Copyright Infringement Essentials – The Demand Letter (respond or ignore)?
This blog discusses general tips ever individual or business owner should keep in mind in making the TOUGH DECISION whether or not to respond to a “cease and desist” letter or a copyright infringement demand letter (what some people refer to as legal extortion). Receiving these types of demand letters can cause great concern, both emotionally and financially to many companies, CEO’s, officers, directors, shareholders and individuals accused with copyright infringement.
Say you found a photo, picture or image on Instagram or facebook. Let’s pick something out of the blue and say you saw a cartoon on the internet and you wanted to take the picture off of the social media website and use it by putting the image on a t-shirt or coffee mug. Your goal is to make money off the sales of the shirts and cups and you sell these on your own website (perhaps an Etsy store or eBay store, or even on Craigslist.com). So you go ahead and use the image, assuming because you “saw it on the internet it must be free to use.” So you plunge forward with your business plan and sales are going well. You sell 100 t-shirts the first week and 50 coffee cups. The next week business doubles since you posted a youtube video that went viral. WOW, things are just going SMASHING for your new online business. Sales are now into five figures. Then one day while going through the mail you see a letter from an intellectual property law firm. You are nervous and open it and see a CEASE AND DESIST letter with a demand for you or your business to stop using a copyrighted image (and in some cases, to send in a settlement amount). You may also see a threat that if you are taken to court you can face $150,000 in damages and pay attorney fees – ALL FOR USING ONE PICTURE, in this case a picture of a cartoon. How do you react? Should you respond? Should you stop making the products? Can you work out a deal? Will your business be sued in Federal Court?
We jokingly refer to this unfortunate situation as receiving “the love letter” which is not so lovely at all. If you are facing this situation (ex. you receive a letter from the business software alliance, ISP, SIIA, or Siemens Produce Lifecycle Management Software, Bentley software, CTC, Parametric just for a few examples, this blog will hopefully provide you with a few things to think about before you throw away or ignore the letter.
General factors to consider when you receive a copyright infringement demand letter
Here are a few things I have learned in over 12 years of legal practice when dealing with legal demand letters, in this case dealing particularly with the topic of using pictures or photos you find on the internet.
Just because you see something posted online on the internet (ex. a photo of a bridge, a picture of a baseball player, a legal cartoon, illustration, creative video, song or lyric, etc.) does NOT mean that you are free to use it as you please. There are limits to uses of digital content, especially where the person who created the creative work has “COPYRIGHTED” it (meaning they registered the photo with the U.S. Copyright Office). The Internet does not mean free for all to use.
NOTE: Images, photos and pictures DO NOT HAVE TO BE REGISTERED with the copyright office. Most people don’t know that even if you do not see the copyright symbol on a photo (ex. the “C” with the circle around it), this does NOT mean that there is no copyright protection on that photo. The surprising fact most people are not aware of is that copyright “rights” exist the minute a “creative work is fixed in a tangible medium of expression” (this means the minute you paint a picture or make a drawing or snap a photo and post it you become the copyright holder and have an intellectual property right in that image or photo). So that may sound strange to some people, but if you create something novel and interesting or creative, and fix it into a tangible form, you automatically get intellectual property rights in the photo or artwork. At this point, other people cannot simply copy it unless they have a legal right to do (for example a “fair use” defense). So this is an important fact to keep in mind in all cases.
Even though someone posted the picture on Instagram, facebook or some other social media website DOES NOT mean that they have relinquished any and all rights they may have in the photo, at least as it concerns you. The social media host may be immune from legal liability due to the fact that the image or graphic was posted on their website, and you probably granted the social media website an unlimited right to host and post the creative work that was uploaded, this is not the same as to say you (as a third party) may simply pluck the photo from the social media website and use it as your please.
So if someone is sharing a cartoon, photograph, portrait, or image on a website like Instagram, this might mean, for example, that Instagram (owned by facebook) might not have to worry about being sued by the copyright holder, but this does not give you or your company an unlimited license or legal “rights” to use the photo in your business venture.
So let’s get down to it, should you ignore the demand letter or hire a copyright lawyer?
Here are some of the factors I would consider as an IP lawyer in deciding whether or not a response to a demand letter is warranted, or whether it should just be ignored:
- Is the image or photo at use something valuable to the copyright holder?
- Are you making a commercial or non-commercial use?
