Wednesday, June 30, 2010

Update on Indy Film: Sita “No Longer” Singing the Blues

One of the first posts on my blog was Copyright Law Not the Problem for Indy Film.  The film was Sita Sings the Blues and is centered around a song that the film maker, Nina Paley, could not get licensed after she already made the movie around the song. 

The American Bar Association Journal contained an article about the film in its May 2010 edition which is called No Longer Singing the Blues.

While the ABA article highlights some of Ms. Paley’s crusade regarding copyright alternatives, what I thought was particularly interesting was the report that Ms. Paley did eventually obtain a license.  Originally, the demand was for more than $200,000; however, she was able to negotiate a deal for $50,000 per 5000 units sold.  Since then, she has been able to do some distribution of the film and, if you follow the link above, you can apparently view the film for free on Google videos.

The point is that Ms. Paley has obtained a workable license under the current copyright regime.  While the argument remains that some copyright owners can use their rights to prevent the creation of artistic works, it is debatable whether that is necessarily a bad thing. 

If the song is so valuable that someone wants to create a film centered around the song, it is hard to argue that the song has no value, or that the author of the song should not be able to obtain the benefit of the value they have created.  The copyright laws are focused on trying to encourage the creation of such works by giving authors the ability to capture this value.  And one has to wonder whether the song on which the film is based would have been created, or made available to others, if the copyright law incentives had not existed.  In many ways, the film, and its value, are dependent on the song and would never have existed without the song.

This raises the relational issues on which I like to focus.   Songs and other works are often more than just an independent work.  They are created and tied to their creator in intangible ways, they have a context.  Some don’t want their work used for purposes that are antithetical to their views, values, or goals.  An example is when a politician uses a song by an artist that is diametrically opposed to the politician.  From the author’s perspective the use of the song twists and perverts their creation.  It’s like taking a quote out of context. 

While we want to promote the creation of works for the public’s use, I am not sure that it is good to completely severe works from the authors intent, desires, dreams, and hopes.  Some things may never be created or said, but that is the necessary corollary of actually being able to say or create something of meaning or value.  It is the necessary corollary of expression. 

Furthermore, it should be noted that often times it is the limits which force the creation of the best works.  Boundaries are not in and of themselves a bad thing.  They simply establish the scope of the work.  A painting has to have edges, and a novel has to use words.  In fact, it is those limits which create the medium in which one operates.  Likewise, access to a limited world of possibilities is often what forces us to do better with what we have, instead of relying on others.

Regardless, Ms. Paley got a license and the world keeps turning. 

Wednesday, June 23, 2010

Copyright Registration: Not Jurisdictional but Still Really Important

One of the frequent questions I get is whether a copyright owner has to register their works in order to have a copyright or to obtain protection under the federal Copyright laws.  Last year, I wrote a short post highlighting registration asking the question: “Should I Register My Copyright?”  Initially, I noted that one has a copyright regardless of whether one registers the work.  I then focused on the advantages of registration including statutory benefits such as enhancing damages, and evidentiary benefits such as having presumptive proof (if the registration is successful) that the work is protected by copyright law.

While these advantages remain true, new developments in the law help to clarify the importance of registration, importance which I think must be emphasized.

Ownership versus Right to Enforce

First, let me point out that there is a difference between having a copyright, and being able to enforce the copyright.  Using the real property example, it is one thing to own your house lawn, it is another to actually prevent others from walking on your lawn.  With copyright, the walking on your lawn is someone else making aStop sign (small) copy of your work without permission.  You, as the author, may own the copyright in the work, but the fact of ownership does not in itself prevent someone from making a copy of the work.  The power of ownership really takes effect when you can use the fact of ownership to prevent someone from making copies.

Accordingly, while one may have a copyright in their original work of authorship by virtue of having actually created the work, one must also be able to prevent copying.

Copyright Protection Other than a Lawsuit

brick wall (small) Second, there are ways to prevent copying other than filing a lawsuit.  For example, if one never shows their work to anyone else, no one can make a copy of the work.  One can also use physical barriers or technology to prevent copying, like watermarks, encryption and so on.  Use of these types of measures is a key part of creating a copyright protection system and should not be ignored.  However, these measures have their limits, including their feasibility and applicability. 

