End of Freelancer Litigation Yields ‘Invitation’ to Claims Process

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Connectiv members have recently been receiving legal-sounding demands for payment from freelance writers. More specifically, they receive a “Dear Publisher” letter regarding a consolidated class action suit entitled “In re Literary Works in Electronic Databases Copyright Litigation,” located in the Southern District of New York. The mailing also contains an explanatory memorandum (dated November 16, 2015) from the Proskauer law firm, as well as a list of works that the member allegedly infringed.

These mailings represent the closing act in litigation that has gone on for well over a decade, and the demands for payment find their origins in a Supreme Court decision, New York Times Co. v Tasini.[1]  There, a freelance writer filed a class action against the newspaper and others, including database providers such as LexisNexis and Dialog for electronically republishing his articles in those databases without payment or permission. The defendants relied on a specific provision of the Copyright Act permitted them to make “revisions” of the original publication without paying the author,[2] but the Supreme Court disagreed. It returned the case to the trial court to determine how to pay the class members for use of their work without requiring Lexis and Dialog to gut their news databases. Tasini was subsequently consolidated with a number of other class actions raising the same issues, and settlement negotiations ensued.

As the two sides slogged through settlement negotiations at the trial level, another issue arose. The copyright law requires the owner to register its rights before filing a case in federal court, and courts had held that they had no authority to hear copyright cases unless that registration had been filed. In order to resolve this case, the parties wanted to pull as many authors as possible into the class so that they only had to pay once—whether or not the copyright claims had been registered. Not every class member liked that solution, so they objected. The Supreme Court was ultimately forced to resolve that question and ended up holding that courts were not barred from dealing with unregistered copyright claims. And back to the District Court they went.

The mailings that members recently received are the result of those long-running negotiations and the end stage of this database litigation. As part of resolving these cases, the settlement agreement set up a claims process, and the letter and memorandum are an “invitation” to use it. Each member has to make its own judgment call based on specific facts, but this piece is intended to answer a few basic questions that might leap to mind.

What works are covered?

The demands cover freelance works published in a database from August 15, 1997, onwards. So, for example, if you allowed Dialog to distribute your newsletter in 1998 and didn’t have permission from all non-employee authors to do it, that infringement would be part of the class. Each time Dialog served that article in response to a search, a new infringement occurs.

Why should I pay these claims if I was never involved in the lawsuit?

Counsel for the database defendants and the newspapers negotiated a deal with the plaintiffs that could shelter you. If you pay the claims, you receive a release for all class members, and may as a result continue to make their works available without liability. That release applies even if other authors in the class show up later and demand payment. Thus, not only do you only pay once, but the work can continue to be published in a database without fear of liability on your part.

How long do I have to pay them?

According to the letter, 60 days unless over 150 claims are asserted against you, in which case you have 75 days. (The letter does not say what happens if you don’t pay within those time frames).

What if I think the claims are wrong?

There is a claims dispute process, but in order to prevail you have to produce some documentary evidence that you did not commit the claimed infringement. For example, a contract with a freelancer showing that you had electronic rights would defeat the claim, as would a pay stub showing that the writer was your employee at the time the article was written. There are nine likely grounds listed, and you should look at all of them. Members will have to balance the cost of paying the claim and obtaining the release against the cost of using the procedure.

What if I don’t pay these claims?

If you don’t pay the authors, then the database companies will have to pay them. However, when you transferred those articles to the database company, you probably promised that those articles did not violate the copyright law. According to the memorandum, the database company will be “obligated” to proceed against you for breach of contract to recoup those payments.

If you have further questions about the settlement, the memorandum provides you with contact information for the database defendants’ counsel so you can call and ask them questions about the settlement and what it means. As to your own specific business, we urge you to contact your own lawyers to review specific factual situations.

SIIA’s policy team will host a conference call on Wednesday, Dec. 15, at 1 pm ET to review the case and field questions from members. Join us by dialing 303.248.0285, code #7846359.

[1]     533 U.S. 483 (2001).
[2]     17 U.S.C. 201(c).

Christopher Christopher Mohr is General Counsel and VP, Intellectual Property Policy & Enforcement at SIIA.