News You Can Use: The SBA on Economic Stimulus for Small Businesses

National Public Radio spoke with Karen Mills , administrator of the Small Business Administration, this morning on the pending economic stimulus programs for small businesses.  To listen to the interview CLICK HERE.

Economic Stimulus for Small Business 2010

In the midst of the bank and automobile bailout of 2009, the federal government implemented  policies to help small businesses obtain credit and relief from the recession.  Primarily the government offered tax relief and easier access to Small Business Administration administered loans.   The goal of the programs was to reignite the United States growth engine.

The stagnant economy and continued job loss seems to suggest that the efforts in 2009 did not meet their objectives.  First, small businesses around the country continue to report difficulty in obtaining financing when they need it.  Banks claim there is less demand for loans now because consumer spending is down.  However, small businesses report being unable to qualify for loans at large banks.  Additionally, the tax relief, including a decreased capital gain tax for investments in small business, did not encourage venture capital or other private equity investments.

So, President Obama and his economic team have decided to try again.  During his State of the Union speech, President Obama announced two major initiatives to encourage economic growth for small businesses:

1. elimination of the capital gains tax on investments in small businesses; and
2. a $30 Billion fund to make loans available through small and community banks to small businesses.

Over the past two years, venture capital investments in technology and other research and development intensive businesses has been difficult to obtain.  Venture capital has sought safer investments where a return on investment is, perhaps, more likely.  Therefore, the elimination of the capital gains tax on investments in small businesses could encourage venture capitalists to invest.

Similarly, it is unclear how much more effective the $30 Billion set aside for small businesses at small and community banks will be than those funds made available through the Small Business Administration last year.   Some claim small business’ demand for loans is down because of the economy.  Others report that small businesses struggle to qualify for loans because of the economy.  Ideally, if Congress approves the funds, the money will be made available to small businesses in a manner that will allow those businesses that have survived this far into the recession to thrive as we recover.

For more information please contact me.

A Primer on Music Performance Licenses (Musical Compositions)

Among the exclusive rights granted to the owners of most copyrights is the right of public performance. As discussed in the Primer on Music Performance Licenses (Sound Recording), the public performance right for a sound recording is only available for music transmitted digitally or by satellite.

But wait, a song is comprised of multiple elements which may each be entitled to separate and distinguishable copyrights. The sound recording that captures a performance of a song is entitled to relatively limited copyright protection since there is not a full performance right. However, the underlying musical composition including the lyrics are entitled to full copyright protection, including the full performance right.

So, the sound recording is only entitled to a limited performance right while the underlying musical composition is entitled to a complete performance right.

A Primer on Music Performance Licenses (Sound Recording)

The United States of America holds a special place in the hearts of the children of France. Not only does America export fabulous music, we subsidize the music education in French schools through funds collected on the performance of the music that is not able to be distributed to American performers and copyright owners.

In France, and most countries throughout the world, royalties are collected on the public performance of both the song and the sound recording. A public performance royalty is collected for the musical composition, that is the lyrics and notes. A neighboring right royalty for the sound recording is the performance of the song.

In the United States historically only the creators and owners of the copyright in the underlying musical composition (the lyrics and notes) have the right to collect a public performance royalty in the U.S. There is a much more limited right for the performers and owners of the copyright in the sound recording to collect a performance royalty.

Fundamentals of Copyright and the Problem with Lost Owners: unintended consequences (Part Two)

As discussed in The Fundamentals of Copyright and the Problem with Lost Owners (Part One) the exclusive rights of copyright attach automatically to a work, whether a photograph or a poem, once it has been transposed into tangible form. However, for works created before 1978, authors and artists had to take affirmative steps to secure the copyright in their works. They also had to notify the public through the use of the (c) symbol or other notice that copyright had been claimed.

Since 1978, registration has been optional for authors and creators.  Registration provides a few additional, yet significant, benefits. Registration is required prior to filing a lawsuit for infringement, or other issue. A registered work is entitled to greater awards of damages than non-registered works. However, creators often choose not to register their works because it is expensive and its value is not obvious.

Also, the requirement that works for which copyright protection has been claimed be marked with some kind of notice to the public was abandoned in 1988 when the United States became a party to the Berne Convention for the Protection of Literary and Artistic Works. Therefore, for the past 20 years everyone from illustrators to songwriters could publish their works without including the (c) symbol or other notice.

As time has passed, creators and/or copyright owners of many works have been lost leaving many works without parents. The copyright registrations may not have been kept up to date to reflect change in ownership or contact information. Modern works for which registration is not required may not have been marked clearly or efficiently to provide third parties notice as to whom the creator and/or owner is. Such works are commonly referred to as Orphan Works.

