This is a highly debated issue, and sometimes causes complications with requests I get for specific items, especially if the requester has found a pattern by someone else that they want me to use. I thought now would be a good time to address the situation and give you some basic information.
The Short Answer
Yes. Practically any pattern you want me to make an item from can legally be made and sold in public.
The Nitty-Gritty
According to what I have been able to find, patterns are rarely copyrighted (meaning that the designer has actually filed with the patent office). Even if a designer has gone this far, copyright law only protects the pattern itself, which means I/you cannot redistribute/resell the pattern, with or without alterations. You also should not be claiming the pattern/design of said resulting items as your own. However, this all only applies to the written instructions and not the items resulting from following the pattern. All items made using a pattern are not protected by copyright law. As such, you can't really be banned from selling items made using another person's pattern, nor are you liable to pay a fee to the designer for permission to sell these items. This also means those blanket statements and cottage licenses have no/little legal standing.
Yarn Obsession has a great summary of the circumstances, and even highlights some personal experiences related to the issue. Tabbers Temptations, also linked in the previous post, goes even further to break down the actual copyright law and explain how it really applies, citing court decisions and even highlighting false statements found on the web.
All that being said, you can't tell who has gone through the legal hoops to get specific protection, and as noted in an article I found in Vogue Knitting called Ask a Lawyer! Knitting and Copyright, and Knitty's Copyright Primer, it is wise to err on the side of caution. A designer may not be diligently policing, or they may; they may not be very litigious, or they could try to sue you (even if the ground they are standing on is very shakey or has no precedent...but do you have the spare money for lawyer fees just to find that out?)
My Answer
While it is completely legal for me to make an item from any pattern you find and sell it to you, both privately and publicly on etsy, I try very hard to adhere to the designer's wishes. Items I list on my shop that are designed by others almost always have a note from the designer saying they are OK with sale of items based off their patterns. This is more out of respect, but I try to follow it none-the-less.
On occasion I may make an item by custom request (meaning one time) that does not have such a note from the designer. In the event that the designer has specifically prohibited sale of items made using their patterns (despite the fact that there is no legal standing for such a statement), I will try to find an alternate pattern or design my own. If that is not possible, I may consider making the item but only for private sale (meaning we will make alternate arrangements off etsy), because despite the fact that it is completely legal for me to do so, I do not want to deal with the hassle and headache that may arise from going against a pattern designer's wishes.
As for the flip side, I do explicitly state on this website that is is legal to make items from my patterns and sell them. I am in like mind Fresh Stitches in that it is more beneficial to me and you to state this out right. You use my patterns, other people see that you've used my patterns, and hopefully I get more sales or custom item requests. Handmade by Caitlin is a side job, so while I would love to make a profit crafting an item for you, I will not be upset to have some extra time to myself while someone who has bought my pattern makes the item for you instead. I do ask that you link back to me, and I do include a note that I would prefer you not selling items made from my FREE patterns of LICENSED characters, not to be a jerk but because some of these license holders can stop the sale of these items and force me to take down my patterns, even though they are free.
Trademarked Characters
This is a whole other beast of a question! I do not have a firm grasp of trademark law, but I know of too many knitters and pattern designers who have gotten themselves into legal trouble creating, designing, and/or selling trademarked or licensed characters. If you are a fellow knitter, I am sure you are familiar with the saga mazzmatazz went through when she designed and shared some free patterns for Doctor Who characters. The BBC found unlicensed knit characters being sold on ebay and went after the designer, hitting her with a cease and desist. This article sums it up nicely. Mazzmatazz was lucky and over the course of a few years was able to work with BBC to release some new and officially sanctioned Doctor Who patterns (more info on her site).
There are also multiple cases of designers, crafters, and sellers of "Jayne Cobb hats" getting hit with cease and desist letters. This article explores the situation really well, but basically the characters and their appearances are intellectual property trademarked by Fox. Distribution of patterns (even if free), and sale of hand knit hats were cutting into Fox's profits of their own licensed products, much in the same way BBC lost some sales of character figurines to the unsanctioned plush ones.
You can see how this gets messy. Some companies don't care, or don't police so only care when it is brought to their attention, and others are very diligent and strict. I don't mind sharing my patterns, but they are free for this reason, and should I ever be asked to take them down by the intellectual property trademark owner, then I will comply most willingly. That being said, I know I have shared intentions of certain themed products for my shop. I have less qualms charging for items I have designed myself (key phrase here), and that I have put hours and materials into. At that point, I feel I am charging for my time and out of pocket costs, but again should I be asked to stop doing so I will.
I hope that may have answered any questions you have about copyright when it comes to requesting knit items, selling knit items, and designing knit items. I have linked you to my research, and while my basic understanding is that for non-trademarked creations copyright law only protects the written pattern and not and items you make using it, please feel free to peruse my sources and conduct your own research. If you find any errors or are better versed in copyright and trademark law than me, please leave a comment. If you have further questions, also leave them in a comment and perhaps I or one of my readers can answer it for you n_n
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