Free Response in Opposition to Motion - District Court of Arizona - Arizona

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EXHIBIT 7
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Coogan v. Avnet, Inc., et al. USDC/AZ CV-04-0621 PHX SRB

Expert Witness Report Prepared by Richard Weisgrau

June 24, 2005

Richard Weisgrau 711 Willow Way Narberth, PA 19072 610.664.6507

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I have been asked to render an opinion in the case of Dan Coogan, doing business as

Coogan Photographic v. Avnet, Inc., Roy Vallee, and Jane Doe Vallee, husband and wife, and Al Maag, and Jane Doe Maag, husband and wife, United States District Court, District of Arizona, Case No. CV-04-0621 PHX
1. The copyright registration's force and effect, SRB) on the following matters: 2. The significance of storing any single digital image in different file sizes 3. The damages resulting from infringements. 4. The nature of willfulness and its applicability In doing so I have relied upon my life experience of more than 39 years in the photography business 1 . In addition to copies of legal documents provided to me by Plaintiff's counsel, I have referred to the Getty Images Website, the Avnet Website, and Dan Coogan's Website in formulating my opinion.

1. The Copyright Registration

On April 25, 2001 the U.S. Copyright Office issued Certificate of Copyright Registration VAu478-174 to Dan Coogan. Among photographs included in the registration were a number of photographs of Roy Vallee, Avnet 01-0412 a-g, 2.Jeff Hatch-Miller, AZHouseLegislator 0l-0416 a-f, 3. Wells Fargo 01-4420 a-d. Some of those photographs are involved in the instant case as infringed images (the ones of Roy Vallee, Avnet 010412 a-g).

The registration certificate indicates that the photographs were unpublished at the time of registration. As such, they qualified to be registered as a "collection" under §203.3 of the Code of Federal Regulations. On page 509 at (3)(B) the regulation governing registration of unpublished works is clear and unarguable. It states: (B) In the case of unpublished works: all copyrightable elements that are otherwise recognizable as self-contained works, and are combined in a single unpublished ``collection.'' For these purposes, a combination of such elements
1

See attached CV

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shall be considered a ``collection'' if: (1) The elements are assembled in an orderly form; (2) The combined elements bear a single title identifying the collection as a whole; (3) The copyright claimant in all of the elements, and in the collection as a whole, is the same; and (4) All of the elements are by the same author, or, if they are by different authors, at least one of the authors has contributed copyrightable authorship to each element.

Registration of an unpublished ``collection'' extends to each copyrightable element in the collection and to the authorship, if any, involved in selecting and assembling the collection.

In issuing a Certificate of Registration, the Copyright Office indicated that in its judgment the requirements of §203.3(3)(B) had been met. Consequently, Coogan's registration is prima facie evidence of registration of a collection of unpublished photographs. As such, under the law and the regulations, each of his photographs deposited with that that registration application is separately protected by copyright, and each deserves the copyright protection as if each was separately registered.

In the defendants' Answer and in the defendants' Answer to the Amended Complaint, these defendants have expressed a belief that the registration of a "collection" entitled its copyright owner to only one count of infringement no matter how many works within that collection were infringed. The defendants have erred in their conclusion. A "collection" under §203.3(3)(B) is not the same thing as a compilation or collective work under the Copyright Law. Additionally, the regulation speaks directly to the issue with these words: "Registration of an unpublished ``collection'' extends to each copyrightable element in the collection." Consequently, "each" of Coogan's photographs included under Certificate VUa478-174 is entitled individually to all protections guaranteed by the Copyright Law.

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Coogan's registration is Prima Facie evidence of his ownership of all the copyright rights in the registered photographs. Since registration was made prior to the infringements of his images, Coogan is entitled to elect either actual damages and profits or statutory damages. He can also request costs and attorney's fees.

2. Digital Image File Sizes Make a Difference

In their responses to Plaintiff's First Request for Admissions defendants denied that a digital image stored as computer files of different resolutions are different images. In my opinion, that denial is baseless. I have used the following definitions from Merriam Webster's Collegiate Dictionary, 10th edition, in formulating my opinion. · · · · · Different means "partly or totally unlike in nature, form, or quality." Image means "reproduction of the form of a person or thing." Copy means "a reproduction of something original." File means "a complete collection of data treated by a computer as a unit especially for purposes of input and output." Vary means "to make a partial change in: make different in some attribute or characteristic." Applying the above definitions, Defendant's denial is without merit because a change in file size constitutes a change in "quality" since smaller files produce inferior results to larger files when used to reproduce images. Defendants admit to storing some or all the image files in different resolutions. These "image files" of different resolutions are different even though the images are identical expression of the form of the subject because the reproducible quality is different from file size to file size. It is not arguable that an image, whether embodied in a computer file or any other medium, when cropped to eliminate original data is not different. Altering an original image in any way is creating a variation. When the defendant acted to vary any original image it changed it and made it different by virtue of creating a variation. Regardless of the defendant's arguments about the word "different" the simple fact is that the defendant made copies of the images in whole or in significant part. As 17 Coogan v. Avnet, Inc., et al., USDC/AZ CV-04-0621 PHX SRB report July 2005 Page 4 Case 2:04-cv-00621-SRB Document 84-4 Filed 09/06/2005

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U.S.C. makes unauthorized copying an infringement, every unauthorized copy is an infringement regardless of whether any variation in form or quality was made.

3. Entitlement to and Determining Damages

Dan Coogan is entitled to elect either statutory damages or actual damages and profits as his claim.

Statutory damages provide the Court with the ability to add a deterrent factor to dissuade the infringer and other possible infringers from such behavior in the future. The Court may also take willfulness into account when determining statutory damages. In the recent case Schiffer Publishing, Ltd, et al v. Chronicle Books, LLC, et al (USDC Eastern District of Pennsylvania, civil action No. 03-4962), Judge Berle M. Schiller cites other cases and reflects as follows in his January 11, 2005 Memorandum and Order.

Page 8: " ... it is clear ... that the statutory damages should exceed unpaid licensing fees so that the defendant will be put on notice that it costs less to obey the copyright laws than to violate them."

