That photo on your website?  It might end up costing your company more than you could have imagined.

Across the country, a breed of plaintiffs—armed with new and improved artificial intelligence (“AI”) and reverse-image search technology—is systematically scanning the internet for unlicensed images, videos, and other copyrighted content.  These “copyright trolls” target businesses of all sizes and, in many cases, use federal lawsuits—or threats of federal lawsuits—as revenue generators, seeking up to $150,000 per allegedly infringing work.  All it takes is an overlooked image pulled from a Google search or a stock photo website to trigger a demand letter—or worse, a lawsuit—landing on your desk.  In certain cases, plaintiffs need not even prove “actual damages.”[1]

Advances in AI and reverse-image search technology have dramatically changed the economics of copyright infringement “policing.”[2]  Unlike earlier search technologies that relied on exact matches, these modern systems identify copyrighted content even when it has subsequently been cropped, resized, color-adjusted, embedded within other content, or otherwise modified.[3]

The result?  Plaintiffs and copyright-enforcement agencies are increasingly able to detect and pursue alleged infringements that might previously have gone unnoticed, and at lower enforcement costs.

In turn, many organizations are on the receiving end of a significantly increased number of demand letters, licensing claims, and infringement actions targeting the use of images, videos, or other copyrighted materials on websites, marketing materials, social media channels, and online marketplaces without proper authorization.  Particularly for companies engaged in digital marketing and online commerce, this makes proactive copyright-compliance practices more important than ever before.

Take a Proactive Approach.

While navigating copyright law in the digital age may seem overwhelming at first, certain best practices for compliance can serve to protect against slip-ups that may otherwise prove to be costly if ignored or left unaddressed.  Taking a proactive approach can help identify potential issues before they develop into disputes or legal claims.  To this end, consider the following:

• Businesses that use images, videos, audio recordings, or other creative content for commercial purposes (e.g., advertising and marketing) should proactively conduct an internal audit of those materials to determine if they were obtained from sources such as internet searches, stock photo websites, or third-party platforms. If so, confirm your business possesses valid licenses, permissions, or other authorization for each copyrighted work being used.
• Preserve all relevant records relating to such content and its use, including, but not limited to, the dates on which such content was initially posted and any available licensing documentation, communications, or screenshots. This will be pivotal if questions arise later regarding ownership or authorization.
• Identify any third-party vendors that manage advertising campaigns, marketing content, websites, or social media accounts on behalf of your organization.[4] Do not assume that images, videos, or other creative works used by vendors have been properly licensed.  Instead, establish procedures to understand the source of such content and verify that appropriate rights and permissions have been obtained.
• Agreements with marketing agencies, social media consultants, and other third-party vendors should include robust indemnification and hold harmless provisions, including reimbursements of legal fees, that protect against losses, claims, and expenses arising from your vendor’s infringing conduct. These indemnification provisions should apply regardless of whether infringement is intentional or inadvertent.
• Resist the temptation to assume that potential copyright issues have become stale simply because the content was posted years ago. Although civil copyright infringement claims are generally subject to a three-year statute of limitations, many jurisdictions apply the “discovery rule,” under which a claim does not accrue until the copyright owner knew or reasonably should have known of the alleged infringement.  As a result, the mere passage of time does not necessarily eliminate the risk of a claim.  This principle may become increasingly significant as copyright owners—including those who acquire copyright rights through purchase, assignment, or inheritance— continue the trend of adopting sophisticated AI and reverse-image search technologies to identify unauthorized uses of copyrighted works online.[5]
• Do not to assume that “embedding” or providing a hyperlink to a photo or video from another’s website will insulate your organization from liability merely because the photo or video was not otherwise downloaded to and reproduced from your organization’s server. Employees may think that “embedding” or “linking” to another party’s content is a defense to copyright infringement because doing so simply directs a user to different site as opposed to actually “copying” the underlying materially from it.  This is not necessarily the case though; the analysis of this “server test” argument is quite nuanced.  In fact, courts throughout the country that have been confronted with this argument have rendered conflicting opinions with mixed results.  So, be safe.  Avoid this practice too (at least prior to consulting counsel from within your specific jurisdiction).
• Determine if your business should acquire insurance protection for these types of potential claims. Alternatively, in a similar vein, determine if its existing coverage adequately addresses the risk of copyright infringement and other intellectual property claims.

