Monthly Archives: August 2008

A “Poor-Man’s Copyright” is a Poor Solution for Copyright Protection

Commentary: Beware the “poor man’s copyright.” It is nothing more than an urban legend that if an artist mails himself a copy of a song, story or some other artistic expression that he created, he will be preserving his copyright in it. That procedure is generally insufficient to protect the original creator’s rights.

Instead, the “poor man’s copyright” is useful solely in that it can help establish when the work was created for purposes of proving that it is protected as a common law copyright. While this could help to establish the ownership and creation date (if that is challenged in a later dispute), it is insufficient to maximize the right to recover damages; for that, one would need to have filed a statutory copyright..

In other words, if someone does not register their work as a statutory copyright with the United States Copyright Office, they may still be entitled to a common law copyright. However, without the Federal registration of a statutory copyright, the amount of damages they can collect will be severely restricted.

What is the difference between a common law and a statutory copyright? Essentially, as soon as an expression is recorded in a tangible form (i.e. written on paper, recorded on film, etc.), there is a common law right in and to the copyright of that expression. This does grant the artist the above-referenced exclusive rights as a copyright owner. Unfortunately, this generally provides him with rights without a remedy. The main concern underlying copyright ownership is preventing someone else’s unauthorized usage. Unfortunately, a common law copyright owner cannot generally go to court to sue for copyright infringement unless and until they have a registered copyright. This means that the work is actually registered with the Library of Congress’s U.S. Copyright Office.

However it is not generally recommended that an owner simply wait until an infringement occurs to register his work as it severely limits his rights. We strongly recommend that all works be registered with the Copyright Office at the earliest possible point. This is because there are added rights and protections that inure to a registered copyright holder. These specifically include an ability to obtain statutory damages and recoup attorneys’ fees. However, an owner can only avail themselves of these protections in a dispute if the work was registered when the alleged infringement occurred.

For instance, if a company obtains the script of a film from another company and then produces the film utilizing that script without permission, it has arguably infringed on the rights of the company owning the script. The creation of a film from a script is a derivative work. Since only the copyright holder may create a derivative work without permission, this is problematic. If the script was not registered for copyright infringement when the film was produced, the script owner will generally only be able to recoup damages from lost profits. This can be very difficult to prove and/or end up being minimal. For instance, the film that the infringing company made may not have been profitable. Accordingly, there might be little damages at stake, even though the violation may have been blatant.

On the other hand, if the company had a registered copyright for the script, it could then have the ability to instead obtain statutory damages rather than be limited to lost profits. In addition, with the prior registration, the company may be able to recoup the attorneys’ fees it expends in connection with the prosecution of its infringement case. This can be the difference between the case being a viable lawsuit or not, at least from a cost-benefit standpoint.

The best practice is therefore to obtain a statutory copyright registration prior to any release, promotion or other distribution of a work so that it can be protected before anyone has the opportunity to infringe on the work.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Newly Enacted Law Removes Maximum Price Restriction on Sales of Admission Tickets to Entertainment Facilities

New Jersey Legislation: The New Jersey legislature recently enacted a statute which removes the maximum price limitation on sales of tickets for admission to various places of entertainment. Under the law, a “place of entertainment” is defined as any privately or publicly owned and operated entertainment facility, such as a theatre, stadium, museum, arena, racetrack or other place where performances, concerts, exhibits, games or contests are held.

Prior to the passage of the law, individuals were restricted from reselling tickets for admission to places of entertainment in excess of 20% of the ticket price or $3.00, whichever was greater, plus lawful taxes. Registered ticket brokers and season ticket holders were allowed to resell tickets at a premium, but only up to 50% of the price they paid to acquire the ticket, plus lawful taxes. The newly enacted law lifts all caps on the price for the resale or purchase of a ticket sold by a person other than a registered ticket broker, as long as the sale is made through an Internet website. The law also removes the prior statutory provision requiring that the face of each ticket include language indicating the maximum premium at which that ticket may be resold.