Page 15: " Adding together Chronicle's profits, Ivy's profits and the licensing fee average results in a total of $33, 271.00. The Court's damage award is between four and five times this amount, which this Court finds appropriate given the circumstances."

One of the "circumstances" of the case was that the infringements were found not to be willful. In spite of that, the Court applied a substantial multiplier to actual damages and profits to determine an appropriate amount of statutory damages.

Actual damages and profits have an important bearing on this case whether elected by Dan Coogan or not. They help to set a framework for determining what damages might

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be awarded. While determining the infringer's profits is beyond the expertise of this expert, determining actual damages is not.

It has been argued in cases of infringement that actual damages ought to be based upon some economic or financial model based upon past earnings of the infringed. While I know of no way to construct such a model, even if I did it would not yield actual damages. It would yield a hypothetical amount based upon speculative model of past history having nothing to do with the infringement. Therefore, even though supplied with tax returns of Dan Coogan, I have not taken those returns into consideration. Nor have I taken into consideration the fees Dan Coogan has charged legitimate clients in the past for the use of his photographs. Those fees were based upon legitimate transactions, negotiated and agreed prior to use between a photographer and client. They were not fees charged for illegitimate uses agreed after the fact of infringement. In my decades of experience I know of no case in which a photographer would extend his customary fees to an infringer. It is more common for photographers to triple, quadruple, and even quintuple, their regular fees. Dan Coogan's term's and conditions on his invoices to Avnet and others state that use before payment (which by other terms constitutes an infringement) will be billed at triple his customary fee. Since actual damages may not be punitive, I have not used such a contractual multiplier.

I have not taken into consideration what a photographer other than Dan Coogan might have charged Avnet for even more rights than Coogan agreed to license in his April 9, 2002 invoice. Undoubtedly, some photographers would offer more than Coogan for a lower fee. No court takes competitive bids from competitors of the infringed party to determine the value of an infringement. What other photographers might have charged in a legitimate transaction with Avnet is hypothetical. Actual damages are not hypothetical.

In the Oxford online dictionary, Ask Oxford.com (http://www.askoxford.com/), the word actual is defined as "1. existing in fact. 2. existing now; current." To meet that standard I

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have chosen a method of valuation based upon reasonable license fees as established in the marketplace.

The instant case involves the residual rights in Dan Coogan's photographs. There is an established business model for licensing residual rights in photographs. That model is known as stock photography, and it involves the licensing of specific rights based upon specific usage criteria for a specific fee. Because of the specificity of the factors used to determine stock photography license fees, those fees are "exact," and they "exist in fact" because they are accessible on the Internet at a licensors' websites. Consequently, I have used the stock license fees of Getty Images, the world's largest stock photography provider, as a basis for my evaluation of damages in this case. From experience, I know that Getty's prices are competitive with other suppliers of stock photography.

The infringements in this case were made by both unauthorized use in printed media and on the Internet. Each medium is covered by a standardized method of pricing that applies certain criteria to determine a licensing fee for any use. The criteria are include type of application, circulation or press run, placement, size of reproduction, language, geographic territory, frequency, and duration of use. To the extent possible and based upon the information available as of June 16, 2005, the damages cited in this report are based upon the criteria applied by Getty Images in pricing licenses for legitimate uses of images in a manner consistent with the infringing uses.

To simplify the determination of damages, the infringing uses are subsequently grouped by media type since each medium has its own criteria for determining licensing fees.

Actual Damages for Internet Website Page Uses

When pricing a license fee at the Getty Images Website, the user is asked to specify the nature of a use through a series of drop-down menu questions. The specific questions and answers related to any specific type of use are listed herein as part of the analysis.

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For Internet use I answered questions as follows: How will the image be used? Advertising ­ Print/Web Specific use? Corporate or Promotional Website Where will the image be used? Home Page or Secondary Page What territories will the images appear in? United States What is start date of image use? June 16, 2005 What is the duration of image use? Up to one month What is the industry of the product or service the image is promoting? Computer hardware and peripherals The system returned the following license fees: Home Page - $310.00; Secondary Page $220.00 for one month or any part thereof. The "up to one month" duration was selected from a list that included three months, six months, one year, two years, three years, and five years. The "up to one month" period was selected because selecting another option would effectively discount the use as the period became longer in duration. Applying a discount would amount to a reward for infringement. Discounts are intended to reward legitimate licensees not infringers.

It is important to note that the licensing fees at the Getty Images Website apply to generic images not to proprietary images like Corporate CEO's photographs, which Getty does not license as traditional stock photography or for standard licensing fees. The infringing images in this case are not generic. They are proprietary, not available for licensing from any agency, and only available for licensing from Dan Coogan. This means the images would have premium license fees that would reflect their unique nature. As part of this analysis, the premium nature of the images will be valued by using a multiplier of 3 times the standard licensing fees for generic images. Using the three times multiplier as a factor for determining value of the Internet infringements gives products of $930 per month for a home page use and $660 per month for a secondary page use. These damages do not include any amount for the further distribution of Coogan's images by making some of them downloadable from the Avnet Website or by transferring copies to third parties.

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There was one home page use and a total of twenty-five secondary Webpage uses. Consequently, the value of these twenty-six infringements can be calculated as follows: ($930 x1) + ($660 x 25) = $17,430 for each month or part thereof of infringing Internet use.

If the licensing agreement of April 2002 (the Agreement) is void, then the damages for the twenty-six infringements are calculated on the basis of 24 months of unauthorized use from April 2002 through March 2004. These damages amount to $418,320.

If the Agreement is in force, then these damages were incurred over an approximate 12 month period and amount to $209,160.

Actual Damages for Avnet's Print Media Uses

A valuation of the various infringing uses in print media follows.

