Fairey et al v. The Associated Press

Filing 233

MEMORANDUM OF LAW in Support re: 232 MOTION in Limine No. 4 to Exclude Certain Testimony of Neil Zoltowski.. Document filed by The Associated Press. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G)(Cendali, Dale)

Fairey et al v. The Associated Press

Doc. 233 Att. 2

EXHIBIT B TO THE AP'S MOTION IN LIMINE NO. 4 TO LIMIT THE OPINION TESTIMONY OF NEIL ZOLTOWSKI

Dockets.Justia.com

BLAKE SELL

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK ----------------------------------------SHEPARD FAIREY and OBEY GIANT ART, INC., Plaintiffs, vs. THE ASSOCIATED PRESS, Defendant/Counterclaim Plaintiff, vs. SHEPARD FAIREY, OBEY GIANT ART, INC., OBEY GIANT LLC and STUDIO NUMBER ONE, INC., Counterclaim Defendants. -----------------------------------------1:09-CV-1123 (AKH) 1

December 2, 2010
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A P P E A R A N C E S: JONES DAY Attorneys for Plaintiff 222 East 41st Street New York, New York 10017 BY: EDWIN FOUNTAIN, ESQ. ALAN RABINOWITZ, ESQ. KIRKLAND & ELLIS LLP Attorneys for Defendant 601 Lexington Avenue New York, New York 10022 BY: CLAUDIA RAY, ESQ.

VIDEOTAPED DEPOSITION OF BLAKE SELL Thursday, December 2, 2010 9:27 a.m.

Reported by: Joan Urzia

(Continued)
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December 2, 2010 9:27 a.m. New York, New York

VIDEOTAPED DEPOSITION of BLAKE SELL, held at the offices of Jones Day, 222 East 41st Street, New York, New York, pursuant to Notice, before Joan Urzia, a Notary Public of the State of New York.

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A P P E A R A N C E S: (Continued) CALDWELL LESLIE & PROCTOR, ESQS. Attorneys for Counterclaim Defendant - 132 Inc. 1000 Wilshire Boulevard Suite 600 Los Angeles, California 90017 BY: KELLY PERIGOE, ESQ.

ALSO PRESENT: Ed Sattler, Videographer

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B. Sell that George Clooney, who we all are familiar with, but he had just won the Academy Award a month earlier, and in fact that year 2006 was People Magazine's Sexiest Man Alive, so he carried a lot of weight in the entertainment circle as well as the news cycle. So what I'm saying here is that based on my understanding of the way AP works, Manny Garcia was sent there, not just to cover Obama -- I'm sorry, not just to cover Clooney on the Darfur, but he was sent there to try to see what else he could shoot for the purposes of the archive and any other purposes the AP could come up with for pictures that could be derived from that event. Q. So are you saying that the Obama photo is not related to the news worthiness of the Clooney press conference itself? MS. RAY: Objection. Misstates his testimony. A. I'm sorry, one more time? Q. Sure.
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B. Sell pictures transmitted, he was in a number of them, but the only picture that he was by himself was clearly not connected to the story because it didn't relate to Darfur, but it was part of the overall event. That's a long answer and I apologize for that, but it's best explanation I can give you. Q. Mr. Sell, moving ahead to the next section, which I believe is 3B, and specifically paragraph 127, and in paragraph 127, you're referring to Mr. Jarosz's opinion as recited in paragraph 125 that The Associated Press would have agreed to a flat-rate fee of $3,000 for all uses of the Obama photo by Mr. Fairey. And you say in paragraph 127 that such a license would have been inconsistent with industry practice. Do you see that, sir? A. Yes, I do. Q. What is the industry practice you're referring to in paragraph 127?
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B. Sell Is your point that the Obama photo, although taken by Mr. Garcia at the Clooney press conference, does not itself relate to the news worthiness of the press conference? MS. RAY: Objection. Form. A. I mean, I think I can answer that that when you go out to photograph a news event, there is typically a tag or a hook on that event. This particular tag was Darfur and George Clooney. So if a photographer had gone out and returned from only one picture of that event and it happened to be Senator Obama by himself, he would not have done a good job of covering the news of the day, which was George Clooney speaking at an event about Darfur. So that in the context of the hook, which was Darfur, George Clooney, Obama was an extra character, one aspect of the story but not the key aspect of the story. So the fact that he was there was part of the story, which is why of the 16

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B. Sell MS. RAY: Objection to form. Objection, misstates his report. It speaks for itself. A. If, in 125, if the picture had been a royalty-free picture offered by a library other than The Associated Press, so it doesn't license its pictures that way -for example, iStockPhoto, which is a company owned by Getty Images which licenses nothing but royalty-free pictures -- if that picture had been available through iStockPhoto, they would have licensed it as a royalty-free image for whatever amount they licensed it for, which could have been 30, or $3,000 or whatever the amount was. But The Associated Press doesn't license images that way for rights-managed image, which is what this is. So he's basically saying that the AP would have licensed the picture as a royalty-free picture, and they don't license pictures that way. Q. Well -Toll Free: 800.944.9454 Facsimile: 212.557.5972 Suite 4715 One Penn Plaza New York, NY 10119 www.esquiresolutions.com

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B. Sell A. And the key words there -- I'm sorry, I don't mean to interrupt. Q. Go ahead. A. The key words there is for all uses for all time, which is a definition of royalty-free image -- or royalty-free license. Q. So it's not the -- setting aside the dollar amount for a moment -- it's not the fact that -- it's not Mr. Jarosz's opinion that the AP would have licensed it for a fixed fee you're objecting to, is that that fixed fee would have been for all uses at all times; is that correct? MS. RAY: Objection. Misstates his testimony. A. I'm sorry, I want to make sure I catch what you're saying. Q. Sure. I'll try again. In paragraph 125, you characterize Mr. Jarosz's opinion that The Associated Press would have agreed to a flat-rate fee topping out at $3,000 for all uses of the Obama for all time.
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B. Sell You know, sometimes in my experience at Getty Images a customer, particularly a commercial customer like Nike or somebody will want to buy a picture out of our archive and say we want this picture forever, we don't want anybody else to see it, we'll buy, we'll buy it out -we call it a buyout -- and they would pay a flat-rate, in which case they would get it for all uses for all time, and that would be written into the contract. But The Associated Press contracts -- Associated Press doesn't license its images that way typically. Q. In footnote 75, Mr. Sell, at the bottom of page 34, and again, feel free to read the entire footnote, but about two-thirds of the way down you write that, "I believe that the AP has a standard framework for licensing its images that still allows its sales representatives the necessary freedom to craft each individual license to meet the particular needs of the customer and the nature of the particular
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B. Sell A. Right. Q. Let's set the dollar amount aside for the minute. If I understood you correctly, you haven't objected that Mr. Jarosz opined that the AP would have agreed to a flat-rate fee. You're objecting that it would have agreed to such a fee for all use was the Obama photo for all time; is that correct? MS. RAY: Objection. Form. Misstates the testimony. A. What I'm saying is that The Associated Press would not have agreed to a license that precluded an evaluation of all potential uses of that picture, but what this says is for all uses for all time. The Associated Press would not have licensed one of its pictures, it would not have come up with a number regardless of a number, and said you can use this forever, anywhere you want, unless that was a specific deal for probably a much higher amount than this.

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B. Sell use." Does that relate to what you were just talking about -- essentially, is this talking about rights management? MS. RAY: Objection. Form. A. Let me read this. Q. Please do. A. I'm sorry. So what this refers to is the fact that The Associated Press would have assigned a sales rep and that's required because he would have been a commercial customer and they don't license things automatically through the website. So they would have assigned the sales rep to talk to him, and then that sales rep would have tried to figure out what his initial purposes might have been and what subsequent purposes might be derived from the initial license, and in the case of this use of a picture, obviously it evolved into a few different uses. So the initial licenses that they might have come up with would be based on a
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B. Sell limited set of what he actually did with it and then some renegotiation with it, and that would be because he had an assigned sales rep who would manage that -- it's called rights-managed because it's a managed relationship. Q. All right. You refer in paragraph 75 to my review of The Associated Press' price guide, and you don't cite a particular document there, and I'm wondering if you can describe the price guide that you're referring to. MS. RAY: Objection to form. A. I'm sorry, I'm trying to find the word price -Q. I'm sorry, it's the sixth line down in footnote 75, the line starting, "Based on Ms. DeGrave's testimony as well as my review of The Associated Press' price guide." A. Uh-huh. Q. I'm trying to figure out what document you're referring to there.
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B. Sell A. Take advantage of the popularity -- some -- all pictures aren't created equal. During the course of a day, 3 to 5,000 pictures come in to The Associated Press through its photographers and freelancers. Although they may start out equal, at one point sometimes one picture gets, people will start licensing that picture more than another. So you will identify that need, it's a supply and demand business, so you'll identify that need and price the picture accordingly. So some pictures taken from one event may not necessarily license for this picture, other pictures taken at that same event, depending on how the salesperson is able to calculate the value of the picture. Q. Does The Associated Press increase the price of photographs based on their popularity? MS. RAY: Objection to form. A. Well, the reason why they require commercial customers to talk to a sales rep
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B. Sell A. Well, it's either one or both of these documents which I cited earlier, which were your exhibits. Q. Exhibits 5 and 6? A. I believe so. Q. Okay. A. I didn't see a lot of price guides. I believe this was the limit of what I saw. Q. I thought that might be the case. I just wanted to confirm that. Moving to paragraph 135, on page 35, Mr. Sell, and again feel free to read the paragraph. A. Okay. Q. In the second sentence continuing to the third sentence of paragraph 135, you state that, "Sometimes a photograph can become particularly popular. When that happens, it is possible for a photo archive to negotiate favorable terms that allow it to take advantage of that popularity." What do you mean by that, sir? MS. RAY: Objection. Form.

