BRATTLEBORO -- A local business owner who has successfully relied on her website to sell fine furniture made in Vermont is finding out the Internet also has a dark side.

"Saturday (May 24) the Windham County Sheriff Came to my house and served me a copyright infringement lawsuit," wrote Peggy Farabaugh on vermontfurnitureblog.com. She explained that she was being sued because a photograph that was used to illustrate the sale of a dining set to a customer in Hawaii, and that she thought was available for reuse through a site that offers free downloads, was in fact copyrighted by a Hawaiian photographer.

"But it was invisibly tagged," wrote Farabaugh, who told the Reformer that she had been advised by her attorney not to speak with the media. However, said Farabaugh, the Reformer was free to use any material on her blog post.

"On May 5, 2012, I received a letter from Carolyn Wright and Cindy Hsu at PhotoAttorney.com demanding $9,500 for use of the photo," wrote Farabaugh, who, with her husband, Ken, owns Vermont Woods Studios. "If I refused to pay up within 10 days, they said VKT might sue me for $150,000."

By utilizing a Google search with the terms VKT and "copyright infringement," the Reformer was able to determine VKT is Vincent K. Tylor, who has filed a number of such lawsuits over the past few years.

"I immediately took the photo down and called VKT to explain," wrote Farabaugh. "He refused to talk to me, insisting that all correspondence go through PhotoAttorney.com. I called and emailed PhotoAttorney.com several times trying to reach a fair settlement. We negotiated for months and eventually they went away."

Vermont Woods Studios works with Vermont craftspeople to market and sell their furniture online and at Stonehurst, a gallery and showroom in Vernon.

On April 25, Farabaugh received a letter from Woolf Gafni & Fowler, in Los Angeles, representing Tylor and demanding $12,000 by May 5. According to the letter, Tylor had been offered between $150 and $300 by Vermont Woods, however Tylor's licensing rates are five to 10 times that amount. If the $12,000 is not paid, claims the letter, Tylor "may elect to obtain statutory damages of up to $30,000 for each infringement or up to $150,000 for each willful infringement."

"Vermont Woods Studios has presented no real defenses to their copyright infringement precluding such an award," noted the letter.

Following receipt of the letter, Farabaugh contacted Adam Gafni.

"I ... discussed the facts and explained that we are a small company that cannot afford a $12,000 fee nor did I think it appropriate," she wrote on her blog. "I asked him to drop the lawsuit. He told me to make him an offer to settle and I said I'd been advised not to settle. At that point, he accused me of extortion, said 'see you in court -- have a nice day' and hung up the phone. VKT filed a $150,000 lawsuit shortly thereafter."

According to Mitch Stoltz, a staff attorney with Electronic Frontier Foundation, Farabaugh did what many people do, and what EFF recommends you never do -- talk to a plaintiff's attorney.

"They will try to trap you into revealing information that can be used against you in a court of law."

Matthew Chan, who, with Oscar Michelen, set up ExtortionLetterInformation.com, was not surprised when he learned of Farabaugh's initial reaction.

"Most people aren't copyright savvy, don't know how to defend themselves and don't know how the psychology of these scams works," said Chan. "They rely on scare tactics. That's why the scam often works."

Chan, who lives in Columbus, Georgia, set up his website in 2008 after he was sued by Getty Images for copyright infringement.

"I started ELI for myself, not for other people. As my case wore on, more and more victims came forth. Oscar and I decided to keep the website running for these cases."

Chan said he is very familiar with Vincent K. Tylor, who puts up images on free wallpaper sites that people can use for desktop savers. But if that image is used for any commercial purposes whatsoever, he said, then Tylor swoops in with a lawsuit. 

"This insures that he has a steady stream of accidental infringements."

Copyright trolls are banking on when someone files a lawsuit, most people will pay it off, he said, but it's important that the target of a copyright infringement suit not panic.

"Just because someone infringes, doesn't make it criminal and just because there has been an infringement doesn't mean there was a significant amount of damages," he said. "Some of these infringements are probably worth $50 or $100."

Stoltz recommends that anyone who receives a letter alleging copyright infringement should contact an attorney.

"Many of them do this work pro bono or for a reduced fee."

However, not everyone hastens to contact an attorney when they are served with copyright infringement paperwork, said Stoltz.

"Some people choose to ignore it and wait until they are contacted by the troll or sued. Sometimes the trolls just go away. It's a bit risky, but trolls don't always have the resources to pursue everyone."

Stoltz said that just in the past three years, more than 200,000 people have been targeted by copyright trolls. He said if a website doesn't openly assert that a picture is free for use, you should consider it copyrighted and not use it for your own purposes.

A copyright doesn't have to be registered to be legally binding, he said. But if it is, the law calls for damages that can be awarded by a judge or jury between $750 and $150,000 per work without the plaintiff having to prove any kind of harm.

"It's a bullying tactic. Juries don't tend to award $150,000, but because the amount is so high, they can use it as a scare tactic."

Stoltz said Congress is considering ways to rein in copyright trolls, but the legislation is not as advanced as proposed legislation to deal with patent trolls.

"And judges have banned various abusive practices of the copyright trolling business model," said Stoltz.

In the end of May, the federal appeals court in Washington, D.C., ruled copyright holders may not abuse the legal process to obtain the identities of thousands of Internet users. In this case, AF Holdings was seeking the identities of more than 1,000 Internet users who it claims illegally downloaded pornographic videos.

The court ruled that it is unfair to sue thousands of people at once in a court far from home based on nothing more than an allegation, according to EFF.

The EFF urges people who are being sued to contact their senators, congresspeople and attorney general and ask for their help.

In her blog post, Farabaugh wrote that it appears Tylor's lawsuit will only be settled one way.

"Unfortunately I guess we're going to court -- the last thing on earth any small business can afford to do," she wrote.

Chan said it may not get that far, but Vermont Woods Studios needs to be patient.

"They're going to have to play chicken with him," he said.

Bob Audette can be reached at raudette@reformer.com, or at 802-254-2311, ext. 160. Follow Bob on Twitter @audette.reformer.