1. The July/August 2001 issue of Avnet Global Perspective magazine contains one of Coogan's images. The September 2001 issue of Avnet Global Perspective magazine contains one of Coogan's images. To assign a value to these infringements I replied to the Getty Images licensing system as follows: How will the image be used? Internal Company Use Specific use? Internal Company Pack Where will the image be used? Inside What territories will the images appear in? United States What is start date of image use? June 16, 2005 What is the duration of image use? 1 Year

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What is the industry of the product or service the image is promoting? Computer hardware and peripherals The system returned a value of $1,120 per use. This number is multiplied by three because of the proprietary nature of the photograph resulting in actual damages of $3,360.

If the Agreement is void, actual damages for the two infringing uses are $6,720.

If the Agreement is in force, there are no actual damages.

2. Both the 2002 and 2003 Avnet Annual Reports contained an infringing use of one photograph owned by Dan Coogan. To assign a value to these infringements I replied to the Getty Images licensing system as follows: How will the image be used? Brochure or Marketing Collateral Specific use? Annual Report What is the size of the image relative to the whole page? Up to one half page Where will the image be appear? Inside What is the print run? 25,000 What territories will the images appear in? United States What is start date of image use? June 16, 2005 What is the duration of image use? 1 Year What is the industry of the product or service the image is promoting? Computer hardware and peripherals

The system returned a value of $715.00 per uses so the fee would for the use of the two photographs would be $1,430. This number is multiplied by three because of the proprietary nature of the photograph resulting in actual damages of $4,290.

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Since the use of Coogan's images in annual reports was excluded in the Agreement, any such use is an infringement even if the Agreement is in force. The actual damages amount to $4,290.

Actual Damages for Known Third Party Use

Avnet allowed others parties to use the images in print and on Websites. Each of these third party uses is evaluated below to the extent possible.

1.

CMP Media, LLC used one image in at least two places on its Website, and

discovery during a subpoenaed deposition turned up an additional reprinting of the article in CRN magazine. The uses fit within the same criteria used to evaluate Avnet's infringing uses. Consequently, the damages can be calculated as follows: ($220 x 2) x (the # of months of unauthorized use) x 3, plus ($315 for the magazine use) x 3.

Estimating the Internet infringement to have been online from January 2004 through January 2005 means actual damages were incurred over a period of 13 months. Applying the formula above yields actual damages for the Internet infringements in the amount of $17,160.

To assign a value to the magazine infringement I replied to the Getty Images licensing system as follows: How will the image be used? Publishing - News/Mag/Web Specific use? Editorial ­ Magazine Interior What is the size of the image relative to the whole page? Up to 1/4 Where will the image be appear? Inside What is the circulation? Up to 250,000 What territories will the images appear in? United States

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What is start date of image use? June 16, 2005 What is the duration of image use? 1 week What is the industry of the product or service the image is promoting? Computer hardware and peripherals

The system returned a value of $315.00 per use. Consequently, the damages can be calculated as follows: $315 times a factor of 3 or $945.

2.

Arizona Governor's Council used one image in two places on its Website. The

uses fit within the same criteria used to evaluate Avnet's infringing uses. Consequently, the damages can be calculated as follows: ($220 x 2) x (the # of months of unauthorized use) x 3.

Estimating the Internet infringement to have been online from April 2002 through the present (June 2005) means actual damages were incurred over a period of 39 months. Applying the formula above yields actual damages for the Internet infringements in the amount of $51,480.

3.

Supply Chain Council, Inc. used one image in two places on its Website. The uses

fit within the same criteria used to evaluate Avnet's infringing uses. Consequently, the damages can be calculated as follows: ($220 x 2) x (the # of months of unauthorized use)

Estimating the Internet infringement to have been online from October 2002 through December 2004 means actual damages were incurred over a period of 27 months. Applying the formula above yields actual damages for the Internet infringements in the amount of $35,640.

4.

Supply Chain Council, Inc. published one image in a printed brochure. To assign

a value to these infringements I replied to the Getty Images licensing system as follows: How will the image be used? Brochure or Marketing Collateral Coogan v. Avnet, Inc., et al., USDC/AZ CV-04-0621 PHX SRB report July 2005 Page 12 Case 2:04-cv-00621-SRB Document 84-4 Filed 09/06/2005

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Specific use? Brochure or Direct Mail What is the size of the image relative to the whole page? Up to 1/8 page Where will the image be appear? Inside What is the print run? 25,000 (estimated) What territories will the images appear in? United States What is start date of image use? June 16, 2005 What is the duration of image use? Up to 6 months What is the industry of the product or service the image is promoting? Computer hardware and peripherals

The system returned a value of $535.00 per use. Consequently, the damages can be calculated as follows: $535 times a factor of 3 or $1605. 5. Supply Chain Council, Inc. also published the Brochure cited in 4., above, as a downloadable document on the Internet at its Website. To assign a value to these infringements I replied to the Getty Images licensing system as follows: How will the image be used? Brochure or Marketing Collateral Specific use? Electronic Brochure Only What is the size of the image relative to the whole page? Up to 1/8 page Where will the image be appear? Inside What territories will the images appear in? United States What is start date of image use? June 16, 2005 What is the duration of image use? 1 month What is the industry of the product or service the image is promoting? Computer hardware and peripherals

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The system returned a value of $390.00 per use. . Consequently, the damages can be calculated as follows: $390 x (27 months of unauthorized use) x 3. The 27 month use was estimated based upon the duration of the infringing use as described in #3 immediately above. Actual damages amount to $31,590.

Actual Damages for Undetermined Distribution to and by Third Parties

Defendant made Coogan's photographs available to third parties without any controls. Currently, except for the information in the amended complaint, there is no information about how many third parties may have downloaded Coogan's photographs. There is also no information beyond the amended complaint about how any of those third parties may have used or further distributed or published Coogan's images. Damages exist, but it is impossible to determine the extent of the actual amount.

Making Coogan's photographs available to third parties shows a reckless disregard for Coogan's interests. Furthermore, Defendant knew it either had no rights to allow third party use of Coogan's photographs per the terms of the April 9, 2002 written invoice, or a compensable limited right to allow third party use of Coogan's photographs for which no compensation was made, per the written offer of Mr. Maag, but this offer was breached by the maker himself. In the absence of details of use, with Avnet's knowledge of wrongdoing and reckless disregard of Coogan's copyright interests only statutory damages based upon willfulness can be applied.

