You may not be prison-bound, but that doesn’t mean you aren’t breaking the law

Under federal copyright law, anyone who willfully infringes a copyright in certain ways will be subject to criminal penalties, including prison for several years. That’s a remedy to be taken seriously. It’s probably not likely that the average consumer or employee will be criminally prosecuted, but there are criminal remedies available. Since copyright infringement may be a crime, if I read a Dilbert® cartoon, really like it, and forward it by email to a friend, is there a chance I will be sent to prison?

What works are copyrighted? The definition is very broad and essentially covers anything that is original and fixed in a tangible medium of expression, which includes digital storage. This includes blog posts, newspaper and magazine articles, images on websites, presentations, memoranda, and educational literature. The list is very long. Usually the issue with copyright rests not with whether the work was original and therefore copyrighted, but instead whether the person in question of copyright infringement had the right to do what he or she did with the work.

Copyright infringement occurs when a copyrighted work is used, copied, distributed, revised, or publicly displayed without the consent of the author or creator of the work. Using the Dilbert® cartoon as an example, infringement includes making a photocopy of the cartoon, scanning the cartoon and saving it in a Dropbox® folder, sending the cartoon to a friend by email, or using the cartoon in a PowerPoint presentation to a chamber of commerce. Infringement also occurs when a presentation is copied and distributed internally in a business or an email is sent to a group in an organization to promote a strategic goal, but includes an image created by someone else.

The act of making a copy or sending a work by email is not really dependent on the audience. An internal email or interoffice copy is just as infringing as blasting a post with infringing material to thousands of subscribers to a news service. It should be noted, however, that the original comic may be delivered to someone in its original form, so long as a copy is not made and delivered.

There are a few considerations for assessing the risk of potential infringement. Sending an internal email of a Dilbert® cartoon is not likely to generate actual damages. If Scott Adams, as the creator, gets really upset, it’s possible he could seek an injunction against any future infringement, but it’s not likely there would be any actual damages. However, Scott would have a right to claim statutory damages. These are damages awarded for situations like this where the actual damages are nominal at best, but the law wants to provide a remedy to the copyright owner. Statutory damage awards may be as high as $30,000 for infringement of the work, but if the infringement is found to be willful, the award may be as high as $150,000. Statutory damages are intended to make us think twice before engaging in any potentially infringing activity.

Infringement does not occur if the person engaging in the copying or other activity has consent, permission, or an express license to copy, distribute, or otherwise use the work in a way that might otherwise be infringing. Usually professionally published works, and often websites, provide an easy way to request permission to use a work. This is not to suggest that the author may not want a royalty, or impose limitations on the work, but this is certainly the safest way to use a copyrighted work. The reason there is so much copying and distribution in the social media world is that the terms and conditions of the social media providers require licenses and rights to allow the distribution, copying, and other use of content posted on the social media sites.

Finally, there is fair use. Unfortunately, fair use does not mean copying anytime there is not a profit involved, or if there is less than 20 percent of a music composition involved. There are no bright line tests. In fact, the test is difficult to implement, and unless a work is being used by a nonprofit institution for teaching or critical analysis, or something very similar, be wary of claiming fair use. Typically fair use is raised after the infringement claim is made, not when someone is considering using a work of someone. If someone is prepared to take the time to do the analysis and take the risk of coming under the fair use umbrella, the person or business would be well advised to use the time and effort getting consent or a license from the author. In most situations, invoking fair use prospectively is risky.

Making decisions on the use of an original work created by another can be tricky. It’s easy to conclude that sending funny stories, posting newspaper clips, and forwarding cool content from a website does not constitute infringement, because we seldom, if ever, hear of anyone being sued for infringement. But this is one case where having the masses engage in the behavior does not provide legal comfort. It may mean that the risk of being sued is not real high, but it does not make the activity legal. It simply means the law is not always being enforced.

Who owns the copyright to content I create or have others create for me?

