooperation of third parties, the publisher, an aggregator, a CMO or all three. We have explained the problems associated with publishers, the CCC, aggregators and the large foreign CMOs above.

Earlier, we made reference to ARS. It is one of two American CMOs routinely offering primary licensing services that already exist. The other is the Visual Artists and Galleries Association (VAGA). The largest of these CMOs, ARS, is authorized by rights holders to license the reproduction of copies of over 50,000 artists. The Visual Artists and Galleries Association (VAGA) is a smaller organization, primarily representing American artists who have not chosen to use ARS. However, these two legitimate CMOs – that have written authorization from a huge percentage of visual artists to represent them in copyright licensing – also could and should be able to administer collective secondary use licenses on behalf of visual artists. However, due to lack of cooperation with the third parties described above, ARS (the CMO currently representing AMI members) is unable to implement a working secondary use licensing system.

Because registration prior to the infringement is a precondition for statutory damages, ARS and AMI members are unable to use past infringements to generate the money needed to support the litigation which appears to be necessary to force cooperation of these third parties.

There is a source of revenue that could be used to boot strap the creation of a self-sustaining CMO capable of enforcing artists’ rights, but it is currently unavailable to AMI members. This consists of visual arts reprographic royalties currently being paid out, as discussed above, by several of the smaller foreign CMOs, but willfully withheld from AMI members and other illustrators by four receiving organizations: the Authors’ Coalition of America (ACA) and its member organizations the Graphic Artists’ Guild, The Society of Illustrators in New York (SINY) and the Society of Children’s Book Writers and Illustrators (SCBWI). GAG officers can afford to travel to international meetings and lobby the Copyright Office and Congress because it has received direct distributions from at least one foreign CMO as well as foreign distributions through the Authors Coalition, an ad hoc group of disparate organizations that, at best, could be characterized as trade organizations. GAG is a member of the Authors’ Coalition and receives copyright royalty revenue through it, but also receives payouts directly from at least one small foreign CMO. Based on publicly available documents, total collections by GAG over the years can be estimated at several million dollars.

Authors Coalition member organizations were never selected by rights holders. Further, to our knowledge and in contrast to ARS and VAGA, none of these organizations has been specifically authorized to license their members’ copyrights much less to receive and keep foreign licensing revenue.

When the Authors Coalition was formed, it was to be governed according to an “operating agreement.” This published agreement specifically states that the remittances received from foreign subsidiary collecting societies are to be used to “assist in the further development of collective licensing programs” for American rights holders. To date, more than two decades after its creation, not a penny has been used by the Authors Coalition to create a mechanism for distributing non-title-specific licensing revenue, foreign or domestic, to rights holders even though publicly available records reveal that the amounts collected are in the range of $100 to $170 million. AMI’s attempt to become a member of the Authors Coalition by joining with other illustrators’ societies to form an umbrella organization intended to be a working CMO was rebuffed by the Coalition, undoubtedly because the copyright revenue received would actually be used to enforce artists’ copyrights provided to them under current law.

The justification for this diversion, which apparently has been accepted by the foreign CMOs transferring funds, is that these organizations contribute to the welfare of visual artists through activities such as lobbying and advocacy. This creates the ironic situation that these organizations are receiving foreign money specifically to lobby the Copyright Office and Congress contrary to the wishes of the vast majority of working professional illustrators and virtually every member of AMI. It is likely that GAG is using diverted artists’ royalties to respond to this Copyright Office inquiry. By contrast, all of AMI’s advocacy efforts, including preparation of this paper, are supported by individual member contributions.

The Graphic Artists Guild, has used the foreign remittances it has received to attempt to silence all efforts by the actual rights holders to advocate for an end to diversion of foreign revenue and support the creation of a working artists’ CMO that, unlike GAG, would function with the specific authorization of rights holders and distribute to them copyright licensing revenue for the use of their works.

