Archive for the ‘Copyright’ Category

The Uncertain Law of Dead Celebrity Goods, Sexy Einstein Edition

Thursday, May 27th, 2010

E = mc squared, baby

Thank you, Albert Einstein, for making our point.

Great minds think alike.

Unknown to The Licensing Law Blog, one day before we posted “The Uncertain Law of Dead Celebrity Goods,” representatives of the estate of Albert Einstein sued General Motors Company for an advertisement featuring the head of the Father of Relativity Theory photoshopped onto the ripped, tattooed naked torso of an underwear model, with the caption, “IDEAS ARE SEXY TOO.”

The ad ran in the November 30, 2009 “Sexiest Man Alive” issue of People Magazine to promote the GMC Terrain SUV, explaining, “THAT’S WHY WE GAVE IT MORE IDEAS PER SQUARE INCH.”

GMC was sued in federal court in Los Angeles by The Hebrew University of Jerusalem (HUJ), which was the beneficiary of all of Einstein’s intellectual property rights in his will, for trademark infringement and misappropriation of Einstein’s rights of publicity. (HUJ also claimed a subsidiary cause of action for unfair competition.) Einstein is the fourth highest grossing deceased celebrity property, earning about $18 million annually, according to Forbes magazine.

What makes this case interesting from a legal point of view is the rights of publicity issue as applied to dead celebrities. HUJ sued GMC under both New Jersey common law rights of publicity and California common law and statutory law rights of publicity.

New Jersey case law is clear that rights of publicity are property, and survive the death of the owner, as mentioned in the previous blog post. What is not clear is how long after death the rights survive. Einstein died in 1955 in Princeton, New Jersey. Did his rights of publicity survive 55 years after his death? The judge in the 1981 case Estate of Presley v. Russen said he had no idea what the survival period was without further guidance from the New Jersey State Legislature (which has not addressed the issue to date), although he suggested in a footnote that a good reference point might be postmortem survival periods under copyright law, which would be at least 70 years after death.

Also, there is the question whether California or New Jersey law controls. Usually (but not always) choice of law principles dictate that the law in rights of publicity cases is controlled by the state of the celebrity’s domicile at the time of death. But after cases involving Marilyn Monroe’s postmortem rights of publicity, in which courts in both New York and Los Angeles ruled in 2007 that the law of New York (Marilyn’s domicile) not California (Marilyn’s place of death) applied, California revised its rights of publicity law in an attempt to preserve postmortem rights of publicity for “personalities” regardless of date or domicile at death. In the unlikely event that this case ever reaches the decision stage, it will be interesting to see whether the court applies New Jersey or California law on rights of publicity.

By the way, no one will accuse GM of being Einsteins in the licensing field. A GM spokesperson said she believed GM had paid a “reputable organization” for rights to run the Einstein ad, but our guess is that they only paid for a copyright license for the Einstein photo, and not for rights of publicity or trademark licenses. In 2005, New England Patriots quarterback Tom Brady also sued GM for using his image in an advertisement without a license.

P.S. In case you are wondering about the impact of GM’s bankruptcy on the Einstein lawsuit, there is none. GM filed for Chapter 11 bankruptcy on June 1, 2009, and sold its assets to a new entity on July 10, 2009, which then took the General Motors Company name, and left the “old GM” to settle its debts with the proceeds it received from selling its assets to the “new GM.” So the entity that published the ad at issue on November 30, 2009 was never involved in bankruptcy, therefore the HUJ lawsuit will in no way be restricted or impeded by bankruptcy law.

5 Minute FAQ: Open Source Licenses

Thursday, May 13th, 2010 / CC BY-NC-SA 2.0

Q: What is an open source license, and why is it important?

