While it may be tempting to snag an image from the Web and use it on your company website, that image is protected under copyright law and using it without permission could lead to significant losses.

“Copyright infringement is essentially a ‘strict liability’ offense,” says John Zanghi, a partner at Fay Sharpe. “In other words, if you infringe on a copyright owner’s exclusive rights you can be found liable for copyright infringement, even if you had no knowledge that an infringement occurred or did not make any money using the photograph.”

Smart Business spoke with Zanghi about copyright law and five strategies to protect your company from infringement.

Who is the owner of a photograph and what rights do they have?

The owner of a photograph is the creator of the work, which is generally the photographer. There are situations where an employer owns the photograph, for example, through a work-for-hire situation, or when the owner of the work transfers the rights to another via a written assignment.

Generally, however, an independent contractor or freelancer owns the work they produce. Being the owner means having exclusive rights to the work, such as the exclusive right to display it, prepare derivative works or modifications based on the original copyrighted work, and the right to distribute copies to the public through any means.

What is fair use of a photograph?

Fair use is an exception to copyright law that allows the use of a photograph without express authorization from the owner. Generally, fair use is limited to various specific purposes, such as criticism, teaching, scholarship, research, comment and news reporting.

Courts look at the purpose and character of the use to determine if an act truly constitutes fair use. Other factors are the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the work as a whole, and the effect of the use upon the potential market or value of the copyrighted work.

If a photograph is posted on the Internet, is it open to public use unless clearly marked as copyrighted?

A copyright owner doesn’t have to provide notice to preserve copyright protection because it’s protected through public display. A photographer could expressly state that a photograph is in the public domain, but it’s safer to assume it’s not and that the copyright owner needs to be contacted to use the photograph. Even if you’re trying to minimize your exposure by citing the source, you could still infringe the copyright in the photograph.

If I’m not the person posting the image to the website, am I still infringing on the copyright?

The company may be liable regardless of who posts the image. The company may try to say it wasn’t aware the Web designer was using a copyrighted image, but if the company had control over the Web designer, it could be vicariously liable for the infringement. Most likely both parties could be held liable. Ignorance is not an excuse for copyright infringement.

Do I have to make money from using the photographs to infringe?

No. Copyright infringement is a strict liability offense. However, the amount of money you made on a protected image could factor into damages for the infringement and could affect the extent to which the copyright owner is entitled to statutory damages. Those can range from $750 to $150,000 for willful infringement, presuming the copyright owner has timely registered the copyright. But even if they didn’t have a timely registration, the owner could still seek actual damages for the profits obtained by the copyright infringer.

What strategies should business owners keep in mind regarding photographs? 

  • When hiring a photographer, have a contract outlining the scope of use of the photographs including when and how you may use them. To take ownership of and any or all of the copyright owner’s exclusive rights in the photographs, ask for an express, written transfer of the rights from the photographer. It’s always best to get your rights on paper and up front.

  • When posting images to your website, make it clear to the Web developers that they must secure the rights and proper licenses to any image they use. Advise them not to just lift photographs from the Web without receiving permission from the owners. An infringement could lead to a cease and desist order that causes you to pull the images you’ve used from your site or from other materials and subject you to possible damages. To avoid this, you could hire your own photographer to take the photographs, which allows you to control the content.

  • In the event that you do produce your own photographs and you do own the exclusive rights in such photographs, you may want to protect them further with copyright registration. There are different rules of how to submit photographs or collections of photographs, so ask your Intellectual Property attorney about the best procedure. But generally, because of the timeliness required for registration and the advantages of getting protection, it’s something to consider right away. You may also consider embedding a copyright notice in the digital image metadata.

  • When using images from the Web, assume they are not in the public domain unless there is an express statement to that effect. Just because they’re on the Web doesn’t mean they’re free. Assume there is a copyright owner because you could be liable.

  • It’s always better to obtain and define your rights before a problem develops, so get contracts when working with contractors. Generally, legal issues develop because someone didn’t imagine there would be a problem and he or she moves forward with a handshake agreement. Then when someone finds there’s more value in a photograph than he or she initially thought, disputes arise. So define the agreement up front, and establish what you’ll pay and what you’ll get back in return.

