Winning logo in design contest is an auto-traced image from iStock.
Final vectorized artwork contains iStock watermark.

$325 logo design contest was held on Crowdspring last year (February 09) and this design was selected as the contest winner:

Upon submitting the winning design into the contest, the designer declared that "This design includes photos, illustrations or fonts created by others and if the buyer picks it, they'll have to buy the rights". The logo is now featured on contest holder's web site:

Almost a year later, the contest holder returns to Crowdspring, holding another contest, this time for a "new logo to compliment our current one". As part of their contest brief and materials, an .EPS file of the original logo ("File 1") is uploaded to the Crowdspring server so that contest participants can incorporate the design into the second logo. The icon portion of the vector artwork looks like this:

Opening the .EPS file, it is clear that not only was the image taken from the iStock website, but that the watermark was vectorized into the logo when it was auto-traced from a raster image to vector format.

The image appears to be part of the 'Scribbles' series of vector illustrations on iStock and is labeled grandparents: Depending on the type of iStock subscription used to purchase, use of the stock art can cost anywhere from approx. $3 to approx. $10. It has been downloaded more than 60 times.

There are several forum discussions about this issue in two threads entitled ROFLMFAO! and PROBLEMO, CAPICHE?.

"I noticed when I opened the eps, the characters were lived traced from a watermarked stock photo. I was curious about this so I asked the buyer. He says that's the way it came from the designer...on crowdspring!

So now that designer A has benefited from the awards to a half assed logo, a WHOLE bunch of designers are getting shafted..."

And:

"A buyer for one project has posted their current logo on their site, and it is not only using stock art, it also has the little i-stock emblem on it, which means they not only used stock, they didn't even pay for it... It is more visible if you download the file they provide in the brief."

Upon being notified of the issue on the forum, a Crowspring representative responded:

"This is an example of something that should be reported to us by clicking "Contact us". Discussing a topic like this here in the Forums is fine, but we ask that you do not provide links, as it is against the code of conduct."

A designer who was competing in the second contest had this to say:

"I honestly have no clue how this can be done without making someone very upset...unfortunately I feel this is going to hassle the buyer to the point of no return. Imagine all the money he's invested in the first logo only for it to backfire on him...and make us look like complete idiots?

I've withdrawn my entries...

As of yet today, the very few projects I have completed here have been nothing short of shady. Every buyer has asked me to borderline infringe on others and I can't see this happening too much longer.

Like I've always maintained that if crowdSPRING is going to provide the atmosphere to sell art that someone has to work out some kind of quality assurance aspect that functions.

If there is one in place already. how does it work?"

The use of iStock artwork in logos and/or trademarks is prohibited by their license agreement:

4. Standard License Prohibitions
(a) Prohibited Uses. You may not do anything with the Content that is not expressly permitted in the preceding section or permitted by an Extended License. For greater certainty, the following are “Prohibited Uses” and you may not:

4. use any of the Content as part of a trade-mark, design-mark, trade-name, business name, service mark, or logo;

Several of the entries for the new logo also featured versions of the iStock image. The second contest was originally closed, and awaiting the selection of a winner, but re-opened after the iStock use was discovered, and a new version of the logo was uploaded.

"An updated version of the OurParents logo in AI format has been attached for your reference. Please use this for design input."

The contest is now scheduled to close on Jan 28. In the 'updated' version, the icon portion of the logo has been altered.