Using a recognizable character, whether it's Disney, Pixar, Pokémon, or any other well-known property, feels like an easy way to grab attention. It's also one of the more common and more expensive legal mistakes small businesses make. Unauthorized use of protected artwork, character depictions, names, or logos creates real exposure under both copyright and trademark law, and it doesn't matter whether you meant to infringe.
This post covers what actually counts as improper use, what it can cost you, when a use might genuinely be defensible, and how this plays out in two common real-world situations.
What Counts as Improper Use
Copying or Displaying Protected Artwork
Copyright gives the owner of a character or piece of artwork exclusive rights to reproduce, distribute, publicly display, and adapt that work. That means a business ordinarily cannot take protected character art, film stills, or similar content and place it on products, packaging, marketing materials, or a website without permission, unless a specific exception applies.
This shows up most often in three places:
- Merchandise and packaging. Character art on products, cups, shirts, or packaging without a license.
- Marketing and advertising. Using character images in flyers, posters, or social media promotion.
- Website and storefront use. Displaying protected artwork anywhere the public can see it.
Adaptations Count Too
Redrawing, restyling, or otherwise recasting protected character art into a new design doesn't make it yours. This implicates the copyright owner's derivative-work right, separate from the reproduction right. A work that merely adapts protected material doesn't become lawful just because you added something new to it.
The Trademark Problem
Trademark law creates a separate issue when a use makes someone else's names, logos, or branding function as your own, or otherwise causes likely confusion about source, sponsorship, affiliation, or approval. An unauthorized use is especially risky if it appears on product labeling, store displays, or advertising in a way that suggests the brand licensed, approved, or endorsed your goods or services. Notably, a use can be commercial, and therefore risky, without a single direct sale.
Licensed Stock Photos Aren't a Complete Answer
A common misconception is that a licensed stock photo automatically clears you. It doesn't. A copyright or image license may not, by itself, convey the trademark, publicity, or other permissions needed for your specific commercial use. The license has to actually cover your intended purpose, medium, territory, and audience, not just the image itself.
Does Profit Matter?
Yes, but not as a simple yes-or-no rule. Commercial use generally weighs against a fair use defense and increases trademark and other risk, but a use can be commercial even without direct sales; profiting from material without paying for it, saving the cost of a license, or using the material to help sell other products or services can all count. Commerciality also matters less when a use is genuinely transformative, and matters more when the new use serves substantially the same purpose as the original.
What It Can Actually Cost You
Copyright Damages
Available remedies include injunctions, destruction of infringing materials, and the infringer's profits. If the work was timely registered, statutory damages and attorneys' fees may also be available.
- Statutory damages generally run $750 to $30,000 per infringed work.
- Willful infringement can raise that to $150,000 per work.
- Innocent infringement can reduce it to as little as $200 per work in limited cases.
These awards are calculated per copyrighted work, not per infringing post or product, so the number of separately infringed works matters.
Trademark Exposure
Trademark remedies include injunctions, destruction of infringing articles, product recalls, profits, actual damages, and attorneys' fees in exceptional cases, with up to three times actual damages available in some infringement and willful dilution cases. If the mark is famous, the owner doesn't need to prove confusion or competition to bring a dilution claim, only that the use is likely to blur or tarnish the mark. Trademark owners seeking injunctive relief are also entitled to a presumption of irreparable harm on a sufficient merits showing.
If It Crosses Into Counterfeiting
Counterfeiting involves a mark that is identical to, or substantially indistinguishable from, a registered mark, and it brings materially worse exposure:
- Statutory damages of $1,000 to $200,000 per counterfeit mark, per type of good or service.
- Up to $2,000,000 per mark for willful counterfeiting.
- Possible ex parte seizure of goods and related materials before trial.
Criminal and Border-Enforcement Exposure
Civil exposure can become criminal in more serious cases. Willful copyright infringement for commercial advantage or financial gain can be criminally prosecuted, as can willful reproduction or distribution of copies worth more than $1,000 within a 180-day period. Criminal counterfeiting is more serious still: an individual can face fines up to $2,000,000 or up to 10 years in prison, and a business can face fines up to $5,000,000, with harsher penalties for repeat offenders. Imported counterfeit goods can also be seized by US Customs and Border Protection, and civil fines can apply to anyone who directs, assists, or aids the importation, regardless of whether they knew the goods were counterfeit.
When a Use Might Actually Be Defensible
Copyright Fair Use: The Real Test
Fair use is evaluated under four factors, weighed together rather than treated as a checklist:
- Purpose and character of the use. The central question is usually whether the use is transformative, meaning it serves a different purpose and adds new expression or meaning rather than just standing in for the original.
- Nature of the copyrighted work.
- Amount used. Using an entire work generally weighs against fair use, though courts sometimes allow it when reasonably necessary for a genuinely transformative purpose.
- Effect on the market. Fair use is weaker when the new use could substitute for licensing the original or interferes with the owner's existing or potential market.
No single favored purpose, including commentary, criticism, news reporting, teaching, or research, is automatically fair. Every case is fact-specific.
Genuine Parody Is Narrow
A true parody has to target the original work itself, at least in part, and can borrow only as much as necessary to "conjure up" the object of the parody. If the real purpose is to attract attention or sell an unrelated product, the parody defense is much weaker.
