Apparel distributors and decorators need a strong working knowledge of intellectual property rights to avoid legal pitfalls and potentially bankrupting fines.

Ben Scrivens watched his first scary movie at age 4; that preschool viewing of Halloween triggered a lifelong love affair with all things gory and ghoulish – a love that eventually led him to launch his online horror-themed T-shirt company, Fright Rags. Chainsaw-wielding maniacs and bloody decapitation scenes barely raise the adult Scrivens’ pulse. But a terse email lurking in the Rochester, NY, man’s inbox on a December day 11 years ago made his blood run colder than the freezing temperatures outside.

>> Related: Know the difference between copyright and trademark

New Line Cinemas had seen his tongue-in-cheek T-shirt design with a play on the well-known “WWJD?” phrase. He’d replaced the J with a stylized hockey mask, and the studio deemed it too evocative of Jason, the iconic character in its Friday the 13th movie franchise. The film company wanted him to stop production of the shirts immediately or face a court date for infringing on its copyright. Figuring he had little to lose, the young entrepreneur told the studio the tee was “complete parody” and went back and forth with representatives to create a hockey mask design that New Line wouldn’t consider an infringement. The day after Scrivens received the all-clear from the movie studio, Fright Rags received an order from alt-mall chain Hot Topic for 8,000 of the shirts.

Of course, not all tales of alleged copyright infringement have such happy endings. Not even all of Scrivens’ stories have happy endings. Like the time Universal discovered a Fright Rags shirt stocked at a Halloween store in Los Angeles and demanded to know who had made the simple, green-hued silhouette with its passing resemblance to Frankenstein’s monster. “I never called it Frankenstein,” Scrivens notes. Regardless, Universal wasn’t appeased until Fright Rags had paid the studio several thousand dollars in an out-of-court settlement.

These days, Scrivens deals almost exclusively in licensed designs, making sure to dot his I’s and cross his T’s before posting a shirt online. He also shares his hard-won wisdom with other T-shirt vendors, trying to dispel the many copyright myths that abound on Internet forums. “People believe things like, ‘If I just change a design 35%, it’s fine,’ ” he says. “I always say, ‘If it walks like a duck and quacks like a duck, it’s copyright infringement.’ If you want to tell yourself some other story to sleep at night, that’s fine, but if a company with deep pockets comes after you, you could be out a lot of money.”

Apparel distributors and decorators who wish to avoid living out their own legal horror stories should take heed: A heightened awareness of copyright law – and the related, though distinct area of trademark law – is an important part of protecting your business.

That begins as soon as a customer crosses your threshold, toting a logo or other artwork to be reproduced in ink or stitches. Always double check that the client has the right – or has been granted permission – to reproduce the image before taking the job, legal experts say. Better still, put together a brief, easy-to-read agreement for your clients to sign, so that everything is documented, says Kristen McCallion, a principal at the international intellectual property law firm Fish & Richardson. Within that one-page agreement, be sure to include a couple of lines stating that the client has to indemnify you, paying legal fees, if doing the job ends up triggering a lawsuit, she adds. “This has a dual purpose,” McCallion says of the document. “You’re protecting yourself, but you’re actually making the client read and sign something. If they’re trying to get away with something, they may think twice.”

It also doesn’t hurt to do a little detective work if a customer wants you to do something that gives you pause. Disney characters and NFL logos are obvious non-starters. The House of Mouse, in particular, is known to “lay the smackdown hard and fast” if it gets wind of infringement, says Ruth Carter, a Phoenix-based lawyer who specializes in intellectual property. But what about hand-drawn sketches or designs that appear printed from a random Web page? Susan Zeh, owner of Suzy Q & Richie Too (asi/706483) in Lake Luzerne, NY, is very careful to question clients tactfully when her internal alarm bells go off. “Given that I am a custom embroidery shop, clients tend to expect me to do anything they want,” she explains. Zeh first employs flattery, asking if the customer created the beautiful design. If the answer is no, she’ll prod deeper, determining who holds the copyright and whether the customer has received permission to use it. She requires written proof of that permission for her records before accepting such jobs.

Don't Risk It
For shops that do a lot of graphic design and retain the rights to their artwork, it’s a good idea to spend the time and money to register those designs officially with the U.S. Copyright Office, lawyers say. Though a copyright is established at the moment an idea is expressed into a given medium (whether or not notice – for laypeople, that little c in a circle – is employed), the kind of legal action you can take in the case of infringement is very limited unless the copyright is officially cataloged. “A lot of businesses are willing to take that risk, but if the business grows, you’re kind of caught in this netherworld,” says Anthony M. Verna, an intellectual property attorney based in White Plains, NY. “I just think that the amount of money spent up front is so little compared to dealing with it on the back end because you have to put a genie back in the bottle.”

It costs around $35 to $55 to apply for copyright registration, and the process is simple enough to complete online. “I’ll sit down with frequent creators and do one hour of tutorial time,” says Sonia Lakhany, an intellectual property lawyer based in Atlanta. “Then, they understand how to do it on their own.”