Significantly the exclusive rights of copyright still apply to Orphan Works. Unlike with real property, there is no such thing as an abandoned copyright. Therefore, publishers, filmmakers and other third parties are wary to use an Orphan Work for fear that a parent might emerge to reclaim the copyright, and claim infringement which could result in monetary or injunctive relief.

Orphan Works are the unintended consequence of automatic copyright without formalities. It is doubtful that Victor Hugo, a driving force behind the Berne Convention, could have predicted the vast array of works to which copyright would apply by the end of the 20^th Century, or the plethora of platforms through which such works can be delivered and used. Nor, one would think, could anybody anticipate the impact the fear of being sued for copyright infringement would have on end users.

In January 2005 Congress charged the Copyright Office of the Library of Congress to review the Orphan Work problem and propose statutory language. The Copyright Office issued its report a year later which outlines that yes there is an Orphan Works problem. The statutory language they proposed, however, left much to be desired so Congress reclaimed the project. The “Orphan Works Act of 2006″ was eventually included in the “Copyright Modernization Act of 2006″ which did not become law.

Congress has revisited the problem of the Orphan Work many times since the initial report was filed.  Unfortunately, they have not been able to resolve it so creators, copyright owners and insurance companies remain trapped in a gray area.

Fundamentals of Copyright and the Problem with Lost Owners (Part One)

Many people find the comparison of real property to intellectual property disconcerting or inappropriate. The arguments I have heard include “one is tangible, the other is intangible” or ” a finite number of people can use one, while millions of people can use the other.”

Regardless, the legal vehicles for ownership and management of real and intellectual property are very similar. The owner of either may transfer complete ownership of the property to a third party through sale, descent or bankruptcy. Likewise, both intellectual property and real property may be leased out to third parties for full or limited use. Similarly, the owner of a shopping mall allows guests on its property without transferring any indicia of ownership in the same way that website operators allow users to visit the site without the user walking away with an ownership interest.

Ownership in real property requires proof. The owner of property must file title with a government entity through which a chain can be created back to the original owner. In the United States, however, once a work has been transposed to tangible form copyright automatically attaches. Though you may register your work with the Copyright Office of the Library of Congress, registration is not required to get the majority of the benefits available to a copyright owner. In fact, no formalities, including notice to the world through the c in the circle, are necessary to secure your rights in a protected work!

Sidebar: In 1988, the United States of America became a signatory to the Berne Convention for the Protection of Literary and Artistic Works. The Berne Convention began its life as an international treaty in 1886! Significantly it reflects the European approach to copyright that includes the droits moraux (the “Moral Rights”) of the creator in protected works. While the Framers of the Constitution included copyright, they seem to have limited copyright to its economic elements without concern for the Moral Rights of the creators (see U.S. Constitution, Article One, Section 8: “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.”

Somehow, though, America ended up becoming a signatory in 1988 without actually adopting the droits moraux concept. Similarly, under the Berne Convention there were not supposed to be any formalities to securing copyright. Yet in America copyright owners do not get the full benefit of the rights without registration. So, there are still some formalities.

However, the owners of real property have to take steps to protect their interests and to maintain ownership. In the event that an owner lapses in the oversight of the property and somebody squats on it for a statutorily defined period of time we stand to loose our ownership interest through a process called “adverse possession.”

Additionally, through a variety of means the government may acquire the ownership of real property. Owners of property, generally, have to pay taxes on the property. Failure to do so may result in the state seizing the property. Similarly, if an owner dies without heirs or a will, the property may escheat to the government. Likewise, the government can acquire the property for a fair market value through the exercise of its eminent domain power.

On the other hand, creators, and their assignees and licensees, do not have to take any steps to secure their rights in copyright protected works, or in fact to maintain them. Once copyright attaches to a work it is automatic. While ownership of a work may be subject to loss through bankruptcy, descent or otherwise, the exclusive rights that attach to a protected work are still enforceable and are not subject to loss.

The passage of time is the only surefire way for a protected work to loose the exclusive rights associated with copyright. Works created after 1978 are entitled to almost an indefinite period of protection. For example, individually created works are protected for the life of the author plus 70 years. A photograph taken when an artist is 20 years old will be subject to copyright for her entire life and then another 70 years. Legitimately that photograph might be subject to copyright for over 140 years!

Unlike with real property, there may never be a “chain of title” for a protected work, nor may there be any notice that a copyright has been claimed on the actual work. Registration with the Copyright Office has not been required to establish copyright interest since 1978. There has been no requirement that creators mark works with any copyright notice since America became a signatory to the Berne Convention in 1988.