Nominative Fair Use
This defense allows limited reference to a brand to identify it, not to borrow its goodwill. The classic test asks whether the product or service can't easily be identified without using the mark, whether only as much of the mark as necessary is used, and whether nothing about the use suggests sponsorship or endorsement. Using a brand's actual artwork or characters as decoration typically goes beyond what nominative fair use allows.
Expressive Works and Public Domain
Courts sometimes apply a more permissive standard to genuinely expressive works, like using a mark in the title or content of a film, book, or song, where the use has artistic relevance and isn't explicitly misleading. That protection generally doesn't extend to uses that function as your own branding.
Material can also be freely used once its copyright has genuinely expired into the public domain, though this has to be assessed work by work. A later, still-protected derivative version can exist even where earlier material is free to use, and trademark rights can continue indefinitely through ongoing use, separate from copyright's fixed term.
DMCA Takedowns and Cease-and-Desist Letters
Online infringement can be addressed through the DMCA takedown process, which can result in content being removed quickly, and rights holders commonly pair this with cease-and-desist letters that set up future litigation if the use continues. Ignoring a cease-and-desist letter can later support an argument that the infringement was willful, which increases both civil and criminal exposure.
A Real-World Example: Merchandise and Event Promotion
Branded Merchandise
Consider a local business, like a gym, putting recognizable character art on water bottles or other merchandise. Using the actual images creates substantial copyright exposure, since it's commercial copying of protected visual works, not a close fair use question. It also creates trademark risk, since branded merchandise on products for sale is exactly the kind of use that can cause confusion about sponsorship or approval. Using just a character's name without any artwork may weaken the copyright argument, but trademark risk can remain strong on its own.
Event Promotional Materials
The same risk applies to using well-known characters in promotional materials for a sporting event or similar gathering, posters, flyers, ads, or social media promotion. This reproduces and publicly displays protected artwork in advertising, and it often supports a trademark sponsorship or approval theory, since a promotional poster using famous characters can imply an official tie-in even when the event has nothing to do with the rights holder. If a famous mark is involved, dilution may be alleged as well.
Why the Usual Defenses Fall Short
In both situations, the standard defenses tend to be weak:
- Fair use struggles because the use is commercial, decorative or promotional, and can interfere with the rights holder's own licensing market.
- Parody doesn't fit, since using a character to draw attention to an unrelated business or event isn't the same as commenting on the character itself.
- Nominative fair use doesn't stretch to cover using a character as the main attraction rather than a minimal, necessary reference.
Enforcement Is Easier Than You'd Expect
These uses are public and easy to document; a photo of merchandise or a promotional poster is simple for a rights holder to find and screenshot. Cease-and-desist letters are a common first step, often paired with a platform takedown request. Continuing the use after receiving notice can support an argument that the infringement was willful, which materially worsens the exposure.
Quick Compliance Checklist
- Confirm any stock image, character art, or licensed material actually covers your specific use, medium, and audience.
- Avoid using recognizable character art, names, or logos on merchandise, packaging, or marketing without a license.
- Don't assume redrawing or restyling protected art clears you legally.
- Review any planned use for implied sponsorship, endorsement, or affiliation, even if unintentional.
- Treat cease-and-desist letters seriously and promptly, rather than continuing the use.
- When in doubt, assume a use requires a license and confirm before you publish, print, or sell.
Frequently Asked Questions
Does it matter if I didn't know the character was protected?
No. Lack of intent is not a complete defense to civil copyright infringement, although innocence can reduce the damages available.
What if I only use a character's name, not any artwork?
Copyright protection may be weaker, since names alone are generally not protectable, but trademark risk can still be significant if the name functions as a source identifier or implies sponsorship.
Is it safe if I don't sell anything, like a poster I just post on social media?
Not necessarily. A use can be commercial, and therefore risky, without any direct sales, including when it's used to promote a business or event.
Can I use a character if I add my own artistic spin to it?
Adding new elements doesn't make an adapted or restyled version of protected art lawful on its own. That still implicates the original owner's derivative-work rights.
What should I do if I get a cease-and-desist letter?
Take it seriously and don't ignore it. Continuing a challenged use after notice can support an argument that the infringement was willful, which increases the potential damages and can affect criminal exposure in more serious cases. An attorney can help you evaluate the letter and figure out your next steps; if the matter is likely to proceed to litigation, that's usually a point where you'd want litigation counsel involved.
Conclusion
The legal exposure for using unlicensed character art, names, or logos is real, and it applies whether you're a large company or a single-location small business. The defenses that often come to mind, fair use, parody, and nominative fair use, are narrower than most people assume, and they're generally weakest for the two things most businesses actually want to do: sell something or promote something.
If you're considering using licensed characters in your marketing, merchandise, or promotional materials, or you've received a cease-and-desist letter and want help understanding what it means and how to respond, I'm happy to help you evaluate the situation and your options. If a matter is already headed toward litigation, I can help point you toward the right litigation counsel.
Schedule a consultation: https://www.chukwuekelaw.com/contact-us
This post is for informational purposes only, does not constitute legal advice, and does not create an attorney-client relationship. Attorney advertising.