The legislative intent behind the law is to level the playing field for New Jersey citizens seeking to dispose of extra tickets that would otherwise remain unused, thus allowing for the public to lawfully sell tickets on eBay, Craigslist and other similar websites. The effect, however, will likely be to open, or re-open, a large area of commerce for professional “scalpers” or other professional bona fide online ticket resellers. Indeed, it may very well result in professional ticket resellers buying up so many blocks of tickets that the average member of the public will have trouble obtaining them directly from the box office where the performance is being held. On the positive side, however, the legislature noted that the previous price restrictions that were in place prior to the passage of this law put New Jersey residents at an unfair disadvantage when competing with sellers from other states who are not restricted by price caps on tickets resold via the Internet. This law would presumably help overcome that disadvantage.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Stolen Ideas Often Result in Limited Remedies

Commentary: Imagine the following scenario: you develop a great idea for a television show and submit it to a network for consideration. They reject the proposal. But, a few months later you see an advertisement for a new show that looks a lot like the show that you had pitched. “Looks like a duck, quacks like a duck…,” right? Unfortunately, even if the show follows the precise outline of your pitch, such use may not be deemed to be intellectual property infringement.

The law does not generally allow individuals to protect ideas. However, it does have certain modes for protecting aspects of intellectual property: copyright allows the protection of the actual expression of an idea (the written script, the actual photograph, etc.); trademark law enables the general protection of a business and product or service names, branding and logo; and patent law will sometimes protect a general concept, however this is generally limited to technical aspects or utilitarian concepts. The best way to protect an “idea” is to generally engage in a combination attack. Essentially, the idea may be able to be protected through the different protectable aspects of the project through intellectual property filings.

In order to protect the over-arching “idea,” protection must be contracted for. Again, the law itself does not provide an over-arching protection for an idea itself. If an idea is openly shared, someone else can separately develop it. It is not a good practice to share ideas unless and until the person or entity with whom they are sharing it promises to keep the ideas confidential and to not use or exploit the idea themselves. This type of contract is generally called a non-disclosure agreement (NDA) or confidentiality agreement. Executing this agreement, might arguably provide recourse against the party to whom the idea was revealed, assuming they then utilized it in violation of their signed, written agreement. Whereas the idea-holder may not be able to sue for infringement, he may have the ability to sue for breach of contract and either stop the infringer from proceeding with the idea and/or obtain damages from their wrongful use.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Independent Filmmakers Increasingly Utilizing Self-Distribution Model

Commentary: In recent years, the marketplace for independent films has become increasingly overcrowded. Several prominent distribution houses for independent films have been forced to sell or close and currently, the general thought is that there are simply too many films for too few theatres. As a result, independent filmmakers have seen it become more and more difficult to obtain conventional movie deals for their films.

For many independent filmmakers, the do-it-yourself model of distribution has become an increasingly attractive option. Although some are forced to go it alone because they have no other viable alternative, for others who do have options under the old model, self distribution can still be the more attractive approach. For example, distribution houses typically require that the filmmaker sign over most of the rights to their film in exchange for small cash advances, and often, they do not expend the funds necessary to sufficiently market the film to the general public. The do-it-yourself model not only allows filmmakers to retain the rights to their films, but it also enables them to retain control over where the film is distributed. It can also enable the filmmaker to exert more artistic control with regard to how the film is marketed, so that the distributor is no longer at the helm. Moreover, it allows the filmmaker to be proactive rather than simply waiting to find a deal.

Nonetheless, there is certainly a downside to self-distribution. In order to take on distribution without the help of a prominent distribution house, independent filmmakers must have a solid understanding of the marketplace. In addition, self-distribution requires the filmmaker to have access to the necessary capital. For example, there can be a huge expense involved in opening a film in major movie markets; filmmakers must cope with the hassle of collecting money from exhibitors; and they must handle the detailed logistics involved in booking a film. To be sure, self-distribution involves an enormous amount of work. But if the filmmaker is willing to put the time in, that work has the ability to reap substantial rewards.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

A Work for Hire Agreement: A Critical Tool for Production Companies

Commentary: Many companies operate under the misconception that if they have hired and paid freelancers for their work, the company has that paid them has all of the rights to it. Quite simply, this is not necessarily true.

