Ideas and the Law: Using Intellectual Property to Protect You Part 2 (Copyright)

As previously discussed on this blog, there is little legal recourse available if someone steals your idea. In certain limited circumstances you may have legal recourse but even then you have to have the resources to enforce your rights. Therefore, it is in inventors, entrepreneurs and companies best interest alike to consider what steps can be taken to protect their rights. The previous post in the series addresses the use of patents to protect inventions that are useful.

Another right that protects the unique expression of an idea is copyright. Specifically, copyright grants creators a bundle of exclusive rights that automatically vest in works of original authorship which creators, or assignees, may enforce against third parties. The bundle includes, but are not limited to, the rights to make copies, derivative works, distribute or publicly perform the works. Unlike with patents, copyright attaches automatically to qualifying works once they have been fixed in a tangible medium of expression. A qualifying work can be in nearly any medium, from literary works to websites and databases, as long as the work is original.

While copyright attaches automatically, the Copyright Act of 1976, as amended, provides additional benefits to those copyright owners who register the protected works with the Copyright Office of the Library of Congress. The additional benefits available to owners of registered copyrights include the ability to maintain a copyright related lawsuit in federal court and to register the works with Customs to prevent importation of counterfeit works. Additionally, registration within three months of publication, or prior to the act of infringement, is required to obtain statutory damages.

The exclusive rights that copyright grants, and the ability to register the works with the Copyright Office, vest in the creator of the qualifying works. A creator is generally the person who creates the works. However, in certain circumstances, where there is a written agreement between the parties, the copyright may vest in a third party as a “work made for hire”:

1) Where an employee creates the work in the course of his or her employment duties; and
2) Where the creator is engaged under contract to a third party to create, or contribute to, a collective work; motion picture or other audiovisual work; translation; supplementary works to another copyright protected work; compilation; instructional texts; testing materials and atlases.

Therefore, from the outset, it is best practices to obtain written agreements from all parties, including founders, who create works that copyright may protect.

The term of copyright varies depending on who the creator is, and it can get confusing!

Individual Creator = life of the author plus seventy (70) years
2 or more Creators = life of the last surviving author plus seventy (70) years
Works Made for Hire = 95 years from first publication or 120 years from first creation, depending on which term expires first.

Significantly in the United States creators of copyright have the right to terminate any transfers that purport to transfer all of the rights (an assignment or exclusive license) after thirty five years. Therefore where possible it is best to have works that are vital to a company be treated as a work made for hire.

Strategic Practices:

1) Obtain written agreements from any people who create copyright protected works for your company;
2) Register valuable works with the Copyright Office of the United States Library of Congress; and
3) Include the © notice on any materials your company creates, including the website.

Ideas and the Law: Using Intellectual Property to Protect You Part 1 (Patents)

In the first of the Ideas and the Law Series, I addressed what steps you can take to protect an idea. Technically there is little legal protection available unless the person to whom you disclose an idea has a contractual obligation to keep the information confidential, or otherwise not use it. However, if you have developed your idea into something that qualifies for protection as intellectual property you can prevent a third party from using the protected works without permission, and compensation.

The remainder of the Ideas and the Law Series will discuss the four major types of intellectual property:

1) Patent
2) Copyright
3) Trademark
4) Trade Secret

Patent

A patent may be granted to processes, machines, methods and compositions of matter that are new, non-obvious and useful. An invention can be for a new product or an improvement on an existing product. Patents are the exclusive rights inventors have to prevent others from making, using, selling or importing their inventions without permission.

The rights are not automatic. Inventors must file an application that sets forth the claims to which the patent would apply with the government to obtain the patent. In the United States, the Patent and Trademark Office can award three types of patents:

1) Utility Patents for discoveries and inventions for a term of 20 years;
2) Design Patents for new and original ornamental design for a term of 14 years; and
3) Plant Patents for the invention of, or discovery of, and asexual reproduction of a new plant variety for a term of 20 years.

To obtain the benefits of a patent, an application must be filed that is both timely and in the right person(s) names. The patent application must be filed in the names of all inventors who contribute a “definite and permanent idea of the complete and operative invention” to the conception of the invention. Under current law failure to file a patent application within one (1) year of the public use, sale, marketing or publishing description of the invention will result in the invention passing into the public domain. In the event that a patent issues on an invention that is later challenged evidence of disclosure of the idea prior to one year before the application was filed will result in the patent being cancelled. However claimants can stop the clock after the initial disclosures by filing a provisional patent application which provides applicants an additional year to file the full application.

