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What Should I Do If Another Business is Infringing My IP?

An appropriate response to infringement (or misappropriation) will depend on which type(s) of intellectual property (IP) rights are involved.  While some forms of infringement can be enforced by the government, prosecutors rarely take up disputes between competitor businesses. This leaves it up to the IP owner to pursue a civil remedy. Therefore, the first step is generally to conduct your own investigation to ascertain your IP ownership rights, ascertain the identity of the infringing party or parties, preserve evidence of the infringement, and perform a legal analysis to confirm that the conduct in question is prohibited by law. Following an investigation, a cease & desist (demand) letter could be sent, a lawsuit initiated, or possibly other action taken.

Tip: Consider implementing a proactive monitoring program to search for and identify potential infringement of your IP. No one else will identify infringement for you.

As part of your initial investigation of infringement, the legal analysis should consider:

  1. do you have a chain of title to the IP (that is, can you prove ownership)?
  2. does the conduct fall within the scope of your enforceable exclusive rights or is the conduct permitted by law (such as a “fair use” under copyright law)?
  3. did the other party have permission?
  4. what jurisdiction(s) is the infringer located in?
  5. what remedies are available for the type of infringement involved? 

Following an initial investigation, which should be performed with the assistance of a knowledgeable attorney, it is common to send a cease & desist or other demand letter.  This puts the infringer on notice of the claim of infringement, which can remove innocent infringer defenses going forward, trigger the accrual of damages, etc.  A letter might be sent to a publisher, distributor, web host, etc. as well, which can have significance under safe harbor provisions for some types of IP.  If a letter is ineffective, or simply not desired, litigation or certain non-litigation action should be considered. 

As to litigation, patent and copyright actions are handled exclusively by U.S. federal courts and generally require having a patent or copyright registration (at least for copyrightable United States works) before filing suit.  Trademark, trade secret, cybersquatting, and false advertising actions can sometimes be brought in either federal or state court.  A trademark registration is not required to bring suit in the U.S.  A statute of limitations or equitable limits may apply, such as a 3-year limit for copyright infringement claims and a 6-year limit on back damages for patent infringement. 

Remedies may be available outside of courts as well, though often without monetary recovery.  For example, administrative agencies such as Customs & Border Protection and the International Trade Commission can block or exclude importation of infringing goods, and a copyright small claims action may be available.  Online platforms and marketplaces may also have their own IP dispute resolution procedures and mandatory arbitration (e.g., UDRP, URS) may apply to domain name disputes. 

With some exceptions, many IP rights are generally enforceable on a jurisdictional or territorial basis.  If infringement implicates activities in another country, the available remedies and requirements to pursue a claim can vary widely and you may need to consult competent foreign legal counsel. 

Many IP disputes reach settlements, though it cannot be assumed that parties will be able to reach a pretrial settlement.  When considering bringing an infringement or misappropriation suit, bear in mind that awards of attorney’s fees are not always available or likely.  The cost to pursue an IP lawsuit might exceed the monetary recovery, though the benefits of stopping infringement or misappropriation may still be worth the unrecoverable expenses of a suit in some situations. 

Photo of Austen Zuege

Austen Zuege is an attorney at law and registered U.S. patent attorney in Minneapolis whose practice encompasses patents, trademarks, copyrights, domain name cybersquatting, IP agreements and licensing, freedom-to-operate studies, client counseling, and IP litigation. If you have patent, trademark, or other IP issues, he can help.

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Copyright Pitfalls: Ways to Avoid Copyright Infringement and Ownership Disputes

A version of this article appeared in AIPLA’s Innovate Magazine in October 2021.


Mark Twain observed that “[o]nly one thing is impossible for God: to find any sense in any copyright law on the planet.”[i]  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 copyright infringement 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.[ii]  

Will an “innocent infringer” defense help in these situations?  Not against liability.   Though it potentially limits statutory damages.[iii]  How much it might limit statutory damages is discretionary, it may not limit actual damages,[iv] 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/mural, clothing design, 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 any 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 (and music) are not actually free but rather are usually subject to lump sum license payments—advertisements about the provider’s license terms may be 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, use 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.[v]   Therefore, if you license an image only to later discover 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,[vi] 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).[vii]  In single-member LLCs and similar small businesses where the owner’s status as an “employee” may be in doubt under 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 at some point. 