Summary of Actual Damages

The total of actual damages is dependent upon whether the Court voids the licensing contract of April 2002, and whether data defining the extent and the duration of third party uses becomes available. The currently calculable actual damages are as follows. A) If the Agreement is void: All unauthorized Internet uses by Avnet = $418,320.

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All unauthorized print uses by Avnet = $11,010. Known third party uses = $138,345. Total = $567,675. B) If the agreement is in force: All unauthorized Internet uses by Avnet = $209,160. All unauthorized print uses by Avnet = $4,290. Known third party uses = $138,345. Total = $351,795.

4. Willfulness Factors and Applicability

The two factors for finding an infringement to be willful are that either the infringer knew its actions to be infringing at the time of the infringement, or that the infringer acted with reckless disregard for the copyright owner's rights. Both factors exist in this case.

By his prior behavior with Dan Coogan and, according to defendant Al Maag, himself, with other photographers, he, on behalf of himself and in behalf of his corporate employer defendant Avnet, Inc., demonstrates that he and Avnet fully understand the requirement that Avnet must have proper permission to publish a photograph for which it does not already have the necessary rights. The defendants clearly had enough knowledge to know what constituted an infringement.

A user of intellectual property has an obligation to exercise due diligence in its acquisition of and use of such property. Defendant Avnet, Inc.'s own policy, as provided in its Code of Conduct, cautions employees to respect the copyrights, patents and licenses of others, including competitors and suppliers of Avnet. By distributing this policy these defendants demonstrated that they had an understanding of the obligation to copyright owners such as Dan Coogan. The recognition of an obligation is not due diligence. Due diligence can only be demonstrated by action. The defendants failed to exercise due diligence in spite of Avnet's own policy requiring such diligence.

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Defendant Al Maag has stated in writing that he acquired one of Dan Coogan's photographs of Roy Vallee from Upside magazine. In Al Maag's email of March 13, 2002 to Dan Coogan, Maag states: "I got that photo from Upside and assumed it was paid for and they gave me permission to use it." Al Maag's title on that email indicates that he was at that time Avnet's Chief Communications Officer. It is inconceivable to me that, being in his high position of responsibility for Avnet's communications, Al Maag did not understand his employer's policy on intellectual property. Mr. Maag "assumed" Dan Coogan had been paid. He readily accepted a permission to publish Dan Coogan's photograph granted by Upside in spite of the fact that he had no reasonable basis to trust that Upside had the authority to grant such a license. Mr. Maag did not acquire a written permission from Upside. Moreover, despite being present when Dan Coogan photographed Roy Vallee, producing the Roy Vallee photographs at issue in the instant case, Mr. Maag made no attempt to verify Upside's right to license or transfer the use of Dan Coogan's photograph by reviewing the license that Dan Coogan granted to Upside. He made no attempt to locate or contact Dan Coogan to verify that Upside had a right to grant a permission to use Dan Coogan'a photograph. It does not take an expert to recognize that there was no due diligence exercised by Al Maag on Avnet's behalf in spite of Avnet's own policy. Al Maag took the easiest way to his goal. He assumed what was convenient to assume and made no attempt to verify. He personally failed to exercise due diligence. And he did so from the time of Avnet's first instances of infringement to the time of its last instances.

The defendants were in violation of the license from Dan Coogan when they published his photographs in Avnet's annual reports and either transferred directly or allowed the download and use of his photographs by third parties in spite of an express written prohibition against doing either (or at least a never-intended-to-be-followed offer of paying Coogan when Al Maag offered him additional payment for such third-party use as an enticement to settle the first of Avnet's infringement). A licensee of intellectual property has a responsibility to live up to the terms of a license. To do that it must have

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some means of assuring that its use of any licensed work stays within the parameters of the license and that some system is in place to assure that it can live up to the terms. There is no evidence of any such controls being in place at Avnet.

In his email of March 13, 2002, Al Maag states: "If used by a publication outside of the industry we serve I will pay you a $500 fee." If you make that statement you should have some controls over who is using the photograph and how so that a proper accounting can be made to the copyright owner. Without those controls Maag's statement is an empty promise and amounts to deception. Through Maag, Avnet used Dan Coogan's photographs on its Website and made them downloadable on demand by any person visiting the website. It emailed copies of Dan Coogan's photographs to third-party users so they could make use of Dan Coogan's photographs. Avnet did not make any attempt to regulate or record who downloaded the images or for what purpose. It placed no restrictions on the use of the downloaded images. This is not only evidence of a lack of due diligence, but it is also indicative of reckless disregard for the copyright owner's rights. Allowing another person's intellectual property to be freely taken and used by third parties without any controls, adequate records, and/or without the permission of the copyright owner of the downloadable intellectual property can only be seen as reckless and willful behavior, especially when you have been expressly restricted from doing so.

The defendants and Dan Coogan conducted a written and oral negotiation that resulted in an enforceable agreement. That agreement was embodied in Dan Coogan's invoice # 2002-1212 of April 9, 2002, which was sent to Al Maag after an earlier email exchange, a March 6, 2002 meeting between them, and a latter email exchange, all before April 9, 2002 failed to settle Avnet's first use of Dan Coogan's Upside magazine photograph of Roy Vallee. On June 17, 2002 Avnet issued payment to Dan Coogan in the form of a check drawn on an Avnet account. The documentation attached to the check indicates the payment was for Dan Coogan's invoice # 2002-1212. At no time between April 9 and June 17 did Al Maag or any other representative of Avnet express any concern over or rejection of any part of that invoice's license granting limited permission to use the