Simply paying someone for their services does not mean that you own the rights and proceeds of that work. Admittedly, it is quite counter-intuitive: you provided your consultant with the idea; they provided services; and you paid for it. You would think this would provide you with all rights in that work. However, the law generally requires that there be a written agreement, signed by the person giving up their rights. It should provide that the services are being performed as a “work-for-hire” and that the contractor is giving up and assigning their rights to it. If you do not specifically provide this in a signed agreement, the contractor could later claim rights to their work; could claim that they are a joint copyright holder; or otherwise cause problems as you try to promote your products or services.

Moreover, although the law provides for greater protection to companies for work created by employees rather than independent contractors, nevertheless, we generally recommend that companies apply the same system described above their employees, as well. Again, this should be in a written agreement, signed by the employee which specifically refers to the fact that employee’s services are being provided to the company as a “work-for-hire.” This is often included within the employee’s employment agreement. However, if the employee did not sign an employment agreement, this still could be accomplished through a separate, stand-alone document.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Privacy Policies Can Be Held Against You Too

Commentary: As Mr. Horn previously discussed in his post, Ebay Liable for Breach of Contract Based on Violation of Terms and Conditions, the Missing Link case underscored the need to take caution in preparing website terms and conditions. There, eBay was held liable for failing to comply with its own terms and conditions. As Mr. Horn explained, this case emphasizes the importance of drafting terms and conditions that are directly applicable to the website and with which the company can comply. However, equally important is that the company is prepared and able to comply with the edicts of its privacy policy.

Privacy policies are critical documents for an e-commerce company. They generally outline what information is being collected by a company and how that information will be utilized. They are required in certain instances and by certain state laws. Moreover, the Federal Trade Commission (FTC) has offered precise guidelines with regard to the implementation of a privacy policy.

Notably, the FTC does not generally compel a company to adopt a privacy policy on its website. A significant number of cases brought by the FTC relating to website privacy policies not only concern the failure to have a policy, but also relate to enforcement actions against companies who fail to adhere to posted privacy policies they do have. In essence, while it is advisable to post a privacy policy, to do so and not adhere to it would be worse than not posting it at all. For example, in one of the landmark decisions in this area, the FTC brought suit against GeoCities, Inc., based on inconsistencies between its privacy practices and its stated policies. A settlement agreement was reached which required GeoCities to change its data collection policies and adopt a new privacy policy to protect consumer rights. In re GeoCities. Notably, this case is also beneficial because the settlement that was reached is instructive of the types of practices the FTC deems appropriate with regard to privacy policies and provides suggestions on implementation (i.e., where the notice should be placed on the website).

Again, this underscores the importance of making sure that the privacy policy, and all of a website’s legal disclaimers, are appropriate for its business. It is critical that the company take time to develop and precisely customize website terms and conditions and privacy policies. These documents need to suit the business’s needs, obtain the rights it needs against customers and website users, but also establish corporate standards that are reasonable and with which the company can easily comply.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

Parker v. Google: Internet Law is too Unsettled to be Frivolous

Pennsylvania Caselaw:  In Parker v. Google, 2008 WL 2600299 (United States District Court for the Eastern District of Pennsylvania 2008), the Court was presented with a lawsuit filed by Gordon Roy Parker, a pro se (a person without a lawyer) against Google. In that case, Parker alleged copyright infringement, defamation, invasion of privacy and negligence relating to the fact that Google catalogues and utilizes digitally stored information that belongs to him. The Court dismissed those claims, in part, on the basis that “Google’s automatic archiving of postings and excerpting of websites did not include the necessary volitional element to constitute direct copyright infringement.” Id at 1. Further, many of the claims were barred by the Communications Decency Act which provides for immunity for websites that are merely a conduit for information or opinion of others.

For these and other reasons, the Court found that Parker had not stated viable causes of action against Google. The latter then moved for reimbursement of its attorneys’ fees based upon the frivolousness of the pleading and the language of the Copyright Act which provides for the option of an award of attorneys’ fees to the prevailing party.

