Breaking the law

Recently it has come to my attention that I inadvertently broke a few copyright laws, oops.

Cutting up an old band t-shirt, or something that had a trademark, copyrighted picture.. etc, I always figured I wasn't breaking any laws since I didn't print the shirt, it was legally obtained, that sort of thing. This is not the case.

Apparently, those such fabrics are for personal use only. I can cut them up and use them to make whatever I want, but I cannot profit by selling them. There is a way to slightly get around this by charging for the labor instead of the actual product, but I don't think I can be that shady with all my sales.

As far as upcycling goes, why would these copyright holders be so stingy and angry at reusing these fabrics. I find my materials in thrift stores, save them from going to the landfill, etc... so why can't they be reused and turned into something beautiful and/or useful. A designer in Florida that used old plastic bags from target to create bags and accessories was in violation of the same copyright law. 

So what to do now? 

Quite a few many things in my shop are in violation of this.. but what's done is done. 
I was forced to take down one purse since the owner of the copyright saw it and emailed Etsy.. I've decided I'm going to leave everything else up on the site, let them sell, and then stick to using non-copyrighted fabrics. I can only get in trouble if the owner of the copyright sees these items, and the chances of that happening are pretty slim.

Any custom orders I do in the future with copyrighted fabrics are okay, since the price of the item will be the charge for labor. Haha takes that U.S. copyright office.