A Legitimate Lawsuit Option for Enforcement

Third, the perhaps the last component of a copyright protection system is a legitimate threat of litigation against those who are copying the work.  One thing to be noted is that copyrights are a federal right and can only be enforced in federal court, i.e., by making a federal case out of it.  But in addition, this is where registration becomes key.

The Reed Elsevier v. Muchnick Case

A recent case from the U.S. Supreme Court addressed registration as a pre-requisite for enforcement of copyright claims.  The case is Reed Elsevier, Inc. v. Muchnick et al., 130 S.Ct. 1237 (2010).  There, some of the parties seeking copyright protection under federal law had not registered their copyrights.  The trial court raised the question on its own (without the parties raising the question) of whether it had the ability to handle the case if those parties had not registered their works.  Another way of saying this is to say that the court raised the question of whether it had jurisdiction to hear the copyright claims. 

This came about because the federal copyright statutes state that a party cannot file certain copyright claims (for our purposes, it is enough to note that the certain claims at issue are pretty much the ones most important to copyright owners) unless they have registered the copyright.  Specifically, the statute states, in part, “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.”  17 U.S.C. Section 411

Applying this statute, the trial court determined that it did not have jurisdiction, and the parties appealed the issue all the way to the Supreme Court.

In resolving the question, the Supreme Court stated that trial courts do have jurisdiction to handle cases involving unregistered works.  However, the Supreme Court indicate that registration was an essential element of a claim for violation of a copyright under the statute.  In short, this means that while the court can hear the case, the copyright owner still has to prove they registered, or tried to register, the copyright with the Copyright Office to succeed in their lawsuit.

Like any lawsuit, a party has to prove they are entitled to relief or a remedy.  If one is claiming someone else trespassed on their property by walking on it without permission, they not only have to prove that the other person actually walked on their property, they have to also prove that they own the property at issue.  If they cannot prove this, they cannot prove an essential element of the trespass claim and they will loose.

With copyright violations, the federal statutes establish the elements of the claim that a copyright owner has to prove to win.  It may be obvious that a copyright owner has to prove the the other person actually copied the work at issue, but the Reed Elsevier case also suggests that the copyright owner will have to prove that they at least attempted to register the work with the Copyright Office as well if they want to win.  If they cannot prove this requirement, they will likely loose.

thumbs down (small) The reason I say that they have to prove they at least attempted to register the copyright is because registration does not have to be accepted for the copyright owner to file suit.  A copyright owner has to have either successfully registered the work before they sue, or have tried to register properly, but been denied registration.  In addition, in some situations, the registration can occur within three months of the suit for a violation of the copyright.

Conclusion

It is integral to be able to enforce a copyright in court against others who copy.  Without the ability to enforce the copyright, one really has nothing from a legal perspective.  Accordingly, because one must register their copyright to be able to win in a lawsuit about copyright infringement, registration is exceedingly important.

Wednesday, June 16, 2010

Legal Assessments: Mean What You Say in Both the Contract and the Relationship

I’m back after a whirlwind of work related to some litigation matters with which I am periodically solely occupied.  My old boss and mentor Rob Baldwin used to tell clients when he was really busy with one matter that he expected they would want the same thing when their matter required the same kind of attention.

Introduction

Previously, I’ve discussed some issues regarding entity structure for companies and corporations from a relational perspective.  These discussions have focused primarily on internal relationships, specifically between owners, principals, shareholders, or members.  I want to turn the attention now to the relationships an entity has with third-parties, whether customers, suppliers, independent contractors or the like.

The Contract Governs Over Informal Negotiations

In general, the same principles apply such as accurately identifying the duties and responsibilities, providing notice or disclosure, and actually complying with the terms and conditions.  But what I want to do here, is point out that often, the people involved in a legal relationship formalized by a contract of some kind, tend to allow for a bit of a incongruity between what they understand the relationship to be, and what they included, or excluded, from the actual document formalizing the relationship.  Specifically, what I want to point out is that the contract will most often govern any dispute, regardless of the informal negotiations before hand.  As a result, the contract matters more than the informal negotiations, and a company can do a lot to stand out by making sure their contracts accurately reflect the informal negotiations.

A personal example

Let me give the example of a form contract you might get from a service provider.  I recently had computer troubles after the lightning storm here in Denver a week back.  I took the computer (my really old G4 iMac) to a service provider to retrieve data Hard Drive small from the hard drive.  I explained that I suspect the drive is fine and it is simply the power to the computer that is a problem.  After discussing the situation with the representative at the store, confirming the price for the services, and what I needed done, I was given the standard service contract the provider uses for me to sign and initial.  Of course, being an attorney and all, I actually read the terms.

