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.

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:

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.

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.

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.

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.

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).

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.’

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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