As discussed earlier, a number of illustrators’ professional associations, including AMI, attempted to create a working illustrators’ CMO, the American Society of Illustrators’ Partnership (ASIP). However, GAG used its receipts from foreign CMOs to do everything it could to defeat this effort, including initiating a lawsuit against ASIP’s leadership in New York State Court (Graphic Artists Guild, Inc. v. Brad Holland, et al., Case/Index No. 109149/2008). This suit, alleging defamation and tortious interference with GAG’s business, was defended pro bono by attorneys supplied by New York Lawyers for the Arts. The outcome was a summary judgment for the defendants. The allegations of defamation were dismissed out of hand in the judge’s written opinion on the ground that “truth is a defense.” Regretfully, while Lawyers for the Arts provided counsel to defend against the GAG lawsuit, this representation did not extend to providing legal counsel for the defendants in preventing GAG’s ongoing diversion of copyright royalty income from legitimate rights holders.

AMI urges the Copyright Office to play a constructive role in helping AMI members to receive the foreign reprographic licensing royalty payments guaranteed by the Berne Convention so that, unlike the funds being diverted to GAG, the use of AMI members work in foreign markets can be used to support their families and strengthen their ability to enforce their rights. As the United States Government Agency responsible for administration of the Copyright System, the Office can raise this matter directly with foreign counterparts.

MOST SIGNIFICANT ENFORCEMENT CHALLENGES FOR ILLUSTRATORS

Disparity Between Legal and Administrative Resources of Illustrator and Client

Significantly, enforcement challenges facing medical and other illustrators are grounded in the fact that, as noted above, the vast majority of AMI members and other illustrators are self-employed, sole proprietors of their businesses, seeking and fulfilling commissions on a free-lance basis with virtually no administrative or legal assistance. According to most recent AMI member compensation survey the median net income for self-employed medical illustrators in 2013 was $58,384. This is for professionals with master’s degrees and six years of multi-disciplinary education in fine art, human anatomy, pathology, molecular biology, physiology, embryology and neuroanatomy.

While medical illustrators work directly with physicians and researchers who write medical texts and journal articles, nearly all of these physicians and researchers are affiliated with large institutional entities: hospitals, universities, research laboratories, pharmaceutical and medical device companies, biotech companies and, of course the publishers of books and journals in the field of medicine and biology. Therefore, the published works they create are not expected to be their source of income, but rather to enhance their professional standing, obtain academic tenure and meet their ethical obligations to share advancements in science with their peers throughout the world.

Nearly all of the institutions with whom medical illustrators must negotiate contracts for compensation are multi-million and multi-billion dollar entities that typically employ highly trained in-house legal counsel and retain major law firms to represent them in any controversies or disputes regarding copyrights covering the work commissioned from AMI members.

The STM publishing industry has been especially impacted by mergers, acquisition and consolidations. While during most of the 20th century, publishing was a “gentlemen’s” profession characterized by relatively small publishing houses where communication was close and respect for authors was embedded into the culture — that is no longer the case. Policy governing contracting, procurement and personnel policies of large conglomerates is more likely to rest with the Chief Financial Officer than the editorial board. And, the primary concern of CFOs is to show market analysts the highest possible quarterly return on investment. One of the easiest ways to squeeze more profit out of the business is to cut costs by pressuring freelance contractors with ever more onerous compensation agreements and terms of employment. Profit is also enhanced when revenue streams traditionally directed to contractors such as illustrators are redirected to the corporate treasury. This explains why the large publishing companies are hostile to the individual creator and there is a resistance to sharing non-title-specific licensing revenue with anyone else.

The Especially Onerous Impact of Migration of the Business to Digital Distribution

Visual art is particularly vulnerable to “orphaning” through no fault of the creator. Artist signatures are removed or cropped, credit lines and figure captions are separated from the image, illustrations are scanned and placed online without attribution, and metadata embedded in digital images are routinely stripped upon upload (IPTC Photo Metadata Working Group http://www.embeddedmetadata.org/social-media-test-results.php)

Content distribution systems make infringement of visual art easy. Illustrations can be downloaded with a simple keystroke and a perfect reproduction made without obtaining permission of the rights holder. As an example, when AMI members’ works are distributed by aggregators as described above, metadata that could assist in locating the rights holder is routinely stripped out by the aggregator. Without copyright documentation the work becomes an immediate orphan and enforcement becomes nearly impossible. Of particular concern is “orphan works” proposals that would limit damages to no more than a standard licensing fee. If this were to happen, infringement will become ubiquitous and enforcement impossible.

