Can you make things that look like copyrighted characters and sell them on Etsy? My friend is making really cool Oscar the Grouch hats, but could she can get in trouble for selling them?
As a general rule, you shouldn’t sell crafts with any character, image or logo that’s not your own. Etsy can and will remove items or ban you for selling work that infringes on others’ intellectual property rights — that includes copyrights, trademarks and patents. So that includes Oscar the Grouch’s face, the Steelers’ logo, the Nike swoosh, a Jeff Koons sculpture, and on and on.
In some cases, companies even restrict the commercial use of fabric or stamps they create. You’ll often see “for private/personal use only” printed on the selvage of fabric. If you want to use commercially produced supplies in the crafts you sell, you should check for the company’s angel policy first. For example, here’s the angel policy page for EKSuccess, which is very specific about the procedure to follow if you want to sell items made with anything they produce.
Aside from the fact that Etsy can take your items down or ban you entirely for selling items with copyrighted or unlicensed images, it’s better for business to make and sell only originals anyway. By creating your own images, patterns or characters, you can establish a visual brand for yourself that’s unique and recognizable.
Instead of making plushies in the image of Sesame Street characters, create your own lovable monsters. Rather than buying commercially printed fabric, create your own patterns and designs on Spoonflower. Instead of using stamps someone else made, carve your own! When in doubt, DIY.
Caveat: I’m not a lawyer. But the folks over at the Art Law Center are.