Risks of Using Copyrighted Content Without Permission

What are the legal risks of using copyrighted content without permission?

The risks are a federal infringement lawsuit and the remedies the Copyright Act attaches to it: a court order to stop, destruction of infringing copies, money damages, and possibly the owner’s attorney fees. Willful infringement for commercial advantage or private financial gain can also be a federal crime.

Liability starts with 17 U.S.C. § 501(a), which makes an infringer of “Anyone who violates any of the exclusive rights of the copyright owner as provided by sections 106 through 122.” The remedies that follow are:

1. An injunction. Under 17 U.S.C. § 502(a), a court may “grant temporary and final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright.”
2. Impounding and destruction. Under 17 U.S.C. § 503, a court may impound copies while the case is pending, and at judgment “the court may order the destruction or other reasonable disposition of all copies or phonorecords found to have been made or used in violation of the copyright owner’s exclusive rights.”
3. Money damages. The owner recovers actual damages plus your profits or, where the registration rule in § 412 allows them, may choose statutory damages set per work instead, as the damages section below explains.
4. Attorney fees. Under 17 U.S.C. § 505, “the court may also award a reasonable attorney’s fee to the prevailing party as part of the costs.” Under § 412, though, “no award of statutory damages or of attorney’s fees, as provided by sections 504 and 505, shall be made for” the infringements that section lists, which the registration section below describes.

A copyright case filed in Minnesota goes to the U.S. District Court for the District of Minnesota, and appeals from that court go to the U.S. Court of Appeals for the Eighth Circuit.

What counts as copyright infringement for a business?

Infringement is using one of the copyright owner’s exclusive rights without permission: copying the work, adapting it, distributing copies, or performing or displaying it publicly. In a civil case, the Eighth Circuit has said, innocence or willfulness “may have a bearing on the amount of statutory damages awarded but cannot affect liability.”

Subject to the limits in sections 107 through 122, including fair use, 17 U.S.C. § 106 gives “the owner of copyright under this title” the exclusive rights “to do and to authorize any of the following”: reproducing the work, preparing derivative works, distributing copies, performing it publicly, displaying it publicly, and, for sound recordings, performing them publicly by digital audio transmission. In a business, those rights come up in ordinary tasks:

• Posting a photo found online on your website or social account copies and publicly displays it. Images pulled from a Google search carry the same rights as any other photo.
• Editing someone’s illustration into an ad prepares a derivative work.
• Copying a trade article into a client newsletter reproduces and distributes it.
• Installing software beyond the license count reproduces it, a problem covered in the risks of unlicensed software.
• Playing music in a store or restaurant performs it publicly, covered in the music section below.

Copyright protects expression, not ideas. Under 17 U.S.C. § 102(b), “In no case does copyright protection for an original work of authorship extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.” Copyright therefore does not stop you from running the same kind of promotion a competitor ran; it stops you from copying the competitor’s photos and text.

Intent is not a defense to liability. In Cass County Music Co. v. C.H.L.R., Inc., 88 F.3d 635 (8th Cir. 1996), the Eighth Circuit wrote: “The state of mind of the infringer is relevant, if at all, only to the award of damages.”

How are copyright damages calculated?

Where the registration rule allows both, the owner chooses between two measures: its actual damages plus your profits from the use, or statutory damages of $750 to $30,000 per work, which a court may raise to $150,000 per work for willful infringement. Statutory damages do not depend on proof of what the owner lost. Under 17 U.S.C. § 412, though, “no award of statutory damages or of attorney’s fees, as provided by sections 504 and 505, shall be made for” infringement that began before the work was registered, unless a published work was registered within the grace period § 412 allows.

Actual damages and profits. Under 17 U.S.C. § 504(b), the owner recovers its own losses and any of your profits from the infringement that are not already counted in those losses. The statute splits the proof of profits: “In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue.” You then must prove your deductible expenses and the part of the profit that came from factors other than the copyrighted work.

Statutory damages. Under 17 U.S.C. § 504(c), the owner may elect statutory damages instead of actual damages and profits at any time before final judgment, where § 412 allows them. The court then sets one award “for all infringements involved in the action, with respect to any one work,” “in a sum of not less than $750 or more than $30,000 as the court considers just.” The award is set per work for each infringer, or once per work for two or more infringers who are jointly liable, so ten photos can mean ten awards. The statute adds: “For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.” Two adjustments apply, for willful and for innocent infringement, and a separate remission rule for some nonprofit users is covered in the fair-use section:

• Willful infringement. If the owner proves willfulness, “the court in its discretion may increase the award of statutory damages to a sum of not more than $150,000.”
• Innocent infringement. If you prove that you were not aware and had no reason to believe your acts infringed, “the court in its discretion may reduce the award of statutory damages to a sum of not less than $200.” Under 17 U.S.C. § 401(d), though, if a copyright notice in proper form “appears on the published copy or copies to which a defendant in a copyright infringement suit had access, then no weight shall be given to such a defendant’s interposition of a defense based on innocent infringement in mitigation of actual or statutory damages, except as provided in the last sentence of section 504(c)(2).”