Most of us know that the words we read and photographs we see online, in books, and in other media are probably protected by copyright law. But who owns the text, images, graphics and other copyright protected works? Who may enforce the copyrights?

As mentioned in a previous post, the person who creates a work is the owner of the copyright in that work. The author of a book is the owner of the copyright in the book. The photographer of an image is the owner of that image. But there is one significant exception: when a work is created as a work made for hire.

Under the work made for hire doctrine, an employer owns the works of an employee created within the scope of his or her employment. So long as the creator is an employee and not working on a project outside of his or her normal duties and responsibilities, most likely the work created will belong to the employer. If the employee wants to retain ownership of the copyright of the work, prior to the creation of the work, the employee and employer should discuss an assignment of the copyright to the employee, and consideration should be given for the assignment. Another option is for the employee to receive a license to use the work. In this way, the employee is not prohibited from using the work he or she created.

Transfer of ownership in a work itself does not transfer the copyright. For example, purchase of a piece of original art gives the purchaser the right to own and display the artwork, but it does not convey ownership in the underlying copyright. As a result, the purchaser may not make copies of the artwork, post images of the artwork online, create derivative works or distribute copies of the artwork. Similarly, if a copyright in artwork is transferred by assignment, the assignment does not necessarily include ownership of any material objects created under the copyright. The material objects and the copyright rights are distinct and treated separately.

Sometimes authors or other creators of original works collaborate on a project, such as computer software. If the contributions of two or more creators are integrated into the overall work and are inseparable, the authors become joint authors and co-owners of the entire work, regardless of the amount of their individual contributions. One software developer may code 10 percent of the program and another may code 90 percent, but both are equal owners of the entire software program. Joint authors may use the work as if there were no other owners, even if the other owner objects to the use. One of the joint owners may, without the consent of the other owners, grant licenses to third parties to use the work. One co-owner may sue for infringement without bringing the other co-owners into the litigation. However, co-owners must account to each other for any profits earned from use of the copyrighted work.

Joint ownership is distinguished from authors making a contribution to a collective work where each individual work remains distinctive and stands alone. Collective works have two different levels of ownership. Authors may own the individual articles or elements of the collective work, and another author may own the copyright in the collection of works.

Ownership in copyrights and the material objects created under copyrights are complex and need to be carefully analyzed before proceeding to exercise rights under the copyright in a work or in the material object created under the copyright. As with most intellectual property rights, caution is the word!

Copying on the internet

Easy is not always better.

Before online marketing, using content in marketing was a deliberate process of finding content, making sure that rights of use were granted, working through multiple steps of proofs and review and ultimately, generating expensive glossy printed material.

That has changed: The world of online marketing has given Internet users the ability to copy and paste content through very simple, no-cost procedures. It’s essentially as easy as right-clicking a source page, opening a destination page, and another right-click to copy content to a destination page. However, easy can lead to some unfortunate results.

Debates continue over the rights that content owners should have online. Some argue that because the content has been posted online, it should be available for use by others, with very few, if any, restrictions. Despite the rapid rate of change in technology, there are fundamental principles that have not changed.

Copyright law protects original works of authorship and original content, regardless of where it is posted or displayed. Original works may include stories, blog posts, articles, graphics, photographs and other images, marketing materials, drawings and plans. Usually, originality is not difficult to find in a work. As a result, as soon as a work, such as an article or photo, is created, copyright rights exist. Copyright registration is not necessary to claim fundamental copyright rights, but registration is necessary to pursue an infringement claim in litigation, but there is a procedure for expedited registration, so the lack of registration does not need to bar a copyright owner from pursuing his/her rights in a copyrighted work.

The person who creates a work is the copyright owner. The concept of work made for hire is confusing to many. If a third-party service provider is engaged to take a photo or create content, the work is not a work made for hire. With a few exceptions, a work is only a work made for hire if it is created by an employee within the scope of his/her employment. If an outside firm or service provider is used to create a work, the user needs to get an assignment or license from the firm that created the work.