Significantly, in September 2011, President Obama signed the American Invents Act, a patent reform bill, into law. The Act, once fully enacted, will overhaul the manner in which patents are prosecuted and enforced. Significantly, beginning on March 16, 2013, the United States will transition from a first-to-invent jurisdiction to a first-inventor-to-file jurisdiction. The transition will create a “race to the courthouse” situation for inventors, and potentially be devastating for small inventors.

Strategic Practices:

1) Share the invention sparsely with people who need to know and only subject to a Confidentiality Agreement
2) Keep an “Invention Notebook” that sets forth the claims of the invention, when disclosures were made, and other pertinent information
3) Have written agreements with all people (employees, contractors, friends) who contribute to the invention

Come back for the next Ideas and the Law post on Trademarks!

The Myth of the Start-Up

Chris Dixon has posted a thoughtful analysis about the Myth of the Overnight Success on his blog. He writes:

You tend to hear about startups when they are successful but not when they are struggling. This creates a systematically distorted perception that companies succeed overnight.

Similarly, there is a general Myth of the Start-up that makes starting a company look easy. Many companies that people commonly refer to as a Start-up are not in fact start-ups in the most basic definition of the word. For example, Priceline was developed in house at Walker Digital and MySpace was a project of an existing marketing company. Neither company struggled through the early stages because they were incubated within larger organizations that provided for their care and feeding. Twitter is another company commonly referred to as a start-up that was incubated within a well funded organization.

Starting a company is hard! Building a company requires patience, perseverance and hard work. Don’t fall for the Myth of Overnight Success OR the Myth of the Start-up!

Ideas and the Law: What every Entrepreneur & Inventor Should Know, and Do

People start companies because they have an idea. Whether it’s an idea for something new, something better, something unique, it all begins with an idea. Not only are ideas the foundation for great companies, ideas may also be the company’s most valuable asset. This post is the first in a series about strategic practices for intellectual property protection for entrepreneurs and inventors.

Ideas, regardless of how great they might be, are of little value on their own because the law does not grant much, if any, legal protection to them. Therefore, it is necessary to take steps to protect ideas to retain their value. The easiest way to protect an idea is to not tell anybody the idea. However, founders and inventors must be able to share their ideas. Sharing ideas is necessary for research and development, raising funds, market research and team building.

Courts have recognized some protection where ideas have been shared where there is either a contractual duty to not use an idea or a confidential relationship between the parties. Therefore, it has become common practice for people to execute confidentiality and non-disclosure agreements when discussing their ideas with third parties. A confidentiality and non-disclosure agreement is a contract between parties in which one or both parties agree to protect confidential information and not use the information in a competitive manner. Additionally, the agreements are necessary to protect the disclosers’ interest in the underlying idea if it qualifies for patent protection.

Confidentiality and non-disclosure agreements generally provide the person receiving the information will:

*Hold the information in confidence;
*Not use the information in a manner
*Not disclose the information to third parties except in certain defined circumstances.

While confidentiality and non-disclosure agreements have become commonplace, with forms and templates available across the Internet, not all versions are the same. In fact, some language can be used in the agreements to negate the purpose, allowing the receiver to use the information for its own purposes. Additionally, many people, including investors, will not execute the agreements because it could expose them to liability down the road. Regardless, even if the receiver has executed the appropriate agreement, it costs money to litigate to enforce the contracts and such enforcement may be too late for a founder to get to market first.

Therefore, from the outset founders should consider what intellectual property rights could be available to protect their ideas. Technically intellectual property does not “protect” ideas. However, patent, copyright, trademark, and trade secrets each provide founders, inventors and creators a different basket of rights which can protect the manifestation of their ideas. Some rights are automatic, while others require the person claiming the right to take some action.

Strategic Practices:

1) Share your ideas sparingly, with people on a need to know basis;
2) Have your own Confidentiality/Non-Disclosure Agreement form which you understand ready to be executed; and
3) Consider what intellectual property rights are available to protect your interests.

Right of Publicity, Steve Jobs, Me and You

Contrary to this article in PaidContent, Steve Jobs’ estate likely has an enforceable interest against InIcons, the manufacturer of a life-like action figure of the deceased visionary, in the United States. The Right of Publicity grants people like Steve Jobs, as well as ordinary people like me, the rights in our images, names and likeness. Jas Purewal, who publishes the blog GamerLaw, brought the article to my attention.

In the United States there is no federal Right of Publicity. However, the Lanham Act provides some protection against unfair competition and false advertising. Specifically, the Lanham Act prevents the misuse of an individual’s name or likeness in a manner that falsely implies endorsement, affiliation or connection.

