Intellectual Property DamagesAn Atlanta artist brought a copyright suit and proposed that his wife be admitted as a damages expert for licensing fees, but the District Court for the Northern District of Georgia found her methodology to be unreliable.

Plaintiff was commissioned to create a drawing (“Drawing “) of a restaurant for $125. When he completed the drawing, he told the restaurant owner that the picture could only be hung as wall art. Plaintiff’s name appeared in the bottom-left corner of the drawing, and the drawing was displayed the on the restaurant’s wall. Plaintiff was unwilling to sell the Drawing or any prints to third parties because it was a commissioned work.

The Restaurant was subsequently sold, including its intellectual property. Although the print of the Drawing no longer hung in the Restaurant at the time of the purchase, the new owner found a copy of the Drawing in an old newspaper ad. Plaintiff’s name wasn’t visible on this version of the Drawing. Nonetheless, the new owner started using the Drawing to promote the Restaurant and thought he was authorized to use it because he’d acquired the Restaurant’s intellectual property.

After visiting the Restaurant, the artist saw that the Drawing was on menus, the website, gift cards, and business cards—but these works didn’t have Plaintiff’s name on them as the artist. Plaintiff’s counsel sent the owner a letter demanding a $23,000 license fee or a $30,000 purchase price for the drawing. The Restaurant owner agreed to investigate the alleged copyright infringements, and the same day, Plaintiff registered his Drawing with the U.S. Copyright Office. The Restaurant offered to purchase an unlimited license to the Drawing, but Plaintiff declined the offer. So, Defendants immediately began to remove the Drawing from the Restaurant’s website, menus, and marketing materials. However, the owners replaced the Drawing with a green and white monochromatic version of a color photograph of the Restaurant. They acquired this color photograph when they purchased the Restaurant’s assets and intellectual property.

A year later, Plaintiff’s counsel sent another letter to the owner, alleging that the Monochromatic Photograph infringed Plaintiff’s copyright interest in the Drawing. Defendant denied the alleged copyright infringement, arguing that the Monochromatic Photograph and the Drawing were materially different. They also confirmed that they’d stopped reproducing, distributing, or displaying the Drawing in any medium that it controlled, and that it had no interest in using the Drawing in the future.

Plaintiff sued, asserting claims for copyright infringement because the owner used the Drawing and the Monochromatic Photograph—allegedly a derivative of the Drawing—without his permission. He also alleged that that, in violation of 17 U.S.C. § 1202, Defendants intentionally removed or covered his signature on the Drawing. During the litigation, Plaintiff identified his wife as an expert witness on the issue of damages, and she produced an expert report. Defendants filed a Daubert Motion, seeking to exclude her testimony because her methodology wasn’t reliable.

U.S. District Judge William S. Duffey, Jr. wrote in his opinion that the Eleventh Circuit stated three requirements that an expert must meet before his opinions may be admitted:

  1. The expert must be qualified on the matter about which he intends to testify;
  2. The expert must employ reliable methodology; and
  3. The expert’s testimony must be able to assist the trier of fact through the application of expertise to understand the evidence or fact in issue.

Judge Duffey noted that Plaintiff’s wife had 24 years of experience in licensing images. Her expert report concluded that the fair market value of the Restaurant’s uses of the Drawing was $33,000 to $36,000 per year. To reach this conclusion, she calculated a “base price range of $11,000 to $12,000,” and then tripled this amount to reflect the Restaurant’s allegedly “exclusive” use of the Drawing as a “brand.” To calculate the base price, Plaintiff’s wife consulted online price calculators offered by stock licensing agencies Masterfile, FotoQuote, and Getty Images. The calculators provided licensing prices based on information she entered about the Restaurant’s use of the Drawing. She also entered the alleged uses into the calculators based on her perception of reasonable quantities that might be expected in a business the type and size of the Restaurant.

After obtaining a “sampling” of calculator prices, Plaintiff’s wife considered the calculator prices in light of her “historical knowledge” of the industry and her understanding of the length of time the Drawing was used by the Restaurant, “the specific usages that were made,” “the impact of the image on the viewer” and on the Restaurant’s business, “the purpose of the use of the [Drawing] by the restaurant,” “the type and size of [the] business” operated by Defendants, “the scarcity of the image, the uniqueness of the image, how difficult the image in question would be to find elsewhere, [and] how difficult the image was to create.” She combined her consideration of these factors with the calculator prices to arrive at a base price for Defendants’ use of the Drawing. She tripled the base price to reflect “exclusivity and brand premiums” because, in her view, the Drawing was “inextricably and permanently associated with the restaurant in such a manner that [it] is no longer useful for relicense.”

The judge found that this methodology wasn’t reliable. She didn’t know how the price calculators worked or on what data they relied, and she didn’t show that the calculators were reasonably relied on by experts in establishing licensing fees. In addition, the expert provided only abstract definitions of several factors that she considered in conjunction with the calculator prices.

Judge Duffey opined that even if the expert had adequately defined the factors she considered, she failed to meaningfully explain how those factors—and her “historical knowledge”—interacted with the calculator prices to produce the base price. Her testimony was too vague to establish the reliability of her methodology.

Defendants’ Daubert Motion was granted, and Plaintiff’s damages expert’s testimony was excluded as unreliable.

The judge was also troubled by the expert’s deposition testimony that she would receive $650 per hour for her work as an expert witness, and that she would receive this payment only if Plaintiff recovered money in the case—a contingency arrangement prohibited by Georgia’s Rules of Professional Conduct.