There are many kinds of open source licenses with a great variety of terms and conditions – Creative Commons License, GNU General Public License, Sun Community Source License, and many others. Open source licensing is becoming an increasingly important business model to distribute creative works (below). As explained in the Licensing Glossary, generally speaking an open source license is one that allows broad rights to use, modify, and distribute copyrighted material without payment of a royalty, so long as the user does not place proprietary restrictions on later users of his content. For example, the Terms of Use of popular online encyclopedia Wikipedia state that, “you can use content from Wikipedia projects freely,” as long as users make their own contributions freely available to others. In the context of software, an open source license is one that complies with the ten requirements of the Open Source Initiative, including: 1) “free” redistribution (“free” as in no downstream proprietary restrictions, and “free” as in no royalties on the original or revised code); 2) inclusion of or easy access to detailed source code; 3) the right to create and distribute modifications and derivative works; and 4) no inclusion of “downstream” license restrictions that reduce or undercut the other open source terms, i.e. once open source, always open source, no matter who adds what later on in time. Although open source software is often called “free software,” that is not quite accurate. One of the best known examples of an open source software license, the GNU General Public License, does prohibit royalties, but also permits licensors to charge a small fee for the physical act of transferring the software, as well as service fees for warranties and maintenance. In the context of licensing of text and images, the GNU Free Documentation License and various Creative Commons licenses are guided by similar open source concepts.

Q: Why would anyone just give away their creative work under an open source license?

Why indeed. The success of the open source licensing model is one of the most fascinating phenomena of the digital age. Sophisticated products with major market impact are available for free under open source licenses: the Firefox Internet browser; the Wikipedia online encyclopedia; and Apache server software. Although traditional forms of intellectual property protection are based on the assumption that the profit motive (self interest) is the greatest driver of innovation, open source licensing is based on the assumption that unrestricted sharing of knowledge and innovation (collaboration) best begets further knowledge and innovation. There is also a hybrid business model, based on the “give away the razor for free to make money selling the razor blades” concept. In some cases, for-profit businesses contribute to open source software so they can sell associated databases, or maintenance, or hardware—several distributors of the open source Linux operating system sell warranties and maintenance to go with their version of Linux, while several sellers of smartphones “give away” the open source Android software that runs them. (Smartphones running Android outsold Apple’s popular iPhone during the first quarter of 2010.)

Q: What happens if the user ignores the requirements of an open source license, for example by charging a license fee for its altered version of the open source material?

Until recently, it was not clear if there was any penalty to ignoring the requirements of an open source license. Opponents of open source licensing had previously argued that if licensors gave their product away for free, then even if licensees ignored the terms of the license, there were no damages. But in Jacobsen v. Katzer, the Court Of Appeals for the Federal Circuit put legal teeth in the open source licensing model, by ruling that violation of an open source license was not just a breach of the license, but might also be a copyright infringement. The case involved software developed by physics professor and model train enthusiast Robert Jacobsen to program decoder chips that control model trains. Jacobsen made the software available under the open source Artistic License. Matthew Katzer and Kamind Associates copied several of Jacobsen’s files into their own commercial software, but in violation of the license terms, did not include a notice of attribution to Jacobsen. While Katzer and Kamind conceded that Jacobsen’s software was copyrighted, they argued that since the Artistic License permitted them to copy the files, there was no copyright infringement, at worst only a breach of the license terms. The CAFC disagreed, ruling that since the attribution requirement was drafted as a condition under which the license was granted, copying in violation of a condition was not excused by the license, and was therefore a copyright infringement. The case is significant not only because it is the first major case validating the concept of open source licensing, but also gives open source licensors a much more effective means to enforce the license. Although contract damages are normally calculated on economic harm suffered by the injured party (and therefore difficult to prove when a product is given away for free), under copyright law, creators can collect damages and attorneys fees based on the infringer’s profit, or under a fixed formula called statutory damages. Furthermore, copyright law allows the licensor to pursue licensees of the licensee, while contract law normally does not. Thus, the Jacobsen case gives real teeth to open source licensing—however, at this time it is limited to cases under the jurisdiction of the Federal Circuit. Although the Jacobsen case makes it much easier for open source licensors to get damages to enforce license terms, an important open question is how easily they can get injunctions to enforce open source license terms, for example an injunction ordering a licensee to disclose its source code to the public, or even shutting down all further distribution of the licensee’s software.

Startup Corner: Tips To Protect Your IP

Sunday, April 25th, 2010

Intellectual property and other intangible assets constitute 80% of the market capitalization of S&P 500 companies. Nowadays, it is as critical for companies to properly maintain their patents, copyrights, trademarks, and trade secrets as it is to maintain their plant and equipment.

