Can I sue a new owner for copyright infringement?

[josunshine]

What is the name of your state (only U.S. law)? NC

I had a long-term client (corporation) whose company was seized by the bank under a blanket lein die to failure to pay a loan. The bank then sold the company to a new owner. The new owner happens to be the father of the sole contact I worked with at the company. This person (we will call him Bob) currently runs the operation (and most likely has some kind of ownership stake).

I was burned pretty badly during the process becuase the bank seized the company with them owing me a considerable sum of money. I have no recourse due to the blanket lein. After 10 years of doing business, my contact has completely stopped using me and has cut off contact.

I did virtually all of the design and graphics that the company is currently using. I did some research to see what I could do in terms of protecting my designs from being used and boy was I surprised at what I uncovered.

There are no contracts between us, so I hold copyright to all the materials. They hired a third party to edit the website I created for them (prior to the siezure/sale). They distributed graphics that I created to at least 18 different companies (dozens of images per company) and those companies are currently displaying those graphics on their websites (I don't know if the distribution occured before or after the siezure/sale). Finally, they contracted a designer to create derivative print materials based on my designs (I suspect this happened after the seizure/sale).

Bob would have been the person to have done all of these things whether before or after the sale. I know I have the legal right to demand the third-parties remove all the copyrighted graphics from their sites. I believe I can also ask the website that I designed be either removed or restored to its original version and I can demand that all derivative print materials be destroyed. I think I can also ask for compensation in lieu of removal of the aformetioned items? Is that correct? The big question I have is can I sue them for copyright infringement? Can Bob just say that all of the infringements took place before he and his father owned the company and therefore as new owners they are not responsible? Does the responsibility convey? Is the fact that he was in charge of marketing and my sole contact for 10 years and therefore aware of the fact the company was illegally distributing my copyrighted material matter either way (although he may not have known what he was doing was illegal)?

Thanks for your help!

 

[divgradcurl]

As a general concept, if there is continuing infringement, the new owners would be liable for damages caused by any infringement, at least from the date they took over the business. Whether or not they would be liable for damages arising from infringement that occurred prior to their takeover of ownership would depend no the business structure, what the new owners actually acquired, whether or not there was a bankruptcy, etc.

All that said, based on what you have written, it sounds like you would have a very tough case. You admit that you did the work for them, and you had a business relationship for at least 10 years. Even without a written contract, a court might very well find an "implied license" exists, because you were involved, knew what they were doing (including the derivative works), and didn't do anything about it until there was this default on the part of the company.

The other issue is that, even without an implied license, there is a concept in the legal world known as "laches," which basically says if you knew there was infringement going on, and didn't do anything for years and years (there is no set time), you allowed the other party to think what they were doing was legal, ,and it wouldn't be "fair" to allow you to sue them now. In other words, you can't sit on your rights -- you either need to enforce them when they are violated or soon after, or hold your piece.

You might want to talk with an attorney in your area, who can review all of the actual facts of your case and advise you accordingly. Even if you don't have a copyright case (which you may, it just doesn't sound as if you have a strong case based on what you've written here), perhaps you still have a breach of contract cause of action against the new owners, based on their taking over of the business. An attorney will be able to sort out all of the facts and guide you.

 

[josunshine]

Thank you so much for your response.

I've done extensive research on copyright especially as it applies to the the internet and found that copyright (in general) cannot be transferred verbally, there must be a written instument. I was an independant contractor and there was not Work Made For Hire Agreement, so copyright for everything remains with me. The only infringement that I was aware of were the edits to the website and the distibution of materials to two websites. I was not made aware of the additional 16 distributions and I did not give permission for them to use my design to create the derivative print works. Am I missing something? It seems clear that at a minimum I could demand they stop using all of the materials illegally or pay a usage fee. No?

 

[divgradcurl]

Thank you so much for your response.

I've done extensive research on copyright especially as it applies to the the internet and found that copyright (in general) cannot be transferred verbally, there must be a written instument. I was an independant contractor and there was not Work Made For Hire Agreement, so copyright for everything remains with me. The only infringement that I was aware of were the edits to the website and the distibution of materials to two websites. I was not made aware of the additional 16 distributions and I did not give permission for them to use my design to create the derivative print works. Am I missing something? It seems clear that at a minimum I could demand they stop using all of the materials illegally or pay a usage fee. No?

I wasn't talking about the transfer of the copyright -- I was talking about an implied license to use the copyright. The whole point of the qualifier "implied" is that it is not a written or bargained-for license, but is instead based on the conduct of the two parties. In other words, if the two parties act as if there is a license to use the work, a court may find that a license does exist.

As far as a takedown notice is concerned, as a copyright owner you can file a takedown notice with the company's ISP, see 17 U.S.C. 512(c). However, if the company disputes the notice, you either have to file a lawsuit against them or the material goes back up -- so this may not be a final solution to your issue. This is why I discussed talking with an attorney.

Also, what you are describing is essentially self-help -- you were okay with the arrangement, didn't care that they used the products that you designed, until they reneged on whatever agreements you had with them -- but that's a breach of contract issue, not a copyright issue, and the courts typically do not look with favor on attempts at "self help." Your remedy for them not paying you is to sue them for breach of contract, unless such a remedy is unavailable due to an intervening bankruptcy.

Also, a takedown notice is not necessarily without risk: Law.com - Universal May Have to Pay the Piper Over Takedown of Dancing Baby. Just something to consider.

 

[zootsuit]

Just to help me understand your views: would the necessity for a written transfer of copyright come into play if the business owner sold the rights to josunshine's works to another firm?

 

[divgradcurl]

I am not sure that would be relevant. If there is a license, then the license can be transferred in most cases. One can only sell or transfer what rights they actually have. In this case, the OP almost certainly has retained ownership of the copyrights, that's not really in question. However, if a license is found to exist, there is no reason to believe that the license can't be transferred to another. Licenses are generally transferable unless they are explicitly made nontransferable.

The OP should talk with an attorney to figure out was rights he might have in this situation.

And again, this shows why business relationships should be in writing.