Dropshipping Risks: How to Avoid Copyright Infringement Issues

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Dropshipping is one of the most common e-commerce businesses, and it can be very profitable for a smart entrepreneur. But something that can easily bite into your profits is copyright issues. Severe copyright infringement can cost between $600 – $30,000 per infringement, and you could be doing it unknowingly.

As a dropshipping merchant it’s important to be aware of how to avoid copyright infringement issues, and making sure that your vendors are licensed as well.

In this article, we’ll go over the risks of copyright infringement issues for dropshipping merchants.

Some examples of copyright infringement

I’m sure you can imagine some blatant examples of copyright infringement. You wouldn’t make your own Disney t-shirts and sell them, that would obviously be a big no-no. But there are less obvious ways to infringe on copyright you may not have realized.

For example, let’s say you have an e-commerce store that dropships mobile phones and accessories. Phone cases with logos and designs are extremely popular, as are pop-culture things like Marvel and Disney characters.

As a dropshipper, you’d want to be sure your vendors are selling licensed items. But if your ecommerce store is just importing available products from your vendors, and you aren’t making it a habit of manually reviewing what your store is selling, things can slip through the cracks.

Alibaba for example is notable for having an enormous amount of products that were manufactured in China, and would violate copyright in North America. Dropshipping unauthorized Ironman phone cases from Alibaba would very quickly land you in trouble.

Furthermore, even if you are dropshipping from authorized merchants, you need to consider product imagery. You cannot just use the company’s product images on your ecommerce store, as those images are licensed intellectual property of either the company or the photographer.

Simply attributing the photo owner and giving them credit is not enough to pass copyright law, you need explicit permission. Furthermore it is an infringement of moral rights to alter the photo in any way without permission, even cropping or brightening the photo would be an infringement.

You can use your own photos of the product if you have it physically on-hand, which means purchasing the product to take your own photos. Alternatively, you can go through the channels to become an authorized retailer yourself, which should give you access to the company’s stock imagery.

Only dropship from authorized distributors

This is really the biggest thing to be aware of, because it will take care of most potential copyright problems for a dropshipping business. It is perfectly legal to resell items of copyright characters, as long as they were purchased legally.

So you need to make sure that your vendors are licensed and accredited distributors, and they obtain their stock directly from the copyright holder’s manufacturer.

Research the brand’s factories

You may encounter fraudulent authorized distributors. A merchant may claim to be an authorized reseller and have forged licenses. They claim to distribute authorized overstock directly from a phone manufacturer’s factory, maybe with “cosmetic defects”.

“Cosmetic defects” is a good excuse for unauthorized copies. It can be an attempt to cover for imperfections from subpar machinery in illegal factories. In fact, there are many copyrights that apply to the individual parts in cellphones.

You should know where a company has its factories, such as if they manufacture in Korea or Taiwan, and ask for proof the distributor is obtaining inventory from the company factories.

Make your own product listings

We talked about using copyrighted product images earlier, but also important is the actual text you use in product listings. It would be copyright infringement to copy product listings from other retailers without permission.

So again, you might dropship merchandise from an authorized distributor, but you don’t have permission to use the company’s product descriptions word-for-word.

Writing original product descriptions for a catalogue of products can be very time consuming, so many retailers use freelancers for cheap. However, you also want to make sure that your freelance writers aren’t plagiarizing or spinning, because just changing a few words is considered a derivative work in copyright law, and will still get you in trouble.

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