Friday, July 29, 2011

Can A Ship Builder Use Patented U.S. Technology?

Dear Rich: I am the builder of a ship. Can I sell the ship with a patented technology to someone else although I am not the owner of the patent? We're assuming you're asking about U.S. patents (and that's all we can speak about, anyway), so here goes: A U.S. patent owner can bring a patent infringement action (lawsuit) against you if you make, use, or sell the ship (incorporating the invention) in the U.S. without permission. Your email indicates you are from Malaysia. A U.S. patent owner cannot stop the manufacture, use, or sale of the technology or device (used in the ship) in Malaysia unless the owner has patented the invention in Malaysia. However it would be an infringement of a U.S. patent to import the ship into the United States, or for you to create all of the parts of the patented invention in the United States and send those parts to Malaysia with instructions for assembly. (Here is some basic information on foreign patent treaty rules.)
What if the boat docks in the U.S.? What if the boat isn't sold or imported into the U.S. but docks occasionally at a U.S. port? Patent law has an exception (the temporary presence exception) that permits ship and aircraft owners (with otherwise infringing technology) to dock here without being sued provided: (1) the ship or aircraft enters the U.S. on a temporary or accidental basis, and (2) the patented technology or device is used exclusively for the needs of the ship or aircraft.

Wednesday, July 27, 2011

Compulsory Notice Questions for Ballet CD

Dear Rich: My boyfriend and I have recorded about 30 tracks to make a ballet class CD (my boyfriend is a pianist at the city ballet). All songs on the CD are movie songs and have been previously released to the public on a sound recording such as a CD or record. He initially learned the basic melodies from sheet music, then over the years enhanced the songs with his own progressions, harmonies, may have added a little jazz improv in some of them. Since the CD is for a ballet class, he adapted the length (shortened or extended) and tempo to fit ballet class exercises. My first question is: Based on what I described above, can I take the Notice of Intention to Obtain a Compulsory License route? My second question is: In three of the tracks, my boyfriend did something unconventional -- for example, in one of the three tracks, he played 16 measures of the theme from Charade, then he played 16 measures of Chim Chim Cher-ee from Mary Poppins. then he ended the track by playing the same 16 measures of Charade. Would these types of formats not meet the requirements for a compulsory license? My last question is: some of these songs were from musicals, but films of these musicals were made. Should I be concerned about the songs not meeting the "non-dramatic musical work" requirement? Sorry, your reference to Charade made us search our iTunes database for our Henry Mancini tracks. What a great movie composer. We have a friend who gives us obscure Henry Mancini recordings and as much as we love Pink Panther and stuff like that, he's is so much more than that -- for example, the tracks from the Peter Gunn TV show equaled and excelled the more well known theme music.
Right, you had a question(s). Yes, you can use the compulsory notice for music that includes some improv and personal progressions. It's true that major revisions to a song require permission, but practically, publishers don't really care about what you do between the grooves provided you pay the toll (9.1 cents per track).
As for your second question. If you're using two tunes on one track, you have a few choices: you can pay both publishers 9.1 cents (again, they won't care what you're doing); you can pay only for the dominant/primary tune that you're using and hope that the other publisher doesn't hear (or care) about your "quoting" of the melody. (The other publisher is unlikely to learn of it unless the title is included in the CD notes -- for example, "Track 5: Charade/Chim-Chim-cher-ee.") And finally, you can try to negotiate with both publishers for a lower rate (probably a waste of time unless you're a major label.) We think you're probably fine with the second choice.
And your third question. The compulsory license is for nondramatic uses so your use on a CD would qualify. A dramatic use would be if you wanted a license to perform the music publicly as part of a show.

Monday, July 25, 2011

Can I Expose Exxon in My Documentary?