The owner of a copyrighted work has several exclusive rights: the rights to copy, reproduce, distribute, publicly display the work or create derivative works from the original.

What about fair use? Fair use is very limited and does not apply for most commercial uses. If the work is being used in an educational or nonprofit environment for purposes of commenting on the work, it may be fair use. If fair use is a possibility and it is critical to use the work, contact legal counsel to help work through the maze of fair use.

Failure of a copyright owner to include a copyright symbol, whether inadvertently or intentionally, does not change the need for permission to copy, use and display copyrighted works of others.

Infringement occurs when one of the exclusive rights has been violated. Not all copying is intentional. If there is inadvertent copying, courts will consider whether the new work is substantially similar to the original work. Through a series of tests, courts will make this determination. If the two works are substantially similar, and the copyright owner can produce a certificate of copyright registration, it is likely there is infringement and liability and then the courts will determine damages.

It is tempting to say, “I will never get caught,” or “If I am caught, what damages could the copyright owner assert?” It may be true that the risk of getting caught or a copyright owner establishing substantial damages is low. But it only takes one time. Getty Images and other image providers are aggressively pursuing websites that post images that have not been licensed. Further, copyright law provides for statutory damages. In litigation, a copyright owner may elect to recover statutory damages, which are damages unrelated to the amount of actual damages. Statutory damages of up to $30,000 per work may be awarded. For willful infringement cases, the amount of statutory damages is up to $150,000 per work.

One final issue: if an article is posted online, may a user make copies of the article and distribute them? Technically, it is distribution of the work, and a violation of one of the exclusive rights of the owner of the work, but the work is already available publicly. The safe course is to distribute the link to the content and have the recipient of the link directly access the materials.

Copying and using online content is deceptively easy. To avoid potential liability, the best strategy is to create original works. If that is not an option, always seek permission or a license to use the creative works of others.

Social media sites and terms of service: What may I do with the content?

Facebook’s terms of service give Facebook the unlimited right to use any photos, videos, and other intellectual property content posted on the site.  Facebook acknowledges that ownership of the content is retained by the user, but the ownership rights are subject to the license granted by the user to Facebook.  Twitter similarly acknowledges that ownership of content remains with the user, but also claims an unlimited license to use the content.

It’s quite tempting to use content posted by friends and others on social media sites.  Whether the use is personal or commercial, or for public or private use, some content is simply very good, and users may want to use the content for a variety of purposes.  The rights granted to Facebook, Twitter, and other social media sites are very broad, and sharing takes place freely, but the sharing rights are not unlimited.

In a case decided earlier this year in the United States District Court of the Southern District of New York, the court decided what rights third parties had to photos posted on Twitter.  Daniel Morel, a photojournalist, was in Haiti at the time of the devastating earthquake in January 2010.  He took several photographs of the scene after the earthquake, and posted them on Twitter through his TwitPic account.  Shortly after Morel posted his photos on Twitter, they were reposted to the account of Lisandro Suero.  Through a series of events, some of the photos were downloaded by Agence France Presse (“AFP”), a French news agency that maintains and online photo database, and some of the photos were licensed by AFP to Getty Images through a reciprocal license agreement to display images.

AFP brought the action against Morel seeking a declaration that its acts did not constitute copyright infringement.  Morel filed a counterclaim against AFP, Getty Images, and the Washington Post seeking a determination that they each willfully infringed his copyright in the photos.

One of the arguments made by AFP was that it was not liable for copyright infringement, because Morel granted it a license to use the photos by posting the photos on Twitter.   AFP acknowledged that the act of posting photos online did not eliminate  Morel’s copyright in the photos, but argued that it had a license to use the photos through the Twitter terms of service.  Alternatively, AFP argued it was a third party beneficiary of the Twitter terms of service.  The court was not persuaded by either of these arguments.

