united-states, legal, copyrightNote: As this is about legal advice I just want to be very clear that this does not directly apply to me, that the situation described is imaginary and that I am asking about the generic case here.
As a startup you will often decide to use the cheapest possible services. Now, let’s say you find a cheap graphic artist online to design you a poster, you print 1000 copies of the poster and after distributing them it turns out that your graphic artist used assets without permission somewhere on the poster. Now, I assume you could quite easily demand the money back for the job itself, but could you also sue him for the extra costs you had due to this (either the cost of settling with the copyright holder of the asset or paying for the cost of the 1000 copies and the cost of putting them up and taking them down prematurely)? The reason I am asking mostly is to know to which extend we should go to check work or whether that falls outside our responsibility.
Just for the sake of the question lets assume both parties are located in the US and that no special mention of such things was made in the contract (lets say a random online marketplace was used).
As a startup you will often decide to use the cheapest possible services.
As a startup, you’re better off deciding to use the best possible services that fit in your budget. If you’re going for the cheapest possible services, you’ve very little chances to be working with the people you want to be in business with.
Could you also sue him for the extra costs you had due to this?
Sure. You could. Whether there’s an indemnification clause counts. If you’re using an online marketplace such as eLance to hire your freelance, the clause is in fact built-in. Note, however, that eLance doesn’t indemnify you: the provider is supposed to do so. And that is why there’s more to it…
Theoretically, you’ve grounds to go after the freelance if they use a 3rd party’s intellectual property.
In practice, a cheap freelance means you’re probably dealing with someone in a developing country or a beginner with no assets. Good luck with enforcing any type of material indemnity, let alone bringing it to court in the event of a major dispute… Even if you do get your way in court after swallowing the high legal costs, the odds are that the recipient of your lawsuit won’t be able to pay up.
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