Dear Rich: I am making an independent film about life on our ranch with ExxonMobil. I had a blog for a few years and youtube page. For three years, I filmed lots of Exxon activities on the land that is owned by my husband. About a six months into my blog writing, ExxonMobil sued me for tortious interference saying "my shenanigans raised their operating costs" because they had increased inspections from regulators. So, I am aware of how they can be big bullies with their lawyers. However, when I was not intimidated, they just backed off and I kept filming and writing. I never got any releases from Exxon workers or subcontractors but I have the permission of the land owner (my family). Of course, everything has Exxon stickers, etc. I even interview the people working there. Exxon's partners (El Paso Corp) sued me for tortious interference and exposing trade secrets on my blog. But, we made an agreed judgement where those claims were dismissed with prejudice. I am planning to make my movie free and put it on iTunes and the Internet. I have this idea that free speech is more protected than commercial speech. But, I don't know if that is true and where I got this idea. I also think that people are less likely to sue me if they think there is no money in sales to fight over. What do you think? We admire anyone who has something to say and doesn't let other people stop them from saying it. But we're also protective of anyone who calls themselves a Dear Rich reader, so we'll provide the legal rules with a caveat that you're already probably aware of --  free speech will protect your rights, but proving you have those rights may prove to be a burden. There is some recent good news for you. Last month, Texas passed its version of an anti-SLAPP law (as explained here). Anti-Slapp laws even the playing field by stopping lawsuits that are used to censor speech. That law could prove helpful if the claims brought against you are trivial or have no legal basis. Anyway, here are the legal rules.
  • Copyright - Because you did all the filming, we don't see much of an issue with copyright. If you are quoting from Exxon's written materials, using their photos, or video, that's an infringement but we think you have a strong fair use claim. However, as we always note, fair use can only ultimately be excused by a court which means you're spending money on lawyers.
  • Trademarks - We don't see much in the way of trademark issues. The reproduction of trademarks in an informational film about Exxon is permitted under first amendment principles and we discussed those issues here. These rules regarding informational uses would protect you against claims for trademark infringement and trademark dilution. Our only suggestion would be to avoid modifying the logos.
  • Privacy/Publicity Rights - Because your film is a documentary (and it's not a commercial endeavor), you may be able get away without releases as you are skirting right of publicity issues. However, without a release, the people portrayed in your film can possibly argue the film violates their right to privacy, or alternatively, it defames them. These aren't likely claims if you make a fair factual film, but as you know, employees who are concerned about retaining employment may regret their statements or wish to recant them. In your defense, you may be able to claim that their permission is implied by the fact that they talked to you and were aware of who you were, and that the material was being filmed. (In the future, you should consider getting a video release. While the camera is rolling, explain what you're doing and what the video will be used for and ask for authorization to use the material in your film. We explain more of these releases in our Getting Permission book.)
  • Trade Secrets - You're familiar with this one. When you disclose confidential business information that you acquired by an unlawful means, a company can claim that you stole their trade secrets. So, if someone has stolen trade secrets from Exxon and they give them to you and you publish them, you could be enjoined (stopped) from distributing them. As you know, this is a gray area encouraging litigation because only a court can ultimately sort out what qualifies as a trade secret
  • Contract Claims - You're already familiar with tortious interference -- when you're accused of coming between two parties to a contract to undermine their dealings with each other -- another gray area of law in which a he said/she said battle can drag on in the courts. Your settlement agreements may also establish some contractual limitations on your future behavior (although it doesn't sound like it from your description).
  • Defamation/Trade Libel -- If you include untrue statements that cause harm to Exxon's business reputation (or to any of their executives or employees), you may expose yourself to defamation claims.
  • Likelihood of Being Sued When There are No Profits -- You asked if you were a likely target if you had no profits. Profits probably only matter when discussing copyright, trademark and contract claims. And Exxon may not care about your profits, anyway. They may be more concerned about stopping the film (getting an injunction). You could be personally liable for defamation, right of publicity or other tort claims. Some people who make documentary films attempt to shield their personal assets by creating an LLC or corporation to produce, own, and distribute the film. 

Thursday, July 21, 2011

Is Coffee Shop an ISP for Purposes of DMCA?

