Copyright Infringement Demand Letter: What to Do when Threatened for Using a Copyrighted Image or Video

The Internet allows startups and small businesses to have a 24/7 storefront. The site can be found by new customers easily accessible and located through social media and search engines. Instead of spending 9-5 at a brick and mortar location, founders can work flexible hours, rent a virtual office, setup at a coworking workspace, or even keep the business in their garage. Overhead drops but websites can cause some potential liabilities skyrocket. As previously discussed, a website's boilerplate terms of service and privacy policy can create a lot of problems. Even more problematic is using images and video found on the Internet, and even works from a hired graphic designer and video editor.

So you received a demand letter

A demand letter is a nice way of saying you are threatened with a lawsuit unless you cough up thousands. How did this even happen?

Thanks to Google's Reverse Image Search a copyright owner can find every instance of their photo on the Internet crawled by the search engine. It will find background images, small clipart used for icons, and even prominent images that properly attribute and link back to the source website. The problem for businesses is this can be considered copyright infringement. In short, you don't need to sell the images or even hide the copyright mark to infringe. The author uses a law firm to monitor for infringing copies, find who owns the website, then send a strongly worded demand letter asking for a significant payment.

The demand letter should provide their basis for why you owe them thousands of dollars. This includes evidence of copyright registration and the statutory damages for copyright infringement. You might be surprised to numbers up to $150,000 for willful infringement. Demand letters can include some trumped up claims that likely would not make it to a lawsuit. Some may be quickly thrown out of court. In other words, it is not uncommon to see irrelevant claims used to increase the proposed settlement because there are few rules surrounding demand letters.

Can I talk my way out of it?

That might be tough. Some firms exist primarily to shake down potential infringers and are unlikely to accept earnest apology. In short, they would be out of business if one phone call could make everything go away. Let's look at the worst of these companies, sometimes called copyright trolls, the now defunct Prenda Law which strong-armed millions from those who allegedly downloaded adult films.

According to Illinois attorney regulators, the copyright troll "conspired to extort settlement funds from thousands of Internet users in a multi-jurisdictional copyright litigation scheme. Specifically, they attempted to exact settlements from users who allegedly infringed on the copyrights of certain pornographic movies." Prenda knew their $3,000 demand was likely under the cost of defending a suit to trial, and a suit could open up infringers to hundreds of thousands in liability. The result was even innocent parties settling.

Similar tactics may be used today, except legally, threatening astronomical damages at trial but an offer to settle close to the full cost of defending an infringement suit. They target everyone from international companies, startups, nonprofits, to charities.

What should I do?

First and foremost, you should discuss your options with an attorney. An attorney can review the facts, the statute, and give you a better idea on what laws apply and the potential damages. Some of the claims may be baseless, and a first-time, innocent infringement may only result in a judgment of a couple hundred dollars. An attorney will make sure the image is copyrighted, and can even see if the firm typically files copyright lawsuits. In short, the high cost of litigation and small value of some cases may mean there's little risk for litigation. If litigation is possible, a qualified attorney can  negotiate a settlement closer to the actual value of the case.

It's important to know your legal options and potential risks, which often look more favorable than the demand letter.

Develop your company's intellectual property policy

Lawyers are cheaper when used proactively. Similar to a seat belt, one small preventative action can be very helpful when you need it. Developing a comprehensive intellectual property plan costs thousands less than paying a single demand letter. The policy can be used with third-party vendors and employees that run social media accounts, design webpages, create graphics, and even edit and create video. For example, graphic designers and video editors hired to create marketing and business material may incorporate copyrighted and trademarked material, especially if you outsource design overseas or on "gig" websites. It's as easy as your Wordpress developer using an unlicensed design theme, which may include dozens to hundreds of unlicensed photos. Even a social media intern posting a "Happy Holidays" image found online can put your company in legal jeopardy.

Competently sourcing your images, video, and even audio can go a long way. DC Comics received criticism for using stock images on their Aquaman poster, but their graphic designers certainly followed their IP policy and properly licensed these shark photographs from Getty Images.

There's a number of ways infringing material can end up on your webpage, Facebook page, and marketing material. Finding out too late can be costly, and it's easy to ensure your company owns all images and video or uses only license-free works. Spengler Agans Bradley uses our own images, licenses graphics as part of this Wordpress theme, and uses royalty-free images approved for commercial use from websites like Pexels and Unsplash.

If you received a demand letter or want to develop an intellectual property policy, contact our attorneys. Spengler Agans Bradley offers a flat-rate legal checkup for startups and business needing a broad, overall legal review of their business and business practices.

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