In these types of third party cases, a Plaintiff should first establish who is liable for direct infringement. Typically, this may well be the webmaster who had access to the company's social media assets, and the right to choose and post images, or links to images. These parties will likely have selected, copied, posted (publicly deisplayed) and distributed the image(s) online on the internet.

1. Direct Infringement

The Copyright Act of 1976 ("Copyright Act"), 17 U.S.C. §§ 101-803, grants copyright owners a bundle of exclusive rights, including the rights "to reproduce the copyrighted work in copies" and "to prepare derivative works based upon the copyrighted work." Id. § 106.

Plaintiffs must prove the following elements for an infringement claim:

(1) they hold a valid ownership interest in the relevant copyrights (also, the image at issue must have been registered with the United States Copyright Office in order to sue in federal court in the United States),

(2) defendants have "actually copied" their works,

and

(3) defendants' "copying is illegal" because of a "substantial similarity" between defendants' works and the "protectable elements" of their copyrighted works. See Penguin Random House LLC v. Colting, 270 F. Supp. 3d 736, 744 (S.D.N.Y. 2017) (citing Castle Rock Entm't, Inc. v. Carol Pub. Grp., Inc., 150 F.3d 132, 137 (2d Cir. 1998)).

For a derivative work claim, "plaintiffs must further prove that,

(4) defendants' works are unauthorized derivatives under 17 U.S.C. § 106(2)."

NOTE: If your company did not directly copy or post the photo (i.e. you hired an independent contractor), you may not liable as a direct infringer. The next question is, can you also sue the business owners, and their company, and if so, under what legal theories?

2. Vicarious infringement

A common legal theory to look at when attempting to hold the business owner liable for the acts of an independent contractor is vicarious copyright infringement. Courts have discussed the requirements.

Your company might be liable if:

• You had the right and ability to control the third party's actions. (for example, you have a right to decide which photos will be used, right to review final options)
• You derived a direct financial benefit from the infringement. (for example, you increase social media followers/fans to your social media channels, generate ad revenue, monetize the unlicensed images, or the image is used in broochures or as the header on a website, such as using a picture of a pier and sunset as the main image on your homepage). To me, these are items that need to be looked at. Google analytics may be used to show how often a site or a particular page is visited. This can often be a question of fact, precluding the defendant from escpaing liability on a summary judgment motion.

To be vicariously liable for copyright infringement, the defendant must have the right and ability to supervise the infringing act and a direct financial interest in the infringing activity. See Gershwin Pub. Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971).

Although the Individual Defendants had the ability to supervise the employees who engaged in the infringing activities the second element of a vicarious infringement claim is lacking. The second element requires a "causal relationship between the infringing activity and any financial benefit [the] defendant reaps." Arista Records LLC v. Lime Grp. LLC, 784 F. Supp. 2d 398, 435 (S.D.N.Y. 2011) (internal quotation marks and citations omitted).

There is no undisputed record evidence regarding any direct financial benefit received by the Individual Defendants from Diesel's infringing activities. Thus, this aspect of Plaintiff's summary judgment motion also must be denied. (Petersen v. Diesel Power Gear LLC (S.D.N.Y. Dec. 21, 2022, No. 1:21-cv-08827 (SDA)) 2022 U.S.Dist.LEXIS 229983, at *11.)

NOTE: Always check the caselaw in your federal court jurisdiction to ascertain any differences in the legal requirements. As you can see, having evidence of a some type of right to control and/or suprevise and having any type of financial benefit is important. However, this can be any type of ad revenue, increase in internet traffic, header images that are designed to increase the business goodwill of a company, or some other type of benefit. This can often be pursued in discovery.

But what if it was an independent contractor and I had no idea they were infringing, nor did they (for example, the indepedent web developer was simply ignorant of the law or negligent)?

This should not affect the above analysis since copyright infringement is considered a "strict liability" tort. In Hitek Software LLC v. Timios, Inc. (C.D.Cal. June 18, 2012, No. CV 12-709 CAS (AJWx)) 2012 U.S.Dist.LEXIS 86560, at *12-13. the court held:

Vicarious liability "allows imposition of liability when the defendant profits directly from the infringement and has a right and ability to supervise the direct infringer, even if the defendant initially lacks knowledge of the infringement." Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 125 S. Ct. 2764, 2776 n.9, 162 L. Ed. 2d 781 (2005); see also Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004) ("A defendant is vicariously liable for copyright infringement if he enjoys a direct financial benefit from another's infringing activity and 'has the right and ability to supervise' the infringing activity") (quoting A & M Records, 239 F.3d at 1013).

