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Copyright law in e-commerce

Unfortunately, in the world of e-commerce, legal disputes are relatively common. For example, using an image without properly giving credit is an infringement of copyright law, which, in serious cases can lead to massive fines. But it need not come to that; violations can be resolved as quickly as they occur. So, if you discover a copyright violation online, what initial steps should you consider taking? And what actions should you take if you have received a warning or a cease-and-desist letter? In such cases, you need to know your rights.

What to do if you discover copyright law infringement

Firstly, it’s important to ensure that the unauthorized use of your images really is an infringement. Check your licensing agency’s policies and your license’s terms of use to see if they might have allowed access to your images. However, if you do find or suspect illegal activity relating to trademark, design, competition or violations of copyright laws, you should act as quickly as possible to secure proof. In any legal dispute, presenting evidence is of the utmost importance. You should carefully document everything you find. The following steps can help you to secure the image:

1. Document illegal activity with screenshots

It’s crucial to back up your evidence as soon as possible, especially when it comes to e-commerce, as websites are always growing and changing. If you lose the evidence, your complaint will simply fall apart. Be sure to save the complete source code, including all external elements and embedded graphics. In addition, you should create full-page screenshots that record the web address and the date of the web page.

2. Producing documents

It can be easy to forget important details that can prove to be conclusive later on in court. It’s important that you write a detailed description of all occurrences and observations. These include (but are not limited to) the nature and extent of the wrongdoing, the time and location upon noticing the copyright law infringement, all persons involved, as well as any correspondence between you and the offending party. Save all email traffic and keep a printed version of them in your records. Attach all bank transactions, relevant certificates, and any other important documents that protect your rights. With a strong argument, you reaffirm your credibility while simultaneously increasing your chances of winning your case.

3. Defer to other witnesses

Testimonies can provide further important evidence. If possible, you should consult at least one other person who can support your claim in a court of law. For defendants, this person can be someone from your company and should directly take part in the discourse.

Options for plaintiffs

In e-commerce law, there are several courses of action plaintiffs can take in order to remove unauthorized material from the internet. Depending on the severity of the copyright infringement and the defendant’s response, you may want to consider pursuing legal action. However, there are several alternatives you can try before it comes to that.

DMCA take-down notices

Introduced in 1998, the U.S. Digital Millennium Copyright Act (‘DMCA’) rules that plaintiffs must give proper notice of any violations. The service provider is responsible for removing any infringing content from a website but is only liable for the copyright law infringement after notice has been given.

In order to be valid, a take-down notice must be in writing and identify the allegedly unauthorized material that is infringing the work. The notice must state that the request is made ‘in good faith’ and confirm that the information is accurate and the plaintiff has the right to proceed as the copyright owner. It is crucial that it is also accompanied by a signature of the plaintiff (i.e. the copyright owner or the owner’s agent).

Cease-and-desist or demand letters

When sending a cease-and-desist or demand letter, the plaintiff contacts the infringing website itself, rather than the service provider. A demand letter gives both parties the opportunity to settle a dispute without too much interference from the court. At this stage, it’s still possible for the offender to remove the stolen content without publicity or admission of liability. Demand letters can be supervised by a lawyer and are a particularly effective and cost-efficient method of resolving disputes. To reach an agreement outside of court, demand letters must fulfill certain criteria regarding form and content.

While there are no official guidelines for creating a demand letter, there are certain requirements that the document must meet in order to be legally valid, should the case be taken to court. For example, the following criteria must be included in a full complaint for an injunction to be valid:

  • Name of the plaintiff and the defendant, including company name and address
  • If you have consulted a lawyer, a power of attorney, in which you name your lawyer as the authority
  • A statement that confirms the court’s jurisdiction
  • A detailed description of the violation(s) committed, naming the legal provisions addressed
  • A request for the omission and removal of the offense
  • Last but not least, your signature

Some copyright owners also include an invoice for three times their usual license fee as a form of compensation. This, however, is an industry standard – not a legal right, and this may be admissible against you in a court case. If you wish to seek compensation, however, it’s advised to include a disclaimer in your demand letter, for example, ‘this offer is an attempt to compromise this dispute.’

Tip

Always issue your demand letter in writing. Should further legal action be required, a written warning counts as evidence. Delivery by registered mail is particularly useful, as this provides a record of exactly when and where your warning was posted.

Filing a copyright infringement lawsuit

Filing a lawsuit should be your last resort, as this is the most aggressive form of attack, which could also prove costly and labor-intensive. Should you wish to pursue this course of action, you need to register your copyrighted material with the U.S. Copyright Office (ideally, you should do this before you notice any infringement but you can also do this up to three months after the date of the infringement). You should then file your claim in a federal district court. It's also a good idea to hire an attorney to help you. If you decide to sue, your claim is valid for three years from the date of infringement to sue for copyright infringement.

If you have copyrighted your work, you may be eligible to receive ‘actual damages’ based on licensing fees, or ‘statutory damages’, which include any profit made directly from your work. If the infringer is knowingly and willingly complicit in the infringement, the plaintiff can stand to win up to $150,000 in damages.

I’ve taken action, so what’s next?