The Eighth Circuit, which hears appeals from Minnesota’s federal court, applied these ranges to a Minnesota consumer in Capitol Records, Inc. v. Thomas-Rasset, 692 F.3d 899 (8th Cir. 2012). Record companies traced file sharing of 24 songs to an internet account in Duluth, and on appeal it was undisputed that she willfully infringed them. Three juries awarded $222,000, $1,920,000, and $1,500,000, and the district court cut the last award to $54,000. The Eighth Circuit held that $9,250 per song, $222,000 in total, did not violate due process, directed judgment in that amount, and ordered a broader injunction. It rejected the argument that a noncommercial infringer deserved less: “By its terms, however, the statute plainly encompasses infringers who act without a profit motive, and the statute already provides for a broad range of damages that allows courts and juries to calibrate the award based on the nature of the violation.” Quoting its earlier decision in Cass County, the court described statutory damages as “by definition a substitute for unproven or unprovable actual damages.”

Removed watermarks and credit lines. Removing a photographer’s name, a copyright notice, or the terms of use can create a separate violation with its own damages. The injured party may recover its actual damages and the violator’s profits, or it may elect statutory damages under 17 U.S.C. § 1203(c)(3)(B) of “not less than $2,500 or more than $25,000” for each violation. Under 17 U.S.C. § 1202(b), the violation is to “intentionally remove or alter any copyright management information” without the owner’s or the law’s authority, knowing, or for civil remedies having reasonable grounds to know, “that it will induce, enable, facilitate, or conceal an infringement of any right under this title.”

Why does the owner’s registration date change your exposure?

Registration does not create the copyright, but it controls when the owner can bring a civil action for infringement and what a court can award on that claim. The owner of a “United States work,” as 17 U.S.C. § 101 defines that term, cannot file an infringement suit until the Copyright Office registers the work or refuses registration. If your use began before the registration took effect, a court generally cannot award statutory damages or attorney fees, “as provided by sections 504 and 505,” for the infringement, which leaves actual damages and profits. A claim over a removed credit line or watermark rests on its own section: under 17 U.S.C. § 1203, “Any person injured by a violation of section 1201 or 1202 may bring a civil action in an appropriate United States district court for such violation,” and the court “in its discretion may award reasonable attorney’s fees to the prevailing party.”

Under 17 U.S.C. § 411(a), “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” Claims for an artist’s attribution and integrity rights under § 106A are an exception. If the Copyright Office refuses registration after receiving the required deposit, application, and fee in proper form, the applicant may still sue by serving notice and a copy of the complaint on the Register of Copyrights. The Supreme Court held in Fourth Estate Public Benefit Corp. v. Wall-Street.com, LLC, 586 U.S. 296 (2019) that “registration occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright.” The same opinion confirms that once the work is registered, the owner can recover for infringement that occurred both before and after registration. A filed application is not enough.

The timing rule on remedies is in 17 U.S.C. § 412: “no award of statutory damages or of attorney’s fees, as provided by sections 504 and 505, shall be made for” two kinds of infringement. The first is “any infringement of copyright in an unpublished work commenced before the effective date of its registration.” The second is infringement of a published work that began after first publication and before registration, unless the owner registered within the grace period § 412 allows after first publication. The statute has separate rules for preregistered works and certain live broadcasts.

In practice, the Copyright Office’s public records show a registration’s effective date, and comparing that date with the date your use began is one of the first checks worth making when a demand arrives. If you own content yourself, the same rule explains the value of registering your own copyrights early.

When does fair use protect a business?

Fair use protects a business only when the four statutory factors, weighed together, favor the particular use. A commercial use that serves the same purpose as the original, such as using a photographer’s image to illustrate your own marketing, weighs against fair use.

17 U.S.C. § 107 provides that the fair use of a work “for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.” Courts weigh four factors:

1. “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes”
2. “the nature of the copyrighted work”
3. “the amount and substantiality of the portion used in relation to the copyrighted work as a whole”
4. “the effect of the use upon the potential market for or value of the copyrighted work”

The Supreme Court applied the first factor to a commercial license in Andy Warhol Foundation for the Visual Arts, Inc. v. Goldsmith, 598 U.S. 508 (2023). The Warhol Foundation licensed a Warhol image based on Lynn Goldsmith’s photograph of Prince to a magazine publisher for a cover about Prince. The Court limited its ruling to that licensing use and held that the first factor favored Goldsmith. It explained that “The commercial nature of the use is not dispositive,” but that when “an original work and a secondary use share the same or highly similar purposes, and the secondary use is of a commercial nature,” the first factor is likely to weigh against fair use absent some other justification.