The Court denied Google’s motion. Interestingly, its basis for the denial was that Internet law is so new and unsettled, that it would not be fair to punish a nonprevailing party with an order to reimburse his adversary’s attorneys fees. Indeed, the Court noted that the case was filed in 2004, and at that earlier time, “many facets of Internet law were even less settled than today.”

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

eBay Liable for Breach of Contract in Violation of Terms and Conditions

General Caselaw: A recent federal court decision from the Northern District of California in found that eBay violated its contract with a vendor based on the timing of making products searchable. In Missing Link, Inc. v. eBay Inc., 2008 WL 1994886 (N.D. Cal. 2008), the plaintiff-vendor alleged that eBay failed to make the posted products searchable for more than four hours after the vendor had posted the items for purchase.

The Court held that the delay constituted a breach of contract because it was contrary to the provisions of the website’s terms and conditions which specifically stated that any item listed would be posted immediately. Accordingly, the Court held eBay to that timetable and held it liable for breach in that four hours was not “immediate.”

The Court refused to accept eBay’s argument that the four hour lag was excusable. It noted that the merchandise could not be found by using the search function in eBay. The Court noted that since eBay is so vast it is extremely unlikely that any potential customer would be able to go directly to the posting without using eBay’s search function

This case emphasizes the importance of carefully crafting terms and conditions for an Internet website. Terms and conditions should not be merely “borrowed” from a competitor’s website, even if the competitor operates in the same industry or provides the same or similar products or services. Every website has unique aspects that need to be accounted for. It is critical that a website’s terms and conditions match the precise intent of the parties, because those terms and conditions are meant to create a contract with the visitor to the website.

The fact that the website’s terms and conditions form a binding contract is a double-edged sword. It greatly enhances a company’s rights and protections against its users. In fact, it provides an opportunity to bind a customer to a contract and business model where no other contract may exist. However, by the same token, the company will be also bound; and its failure to adhere to its own terms would make the company liable for breach. Finally, website terms and conditions should not be considered a static agreement. It should be reviewed periodically to be sure to account for changing technologies and any changes in the website’s business procedures.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

The Digital Millennium Copyright Act: A valuable tool or a dangerous weapon?

It is critical that website operators fully understand their rights and responsibilities under the Digital Millennium Copyright Act (“DMCA”). This is particularly important for operators of social networking sites, blogs or other sites that allow third parties to publish content on the site. As more and more “traditional” websites now allow such postings — one of the many aspects of the Web 2.0 age — the importance of the DMCA grows.

The DMCA is a Federal statute that was enacted in the 1990’s which essentially modified copyright law in order to account for new technology, including the Internet. One aspect of the statute specifically provides for a limited immunity for websites posting content that might arguably infringe another’s copyright rights. Essentially, the law outlines certain protocols for webmasters to utilize, which includes providing an adequate way for those whose work has been infringed upon to contact the website and request the removal of the content. The DMCA generally says that if the website has engaged such protocols, and takes down content that is properly reported to it, it can have immunity from a copyright infringement claim. For this reason, it is critical that all websites who host third party content ensure that they are properly engaging in the protocols provided by the DMCA and include the appropriate instructions in their posted terms and conditions.

A little-known aspect of the DMCA applies to those reporting infringements. While the DMCA protocols allow a person whose rights have been infringed to request that the website remove the protected content, the statute also provides a penalty for a person who wrongfully utilizes this protection. The law provides for liability against the wrongful reporter, including payment of attorney’s fees, which may be payable to (a) the alleged infringer; (b) the website that removed the content; and/or (c) the copyright owner or licensee of the copyright owner. Essentially, the damages might be paid by anyone in one of those three categories who is injured as a result of the false report. Specifically, the DMCA states that: “[a]ny person who knowingly misrepresents under this section – (1) that material or activity is infringing, or (2) that material or activity was removed or disabled by mistake or identification, . . .” is liable under the Act. 17 U.S.C. 512(f). In sum, there are two ways of being liable under this provision: (a) for indicating that a work is infringing if it is not or (b) for indicating that a work which was removed was in fact, not infringing and should have remained posted.

