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socrateaser
socrateaser, Lawyer
Category: Intellectual Property Law
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Experience:  Retired (mostly)
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I am the owner of Signs in Paintsville,. We have a local

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My name is***** and I am the owner of Ward Signs in Paintsville, KY. We have a local competitor that has done work (vehicle wraps, etc.) for a customer, East Kentucky Lawn Care in which our competitor has done business with for a couple years. The customer became unsatisfied with the current work by the competitor so they brought their business to us. We duplicated the art for some projects, as well as the logo, and the competitor has had a lawyer send a threatening letter of further litigation if we didn't stop printing. We actually changed the background image used and did trace some of the artwork, but the customer has paid thousands of dollars for the work to the competitor and was under the assumption they owned the rights and could take their business elsewhere.
JA: Have you talked to a local attorney? Has anything been filed in court?
Customer: Nothing has been filed and local attorneys that I have spoken with aren't sure.
JA: Anything else you want the lawyer to know before I connect you?
Customer: We have an upcoming job from another customer that wants to use us and I have the art available to use for their cars and have them scheduled for Friday. The wrench in this is that the competitor has used a duplicate of artwork derived from another Sheriff Dept. from an image brought to them that they duplicated.

Hello,

A "duplicate" of someone else's creative work is copyright infringement. If both the duplicate and the original are copies of a third party, then everyone other than the original artist/owner is committing copyright infringement (though, possibly in different amounts -- but, it's infringement, nevertheless).

However, if your customer owns the copyright, by virtue of the contract between the customer and the original artist, then your work is not infringement. In order to determine if your customer owns the copyright, look in the contract for the terms, "work made for hire." If the contract is a work made for hire, then the customer owns the copyright -- otherwise not. And, if the customer doesn't own the copyright, then you can be sued for copyright infringement.

That said, copyright infringement can only be sued on in U.S. District Court. There are very few lawyers who are competent to bring this type of lawsuit, and they are very expensive to hire. Consequently, the threat from the law firm you have received may be quite hollow. Moreover, unless and until the copyright owner registers the copyright with the U.S. Copyright Office, no lawsuit can be filed, and any infringement occurring prior to registration is limited to actual damages -- which makes the case much more difficult to win.

The issue here is largely on the customer. If you think that the customer has deep enough pockets to indemnify you if you're sued, then maybe you want to get an indemnity agreement from the customer, and you can continue to infringe, hoping that the competitor won't sue. Without that, however, you are "hanging out to dry." You could get sued, and if you are sued, you'll probably spend $25,000 trying to settle the case, because as previously mentioned, the cost of a copyright litigation defense is very expensive. You could easily spend $500 per hour in attorney's fees.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf.

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Customer: replied 2 months ago.
Ok, thank you for clarifying. The artwork is different, as I used a different background for the art from public domain. The only things that are duplicates are small stripes and the actual logo. We also have another customer that wants us to do their car, but keep it the same as their current fleet in which the same competitor did. However, the art was derived or duplicated from another design, not originally produced by them. Should I keep this car on the schedule for Friday or, in light of this current threat, refuse?

Small stripes and similar are considered "scenes a faire" under copyright law -- meaning that when something can only be done in a certain manner, then it's not subject to copyright protection.

A logo, however, if designed by someone else, is flat copyright infringement -- no way to avoid that, except s a "work made for hire."

A derived work is a copy of someone else's creative work, so it's infringement.

If I were you, I would probably contact your competitor and see if you can settle on some sort of small royalty payment. If not, I would refuse the work, unless the customer agrees to (and can afford to) indemnify you from any resulting damage.

I hope I've answered your question. Please let me know if you require further clarification. And, please provide a positive feedback rating for my answer (click 3, 4 or 5 stars) -- otherwise, Justanswer retains your entire payment, and I receive nothing for my efforts in your behalf.

Thanks again for using Justanswer!

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