Here, Chamberlain (the computer specialist Defendant) specifically denies that Sarumaru or any other employee at Timios (the Defendant company that hired the contractor) had the ability to direct or control his work as an independent contractor (he was trying to keep them off the hook). While plaintiff (HiTek Software) contends that there is "nothing" in Chamberlain's consulting agreement that "isolates" him from Sarumaru's control, reply at 12, this presents a question of fact not appropriate for resolution as a matter of law. This is so even though a defendant's ability "to block or police use of its internet service is evidence of the right and ability to supervise." A&M Records, 239 F.3d at 1023-24.

Again, if there is a question of fact, you can expect the case to go to the jury.

3. Contributory infringement

Another possible leagl theory to hold the business owner liable for selecting and posting unlicensed art, comics, photographs, and other creative content is contributory copyright infringement.

Under this legal theory, the company and its officers and directors might be liable if:

• You knew or should have known about the infringement.
• You materially contributed to or facilitated the infringement (e.g., by maintaining the website, or let's say you had a hand in choosing and approving the use of the images. If so, you should have confirmed the licensing status and the right to use such photos).

Defendants move for summary judgment regarding the Individual Defendants' liability as contributory infringers. To be liable for contributory infringement, the Individual Defendants must have had knowledge of the underlying direct infringement and engaged in personal conduct that induced, caused or materially contributed to the infringing conduct. See Arista Records, LLC v. Doe 3, 604 F.3d 110, 117-18 (2d Cir. 2010).

"The knowledge standard is an objective one; contributory infringement liability is imposed on persons who 'know or have reason to know' of the direct infringement." Willful blindness is not an excuse, and is sufficient to satisfy the knowledge requirement. The Individual Defendants' participation or contribution to the infringement must be substantial. See Arista Records LLC v. USENET.com, 633 F. Supp. 2d 124, 155 (S.D.N.Y. 2009).

(Petersen v. Diesel Power Gear LLC (S.D.N.Y. Dec. 21, 2022, No. 1:21-cv-08827 (SDA)) 2022 U.S.Dist.LEXIS 229983, at *11-12.)

NOTE: This theory can be a bit more difficult to prove since you need to show the company and/or its officers, directors, marketing officers had a reason to believe infringement was occuring and decided to participate in that infringement. Look for facts that can help establish that (such as the marketing team knew google images were being used, but to save costs, they sent an email saying "go for it" (i.e. turning a blind eye fashion)

4. Employees and respondeat superior

If it is an employee of a company that selected and/or posted unathorized content, the employer is typcially liable under "respondeat superior" theory (let the master answer). Here is a case law snippet from New York on this point of law:

Copyright infringement is in the nature of a tort, for which all who participate in the infringement are jointly and severally liable." Screen Gems-Columbia Music, Inc. v. Metlis and Lebow Corp., 453 F.2d 552, 554 (2d Cir. 1972).

Further, "the normal agency rule of respondeat superior applies to copyright infringement by a servant within the scope of his employment." Shapiro, Bernstein & Co. v. H.L. Green Company, 316 F.2d 304, 307 (2d Cir. 1963).

Indeed, one who had promoted or induced the infringing acts of another has been held jointly and severally liable even though he had no actual knowledge that the copyright is being violated. See Gershwin Publishing Corp. v. Columbia Artists Man., Inc., 443 F.2d 1159, 1162 (2d Cir. 1971), MCA, Inc. v. Wilson, 425 F. Supp. 443, 456 (S.D. N.Y. 1976), aff'd, 677 F.2d 180 (2d Cir. 1981).

The facts presented in the deposition establish that Drake employees, within the scope of their employment and under the supervision of Drake, undertook the activities leading to the infringement of the copyright. That Drake and Dorjam have separate ownership and that Dorjam may have paid Drake for the services of Drake employees does not serve to absolve Drake of liability for the wrongdoing of its employees. The principles of contributory infringement and respondeat superior therefore impose liability on Drake. (Sygma Photo News, Inc. v. High Soc. Magazine, Inc. (S.D.N.Y. 1984) 596 F.Supp. 28, 33.)

NOTE: Always check to see if the employee was acting within the course and scope of its duties. If infringing activityy is done outside the scope, this would be an issue to examine more closely.

What is the difference between vicarious liability for copyright infringement of another versus contributory infringement?

These are two theories of liability to go after the company (who while they may have not have selected or posted the images at issue) can still be held liable. For more help, watch this video.

Case from Indiana Federal Court - The Skyline Photo

United States District Court for the Southern District of Indiana, Indianapolis Division

April 27, 2020, Decided; April 27, 2020, Filed

No. 1:18-cv-00056-JPH-DLP

RICHARD N. BELL, Plaintiff, v. MERCHANTS BANK OF INDIANA, Defendant.