Below is a quick checklist of eight items your company should follow to protect and preserve its IP.

1. Implement Intellectual Property Ownership Agreements

For most forms of intellectual property, the default rule is that whoever created it, owns it, so have all employees sign employment agreements and independent contractors sign service or consulting agreements that stipulate all intellectual property they create while working for your company is either a work made for hire, or if not, that the creator automatically assigns ownership of its IP to you as of the time of its creation. For similar reasons, on joint projects that could result in patentable inventions, have co-researchers sign agreements assigning ownership of all IP to your company, or if that is not possible, specifying the terms of co-ownership of any patents. Having these agreements in place will save you from a claim that someone else owns valuable IP that you paid for.

2. Put All Licenses and Assignments in Writing

You should not allow other parties to use your inventions, creative content, software, logos, confidential information, etc., nor should you use theirs, without a license agreement in place. If there is a dispute, then at best it would be hard to prove who was allowed to do what for how much money, and at worst, you may lose ownership of your IP in part or in whole. Furthermore, where ownership in patents, copyrights, or trademarks are transferred (an assignment), then often a signed writing is required to make it legally binding.

3. Preserve Confidentiality of Trade Secrets

Trade secrets are valuable commercial information or formulas that maintain their protected status only so long as their owner takes reasonable measures to preserve their confidentiality. Therefore, companies should implement policies that require employees to preserve confidentiality of confidential information, and follow good housekeeping procedures, including: placing “confidential” or “proprietary” stamps on documents; requiring employees to sign nondisclosure agreements; requiring password protection for all computer-stored trade secrets; restricting physical access to areas containing trade secret information and implementing sign-out log procedures; and conducting exit interviews with departing employees. And before release of any valuable confidential information to an outside party, require the recipient to sign a nondisclosure agreement that requires the recipient: 1) to take at least reasonable steps to maintain confidentiality of the information; and 2) to only utilize it for the purposes allowed in the agreement.

4. Register Important Copyrights

Original, creative works such as text, images, music, websites, and software come under copyright as soon as they are fixed in a tangible medium, but in order to get meaningful enforcement capability against infringement, registration with the US Copyright Office is advisable.

5. Register Important Trademarks

Words, logos, or jingles that identify your company’s goods and services often qualify as trademarks. Some degree of protection exists even without registration, under the doctrine of common law trademark. But as with copyrights, in order to receive the maximum degree of protection, registration with the US Patent and Trademark Office is advisable. Furthermore, purchase all domain names that your company is likely to use in the future, including common variations.

6. Challenge Infringing Uses of Your IP

Perform periodic Google and eBay searches to make sure that others are not misappropriating or abusing your company’s copyrights or trademarks. If evidence of infringement is found, consult with your attorney about the advisability of a cease and desist letter or even a lawsuit. Especially in the case of trademarks, ignorance is not bliss — it can lead to forfeit of your IP.

7. Use Copyright and Trademark Notices

Use standard copyright notices, such as “© 2010 Your Company, Inc. All Rights Reserved,” for text, graphics, music, software, websites, and other original creative content, and standard trademark notices, such as “® Your Company, Inc.” or “®” (for registered trademarks) or “™ Your Company, Inc.” or “™” (for common law trademarks) next to words or logos that identify your goods or services. Better yet, have your attorney work with your marketing people to draft comprehensive guidelines for proper use of copyright and trademark notices for all products, product packaging, and company communications. This shows the outside world that you are knowledgeable and vigilant about your intellectual property rights, and also eliminates an “innocent infringement” defense in enforcement litigation. Or as Ali G says when pitching his idea for an ice cream glove to a venture capitalist, “That’s a ©, which means you can’t nick it.”

8. Post Effective Rules for Your Website

Website Terms of Service and Privacy Policies are important means of limiting your company’s legal risk and earning your customers’ trust. Although technically not IP protection devices, they are critical legal safeguards, especially for companies that engage in e-commerce.

5 Minute FAQ: When Is An Agreement a Contract?

Sunday, February 14th, 2010

A contract is an agreement that is legally binding, and can be enforced in court.

