Anyone can file a lawsuit and the costs of defending yourself against a claim are high, regardless of how strong your case is. Combined with vague standards, the result is a chilling effect for every independent artist hoping to build upon or reference copyrighted works.
This is what Andy Baio wrote on his blog.
Baio, a web developer, paid photographer Jay Maisel more than $32,000 settlement over a copyright infringement claim. The case stems over the cover art for the album Kind of Bloop, a chiptune remake of the Miles Davis classic, Kind of Blue.
Yes folks, he paid $32k for this!
Copyright is tricky and people will fight hard for whatever rights they think they have so you better be armed.
If you designed all parts of your album artwork yourself, then you are the sole owner of the said artwork. You need legal proof that you are in fact the owner of such artwork so you can send anyone to court for using your artwork without permission. You need to copyright your work so you can have your rights –and so no one steals it.
If parts of your artwork are not original (you teamed with a photographer, you bought artwork from istockphoto), then you are not the sole copyright owner of the artwork. This may mean that you will have to share a portion of whatever amount you will get for the licensed artwork in the event that you caught someone using your album artwork without permission.
The business between photographers and album owners is another case. Even if you bought the picture online, even if you hired a professional photographer and graphic artist, you still need to be clear of the what,where, and how you are going to use their artwork (which you bought). This may mean you will pay a few dollars more but hey, better than getting sued for unfair use. Some artists prefer to get a share of your sales, some want big-time payment. Either way, the important thing is HAVE EVERYTHING IN WRITING.
It helps to be a little paranoid regarding these matters. If you wish to put your artwork in posters, print it on shirts, in publications, on your website, indicate so and let them sign. Enumerate everything you can think of- even bumper stickers and iTunes photos. It is better that way in case some issues turn up.
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