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December 29, 2011 Geoffrey Beal Masterfile Corporation 3 Concorde Gate, 4th Floor Toronto, Ontario, Canada M3C

3N7 Dear Mr. Beal: Re: Notice of Copyright Infringement - www. We are in receipt of your email dated December 22, 2011. Thank you for sending the documentation showing that Masterfile registered a copyright with the Library of Congress, United States Copyright Office. However, these documents only show that a copyright for a group of images was received. Unfortunately, this document does not prove that the image in question was part of that copyright. Masterfile has not provided adequate documentation showing that they own the copyright to the image in question. Masterfile has also not shown that the artist who originally created the image has consented to and continues to consent to Masterfiles management of their rights. In good faith, we are willing to assume that Masterfile can provide proper documentation in this matter - however, please note that it has not yet done so. If Masterfile wishes to continue pursuing any alleged damages or compensatory fees in this claim, proof of copyright registration, an artist contract and an artist affidavit will be required. Thank you also for your offer to forgo compensatory fees and your attempt settle this claim. However, we find your offer of $600.00 US unreasonable for several reasons. First, you state that your standard un-authorized fee starts at a one year License. We do not find this fee to be reasonable, nor do we feel that this case qualifies as standard unauthorized use. Please remember that this was in no way knowing infringement of your alleged copyright, the image in question appeared on our site for less than one (1) month, was only used for composition purposes, and was only viewed by a very limited number of people. In fact, we are in possession of very accurate statistics showing the number of unique visitors to the particular page containing the image in question for the time period described in this claim. We can assure you that Masterfile will have a very difficult time showing that anyone other than employees or associates of viewed the page with the image in question. Further, according to the online calculator on the Masterfile website, to regularly purchase complete usage rights to the image in question, one would select Internet, Web Promotion, Secondary page, City, Washington DC, Up to one month, and arrive at a price of $390.00. One would assume that the regular fees associated with a rights-managed image also include a percentage of the cost of licensing the image, external costs with locating copyright infringements, and internal costs associated with enforcing copyrights. Therefore, any fair and reasonable charge for un-authorized use should be in line with Masterfiles regular fees and not an arbitrary one year term. Second, we feel that your comparing to a client in good com

standing is not reasonable (not to mention somewhat insulting) in this claim. It implies that was in the market for a rights-managed image and in the position to pay for the use of such an image. It was not. In fact, we show you below what we have paid for the design, build-out, images, copy writing, and hosting of our website. You will see that $390 US for one (1) months use of a rights-managed image from Masterfile was not something that we would have remotely considered. website hosting, domain registration, email service: $6.99 per month ($83.88/year) website design, build-out, copy writing: $0 (donated time and services) royalty-free images used on website: $75.50 (4 royalty-free images purchased from iStockphoto.com) remaining images used on website: $0 (images taken by ourselves)

As you can see, we would pay more for one months use of a single rights-managed image from Masterfile than for for three (3) years of costs associated with the remainder of our website. We feel that if Masterfile were truly being fair, reasonable, and balanced it would have notified of its alleged infringement and asked for removal of the image in question. If the image was not removed immediately, Masterfile would have much more ground to stand on in terms of copyright defence, compensatory claims and recovery of damages. We understand that Masterfile bears the burden of registering and enforcing its copyrights and that artists contracted with Masterfile depend on income generated by the use of their images. We also understand that Masterfiles rights-managed images lose value with unauthorized use. However, with a copyright and loss of value also comes the burden of proof in enforcement. Masterfile has not proven that they are the exclusive rights holder, has not sufficiently proven that they hold the copyright, has not proven that the original artist was and is still in contract with Masterfile, has not proven that the image in question appeared on the website for any length of time beyond the single day of November 21, 2011. In fact, Masterfile would have a very difficult time showing any loss of value incurred at all as a result of this unknowing infringement. At the very most, is willing to assume, in good faith, a certain percentage of Masterfiles external costs in locating infringements and internal costs in enforcing its alleged copyrights. We are aware of the burden of proof placed on Masterfile in this situation - yet we are also aware of our rights. To this end, is willing to offer $150.00 US to Masterfile to cover external costs in the locating of this alleged infringement and internal costs in enforcing the alleged copyright associated with this claim. immediately removed the image in question and feels that this offer is a fair and reasonable settlement toward this claim. Please note that the removal of the image in question and this offer of good faith settlement is in no way an admission of any wrong doing on the part of This is not an agreement to the terms of

your claim - this is only an attempt to amicably settle this claim. Please also understand that nothing in this reply should be construed as a waiver of any of the rights of remedies, or protections under law. Masterfile will have ten (10) days to supply an updated claim invoice in the amount of $150.00 US in settlement of claim PMI Receipt of said invoice, and subsequent payment by will conclude this matter. If Masterfile does not wish to comply to these terms and offer of good faith settlement, please note that will consider this settlement closed and any good faith assumptions held in this letter will be retracted. Regards,