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infringed photographs. Nor was there any objection to any of the invoices terms and conditions. Mr. Maag, as Chief Communications Officer of Avnet received the invoice directly into his email at work and passed it on for payment. One can only assume that he had control of his mental faculties and therefore knowingly accepted the license and terms and conditions set forth on that invoice. Thereafter, Avnet exceeded the terms of the license, and it ignored important terms and conditions in the agreement. If the writing expressing that agreement was not as agreed or was not acceptable to Avnet, then Mr. Maag had an obligation to protest. In my opinion, failing to protest, accepting, and paying the invoice amounts to a contract by conduct, which is a common practice between professional photographers and their clients. The language of that invoice is not confusing or ambiguous. The defendants ignored many parts of it and their obligations therein. In this case "the handwriting was on the wall" and the Defendants ignored it. While serving for fifteen years as the executive Director of ASMP, American Society of Media Photographers, I reviewed hundreds of infringement claims submitted by ASMP members who were seeking advice on and support for their claims. In my experience, the instant case involves more infringing uses than most cases that I reviewed. The sheer volume of infringements in this case distinguished it as one of the most egregious abuses of a photographer's copyright that I know of. A single use might be simple negligence. The number of infringements in this case can't be simple negligence.

The defendants had an obligation to Dan Coogan as a copyright owner, but it chose to ignore those obligations. By having no system in place to enforce or even monitor its own policy, and no system in place to assure it lived up to the terms of the licenses it entered into, the defendant was reckless in its treatment of Dan Coogan's copyright interests. In my opinion defendants' behavior in this case demonstrates that both factors needed to determine willfulness are present.

As Judge Berl wrote: " ... it is clear... that the statutory damages should exceed unpaid licensing fees so that the defendant will be put on notice that it costs less to obey the copyright laws than to violate them." In my opinion, any award of statutory damages

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ought to be set at the maximum amount allowed by law for willful infringement for each infringed image.

Respectfully submitted,

Richard Weisgrau

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Richard Weisgrau
Photographer · Writer · Consultant www.rwpwc.com [email protected] 711 Willow Way, Narberth, PA 19072 Tel: 610.664.6507 Cell: 610.585.3039

Work History
2003 ­ to date Photographer, Writer, Consultant Self-employed, Narberth, PA Working on special photography projects, writing magazine articles and books, and providing business consultations and expert witness services in the photography sector. 1988 ­ 2002 Executive Director ASMP, American Society of Media Photographers, Philadelphia, PA ASMP works to protect and promote the interests of professional photographers through business education, legislative and judicial advocacy, information distribution, and industry relations. Duties: Developed and implemented strategic plans and policies Directed legislative advocacy at federal and state levels Supervised ten person staff including membership, communications, and education directors Organized and directed intra and inter industry coalitions Directed corporate sponsorship operations Developed and managed budgets and financial plans

1973 ­ 1988

Vice-president & Chief Operating Officer Audio Visual Group, Inc., Philadelphia, PA Served as chief photographer and directed all staff and freelance operations in the production of multi-image and multi-media programs for corporate, institutional, and government clientele.

1966 ­ 1972

Freelance Photographer New York, New York Provided photographic services to a variety of magazines, wire services, creative agencies, and corporations.

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Military Service
1959 ­ 1965 United States Marine Corps Reserve (59 to 63) Active Duty (64-65) Served as combat & reconnaissance photographer Highest rank achieved - Sergeant Honorably discharged in September 1965

Education
1965 - 1966 1964 1960 - 1963 1955 - 1959 Germain School of Photography, New York, NY Certificate in Professional Photography U.S. Navy Photography School, Fort Meade, MD M.O.S. 4631 Certification St. Joseph's College, Philadelphia, PA Bachelor of Science in Political Science St. Joseph's Preparatory School, Philadelphia, PA Diploma for Academic Studies

Honors
1998 Brooks Institute of Photography, Santa Barbara, CA Honorary Master of Science Degree Germain School Of Photography Certificate of Honor for Photojournalistic Achievement

1966

Significant Accomplishment
In a vision statement and strategic plans that I developed for ASMP from 1990 through1993, predicting that Internet technology would dramatically change licensing photography usage, I developed the apparatus for a photographer owned Internet marketing service as a subsidiary of ASMP. From 1993 through 2000 I planned and implemented the strategic and tactical steps to that goal. Once firmly established, ASMP converted its subsidiary to a cooperative corporation owned by photographers. I assembled the management team for the cooperative, worked with the business development team on the business plan, secured new venture funding from the National Cooperative Bank, and developed the donation of space and technology services from the Copyright Clearance Center. In June of 2000 Creative Eye Cooperative was officially in business marketing photography through its Internet service at www. MIRA.com, which continues to operate. Creative Eye now represents more than one thousand member/owner photographers.

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Public Speaking
Government Hearings 1989 1993 1993 1995 1998 1999 2000 U.S. U.S. U.S. U.S. U.S. U.S. U.S. Senate Hearing on Copyright Work For Hire House of Representatives Hearing on Copyright Reform Senate Hearings on Copyright Reform Copyright Office Hearing on Copyright Registration Copyright Office Hearing on Registration of Photographs Copyright Office Hearings in Registration Fees Copyright Office Hearings on the DMCA

Seminars & Lectures 1987 through 1992 1989 through 2004 1992 through 1994 1989 1992 1994 2000 2000 2001 2002 2003 Negotiating the Deal: Taught more than 50 all day workshops over a period of five years from across the country. Photo Expo, NY, NY: Spoke on a variety of topics at twelve of these events, most recently in October 2004. Strictly Business, ASMP: Taught business planning and negotiating sessions at ten events. Columbia Law School, NY, NY: Center for Law and the Arts, Work For Hire Roundtable Museum Computer Network Conference, Boston, MA Collective Licensing Opportunities for Copyright Owners Cardozo Law School, NY, NY: The Copyright Office, a Proposed Direction. New York County Lawyers Association, NY, NY, Collective Administration of Photographers' Copyright Rights. Museum Computer Network Conference, Las Vegas, NV Museums and technology, The Name of the Game is Change Illustrator's Conference, Santa Fe, NM Collective Licensing Opportunities for Creators Museum Computer Network Conference, Chicago, Il The IP Maze for Museums Illustrators Conference, Philadelphia, PA Collective Bargaining and Antitrust Exemptions

