I-Team: Beware Copyright Letters That Demand Money For Photos Posted Online

BOSTON (CBS) - This might make you think twice the next time you pluck a photo from the internet with a simple "right click" and post it to your blog or business web site.

A growing number of consumers are receiving letters that accuse them of copyright violations. And they report what happens next feels a bit scary: Pay thousands of dollars to settle or face the threat of a federal lawsuit.

Katy Shamitz is the director at the Chapman Farm School, a small private school in Norwell.

Several years ago, she wrote blog entry about sportsmanship for children. To accompany the post, she searched the web and found an image of a toddler crying with a Patriots logo superimposed on his chest.

"I threw it up on my blog," Shamitz explained. "It had a very small following and I forgot about it."

That is, until she received an email, accusing her of using the photo without permission. The communication demanded action within 10 days, ordered her to immediately remove the image from her blog (which wasn't even active anymore), and pay a settlement of $1,430.

"Discontinuance of use of the imagery does not release your company of its obligation to pay compensation," the email warned. "Copyright infringement can occur regardless of knowledge or intent."

As a small business owner, Shamitz said the message set off a sense of panic.

"It was really intimidating," she recalled. "I felt terrible that I'd possibly made a copyright mistake. But at the same time, the entire thing felt predatory."

Luckily, Shamitz said she was already working with attorney Rob Pellegrini on a separate business matter and ended up paying much less to make the case disappear.

Pellegrini, with the firm PK Boston, said he is helping an increasing number of small business clients respond to the copyright infringement letters.

"The intention is to intimidate and in a lot of cases, it really does succeed," he told WBZ. "What they are doing is trolling out there, looking for a quick check to be written."

Pellegrini is even fighting a case of his own after he received communication from a law firm about an estate planning image used on the business web site.

The copyright infringement letter demanded more than $8,000 and warned the artist could be entitled for damages up to $150,000, plus attorney fees and court costs, if it goes to federal court.

"It's a very generic photo," Pellegrini explained. "It was taken from a web site that claims to have free art work."

Sure enough, when the I-Team typed "estate planning" into a Google image search, and then used the filter for "free to use or share, even commercially," that image was the first result to pop up on the screen.

When the I-Team asked Google about this, a company spokeswoman said there's a statement included on all searches that images may be subject to copyright.

"Google does not confirm the status or license of images that appear on such searches, and it is ultimately up to the user to ensure that any use of an image complied with such terms," the spokeswoman wrote.

Stacey Dogan, a law professor at Boston University who specializes in intellectual property, said there are sometimes attribution requirements the copyright holder buries in the fine print of sites that appear to offer free images.

"It feels to the consumer like entrapment because all they saw was the word, "free." Always assume every image has a copyright," Dogan said.

The law professor said the copyright settlement demands have provided a valuable business model for online ambulance-chasing firms.

Dogan also said that the federal copyright law allows the letters to provide more intimidating language that insinuates consumers could be responsible for six-figure damages in court. In reality, those awards are reserved for willful violators instead of innocent mistakes.

"The lawyers are not necessarily abusing the law," Dogan said. "They are working within the system, but they are gaming the system."

Nick Isaac, the owner of a small pest control company in California, found out the hard way what can happen if you ignore a copyright infringement letter.

Isaac told WBZ he had searched for an image of a termite that would be safe for commercial use on his business web site. Before long, he received a settlement demand for $2,000.

"I figured it was some kind of scam," Isaac said.

But months later, he discovered the copyright holder had filed a lawsuit in federal court. He ended up having to hire an attorney and paid several thousand dollars to settle the case.

"It felt like extortion. Pay close attention if you get a letter like that because it can snowball into something much bigger," Isaac said.

For Shamitz, the school director, the experience provided a valuable lesson she can pass along to her students.

"If I don't take the photo or create the image myself, I don't post it," she said. "It feels like there are web crawlers out there looking for certain images and then going after people for money."

Ryan Kath can be reached at rkath@cbs.com. You can follow him on Twitter or connect on Facebook.