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B. Sell is so they can individually craft a license for those pictures. Q. But do you know whether The Associated Press takes into account a photograph's popularity in negotiating a license with a particular customer? MS. RAY: Objection. Form. Asked and answered. A. I believe that the answer is yes because, as I said, every picture is not equal to every other picture. So when they have a picture -- for example, I'll use an example of earlier, you cite my experience with the shoe bomber -- granted it's a different kind of situation than the picture we're talking about. However, if there is a demand for that picture, that picture of a shoe bomber is not equal to another picture shot by that same passenger of his wife sitting next to him -- I'm being obviously absurd. So when you look at a picture taken from the same event, and one picture has high value and another picture has low
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B. Sell value. Now, the reason why they don't license pictures automated through the AP system is so they can take advantage of that difference and require you to talk to a salesperson. Q. Right. But do you know whether The Associated Press -- strike that. Do you know whether The Associated Press charges higher prices based on a photograph's popularity holding the end uses of the photograph by a particular customer constant? MS. RAY: Objection to form. A. I'm not sure I understand. Q. Sure. Two customers come into the AP, each wanting to license a different photograph. A. Uh-huh. Q. Their use and the value of that photograph to that customer is the same in both respects. The only difference is the
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B. Sell A. Uh-huh. Q. And so what do you mean by popularity there? A. By popularity, I refer to basically the demand for that picture. Q. As measured by the number of customers licensing that particular photograph? A. Not necessarily -- and again, I'm not trying to be difficult -- but sometimes you can have a picture of a shoe bomber and nobody has yet licensed that picture, but you know that that picture is going to be in high demand before you even attempt to go out and license it. So therefore, the starting point for negotiation is very, very high. So from that sense a picture is popular before it's ever been seen by anybody. Q. And are you aware of any instance where The Associated Press has increased the price of a photograph because of its popularity? MS. RAY: Objection. Form.
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B. Sell photograph. Does The Associated Press take into account the popularity of one photograph versus the other and charge a higher price because a photograph is more popular? MS. RAY: Objection. Form. A. It can. Q. Does it? A. And that's why the system is designed that way, to take advantage of that difference, because every picture is not the same as every other picture. Now, I think, maybe we need a definition of what popularity means. Q. Sure. A. I mean, as I said, it's a supply and demand business. So popularity doesn't mean there's a vote on it taken by the public. It could be popularity just based on other circumstances. Q. Well, you refer in paragraph 135 to taking advantage of a photograph's popularity.

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B. Sell A. I would say that every license, because it has to go through a salesperson, that that is one of the factors a salesperson would calculate, is the value of that image to that customer. Again, I have to make a distinction between an editorial customer and a commercial customer. An editorial customer can come to the AP Images' website and simply plug in some criteria which calculates the geographic region, the size, placement, all those other factors, including duration, which is in effect a calculation of the value of that picture, so it is a revenue share that's non-expressly stated that way. But when a commercial customer comes to The Associated Press to license a picture, they must talk to a sales rep and that sales rep doesn't simply referring to the sales guide, they look at the picture, they try to evaluate what the picture is, whether or not it's a picture of Kennedy and the Chairman of the Soviet Union, of
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B. Sell which there is very, very few pictures in existence, so that picture would become more popular or more high in demand. So I'm using the word popular in that context. Q. Mr. Sell, let's go to Section 3b2, which begins at the top of page 36 of your report. And the heading of this section is, "The new license would have incorporated a revenue-sharing based royalty." And so in this context -- well, let's go back. The new license you're referring to here is what? A. I'd have to go back and look in context, I'm sorry. Q. Sure. That's all right. A. There is two aspects to this deal. One would have been the initial license, which we were discussing everything prior to that, and the initial license would have been Shepard Fairey, one of the associates contacting The Associated Press salesperson and saying I want to use this for X number of things for X amount of
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B. Sell subsequent contingencies, which would be basically a second license for the picture based on those contingencies. In this case, since no initial license was ever negotiated, since Shepard Fairey didn't go through the trouble to do that, you know, at this point we're talking about a first and second license which are done post facto, which are an entirely different problem. But if he had negotiated -again, I'm using Jarosz's example of what he thought the initial license would be and if there had been an initial license, which we know there wasn't, there would have had to have been a subsequent license. Q. All right. And when you say the new license would have incorporated a revenue-sharing-based royalty, what do you mean by revenue-sharing-based royalty? MS. RAY: Objection. Form. A. The same things we've been discussing all morning here, that every
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B. Sell time, and some sort of deal would have been structured based on that, the value again to Shepard Fairey of that project at that time. But since the project evolved to include many, many more things, a new license would have had to have been negotiated. So when I say a new license, I'm referring to a subsequent license. Now, in some cases, and I've done this in a fair amount, in some cases that second license might be built into the first license as a set of contingencies. So if a book publisher comes to license a picture, in the example we used before, a book publisher may not really know how popular a textbook is going to be, for example, yet they're publishing it on spec, you don't necessarily have a customer for it yet. They don't know how many universities or high schools it's going to be in. So you come up with a price and you bake into the initial contract

