I Framed a Website; Now PicRights Wants Money!

Dear Rich: I build websites, and one of my clients is a small auto shop. The auto shop's website includes a listing of brands that they carry and includes links. Some of the links steer the user to the brand website. Some of the links allowed the user to stay at the auto shop website and to view the brand website within a frame. Several months ago, the auto shop got threatening letters and emails from PicRights.com, a photo rights company, saying that two of the framed brand sites each had a photo that was "copied" from one of their stock photo clients. Naturally, the auto shop nor I had any knowledge or control over what one of these brand companies or their web people used on those sites. I removed the links to those companies, and we told PicRights that via email. But the auto shop continues to get threatening letters including one from an attorney. 
We can't predict how the auto shop would fare if this matter proceeded to court (and we assume the auto shop doesn't want to litigate), but if we were a betting blog, we'd wager that the auto shop's liability would not exceed $1500. It's even possible that the shop would owe nothing. Here's why:
Framing and copyright. What makes framing different from typical linking is that instead of taking the user to the linked website, the information from that website is displayed in a special “frame.” When you’re viewing framed information, your computer is connected to the site doing the framing, not the site whose page appears in the frame. But in reality, the image isn't duplicated because the link is just HTML code pointing to the image or other material. (A similar result occurs when a single photo from one site is embedded in another site -- a process called "inlining.")
Conflicting case law. Framing and inlining are often used to deliver search engine results. Courts have held in two cases where search engines linked to thumbnail images, that such uses are permitted as fair use. In one of those cases, Perfect Ten, the Ninth Circuit Court of Appeals devised the “server test" in which the court ruled that if the allegedly infringing work is on your server, you infringed. Under the server test, the auto shop might prevail, assuming no copies of the infringing photos were stored on the auto shop servers. Complicating the analysis, a New York judge in 2018 rejected the server test in a case about an embedded Twitter photo. In other words, your case might achieve a different result in California than in New York. (Hopefully, an appellate court or the Supreme Court will resolve the difference between circuits.)
What should the auto shop do? You were wise to remove the framed links immediately as that demonstrates your good faith responding to the claim as well as limiting your potential damages. It's also reasonable for the auto shop to request proof that the images have been registered in the Copyright Office. If they haven't been registered before your posting, PicRights or the stock photo company could not claim statutory damages or attorney fees. Also, they can't sue you in federal court without the registration. (Although not conclusive, we found no copyright registrations under either complaining party's name in the Copyright Office database.) If they have registered the copyright before your posting, the minimum for damages would be $750 per photo (or $200 per photo if you were determined to be an "`innocent infringer"). Feel free to write to the photo rights company and share our information but don't expect a reasoned response. (If we analogize to fishing, the company's policy is to use drift nets, not catch-and-release.)
Will you get sued? Oddly, when we searched PACER, we couldn't find any records of copyright lawsuits filed either by PicRights or by the stock photo company claiming to own rights. Perhaps the companies sue under other names, but it's possible that they never file lawsuits, only threaten them. To be prudent, the auto shop should obtain an opinion from an attorney before blowing off the letter.
P.S. Dept. It’s possible that you may be threatened with contributory infringement. We believe that under Ninth Circuit standards, you would prevail.

Wants to Write a Story About Troll Dolls

Dear Rich: My daughter is a collector of Troll dolls, and I am a published fiction-story writer. Do I need permission to write a fiction story about Troll dolls? You're free to write about the Troll dolls but there may be limits on how far you can go when exploiting your story. 
Backstory. The Troll doll characters are protected under a copyright owned by the Danish company Troll Company ApS. [Disclaimer: We used to perform legal services for the Troll Company ApS and we're still deeply fond of the Thomas Dam creations.] The copyright history has been complex and for a period, U.S. courts considered Troll dolls to be public domain. That ended after the U.S. entered into an international copyright treaty in 1996 and the Troll Company reclaimed its rights in the U.S. (It had never lost them in the rest of the world.). The Troll Company has been active in its attempts to exploit its copyright and its most recent foray looks to be a major movie event  with a release date set for 2015.
Protectible characters. BTW, we have previously written about the protectability of literary, film, and licensed characters. We think that literary publication of your story may be possible under fair use/free speech rights but beware that some uses of characters in literary ventures have been successfully blocked. Beyond literary publication, Troll Company would have a right to halt commercial exploitation -- for example licensing the story for TV or film.

Can You Sell Your Right to Sue?

Dear Rich: We know somebody who was sued by Righthaven and we read that a Righthaven case was thrown out. Does that mean that all of the cases will get tossed? Can people get their money back if they settled? Chances are good that most of the recent infringement cases filed by Righthaven will get thrown out. The reason: Righthaven claimed that it had been assigned copyrights but it had only been granted the "right to sue."
Backstory. Righthaven is co-owned by an attorney and members of the family that also owns Stephens Media (which owns the LasVegas Review-Journal). According to this website, Righthaven's business model is "finding infringing content online, obtaining the rights to copyrighted content, registering the copyright with the U.S. Copyright Office, and then filing a copyright infringement lawsuit." (That's also a rough description of a copyright troll). Righthaven has filed over 140 lawsuits based on material excerpted from the Las Vegas Review-Journal.
The Big Problem. Righthaven made a deal with Stephens Media whereby they obtained the right to sue over infringed articles. Assigning the "right to sue" won't fly under copyright law (it's technically referred to as the "bare assignment of an accrued cause of action" and according to this case, is impermissible). The judge in the Righthaven case seemed pretty ticked off by the last minute revelations from the so-called "assignment" so you may see sanctions along with an award of attorney fees to the defendant. It's too early to see whether other cases will be dismissed (Righthaven can still appeal this decision), but if we were a betting blog, we'd bet on the defendants in those 140+ cases. As for those who already ponied up a settlement, that's a more challenging call. Setting aside settlements will likely require that the defendants prove that they were fraudulently induced into settlement. Some of the settlers are apparently considering a class action.