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If company A pays company B to create an ad/logo/video/etc. and then uses it, what happens if company B used copyrighted material without obtaining the necessary permissions, unbeknown to company A? Is company A liable for that?

I assume they wouldn't be able to use the material after being informed of the infringement and presented proof of that. I'm asking about if they don't know about it.

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Yes, company A is liable for that; ignorance is not a defence.

For this reason, a prudent company A would put an indemnification clause in their contract with company B so that if A is sues then company B pays. This is, of course, completely useless if company B is out of business at the time of the suit.

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  • Actually, ignorance usually is a defence to criminal proceedings for copyright infringement (in places which have them). However, civil liability remains, which is usually the main concern. – sleske Jun 6 '16 at 9:24
  • @sleske the question is about liability which is usually about civil actions – Dale M♦ Jun 6 '16 at 9:27
  • Well, I'm neither a native speaker nor a lawyer, but as far as I understand "liable"/"liability" is also used to include criminal matters (e.g, Google has almost 2 mio. hits for "criminal liability"). I just wanted to mention it for completeness' sake. – sleske Jun 6 '16 at 9:31
  • Just to add as a designer – Prudent design company B will put a clause in the contract making it clear they don't take any liability unless negligence can be proved. And they'll have insurance anyway; don't work with a design agency which doesn't have professional indemnity insurance. Company A should also have their own insurance. – Dan W Feb 8 '19 at 19:05

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