Real Estate E&O Claims Spotlight: The Costs of Copyright Infringement

The world’s information is at our fingertips, thanks to the Internet. On the web, it is possible to find literally millions of images, and sometimes these images are used to illustrate websites, business brochures, and advertisements, just to name a few of the many potential uses. Unfortunately, a poor understanding of copyright law has led to problems; unauthorized use of a copyrighted image can lead to legal claims by the artist, potentially costing the copyright violator thousands or even millions of dollars in damages.

Let’s explore an ongoing copyright claim to learn more about how using an image without the artist’s consent or permission can result in an expensive E&O insurance claim.

The Claim

In 2017, a professional photographer and artist created a photographic image of the Columbus, Ohio skyline. When the image was created, the artist applied Copyright Management Information to the image itself via watermark. He also successfully registered the image with the Register of Copyrights, receiving a registration number.

At some point in early January, 2020, a real estate agency in the Columbus, Ohio region used the artist’s copyrighted image without his permission, license, or consent. This unauthorized use runs afoul of The United States Copyright Act as well as the United States Code, Title 17. There is also evidence that the real estate agency removed the watermarked Copyright Management Information applied by the artist prior to their unauthorized use of the image in marketing materials.

What Went Wrong

Under existing copyright law, the artist may be entitled to significant damages, including additional profits from the copyright infringer that is permitted by law depending on the case itself. For example, statutory damages between $30,000 and $150,000 per work infringed are possible if legal action is successful. The higher damage number is possible if the infringement is shown to be willful; in this case, removal of watermarked copyright management information added to the image by the artist suggests the infringement was willful. According to 17 USC 1203(c)(3)(B), the artist is able to recover statutory damages of not less than $2500 or more than $25,000 per violation of the prohibition against alteration or removal of copyright management information. These specific statutory damages may be in addition to the damages discussed above.

The lawsuit is still ongoing. It is expected that the artist will be successful in his claim against the real estate agency.

To protect against the potentially damaging expenses associated with common lawsuits, such as copyright violation or similar, it is imperative that business owners check their insurance carefully. Ensuring that adequate protection and coverage limits under Errors & Omissions (E&O), Commercial Package Policy (CPP), or Cyber Liability policies make sound financial sense, especially in light of the high costs in defense and settlements/judgments associated with legal claims against a business. Real estate agencies and agents manage many moving parts associated with advertising their services, creating websites, showing properties, and conducting sales, which is why agents and agencies alike should review their insurance coverage for adequate protection prior to an incident like this occurring.

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