Any Freelancer Who Is Not Outraged Is Not Paying Attention

In 2002 the defendants in the copyright class action filed a mediation brief. (The document was produced for the objectors just before the September 2005 "fairness hearing" on approval of the settlement.) "Only a tiny percentage of freelance authors -- on the order of 0.08% or fewer -- ever register the copyrights in their periodical contributions," the brief states. If there were 200,000 potentially eligible freelancers, "the data shows that only 160 authors would have registered."

The defendants then proceed to tell the lawyers for the 23 individual named plaintiffs -- all of whom belong to that 160-author subset -- that they would fight them tooth and nail over a long list of issues. The defendants are interested, however, in "a global resolution of this matter."

The point is: The named plaintiffs were never doing the unregistered freelancers a favor. It was the other way around.

Why? The plaintiffs could not get their nice Category A and B awards, and their special $2,000 fees for being class representatives -- and their mouthpieces could not collect their $4.4 million in fees -- without wrapping the unregistereds into the deal.

The record of the "negotiations" makes it clear that it was really the "associational plaintiff" organizations -- the Authors Guild, the American Society of Journalists and Authors, and the National Writers Union -- that called the shots. To the extent these associations have freelance writers as members, the vast, vast majority of them have unregistered articles.

In the mediation brief the defendants attack the legitimacy of the writers' organizations to represent anyone. Yet that changed once the associations were willing to deal -- and deal badly -- on behalf of the unregistereds.

Take a close look at the Category C reduction provision of the settlement -- the terms under which the claim awards for unregistereds can go down, even to zero, if they turn out to overload the $10-million-to-$18-million settlement fund. What this means is that these sterling freelancer organizations thought that it was OK for C awards, which were already super-low, to be abandoned before the A's and B's would be touched. They were saying to their members: Give up your claims, grant a perpetual license to your works, and possibly don't even get anything in return.

And, again, remember that the A's and the B's couldn't pull off this deal in the first place without the C's.

Now let's look at the difference between B and C awards. The table below -- also found on page 12 of the objectors' appellate brief, which was filed this week and is viewable at http://www.muchnick.net/AppealBrief.pdf -- provides a good shorthand:

Price Paid for Article	B Gets % of price	C Gets
$250	$150	$25
$500	$150	$25
$1000	$150	$40
$1200	$150 12.5%	$40
$1300	$162.50 12.5%	$40
$1500	$187.50 12.5%	$40
$1800	$225 12.5%	$40
$2000	$250 12.5%	$50
$2500	$312.50 12.5%	$50
$2800	$337.50 12.5%	$50
$3000	$362.50 12.5%	$60
$4000	$500 12.5%	$60
$5000	$625 12.5%	$60

This scheme makes no sense -- none whatever -- by any explanation other than that the registereds sold out the unregistereds. It's real plain. The C's, who were the key to this deal, got screwed by their so-called representatives.

National Law Journal: 'Copyright Bomb Quietly Ticking'

Talk about a timely article: A piece in the April 3 issue of the National Law Journal notes: "A copyright time bomb has been quietly ticking away for the music and publishing industry for nearly 30 years -- and may soon explode into a plethora of legal disputes over ownership rights, intellectual property litigators say."

The reason is that the Copyright Act of 1976 gave authors a new power to recapture control of works sold early in their careers before the value became known. (Like ... say ... for instance ... just to choose a random wild example ... electronic databases started in the 1980s.) The legislative history shows that Congress wanted authors to be able to reclaim control of their creations and negotiate better royalty deals for popular works.

The implications for the objections by a group of authors, including myself, to the copyright class-action settlement approved last fall are clear. (Our appeal to the Second Circuit was filed yesterday and is viewable at http://www.muchnick.net/AppealBrief.pdf.)

First, as our brief points out, the settlement simply and summarily abandons "scientific works," whatever those are, presumably because they have no market value. Oh really? It seems to me that if a substantial number of science and medical writers from the 1980s chose to take back control of their writings -- basically the history of scientific advance during that period -- the publishers who are redistributing these works might stand to lose some profits.

Second, the settlement would, by fiat, remove the right of takeback that exists for all authors, via what we've termed the "License by Default." There's nothing subtle about it: The defendants and publishers would have an “irrevocable, worldwide, and continuing” license to electronically reproduce, distribute, display, license, sell or adapt” the works encompassed by the settlement. As our attorney Charles Chalmers convincingly argues, that is illegal.