Q: So what are the magic ingredients that make an agreement a legally binding contract?

First, there must be a concrete, bona fide offer, for example, “I will sell you those shoes for $25”.  But if the seller had said instead, “I am not selling those shoes, but if I did I would probably sell them for $25,” then no contract can result.  (This is similar to the language used in a letter of intent, which is also not legally enforceable.)

Second, there must be an acceptance that matches the offer on at least the main terms, such that there is a “meeting of the minds”—“I will buy those shoes for $25.”  If there isn’t a match, then the reply to the offer might be considered a counteroffer (“I will buy those shoes for $20”) which requires its own acceptance.  Note that an offer can be accepted not only with words (oral or written), but also with actions, for example handing over the $25.

Another necessary ingredient is “consideration,” not in the sense of the parties being nice to each other, but in the sense of each party bargaining for a benefit, including the ever popular “money.”  Which sounds like it would always apply, because who makes an offer for which he does not seek a benefit in return?  But for example, an offer of a gift (“I will give you $1 million because you are a lovely person”), even if promptly accepted with a hearty “yeah baby!” would not “normally” be legally binding, because there is no bargained-for benefit to the gift-giver.  “Normally,” because there are exceptions where offers that lack consideration can still become legally binding.

Finally, some kinds of agreements must be in a signed writing to qualify as a contract.

Q: In some cases? You mean oral agreements can be legally binding?

Yes, if there is a valid offer, acceptance, and consideration, then most oral agreements qualify as contracts.  Certain kinds of important agreements are required to be in a signed writing.  In fact, the laws of every state except Louisiana require five kinds of agreements to be in a signed writing: 1) agreements to pay the debt of another; 2) agreements to sell or transfer real property; 3) agreements to get married; 4) agreements that cannot be completely performed within one year; and 5) agreements for the sale of goods (not services) worth more than $500.  These laws are descended from the English Statute of Frauds enacted in 1677.

In addition, assignments (transfers of ownership) of patents, copyrights, and federal trademarks are all required by law to be in a signed writing.  This often applies to exclusive licenses of patents, copyrights and trademarks, because they are often deemed equivalent to transfers of ownership. Also, a work made for hire contract with a non-employee must be in a signed writing.

Q: So oral agreements are okay?! Doesn’t that contradict what you are always saying?

I said oral agreements could be legally binding, but they are definitely not okay.  Trust me when I say— in case of problems, there will always be a conflict over just what was agreed to.  Any agreement concerning anything of value should always be in writing.  I wholeheartedly agree with the quote variously attributed to Yogi Berra and Samuel Goldwyn: “A verbal contract isn’t worth the paper it’s written on.”

Q: Can a series of e-mails discussing deal terms be considered a contract?

Absolutely.  And under the federal Electronic Signatures in Global and National Commerce (E-SIGN) Act and the largely complementary Uniform Electronic Transactions Act enacted in 47 states and the District of Columbia, an electronic signature in a business or commercial record will be given the same legal effect as a handwritten signature if it is: 1) a sound, symbol, or process; 2) attached to or logically associated with an electronic record; and 3) made with the intent to sign the electronic record.  So an e-mail agreement could be legally binding even if it concerned one of the five “Statute of Frauds” categories of agreements.  Typically, the problem will be figuring out whether in the back and forth of e-mails there was ever truly a meeting of the minds—an offer of terms that was substantially accepted by the other side.

Q: Putting this in the context of license agreements—are so-called “clickwrap” and “shrinkwrap” software license agreements legally binding?

Yes, they can be.  If the licensor made the terms of the license clear and visible to the licensee, and gave the licensee an opportunity to manifest its acceptance, either by removing the shrinkwrap on the install disc or clicking a “Yes, I Accept These Terms” button on a website before downloading the software, then the licensee will be bound by the license terms.  On the other hand, courts have ruled that where the license terms were on a submerged screen not visible from the download screen, then the downloader is not legally bound.  Similarly, if the license terms were not clearly and completely visible to the buyer/licensee before he removed the shrinkwrap, then he would not be bound.  I will examine some of these cases in greater detail in future posts.