- Does the copyright holder have a “history” of filing lawsuits?
- Do you have a privacy interest at stake?
- Do you have assets (such as a home, vehicle, money in a bank account, etc.) or are you “judgment proof” or willing to file bankruptcy if necessary.
Here is a video discussing some of the factors we look at in deciding whether to ignore or respond to legal demand or software audit letters [Respond vs. Ignore]
VIDEO: Click on the picture above to watch the video. This will provide a non-exclusive list of factors to take into mind when deciding if you want to respond to the movie, music, or software company and their lawyers. Click on the Red “V” to subscribe to our channel for free general legal updates!
Let take a closer look at these factors:
- Value of copyright at issue:
Not all creative works are equal. A copyrighted logo of Mickey Mouse is very important to the Disney brand and has made them a lot of money. They have “copyrighted” the logo (aside from the automatic protections noted above there are special benefits of formally registering a copyright). So while they may try to promote their brand through an online sweepstakes or promotion or just simply post the picture in an ad, this does NOT mean that they are consenting for your business to use their logo on blankets, artwork, t-shirts or other commercial products you may be wanting to sell. So in a case like this, if you receive a demand letter asking to cease and desist, you will probably decide it is better to stop. If they are asking for money, this is a good time to get an IP lawyer involved. So you have to try to ascertain what the value of the copyright is to the copyright holder. The more valuable, the more serious they will likely be, and if the copyright is “registered” (a fact which may be noted in their demand letter), simply ignoring the letter might not always work.
On the other hand, if you have a photographer that takes thousands of photos (ex. of the seven wonders of the world) and posts them online, while still subject to copyright, it is doubtful the photographer (or videographer in the case of movies shared online) actually took the steps to copyright each and every photo. In this type of case, the demand letter may be more along the line of a “bluff” even if it came from an attorney. In many cases you are dealing with a “form letter” that took 20 minutes for an attorney to get out the door. In these types of copyright bully cases, a demand for $20,000 for using the photo on your coffee mugs might not be as credible. But again, to the business that did not properly license the photo, the risk of a copyright lawsuit could be looming if you shred the demand letter. But this is an important factor to consider, the value of the copyrighted work to the copyright holder.
2. Commercial v. non-commercial use:
The nature of YOUR use of the copyrighted video, photo, image or artwork is another important consideration. If you are using the image in a NON-COMMERCIAL USE (ex. you just share it on your facebook, Instagram, snapchat, or other social media website) and are not making money from the copying or if you are “transforming” the image into something totally new, you could be protected and this might be something worth pointing out to the party seeking to “shake you down.” For example, if you use the cartoon image we are talking about on a T-shirt and you are giving away free t-shirts just for fun (not likely but possible), this might be deemed a “fair use” under the copyright laws and is a defense to infringement. Copyright fair use analysis typically looks at four factors, and usually it is best if a lawyer helps you make this determination. We have talked about this in other blogs and videos.
Click here to go to our popular legal youtube channel. But suffice it to say, if you are out making lots of money off the use of another photographers, artist, or videographers creative works you can find that the IP law firm that sent you the legal demand letter could be more persistent, and if ignored, might file a lawsuit to get your attention and try to force a settlement.
3. History of filing lawsuits:
Another critical factor we look at in deciding whether or not to respond and/or how to best respond is the history of the copyright holder in filing federal lawsuits. Anyone can look up federal lawsuits online and you can do this in a variety of ways such as (a) google the company that sent you the letter. Do you see them filing lawsuits against other people or businesses (b) check the chat boards, what are people saying on Yahoo, Google, etc.), (c) check Pacer.Gov (here you should google both the lawyer that sent you the letter and the firm that is threatening you with $150,000 willful copyright infringement damages. If you do not see them having a history of filing lawsuits, you might be able to get away with not responding to their letter. On the other hand, if the company at issue has filed several suits, or their infringement lawyers have filed many, you have to take this more serious than if there was no such history. Again, another factor to weigh and consider.
Watch this video to learn how to find out if a BitTorent Copyright Bully, Software company or IP law firm actually files lawsuits
VIDEO: Here is a video by Attorney Steve that shows one tool we use to see if the party who sent you a legal demand letter, take down notice, or copyright infringement notice actually files federal lawsuits, or is more along the line of a bluffer! Make sure to Click on the RED “V” for victory to subscribe to our legal channel. We are now over a quarter million page views and counting!! Thank you!!!
