SuperStock Letter

[hamilsoft]

I represent a small company in Colorado that sells investment software.

Years ago, we joined an affilliate program offered by RevenuePilot, which pays royalties for advertising on our website by RevenuePilot's clients.  One of the advertising devices they offered was a pay-per-click search box that renders itself on our website via a code snippet we add to one of our pages.  We have no control over the content displayed in RevenuePilot's banners or search box.  All content displayed is located on RevenuePilot's servers and controlled by RevenuePilot.

In March, 2010, we received a settlement demand letter (for $2240) from SuperStock for an image displayed by RevenuePilot's search box background banner on our site.  As I say, we had no control over the image displayed, nor did the image ever reside on our server.  Our agreement with RevenuePilot granted us a license to display their content.

As we had never received a penny from RevenuePilot, and forgotten we were even part of their affiliate program, it wasn't until we received SuperStock's letter that we discovered RevenuePilot has discontinued their program and probably gone out of business (their website still exists, but claims they have "closed media operations".)  

Under "strict liability", are we liable for an image used by a third party through a separate license agreement?  Does anyone who allows display advertising on their site assume liability for the images in the ads?  Surely there must lots of case law from the world of printed media.  Is Time Magazine liable for every ad it prints?  

Assuming the worst case, i.e., RevenuePilot illegally used SuperStock's image and is no longer around, does the liability then fall on us?  What would you expect a court to award SuperStock in such a case?  We're willing to settle with them for a reasonable amount if we're technnically liable.  We've removed the RevenuePilot code from our site but have not contacted SuperStock yet.  What actions do you recommend we take at this point?

Thanks for any help!

[Oscar Michelen]

Hamilsoft, I responded to this question under your other post, but you may be entitled to protection under the Digital Millenium Copyright Act (DMCA)