Dear Rich: A friend of mine runs a coffee shop and just received a DMCA notice — apparently someone in his shop has been bit-torrenting a TV show. Does my friend have any liability? Can he be considered an ISP? What should he do next?  A DMCA takedown notice is sent because a copyright owner believes someone has posted an infringement and they want it removed without the hassle of filing an infringement lawsuit. For example, the Dear Rich Staff periodically finds infringing copies of its eBooks posted at websites or blogs. Instead of writing to the individual user, we send a DMCA notice to the company that owns the blogging service or the web provider that hosts the site (the Internet Service Provider or ISP). The ISP (assuming they're not in Rumania, China, or some other country where the locals don't fear U.S. copyright lawyers) typically removes whatever is complained about -- for example, an infringing picture at a blog, an infringing movie at YouTube, etc. By promptly removing the material, the ISP is given a "safe harbor" meaning that the ISP can't be sued for infringement. The ISP then may write to the individual user who maintains the blog, website, or YouTube account and inform them about the Notice to explain why the music, movie or eBook is now missing. The individual user then has the right to file a counter-notice. (We explain the procedural aspects here.)
What's an ISP? We believe that if the copyright owner sent the notice to your friend's coffee shop, then your friend's coffee shop is beng considered as an ISP. An Internet Service Provider (ISP) also sometimes referred to as an Online Service Provider (OSP) is any business that provides access to the Internet. That includes big access providers like AOL, Yahoo! and Google, or it can refer to companies that provide website hosting, commercial wi-fi services, or file-transferring (FTP) services.
What's confusing about your friend's notice ... A DMCA takedown notice is intended to direct the recipient to take something down from the Internet (or disable access). This is obviously something within the ISP's control. We're not clear how that would work in the case of a wifi coffee shop. If there are standalone computers at the coffee house, perhaps the notice is requesting deletion of bit-torrent files -- for example, if the in-shop computers are serving as bit-torrent clients. But if the customers bring their own computers to the coffee shop, we're not sure what can be "taken down."  More information is needed. (BTW, if this answer seems disjointed, it's because we stopped mid-answer to make ourselves a cup of coffee. We've fallen pretty hard for the Blue Bottle party line and we can't seem to free ourselves).

Tuesday, July 19, 2011

Church Steeple Copyright

Dear Rich: I am working on a photography book idea involving church steeples that I come across on my travels in the south. Do I need to get the churches permission to publish a picture of the steeple, with a small caption stating name of church and state? Your letter reminded us that the last time we answered a question regarding a church steeple, we received a cease and desist letter from the owner of a clip art company who apparently did not appreciate the modifications we made to their artwork. (We took our own advice and removed the artwork but it just goes to show that you never know what you'll find in your mailbox.)
Right, you had a question. We believe you can proceed with your book without seeking authorizations. Here are the general rules:
Anything created before 1990 is fine to reproduce. The appearance, architectural plans, drawings, or photographs of an architectural work (a building) created after 1990 cannot be reproduced without the consent of the owner of copyright -- usually the architect or developer. However, there are exceptions that would permit photos of post-1990s steeples -- for example, pictures of a church can be taken, distributed, or publicly displayed without permission if the church is located in a place that is ordinarily visible to the public. In addition, copyright will not protect standard architectural features (and a steeple seems pretty standard). Perhaps there exists a modern steeple that has ornate or other artistic details that make it protectable -- for example, maybe if this steeple were new. But even if it were protectable, your use of the photos in your book seems excusable because it is intended to comment upon the steeples --  precisely what fair use was intended to permit.

Monday, July 18, 2011

How Do You Protect Trade Secrets?

Dear Rich: How are trade secrets made official? Do you have to have someone sign a NDA? NDAs won’t protect just any business information; the information must qualify as a trade secret. To qualify, the info you're trying to protect must not be generally known or ascertainable through legal methods and must provide you with a competitive advantage or have economic value. In some ways, trade secrets are like tamagotchis -- remember those little creatures from Japan that needed constant digital tending or they would pass on. If you have a trade secret, you must always conceal it, disclosing it only to those bound to maintain confidentiality. An NDA helps to conceal a secret because it is an agreement promising to keep a secret. If broken, the agreement provides remedies against the discloser. Other advantages of using an NDA are:

  • It places the party receiving the information on notice that you consider the information confidential. 
  • It specifies what information is defined as confidential, which helps prevent misunderstandings and resolve disputes.
  • It can establish a method for resolving disputes—for example, mandating that the parties arbitrate any disputes instead of going to court.
  • It can guarantee that any dispute will be decided in your geographic area.
  • It can establish which state’s laws will govern disputes. For example, if you are entering into an agreement with a company in another state, you may prefer to have disputes resolved under your state’s trade secret laws rather than the laws of the other party’s state.
  • In some cases, you may have a longer period of time to file a lawsuit than if you did not have a signed agreement.
There are many decent NDAs available on the web but we prefer the ones posted by the Dear Rich Staff  at this website

Thursday, July 14, 2011

Can Your ISP Make You Go to Copyright School?

Dear Rich: Can you explain the deal brokered between ISPs and media companies? 
First, some backstory. It’s estimated that 95% of the music, and 80% of the movies downloaded are illegal. These statistics are frightening for media companies who have spent the last ten years using a heavy-handed and largely ineffective strategy of dragging individual users into court. Passing more stringent laws seems like a dubious proposition as that would still require individual legal battles. So, with the assistance of Governor Cuomo of New York (and encouragement by President Obama), a deal was brokered between ISPs and media conglomerates. This isn’t a law; it’s a contract involving six ISPs (AT&T, Comcast, Cablevision, Time-Warner Cable, or Verizon).
How Does the Deal Work? The agreement requires that your ISP implement a “six-strikes” system in which individuals who download illegal material receive a series of escalating alerts. The first four alerts are informative and explain how to download legally. By the fifth alert, the ISP can either provide a warning like the other four, or can implement tougher punitive restrictions, for example reducing download speeds or requiring the user to respond to educational materials about copyright. If another alert is needed, the ISP can implement stricter restrictions. Nothing in the deal requires that the ISP cut off service, limit emails, or messages, and no personal information about the user is exchanged – all of it is accomplished via the user’s anonymous I.P. number. Opponents of the deal object that users may be punished even though they haven't legally been proven to have infringed.
Takeaway Points. If a user disputes actions taken by the ISP, the user can – for $35 – file for an “independent review,” though it’s not clear what that entails. The deal, like any deal, can be amended and could possibly include harsher penalties in the future. The deal also may get road tested in courts as users or rights group test the legality. Stay tuned.

Wednesday, July 13, 2011

Adapting Pop Songs For Musical Show

musical in which Dear Rich staff
had the lead in MacArthur High School
Dear Rich: I write totally original "mini-Broadway style" musical plays for homeschool groups. I want to market these plays to other homeschoolers and community theater groups, etc. Many songs are totally original. Sometimes I take a popular song (such as "Don't Stop Believing" or the "If You're Good to Mama" song from Chicago) and completely change the lyrics, context, intent, and often the arrangement, and use it in a play. The "new work" only makes sense in the context of my original play. Audiences may or may not get the "joke" of using the adapted melody arrangement of the song in a completely different context (depending on if they are familiar with the original). The song works, whether they get the "joke" or not. Examples: Joan Jett's "I Love Rock n Roll" is changed to "This Boat Rocks and Rolls" in a comedy about Noah.  The work is "transformative" and would not compete with the original song. It actually reminds some people of the song (advertises it). These productions are not commercial, but I am seeking revenue for the entire work, which is original.  We love musicals especially those really old ones before rock music came along and got rid of the pit orchestras. So, thanks for fighting the good fight and creating new mini-musicals. Unfortunately, we don't have much good news as to your situation. Here's our response to each of your issues:

  • your work is totally original. Sorry, we're sure there is a lot of originality in your work, but it's  also derived from other works. The copyright owner controls the right to make derivatives. Yes, there's creativity required to adapt works but doing so without authorization is infringement.
  • your work doesn't compete with the original songs. Your work doesn't have to compete to infringe.
  • your work  promotes (advertises) the original work. Does it? It may cause listeners to conjure up the original -- that's the reason why people create parodies of famous songs -- but it's primarily being used to promote your ideas and concepts.
  • the songs 'work' whether or not the listener knows the original. That's not a defense to infringement and in any case that's true for most parodies. We would probably appreciate Weird Al's "Eat it" whether or not we know the MJ version. But the real success of the adaptation relies  on its juxtaposition and familiarity -- otherwise, why use the original in the first place.
  • your plays are not commercial. This may be factor in a fair use analysis or in assessing damages, but won't make much difference when determining if you are infringing. In any case, you're seeking revenue for your work so we think this argument is moot, as the lawyers say.
  • your adaptations are transformative. Don't confuse the fact that you are "transforming" the songs with the transformative standard used in copyright law. Most courts require that the transformation comment upon or parody the original. It is usually not considered transformative when the material is used to poke fun at something other than the original -- for example to use the Dr. Seuss style to poke fun at the judicial system. Check out these fair use examples.

We don't want to dissuade you from creating musicals. The world needs more. But we also don't want you to invest a great deal of money in promoting or publishing these works only to get hit with a cease & desist letter. The use of a song in a show requires a special license from the music publisher as does the modification of the lyrics (that's right, Weird Al has to pay big bucks for these songs!). So unless you're positive you'll be flying below the radar, we think you're engaging in some risky behavior.

Monday, July 11, 2011

Can They Use Photos of Our Home in Magazine?

Dear Rich: We are restoring our home in Atlanta and our architect had asked me near the beginning of the restoration to fill out a questionnaire about the experience of working with him. I did so very positively. The relationship has since cooled a little, and recently we became aware of an article published about us and our home in which my responses were modified and used extensively as direct quotes by the writer as if she had talked to us. We had never talked to the writer or knew anything about the article. Many quotes were attributed to my wife who had never seen the questionnaire. The article also included pictures taken of the home from on our property. And, the writer had us quoting someone from the Historical Society saying something that he never said and that we never said he said. The feature ended with a bold-faced paragraph saying, "Look for an an upcoming issue." We do not want another story done by this publication. Do we have legal rights to prevent them from using photos of our home--interiors and exteriors shot from our property--that are taken by the architect?  We assume that the architect instigated the article, so practically we think the best course is to notify him and ask him not to publish any more photos of your home or publish any more statements attributed to you or your wife. We think the letter will work best if it is flat and matter of fact, not harsh, legalish, or argumentative. The prudent response from the architect would be to comply.
The Legal Analysis. In answer to your specific questions, a magazine would need permission from the copyright owner of the photos (the architect, apparently) and would only need a property release for the interior pictures assuming they were taken without the authorization of the homeowners. That may be the case here but it's probably not worth hassling over and it may be difficult to prove without losing money on attorney fees.  Exterior photos of your home taken from public locations can be used for editorial purposes without your consent. Using your quotes without permission is probably a violation of copyright law, unless the architect can demonstrate that you consented or that your consent was implied, or there is a fair use defense.
Ennyway ...  all you really want is for people to behave properly in the future and most of the time, you can accomplish that with a well-written letter. Of course, if this isn't one of those times, then it may be worth having an attorney write them a letter to set things straight.

Friday, July 8, 2011

Can Apple Stop Anyone From Using the Term 'App Store?'

Thursday, July 7, 2011

Can You Own a Community Event?

Dear Rich: I'm on a non-profit board that puts on a race of human powered art machines. The non-profit was formed when “ownership” of the race was tied up in litigation and the artist who started the race asked a group of his friends to find a way to keep the tradition alive. The non-profit was formed, the event name changed and now we have been putting on the race for five years. Further, the non-profit has other fundraisers it does to fund the Memorial Day race. This year the artist’s son claims, as heir to his father’s estate, he “owns” the race and sent a cease and desist letter that we were putting on “his” race illegally. He has not used the old race name in 5 years. We don’t have much money for a legal battle around this, but can find no trademarking of events or races at the USTPO. Battles over who owns festival or event rights are almost always about who owns the name/trademark. (Here's a recent example and here's one from 2010.) It's possible that other issues may arise in these disputes -- for example, contract disputes (if agreements have been made between the parties) or claims of defamation. But in general, if the dispute is about who "owns" the festival, the dispute will come down to who owns the rights to the name and logo. Event names can be registered at the U.S. Patent and Trademark Office (to see examples, visit the USPTO site, choose Search Marks, then Basic Word Mark Search and type in "festival").
What About the Artist's Son's Claims? Because you're using a different name, we're not sure what claims the son may have. The idea of "owning" the race apart from the trademark seems like a weak claim unless there's a breach of an agreement or one party has interfered with a contractual relationship. (What was the result of the litigation?).  If the son is planning to use the same name you've been using for the event, you probably have a superior claim because of your five years of use.
What about the son's five years of nonuse of the trademark? Three years of nonuse of a trademark creates a presumption that the trademark has been abandoned. At least that's the rule for federally registered marks. That's just a presumption however and if the son can prove that during the five years he always intended to resume use, then his rights to the mark will not be considered abandoned.
Takeaway points. You should file a federal registration for your trademark (probably in Class 41). Often the success of an event hinges on the organizer's relationship with the government that issues the permits and the merchants who serves as sponsors. It's possible that if you focus on these relationships and maintain your name rights, you will be able to continue without hassle from others.