The court acknowledged that Twitter encouraged and permitted broad reuse of content, but also found that Twitter did not grant an express license to AFP to use the photos for purposes other than reposting.  The Twitter terms of service provide that the user, by posting content, grants to Twitter a worldwide, non-exclusive, royalty-free license to use content in any and all media or distribution methods.  The terms of service further provide that Twitter may make content available to other companies, organizations, or individuals who partner with Twitter.  But the court found that the terms of service did not give AFP the rights of use it claimed in the litigation.

Photos and other content on social media sites generally may be reposted.  The current Twitter terms of service provide that “this license is you authorizing us to make your Tweets available to the rest of the world and to let others do the same.”  Facebook’s terms of service are similar. However, the rights granted are not unlimited, and specifically do not include the right to download and license photos posted on Twitter or Facebook to third parties.

There are two potential ways to have permission to repost or otherwise use a photo or other content posted on a social media site.  One is to contact the owner of the copyright and obtain permission directly from the owner.  The second way is to fall within the terms of the terms of service of the social media site.  Before relying on the site’s terms of service, however, it should be clear that the use falls within the scope of the license granted in the terms of service, and that the person using the content is an intended licensee or beneficiary under the terms of service.

As Agence France Presse learned the hard way, using without permission another’s content posted on a social media site is still copyright infringement.

Startups? Who owns the software

Startups usually operate on a shoestring budget with a minimum number of employees and resources. Many, if not most, of the formalities of a Fortune 500 company simply don’t exist. Many times even basic formalities don’t exist. So, how does a startup determine who owns software developed by a developer engaged by the fledgling company?

The rules of ownership for software are fairly straightforward. Software created by a developer who is employed by a company is owned by that company. But software created by a developer who is an independent contractor is owned by the independent contractor developer. Under federal copyright law, creative works, which include software, created by an employee within the scope of his or her employment are owned by the employer. This is referred to a as a work made for hire. The relevant issue, then, is whether the developer is an employee.

When it is clear whether the developer is an employee or independent contractor, it is also generally clear whether the software is owned by the company or the developer. But in a startup where formalities surrounding employees are often fuzzy at best, the answer to the question is now always clear.

In a case heard in the Ninth Circuit Court of Appeals, the court considered whether a startup software company owned software being developed by a developer associated with the company, or whether the developer individually owned the software. To the disappointment and frustration of the developer, the court found in this case that, although the startup company did not follow many of the formalities it should have followed to treat the developer as an employee, the developer was still found to be an employee, and therefore, the startup owned the software, not the developer.

To reach its conclusion that the developer was an employee of the startup software company, the court looked at several factors. Perhaps most prominent was that the company was a startup, and the failure to follow certain legal formalities did not weigh as heavily in favor of finding that the developer was an independent contractor as it may have in the case of a more established business enterprise. The court cut some slack to the entrepreneurs struggling to work through the startup phase. The court in essence recognized the reality of entrepreneurship.

Specifically, in finding that the developer was an employee and not an independent contractor, the court looked at several factors and found that (a) the developer did more for the entrepreneurial enterprise than just work on the software, (b) the developer was paid a regular salary, although some of the compensation was in the form of stock, and (c) the developer’s work at the company was integral to the success of the business in general. The court considered the arguments made by the developer that the developer should have been treated as an independent contractor because (x) his hours were flexible,(y) the company did not exercise much control over the developer, and (z) the company failed to treat the developer as an employee when it came to forms and the payment of taxes. But again, the court gave the startup great latitude, and said that the company conducted its business more informally than an established business might have done, and the expectation for formalizing the employment relationship was not high.

In this case, the company was lucky, and the developer was left to negotiate for additional rights or additional compensation based on the software. But there is no need to leave the determination of ownership. Any software developer and company should reach a decision whether the developer is an independent contractor or an employee, and then appropriately document the relationship and the ownership. It should be clear what the intent of the parties is regarding ownership of software, and any other copyrighted works. In this case, the court stretched to find that the company owned the software, but another startup, or a more mature business might not be as fortunate.