4. Privacy concerns:
Sometimes the type of content at issue (ex. adult pornography you found on the internet BitTorent) is very sensitive and may be highly embarrassing in nature. In cases where you as the named individual in the letter may be subject to embarrassment if a federal lawsuit is filed, it might be best to “lawyer up” as opposing to discarding or avoiding the letter. Why? If a lawsuit is filed this becomes a public record. In copyright cases, as noted above, the case will end up usually:
(a) online open to a google, or yahoo search
(b) will be on Pacer.gov (federal public records database)
Once this happens, anyone can find it and it will be hard to make the issue completely go away. In the example above, if you are using a picture of a bridge on your coffee mug, this might not be very embarrassing, and if the copyright holder filed a lawsuit against you this might not be as embarrassing and you would still have a chance for “early settlement” of the lawsuit, and if somebody finds this on the internet, you can probably explain it without having to feel shy about it. So another consideration is whether or not you have a privacy issue at stake.
NOTE: Keep in mind, as a federal litigator myself with over a decade of legal experience, normally suits are not filed unless there is good reason to do it, and real damages to recover. For one, drafting the lawsuit costs money, so does paying filing fees, and service of process fees to serve the summons and complaint). Just something to bear in mind
Finally, another important consideration (aside from whether or not you have legal defenses to copyright infringement and want to litigate the issue) is whether or not the alleged infringing company, officers, directors or individual has assets worth going after. For example, some of the bully cases we deal with involve kids with no jobs, barely getting by, etc. These potential defendants have no assets, no house, no equity, etc. Not the best target for filing a lawsuit especially since there is a chance that any copyright infringement award could be wiped out in bankruptcy. On the other hand, if the copyright holder does a simple title search (assuming they know your name and identity and do not have to subpoena your ISP for this information) and finds that you own a million dollar home with a $250,000 mortgage, then a good IP lawyer representing them will know that you make a good potential target (at least from a financial aspect) and this could weigh in favor of them filing a lawsuit against you if you ignore the legal demand letter and fail to pay them a settlement they are asking for.
NOTE: Officers and Directors can be held liable in certain cases and the “corporate veil” can be pierced in certain intentional knowing infringement and piracy cases. To be safe, you should always seek to “clear your copyrights” or seek a “license” before using a photo, cartoon, comic or piece of artwork on your commercial products and selling these on your online stores such as Etsy.
What can happen if you ignore a cease and desist letter?
Here are a few things that might happen if you ignore a demand letter:
- Nothing. The copyright holder simply goes away and decides not to sue you (again, there are costs involved, possible defenses the troll may have to deal with, and the enforceability of a judgement has to be considered).
- A federal copyright infringement lawsuit can be filed. If this happens, you must be “served” with the summons and complaint (sometimes a subpoena is sent to your ISP, Internet Service Provider, requesting your name and address so they can serve you). We have talked about motion to quash and motion for protective orders in other blogs and videos)
- If the lawsuit is filed, you can still seek an “early settlement” – which means to try to get the case resolved and settled buttoning it up with a written mutual release and settlement agreement.
- If you do not respond to the complaint a “default judgment” can be entered against you, and once the judgment is obtained by the Plaintiff in the court case, they can seek to enforce the judgement by levying your bank account, garnishing your wages, a lien or “abstract of judgment” on any real property you own, and seize any other personal property and pursue any other available collection technique.
- Of course you can always consider filing for Chapter 7, 11 (for companies), or 13 bankruptcy protection, but filing for BK is usually one of the last options I want to look at. Also note, in some cases you may not be able to discharge the judgement in BK court.
Other things could happen, this is just a sample general list.
As you can see, there are no easy answers in making the decision to engage or ignore the cease and desist or monetary demand letter. In some cases people are successful merely ignoring the legal demand letter. In other cases, responding with a strong defense is the best bet. When responding, there are some other general tips you should consider, and you must identify your potential legal defenses BEFORE reaching out to contact the opposing counsel or the copyright holder. This is essential to creating negotiating power. We have helped many companies and individuals across the United States (and Internationally) and in many different industries protect and defend against intellectual property infringement cases. To discuss your case in confidence, call to speak with a lawyer at (877) 276-5084.
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