It should be kept in mind that copyright litigation may be initiated only in federal court where the costs are especially great. There is no option to sue in a local state court. Should previous orphan works legislation be revived and enacted, the cost of an hour-long interview with an attorney to discuss bringing an infringement action will be greater than recoverable damages. Infringement litigation will be possible only if the illustrator has independent deep-pocket financial resources enabling him or her to sue simply for the principle of justice. There will be no economic rationale for bringing a law suit.

As a practical matter the notice and takedown provisions in §512 of the Copyright Act are meaningless to AMI members. It is virtually impossible for an illustrator working alone or in a small studio to monitor the Internet and prepare and send take-down requests while actually doing the commissioned work for which they have been trained and which is their means of earning a livelihood. As sole proprietorships and small businesses they also have the burden of personally handling all administrative, procurement, marketing and accounting activities required to remain solvent. There simply is not enough time in the day to monitor the thousands of images on the Internet to find infringing uses of their works.

The Inability of Illustrators to Receive Statutory Damages for Most Infringements

Most cases of infringement involve works of illustration that have not been registered. While the illustrator must register a work prior to filing an infringement action, such registrations typically occur after the infringement has taken place, making it impossible to receive statutory damages that serve both as a deterrent to future infringements, but also provide the prospect of damages sufficient to cover legal costs. Since most illustrators are unable to pay attorneys’ fees and costs upfront, the only means they have to secure legal representation is to agree to compensate attorneys on a contingent fee basis.

Inability to demand statutory damages reduces financial recovery to a level unlikely to satisfy the requirements of attorneys accepting clients on a contingent fee basis. For this reason AMI would support legislation either eliminating the registration requirement entirely for works of visual art or, in the alternative, continue the registration formality as a pre-condition to infringement litigation, but permitting recovery of statutory damages for infringements taking place prior to registration.

MOST SIGNIFICANT REGISTRATION CHALLENGES FOR ILLUSTRATORS

Medical and other illustrators must generate a much higher volume of copyrighted works in order to earn a living than is the case for other categories of authors, such as songwriters, playwrights, scriptwriters and writers of most literary works. Since they are typically self-employed illustrators, they must personally handle every task associated with their business. In addition to actual painting and drawing, medical illustrators must engage frequent communication with the authors of the text of works for which they are creating illustrations, handle billing of clients, accounting, record keeping, purchases of supplies, payment of bills, and of course quarterly estimated tax payments and annual income tax filings. Many of these administrative tasks are obligatory if the illustrator is to stay in business and comply with legal obligations. For most the burden of routine registration of Copyrights is simply too much. There are not enough hours in the day. Therefore, all or most of their works are not registered prior to publication. In addition, the collective amount of fees required for registering each work would significantly reduce the net income the artist needs to support him or her and family.

Further, the reality that most illustrators have large inventories of past works which have not been registered makes the possibility of catching up of registrations nearly impossible.

Finally, the Copyright Office and Congress should consider whether the current system of registration and deposit is meaningful to users who are using its database to determine authorship or the public domain status of works they may wish to reproduce. Simple registration of the name of the author and the title of the work is of little value in copyright searches involving works of visual art. Users desiring to reproduce a pre-existing work rarely know the identity of the artist of the work and a meaningful search would require access to actual images embodying the work. In the case of works of visual art the original image is rarely deposited and the deposit often consists of a photograph or scanned image rather than the work itself. Deposits that accompany registration of a work are of no value in a copyright search since the deposit is not accessible to the searcher and the Library of Congress does not even retain most deposits for the entire term of a work’s copyright.

Much is said about the need to balance the interests of copyright owners and users. Registration prior to bringing an infringement action has no value to a user other than an infringing user by immunizing him or her from liability for statutory damages. AMI strongly believes that the very limited value to users of the information contained in a copyright registration does not outweigh the hardship registration places on the artist attempting to enforce copyright in a given work.