This penalty-based aspect of the statute was recently highlighted in a case currently pending in Illinois relating to the YouTube.com posting of rodeo competitions. In that case, Showing Animals Respect & Kindness v. Prof’l Rodeo Cowboys Association, an animal rights group posted video from a rodeo event on YouTube. The Rodeo Association then contacted YouTube and requested that the videos be removed because they infringed upon the Association’s copyright. SHARK, the animal rights group, filed suit indicating that the Association’s request violated the DMCA because it was based on a false claim. Its argument was that the Association knew that there was no copyright in the rodeo event, and therefore the request that the videos be taken down was not a rightful request to prevent infringement, but rather constituted a wrongful means of trying to remove content that was unfavorable to them. The case is ongoing.

Clearly, those reporting infringements should take caution in doing so. The Rodeo case highlights the importance of being reasonably certain that one has a viable claim for copyright infringement before making a request that a posting be removed under the DMCA.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC

The Digital Millennium Copyright Act: A valuable tool or a dangerous weapon?

Internet Law: It is critical that website operators fully understand their rights and responsibilities under the Digital Millennium Copyright Act (“DMCA”). This is particularly important for operators of social networking sites, blogs or other sites that allow third parties to publish content on the site. As more and more “traditional” websites now allow such postings — one of the many aspects of the Web 2.0 age — the importance of the DMCA grows.

The DMCA is a Federal statute that was enacted in the 1990’s which essentially modified copyright law in order to account for new technology, including the Internet. One aspect of the statute specifically provides for a limited immunity for websites posting content that might arguably infringe another’s copyright rights. Essentially, the law outlines certain protocols for webmasters to utilize, which includes providing an adequate way for those whose work has been infringed upon to contact the website and request the removal of the content. The DMCA generally says that if the website has engaged such protocols, and takes down content that is properly reported to it, it can have immunity from a copyright infringement claim. For this reason, it is critical that all websites who host third party content ensure that they are properly engaging in the protocols provided by the DMCA and include the appropriate instructions in their posted terms and conditions.

A little-known aspect of the DMCA applies to those reporting infringements. While the DMCA protocols allow a person whose rights have been infringed to request that the website remove the protected content, the statute also provides a penalty for a person who wrongfully utilizes this protection. The law provides for liability against the wrongful reporter, including payment of attorney’s fees, which may be payable to

(a) the alleged infringer; 

(b) the website that removed the content; and/or 

(c) the copyright owner or licensee of the copyright owner.

Essentially, the damages might be paid by anyone in one of those three categories who is injured as a result of the false report. Specifically, the DMCA states that: “[a]ny person who knowingly misrepresents under this section – (1) that material or activity is infringing, or (2) that material or activity was removed or disabled by mistake or identification, . . .” is liable under the Act. 17 U.S.C. 512(f). In sum, there are two ways of being liable under this provision: (a) for indicating that a work is infringing if it is not or (b) for indicating that a work which was removed was in fact, not infringing and should have remained posted.

This penalty-based aspect of the statute was recently highlighted in a case currently pending in Illinois relating to the YouTube.com posting of rodeo competitions. In that case, Showing Animals Respect & Kindness v. Prof’l Rodeo Cowboys Association, an animal rights group posted video from a rodeo event on YouTube. The Rodeo Association then contacted YouTube and requested that the videos be removed because they infringed upon the Association’s copyright. SHARK, the animal rights group, filed suit indicating that the Association’s request violated the DMCA because it was based on a false claim. Its argument was that the Association knew that there was no copyright in the rodeo event, and therefore the request that the videos be taken down was not a rightful request to prevent infringement, but rather constituted a wrongful means of trying to remove content that was unfavorable to them. The case is ongoing.

Clearly, those reporting infringements should take caution in doing so. The Rodeo case highlights the importance of being reasonably certain that one has a viable claim for copyright infringement before making a request that a posting be removed under the DMCA.

Comments/Questions: ljm@gdnlaw.com

© 2008 Nissenbaum Law Group, LLC