Wednesday, July 6, 2011

Crafts Inventory and Taxes

Dear Rich: I have been making crafts for gifts for many years. Over the years I have accumulated much inventory, including several sewing machines, yards of various fabrics and ribbons, etc. I have recently decided to start a business selling on When doing my taxes, how do I claim the existing inventory accumulated over the last 20 years, much of what I will use in my new business? WARNING! Entry may cause drowsiness. Do not read while driving.
Right, you had a question. Short answer: You probably can't count your 20 years of supplies as inventory unless you have incorporated those materials in finished (and unsold) works or works in progress.
The Basic Inventory Rules.  Inventory includes completed but unsold crafts work, raw materials used to create the crafts work, crafts works in process and certain supplies that become part of your crafts work. In other words it's all the stuff you've created that's unsold as well as all of the direct costs to make that stuff. The IRS wants you to calculate your inventory value (or "cost of goods") at the beginning and ending of each tax year. These costs include:
  • the money spent on materials that become an integral part of the finished product, or materials consumed in the manufacturing process and are identified with the crafts goods
  • the money spent on labor associated with each crafts items -- payments for employees, contractors, payroll taxes, etc.
  • indirect costs necessary for production of each item other than direct production costs. (You may not have any of these unless you can calculate things like variable and fixed overhead expenses).
If you don't know how to calculate the direct costs of materials and labor for your goods, there's an explanation in our book for crafts artists as well as the explanation in this IRS circular.
Can you deduct 20-year old ribbon and fabrics? Although we talked about raw materials as part of the inventory, the IRS position seems to be that only finished (or partly finished) merchandise should be included in inventory. According to Code of Federal Reg. 1.471.1, raw materials and supplies should only be included in inventory to the extent that the goods have been acquired for sale or will physically be part of the merchandise intended for sale. So, unless your past purchases are incorporated in finished works or works in progress, they should not be counted as inventory. 
What about sewing machines and other equipment? Sewing machines and other equipment used in production are considered to be long-term assets (assets with a useful life of more than one year). They can be deducted in one year under Section 179, or they can be depreciated.
When tax time arrives ... you may want to consult a tax expert, at least for the first year you calculate inventory. Your beginning inventory for subsequent years will be your ending inventory for the previous year.

Tuesday, July 5, 2011

Using Movie Quotes on T-Shirts

Dear Rich: I read your blog advice about the "No Soup for You" question and you stated that short phrases can't be covered by copyright. So just so I am clear, if I create t-shirts using famous phrases from movies and TV shows, I don't have to worry about a copyright infringement, as long as I don't place an image on the shirt that is connected to the movie or TV show - is that correct? That's kind of close. You probably don't need to worry about copyright claims (although some movie quotes have been protected under copyright). When it comes to merchandise and short phrases we're more concerned about trademark issues (as per our follow-up question about Seinfeld). And as Dear Rich readers know, our real concern is whether the movie company will see your work or care. If we were a betting blog, we'd bet that you'll be fine with your shirts (sans any other movie references).

Friday, July 1, 2011

Can Research Assistant "Borrow" Professor's Ideas?