Is my company liable if our vendors infringes a third party's rights?
Your company may also be liable for any infringing acts the web designer commits in creating the website, if it can be shown that your company had authorised the infringing act. Whether or not you have authorised the infringing act will be determined by the courts, on a case-by-case basis with reference to the facts presented. For example, if you had knowledge of the source of the photographs and that the external web designer did not check on obtaining permission to use the photographs, you could be found to authorise the infringing act. There may be an element of risk when companies hire external vendors to create copyrighted works, since they may not have entire control over the actions of such vendors. It is therefore important to have terms in the engagement contract that the vendor must obtain the necessary permissions to use any third-party content. You should also enquire as to the source and ownership of the materials being uses and ask for proof of written permission for the of any third-party content. It is recommended that companies keep a copy of all relevant consents in their records. Companies may also wish to engage the services of a lawyer. A lawyer will be able to advise the company on ways to limit legal exposure, for instance, by advising on steps to obtain IP clearances, inserting appropriate indemnities by the vendor and other contract provisions that limit exposure.
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