So it finally happens to you and your startup — you receive a very menacing-looking package in the mail from one of those big stock image companies claiming that you’ve infringed on the copyright of one or more images owned or managed by them by using it on your website without a license. They demand that you take the image down, but more importantly, also demand a sum of money that can reach as high as $3000 or more in order to settle their claim against you without resorting to litigation. They even have a convenient online payment processing system for your to send them money in order to settle. Your first instinct may be to panic — how are you supposed to come up with thousands of dollars right now, when you and your company are surviving month to month?! Moreover, you don’t even understand how you got in this situation — you had someone else develop your website, or you did it yourself and were careful to use Creative Commons licensed or public domain photos. First things first — to quote The Hitchhiker’s Guide to the Galaxy….don’t panic. Look at that number being demanded for settlement. That’s probably as bad as things are going to get, and in all likelihood they’re going to get much, much better. Large stock image agencies purchase copyrights, licenses, or management rights from photographers or photo sites, and add those images to their catalog. They scan the internet to see if those images are being used elsewhere, and then send out boilerplate settlement demand letters. The hope is that the average person will pay the settlement simply to avoid the prospect of litigation, as their demands often exceed what they would likely recover in court, not to mention that the costs of going to court would likely outweigh their recovery. So when you get a copyright notice, if you stand up for yourself, you may end up saving yourself quite a bit of money. First, be sure to take down the image or images, even if you’re sure you did nothing wrong. If your case were to end up in court, the other party may be entitled to statutory damages, which can reach thousands of dollars. However, if you used the image without notice of copyright, you may be deemed an “innocent infringer”, which allows a court to limit statutory damages to $200 — so taking down the image allows you to preserve that defense. Otherwise, continuing to use the image(s) after notice of a (potential) copyright turns you into a willful infringer (of course, if you used the image(s) with knowledge of a copyright or potential copyright, an innocent infringer defense probably isn’t available to you). If you used a third-party developer and signed a contract with them to develop your site, check the agreement — the developer may be required to indemnify and defend you against IP infringement. If not, contact the developer anyway and let them know what happened (although don’t get angry and start pointing fingers). They may decide to indemnify and defend you anyway in order to keep you as a happy customer. If you have to handle it yourself or with the assistance of an attorney, the important thing is to ask that they send proof of copyright registration and of their right to enforce the copyright (and if there is a question regarding it, proof that the image they claim you’ve used is in fact the image you used). They will likely refuse to send such information, citing their confidentiality agreements with their photographers and arguing that registration is irrelevant since copyright attaches as soon as a work is fixed into tangible form. While that’s true, a registration is prima facie evidence of copyright ownership, and a copyright registration significantly changes the rights and options for both parties, so it’s reasonable to demand they provide proof of ownership in order to establish that you might actually owe them money as well as make an educated decision about how to handle things. For example, some courts hold that a registration is a procedural requirement in order to file suit for copyright infringement. Furthermore, if a registration exists, the other party could be entitled to significant statutory damages in court At the same time, try to find out how much they would have charged you for a license for the image they claim you’ve used. The actual license fees may only be a fraction of their settlement demand — to me, that’s negotiating in bad faith on their part, and if you point that out to them, you may gain the upper hand in the negotiation, and set the basis for a much lower number if you do end up settling. In the experience of many attorneys who handle these letters, the large stock image company tends to simply go away after a couple of rounds of correspondence — again, the more time and effort is required in order to obtain a recovery (either by settlement or in court), the less profit there is for the company. However, it isn’t exactly comforting to have a potential legal claim floating out in the woods. Accordingly, if you want to definitively resolve the matter, it will cost you. You can either negotiate a settlement with the image company; or, if the settlement numbers are exceedingly high and you are convinced (on a legal basis) that you did not infringe on copyright, you also have the option of seeking a declaratory judgment in court — in essence, having a court rule that you did not infringe on copyright, thereby invalidating the other party’s claim against you. ————————————– The FVL Blog is going on holiday break and will be back with a new article on Friday, January 3. I would like to wish everyone a pleasant holiday season and a happy new year!