Copyrights & Trademarks
Remember, usage of *any* licensed fabric/embroidery file/image for finished products is a DEFENSE, not a right. The intellectual property owner is within their rights to protect their registered property and their brand reputation.
What about fan art and "Inspired by" works?:
Inspired by/fan art etc: Fan art is supposed to be for personal use. The second you try to sell it, it can become a violation.
What about the % of change deal?
I don't know where this even started, but I say this: "If it looks like a duck..." You are essentially making money off of someone else's creative property. There is no real % for this kind of thing.
But I purchased the licensed material from the store...
On the selvaged edge, however, it will typically state "For Personal Use Only" or "For Non-Commercial Use Only". This may mean that you can purchase the fabric to make stuff for yourself, but not to sell.
But what about "First Sale Doctrine"?
In short, the First Sale Doctrine basically states that you are free to resell unaltered items. Once you alter the item, it becomes something new and could become a violation of the IP owner's rights. To find out if it is, you must go to court for a judge-given ruling. Each lawyer and each judge will interpret it differently. Be vigilant in getting an interpretation from someone that is working for you in your specific situation.
But I can't afford a lawyer:
You don't have to afford a lawyer. There are colleges around who educate and train people to become lawyers, utilize the instructors and possibly the senior students. SBA.gov has many different volunteers available in various places around the country, utilize their services by visiting their offices or calling them. Google is also a good resource to find attorneys who may meet with you or speak with you over the phone about what they can and cannot do for you free of charge. Many attorneys offer low cost consultations for various topics.
Dana Bucy Miller of DM Law, LLCis a wonderful resource for intellectual property questions. She offers some quick phone calls as well as more in-depth consultations so you get a full sense of potential solutions for your questions.
There are slightly different rules for Copyrights and Trademarks, so it is important to speak with someone who knows what those differences are.
Keep in mind: If you spent endless hours on an image just to have someone else "recreate" it and sell it, how would you feel?
Note: Embroidery files are another beast of its own. If you purchase an embroidery file that is not legally licensed, the IP owner may subpoena the vendor's records of who purchased. The same may hold true for fabric and other items, but I have not seen such a reaction yet.
Here's a good article: