Most likely you are being sued, and you will sue your contractor independantly.
That's what I deem the most likely thing, too. Which lends to rewording the question into: "What happens if you buy kettle from some guy who doesn't own them". Clint Eastwood tells us that you're still going to hang. This movie is surprisingly close to reality, even to how things work today.
If you survive the hanging, you can seek redemption. But like in the movie, you've paid 500 dollars, and the people lynching you will steal the rest, and the bad guy will only have 2 dollars in his pockets (if that) when he is caught. Your 500 dollars are gone, the kettle is gone, and so is your horse, and all you get back is 2 dollars and an ugly scar on your neck.
The laws in pretty much every country are made by scumbags for scumbags, they're not for honest people. If your contractor is honest, you're lucky.
If your contractor cheats you and runs off with your money, leaving you in a copyright lawsuit with a third party, your chances of getting any of your expenses back from him are dim. The money is either on his wife's account, or you're suing a limited company that doesn't exist at all any more (or exists and is bankrupt) before you even start. No matter from which angle you'll look at it, your money will be "gone" and the guy who is driving a 100k car will possess "nothing" that you could take in a lawful way.
You can shoot him, of course. But then you're the criminal, and you still don't have your money back.
Is this not a case where Indemnity insurance comes to your rescue?
If they don't find a way of backing out of it (they most likely will), yes. And if you have one that applies, of course. One may naively think "I got insurance" but when something happens, they'll find all kinds of excuses why you don't. Such as "oh, but this one is for your person, it does not cover work" or "oh, but here it reads 'blah blah' but since your company has a headcount of 5, so you'd actually need to...".
Insurances don't live by paying, but by collecting your money and denying payments as much as they can. So be very careful that you really pay for what you expect to have covered, and that they do not find a loophole, such as negligence. Even if they don't deny payment, some insurances will simply delay them (until you're bankrupt or dead).
Which, again, emphasizes what Tom Sloper said: Need lawyer, need contract. Only with a watertight contract you have a chance of proving to the insurance that there's no intent or negligence from your side and that whatever happened really came as a total surprise to you.
