(Click here for Part 1)

Sally, your long-time client, is back in your office. “I found the most wonderful Mr. Peanut designs on the Internet today – that means they’re free, right? Let’s get started on producing some promotional products I want you to do.”

Oh, Sally, just because you found a design on the Internet does not in any way make it “free,” or allow you to use it without full regard for U.S. copyright and trademark law. The topics the Internet does expand, however, are two-fold. First, copying is much easier; just select and copy to file. Second, the critical question is who is going to enforce their legal rights anyway. After all, the owner might just be outside the United States and its protection for owners and authors.

Remember our basics from Part I in this series: copyright law protects the author (the owner or creator of the expression), while trademark law, on its face, is meant to protect the consumer from false and misleading advertising and communication.

Certain legal issues related to the Internet concern just that–use of images, hyperlinks and designs in cyberspace. Yet the larger issue is one of asking for – and receiving – permission from the appropriate owner of the copyrighted materials or the trademark.

THE INTERNET AND TRADEMARKS

Trademark law can come into effect on the Internet when a domain name is chosen, or when attempts are made to choose a name. Consider, for example, Sally’s continuing desire to appropriate the Mr. Peanut icon and name for her own business. “Let’s take www.mrpeanut.com,” she demands. Is it already taken? Perhaps. Type in the hyperlink and you are directed to the Planters Web site, where Kraft Foods Inc. owns the company and its federally-protected trademark. Kraft employs a strategy of casting a net of ownership of domain names tied to its Mr. Peanut icon.

Yet type in www.peanutman.com and the outcome is different. Here, the name is taken. But the Web site prominently states (as of the date this column was written), “The domain peanutman.com is for sale. To purchase, call…” Let’s see who gets there first, Sally or Kraft Foods.

The legal issues with domain name choices look similar to traditional, or off-line, trademarks. First, the mere registration of a domain name does not create a trademark, by itself. The full trademark registration process must be undertaken to have the protection of the law. Also, a person or entity that registers a domain name with the objective of creating confusion among consumers (or which dilutes a pre-existing trademark) is subject to legal challenge from the owner of the trademark under attack. (Sally, this means you.)

IT’S ON THE INTERNET SO IT’S FREE, RIGHT?

Copyright law and the Internet are still evolving. As I mentioned, it is so easy to copy something off the Internet that an entire generation (that is, your designers and other employees) may consider themselves entitled to capture any and all available images. This opens the larger discussion of the need to obtain authorization, or permission, before using an image or design in your commercial work. Without getting that permission, you are subject to a lawsuit for copyright infringement or violation of trademark law.

Consider, as an often-used example, stock photos. Your client brings you a file to print with an image from a stock photo company. As the printer of this file, you are now a participant in the decision chain whether or not this is a rightful use of the image.

Generally, there are two kinds of images available for purchase. The first is usually referred to as right-protected. These images become available after setting a specific fee for a specific use. While the image quality is typically higher, so is the price. That’s why the second kind of image is for sale, royalty-free.

STOCK PHOTOS AND CLIP ART

Royalty-free images are not sold on an exclusive basis, so the picture that is purchased by your client, Sally’s Boutique, could also appear exactly in a poster for a life insurance company or an airline. Nevertheless, you will still have to truthfully commit to the use for the photo (advertising or commercial use versus educational or informational) and you may be subject to restrictions regarding its reproduction or modification.

Clip art is another example of images available for purchase but still needing at least a minimum of permission. Here the artwork is usually royalty-free, or alternatively, available in what is called the public domain. If you have ever bought a CD-ROM of clip art or downloaded similar images from a Web site, you have purchased a limited license for use of the royalty-free designs. When you opened the shrink-wrapped CD case, or clicked through on the Web site to begin the download, you accept the license the publisher has offered, with all its restrictions.

LICENSES AND PROMOTIONAL MERCHANDISE

The licensing process – that is the process of getting permission from the legal owner of an image, trademark or logo – is more involved for producing merchandise. Many of you are familiar with, or even manufacture, the kind of licensed merchandise that is approved by entities such as the NCAA, the NFL, or selected musicians and artists.

With this kind of license, the organization giving the approval has made all kinds of demands: the right to a specified payment (a royalty), the right to have the product made to exacting quality standards, and the right to enter your printing facility to double-check whether those standards are being met. In return, you get to produce high-end, high-quality products with predictable revenue, as long as you abide by the contract terms.

Where the more troublesome legal issues arise is with clients like Sally. She wants to take the Mr. Peanut icon, change just a few things here and there, and put the altered image on handbags, towels, caps, mousepads, and more, which will promote her commercial enterprise. What Sally is requesting puts her and you clearly in the legal gunsights of Mr. Peanut’s owner, Kraft Foods. But even with the purchase of a royalty-free image, a stock photo or clip art, beware of major alterations to the image you are buying.

AS ALWAYS, PROTECT YOURSELF FIRST

Yes, it’s tough to use the “No” word with a client. But, after all, we are part of the corporate identity business. We have a responsibility, and a legal obligation in the U.S., to respect copyright and trademark law. When in doubt, seek a legal release or other indemnification from your client, especially those like Sally. She may want to skirt the law but that is no excuse for you to do it, too. If you participate in a scheme like Sally’s, and you know or should have known it involved violations of copyright or trademark law, that will be your name on the lawsuit in addition to Sally’s. And that’s not the kind of recognition your business needs in today’s market.

The Fine Print: This column is meant to explore issues of importance to your business. I am not offering legal advice. You will always need to consult with your attorney and other business advisor before considering any of the ideas discussed in this column. Any businesses or persons mentioned are purely fictional and are not based on any real business or person, even in part.