15-Times Liquidated Damages Claim Survives Dismissal

Access practice tools, as well as industry leading news, customizable alerts, dockets, and primary content, including a comprehensive collection of case law, dockets, and regulations. Leverage...

By Anandashankar Mazumdar

Jan. 6 — A clause in a freelance photographer's contract that provided for liquidated damages—at 15 times her going rate—is not on its face unenforceable, the U.S. District Court for the District of Maryland ruled Jan. 5.

The court rejected the defendant's argument that demanding 15 times the rate was, as a matter of law, in violation of Maryland state contract law, which requires that liquidated damages not be punitive or excessive.

Lawyers with a photographer's industry association told Bloomberg BNA that inclusion of a liquidated damages clause might very well be a wise practice for a freelancer, especially from the point of view of protecting oneself from a claim by a dissatisfied client.

Many, if not most, freelancers neglect putting contractual obligations in writing at all and hope to rely on oral agreements, they said, and it might be even more important to register copyrights to ensure eligibility for statutory damages.

Screenshots Posted by Freelancer's Client

The National Catholic Prayer Breakfast of Potomac, Md., is an organization founded in 2004 that hosts events featuring prominent speakers.

In April 2014, the organization hired Renata Grzan Wieczorek of Laurel, Md., to take photographs at an event at a rate of $450.

According to Wieczorek, the job required her to present a series of images to the organization, which could then choose to acquire licenses for them individually. She posted some of the images as samples of her work on her Renata Photography Web site.

The following spring, Wieczorek discovered that three of the images from her site had been screen captured and posted to the National Catholic Prayer Breakfast's Web site with her Renata Photography watermarks removed.

In August 2015, she sued in the District Court of Maryland for Anne Arundel County, alleging breach of contract. Her complaint referred to a clause in her contract with the organization that any copyright violations would be subject to liquidated damages of 15 times her published rates for such work. Based on this formula, Wieczorek sought $6,750 in damages.

The Catholic Prayer Breakfast had the matter removed to federal court for subject matter jurisdiction under the Copyright Act of 1976.

Registration, Statutory Damages Recommended

Mickey H. Osterreicher, general counsel to the National Press Photographers Association, told Bloomberg BNA that his association encourages its members to register their copyrights promptly so that, in cases of infringement, they are able to seek statutory damages under Section 504(c) of the Copyright Act of 1976.

Section 504(c) allows a copyright holder to seek from $750 to $30,000 for each work infringed. That relieves a holder from the burden of proving actual damages or lost profits. In the case of willful infringement, Section 504(c) allows a court to award up to $150,000 for each work infringed.

Osterreicher offered an example of the case of Daniel Morel, who won an award of $1.2 million for willful infringement against Getty Images (US) Inc. and Agence France-Presse. Agence France-Presse v. Morel, 111 U.S.P.Q.2d 2017 (S.D.N.Y. 2014) (88 PTCJ 1041, 8/22/14).

Should a freelancer choose to include such a clause, he said, he or she should be aware of the limits on liquidated damages—for instance, that they not be punitive.

In this case, the defendant quoted from Maryland precedent that said that such damages must not be “out of all proportion to the damages that might reasonably have been expected to result from such breach of the contract.”

Liquidated Damages Can Protect Freelancer From Excess Liability

“This photographer is way ahead of a lot of people just in requiring a contract,” Alicia Calzada of Haynes & Boone LLP, Austin, Texas, who is counsel to NPPA, told Bloomberg BNA in reference to Wieczorek's matter.

Calzada said that she encourages the association's members to include liquidated damages clauses in their contracts, but more from the point of view of limiting a photographer's potential liability to a client.

“There certainly are circumstances where a client could claim that you caused them a significant amount of trouble,” Calzada said. For example, a bride and groom unsatisfied with their wedding photos might demand that the photographer pay to have the wedding entirely restaged so that new pictures can be taken.

In such cases, she said that often it is reasonable to set liquidated damages at the amount of the photographer's fee.

Wieczorek was represented by Gohn Hankey Stichel & Berlage LLP, Baltimore. The National Catholic Prayer Breakfast was represented by Tydings & Rosenberg LLP, Baltimore.

To contact the reporter on this story: Anandashankar Mazumdar in Washington at amazumdar@bna.com

To contact the editor responsible for this story: Mike Wilczek in Washington at mwilczek@bna.com

For More Information 
Text is available at: http://src.bna.com/bTe.


Request Intellectual Property on Bloomberg Law