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Publication
Books Published by Allworth Press. NY. NY ASMP Business Practices in Professional Photography Published in 2001 Authored or co-authored the following: Chapter 2 Stock Photograph Chapter 4 Negotiating Chapter 6 Formalizing Agreements Chapter 7 Copyright Chapter 8 Electronic Technology The Real Business of Photography Published in May 2004 The Photographer's Guide to Negotiating Published in June 2005 Licensing Photography Publication in Winter 2005 Publishing Photography Publication in Spring 2006 ASMP BULLETIN Published by ASMP, American Society of Media Photographers Among the more than 100 articles I wrote for this professional journal are the following titles: Payment Overdue October 1989 Getting Work December 1989 Pricing For Profit March 1990 Niche Marketing Your Stock December 1990 Surviving In Our Economic Climate February 1991 Electronic Media Contracts101 November 1991 Who Owns the Photographs September 1992 Bidding Wars March 1994 Economics 101 June 1994 The State of the Industry May 1996 Fortune Telling & Vision June 1997 Watching Trends October 1998 Information Technology November 1998 Opportunity Threat November 1998 The Art of Selling Jan. 1999 Bust and Boom Feb. 1999 Common Sense October 1999

ASMP White Papers and Monographs Copyright Guide for Photographers Future Options Report Copyright Registration Guide ASMP Editorial Day Rate Editorial Day Rates ASMP Chapter Dynamics Form Agreements Assignment Photography Collective Administration of Photographers' Copyright Rights Arts & Entertainment Journal, Spectra, Cardozo School of Law, New York, 1994 The Copyright Office, a Proposed Direction Museum Computer Network, New York, 2001 Finding Your Way on the Information Super Highway

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Board of Directors Experience
1977 through 1982 American Society of Media Photographers Committee Service: Executive Finance Copyright Editorial practices Publications Treasurer 2nd Vice Presdent 1st Vice President

Officer positions:

1996 through 1999

Copyright Clearance Center Committee Posts: Finance Copyright Policy Business Development

1998 through 2000

Media Photographers Copyright Agency Committee Service: Officer Position: Business Planning Chairman of Board

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26
v.

UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA DAN COOGAN, doing business COOGAN PHOTOGRAPHIC, Plaintiff, as

CASE NO.: CV-04-0621 PHX SRB PRELIMINARY EXPERT WITNESS REPORT AND DISCLOSURE OF JEFF SEDLIK

AVNET, INC., ROY VALLEE and CINDY VALLEE, husband and wife, and AL MAAG and MICHAELLE MAAG, husband and wife, Defendants.

PRELIMINARY EXPERT REPORT AND DISCLOSURE OF JEFF SEDLIK Submitted June 24, 2005 Confidential

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I have been engaged by Plaintiff Dan Coogan, doing business as Dan Coogan Photographic ("Coogan") in the above captioned matter to serve as an expert witness, and possibly as a testifying expert witness. Specifically, I have been asked by Coogan to provide an expert opinion and possibly to give testimony on damages, copyright registration issues and commercial photography industry practices and procedures, both in general and relative to the discussions, transactions and other related interaction between Coogan and Defendants Avnet Inc., Roy Vallee and Jane Doe Vallee (collectively, "Defendants").

Based on my nineteen years of experience as a commercial photographer working with high level clients, observing and interacting with many other commercial photographers, and my knowledge of the industry, I expect to offer opinions and testimony in this case related to practices and standards within the commercial photography industry. In addition, based on my ten years of experience with copyright and licensing issues, including my involvement in leading industry organizations and standard-setting bodies, I expect to offer opinions and testimony related to copyright and licensing issues that might arise in the case. Specific topics on which I expect to testify are discussed in more detail below.

This preliminary expert report is submitted pursuant to Fed. R. Civ. P. 26(a)(2). Section V outlines my preliminary opinions. My opinions at this time are based in part on an independent examination of documents produced, interviews and certain third party documents as disclosed.

I understand that discovery is continuing in this case, and that Defendants have yet to produce many of the documents and materials requested by Coogan. I have had the opportunity to briefly review the documents produced by Defendants as of this date. To the extent that additional relevant information comes to light, I may amend or supplement my opinions as necessary and permitted by the Court. I may also offer rebuttal expert reports in response to reports filed by any individuals retained by Defendants in this case. Any rebuttal report that I file may address additional topics on which I would expect to testify.

I reserve the right to supplement or amend this report pursuant to Fed. R. Civ. P. 26(e), if additional information affecting my opinion becomes available. If called upon as a witness in

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this case, I could and would make the following statements of my own personal knowledge and experience.

This report has been prepared in connection with the above referenced case. The report is to be used for specific purposes of this litigation, and is confidential and not to be used for any other purpose without my express written consent.

I.

QUALIFICATIONS

I am currently the President and CEO of the PLUS Coalition. "PLUS" is an acronym for "Picture Licensing Universal System." The PLUS Coalition is a non-profit, international standards body and trade association representing the shared business interests of all industries involved in the creation, licensing and use of photography and illustration, including photographers, illustrators, advertisers, advertising agencies, graphic design studios, publishers artists' representatives and others. PLUS develops, propagates and maintains universal standards for use by licensees and licensors in transactions involving photography and illustration. I also serve as a founding member of the PLUS Board of Directors, and was personally responsible for the initial development of the core concept ultimately resulting in the formation of the PLUS Coalition and the PLUS standards.

I am the recent past National President of the Advertising Photographers of America, the leading trade association for commercial photographers in the United States, for which I currently hold the position of Chief National Advisor on Licensing and Copyright. In that position, I advise the APA on current issues related to copyright and photography business practices, represent the organization in discussions with the US Copyright Office on matters related to photography and copyright, and also interact with trade organizations in photography and other industries, discussing industry standards and other matters related to the business of photography. I have also served on the Board of Directors of the Los Angeles chapter of the APA.

I currently serve on the Advisory Board for Workbookstock.com, a leading stock photography agency. In that capacity I have advised Workbookstock on photography pricing

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models, copyright issues and contractual terms for contributing photographers. I have also served in a similar advisory capacity for Adobe Systems, Digimarc and other organizations.