LEGITMATE CONCERNS OF USERS OF WORKS OF VISUAL ART

Recent Congressional hearings focusing on the balance between users and authors have revealed that user concerns in the area of visual art are limited primarily to the desire of academics and archivists to have the cloud of liability for infringement lifted from them in performing their teaching, research and archival functions. For the most part these concerns do not reflect reality in the world of visual art.

The difficulty of copyright enforcement described above has meant that visual art accounts for a very small percentage of copyright infringement actions in comparison with actions involving literary, musical and cinematographic works. Therefore, the likelihood that unlicensed academic or archival use will invoke a lawsuit is extremely remote. However, AMI does not object to safe harbors covering nearly all archival, cultural heritage preservation, and documentary filmmaker uses.

Rather, medical illustrators object to copyright limitations and safe harbors which enable unauthorized use as a substitute for a licensed use that would provide meaningful compensation to the illustrator or in which the unauthorized use has the effect of subjecting a work to broader infringement, such as that resulting from uncontrolled access on the Internet where a work may be freely copied by anyone. AMI believes that existing fair use precedents combined with limited safe harbors covering archival use would sufficiently address the needs of users while not harming the economic interests of illustrators in effective copyright protection.

OTHER ISSUES OF GREAT IMPORTANCE TO ILLUSTRATORS

Misuse and Misinterpretation of the Work-Made-for-Hire Provisions of the Copyright Act

These comments have described a change in business environment and culture in which medical and other illustrators work. We have explained that concentration in the STM publishing industry has destroyed the relationship of mutual respect that formerly characterized the relationship between the illustrator and the client. Most medical illustrations are commissioned either by author/scientists or editors of journal articles and books for the purpose of providing readers of with visual representations of the written text. Until recent years, rights in an illustration typically were retained by the illustrator who had the option to later use the work in another context, including another publication as well as secondary uses such as analog or digital reprography. Commissioned works were rarely treated as works-made-for hire unless the illustrator was an actual employee of the textual author’s company or research organization.

However, in the world of consolidated STM publishing medical illustrators are routinely forced to sign work-made-for-hire agreements as a precondition for receiving a commission. Of course, this automatically makes the publisher the legal author of the illustrator’s work, giving the publisher all rights in secondary uses of the work. Overwhelmingly, illustrators who work on a commission basis are sole proprietors of their business or partners in a small studio. The clients who dictate the terms of commissions, however, are very large companies: increasingly multi-billion dollar conglomerates. In these situations the market power of the publisher is so overwhelming that the illustrator has absolutely no capacity to negotiate and must accept contractual agreements on a take-it-or-leave-it basis if he or she is to have any work. AMI members report that this is often the case when an illustration is commissioned for a book.

Most AMI members have catalogues of previous illustrations to which they have retained all rights and may continue to license to new users. However, recent appellate court decisions, particularly in the Second and Ninth Circuits, have so misconstrued the plain letter of the law and legislative history with the result that nearly all commissioned work can be considered made-for-hire, even though the illustrator never gave written consent for works to be considered made-for-hire.

The legislative history of the 1976 Copyright Act and more recent revisions clearly demonstrate the intent of Congress that, in the absence of a written contract to the contrary, an author’s work cannot be considered a work-made-for-hire unless the author has created the work as a salaried employee.

AMI joined with other artists’ rights organizations last year to file an amicus brief supporting the petition of illustrator Jack Kirby’s heirs to overrule a decision by the Second Circuit Court of Appeals denying their termination rights on the ground that his works were made-for-hire even though there had never been a written agreement to that effect. Jack Kirby was the illustrator and writer who created some of the most famous Marvel comic book characters, nearly all of which are the subject of recent major television and motion picture productions. The Second Circuit ignored the clear language of the definition set forth in §101 of the Copyright Act that a commissioned work is a work-made-for-hire only “if the parties expressly agree in a written agreement signed by them that the work shall be considered a work made for hire.” It held that a commissioned work is automatically made for hire if it is created at the “instance and expense” of another. Instance was described as including the mere fact that the work was commissioned by the publisher. Expense, was described simply as being paid.

