If a craft magazine has stopped publication/gone out of business, are their patterns still protected under copyright laws?
Yes. A copyright applies to the product, not because it is published.
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I have seen and even purchased on CD restored patterns from publications no longer in business. I've asked because their statement was, "Because these were old books no longer in circulation that after restoring the pages and copying them on CD, allowed them to sell on eBay!"
If the copyright has expired, then you would be in the clear. However, finding out could be a challenge. My suggestion would be to contact the company first and see whether or not they have expired/or even if they had any.
Based on internet searches, the magazine, "Magic Crochet" , seems to have disappeared in 2005. I have had a subscription with them since the 70's! But like many, no one seems to know what happened and many are disappointed. I have tried, like others that I have found on blogs, to contact the company with no luck. It would definitely be worth it to me to find if those patterns are still copyrighted. How do I do it!
Your best option is to contact the company. You can also contact the US Copyright office in Washington DC to find out if any copyrights are still active for this company.
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