The Right of Publicity is primarily a state based law. Each state takes a different approach to the Right of Publicity. Unlike what the columnist in PaidContent, wrote nearly half of the states statutorily recognize the Right of Publicity, and the courts of the other states recognize the right. However, few states approach the Right of Publicity in the same manner. For example, the courts in New Jersey recognize a perpetual Right of Publicity for its residents. In California and Tennessee the Right of Publicity is statutorily defined and fairly broad, extending the rights postmortem. While in other states, like New York, the statutory Right of Publicity is narrowly defined and available only during the life of the individual to which it applies.

Determining which law applies to a living individual is fairly simple. Generally, you need to know which state the individual calls home. Regardless, most states recognize that living individuals have the Right of Publicity. Next time you go to a sporting event, or other event that may be broadcast live or recorded for later broadcast, read the back of your ticket. It will likely include language similar to the following disclosure:

Holder expressly grants the NCAA and its licensees to use Holder’s image or likeness in connection with any live or recorded transmission or reproduction of such event.

Identifying which state Right of Publicity law applies for a deceased individual is more difficult as there are a number of factors that must be considered. It’s not enough to know where the individual was domiciled at the time of death. Recently, a court held that though Marilyn Monroe died in California she was subject to the Right of Publicity law in New York because her will stated that laws of the State of New York applied to her estate.

Here, let’s assume Steve Jobs’ estate is subject to the laws of the State of California as he died in the state. California has enacted the “Fred Astaire Celebrity Image Protection Act” which provides, among other things, that you must have consent for use of a “deceased personality’s name, voice, signature, photograph, or likeness, in any manner, on or in products, merchandise, or goods.” The statute defines a deceased personality as “any natural person whose name, voice, signature, photograph, or likeness has commercial value at the time of his or her death” whether or not the decadent made money off his/her likeness while alive. Steve Jobs was the face of Apple, his voice and likeness launched many a product which are now ubiquitous (iPod and iPhone anyone). Steve Jobs may not have been a celebrity in the Hollywood sense of the word but there was a definite “commercial value” in his name and likeness while alive. The Fred Astaire Celebrity Image Protection Act grants his estate the ability to protect his image in death just as Steve Jobs did in life.

Finally, the PaidContent article fails to recognize a fundamental tenet of American jurisprudence. The Constitution of the United States provides that each state shall give the laws of the other states “full faith and credit.” Continuing the assumption that the Steve Jobs’ estate will be subject to the laws of the State of California, the courts in the other states will enforce California’s Right of Publicity law against parties who infringe it. Therefore, contrary to the article, the Steve Jobs doll manufactured without permission from the estate would be illegal in all states.

How to Clear a Song: A quick tutorial

One of the complaints I most often hear about copyright is that it is too hard to identify who owns the rights to a copyright protected work. The challenges are particularly great when trying to track down the owners of the copyrights in a song: the label on which a song originally had been released may be defunct; the band long ago may have retired and scattered to the four corners; or the songwriter may have vanished or died. People often use the difficulty they face to justify using a song without permission, or worse not using it at all.

While I agree that it can be difficult identifying who owns the rights to a song, it is not impossible. With a little bit, okay maybe a lot, of hard work I can generally find out who has the rights to any song under the sun. The resources available on the Internet, from fan sites to performing rights organizations, make the process significantly easier than it used to be.

In anticipation of a panel on which I am speaking during Licensing University at the Licensing Expo, I have prepared “The Who What When Where & Why of Music Clearance”. The brochure provides guidance on how to identify who owns the rights in a song, and what to expect during the clearance process. If nothing else it illustrates why clearing a song is an incredibly complicated, and nuanced, process!

Saferproducts.gov: Unsafe for Businesses at any Speed

The summer of 2007 saw a range of product recalls from jewelry for children to pine nuts. Most of the products involved had been manufactured in China and imported into the United States. The Consumer Products Safety Commission a relatively unknown government agency was thrust into the spotlight due to perceived regulatory failures. Congress responded to the so-called “Summer of Recalls” with a series of hearings that resulted in the adoption of the Consumer Product Safety Improvement Act.

Among the provisions of the Consumer Product Safety Improvement Act (the “CPSIA”) is a requirement that the Commission develop and implement an online database on which consumers may report unsafe and dangerous products. The database, according to the CPSIA, must be publicly available, searchable and accessible through the Commission’s website. Additionally, the data should be “sortable and accessible” by date, consumer product, model name, manufacturer or private labeler’s name, as well as any other element the Commission has deemed necessary in the public interest.

The resulting database is set to launch on March 11, 2011, barring government shut-down or legislative action to delay or stop implementation. The database is accessible through the Commission’s website and directly at www.saferproducts.gov. The Commission held hearings and industry meetings to discuss the database, its role and how it would be developed and implemented.

