Why Small Business Owners Should Understand Copyright Law

Protect Your Business from Becoming a Copyright Infringer

February 15, 2021

Julie C. Hancock

Every business, large or small, needs to understand copyright law. It is one of the most misunderstood areas of the law. It is also an asset that can help or hurt your bottom line, depending on whether you care for it or neglect it. With the expansion of social media and our lives going digital, it is an oft overlooked legal issue that can cost your business big time.

Here are a few basics to understanding how copyright-protected works go hand-in-hand with your business.

Copyright Law is Strict Liability  

When you use branding assets or content created by someone else without the proper permissions or paying appropriate licensing fees, your intent is not relevant in infringement. Using a protected work, you are liable for copyright infringement. This includes following one of the many false myths out in the world about the use of other creators’ works. Several popular myths — mistake, the “30-second rule” — or any other myth will not excuse liability.  In very limited circumstances, “innocent infringement” can be argued, but this only helps to reduce monetary damages, not erase your liability for infringement.

Copyright Trolls: The Debt Collectors of Copyright Infringement

You know those annoying debt collectors who call relentlessly to scare you into compliance by telling you a criminal charge has been filed or a process server is outside your door?  This is similar to what some lawyers do to make a living from copyright infringement.  These are law firms or lawyers who, with the use of certain software/technology, troll the internet for infringing materials. These methods can even find items since removed from the internet.  

Then, they send you a scary cease and desist letters demanding payment of a seemingly reasonable amount — maybe $2000 — to settle the claim before they sue you for much more money. The amount is enough for them to profit but not enough for you to think it warrants spending money to seek an attorney's help. They can be equally harassing and relentless as debt collectors.

It is important to note that in many cases, if you receive such a letter, you more likely than not have some amount of liability.

Problem is, as scary as those letters sound, you may have a way to reduce the payment based on actual circumstances. Often times, these lawyers are making empty threats  of which they cannot follow through. There tend to be any number of problems with the way these letters approach infringement.  However, they succeed in scaring many people into paying up.

This is where knowledge is power. Should you ever find yourself on the receiving end of such a letter, you will understand that engaging an attorney to respond may actually save you money and most of the headache. These attorneys will not magically go away if you ignore them.

Damages for Copyright Infringement Range from Two Hundred Dollars to Hundreds of Thousands

Since copyright infringement is strict liability, if you use someone’s work without permission and do not have a viable defense to that use, your business will likely have to pay something for that use. A copyright owner can recover either 1) actual damages and additional profits of the infringer or 2) Statutory damages.

Statutory damages are available for works registered with the U.S. Copyright Office and are as follows:

- If you can demonstrate you are an innocent infringer, you will pay no less than $200
- If the copyright owner can prove infringement, you will pay between $750 and $30,000 per infringement
- If the copyright owner proves that the infringement is willful, damages can be up to $150,000 per infringement

These types of cases must be brought in federal court. In addition to the hefty “damages,” court costs and legal fees are expensive.

With the passage of the CASE Act this past December, a less expensive alternative venue for infringement claims will open up in the form of a “small claims” body. This will provide a more accessible avenue for such disputes, but this will only change the avenue, not the statutory amounts for liability.  This also is voluntary participation (unlike federal court where it is mandatory to participate in a lawsuit against you).

Why Should You Pay More Attention to Copyright Law in Your Business?

If you are a business owner, freelancer, content creator, musician, artist, photographer, film or television producer, writer or any other category of person who either creates original, creative works or utilizes them in business, the above applies to you. Furthermore, with the establishment of a small claims venue to hold infringing parties accountable, owners of copyright protected material may be more likely to pursue claims. With how freely people use copyright protected works across the internet, everyone needs to take stock in the materials used, where those materials originated, and act to replace any problematic materials. Alternatively, now is a great time to ensure your copyright protected assets are safe by registering them with the U.S. Copyright Office.

The best first step you can take is to review your contract templates with an intellectual property attorney. Circumstances will vary greatly where creative works come into play. However, this small step can save your business money and time in the long run.

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