Sports Licensing Corner: When a Tattoo Costs an Arm and a Leg— Basketball Star Gets Schooled In IP Law

Wednesday, February 3rd, 2010
I told the 'guy to ink a "T," not a "C"!

Rasheed says: "I told the guy to ink a 'T,' not a 'C'!" / CC BY-NC-SA 2.0

Here is an oldie but goodie from the worlds of sports licensing, which again reminds us that IP assignment agreements are not just for the rarefied world of lab researchers, but for the nitty gritty worlds of tattoo artists and technical foul prone power fowards as well.

Back when he was playing for the Portland Trail Blazers, basketball star Rasheed Wallace got an elaborate tattoo on his upper right arm depicting an ancient Egyptian royal family with the sun in the background (see photos here and here). For a fee of $450, Portland tattoo artist Matthew Reed created preliminary sketches of the tattoo for Wallace’s approval, then applied ink and needle to skin. Reed and Wallace signed a one page contract, but it was silent on who owned the intellectual property in the tattoo.

Wallace appeared in a Nike television commercial which focused on the tattoo in close up, and included an animation simulating the tattoo’s creation, with voiceover from Wallace explaining the meaning of the symbols.

Reed, surprised that his $450 creation was the focus of a multimillion dollar advertising campaign, sued Wallace, Nike, and its advertising agency for infringement of his copyright.

Why? How?

A person who creates intellectual property as an independent contractor generally owns that IP, in the absence of an agreement to the contrary. As mentioned, the contract between Reed and Wallace was silent on the issue of copyright ownership, so it could not be considered an assignment of copyright, and the tattoo did not fit one of the work made for hire categories, so it could not be considered a work made for hire. Since Reed was an independent contractor, the ownership of the copyright in the tattoo remained with him. Which meant that anyone who reproduced the tattoo without a license from Reed was infringing his copyright.

The lawsuit was settled confidentially, but it is likely that Reed walked away with a lot more than the original $450 fee.

So what rights did Wallace get for his $450? Wallace owns the physical manifestation of the tattoo, and has the right to display it to people in the same physical location, but has no right to make or sell reproductions, such as photographs or video, or to create derivative works, such as animations based on the tattoo. Similarly, the purchaser of a painting who does not obtain an assignment of copyright from the painter owns the canvas, and implicitly has the right to sell the original canvas or even destroy it, but does not have the right to make or sell copies of the painting on the canvas.

And it probably would not have helped Wallace’s case even if he proved that he conceived of the “idea” for the tattoo, because copyright does not protect ideas or concepts (e.g. the concept of an Egyptian royal family and a sun), only the expression of those ideas (e.g. an actual image of an Egyptian royal family and a sun).

Takeaway: when purchasing artwork, video, text, or other creative works that you may wish to make available to a broader audience, make sure that you have a written agreement with the seller/licensor either transferring ownership of the copyright to you, or licensing reproduction rights to you (coupled with a guarantee that he is indeed authorized to license those rights to you). Otherwise, you could get “tattooed” like Rasheed Wallace.

Why IP Assignment Agreements Matter, Part 2

Tuesday, January 5th, 2010

Beat on the Bratz, Beat on the Bratz...

A cautionary tale for start-ups, or any company that deals in intellectual property, is offered up by the Barbie versus Bratz tussle, otherwise known as Mattel v. MGA Entertainment in federal District Court in Riverside, California.

If you have a pre-teen daughter, you can skip this paragraph, because you already know that Bratz are the pouty-lipped, multi-ethnic, high attitude, high fashion rivals to Mattel’s perennial favorite leggy California beach blonde. Sales of the Bratz line have have topped $3.1 billion since their 2001 launch, and have also spawned several movies, a television series, video games, and even a line of diamond jewelry.

The crux of the case was Mattel’s allegation that Bratz designer Carter Bryant came up with the idea, name, and many of the original Bratz sketches while he was still employed as a Barbie designer at Mattel. Mattel claimed that (like most companies that create intellectual property) it requires employees to sign agreements assigning all their rights to any IP created during their employment to Mattel, that Bryant had signed such an agreement, and that Bryant had created Bratz while under Mattel’s employment.