Sidebar: Under the Copyright Act of 1909, which was effective through 1978, registration and notice were both required to enforce a copyright. There term of copyright in effect when the Copyright Act of 1976 was enacted was 28 years, with a onetime renewal of 28 years. The Copyright Act of 1976 amended the renewal term to 47 years, and such renewal time was extended again in 1998 (yes, the Bono Act) for 20 more years. For all works created prior to January 1, 1964, a renewal application had to be filed with the Copyright Office to obtain the extended protection. For works created after January 1, 1964, but before December 31, 1977, renewal and extension after the initial 28 year term is automatic.

While it has been a great benefit to creators for copyright to attach automatically, there has been a significant unintended consequence to the automatic attachment: Third parties have had a difficult time obtaining the appropriate permission to use works because they have not been able to track down the owner of a work.

Consider a photograph taken in 1967 which may have been registered with the Copyright Office under a woman’s maiden name. She marries, takes her husband’s name but does not update her copyright registrations. Time passes, and so does she. Having found the photograph in a clippings file about his subject, a historian now wants to include the photograph in a book. His publisher wants to use it on the cover.

The publisher being extremely risk adverse, not wanting to be sued for copyright infringement, proceeds to obtain the permission from the copyright owner to use the photograph. A search of the records at the Library of Congress reveals that the work is registered, and thus subject to copyright. The publisher attempts to locate the photographer to obtain permission but due to the change in her name or other factors is not able to find her or any current owner of the rights in the work.

For more information, visit Part Two—> HERE

The importance of taking a long view, even with Creative Commons licenses

Over the past year or so, I have noticed more and more people using Creative Commons branded licenses with their creative works.  Creative Commons licenses are form licenses (similar to those you can find through Nolo Press) with a twist.  That twist is what makes Creative Commons unique.

In their own words:

Creative Commons is a nonprofit organization

We work to increase the amount of creativity (cultural, educational, and scientific content) in “the commons” — the body of work that is available to the public for free and legal sharing, use, repurposing, and remixing.

CC provides free, easy-to-use legal tools

Our tools give everyone from individual creators to large companies and institutions a simple, standardized way to grant copyright permissions to their creative work. The Creative Commons licenses enable people to easily change their copyright terms from the default of “all rights reserved” to “some rights reserved.”

So Creative Commons gives licensors (i.e. creators or copyright owners) the ability to license their works to the public in general, and not to a specific user.

The licenses seem like a good idea because many people who upload content on the internet create as a hobby and are excited when they see their works being used on other sites.

However, as with anything else in life, it is important to read the (not so) fine print.  In the popular Creative Commons’ Attribution NonCommercial Sharealike 3.0 Unported license, as well as in most of the other CC 3.0 licenses, the license term is perpetual!  I.E. forever!

Works made available under a Creative Commons license are generally available to the world to make derivative works, forever.

Technically, the license is for non-commercial purposes.  However, Creative Commons has not defined what is “non-commercial,” and its attempt seems to make the category broader than “not-for-profit” uses.  The contract provides that a licensee may not use the works “in any manner that is primarily intended for or directed toward commercial advantage or private monetary compensation.”  Who sets out to make a documentary for commercial advantage or private monetary compensation?  Or choreographs a ballet for the money?  Writes poetry?  Maintains a blog?

Those who choose Creative Commons branded licenses should take great care to really understand the impact, both short term and long term, that using the license might have on their career or their works.  More importantly, even though Creative Commons refers to the full document as “Lawyer Readable Legal Code,” like any other contract you should read and understand it before signing it.

Especially since like most contracts, there is a strong likelihood that if you end up litigating a Creative Commons brand license in the United States it will be enforced.   Recently, a federal court of appeals upheld the “Artistic License,” a form of open source license, that the developer of a software for model trains had used to distribute the program.  (Jacobsen v. Katzer)

In Jacobsen v. Katzer, a collective of computer programers who happen to be model train enthusiasts had created an application that they licensed through the Java Model Railroad Interface (“JMRI”) under the Artistic License.  Katzer allegedly incorporated elements of the JMRI program into its competing software application without complying with the terms of the Artistic License.  In addition to claiming copyright infringement due to the breach of the license, Jacobsen and JMRI sought to invalidate a patent Katzer had obtained on elements of the underlying software.  Initially the lower court held that the issue in Jacobsen v. Katzer was one of breach of contract, not infringement of copyright.

However, on appeal the court held that where the use of a copyright protected work falls outside the terms of a license infringement has occurred.  Applying standard contract theory, the Judge held that the license grant in the Artistic License was limited in scope, that the terms of the license served as conditions to the grant and that those conditions are “vital to enable the copyright holder to retain the ability to benefit from the work of downstream users.”