Turns out that the standard form contract I was supposed to sign included a certification by me that I had a back-up of the data off the hard drive.  It then went on to state that I would not hold them responsible if the data on the drive was lost during the repair work.  This gave me pause.

As you can imagine, the terms are there because the provider needs the freedom to work on a broken machine without concerns that their efforts might accidentally destroy data which cannot be replaced.  However, the situation in the form contract did not fit my circumstances.  I was there because I needed them to retrieve the portions of the data on the machine for which I did not have a back-up.  If I had the back-up, I would not need them.  In addition, they wanted me to release them from responsibility, even if they lost the data because they were negligent (which is another way of saying they lost the data because of their own fault when they reasonably should not have lost the data).

This put me in a quandary.  First, I was not about to lie and certify that I had a back-up.  Second, I got a little concerned that they might be a bunch of hacks.  I am willing to pay them because they hold themselves out as being capable of providing the services I am requesting using a skill I do not have.  But their form contract implies that if they delete my data because they do not really have any skills, or because they have those skills and failed to apply them to the job, I basically have no recourse.

The Application

I bring all of this up as an example of how we do business and form legal relationship.  In talking with the representative, I felt comfortable that they understood what I needed and had the skill necessary to do the job.  I also received assurances that they understood my problem and would do what they could to help by applying skills I do not have, without accidentally deleting the data they were trying to recover for me.  But after all of this conversation and forming of the relationship with the provider, the contract, which actually formed the relationship, was different in important respects.  So the question arises, which one will actually govern the transaction: the informal conversations, or the contract.  The answer is generally going to be that the contract will govern.

My issue with repair work on a computer is small.  But when this principle is applied to a bigger transaction, with larger consequences, the same problem arises.  One might have a great interaction with the other person, but get a contract that contradicts one’s understanding of how things are going to work.  It might provide for discretion by the other person that keeps them from being responsible in certain situation, or limit how much skill they have to actually apply to the job.  In the end, it is the contract which will govern any conflicts, and the discussions and expectations formed outside of the contract will probably not be worth much.

What many of us tend to do is pretend that the informal interaction is the real relationship and will actually be how the other party will perform in the relationship, even if the contract does not force them to do so.  However, the contract is where the rubber hits the road.  If someone is willing to say they can do something informally, they certainly ought to be willing to back it up by making themselves accountable in the actual contract if they cannot do it.  Otherwise, we are simply entertaining a form of lying.

An Opportunity for Businesses to Stand Out

I think it is better, and actually a way for businesses to stand out among their piers, for businesses to draft their contracts in a way that honors the informal relationship they form to get business. 

Using my example of the computer repair, it is perfectly possible to craft language in a form contract that addresses the concerns of both the provider and the customer.  One way is that rather than asking a customer to release the provider from the responsibility to exercise the skill they hold themselves out as possessing, the provider could simply specify what the provider will be responsible for while also specifying what they will not be responsible for (like faulty equipment or incidental damage caused by good faith attempts to do the work requested on the machine).  The provider could focus the form contract on getting authorization from the customer to do what is deemed necessary by the provider, at the providers discretion, to accomplish the task at hand, with a disclosure that such activities may have unintended consequences which the customer is willing to accept as a condition of providing the machine for the work, including a loss of data.  The provider could state that they are limiting their liability for legitimate screw ups that could have been avoided to the amount of the charges for the work performed so they have an incentive to exercise their skill, but do not have to worry about a screw up sinking their business.  And the provider could use the contract to suggest the customer get a back-up of the data before allowing the work, noting that if the customer chooses not to do so, the provider cannot be held responsible for inadvertent losses of data.  

The Contract Matters, SO Draw a Line

Another point is that businesses and individuals should pay attention to the actual contracts.  The informal relationship is a legitimate basis for some concessions in the contract terms, knowing that when all is said and done, one will have to live with the contract terms if things go bad.  However, we do have to draw the line somewhere.

For me, I only crossed out the term in which I was asked to certify that I had a back-up of the data because, while it bothered me that they wanted me to release them from all liability for deleting my data while doing the work, it was not critical data and they had agreed to significantly limit the charges for doing the work if they could not retrieve 75% or more of the data.  On the other hand, I was not about to lie.