John Zanghi is a partner at Fay Sharpe. Reach him at (216) 363-9000 or jzanghi@faysharpe.com.

Insights Legal Affairs is brought to you by Fay Sharpe LLP

Published in Cleveland

In today’s global marketplace, many U.S. companies have the desire to claim a position at the forefront of innovation. However, if your company is developing innovative ideas, it also has a higher level of exposure to the risk of patent or copyright infringement.

“A lot of companies think they have the coverage for this exposure, but they really don’t,” says Phil Coyne, a vice president with ECBM Insurance Brokers and Consultants. “Copyright and patent infringement coverage is usually limited in a standard commercial general liability policy, if it is included at all.”

By taking steps to protect your intellectual property, you can achieve an offensive position within your market, and use those protections defensively to keep others from encroaching on your market.

Smart Business spoke with Coyne about how to protect your patents and copyrights.

Why is patent and copyright infringement important?

With the increasing use of the Internet, e-commerce, technology and a global marketplace, and with many companies using these tools for their advertising and sales, there is a higher exposure to patent and copyright infringement claims.

Companies need to protect themselves from these exposures because infringement claims can have several negative consequences for a business. First, costly lawsuits can be avoided and, second, a copyright infringement claim can do irreparable damage to a company’s brand and its reputation with customers.

Is there coverage available for patents and copyright?

The simple answer is yes, but it is a little more complicated than that. While many companies may believe that they have coverage under their standard commercial general liability policies, that coverage is very limited in nature.

To trigger coverage for copyright infringement, an insured must first demonstrate that the injury occurred during the policy period and that it arose in conjunction with its advertising activities. The typical policy has an intellectual property exclusion, and there is not coverage for patent infringement.

In response to the exposure and gap in coverage in this area, the insurance industry has developed various policies. There are specialized policies available for coverage of copyright infringement outside of your advertising activities. There are also specialized policies available for patent infringement.

Examples of these policies are:

* A defense and indemnity policy that is designed to cover claims brought against an insured for its activities regarding use, distribution, advertising and/or sale of its product. This type of policy usually covers the insured’s liability for defense costs, damage awards and settlement payments. Defense costs typically erode the limits of coverage.

* Infringement abatement coverage. This type of policy covers the insured’s costs in bringing and prosecuting litigation against alleged patent infringers. Infringement abatement policies typically cover 75 to 80 percent of the litigation costs but do not cover liability for judgments or damages. Also, the insurer will share in any recovery achieved.

* Patent defense only, or patent infringement defense costs reimbursement, is a type of policy that provides coverage for an insured’s defense costs in patent litigation but does not provide for damage awards against the insured.

How can a company ensure that its patents and copyrights are protected?

There are two main steps companies must take. First, analyze this additional risk and exposure. Second, have an internal companywide intellectual property compliance program. If you do not have one already set up, begin developing one immediately. These programs will enable companies to do two very important and necessary jobs in the risk prevention process — both safeguard their intellectual property and help ensure that they do not infringe on the intellectual property rights of others.

What do companies need to know about an intellectual property compliance program?

There are four aspects of an intellectual property compliance program that companies should strive to understand and implement.

First, it should consist of a clear statement of the company’s policies and procedures regarding intellectual property and its use and development.

Second, it is necessary for personnel to have a clear understanding of their responsibilities and duties.

Third, a successful property compliance program needs a formal training portion to help employees learn about these issues.

And finally, the company must continue to monitor and update its program and all related procedures.

Are there any legal changes businesses should be aware of?

Congress just passed the America Invents Act effective Sept. 16 that is supposed to speed up the U.S. Patent and Trademark office so that the U.S. will be more aligned with the international marketplace regarding patent applications. Even though the process has been streamlined and this law is designed to try to eliminate cases of litigation and patent law, it could cause a potential increase in the number of claims as companies rush to file claims to either take advantage of the old law or the new law.

Phil Coyne is a vice president with ECBM Insurance Brokers and Consultants. Reach him at (610) 668-7100 or pcoyne@ecbm.com.

Published in Philadelphia