A good-faith belief in fair use does not end the risk for a for-profit company. Under § 504(c)(2), the rule requiring courts to remit statutory damages for a reasonable fair-use belief covers only two groups. The first is a nonprofit educational institution, library, or archives, or its employee or agent, “which infringed by reproducing the work in copies or phonorecords,” in the statute’s words. The second is a public broadcasting entity, or a person acting as a regular part of its nonprofit activities, that “infringed by performing a published nondramatic literary work or by reproducing a transmission program embodying a performance of such a work.” More detail is in how courts weigh fair use and in fair use in advertising.

What are the rules for playing music in a Minnesota business?

Playing music where customers gather is a public performance that needs a license unless a federal exemption applies, such as the narrow exemption for radio and TV transmissions, which turns on the establishment’s size and, for larger spaces, on its loudspeakers and screens. Minnesota regulates how music licensing organizations sell those licenses, but it does not excuse the license.

Under 17 U.S.C. § 106, the owner of a musical work holds the exclusive right “to perform the copyrighted work publicly,” and 17 U.S.C. § 101 defines performing publicly to include performing “at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered.” A store or restaurant open to customers fits the first part of that definition.

The radio and TV exemption. 17 U.S.C. § 110(5) exempts some transmissions of music in businesses. It reaches only transmissions “originated by a radio or television broadcast station licensed as such by the Federal Communications Commission, or, if an audiovisual transmission, by a cable system or satellite carrier.” The size test differs by business type. A food service or drinking establishment meets it if it “has less than 3,750 gross square feet of space,” and any other establishment if it “has less than 2,000 gross square feet of space.” Larger spaces meet it only within limits on loudspeakers, screens, and screen size. Every business must also meet the other conditions: no direct charge to see or hear the transmission, no further transmission beyond the premises, and a transmission licensed by the copyright owner. A business that claims this exemption without reasonable grounds faces, under 17 U.S.C. § 504(d), “an additional award of two times the amount of the license fee that the proprietor of the establishment concerned should have paid the plaintiff for such use.”

The record and equipment store exemption. 17 U.S.C. § 110(7) separately exempts “performance of a nondramatic musical work by a vending establishment open to the public at large without any direct or indirect admission charge, where the sole purpose of the performance is to promote the retail sale of copies or phonorecords of the work, or of the audiovisual or other devices utilized in such performance, and the performance is not transmitted beyond the place where the establishment is located and is within the immediate area where the sale is occurring.”

Minnesota’s licensing statute. Minn. Stat. § 325E.50 subd. 3 defines a performing rights society as an entity “that licenses the public performance of nondramatic musical works on behalf of copyright owners,” naming ASCAP, BMI, and SESAC. The statute protects a “proprietor,” which § 325E.50 subd. 4 defines as “the owner of a retail establishment, office, restaurant, inn, bar, tavern, or any other similar establishment or place of business located in this state in which the public may assemble and in which nondramatic musical works may be performed, broadcast, or otherwise transmitted.” Its main rules are:

• Written terms before signing. Under Minn. Stat. § 325E.51, “No performing rights society shall enter into, or offer to enter into, a contract for the payment of royalties by a proprietor unless at the time of the offer, or any time thereafter, but no later than 72 hours prior to the execution of that contract, it provides to the proprietor, in writing, the following.” The list begins with “a schedule of the rates and terms of royalties under the contract.” It also requires, “upon the request of the proprietor, the opportunity to review the most current available list of the members or affiliates represented by the society,” and notice that the society will provide its current catalog of works “upon written request of any proprietor, at the sole expense of the proprietor.”
• A signed contract. Under Minn. Stat. § 325E.52, “Every contract for the payment of royalties between a proprietor and a performing rights society executed in this state must be in writing and signed by the parties.”
• Remedies. Under Minn. Stat. § 325E.55, “A person who suffers a violation of sections 325E.50 to 325E.57 may bring an action to recover actual damages and reasonable attorney’s fees and seek an injunction or any other available remedy.”

The statute does not stop enforcement of the federal right. Minn. Stat. § 325E.54 provides: “Nothing in sections 325E.50 to 325E.57 shall be construed to prohibit a performing rights society from conducting investigations to determine the existence of music use by a proprietor or informing a proprietor of the proprietor’s obligation under the federal copyright law, United States Code, title 17.”

