Etsy, the online e-commerce website focusing on handmade goods, crafts, and vintage items, has continually come under fire due to incessant copyright infringement found in its marketplace shops. This shouldn’t come as a surprise. Etsy has over 5 million sellers that are mostly individuals or small businesses that don’t have legal counsel that they can regularly consult. As such, many Etsy sellers are unaware of copyright laws or neglect to do their due diligence when purchasing wholesale goods from companies located in countries that don’t enforce copyright laws, such as China.
The result is that many Etsy stores contain items that are likely cases of copyright infringement, with many artists claiming Etsy sellers are ripping off their designs.
Here is a typical scenario:
An artist is surfing through Etsy looking for a Mother’s Day gift when they are confronted with their own artistic work adorning a t-shirt, a hat, or a nice fluffy pillow. Outraged, the artist contacts Etsy to ask for the removal of the item. Etsy complies, sometimes even removing the store due to its many infringing items.
The artist, knowing that there could be more infringements, scours Etsy to find similar items being sold by other Etsy sellers. The infringing products are removed but pop up later by new sellers, or are added again by existing sellers. The artist continues to request removals but it is like playing a game of Whac-A-Mole, leaving the artist feeling helpless and frustrated.
Stopping an Etsy copyright infringement is like playing a game of Whac-A-Mole.
Unfortunately, while Etsy has become more aggressive in dealing with unscrupulous sellers, the Etsy copyright infringement problem is far from resolved. Is there any recourse for the content creators to stop these infringements?
Is Etsy Safe?
First, to better understand Etsy’s responsibilities regarding infringing content on its site, let’s review the basics of Copyright law and the rights given to creators of artistic works. Copyright is available for any :
- Original works of authorship,
- Fixed in a tangible medium (meaning more than just an idea in your head) and
- with a minimal degree of creativity.
The bar for the degree of creativity required to receive copyright protection is set pretty low, so generally, as soon as your creative idea is made tangible, whether as a painting, photo captured on a camera sensor, or even a drawing on a napkin, the artist has automatic copyright protection for the work.
Registration with the U.S Copyright Office is not required (although copyright registration does provide many benefits), nor does the work need a © symbol or other ownership markings on the work.
As the copyright holder, U.S. Copyright Law affords certain exclusive rights regarding the use of artistic work. Only the copyright holder can decide who can:
- reproduce (i.e., make copies of) the work;
- create derivative works based on the work (i.e., to alter, remix, or build upon the work);
- distribute copies of the work; or
- publicly display the work.
More importantly. copyright is a “no-fault” law, so if any one of these exclusive rights is violated, it is considered an infringement. The reasons for the infringement have no merit. Even if the Etsy seller legitimately purchased the items from a wholesaler or distributor, if they show the infringing artwork in the Etsy store, they are infringers.
The seller’s lack of knowledge that the goods were infringing doesn’t matter. So while artists often disparage these sellers and crooks and thieves, very often, they are actually unaware that they are infringing, having purchased the goods in what they presumed was a legal manner from a reputable seller.
Can I Sue for Copyright Infringement?
There are three potential defendants, 1) the Etsy seller, 2) the wholesaler where the seller bought the goods, and 3) Etsy However, there are a few things that make suing any of these parties difficult.
Suing the Etsy Seller
While anyone can initiate a lawsuit, it may be difficult to sue an Etsy Seller. First, the lawsuit may not be profitable. In a standard copyright infringement lawsuit, the copyright holder can only receive the profit from the sales made by the seller. Most Etsy sellers don’t sell in high volume, so there is often little profit from infringing goods. Plus, you won’t know how much they sold until you initiate legal action and request the sales figures as part of the lawsuit. So the copyright holder would have to spend money on a lawyer just to find out if the lawsuit is even worth it.
For example, let’s say you discover someone selling your artwork on a t-shirt. Each shirt sells for $20, and you hire an attorney to initiate a lawsuit. Just to get to discovery where you can find out the sales figures could cost several thousand dollars. Let’s say you find out that about 300 t-shirts have been sold. $20 x 300 = $6000, which could potentially be yours. But since you are only entitled to the profit, you have to remove the costs from the $6000. If each shirt costs the seller $8, and then they add in other costs like shipping and marketing expenses, the profit on these shirts can easily come down to $3000. Any lawsuit would cost you far more than that in legal fees.
Even more problematic, if you were to sue, many of these sellers have likely spent the money or taken it as salary, leaving little within the company to grab. And, many of these sellers have formed LLCs or other corporate entities which protects you from getting them to use their personal assets to pay you. Or, they seller may be located in a foreign country with different laws, making it even harder or more expensive to sue. In many cases, it is easy for the seller to just close the company if the penalties are too high. Then they can just open another one and start a new Etsy store.
So, in most cases, there may be little you can do other than to have the work removed and continue to play the game of Whac-a-Mole for every infringement.
Copyright registration, statutory damages, and legal fees
One thing that can make handling the problem a bit easier is to register your artwork with the Copyright Office. As mentioned earlier, copyright registration is not required but has several benefits. Any work registered with the U.S Copyright Office prior to an infringement (or within three months of the work’s publication) is entitled to statutory damages, which range from a minimum of $750 to a maximum of $30,000 per infringement, with the specific amount being determined by the court. More importantly, reasonable legal fees will be paid by the infringer if you win.
