Corbis Sygma Held Responsible for Loss of Images

Arthur Grace, a photojournalist who recorded events of historical significance for many years, sued Corbis Sygma in the United States District Court in the Southern District of New York for failure to return what eventually was determined to be approximately 40,000 images. (He had initially claimed a loss of approximately 67,473 images.)

After an extensive trial the Court made a number of findings relating to liability issues and damages under the facts concerning this particular photographer.

First and foremost, the Court determined that Sygma (which was the initial stock photo agency, later acquired by Corbis) never had a system in New York for keeping track of all the images in its inventory. Its system was, in the Court's words, "completely inadequate.” Images were not organized by photographer but were kept chronologically and by theme or story. No record was kept of which images were sent to the client on consignment or which were returned.

Over the years Sygma, and later Corbis Sygma, would sporadically return images, eventually totaling over 33,000.

The Court found that the submission of the images to Sygma was a bailment for mutual benefit (since Sygma was obtaining fees for its licensing services). Therefore, Sygma was presumed to have been negligent in failing to return the missing images. Since it did not provide a sufficient explanation for the loss, the Court found it was therefore liable.

As to the damages, the Court went through the usual process of determining the uniqueness of the lost slides and the plaintiff's earning potential, among other factors. The Court found that, although some of the missing images were "selects,” the majority were not unique in the sense that they were "out-takes" or were not usable for one reason or another. Only a small percentage of the images were actually placed into the licensing stream. As part of this analysis, the Court determined that Grace's licensing income during the thirteen year period involved, from 1990 to 2002, was an average of $11,002 per year. After removal of fees relating to images of Robin Williams and Christopher Reeve, which were not lost, the Court determined that Grace's average total income for the lost images during the ten year period, 1991-2000, was $5,881.

The Court stated that Grace's reputation and expertise in the photography industry was one of the best. However, it also determined that he had spent little time as a photojournalist in the last fifteen years. The Court further found that the nature and extent of the market demand for the kind of images lost would remain but surely decline as the images age and the news stories in question fade into history. Furthermore, there is significant potential for competition. That is, many other photographers created similar images and other stock photo agencies had such images available for licensing.

The Court was very much influenced by the fact that Corbis bought the entire Sygma collection, consisting of some 40,000 images, for $12.5 million, or approximately 31 cents per image. Corbis also bought the 11 million image collection in the Bettmann archives for $13.5 million, or about $1.23 per image. In addition, the purchase price paid by Corbis for the 600,000 image Turnley collection (which was edited before the acquisition) and included copyrights, was $2.3 million or $3.83 per image. The Court indicated that these acquisition prices were relevant, but on the other hand, Grace did not want to sell his images at all.
AN ABSURD AMOUNT
The Court discussed the proverbial $1,500 per image liquidated damage provision contained in most contracts and found that it did not apply in this case and would lead to an absurd result (the mathematics would add up to over $100 million based upon Grace's initial claim!). The Court found that using the $1,500 figure per image for the 40,000 images the Court determined to be lost would far exceed the entire purchase price for what Corbis paid to acquire the Sygma, Bettmann, and Turnley combined collections.

The Court rejected various alternative valuation theories proposed by Grace as being unreasonable under the circumstances, and eventually awarded damages to Grace based upon $8,000 a year for 4.5 years to account for lost licensing income from the date the images should have been returned, to the trial date. The Court also awarded an additional $100 per image for the 4,000 images the Court concluded were selects (based upon 10% of the total), or $400,000, and an additional $1 each for the remaining 90%, or 36,000 images. In all, this amounted to a judgment of $472,000, without pre-judgment, interest which was already taken into account by the Court.

Since the Court was faced with propositions which, as stated above, would lead to an absurd result, caution should be taken by other photographers when making what would probably be considered to be outrageous demands under the circumstances. I have always advocated taking a reasonable approach which would hopefully result in a reasonable outcome. I believe it is easier to justify a reasonable position than to have to backtrack from an unreasonable one.

Attorney Joel L. Hecker lectures and writes extensively on issues of concern to the photography industry. His office is located at Russo & Burke, 600 Third Ave, New York NY 10016. Phone: 1 212 557-9600. E-mail: HeckerEsq@aol.com.

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