I sit on the Intellectual Property Committee of the Art Center College of Design, where I am an active faculty member, holding the title of Adjunct Professor of Photography, and where I teach advanced courses on legal, business and technical issues related to commercial photography, with an emphasis on copyright, contract and other business issues.

After 19 years as a commercial photographer and the President of Jeff Sedlik Photography, I continue to actively operate an advertising photography studio in Los Angeles, California , with clients such as Nike, Federal Express, Farmers Insurance, SBC, GTE, NBC, Sony, AT&T, Blue Cross, Epson, Ikea, MCA, United Airlines, Warner Brothers, Toyota, Nestle', Disney, Bank of America, and others.

I am the President of Mason Editions, a publishing company producing and distributing fine reproductions of photographs.

And finally, I provide consulting services to photographers nationwide on issues related to copyright, licensing, negotiating and business practices and procedures. I have occasionally testified as an expert witness in litigations involving photography and photography licensing issues. The cases in which I have testified at trial or by deposition in the last four years are:

Frank Hillebrand v Bodionics Superior Court of the State of California County of Riverside-Indio District Case # INC011593

Karen L. Knauer et al v Kaiser Permanente U.S. District Court Northern California District

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Case # C02-05172 DLJ (EMC)

Photographic Illustrators Corporation v The Gillette Company U.S. District Court Massachusetts District Case # 04-CV-10913-WGY

My publication list is included in my CV, a copy of which is attached to this Report as Appendix A.

II.

COMPENSATION

My work on this case is being billed at my standard rate of $650 per hour. For clients electing to pay my fees in advance or within ten days of my invoice date, I offer 20% Net 10 payment terms on fees for my time, excluding time dedicated to courtroom and deposition testimony. My compensation is not contingent upon the outcome of this case.

III.

MATERIALS REVIEWED

Plaintiff and Plaintiff's counsel made available to me any case materials that I requested, including documents and exhibits. In preparation for this report and for the expert testimony that I may be called on to provide, I have reviewed the materials listed in Appendix A. In addition, I have interviewed Plaintiff Dan Coogan, and I have obtained license quotes from photography agencies.

IV.

BACKGROUND

Plaintiff Dan Coogan is a well known professional photographer with twenty years of experience, having owned and operated Coogan Photographic in Phoenix, Arizona for fifteen years after relocating from Ohio. As the principal photographer for Coogan Photographic, Dan Coogan is actively engaged in authoring photographs and licensing rights in his photographs to editorial, corporate and advertising clients nationwide. Coogan Photographic generates revenue by securing license fees from its clients in exchange for grants of rights

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allowing Coogan's clients to exploit Coogan's copyrights by reproducing and distributing copies of Coogan's photographs in specified media. Coogan bases his photography fees primarily on the extent to which the copyright in his photographs is to be exploited by each client.
1

Defendant Avnet Inc., founded in 1921, is a distributor of semiconductors, interconnect, passive and electromechanical components, enterprise network and computer equipment, and embedded subsystems. With headquarters in Phoenix, Arizona, Avnet is a publicly traded company, serving customers in 68 countries from 275 locations worldwide. In 1994, Fortune Magazine ranked Avnet at #223 on the Fortune 500 list. With 9900 employees, Avnet markets and inventories products and provides supply chain management and engineering services to its customers. Avnet reported over $10.2 billion in gross revenue for fiscal year 2004. Avnet is governed by a 10-member board of directors including Defendant Roy Vallee, who joined Avnet in 1977. Vallee previously held sales and management positions at Avnet, among them President of the Computer Marketing operating group, before becoming board chairman and CEO in 1998.2

In 2001, Coogan authored photographs ("Photographs") of Roy Vallee. The Photographs were created at the request of "Upside Magazine," whose representatives contracted with Coogan to license the limited, non-exclusive right to reproduce and distribute the Photographs in the July 2001 issue of that publication. As Coogan authored the photographs as an independent contractor, copyright ownership in the Photographs vested initially with Coogan upon fixation. Coogan reports that he has neither transferred copyright in the photographs to any party, nor licensed exclusive rights in the photograph to any party. Thus Coogan remains the sole owner of the copyright in the photographs as of this date. Coogan's invoice to Upside Magazine stated non-exclusive license terms limiting Upside Magazine's use to one time editorial reproduction, expressly excluding the right to grant rights to third parties.3 Upside Magazine went defunct without paying Coogan for the use of the Photographs in the magazine.

1 2

Source: Interview with Dan Coogan, review of Coogan invoices. Source: Avnet website, Annual Reports 2002, 2003, Fact Sheet FY 2005 2nd Quarter 3 Source: Coogan Photographic Invoice #2001-1148 to Upside Magazine, dated 04/17/2001

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Defendant Avnet obtained one or more of the Photographs in 2001 through unknown means4, and proceeded to reproduce one of the Photographs in the July/August 2001 issue and the September 2001 issues of Avnet's "Avnet Global Perspective" magazine, without first notifying Coogan or seeking to obtain permission or license reproduction rights from Coogan. Upon learning of the infringement by happenstance, Coogan then contacted Avnet representative Al Maag to discuss Avnet's unlicensed use of the Photograph. Rather than filing a copyright infringement claim against Avnet, Coogan instead exercised restraint, and in a good faith effort to resolve the matter amicably, offered Maag a retroactive license granting Avnet the limited right to reproduce several of Coogan's Photographs of Vallee in specified media, in exchange for a license fee of $2,500.5 Coogan made such offer after Al Maag gave indications that Avnet would provide further work to Coogan. Coogan then granted Avnet a retroactive, limited, non-exclusive license of up to five of the Photographs for use only in Avnet publications, specifically excluding reproduction in annual reports and specifically excluding the right to sublicense rights in the images to third parties. These terms were clearly spelled out on the face of Coogan's invoice delivered to Avnet.6 On the reverse of Coogan's invoice, additional terms and conditions governing the transaction specified that Avnet must provide a copyright notice on all reproductions, and expressly prohibited any alterations, "digitalization" or "synthesizing" of the photographs. The terms and conditions repeated a prohibition against sublicensing and assigning rights to third parties, echoing the provisions included on the face of the invoice.7 The invoice is dated April 9, 2002 and indicates a one year license period. The rights licensed by Coogan to Avnet expired one year from the invoice date, on April 9, 2003. Avnet received, reviewed and paid Coogan's invoice in full, without notifying Coogan of any objection to the terms of the invoice.8 Avnet then proceeded to reproduce and distribute copies of Coogan's photograph of Vallee in Avnet's 2002 and 2003 annual reports, though annual report use was expressly excluded in the license granted by Coogan to Avnet.9