Remember that copyright infringement is a no-fault law, so if the seller put your work on Etsy without your permission, you win. The question becomes how much you win. That means your legal fees would be paid for, making any lawsuit easier to manage. In fact, most copyright litigation attorneys would be willing to take a statutory damages copyright lawsuit on contingency. In that case, you would only be responsible for the hard costs, like filing fees, but don’t have to pay for the lawyer’s time. The attorney’s fee comes out of the final settlement or award.
Still, you cannot get money from a small company that doesn’t have any cash on hand. If that happens, then you would still only have paid for the hard costs, so the investment in the lawsuit would be minimal, even if it turns out that the seller closes the company to avoid paying you.
Etsy Copyright Infringement and China Wholesalers
Alibaba is a Chinese-based wholesaler where Etsy sellers can find goods to resell, but it also has many infringing items.
As mentioned earlier, the vast majority of sellers in the Etsy marketplace are small mom-and-pop stores that generate profit in the tried and true method of buying low and selling high.
Etsy provides the infrastructure which helps the sellers limit their expenses, enabling them to sell goods at reasonable rates, often below prices found on competitors’ sites outside of Etsy. How do Etsy sellers buy such cheap products? They buy from China through online wholesalers, such as Alibaba.com.
Consider this: When most Americans think of copyright infringement or knock-off items, they think of China. China has been very laissez-faire in its protection of international copyrights. Factories that produce large amounts of goods are more than willing to circumvent licensing due to the large fees that would entail.
Consider a t-shirt factory making hundreds of different t-shirts with individual designs. The cost of licensing fees, the time necessary for developing those agreements, and accounting requirements for payment to the licensees, amongst other monetary considerations, provide a real incentive for these factories to avoid the whole licensing process.
Combine that with the lack of copyright enforcement by the Chinese government, and there becomes very little reason for a Chinese manufacturer to pursue licensing agreements with U.S. artists. And, with so many artists showing off their artistic creations in high resolution on their websites, it’s easy for a Chinese manufacturer to download all the works of a particular artist and apply them to various goods.
Etsy sellers buy from these online Chinese wholesalers assuming that the company has the legal right to sell the goods when, in fact, they are infringing. As soon as the goods are made available for sale in the seller’s Etsy marketplace, they are infringers even though they paid for the products legitimately.
In a traditional purchasing workflow, there would be recourse. A retail seller of infringing goods sued by a copyright holder would likely have had an indemnification clause in the purchase order requiring that the wholesaler be responsible for any legal action due to copyright infringement for items purchased. But if the wholesaler is in China, the small Etsy seller is not going to be able to hold it responsible for selling infringing goods. And so, the seller remains responsible.
So, if you can’t sue the Etsy seller and you cannot sue the Chinese wholesaler, then what about Etsy?
As a major online marketplace, one would hope that Etsy would be responsible for infringing items sold on their site. However, Etsy is protected by the “Safe Harbor” provision of the Digital Millennium Copyright Act (DMCA) as long as Etsy is merely a passive conduit for user-generated content. Etsy is providing the forum but does not take part in the manufacturing of any of the goods sold. As such, they have the benefit of the “Safe Harbor” and cannot be sued for infringement. Why would the government let companies like Etsy off the hook?
Well, given that copyright law is no-fault, then anytime a user uploads infringing content to companies like Etsy, YouTube, or Vimeo, they could be sued. There is no way a company could operate under those conditions, so Congress carved out an exception so these companies could exist. In return, however, the online provider, such as Etsy, must implement and follow certain procedures.
You may have heard of these procedures under the moniker “takedowns.” If a copyright holder finds their work on Etsy, they can make a takedown request, and Etsy is required to remove the infringing work from its site unless the uploader, which in this case would be an Etsy seller, makes a counterclaim stating that the work is not infringing. At that point, Etsy can allow the work to remain on the site until the case is resolved in court.
At Etsy, anyone can make a store. There is little preventative due diligence on Etsy’s part. A person can just sign up, give the store a name, and they are now a purveyor of goods. Creating the shop is free, although there is a small charge for a listing, and each listing will have a shelf life of about four months or until a product is sold. Etsy takes 3.5% of each sale. The problem for creators is that while Etsy must takedown infringing work on request, they have no requirement to monitor or be proactive, only reactive.
So, if a person or company wants to sell your infringing work, they can just sign up, give the store a name, and they are now a purveyor of goods. Creating the shop is free, although there is a small charge for a listing, and each listing will have a shelf life of about four months or until a product is sold. Etsy takes 3.5% of each sale. So if an item is selling well for a particular seller, and they lose it due to a takedown request, they may just put it up again, so you have to issue another takedown.
Eventually, if you stay on top of the seller issuing takedowns continuously, putting the item back up would be pointless for the seller. To their credit, Etsy has gotten a lot better about dealing with repeat infringers, often taking the store off the Etsy marketplace, but the seller can just open up a new account under a different name and start selling the items again. So the copyright holder must maintain vigilance and constantly check to make sure that the infringing items are not added again. That is not a great outcome for creators.
So, there are a few situations that warrant legal action, and for those cases in which legal action is appropriate, suing Etsy sellers is the best option. However, legal action would be much easier if you register your work. You can then can invoke statutory damages, which may provide an opportunity to sue in many more cases than without it. You can also use online monitoring services like ImageRights, to track your images on Etsy and across the web.
At least this way, you won’t have to continually search through Etsy, hoping to find your work in one of the millions on sale. While not the perfect solution, at least you will always be notified when someone uploads your work without permission. Then you can issue a takedown notice and keep the infringer from benefiting from your creativity.
Have you had any run-ins with an Etsy copyright infringement? What’s your story? Tell us in the comments!