The full text of the National Journal article is available only to subscribers at http://www.law.com/jsp/nlj/index.jsp.

Go to the Source

One of its dozens of recipients has forwarded to me an email from named plaintiff Miriam Raftery, which states simply -- and somewhat simplistically -- "FYI, this guy is trying to get the unregistered works kicked out of our lawsuit."

At the end of our appellate brief (viewable at http://www.muchnick.net/AppealBrief.pdf), the objectors seek eight specific points of relief. We ask the Second Circuit to hold:

1. That the settlement approval was an error of law because the class representative did not have the authority to grant a license of class members’ copyrights.

2. That class certification was an abuse of discretion because the settlement makes significant allocation decisions between the holders of registered and unregistered copyrights and the class representatives are holders of registered copyrights.

3. That approval of the settlement as fair was an abuse of discretion, as a matter of law, because the C Reduction, the C Category compensation structure, and the abandonment of scientific/medical works are unquestionably unfair and unreasonable.

4. That the dismissal of claim for scientific/medical works violated Rule 23(e) because the district court made no finding that such a dismissal was fair and the district court did not order, or even consider, a notice to those class members.

5. That certification of the class was an abuse of discretion because the submission of a settlement that denied any compensation to claims for scientific/medical works, while releasing those claims, and the subsequent dismissal of those claims, demonstrate that the class representatives are inadequate.

6. That preliminary approval of the settlement without evidence of settlement adequacy and the requirement of personal appearance as a condition for objecting were denials of Due Process.

7. That the lack of district court analysis prevents review under the abuse of discretion standard.

8. That if the case is remanded for further proceedings regarding this settlement the objectors may have discovery concerning the settlement negotiations, the methodology of the damage study, and the mediator’s compensation.

Full Appellate Brief Is Up ...

... at http://www.muchnick.net/AppealBrief.pdf.

APPELLATE BRIEF FILED

Attorney Charles D. Chalmers has filed the objectors' brief with the Second Circuit Court of Appeals. I'll get the whole document up at our website later today. Meanwhile here's the full text of the "Summary of the Argument":

The settlement grants the Defendants and an extensive, but partially unknown, list of Publishers an irrevocable license to class member copyrights, including the right to license others and to allow those others to license to others. Class representatives are limited, by Rule 23, and the requirements of Due Process, to the disposition of pending claims. The license can not be upheld as a release because it fails the identical factual predicate doctrine. The doctrine limits class action releases to claims based on the facts that underlie the action. Approving this license was an error of law.

The litigation was initiated for owners of registered copyrights. More than 99% of the class own unregistered copyrights, for which registration is a precondition to suit. The unregistered owners were incorporated into the settlement at the demand of the Defendants. The class representatives hold registered copyrights. Class certification was an abuse of discretion, as a matter of law, because the plaintiffs are not adequate representatives to represent the unregistered copyrights. This inadequacy is confirmed by settlement provisions, particularly the C Reduction and the compensation structure for unregistered owners. It is necessary to establish a structural assurance of fair and adequate representation for the unregistered copyright owners. This requires that they be defined as a subclass, with separate class representatives holding typical claims, and separate counsel, who understand that their role is to represent the members of that subclass.

The C Reduction and the C compensation structure are unfair and unreasonable on their face. The parties’ justification for the C Reduction confirms that the class representatives placed the entire risk that claims would exceed the settlement fund on the unregistered owners.

The Agreement and the Notice deny compensation to certain claims while releasing those claims and granting a license for the use of those copyrights. After objections the parties said these claims would not be released. The final order is a voluntary dismissal of these claims. The explanations are inherently unbelievable. These actions show that the plaintiffs are inadequate.. The dismissal was an error of law because it did not comply with Rule 23(e).

The approval procedures denied Due Process. Preliminary approval was granted without any showing the settlement was adequate. Since there was no litigation, and no pleadings in the court file, class members had no information before the deadline for opting out or objecting. Efforts by the objectors to obtain information were denied. The Notice required any class member wishing to present an objection to appear, in person or through counsel, at the fairness hearing.

The district court failed to provide any analysis of certification or settlement approval, and did not reveal its reasons for rejecting the objections. The district court’s discretion can not be reviewed without such a record.

If this matter is remanded for proceedings regarding this settlement the objectors should be granted discovery on three subjects: (1) negotiation of the settlement; (2) the damage study on which the settlement is based, and; (3) the contingent compensation of the mediator.