Copyright Pitfalls
By Austen Zuege

Mark Twain observed that “[o]nly one thing is impossible for God: to find any sense in any copyright law on the planet.”[1]  From the standpoint of individuals and small businesses, Twain’s observation might ring true.  Not only do some people have difficulty distinguishing between what they feel copyright law ought to entail and what it actually does entail, there are many genuinely ambiguous and confusing copyright issues that arise from everyday practices.  What follows is a collection of observations about a few common pitfalls, meant as a practical reference for those who wish to avoid finding themselves embroiled in an avoidable copyright dispute.

“Free” Materials

“Free” photo and clipart websites and similar archives are used at your own risk.  Unless provided with full indemnity, which usually is not provided, ordinary users are liable for infringement if the “free” image website did not actually have permission to use and distribute the image(s) in question.  Put another way, just because a web site claims to grant free use of images that appear on the site does not mean that the site operators actually have the authority to grant such permission for a given image—the site operator or whoever uploaded an image to the site might be an infringer.  In some instances, there may even be reason to suspect that the alleged owner is aware of the presence of materials in a “free” repository—or was even responsible for placing the materials there—and seeks settlements in bad faith or through outright fraud.[2]  

Will an “innocent infringer” defense help in these situations?  Not against liability.   Though it potentially limits statutory damages.[3]  How much it might limit statutory damages is discretionary, it may not limit actual damages,[4] and it will not prevent an injunction.  In pragmatic terms, innocent infringement defenses do very little in the face of nuisance settlement demands from copyright owners engaged in troll-like enforcement activities. 

“Creative Commons” (CC) licenses are another area where materials turn out to be less usable than believed.  There are different types of CC licenses and a given work subject to one kind of CC license may not permit your intended use, especially if your use is “commercial” in nature.  And, as discussed below, removal of copyright management information (CMI) from CC works is still a potential source of liability.

Moreover, even where a copyright owner freely grants use of a particular image, if it is an image of a person or derivative of another work—like a photo of a sculpture, painting, etc.—then separate authorization or release of a right of publicity/privacy (a so-called model release) for the depicted person or copyright authorization for the depicted work may still be required.  Very likely such additional authorization(s) must be sought from a different person or entity. 

Licensing Stock Images

Many stock image providers offer what seem like intentionally confusing licenses.  “Royalty free” images are not actually free but rather are usually subject to lump sum license payments—other advertisements about the provider’s license terms may be even more confusing if not outright misleading.  Many stock image providers also offer different types of licenses that are difficult to differentiate.  For instance, the least expensive types of stock image licenses often do not cover use for “merchandising”, use on more than a specified number of hard copies, with video production budgets over a certain threshold, etc.  Understanding which type of license addresses your particular intended use may not be simple.  Yet, if you purchase an incorrect license you may find yourself in the position of having made an unlicensed use. 

Lastly, stock image providers may not offer indemnity or, if they do, it might be provided at levels well below statutory damage maximums.[5]   Therefore, if you license an image only to later find that the image provider was not authorized to license that image you could find yourself in a lawsuit with a monetary exposure that may exceed your apparent culpability.  

Outside Contractors and Ownership

You need a written assignment to own copyright in outside contractors’ work.  This holds even when an outside contractor was specifically hired to create copyrightable works, such as advertising copy, software code, photos, videos, etc.  While “works made for hire” are initially owned by the employer, absent a written agreement to the contrary,[6] that ownership provision only applies when the work is created by an employee within the scope of his or her job duties or if there is a written work-made-for-hire agreement and the work falls within nine statutory categories of works (and, chances are, it probably does not fall in one of those categories).[7]  In single-member LLCs and similar small businesses where the owner’s status as an “employee” may be in doubt under applicable state agency law, and there is no employment or other applicable agreement in place to clarify, then the ownership of copyrights created by such a person may be subject to dispute. 

Outside vendors, like marketing companies, will sometimes have service agreements with their customers stating that the customer will own all of the work product, but such language may be phrased in the future tense, which is generally not sufficient to constitute an assignment of copyright—in such cases only a contractual obligation to assign has been established and an additional written assignment is required for the customer to actually obtain ownership of particular copyrights, though this may vary under state law.[8] 

Failure to own a copyright prevents enforcement against infringers.  So, if a business hires an outside photographer to take photos for the business’ web site, if a competitor copies any of them the business may find that it does not own the copyrights in the photos and therefore cannot assert infringement until ownership is secured. 

 DMCA Takedowns

The Digital Millennium Copyright Act (DMCA) includes a “safe harbor” notice-and-takedown provision in 17 U.S.C. § 512.[9]  Takedowns can be powerful tools against online piracy but can also be abused or misused.  There are also known scams involving infringers of a copyright using takedown notices to seek nuisance settlements from third parties (who may be protected by fair use) and allegations of usage to silence critics. 

CMI, Circumvention, and Repair Issues

Liability for knowing removal or alteration of copyright management information (CMI) is set forth under 17 U.S.C. § 1202.  CMI includes the title, author or copyright owner names, and terms and conditions for use.  While the law requires removal to be knowing, rather than unwitting or unintentional, copyright owners sometimes broadly assert CMI removal to seek additional damages or as a fallback position when substantive infringement claims are unavailable.[10] 

Section § 1201 limits “circumvention” of a technological measure that effectively controls access to a copyrighted work, unless the Library of Congress grants an exception.  Product/repair manuals, error code outputs generated by diagnostic tools, and/or diagnostic tools themselves may be subject to anti-circumvention restrictions stemming from copyright, which can impact the ability to repair a purchased item.  State right to repair law may provide some counterbalance.  

End user license agreements (EULAs) also bridge copyright law and contract law and attempt to circumvent the first sale doctrine (more generally, exhaustion of rights).  They may limit or prevent the use of unauthorized repair sources or transfer/resale, even if the enforceability of such EULA terms might be questioned in some jurisdictions. 

Predatory Contracts

Finally, buyers sometimes request products from vendors while specifying product requirements (e.g., a fabric pattern or decorative image, included text or video) for which the buyer may not have rights.  That is, the buyer may be requesting an infringing knock-off product without explicitly saying so—and possibly without realizing that copyright infringement is being requested.  All liability for copyright infringement may nonetheless be placed on the vendor by a purchase agreement, including a buyer indemnification that overrides the Uniform Commercial Code (UCC).[11]  Such agreements might be called predatory contracts where they give the appearance of an opportunity for the vendor when, at bottom, they are really vendor liabilities and the buyer is shifting a greater risk to the vendor than the value of the contract.