Prior History: Bell v. Merchs. Bank of Ind., 2018 U.S. Dist. LEXIS 233172 (S.D. Ind., May 18, 2018)

Legal Analysis

Richard Bell alleges that Merchants Bank willfully used his copyrighted photo of the Indianapolis skyline on its website without his permission. He has moved for summary judgment on his claim of copyright infringement. Merchants denies that it infringed and contends that even if it did, the infringement was not willful. Merchants has moved for summary judgment on Mr. Bell's claim of infringement and as to willfulness. The parties have filed cross-motions for summary judgment, so the Court takes the motions "one at a time." For each motion, the Court views and recites the evidence and draws all reasonable inferences "in favor of the non-moving party."

In September 2014, Merchants Bank (DEFENDANT) of Indiana contracted with Sonar Studios Incorporated (INDEPENDENT CONTRACTOR) to develop Merchants' new website. Merchants provided the text for the website, but Sonar provided the other content, including most of the images.

One of the photos Sonar included on the website was a photo of the Indianapolis skyline at night (the "Photo"). This Photo and the other website content were included in the website's media library and stored on a server that Merchants leased. The website launched in January 2015 and, in 2017, included this statement at the bottom of every page: "© Copyright 2017 Merchants Bank. All Rights Reserved."

On March 13, 2017, Rebecca Marsh, the Merchants employee charged with operating the website, created a blog post that included the Photo. She linked to the Photo from the website's media library on the server where Sonar stored it.

In December 2017, Richard Bell discovered that the Photo was being displayed on Merchants' website. He recognized it as a picture he took of the Indianapolis skyline and had copyrighted with the United States Copyright Office. Neither Merchants nor Sonar had paid him for the Photo, and he had not provided them with a license to reproduce, distribute, or publish it.

On December 14, Mr. Bell emailed the owner of Merchants' server stating that Merchants was infringing on his copyright by displaying the Photo on its website. The next day, Ms. Marsh removed the Photo from the website and deleted it from the media library. Mr. Bell then sued Sonar and Merchants for copyright infringement.

Sonar has since been dismissed from the case [The parties appeared in person and by counsel for a settlement conference on November 25, 2019.A settlement has been reached in this action as to Sonar Studios Incorporated].

Mr. Bell has moved for summary judgment, and Merchants has filed a cross-motion for summary judgment.

"The Copyright Act provides copyright holders with six "exclusive rights," including the exclusive right "to display the copyrighted work publicly." 17 U.S.C. § 106(5). Anyone who violates any of these exclusive rights infringes on the copyright. 17 U.S.C. § 501(a). Copyright infringement may occur unintentionally. 17 U.S.C. § 504(c)(2); Design Basics, LLC v. Lexington Homes, Inc., 858 F.3d 1093, 1099 (7th Cir. 2017). In a case of willful infringement, the copyright owner may recover up to $150,000 in statutory damages. 17 U.S.C. § 504(c)(2).

Did Merchants' infringe on Mr. Bell's copyright?

Merchants admits that it displayed the Photo on its website in 2016 and 2017. Mr. Bell did not grant Merchants or Sonar permission to display his Photo. Merchants argues that it did not infringe on Mr. Bell's copyright, however, because it never uploaded the Photo to its website—Sonar did.

Once uploaded, the Photo existed on Merchants' website only as a unique hyperlink. According to Merchants, that makes this case similar to Flava Works, Inc. v. Gunter, 689 F.3d 754 (7th Cir. 2012) and Perfect 10, Inc. v. Amazon.com, [*1050] Inc., 508 F.3d 1146 (9th Cir. 2007), which held that businesses that displayed copyrighted photos or videos on their websites did not infringe on the copyrights.

But this case is different. In both of those cases, the defendants' websites acted as middlemen, pointing visitors to content hosted on other websites. In Flava Works, the defendant's website allowed customers to bookmark videos that they found somewhere else on the internet. When customers viewed bookmarked videos, they were viewing content that was hosted elsewhere. And in Perfect 10, Google allowed visitors to search for images, and it would display the results, but the images themselves were stored on another website. In both cases, the copyrighted images or videos were stored on servers hosting other websites that were beyond the control of the defendants.

Here, Merchants' website was not a middleman; its website displayed the Photo without connecting its visitors to another website that hosted the Photo. Unlike the defendants above, Merchants stored the Photo on servers it leased. Indeed, Merchants admits that the Photo was "being stored on its Website."

