It’s easy to become excited about the prospect of opening a dropshipping shop. However, your enthusiasm would quickly dissipate if a legal notice were delivered to your door.
It’s true that careless behavior can lead to legal action against a dropshipper.
Most new business owners make the mistake of not giving the legalities of a dropshipping operation any thought at all.
It’s important to keep in mind that copyright infringement can have a devastating effect on your bottom line. And possibly all the way to the verge of insolvency!
Consequently, if you are interested in knowing how to stay out of trouble with copyright when dropshipping, this post is for you.
Just get right down to business, shall we?
Do You Need a License for Dropshipping?
Should you seek a license for your dropshipping business? In a nutshell: not really. However, there are a number of situations in which this is a fantastic idea, so let’s explore those.
Creates a Solid Foundation
Business registration procedures and requirements vary from one country to the next. In the United States, companies can choose between registering as either an S-corp or an LLC.
Registration is optional and often avoided by drop shippers. If you’re truly committed to managing your company, this alone can provide you a significant advantage.
Protects You from Lawsuits
Because a registered store is considered to be a separate entity from its owner, your personal assets and wealth are safe in it.
In the event of a lawsuit, any damages awarded would go toward compensating the harmed party rather than you personally. Of course, you want to keep legal trouble at bay.
In addition, you should consult a lawyer if you intend to register your business.
Depending on the laws of the country in which you currently reside, an attorney would be able to advise you on the proper course of action.
Enhances Your Credibility
In order to distinguish yourself from the competition, registering your store is highly recommended.
In addition, you can differentiate your store from similar but unlicensed dropshipping businesses by pointing out that you have obtained the necessary licenses.
Additionally, this would demonstrate to your suppliers that you mean business.
Is the Copyright Law Applicable to Dropshipping?
It’s not legal to sell copyrighted products, even if many dropshipping stores do it nevertheless. True, the creators can sue you for copyright infringement if you engage in dropshipping.
Yes, you may be thinking, but what about all the dropshippers out there peddling counterfeit goods? Well, that is subject to a few caveats.
You must have obtained the products you are reselling in a legal manner if they are protected by intellectual property rights. And without the author’s permission, you shouldn’t make any changes to it yourself.
There are still establishments out there that do not adhere to either of these standards, putting them at constant risk of legal action.
What is Considered a Copyright Violation is Dropshipping?
Here are only a few examples of copyright infringements:
Copying Texts, Videos and Images
If you want to reproduce something from a store, be sure to ask for permission first. In most cases, your provider will give you permission to utilize them.
However, if you steal trademarked content from some random internet business, you are breaking copyright laws.
Keep in mind that giving proper attribution for copied trademarked content does not make the problem go away. Using it requires purchasing the permission to do so from the creator.
Altering Branded Products Without Permission
Similarly, making unauthorized changes to a branded goods is a potential copyright infringement.
Products that have been granted copyright protection or trademark protection are safeguarded by law. And if you make any changes to it, the holder can sue you for damages.
Claiming to Be an Authorized Reseller
If you are getting your hands on branded and copyrighted items in a lawful manner, then by all means, sell them.
You also run the risk of being sued if you represent yourself as the product’s official distributor.
As a result, it’s highly recommended that you stick with reputable vendors.
Tips to Avoid Dropshipping Copyright Infringement
Intent on avoiding copyright violations associated with dropshipping? To help you out, here are some pointers:
Avoid Intellectual Theft
Theft of another person’s ideas, inventions, or artistic expression is commonly referred to as “intellectual theft,” a word that sounds more sophisticated than it actually is. The product videos and photos included in it are sadly the work of a third party.
So in a way, if you’re using them without the permission of their creator, then you’re committing a copyright infringement.
While many dropshippers may get away with breaking the law and may not even take the practice seriously, the United States and other nations have very specific regulations in place to prevent this.
To put it into perspective, the price tag for copyright infringement can range from $750 to $30,000. It’s possible that the fine will be more than $150,000 if it’s determined that you acted intentionally.
Most dropshipping businesses don’t turn over this much in a year. Therefore, if that occurs, you will be forced to declare bankruptcy.
Also, remember that not all copyrighted media needs to be watermarked. Watermarks, however, make it much simpler to spot the genuine articles.
Those of you with editing expertise may be thinking, “Hey, I can simply erase watermarks!”
