Avoiding the legal pitfalls of stock imagery

by Jenna Wilson

A version of this article was originally published by LexisNexis in The Lawyers Weekly, 5 June 2009

For many businesses, stock photography and illustrations are an inexpensive source of creative material for advertising literature and websites. But businesses who misuse stock images, even innocently, can find themselves negotiating settlements for thousands of dollars for the use of graphics they had assumed were free to use.

Many stock agencies provide online portfolios of photographs, illustrations, and even video, available to be licensed for use in print and digital media. To protect their assets against unauthorized copies, stock agencies monitor the Web for suspected copyright infringers; suspected infringers may be presented with an invoice reflecting the licence cost, perhaps with a punitive factor added in. Stock agencies sometimes resort to copyright litigation to collect compensation and for the deterrent effect on others.

Unfortunately for some businesses, images may have been properly licensed, but the “paper trail” may have been lost. Others may have erroneously assumed that their designer had taken care of any legalities involved in using third party images—or that their designer had provided his or her own original works.

This problem is exacerbated by the growth of “crowdsourcing” and the democratization of design contracts: instead of retaining (higher-priced) professional designers, clients can use various Web 2.0 services to solicit design submissions at lower cost from a larger pool of potential designers—especially amateurs—under the guise of a competition. This practice isn’t new, but it has gained momentum and a greater reach on the Web.

However, the lower compensation that is frequently offered in the crowdsourcing scenario provides less motivation to participants to create original work. In some cases, less professional designers have even submitted copies of stock images as their own work—a doubly-problematic practice when the client was looking for an original and unique image to use as a trade-mark or corporate identifier.

For the business or individual looking for cost-effective creative design work, the solution is to manage these risks with due diligence:

Trademarks

Trademarks are better developed from original material, not stock images. Stock images, by definition, are images that are stored in archives or banks for potential future use. They were not created exclusively for one client’s particular requirements. While some stock images might be available for exclusive use, most are licensed strictly on a non-exclusive basis. Some stock images may be licensed exclusively only for time-limited, geographically-limited, and/or application-limited use.

Thus, a stock image may be licensed to others in the future, and may have already been used by somebody else—perhaps even by the client’s competitor. These other uses may destroy any potential distinctiveness in a stock image, or a design developed from a stock image, impeding its use as a trademark. Moreover, most stock agency licence agreements expressly prohibit the use of their stock images in trademarks, logos, service marks, and other corporate identifiers.

Use of stock images

Many clients do not realize that “royalty-free” does not mean “no payment required” or “free for all uses”. Stock licence fees rarely buy permission to use an image in any way possible. Most stock images are licensed as either “rights-managed”, meaning that the fees are negotiated on a case-by-case basis determined by factors such as type of use, extent of distribution, and duration—which allows the stock agency to ensure that the image is not used for a competing purpose by another licensee at the same time—or “royalty-free”, meaning that in exchange for a one-time payment, the client is granted the non-exclusive right to use the image, which can include multiple projects, not limited in time.

However, even under royalty-free arrangements, certain uses may be prohibited. For example, the licence terms may forbid the use of the image in connection with the distribution of print-on-demand products such as t-shirts and calendars, or with downloadable products like electronic templates and wallpaper. Some licences limit the number of impressions or reproductions (which can include web page views) that may be made. Use beyond these limitations may require additional permission and additional licence fees. Without the additional permission or licence, use beyond the original licence terms may constitute copyright infringement or breach of contract.

Document all acquisitions

The client should retain any “proof of purchase” documentation from the acquisition of stock images—mere possession of a copy of the high-res downloaded graphic is not enough. If the image was obtained from a stock agency’s website, particulars of the licence transaction would likely be documented in the agency’s records, and the client may have received e-mail confirmation of their licence fee payment. Years down the road, however, the client may have lost that e-mail confirmation or access to the online records; and if the client obtained the stock image through a contractor such as a consultant or website designer, then the client may not have any documentation at all.

Keeping an offline or paper record of the licence transaction can help prevent future headaches, should the need arise to demonstrate that use of a stock image was properly licensed. If the stock image was obtained via a contractor, then the client should obtain a copy of the documentation from that third party.

Using freelancers

Due diligence is still important even when sourcing materials through a consultant or freelancer. Clients using a designer or other contractor for design work often assume that any legal or contractual issues regarding the use of creative works will be handled by the contractor. However, not every contractor understands the nuances of licensing third-party material. Both the client and contractor should understand and agree who will be responsible for clearing rights or obtaining permissions—including copyright, trademark rights, and personality rights (occasionally, model releases may be required)—and memorialize this in the contract setting out the contractor’s scope of work.

Even if the contractor is retained to provide original designs (such as a logo or trademark) for the client, the cautious client will still engage in due diligence. Not every contractor actually produces creative works in-house—some outsource the work, and may even crowdsource it. The client should ask the contractor who will be preparing the designs, and who will be handling any rights issues. It may even be appropriate for the client to request an indemnification and warranty against allegations of intellectual property rights infringement.

The originality of the contractor’s work may also be investigated by a cautious client, for example, by comparing it with the designer’s style as evidenced in his or her portfolio, or by asking to see the rough drafts and sketches leading to the finished design. The client could even conduct its own online image searches (using resources such as stock image websites and Google image search) to see if the design bears too much resemblance to existing stock images to be explained away by coincidence.

Such independent investigation of the originality of a creative work is rather like proving a negative, and is not foolproof. It can also be quite laborious. But given the potential cost of infringement, sometimes a little prevention is worth a pound of settlement.