Not Saying it is Illegal, But a Warning About Crowdsourcing
Designs are inheritably shared, for this reason I have nothing against Logo Contests/Crowdsourcing. We have to admit that creative people will share without being paid because the motivation to create is just..too....STRONG..ugh...sigh*
However, if you’re planning to use Contests & Crowdsourcing, then I must warn you of two things.
There Is No Relationship
When a design is selected from all the contenders sharing their ideas, remember that they are strangers. In fact, they’re probably pirates or criminals starting up a new cover as a creative person. Point is—they are people you don’t speak to regularly and are not obliged to continue to work with you. They can consider helping, but they don’t know what will happen if they joining forces and neither do you. It can’t be said that you have each other’s trust or work well together. You may find out you want to strangle one another.
Crowdsourcing could be driving your business to the ground
There is no insurance that this design was the right direction for your brand. The Crowdsourced design was probably selected on a majority gut feeling. No research for whether this was the correct direction. Not to mention some of these designs may not be original. "Stolen you say?! Gasp!"
Normally, designers spend a large portion of time researching, communicating and collaborating with the client. With a Contest however, this process is non-existent.