AMI was hopeful that the Supreme Court would correct this blatant and unfair misreading by re-stating the clear teaching of Justice Marshal in CCNV v. Reid that “the work for hire doctrine codified in §62 [of the 1909 Act] referred only to works made by employees in the regular course of their employment (italics added).” Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989).[1] However, after the Supreme Court took the extremely rare action of requesting reply briefs of the respondent, Marvel and its parent company Disney, sought and obtained a settlement which is now covered under a confidentiality agreement. But, one consequence which cannot be kept confidential is that Jack Kirby’s name now appears prominently in the credits of Disney movies based on comics published by Marvel.

The AMI strongly urges the Copyright Office to advise Congress of the abuse by publishers and recommend amending the definition of work-made-for-hire to legislatively overturn the mistaken Second Circuit “instance and expense” test and also to restrict the ability of publishers to use their superior bargaining power to coerce illustrators to give up their authorship rights.

[1] While the facts of the CCNV case took place under the 1909 Act, the definition of work-made-for-hire remained essentially the same under the 1976 Act and the legislative history clearly supports the application of Justice Marshal’s interpretation in the context of that Act.

Misuse and Misinterpretation of the Termination Right

Under the 1909 Act copyright expired after an initial term of 28 years unless renewed for an additional 28 years in the year prior expiration. This permitted the original author or heirs, by filing for the renewal, to regain ownership of a copyright that may have been assigned to another during the first term. However, by the time Congress began the work leading to the 1976 revision a common practice of assignees of copyrights was to require transfer rights to the second term by contract, thwarting what had been perceived to be a formality that intended to benefit of the author.

The 1976 Act replaced the dual 28 year term with a single term of life of the author plus 50 years, the standard required by the Berne Convention on Literary and Artistic Works. The transition provisions provided that Copyrights not yet expired as of the effective date of the Act were extended by an additional 19 years to a flat term of 75 years. However, to restore the ability to recapture previously assigned rights, authors and their heirs were permitted to file with the Copyright Office termination notices and reclaim previously transferred rights at any time within a period of five years following the 56th anniversary of the original registration.

That Congress intended the termination right to be inalienable could not have been set forth more clearly. §304 (c) (5) states, “Termination of the grant [previous assignment] may be affected notwithstanding any agreement to the contrary.” Congress continued this policy with enactment of the Sonny Bono Copyright Term Extension Act of 1998 which extended copyright term for an additional 20 years so as to mirror the recently adopted standard of the European Union. The 1998 legislation provided another opportunity for authors and heirs to assert termination rights for this additional 20 year term.

Regretfully, large publishers to whom copyrights had been previously transferred resisted the clear Congressional intent in twice enacting termination rights. While on the face of the statute the termination right is inalienable, publishers have successfully used their disproportionate capacity to litigate – as in the case of works-made-for-hire – to create case law effectively thwarting the clear Congressional intent to eliminate, in actual practice, a provision of the Copyright Act intended to provide equity to authors. Clearly, Congress intended that benefits of additional copyright term should be enjoyed by authors and heirs rather than become a windfall for corporations.

One of the most egregious examples of this involved the attempt by Joseph Shuster, the son of the illustrator who created Superman, to assert the termination right established in the 1998 Act. When Shuster’s son, Mark Peary as executor of his father’s estate, attempted to exercise the statutory termination right, the publisher, DC Comics, initiated a full-scale legal battle to attempt to hang on to their interests in the Superman character even though at the time rights were transferred to them by the illustrator, they had the expectation of a maximum 56 year term rather than the 95 year term that later resulted from two term extensions enacted by Congress. While the statute is crystal clear that termination must be granted regardless of “any agreement to the contrary” DC Comics, a division of Warner Brothers, was able to persuade the Ninth Circuit Court of Appeals that the clear letter of the law did not apply because a previous agreement providing pension rights to Shuster’s siblings foreclosed termination because it was not “an agreement to the contrary.”

It challenges the credibility of our judicial system that an appellate court could so twist clearly stated policy so as to render it meaningless. AMI joined with a large number of other artists’ rights and illustrators’ organizations in filing an amicus brief seeking certiorari review of this finding by the Supreme Court. That brief accompanies this submission and explains the circumstances and the outcome in much greater detail.