You Received a Demand Letter from a Troll … Now What?

Despite your organization’s best efforts, it may still receive a formal demand letter alleging copyright infringement.  If that happens—do not panic, but do not ignore it either.  The following steps can help your organization respond effectively:

• Determine whether your organization has rights in the work(s), as outlined above. Sometimes this requires discussions between or among several departments within your organization.  Other times associated and affiliated entities should be consulted as well.  Keep in mind that “copyright trolls” tend to target alleged infringers through a practice that emphasizes volume over substance.  Stated differently, trolls tend to “act first and ask questions later.”  For this reason, demand letters often employ language such as “it appears that…” or “to our knowledge…” to qualify the accusations being made.  So, you should not simply assume that a claim has merit.
• If you determine that you do have authorization to use the work(s) at issue, hopefully letting the troll know will resolve the dispute and make it go away. Fingers crossed.
• If you determine that you do not have authorization (or the troll remains aggressive), your organization should most certainly involve legal counsel. Legal counsel can then evaluate key pieces of information such as the date the work or works at issue were registered, published, and, in turn, whether the maker of the claim would be entitled to “statutory damages.”[6]  To this end, if the demand letter you received does not include the copyrighted work’s registration details, together with proof that the sender is authorized to act on behalf of the troll, this information should be sought immediately.
• Finally, review your organization’s existing insurance coverage and assess whether the allegation may be covered. If coverage exists—or you think it might—report the allegation to your carrier as soon as possible after being placed on notice of the cla

Ignorance Is No Excuse.  The Best Defense is a Good Offense.

If all of this seems like an unfair “shake-down,” you are not alone.  But as the saying goes, ignorance of the law is no excuse.  The Copyright Act is generally unforgiving, and the technology powering these automated monitoring platforms will only improve—becoming more accessible and cost-effective for rights holders—in the years ahead.  The good news?  Proactive corporate workflows can help your organization get in front of these issues before they arise.  The time to establish these workflows is now.  Implement them, use them, and continuously refine them.

[1] See n. 6, infra.

[2] As mentioned, rights holders and their representatives now deploy AI-powered tools that scan billions of webpages, social media posts, online advertisements, and e-commerce listings for unauthorized uses of copyrighted photographs, videos, music, and other creative works.  These automated web-crawling capabilities combine visual recognition algorithms and different types of metadata analyses to allow copyright owners to locate potential infringements at a scale and speed that would have previously been thought of by many to be unfathomable by manual monitoring alone.

[3] These automated monitoring platforms also often generate reports as a matter of course identifying potential commercial uses that may be deemed unauthorized and, in turn, infringing by their nature, for rights holders to then go and act on.

[4] If your vendor uses unauthorized content, your company may be held liable.

[5] As discussed above, these tools enable rights holders to locate images, videos, and other protected content that may have remained undetected for years.  Do not assume that older content is insulated from scrutiny, as the use of these technologies may affect when a copyright owner is deemed to have discovered potential infringement and, in turn, when the limitations period related to the same begins to run.

[6] “Statutory damages” are available to all copyright owners who registered the copyrighted work either before the infringement or, if registration occurred after the infringement, within three months of the first publication of the copyrighted work.  Hence, the need to engage legal counsel.  Whether statutory damages are available to a troll will largely dictate how negotiations proceed and the amount of troll’s demand.  The analysis must be undertaken properly.

Statutory damages of between $750 and $30,000 per infringed work are generally awarded by courts to plaintiffs who are entitled to and elect them. For this reason, do not be surprised if your organization receives a demand for $30,000 (or a multiple thereof if more than one work is at issue).  Notably, though, if an infringer is deemed to have known that its conduct constituted infringement or recklessly disregarded the possibility of it, courts may award up to $150,000 per infringed work under the Copyright Act.  So, you may see this figure (or a multiple of it) serve as a demand as well.