Of course, even when a work is registered, finding and stamping out infringement can be tricky and time-consuming. Rick Roth, owner of Mirror Image Screen Printing in Pawtucket, RI, and co-owner of the Ink Kitchen blog, once discovered one of his shop’s designs – a shirt covered in petroglyphs of jackalopes and other unusual creatures – being sold at a Canadian apparel retail chain. Roth’s reaction was visceral: “I was dumbfounded. … It was like they hit me over the head with a club and stole my f***ing wallet.” Luckily, Roth’s brother-in-law is a lawyer, and he was able to get the retailer to stop selling the copied shirt, plus pay out about $10,000 in damages. Often, however, that payday never materializes. “People are slippery,” Roth notes. “Just because you have legal protection, no one is going to enforce it for you. … Most often, the best you can do is get people to stop printing the shirts.”

Sometimes, you don’t even know if your efforts have been successful, says Howard Potter, CEO of A&P Master Images (asi/702505) in Utica, NY. Potter has had to send out two cease-and-desist letters to imitators in the past year. “I’ve had competitors scan one of our shirts to try to re-create the design,” he explains. “You don’t truly know if they’ve listened to your cease and desist unless you’re in their shop. They could still get away with it, and that’s the hardest thing.”

The other area where distributors and decorators need to tread lightly is trademark. Whereas copyright protects artwork regardless of the medium, trademark refers to the branding you put on your products and services, such as logos and slogans. Certain color combinations, the distinctive shape of a Coke bottle or other distinguishing features, known as “trade dress,” can also be part of a trademark, according to Alex Butterman, a trademark attorney with Staas & Halsey in Washington, D.C.

Ann Polen, owner of Ann’s Shop (asi/345227) and Tom-Mar Farms in Knapp, WI, got a tough lesson in trademark after creating a brochure for her decorated apparel business. As part of the document, the dairy farmer and embroiderer included the Tom-Mar Farms logo, which featured a cow and a green-and-yellow tractor. Not long after distributing the flier, Polen received a marked-up brochure in the mail, along with a cease-and-desist letter from John Deere. “Everybody knows you can’t do the logo or name, but nobody probably knows you can’t do the equipment in their colors,” she says. It’s a shame, she adds, because the farmers who frequent her shop are fussy about how their equipment is reproduced in embroidery, and accurate color is a huge part of that. “I would think a farmer having the John Deere tractor on the back of a jacket because that’s what he’s proud of is good advertising for John Deere, but that ain’t the way they see it,” Polen adds.

In fact, legal experts say, businesses must actively defend their trademarks, seeking out unlicensed usage, in order to retain the rights to those marks. Otherwise, their trademark rights could be diluted or even canceled. Sometimes, however, that hyper-vigilance goes a little too far. Roth, for example, tried to launch a clothing line called Article 23, the name chosen to match the fair labor standards set down in the United Nation’s Declaration of Human Rights. When he went to trademark the fledgling brand’s name, it was nixed because basketball legend Michael Jordan had trademarked his jersey number, 23. “I think we probably could have prevailed because our clothing line had nothing to do with Jordan or basketball,” Roth adds. “But who has the money to question how these things go down?”

Working in a Gray Area
Both trademark and copyright “tend to be a lot grayer than most people think,” says Tennessee attorney Ben Rose. “The legal analysis of what constitutes infringement is a multi-factored analysis and not a matter of simply owning a mark to the exclusion of all others.” Though the doctrine of “fair use” allows people to use copyrighted material for transformative purposes, like parody, there’s no hard-and-fast formula defining how much the original must be changed to be considered transformative, rather than derivative. If the copyright holder objects to your parody, it could be left to a judge’s discretion to interpret whether the use in question is indeed a protected parody, or a fine-worthy infringement. And fair use doesn’t apply when it comes to trademarked logos, Carter says. She points to The South Butt, a brand that played off the name and logo of popular outdoor apparel company The North Face. The North Face sued the parody brand and won, because “there’s no such thing as a legit trademark parody,” Carter adds.

Some decorators and distributors are more comfortable dealing in the gray areas than others. If a school group wants to use a copyrighted character on a T-shirt, for example, Roth doesn’t bat an eye. “If they’re not selling it, I don’t care,” he says. “Let them sue me because I printed 30 shirts for some club at the college. ... Copyright is meant to stop people from taking stuff and selling it as their own.”

Many have gotten creative to skirt potential hazards. Polen got around John Deere’s trade dress restrictions by sewing a green-and-cream tractor on the back of jackets purchased by Wisconsin agricultural mechanics. Once the customers took the completed garments home, they used a yellow marker to fill in the cream parts of the tractor, she explains. “That way, I’m not infringing,” Polen adds. “I do that for anybody who’s asked me to do a John Deere.”

Though Chris Konrady, owner of an EmbroidMe franchise in Davenport, IA, draws the line at reproducing college mascots and other licensed images, he has sold apparel with, say, gold lettering spelling out the words “Notre Dame.” His justification? There are Notre Dame high schools, and they aren’t licensed. “If anyone ever asks, we can say it’s for the high school,” Konrady says. “It’s that gray area that we unfortunately have to walk. … We’re not doing it on a massive commercial scale.”

Relying on such technicalities is no guarantee of protection, lawyers say. “They’re not going to save you at the end of the day,” McCallion notes. “If you’re a small-business owner, why put yourself at risk?”

– Email: thegel@asicentral.com; Twitter: @TheresaHegel