Unfortunately for MGA, Mattel proved its allegations, which meant that not only did MGA lose the case, it lost its entire multi-billion dollar product line! Trial judge Stephen Larson entered orders which among other things:

  • transferred ownership of the Bratz dolls and their molds to Mattel
  • required MGA to withdraw infringing product from retail shelves
  • appointed a receiver to monitor MGA’s finances and collect royalties from sales of Bratz products pending full transfer of ownership to Mattel

In short, a devastating turn of events for the once flush MGA. Now the Bratz dolls really have something to pout about. They got a legal b*-slapping from Barbie.

The transfer of ownership was supposed to occur this month, but an eleventh hour ruling from the the federal Ninth Circuit Court of Appeals put a hold on the transfer until it completes a full review of the trial court’s orders.

Takeaway: when accepting contributions of intellectual property, especially from independent contractors and new employees, know who originally created it and where it really came from, and back it up with documentation.

Entertainment Licensing Corner: Licensing and the Music Business

Monday, January 4th, 2010

Chili #1: "We shoulda licensed..." Chili #2: "Now you tell me?!"

The music business has been hard hit.

Total revenue for US music sales in all formats has decreased from a high of $14.6 billion in 1999 to $10.4 billion in 2008 to a forecasted $9.2 billion in 2013.

The most profitable part of the music industry is no longer the sale of music, but what were once considered ancillary parts of it—concerts and music publishing.

But the music industry has largely overlooked another important revenue-generating tool—licensing.  Not just licensing the band name, which is common, but for smart bands, licensing album and song names as well.

The extent to which this is not done is shocking.  UK law firm Pinsent Masons has found that none of the album titles in Rolling Stone’s Top 10 Greatest Albums of All Time have been registered as trademarks in either the US or the UK by the artists or their record companies.

But there are registrations galore from third parties capitalizing on famous album and song names, from the silly (“Sgt. Peppers Only Hot Dog Stand”) to the enormously lucrative (“Ruby Tuesdays”).

To explain how and why this matters, a little brush-up on IP law is in order.

Trademarks are symbols that communicate the source and quality of goods and services.  So in the usual case, a band’s name and associated logo serve as a trademark for its music and live performances.  It is highly advisable for the band to formally protect its trademark with a trademark registration, but some degree of legal protection exists even without a registration via the doctrine of common law trademark.

So far, so good.  So what’s the problem?

1) Even a registered trademark on a band name won’t prevent someone else from using the same mark for goods other than music or for services other than live performances, because you only get trademark rights for the goods or services that you sell or license.

2) Even a registered trademark on a band name won’t protect others from using album or song names that have enormous public recognition and good will, because you only get trademark rights in symbols that represent source indicators for goods or services that you sell or license.

Are you beginning to notice a trend here?

The Red Hot Chili Peppers learned both lessons the hard way when Showtime broadcast the popular series “Californication,” which also happened to be the name of the Chilis’ most popular album, but the show didn’t take a license from the band.  (The series also contained several other references to Chilis’ song titles and lyrics to remove any doubt that they were drawing on the album’s name for the series name.)  The Chilis sued Showtime for trademark infringement in November, 2007, but the network replied that there was no infringement because (among other reasons) Californication the show was a different category of product than the musical recordings on Californication the album, and that the Chilis had never used Californication in a trademark sense, to indicate the source and quality of goods or services.  At this writing, the case is still pending, but most experts don’t give the Chilis good odds of winning the whole enchilada, errr, winning anything more than a token settlement.

What the Chilis and other bands should do is a bit of brand extension.  First, license not only the band name, but also popular album and song names to manufacturers in fields like apparel, eyewear, jewelry, leather goods, and food products, who will pay the band for the right.  Second, follow up by applying for trademark registrations covering these categories.  (Or this could be the first step if the band files an intent to use application.)  Third, if the band skipped the first two steps, and someone has started cashing in on its band’s album or song names, then it should file a trademark registration application before the interloper.  The Chilis didn’t, but the Sex Pistols did when an ice cream company started marketing “God Save the Cream,” a conscious play on the Pistols’ notorious song, “God Save the Queen” (“God save the Queen/ She ain’t no human bein’.”)

Takeaway: with the music industry hurting and bands starving, licensing is a smart strategy.