Can I Sue Online Craft Sellers (Like Etsy)?
Yes, you may be able to sue a seller on an online marketplace like Etsy if the seller copies your handmade items and sells them. Under copyright law, you have intellectual property rights in original visual works you create, such as a photograph on a t-shirt or a design on a mug. If an Etsy seller sells your images without your permission, they have committed copyright infringement and can be sued.
Don't have to run to court yet, though. The Etsy marketplace has a process through which you can notify it of copyright infringement and get an infringing product removed from the marketplace. If the seller fights you and Etsy restores their product listing, you then could exercise your right to sue. An intellectual property attorney would be able to give you legal advice about your rights, help you decide if the costs of a lawsuit are worth it in your case, and represent you in legal proceedings.
What Is Etsy?
Etsy.com is a global online marketplace that connects sellers of unique items, such as crafts or vintage items, with interested buyers. In 2021, Etsy and its affiliates connected 7.5 million active sellers with 96.3 million buyers and generated about $2.3 billion in sales.
Most sellers use Etsy for legitimate business purposes. However, there are unscrupulous people who copy other people's works and sell them for profit. All it takes is a search of Disney characters, Harry Potter, Star Wars, or some other popular franchise, and you're bound to find someone selling knock-offs of fan art.
If you discover someone selling your works on the e-commerce website, there are steps you can take to protect your rights as the copyright holder. Intellectual property law may also let you bring legal action for other reasons, such as trademark infringement, but our focus in this article will be on copyrights.
What Is a Copyright?
A copyright gives the copyright owner an exclusive right to reproduce, publish, or license an original work of authorship. That can be a literary, musical, dramatic, artistic, architectural, or other creative work. Your copyright protects only the form of the work, not the original idea.
Being a copyright holder gives you certain exclusive rights:
- The right to reproduce a work
- The right to display a work publicly
- The right to prepare works based on your copyrighted work (derivative works)
- The right to grant others the authority to reproduce your work
- The right to transfer your copyright to someone else
Infringement occurs when someone reproduces a copyrighted work without permission. You can sue someone for copyright infringement. You do not have to register your copyright with the U.S. Copyright Office, but you must do so if you want to sue someone for copyright infringement.
Not every use of a copyrighted work violates a copyright owner's copyright. Under the legal doctrine of fair use, certain uses, such as criticism, news reporting, teaching, and research, are okay. However, you cannot sell or reproduce a copyrighted work without permission.
What Should You Do if Someone Copies Your Products on Etsy?
Suppose you're a graphic designer, but you've always enjoyed being a crafter. You decide you want to show off your creative work and start a side business selling customized mugs. You go out and buy a new Cricut machine. Once you get good with it, you set up an Etsy shop and start selling your own original designs. Business takes off like gangbusters. You're thinking of making your small business your full-time job.
Then one day you get an email from a repeat customer. They tell you that someone in their Facebook group is selling your original artwork on T-shirts and stickers on Etsy, and it looks like they have sold them to a lot of people for a lot of money. You are livid and want to make the Etsy seller stop. And maybe pay.
Contact the Seller Directly
Your first step is to contact the seller. Send them a takedown notice informing them of your copyright and demanding that they stop selling reproductions of your work. If your competitor was unaware of your copyright, they may take down the listing and desist selling the reproductions.
Submit an Intellectual Property Infringement Report With Etsy
You should also submit an intellectual property infringement report to Etsy. Moving on from its former online form, Etsy offers a reporting portal that allows you to register your brand as well as submit infringement reports. Etsy provides detailed instructions and a tutorial on how to report intellectual property infringement.
As long as you comply with Etsy's policies and provide accurate and truthful information, Etsy will process your notice, take down the reported content for suspected copyright infringement, and notify the Etsy seller. That may end the matter.
What Happens Next?
Be prepared for the idea that the seller might fight you. According to the Digital Millennium Copyright Act (DMCA) and Etsy's Intellectual Property Policy, once Etsy notifies the seller that their listing has been removed for suspected copyright infringement, the seller can submit a counternotice. Etsy will process the counternotice and may restore the listing within 10 days unless you bring legal action against the seller and inform Etsy of your lawsuit.
Sue the Seller
If they file a counternotice, you will have the option to go with a lawsuit against the seller. When they submitted their DMCA counternotice, the seller consented that they could be sued in the federal court in which they are located or, if they are outside the United States, where Etsy is located. You would be able to sue the seller in one of those two places.
Intellectual property lawsuits are expensive and time-consuming. You'll have to decide whether the costs of bringing a lawsuit are justified by the chance you'll win and the harm that the seller is doing to your business. An experienced intellectual property lawyer located in the state the seller is in would be able to help and represent you if it comes to that.
Can You Sue Etsy?
You may be hesitant about trying to sue the seller and want to go after Etsy instead. After all, they can take down the listing and ban the seller. Be aware that your options against Etsy are limited.
To use Etsy, you have to set up a user account. As part of that process, you were required to agree to Etsy's terms of service. That agreement is a binding contract that governs your relationship with Etsy. The contract limits your rights in several ways if you have a dispute with Etsy, some of which are listed below:
Release of Claims Against Etsy
In the first place, you agreed to release Etsy from any and all claims arising out of disputes with third parties, including other Etsy shops. That means you gave up any claim you might have against Etsy itself arising out of a dispute with another seller. That would include a copyright infringement dispute.
Limited Choice of Where To Bring Legal Action Against Etsy
You also agreed that you would make a choice about where you bring any legal claim against Etsy. You only have two options: arbitration or small claims court. Each comes with its own limitations.
Arbitration is an out-of-court process in which a decisionmaker, called an arbitrator, reviews relevant documents, hears from witnesses, and makes a binding decision about your dispute. It can be a lot like a typical court trial, but it is often more informal and is considered to be less expensive. In general, you cannot appeal the decision, even if you think the arbitrator got it wrong.
If you decide to go to small claims court, you at least have the advantage of a judge hearing your case. Many states don't allow you to have a lawyer in small claims court. Small claims courts are also limited in the amount they can award you under state law. You may believe you have a multi-million dollar case against Etsy, but a small claims court could only award up to its legal limit, which varies between $2,500 and $25,000. Many states come in at $10,000.
Limit on Amount You Can Recover From Etsy
Finally, you are limited in the amount you can recover from Etsy, regardless of whether you seek to arbitrate your claim or you sue in small claims court. Etsy's user agreement limits that amount to either $100 or the amount you paid to Etsy in the last year. Some states don't allow Etsy to limit its liability, so you need to check the laws where you live. In most states, you're stuck.
An Intellectual Property Lawyer Can Help
You need to be vigilant if you sell your works on Etsy. Copyright infringement is a real problem, and while you may be successful in getting Etsy to remove infringing products on your own, you may face a persistent seller who either believes they are acting legally or doesn't think you will do anything about their infringement. An intellectual property attorney could provide you with legal advice about what your best options are.
If you do choose to bring legal action, keep in mind that you have a limited amount of time under the U.S. Copyright Act — three years — in which to bring a copyright infringement claim. So you will need to act soon if you want to assert your rights.