6 hidden legal risks of crowd-sourcing packaging designs

Marketing has changed dramatically over the last five years. Increasing client service and output demands, along with increased competition and ever-shrinking headcounts and budget restrictions means that marketers have had to look at new ways to reduce costs.

Crowd-sourcing using the creativity and talent of a crowd, has become an acceptable means of corporate cost savings.  Whilst crowdsourcing packaging design seems like a simple solution with definite benefits and efficiencies, there are a number of hidden legal risks and costly copyright issues to be considered.

Below are 6 hidden risks of crowdsourcing to be aware of:

  1. Legal Risks – Authorship Issues

The creator or author of an original work is largely considered to be the first owner of copyright for that specific work. According to Australian copyright law, copyright will be recognised as a transfer to a business or new owner ONLY when the ownership is released in writing. Until then, the contributor maintains all rights on the content. Without proper due diligence and appropriate paperwork, the company is at risk of the original owner claiming rights on the work.

  1. Legal Risks – Copyright Infringement Issues

Due to the typical high volume of crowd-sourced submissions received during a round of competition and the absence of strict due diligence in contributor selection, a company cannot ensure that submissions are not already infringing upon an existing copyright.

Crowd-sourced freelancers are often in a competition to win work. Savvy designers will present risk free and familiar concepts a client will be prone to accept. Besides lacking creativity and innovation, to win the work designers may “borrow” from existing designs or use unauthorised images etc. If the contributor of the design does not have ownership rights because the design is stolen or unauthorized, or if the contributor does not transfer rights to the company, copyright infringement becomes an issue. Confirming ownership rights is often impossible. Thus crowdsourcing designs pose high copyright risks for a company.

  1. Legal Risks – Subject Privacy

When contributors submit designs, there is the possibility the subject of those designs (photograph, video, animation, written word etc.) may not have been given authorization to the contributor use for their work. Without the explicit consent of a subject to use and freely publish work, right of privacy may be violated. A proper release to allow use of a subject’s name, image, likeness, and identifying information may be necessary to avoid privacy infractions.

  1. Legal RisksTrademark Infringement Issues

In the same way crowd-sourced designs can infringe on an existing copyright, they can also infringe on an existing trademark. Without strict guidelines for submitted work, a company has no way of confirming that logos and graphics used in submissions are not already protected works of another individual or business.

  1. Legal Risks – Competing Interests

The very nature of open and freely accessible crowdsourcing platforms to designers from all around the world may risk exposure of company ideas and strategic direction. Competing third-party individuals or companies can utilize crowdsourcing efforts to gain insight into future company goods and services, ultimately risking confidentiality and increasing likelihood of stolen designs.

  1. Legal RisksWarranty and Contractual Issues

In a standard agency relationship, acquisition of design rights and usage by the company are defined through licensing processes. When liability issues arise, the company is indemnified under legal warranty from loss or damage. When crowd-sourced designs and content are used, however, the areas of coverage and liability protection for the company become grey.

In conclusion

The seemingly easy and inexpensive nature of crowdsourcing can be enticing to many companies and individuals in need of bulk designs. The advantages of outsourced designs are certainly worth considering, that said, the hidden risks involved may be enough to avoid the crowd all together.