Well, we don’t advise that since if the inventor can prove that you did it on purpose, you’re in for some unpleasant legal trouble.
What’s the Alternative?
The most convenient way to avoid infringing on others’ copyright is to obtain permission beforehand or to make use of sites that offer free photos and images.
There are many places online where you can find copyright-free images to use on your website; these images may or may not be directly related to your product, but they could be useful in other contexts.
Some places to look for pictures that haven’t been stolen:
Both films and pictures posted there do not infringe on any copyrights. Some of the pictures there may also be protected by copyrights, but that information will be readily apparent.
Avoid using any media that you have any reason to believe may be copyrighted.
Find Trusted Suppliers
You can’t run a successful dropshipping business without total trust in your wholesaler.
While you may be able to obtain a few test samples, it may be tough to test every product because you aren’t maintaining an inventory.
To avoid copyright violations, it is important to find trustworthy vendors or sourcing agents.
The worst part is that the dropshipper may not even be aware that their customer did not receive the correct item.
Problems like these are uncommon, however, when you deal only with reputable vendors.
If you can’t discover any vendors who meet this requirement, look for high ratings and reviews as a backup plan.
Customers can sue you if they are dissatisfied with your product or if you make false claims about it.
In a nutshell, it’s worth the extra cost to find a dependable source from which to purchase your goods.
Make Yourself Trustworthy
In general, the more satisfied your consumers are, the less likely they are to file a lawsuit against you.
Make an effort to establish your company as a reliable brand, rather than just another dropshipping store offering the same low-quality, overpriced goods as everyone else.
As we’ve seen, getting your business registered is just one of several steps you may take to win your clients over.
Customers are more likely to trust a company whose owner has taken the time and effort to register their firm, as this shows that the owner is serious about running a legitimate business.
The return and exchange policies of major retailers are another something you should investigate. True, refunds can be a hassle for a dropshipper, but that’s where your supplier comes in.
Top-rated vendors won’t allow you to deal with refunds on your own.
Instead, they would investigate the issue with the product to help you reach a peaceful resolution.
Don’t Sell Counterfeit Products
Web marketplaces like Alibaba have earned a reputation for selling fake goods. Although the platform has been working to address this, there is still a plethora of shops offering them.
So, no, dropshipping those $10 Nikes is not worth the risk of getting sued over.
The locally made knockoffs of these items all look and feel cheap.
Although selling them could bring in some quick cash, they could end up costing you dearly down the road.
The worst case scenario is that the dropshipping platform you’re using will ban your store for selling fake goods.
You must exercise extreme caution, for example, if you engage in dropshipping via Shopify, as the site does not tolerate the sale of counterfeit goods.
Get Your Business Insured
Although this has nothing to do with evading legal action, it can help you avoid insolvency.
We recommend the following insurance policies to protect online store owners:
Defaulting on a General Obligation
Responsibility for Products
Risks associated with cyber activity
In the event of a lawsuit for copyright infringement, general liability insurance can be of assistance. Your insurance policy may be able to pay for all of your legal fees.
In a similar vein, it may be prudent to invest in product liability insurance. Any injuries or property loss that can be traced back to your product are covered by this guarantee.
It’s not likely to be your top priority, but catastrophes rarely give advance warning.
An Etsy teething necklace was responsible for the death of a young boy, demonstrating the importance of exercising caution.
Finally, it should be clear why we tacked on cyber liability insurance to the package.
Operating an online store means handling the personal details of hundreds, if not thousands, of customers.
Should the data be compromised in a cyberattack and leaked, you can expect multiple lawsuits. You should only risk paying out of pocket for damages if you don’t have cyber liability insurance.
What to Do If I Face Copyright Issues as a Dropshipper?
As a dropshipper, you must first determine the root cause of your copyright problems. Is it because of the item itself or because of a video or picture you posted?
Don’t sell that crap anymore, whatever it is. And if you find yourself embroiled in a legal dispute, it’s imperative that you retain the services of an attorney.
Is It Necessary to Dropship from Accredited Distributors?
Dropshipping from authorized sellers isn’t required, but it’s often a good idea due to the higher quality of the items you’ll be selling. Additionally, the price will be lower than at regular stores.
Drop shipping has all the legal pitfalls of any other type of business.
Most individuals don’t give it much thought, yet a lawsuit can put you in the poor house fast.
This is why you should avoid taking any chances with copyright violations in the first place by adhering to the guidelines we’ve provided above.