Significantly, however, is that Jacobsen v. Kertzer joins a long line of cases where courts enforce contracts.  Technically the court has declared that the Artistic License is an enforceable agreement.  Breaching it as it relates to the underlying copyright results in copyright infringement because the use is outside of the grant of the license.

But if the license grant is as broad as those included in many of the Creative Commons branded agreements, it might be hard to find a use that falls outside the grant to support a copyright infringement claim.   So when you opt for the convenience of a Creative Commons branded license agreement it is important to take the time to read and comprehend what the contract really means, both for the present and the future.

To learn more about my practice visit my practice web page , or feel free to contact me.

Coming soon…

I am pleased to announce the pending relaunch of my blog.  This time around, I am going to provide practical advice on topics ranging from copyright to estate planning.   I will be taking questions from the audience!   I look forward to making my first post shortly!

Do you know what to do?

Good Poets Borrow, Great Poets Steal…

A reporter for NPR’s Morning Edition used my favorite misquote in her “Stanford Center Advocates for Fair Use on the Web” piece that aired on May 7, 2007. Though the quote is usually attributed to T.S. Eliot, the reporter attributed a slightly altered version of “Good poets borrow, great poets steal” to Picasso, this time it was “good artists copy, great artists steal.”

I heard the quote “good poets borrow, great poets steal” for the first time on December 16, 2006, in a commentary about fair use and copyright Bill Hammack, a chemical engineering professor, made on MarketPlace.

My mind was blown. In my earlier, more literate, youth, poetry and poets occupied a great deal of my time. I could not imagine T.S. Eliot would have said such a thing.

I had my aunt consult Bartlett’s Familiar Quotations and other sources in her library, and she did not find anything. I searched the Internet and found that the quote mostly appeared only where Bill Hammack was quoted or in articles he had written. He always attributed it to T.S. Eliot.

When I failed to find any reliable reference to the quote, I decided to go to the source; or, to a source that would lead me in the right direction. I knew there had to be a scholarly society dedicated to T.S. Eliot.

Lo and behold, I found the T.S. Eliot Society. Even better I discovered that one of the officers was a professor of English at my undergraduate alma mater, University of Wisconsin, Madison. I had to know if T.S. Eliot really said “good poets borrow, great poets steal” so I reached out to Professor Cyrena Pondrom.

I honestly did not expect to hear back from Professor Pondrom for two reasons: (1) would you respond to some random girl asking a random question and (2) it was December 16!

While sitting in the movie theater watching Casino Royale, my BlackBerry alerted me that I had received a message. To my amazement, Professor Pondrum responded with the actual quote as it appeared in T.S. Eliot’s critical essay on the playwright Philip Massinger, and his works. Apparently, the playwright Massinger may have relied a bit too heavily from time to time on William Shakespeare, with whom he overlapped in time.

So, here is the paragraph from the essay which contains the language which Bill Hammick has bastardized to make a statement that neither T.S. Eliot nor Picasso ever made:

One of the surest tests [of the superiority or inferiority of a poet] is the way in which a poet borrows. Immature poets imitate; mature poets steal; bad poets deface what they take, and good poets make it into something better, or at least something different. The good poet welds his theft into a whole of feeling which is unique, utterly different than that from which it is torn; the bad poet throws it into something which has no cohesion. A good poet will usually borrow from authors remote in time, or alien in language, or diverse in interest.

Eliot, T.S., “Philip Massinger,” The Sacred Wood, New York: Bartleby.com, 2000.

In his essay on Philip Massinger, T.S. Eliot makes an argument that mature, strong poets use other people’s works in a transformative manner that contributes something new to society and culture. He does not argue that “stealing” someone elses works is appropriate or justified as a means to the end. He seems to argue that poets and authors can use other people’s writings as a base for their works as long as the reuse takes the work to a new place, and introduces it to a new audience.

On Monday, Ms. Sydell used a version of the “good poets borrow, great poets steal” quote that has been attributed to Picasso. I have not gone to the lengths I went to debunk the T.S. Eliot version but my research thus far does not support that Picasso ever uttered the phrase “good artists copy, great artists steal.”

In fact, the publisher of a range of resources for quotations has made all of the books, including Bartletts and Columbia, available online. Only two quotes using the word copy are attributed to Picasso, none with steal or borrow.

Paraphrasing is fine, but attributing a paraphrase as a quote is intellectually and academically dishonest. Both versions of the quote have been adopted and implemented into culture by people justifying broad fair use arguments or their own habits. Significantly, it is unfair that either of the great artists have been affiliated with a quote that does not reflect them, or their work.

This post receives a great deal of traffic from search engines.  I would greatly appreciate hearing feedback from you.  For example, did the information in the post change the way you used the quote?   A comment would be great, or you can email me at nancyprager at yahoo dot com.  Thanks!