According to the Commission, however, government databases, already in use, where consumers are able to report safety issues had been used as a foundation for its database. Specifically, according to the Commission, the Food and Drug Administration’s MedWatch, a reporting system for drugs, medical devices and other regulated items, and the National Highway Transportation Safety Administration’s Safercars.gov, a system for reporting safety issues related to automobiles, had been used as guides.

However there are significant differences between the FDA and NHTSA databases and the one the CPSC has developed. On the CPSC database a consumer must input relatively little information to report a claim that a product has either actually caused harm or has the potential to do so. The consumer must define the product and provide a narrative that describes the actual or perceived danger, as well as providing contact information for the Commission’s use.

On the FDA and NHTSA databases, consumers are required to provide a significant amount of information about the products for which a claim has been filed. On the NHTSA database, a report may not be filed until the consumer has specified not just the manufacturer of the car but the make, model and year as well. The FDA requires that a consumer provide a variety of information including product name and lot number.

Unlike the FDA and NHTSA databases, the consumer is not required to provide information that specifically identifies the products about which the complaints are filed. The product/brand names, serial number, manufacturer and place of purchase are optional on the CPSC database.

Even though the Commission has not required that consumers provide information that specifically identifies a product, the CPSIA requires that the reports be made public within ten (10) days of having been filed. Prior to being published, the Commission must notify a named party (a manufacturer, importer or private labeler) that the report has been filed. Considering the consumer is not required to name a manufacturer, importer or private labeler, the Commission is either going to have to research the claim rather quickly to find one or fail to send the required notice.

Regardless, a manufacturer or other entity has limited options for a response to the complaint. It can provide a response to the complaint directly on the database, request redaction if confidential information is compromised or request removal due to “materially inaccurate” information. As of this writing, the Commission has not yet defined what qualifies as “materially inaccurate,” but has stated that the burden is on the manufacturer or importer of the product to prove that the information is not accurate.

Congress has required that the Commission provide notice to the general public that there is no guarantee of accuracy, completeness or adequacy of the complaints. Specifically, a product being included in the database does not mean it is actually defective or unsafe. However, the Commission’s representatives have made public claims that contradict the objective nature of the database. As recently as last week the chair of the Commission, Inez Tenenbaum, told those gathered (me included) at the International Consumer Product Health and Safety Conference that a mother should be able to search the database to find out if there are issues with a product that could harm her child.

Significantly the risks the database in its current incarnation poses to businesses are great:

•There are no safeguards to prevent individuals, competitors, or even investors who want to impact a stock price, from filing false or misleading reports that could result in negative publicity for a named manufacturer. While a manufacturer can take steps to prove a report is materially inaccurate, it will require time and money to do so and until the claim is established to be materially inaccurate it remains on the database.

• It is unclear what companies are entitled to register to receive notices of complaints. That is, consumers may state where the product in question was purchased but retailers are not allowed to register to receive notification of complaints.

•The claims are not verified, and consumers do not have to provide information that specifically identifies the products or the parties involved.

• There is no accounting for counterfeit goods which will be wrongly attributed to a manufacturer until they can prove the product is counterfeit.

However, the Commission could implement minor changes to the database to limit the negative impact on businesses of the public databases:

• Consumers should be required to identify the name of the product or brand, the manufacturer, where known, and provide a serial number, or other information, to sufficiently identify the product and prevent multiple reports.

• Consumers should have to acknowledge a formal notice that lying to the federal government is a crime punishable by imprisonment and civil fines.

• The Commission should collect IP addresses from complainants and flag repeat addresses to discourage competitors and others from filing multiple reports, whether or not false.

•Before accessing the database, consumers should have to acknowledge by checking a box that the database is provided for information purposes only and that the products included are not necessarily unsafe. A link to the recall database should be provided to note the difference between the databases.

The Commission has put a call out for all manufacturers, importers and private labelers to register with it so that they can provide timely notice if any claims are made involving their products. However, you should consult with a consumer product safety attorney before complying with the request to make sure it is in the best interest of your company to do so. Regardless, companies MUST monitor the database on a daily basis for reports involving their company or products.

A focus of President Barack Obama’s 2011 State of the Union, and of his current legislative strategy, is regulatory reform. He has emphasized that the government needs to consider the impact regulations have on small businesses while not sacrificing its duty to protect Americans. The impetus for the revisions to the Consumer Product Safety Act, including the database, were a number of situations where consumer products had been imported into the United States with unsafe lead levels or other issues. While the Commission has been directed to establish a database for consumers to report alleged unsafe products, the current incarnation of the database will have a profound negative impact on businesses, especially small ones.