The Court did not grant cert in this case. One can only speculate, but it is possible that of the two petitions pending before the court at the same time, the court would have been more interested in Kirby because, unlike the Peary case, it offered the opportunity to correct the case law on both the work-made-for-hire issue and the termination right. While AMI is gratified Marvel and Disney were so fearful of Supreme Court intervention that Jack Kirby’s heirs received what we assume was a fair settlement, we are very disappointed that the opportunity was lost to correct the misinterpretation of two provisions of the statutory law of vital importance AMI members and all artists’ ability to enjoy meaningful copyright protection. The failure to receive Supreme Court review was especially disheartening in that so few freelance illustrators have the wherewithal to finance federal court litigation that it is unlikely a case will arise in the foreseeable future that would give the high court the opportunity to correct the law. That means that legislative correction is the most likely means for artists to obtain relief from the abuse of illustrators by large corporate entities that is described in detail in the facts of these cases. We cannot imagine a situation in which the Copyright Office would not advise the Congress of the judicial misinterpretation of these two vital artists’ concerns.

RECOMMENDATIONS FOR THE COPYRIGHT OFFICE

AMI appreciates the initiative of the Copyright Office in undertaking a review of how copyright law today impacts the visual arts. Copyright in the 21st Century is in grave danger of becoming meaningless and irrelevant. In part, that is due to the challenges posed by technology. But, far more, the threat to copyright is that it is losing its legitimacy which is based on protecting the work of the human author and permitting him or her to benefit monetarily and morally by the exclusive rights promised by the founders in Article 8, Section 1 of the Constitution. Large corporations and institutions have an important role in facilitating the expression of an author’s creativity and in making it possible for those who want access to that expression to easily obtain it. Their role in the dissemination of the creative output of artists and other authors justifies their right to a fair profit. However, the systematic cannibalization of authors by the multinational conglomerates that control the distribution of their works in the interests of a quarterly bump in profits threatens the legitimacy of these giant enterprises themselves. Without a nurturing environment of respect for the rights of the individual artist and his or her intellect as envisioned by the drafters of our Constitution, the dissemination of ideas and expression as art that has enriched our country for over two centuries collapses into a jungle where only savages survive. We strongly urge the Copyright Office to consider how to meaningfully respond to the assault on visual artists’ copyright described in this paper.

AMI suggests the following actions for the Copyright Office as a consequence of this inquiry.

1. The Copyright Office should examine the licensing practices of the Copyright Clearance Center and licensors of aggregated content to determine whether they unfairly discriminate against visual arts authors to the benefit of publishers. On the basis of this examination the Office might recommend legislative correction, which could include a regulatory role for the Office in supervising CMOs and licensing aggregators.
   
   
2. The Copyright Office should determine whether existing mechanisms for securing national treatment for both American and foreign visual artists are adequate. The Office should examine whether the United States is complying with its national treatment obligations to foreign artists whose work is subject to analog and digital reprography and whether foreign states are providing appropriate national treatment to U.S. artists.
   
   
3. The Copyright Office should examine the operations of the Authors’ Coalition of America and its member organizations to determine whether they are collecting and distributing foreign copyright licensing revenue based on the works of American visual artists and, if so, forward its findings to appropriate enforcement agencies, such as the Federal Trade Commission, the Department of Justice, and state law enforcement and consumer protection authorities.
   
   
4. The Copyright Office should examine whether the value of a copyright registry to users and copyright searchers outweighs the burden on visual art copyright holders.
   
   
5. The Copyright Office should examine whether existing remedies for infringement and the necessity to seek such remedies through federal court litigation prejudice the ability of visual artists to enjoy meaningful copyright protection.
   
   
6. The Copyright Office should examine whether the obligation to register prior to infringement unfairly limits the ability of visual artists to damages sufficient to justify federal court litigation and whether the requirement limits the effective deterrent value of statutory copyright protection.
   
   
7. As the statutory provisions governing the termination right and application of the work-made-for-hire doctrine were drafted based on extensive study by the Copyright Office leading to the 1976 Act, the Office should recommend to Congress legislation that would restore the intended effect of the Office’s recommendations.