Freelance settlement - authors guild

Updated Dec. 6.

It has been a long road, but we can report some new progress toward the payout in the freelance class-action suit initiated by the Authors Guild in 2000. Many of you are claimants in the case, filed against electronic databases and two major newspapers and magazines (In re Literary Works in Electronic Databases Copyright Litigation). Thousands of freelance writers had agreed only to one-time uses of their works, which were then used in electronic databases without authorization and without further compensation.

After 14 years of litigation—trial court, Court of Appeals (twice), and the U.S. Supreme Court— in June 2014, the court gave final approval to a revised settlement. The payout was initially set at $18 million; the final number could now be somewhat more or somewhat less. Initially the lawyers for the class estimated that writers with valid claims could receive payment as early as the third quarter of 2015, but they didn’t know how long the claims-administration process would take.

More than three years later, class members still haven’t been paid. The main reason for the delay is that publishers filed 41,000 specific objections, an unexpectedly large number, and those objections have had to be resolved through a painstaking process of investigation and negotiation. (The plaintiffs’ lawyers did ask that the undisputed claims be paid without delay, but defendants and publishers wouldn’t agree to that.)

The process is finally nearing an end. We want to bring you up to date on where matters stand and offer the best information we can on what has happened and what remains to be done before the money is paid out.

Case History

The litigation began after a federal appeals court ruling that the electronic rights in an author’s freelance works belong to the author, not the print publication in which the article appeared. Appeals led to a landmark Supreme Court decision, New York Times v. Tasini (2001), which held that several online databases and print publishers had infringed the rights of six freelance authors by reproducing the authors’ works electronically without first securing their permission.

It was a crucial moment for preserving the rights of working writers in the transition to an increasingly online publishing economy. The Authors Guild filed a companion suit in 2000, along with the American Society of Journalists and Authors, the National Writers Union, and 21 freelance writers, and that was combined with the Tasini case after the Supreme Court decision. The case went back to the lower court for a decision on the remaining legal issues and damages.

The defendants were database owners like LexisNexis and publishers including The New York Times, Dow Jones, Time Inc., and The San Diego Union-Tribune. We spent several years negotiating a settlement, which was approved in 2005. But challenges kept it bogged down in the courts.

When Will I Be Paid?

With more than 3,000 authors and about 600,000 articles at stake, this was an enormous lawsuit. The many disputes over individual articles took the lawyers and the claims administrator by surprise. (In most cases, authors don’t even know if their claims have been disputed.) But the plaintiffs’ counsel now report that all the objections have been resolved.

The final timetable is this:

  • The claims administrator, Garden City Group, will issue its Final Report (expected the third week of December).
  • The publishers then have 60 days to deposit the money they owe into an escrow account.
  • The bank then will have 28 days to report on which defendants have or have not made their payments.
  • The Defense Group as a whole then will have 10 days to make good on any missing payments.

If this timetable holds, and we see no reason it shouldn’t, writers should receive their checks by April. Information from the class counsel can be found on the settlement website, http://www.copyrightclassaction.com, though this is sometimes out of date.

We are going to track this closely and will keep you informed.

If you need to provide the claims administrator with your updated contact information, you can do so here: https://cert.gardencitygroup.com/ed2/fs/home.

How Much Will I Receive?

Because of the technicalities of copyright law, the amounts depend on whether each work was formally registered with the US Copyright office, and if so, when. (It’s not typical for freelance magazine and newspaper writers to do that, but it provides the strongest protection against infringement.) The plaintiffs’ works were divided into three classes: A (registered promptly), B (registered later), and C (not registered).

The exact amounts also vary depending on the original fee paid for the article, the year it was published, whether the writers registered the copyright, and whether they agree to future use of the article in the databases. According to lawyers working on behalf of the class, a small number of writers will receive settlement payments of more than $100,000; a larger number will receive five-figure payments, and many writers will receive four-figure checks.

Please note that only those class members who submitted timely, valid claims under the Initial Settlement Agreement are eligible to receive payments under the Revised Settlement Agreement. The claims deadline for that original settlement was September 30, 2005.

The official Plan of Allocation follows.

Plan of Allocation

Category A Subject Works: For each Subject Work the Claimant properly registered as an individual work with the United States Copyright Office in time to be eligible for statutory damages under 17 U.S.C. § 412 (2), the Claimant will receive:

-       $1,500 for the first fifteen Subject Works written for any one publisher;

-       $1,200 for the second fifteen Subject Works written for that publisher; and

-       $875 for all Subject Works written for that publisher after the first thirty Subject Works.

Category B Subject Works: For each Subject Work that the Claimant properly registered before December 31, 2002, but not in time to be eligible for statutory damages under 17 U.S.C. §412 (2), the Claimant will receive, per Subject Work, the greater of $150 or 12.5% of the original sale price paid by the publisher of the Subject Work; except that any claim that would otherwise be a valid Category B claim shall be reclassified and paid as a Category A claim if the Claimant registered copyright in the Subject Work prior to the licensing and delivery of the Subject Work, by any defendant, to Amazon.com or Highbeam (aka Highbeam Research). A schedule of the dates of availability has been provided to the Claims Administrator and to Class Counsel.

Category C Subject Works: For all other Subject Works, the Claimant will receive, per Subject Work, an amount that is at least 14% larger than the amount provided for in the Initial Settlement Agreement as follows:

-       The greater of $5.70 or 11.4% of the original price of the Subject Work (except for works sold for amounts over $249, as described below);

-       $28.50 for Subject Works originally sold for $250 to $999;

-       $45.60 for Subject Works originally sold for $1,000 to $1,999;

-       $57.00 for Subject Works originally sold for $2,000 to $2,999;

-       $68.40 for Subject Works originally sold for $3,000 or more.

In addition, $343,500 from the Total Separate Contribution shall be paid to and distributed among all valid Category C Claimants pro rata, i.e., in proportion to their respective valid Category C claim dollar amounts. As described more fully in the Class Counsel Expense Sharing Agreement attached hereto as Exhibit C, the Total Separate Contribution less the foregoing $343,500 amount shall be applied to (i) Administration Costs and (ii) payment required under paragraph 9. To the extent there is still a balance remaining from the Total Separate Contribution after payment of such amounts, then a pro rata payment and distribution from such balance shall be made to and among all valid Category C Claimants in accordance with Exhibit C.

Reduced Payments: For Subject Works created before January 1, 1995, payments in Categories B and C above shall be reduced to an amount no lower than $5.70 per Subject Work, based on the years in which the Subject Work was created as follows:

-       Subject Works created in 1995 or later: no reduction;

-       Subject Works created in 1985–1994: a 5% reduction for each year beginning in 1994 and continuing through 1985, i.e. payments for Subject Works created in 1994 will be reduced to 95%, payments for Subject Works created in 1993 will be reduced to 90%, and so on until 1985;

-       Subject Works created before 1985 will receive a 50% reduction.