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B. Sell license is based on some understanding that the salesperson has of a value of their project to, in this case Shepard Fairey, since we're being specific here about Shepard Fairey. So Shepard Fairey would have come to the, on the phone, discussed with the sales rep that he was going to do X amount of things with this picture over X amount of time, and the salesperson would have said this is the amount that we think is -well, they would have discussed it internally, decided what the value of it was to Shepard Fairey and try to come up with a system based on that, or again using your example, they could have also negotiated with him an explicit or implicit -- explicit -- -Q. Expressed? A. Expressed revenue share. I forget the terminology we used. Q. So you're saying it could have been a baked-in revenue share, to use your phrase, or an express percentage revenue
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B. Sell share? A. But since it never took place -Q. Right. A. -- it could have been either-or. Q. So the word royalty doesn't have a particular meaning in this case? A. I mean every -Q. Is it -A. Royalty is a license. So I mean it could, I could have used a different word there, but it means the same thing. Q. Royalty here doesn't mean something different than licensing fee, it's not a term of art having a particular meaning in this context. MS. RAY: Objection. Form. A. No. I believe what I'm trying to say here is that either -- if there had been a second license, it would have been based on a revenue-sharing arrangement of some sort, whether it was expressed or not expressed, and there would have been revenue-based royalty paid for that I am imagine, or revenue-based license or
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B. Sell opposed to a lump sum base license. A. Uh-huh. Q. Do you see that, sir? A. Yes, I do. Q. So when you refer to a lump sum-based license, are you referring to a royalty-free license? A. No, I'm not. Q. What are you referring to? A. The Associated Press doesn't license its pictures as royalty-free. Q. Okay. A. So I'm using a lump sum as, in the same context we use it in the earlier footnote, when we first sat down, which was revenue is based on a baked-in understanding of the value to the customer and it would have been a fixed amount. If I could also add? Q. Please. A. Revenue sharing was something that Shepard Fairey had done with other photographers, based on the documents that I had seen, which I state in, I believe
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B. Sell whatever, however you want to express it. Q. In paragraph 138, you indicate that Shepard Fairey said he intended to sell commissioned artworks for as much as $100,000 each. Do you see that, sir? A. Yes, I do. Q. And what statements by Mr. Fairey are you referring to there? MS. RAY: Objection. Form. A. This had to come out of depositions that I read. I assume -- I mean, I would assume it has to be somewhere in either his testimony or in Danziger or some of the other sources I found. Q. You don't have a specific recollection sitting here now? A. I didn't cite it, but I'm sure I didn't pull a number out of the area. Q. In paragraph 142, Mr. Sell, you refer to Ms. DeGrave's testimony that if a potential licensee planned to use an AP Images' photo to create merchandise, the AP may entertain a revenue share license as

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B. Sell it's 140 -- no, no, sorry, is that correct -- but I saw documents saying that Shepard Fairey had entered into revenue-sharing arrangements. So it didn't strike me as particularly peculiar that he would entertain that when Farah DeGrave mentioned that to me. Q. What do you know about the circumstances of those instances where Mr. Fairey agreed to a revenue share with a photographer? A. What I've read in reports by Jarosz and -- I'm sorry, what I've read in the reports -Q. Kudrowski? A. No, Zoltowski. Sorry. I got them mixed up. Q. Mr. Sell, do you have an expert opinion on whether Shepard Fairey's creation of the Obama HOPE image affected the value of the Obama photo? MS. RAY: Objection. Form. A. I mean, it's one of the things I was -Toll Free: 800.944.9454 Facsimile: 212.557.5972 Suite 4715 One Penn Plaza New York, NY 10119 www.esquiresolutions.com