If you don’t own a T-shirt with a clever design incorporating past or present pop culture, you probably at least appreciate seeing one in passing. So, how do these popular Internet T-shirt companies walk the fine line between parody/fair use and copyright infringement? Very carefully, if not precariously.

An in-depth Ars Technica report explores just how these designs can “exist in a world of DMCA takedowns, cease-and-desist letters, and stringent IP enforcement.” One profiled T-shirt company stated that it worked with an IP law firm for several months, shuttling designs their way for legal review. Over time, the company grew to understand what was legal and illegal to use. But even with this knowledge, the company still finds itself responding to a few Digital Millennium Copyright Act takedown requests annually, which they respond to quickly, referring to specific guidelines that counsel had previously established. These guidelines, says Ars, aim to have each design meet parody and fair use guidelines.

While both T-shirt companies and designers need to be aware of parody and fair use guidelines, designers also need to protect their own intellectual property from would-be design thieves. And yet, this is a gray area because some of those very designs that have been duplicated or stolen were based on other companies’ intellectual property.

These IP holders whose franchises end up on these T-shirts make up the third pillar of the Internet T-shirt economy, says Ars. As a result, says Ryan Morrison, founding partner of the firm Morrison/Lee, he doesn’t feel his T-shirt company clients “are operating on solid legal ground.” Morrison continues:

“Calling something fair use or parody is saying ‘Yes, I’m infringing, but,’ because what those two things are, they’re not rights, they’re defenses. It means you’ve infringed, you’ve absolutely admitted you’re infringing, and now what you’re saying is it’s OK you infringed because it’s either fair use or it’s parody… it would be very difficult to convince me if I was the judge, even as someone who really enjoys these shirts, that they’re actually fair use or parody.”

Morrison recommends considering four factors for fair use:

• purpose and character of the use
• nature of the copyrighted work
• amount taken from the original work
• effect and use on the potential market

Parody, by comparison, is not as clear-cut because it depends on the wearer’s understanding of a design as a joke.

So if the T-shirt economy contains copyright infringement, why aren’t the IP holders taking these companies and designers to court? Two possible reasons, Morrison offers: the money made is nothing compared to profits from their own merchandise and the damage to their reputations from going after these smaller companies and designers would be far too costly. Rather than becoming case law, they’d rather continue to have the ability to take down sites at will, plus reap the rewards of what can be considered free marketing in the meantime.