4 5

Maag has indicated that Upside Magazine gave him the photographs. Source: Interview with Dan Coogan. Review of Coogan Photographic's invoice #2002-1212 6 Coogan Photographic invoice 2002-1212 7 Reverse side of Coogan Photographic Invoice #2002-1212 8 Source: Interview of Dan Coogan. Review of Avnet check #00551447 dated June 17, 2002. 9 Source Avnet's 2002 and 2003 Annual Reports.

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Avnet then proceeded to reproduce, display and distribute copies of two of Coogan's photographs on the Avnet web site after April 9, 2003, though Avnet's license to reproduce the Photographs expired on that date.10 Avnet then provided Coogan's photographs to third parties11 and allowed such third parties to reproduce and distribute the Photographs, though Coogan's license to Avnet expressly excluded the right to sublicense the photographs to third parties. Avnet then proceeded to reproduce the Photographs in the July/August 2003, September/October 2003, and November/December 2003 editions of Avnet Global Perspective magazine, though Avnet's license to reproduce the Photographs expired on April 9, 2003.12 Avnet made the above described uses of the Photographs without first notifying Coogan, and without first seeking or obtaining a license from Coogan authorizing Avnet to exploit the photographs as described. As of this date, Avnet has not secured a license from Coogan for the above described uses.

V.

DISCUSSION

A.

Standard Industry Terms

The reverse side of Coogan's invoice delivered to Avnet contained a version of industry standard terms and conditions authored by the trade association known as Editorial Photographers ("EP"), and used and accepted by Coogan and other photographers and their clients worldwide.13 The boilerplate provisions of Coogan's EP contract are substantially similar but not identical to the provisions of standard contract forms offered by other photography trade organizations such as the Advertising Photographers of America and the American Society of Media Photographers and used by their members. B. Coogan's Work. Quality and Independent Economic Value

10 11

Source: Exhibits evidencing reproduction of the Photographs on Avnet's web site after 4/9/2003. Source: examples in exhibits evidencing use by CRN, the Arizona Governors Council on Innovation and Technology, and the Supply Chain Council. 12 Source: Avnet's Global Perspective Magazine 13 Source: Coogan Photographic Invoice #2002-1212. Coogan made one revision to the terms and conditions, applying to credit lines for web reproductions.

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Having reviewed samples of Coogan's photography14, I conclude that Coogan is a highly talented artist with work of superb creative and technical quality. With respect to Coogan's photographs of Vallee, it is my opinion that the photographs are exceptional in quality. While it is very easy to create a mediocre, run of the mill executive portrait, it is very difficult to create portraits of a quality comparable to Coogan's portraits of Vallee. The distinguishing elements of Coogan's portraits of Vallee include dramatic and carefully placed artificial lighting, a careful balance of the existing natural lighting, choice of camera position, control of perspective, subject direction, controlled exposure, selective focus and timing. Avnet, Maag and Vallee endorsed and acknowledged the exceptional quality of Coogan's portraits of Vallee by selecting Coogan's work above all others for use in a broad spectrum of high profile media over a significant time period. Though Avnet could have easily afforded to hire another photographer to make new portraits of Vallee, Avnet elected not to do so, instead continuing to use Coogan's portraits of Vallee. Avnet repeatedly demonstrated the value of each of Coogan's photographs by making high profile use of the images. Fortune 500 corporations such as Avnet carefully select photographs of their CEOs for use in corporate newsletters, annual reports and on corporate web sites to engender investor and customer confidence in the capabilities and leadership of the corporation. By engendering confidence in corporate leadership, photographs like Coogan's portraits of Vallee contribute to the continued success and growth of the company. Based on Avnet's decision to use Coogan's photographs of Vallee time and time again, Coogan's photographs evidently served Avnet very well. Each of Coogan's portraits used by Avnet has clearly demonstrated independent economic value.

14

Source: Coogan's photographs of Vallee, and Coogan's photographs at http://www.cooganphoto.com

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C.

Coogan's License to Avnet

Because Coogan never assigned its copyrights to Avnet (and did not create photographs for Upside Magazine or Avnet as works for hire), Coogan retained the copyrights in its images, granting Avnet limited licenses to use the images only to the extent licensed in (and subject to the limitations stated in) Coogan's invoice. Avnet's use of the photographs in excluded media and beyond the license expiration, together with Avnet's distribution of the Photographs to third parties for additional use clearly exceeded the scope of the license, and infringed on Coogan's copyright in Coogan's photographs. By carefully describing the licensed media and duration of the license, and by expressly stating other requirements and exclusions, Coogan made every attempt to ensure a precise mutual understanding of the license terms. These license concepts are critical in the photography industry, which is why the terms are set forth so explicitly on Coogan's invoice. The fee for any particular license is calibrated only to cover only the uses granted under that license --- it does not cover other uses that a client might later decide to make of the images. Photographers' livelihoods depend on their clients respecting these terms and paying for the usage that they desire. The amount charged by the photographer can vary dramatically depending on that usage. For most photographers, when determining an appropriate fee, the time and complexity involved in the creation of a photograph (although an important consideration) is secondary to consideration of the extent of the reproduction rights granted. Coogan bases his fees on the extent of the license granted.15 Photographers are not always perfect in policing every violation of their license terms. In many cases individual violations do occur but are dif