Legal Question in Intellectual Property in California

Usually, once you have acquired and image through a royal free license, then you are not required to pay any royalty and punitive damages should not apply.

However, if your royalty free license has restrictions, then your actions that violate the restrictions is a contract breach and subject you to copyright infringement. So contact an attorney to review the standard rights release agreement that you signed, to see what rights you obtained through the license.

The other attorney is right on point here. The standard rights release may actually have given you more rights. This document needs to be examined. Consult with a good business or franchise attorney in your area for specific advice.

Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.

Franchise Attorney

Franchise Foundations APC

Be sure to distinguish between damages and punitive damages. The first is designed to compensate the plaintiff for its losses. The latter is designed to punish or make an example of the defendant. Punitive damages are not commonly awarded, and only in cases where the defendant has been guilty of fraud, malice or oppression, or where a statute specifically provides for damages in addition to a compensatory sum.

Licensing works for one use and using for another (which is what you're describing) would fall under copyright infringement. The statutory damages (which means the copyright owner does not have to prove they have actually been damaged at all) can be from $300 up to $150,000 per infringement (in the case you describe--EACH mug). This is regardless of whether you make any money or give the mugs away for free.

Probably not worth it to cheat. Get the license you need.