Furthermore, Merchants "had the right and ability to control and supervise the content of its website." Ms. Marsh had "the keys" to the website, allowing her to decide what images visitors to the site could see. This allowed Ms. Marsh to display the Photo or remove it entirely.

These facts make this case more like Batesville Servs., Inc. v. Funeral Depot, Inc., No. 1:02-cv-1011-DFH-TA, 2004 U.S. Dist. LEXIS 24336, 2004 WL 2750253, at *12 (S.D. Ind. Nov. 10, 2004) in which the court rejected an argument similar to the one Merchants makes here. There, the defendant hosted a website that displayed copyrighted photos of caskets, but when the photos were clicked, they took visitors to a different website that was authorized to display the images. The defendant argued that it did not infringe on any copyrights because the photos were just hyperlinks. The court rejected this argument, holding that the defendant was responsible for the infringement because it created the pages, paid for them, controlled them, and made changes to them.

So too here. Merchants paid for the website, paid for the server that stored the Photo, controlled the content on the website, made changes to the website, and even used the Photo with original content. The Photo's hyperlink was a part of Merchant's website with an address that included "merchantsbankofindiana.com." This conduct is sufficient to establish infringement.

Merchants also argues that it is entitled to summary judgment because it "never copied the Photo." But a party can infringe on a copyright holder's rights by violating any of its exclusive rights under 17 USC 501(a). An infringement on any of these rights, not just the right to copy, can support a claim for copyright infringement. See Flava Works, Inc. v. Gunter, 689 F.3d 760. Display of a copyrighted photograph on a webpage can infringe on the copyright holder's exclusive rights. See also Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1160 (9th Cir. 2007); Goss Int'l Americas, Inc. v. A-Am. Mach. & Assembly Co. (N.D. Ill. Nov. 30, 2007). On this basis, Mr. Bell has been awarded summary judgment in other cases in which businesses have posted his photos on their website without his permission. See, e.g., Bell v. Turner, No. 1:15-cv-931-TWP-DKL (S.D. Ind. Mar. 31, 2016).

Finally, Merchants argues that it is entitled to summary judgment because "Sonar, not Merchants, stored (uploaded) the [Photo] on the website without Merchants knowing that Bell claimed rights to it." While the designated evidence supports Merchants' lack of knowledge, liability for copyright infringement exists even when the defendant "was not aware and had no reason to believe that his or her acts constituted an infringement of copyright." 17 U.S.C. § 504(c)(2); Design Basics, LLC, 858 F.3d at 1099 (ownership and copying, not knowledge or intent, are the elements of an infringement claim).

Thus, "it is no defense to copyright infringement that the infringer reasonably but mistakenly thought he had a license." Douglass v. Hustler Magazine, Inc., 769 F.2d 1128, 1140 (7th Cir. 1985); see also Novelty, Inc. v. RCB Distrib., Inc., (S.D. Ind. July 9, 2008) ("copyright infringements may occur unintentionally"). Therefore, Mr. Bell is entitled to summary judgment on his claim that Merchants infringed on his copyright.

NOTE: It is important if the case cannot be settled and moves to litigation, to examine the level of involvement by the company and its officers, employees and directors. It makes no difference if they "knew" they were infringing or not. Many defendants will claims "I didn't know or mean to infringe." This is not a defense to copyright infringement as this is considered a "strict liability" legal violation. The next question is whether or not the company has the defense of "innocent infringement" ($200 plus attorney fees possible) or if it can be held liable for non-willful infringement ($750-$30,000 plus attorney fees is possible) or "willful infringement" (where damages can range from $30,000 up to a staggering $150,000 for each infringed photo/image). See more about copyright infringement penalties/damages in this video.

The Act does not define "willful," but the Seventh Circuit has held that infringement is willful "if the infringer knows that its conduct is an infringement or if the infringer has acted in reckless disregard of the copyright owner's right." Wildlife Exp. Corp. v. Carol Wright Sales, Inc., 18 F.3d 502, 511 (7th Cir. 1994). In making this determination, "the trier of fact may consider evidence that the defendant ignored the plaintiff's notices about copyright protection, did not seek advice of an attorney, and passed the matter off as a nuisance." In sum, while actual knowledge is not required for infringement to be willful, the defendants must know or have some reason to know that their actions constituted infringement. Martin v. City of Indianapolis, 4 F. Supp. 2d 808, 810 (S.D. Ind. 1998), aff'd, 192 F.3d 608 (7th Cir. 1999).