A policy is not a license. In Cass County, an Arkansas comedy club played recorded and radio music before shows, declined an ASCAP license, and told staff to play only tapes with no ASCAP music. An ASCAP investigator documented four ASCAP songs played anyway. The Eighth Circuit affirmed liability against the company and its officer-shareholders: “The fact that there was such a policy and that it evidently was violated by employees of the club without management’s notice is not relevant.” After ASCAP’s repeated notices, the court also held that the infringements were not innocent. It reversed the denial of a jury trial, so the amount of statutory damages went back for a jury to decide. Each society licenses the works of the copyright owners it represents, so I suggest matching your licenses to the music your staff actually plays, because Cass County rested on four unlicensed songs.

When does copyright infringement become a crime?

Infringement is a federal crime only when it is willful and fits one of the categories in the criminal statute, which include infringement for commercial advantage or private financial gain. Proof that you copied something is not enough by itself to show willfulness.

Under 17 U.S.C. § 506(a), “Any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed” in one of three ways. The first two are infringement for commercial advantage or private financial gain, and reproducing or distributing copies with a total retail value over $1,000 within a set period. The third is making a work being prepared for commercial distribution available on a computer network accessible to members of the public, “if such person knew or should have known that the work was intended for commercial distribution.” The statute adds that “evidence of reproduction or distribution of a copyrighted work, by itself, shall not be sufficient to establish willful infringement of a copyright.”

The penalties are in 18 U.S.C. § 2319. For a first offense committed for commercial advantage that involves at least 10 copies with a total retail value over $2,500 in the period the statute sets, the offender “shall be imprisoned not more than 5 years, or fined in the amount set forth in this title, or both.” Lesser offenses carry up to one year, and repeat felony offenses carry more.

How should a business respond to a copyright demand letter?

A business that receives a copyright demand letter should stop or pause the use, preserve its records, confirm who owns the work and when it was registered, check its license and fair-use position, and then negotiate with the fee-shifting rule in mind.

As I explain to owners in a video on the public domain and copyright ownership, going straight to court means spending heavily on legal fees, so the best first step for an owner is usually a cease and desist or demand letter. For the business that receives one, the letter is the chance to resolve the claim before anyone files. I suggest working through these steps in order, because each one bears on the amount at stake:

1. Pausing the use and keeping the evidence. Taking the work down or stopping the music limits continuing use while you investigate. A record of where the work appeared and since when matters too, because the start date controls § 412 and your revenue from the use matters under § 504(b).
2. Confirming the claimant owns the right. Under 17 U.S.C. § 501(b), “The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the requirements of section 411, to institute an action for any infringement of that particular right committed while he or she is the owner of it.” An agent or licensing company that writes to you should be able to show it acts for that owner.
3. Checking the registration date. The effective date in the Copyright Office records, compared with the date your use began, decides whether a court can award statutory damages and fees “as provided by sections 504 and 505” on the infringement claim, as the registration section above explains. If the claim arrives instead as a Copyright Claims Board notice, a business that does not submit a written opt-out notice in time can be bound under 17 U.S.C. § 1506(i), and 17 U.S.C. § 1504(e) lets the Board award statutory damages “With respect to works not timely registered under section 412, but eligible for an award of statutory damages under this section.”
4. Finding your license. Stock-site terms, a designer’s contract, or an agency agreement may already grant the use, or may show it went beyond what you bought.
5. Checking for removed credit information. A missing watermark or credit line can add a § 1202 claim, as the damages section explains.
6. Weighing the fee risk both ways. 17 U.S.C. § 505 lets the court award a reasonable attorney’s fee to the prevailing party, which can be you. In Kirtsaeng v. John Wiley & Sons, Inc., 579 U.S. 197 (2016), the Supreme Court held that a court “should give substantial weight to the objective reasonableness of the losing party’s position,” while still considering all other relevant circumstances.

Knowing what an infringement notice should contain helps you test the letter you received, and settling a copyright infringement claim covers the terms worth negotiating. If the content came from a customer or user rather than your own staff, the safe harbor for infringing content your users upload may apply instead.

Next Steps Before You Use Someone Else’s Work

The decisions that shape copyright exposure come before the content goes live. A written license from the actual owner, a check of what each stock or music license covers, and credit information left in place address the main risks on this page. When a demand arrives, the owner’s registration date, the number of works, and whether the use was willful set the range of what is at stake.

For content you commission, ownership turns on the contract, so I suggest reviewing your work-for-hire and IP assignment terms before the next project starts. More on copyright for Minnesota businesses is on the practice page. If you would like to know how these rules apply to a demand letter you received or to a planned use of someone else’s work, email [email protected] with the letter or a short description of the content and how you plan to use it.