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.[viii] 

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.[ix]  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, and further requires knowing or having reasonable grounds to know that doing so will induce, enable, facilitate, or conceal an infringement, copyright owners sometimes broadly assert CMI removal to seek additional damages or as a fallback position when substantive infringement claims are unavailable.[x] 

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.  Aside from Section 1201 anti-circumvention exemptions, 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).[xi]  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. 

Photo of Austen Zuege

Austen Zuege is an attorney at law and registered U.S. patent attorney in Minneapolis whose practice encompasses patents, trademarks, copyrights, domain name cybersquatting, IP agreements and licensing, freedom-to-operate studies, client counseling, and IP litigation. If you have patent, trademark, or other IP issues, he can help.


Endnotes:

[i] Mark Twain, Mark Twain’s Notebook (A.B. Paine, ed., 1935) quote reprinted at <http://www.twainquotes.com/Copyright.html>.

[ii] See also U.S. v. Hansmeier, No. 19-2386 (8th Cir., Feb. 10, 2021); Jason Mazzone, “Copyfraud,” 81 N.Y.U.L.R. 1026 (2006).

[iii] 17 U.S.C. § 504(c)(2).

[iv] Actual damages may be low or difficult to establish.  See, e.g., On Davis v. The Gap, Inc., 246 F.3d 152, 165 (2d Cir. 2001); Gregerson v. Vilana Fin., Inc., No. 0:06-cv-01164, 2008 U.S. Dist. LEXIS 11727, *14-15 (D. Minn., Feb. 15, 2008).

[v] General business insurance polices may cover non-willful copyright infringement, such as under “advertising injury” provisions. See, generally, David A Gauntlett, IP Attorney’s Handbook for Insurance Coverage in Intellectual Property Disputes (2nd ed., ABA 2014).

[vi] 17 U.S.C. § 201(b).

[vii] 17 U.S.C. § 101; see also Z. Peter Sawicki et al., “Copyright Ownership: A Mere Handshake Isn’t Good Enough” AIPLA Innovate (Sept. 24, 2018).

[viii] E.g., TD Bank N.A. v. Hill, 928 F.3d 259, 274 (3d Cir. 2019); cf. IpVenture, Inc. v. Prostar Computer, Inc., 503 F.3d 1324, 1327 (Fed. Cir. 2007) (interpreting “agree to assign” as requiring subsequent written instrument to effectuate assignment of patent rights).

[ix] See also U.S. Copyright Office, “Section 512 of Title 17: A Report of the Register of Copyrights” (May 2020).

[x] See, e.g., Philpot v. WOS, Inc., No. 1:18-cv-00339, 2019 WL 1767208 (W.D. Tex. April 22, 2019); Mango v. BuzzFeed, Inc., 970 F. 3d 167, 171 (2d Cir. 2020) (A plaintiff must prove the following: (1) the existence of CMI in connection with a copyrighted work; and (2) that a defendant distributed works or copies of works; (3) while knowing that CMI has been removed or altered without authority of the copyright owner or the law; and (4) while knowing, or having reasonable grounds to know that such distribution will induce, enable, facilitate, or conceal an infringement.); Stevens v. Corelogic, Inc., 899 F.3d 666, 673-75 (9th Cir. 2018) (there are two scienter requirements and for the second the copyright owner “must provide evidence from which one can infer that future infringement is likely, albeit not certain, to occur as a result of the removal or alteration of CMI” “such as by demonstrating a past ‘pattern of conduct’ or ‘modus operandi’, that the defendant was aware or had reasonable grounds to be aware of the probable future impact of its actions.”). 

[xi] UCC § 2-312(3) (2002) (“a buyer who furnishes specifications to the seller must hold the seller harmless against any such [infringement] claim which arises out of compliance with the specifications”).