For example, the court in Morganactive Songs v. K&M Fox Inc. held that a defendant willfully infringed on a copyright when it knew it needed a license to use copyrighted material and ignored "repeated warnings of potential liability." No. IP-00-1039-C-G/H, 2005 U.S. Dist. LEXIS 49561, 2005 WL 3601973, at *8 (S.D. Ind. Mar. 29, 2005). A willfully blind defendant is one who takes deliberate actions to avoid confirming a high probability of wrongdoing and who can almost be said to have actually known the critical facts. A reckless defendant is one who merely knows of a substantial and unjustified risk of such wrongdoing. Erickson Productions Inc. v. Kast (N.D.Cal. Aug. 26, 2024, No. 13-cv-05472-DMR) 2024 U.S.Dist.LEXIS 152885, at *18.).

NOTE: Again, it is important to examine the facts. "Reckless disregard" is something I see quite often. For example, if we send a demand letter notifying a company about infringement and they do not take down the image, and ignore the cease and desist demand letter. Also, look to see if the company been sued for copyright infringement before (i.e repeat offender)? Other factors may include cropping out photographer's copyright symbol (and using your own copyright symbol on the bottom of the company website), and things like removing a watermark, or failing to provide the required attribution or following other requirements to use creative commons imagery and photography. The existence of a copyright notice on a website containing infringing material may constitute willful infringement, knowledge of infringement, or reckless disregard for infringement. See Bell v. Fischer, 1:18-cv-1570 RLY-MJD, Dkt. 22 ¶2 (S.D. Ind. August 15, 2019) and Bell v. Patrick, 1:16-cv-1160-TWP-DML, Dkt. 18, p. 2-3 (S.D. Ind. April 9, 2018).

Innocent infringement

If a Copyright Plaintiff litigant cannot show willful infringment, the company may seek to assert a "innocent infringement" defense. This defense DOES NOT defeat liability, but it can reduce the statutory damages amount to as low as $100 per infringed image. Many defendants assert this, however, it is not as easy to satisfy as it sounds. Here is some case law on point.

An innocent infringer is someone who's not aware and had no reason to believe that his acts constituted infringement." See Erickson Productions Inc. v. Kast (N.D.Cal. Aug. 26, 2024, No. 13-cv-05472-DMR) 2024 U.S.Dist.LEXIS 152885, at *23.)

The “innocent infringer” provision of section 504(c)(2) has been the subject of extensive discussion. The exception, which would allow reduction of minimum statutory damages to $100 where the infringer “was not aware and had no reason to believe that his or her acts constituted an infringement of copyright,” is sufficient to protect against unwarranted liability in cases of occasional or isolated innocent infringement, and it offers adequate insulation to users, such as broadcasters and newspaper publishers, who are particularly vulnerable to this type of infringement suit. On the other hand, by establishing a realistic floor for liability, the provision preserves its intended deterrent effect; and it would not allow an infringer to escape simply because the plaintiff failed to disprove the defendant's claim of innocence. (17 U.S.C. § 504 (LexisNexis, Lexis Advance through Public Law 118-151, approved December 17, 2024).)

Attorney Steve® Tip: Look to the nature of the company. What is their business? Are they sophisticated in online marketing, advertising, and do they routinely post content? Did they take any measures, for example if they are claiming a fair use defense, to analyze the four fair use factors? Even if the defense applies, look to actual damages, and you can still seek to recover attorney fees. Realize however, copyright attorney fees are subject to the discretion of the court applying a variety of factors.

Tips to avoid copyright infringement for business owners

Here are some of my most imnportant tips. This is not an exclusive list.

1. Properly license your photos, drone videos, music for your corporate videos, etc. A license is your best form of protection.
2. If you are using Creative Commons licenses, make sure you are READING and FOLLOWING all the photographers requirements for using their image. If you fail to follow even one requirement, you can easily find yourself dealing with a photo attorney and a legal demand.
3. Create and copyright your own images (hey, you can pursue infringers of your important works too).
4. Ask for written permission to use an image. An email to the photographer can be very simple, and if done through social media account, can sometimes be quickly accomplished. BINGO, you are good to go.
5. Be careful with MEMES. While parody can constitute a fair use defense, I have seen claims for things that appear to be re-posting of a meme. Sometimes it makes sense to have a legal counsel on retainer to review your social media posting.
6. Do not crop off copyright symbols, author information or watermarks. This can show willful intent, and reckless conduct at a minimum (a disregard of a photographers rights).
7. Do not assume a photographer will not find their images on internal pages of your website or on your social media channels.
8. If you are using third party contractors, freelancers, of Fiverr, make sure you have written agreements with these entities or individuals, and these should include indemnification clauses.
9. Consider purchasing general liability insurance that covers "advertising injury" or media liability.
10. Train employees to understand copyright law, especially in your marketing and advertising departments.

Hope this article has been helpful.