After you have sent your warning, it is customary to give the other party 30 days to respond; during this time, you should not seek further action, as doing so could aggravate the situation before the defendant has had a chance to formulate a response. After this period, you can proceed as follows, depending on the outcome of your warning.

Scenario #1: you receive a response

If the infringer admits fault, they should submit a response in writing that claims responsibility for the infringement and agrees to the terms laid out in your warning. Alternatively, they might contact you to disagree with your claims or terms, in which case, they will enter negotiations with you to come to an agreement that both parties find fair. In a worst-case scenario, they might also respond with a refusal of your claims and/or terms, which could then prompt both parties to seek judicial intervention.

Scenario #2: you receive no response

If, after thirty days, you have not received a response or have not reached a compromise, you can send another warning (either of the same kind or in a more aggressive form), or alternatively, you can pursue legal action. However, the second option is only advisable as a last resort, if the infringer is completely non-cooperative. If they do respond with a rebuttal or refusal, it’s better to simply rethink your form of attack and modify it if necessary. An out-of-court settlement is advisable for reasons of cost: If the court decides on a partial debt, the court costs are often shared between both parties. If your competitor is released in all of the claims, you will still have to pay the entire cost.

Important

You must give your competitor the response time stated in the warning. During this time, the other party is not obliged to terminate the infringement with immediate effect. You will receive compensation for the damages.

What should I do if I receive a warning?

If you have committed or been accused of committing any infringement of copyright law, you should not ignore any red flags, as this could lead to harsher punitive measures later on. Even if you have not committed any wrongdoing, it’s inadvisable to simply throw the warnings away. While it is, of course, well within your rights to ignore any letter, open communication and cooperation will bolster up your defense should the matter lead to a court case.

If you refuse to respond or cooperate to a warning, the plaintiff has the right to shift to a more aggressive form of attack. Such methods include cease-and-desist letters, preliminary injunctions, or any other kind of written or verbal cautions. Demand letters are usually used as a last resort if a company has failed to comply with previous warnings.

In most cases, it is required to respond to all kinds of warnings within a given time period (generally within two weeks). After this deadline, a dismissal can theoretically prompt further action or initiate a court proceeding, in which case the losing party must cover the legal fees of both sides. However, if the plaintiff signs the demand letter, it becomes a consensual agreement.

The agreement should be divided into two main points: a clearly formulated cease-and-desist order and an agreement to meet the terms of the plaintiff. The cease-and-desist order indicates the actions that must be avoided in the future, for example:

‘Person X hereby orders Person Y to refrain from uploading and using their private images on their website.’

However, if Person X continues to use these unauthorized images, they commit a breach of their contract. In this case, the contract penalty promise specifies the amount that person X must pay for his repeated offense to person Y. In practice, the guardian or a third party chooses the amount at his/her own discretion. The defendant can apply for judicial review for appropriateness. If another offense occurs, a new injunction can be negotiated with a higher contractual penalty.

Tip

It is advised to put your contracts in writing in order to avoid any inconsistencies and misunderstandings.

If you receive a warning, there are four possible ways to respond:

1. You can accept fault for breaching copyright law and pay any incurring fines, concluding the case and waiving any further legal action.

2. Instead of accepting the terms presented in the warning, you could submit your own, modified cease-and-desist letter.

3. You can reject the complaint by submitting a refusal.

4. You can launch your own offensive and initiate a counter case.

1. Accepting fault

If you choose to accept fault, be careful what you sign your name to. Signed contracts can go on your permanent record, and any inaccuracies can be taken as fact. It’s advisable to take your time to read the warning carefully and not sign anything immediately. Plaintiffs will often try to receive more damages than they are actually owed. In rare cases, demand letters are sent in an attempt to extort the recipient.

Tip

Always read through cease-and-desist letters and demand letters thoroughly before signing! Written contracts are binding, so if in doubt, consult a lawyer before providing your signature.

2. Submitting a modified injunction

This is the most common method of responding to a complaint. If you partially accept the terms stated in the warning, or if the compensation payment seems too high, you should write your own, altered injunction. In this, you can agree to the omission of individual points and suggest a fairer penalty. The plaintiff can either agree to your proposal, continue to negotiate or take further legal action.

Tip

Invoke your right to information here. The plaintiff is obliged to provide you with all evidence and facts. If you are unsatisfied with the charges, the right of information could give you the material you need to create a concrete case.

3. Submitting an objection

If you believe the case against that you are accused by is unlawful or unjustified, you should lodge an objection within thirty days of receiving your first warning. Instead of paying compensation or negotiating, use your right to information in order to find evidence to prove that you are in the right. Before you do this, however, you should take time to check the laws to ensure you have a solid case.

4. Initiating a counter case

You can also go on the offensive and launch a counter case. If in your view the warning is completely unjustified, you can send a cease-and-desist letter of your own. Here you should explicitly refer to the errors made in the initial warning and make your own injunction against the plaintiff. If the plaintiff has caused a great deal of distress, you can also take further legal action against them. In this case, the court decides whether the initial claims are justified or not.

Warning

Keep in mind that taking legal action can be a great financial risk. If you do not win the case, you will be forced to cover all the costs yourself. On the other hand, the threat of presenting the opposing party with a lawsuit may sometimes be enough to force them to drop their demands.

Click here for important legal disclaimers.

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