Wednesday, November 30, 2011

Family Named Business Can't Always Use Family Name

Dear Rich: Our family has had a restaurant business since 2003 and recently we got a letter from a large chain asking us to change it because their lawyers say it is too similar to the chain's trademark. I don't know how they found out about us. We're a pretty small operation. Can they really make us change our restaurant's name? We're sorry to report that -- depending on the circumstances -- you may have to change your name. We've written an article on the subject of family names as trademarks so check that out, first. Assuming the chain has been using the name longer than you have, the wisest course is for you to hire a business lawyer to determine your response.
P.S. Speaking of restaurants, here's an adventurous desert we recently ordered at our local seafood shack -- Chocolate ganache wrapped in filo topped off with peanut butter sauce and hot fudge. It was great!

Tuesday, November 29, 2011

Wants to Quote Movie Dialogue in Novel

Dear Rich: I don't see anything in your Getting Permission book on getting permission to quote dialog from films. I assume that the process is similar to getting permission to quote song lyrics, but it would be better if you covered this in detail. I want to quote with attribution some movie dialog in a novel I am writing. Any suggestions? Speaking of film dialogue, we were surprised recently when reading the French classic Pere Goriot to find a line about someone "making him an offer that he cannot refuse." Did Balzac travel to the 20th Century, watch the Godfather, return to the past and copy the movie dialogue for his novel? We guess we'll never know.
Right, you had a question. The rules for using film dialogue in a novel are the same as for all text uses (explained in Chapter 2 of the book). As you're probably aware, there is no fixed amount of words that you can use without permission, although some uses are so minimal as to be considered de minimis (scroll down). The difference with using film dialogue is that it's often difficult to figure who owns the rights and even harder to get permission for the use.
Why is it difficult to get permission for movie dialogue? Generally the studio (or a producer) owns all rights to the movie including the dialogue. But in some cases, screenwriters may retain rights. In other cases, if the movie were based upon a book, the author may retain certain rights. That's the challenge when using one layer from a multi-layered work -- determining who has the right to grant permission. Even if a studio does own the rights to the dialogue, you still have the practical problem of finding the person authorized to grant permission (and convincing that person not to hang up on you).
What's a novelist to do? If you're publishing the book yourself, you're probably less at risk because you won't be indemnifying against infringement. Publishers get uptight about stuff like that and insist on some security in the form of warranties and indemnity. On the other hand, a publisher may be able to assist you with getting rights and permissions from a studio. If you're on your own and you're still concerned about getting chased, consider whether you can make a realistic fair use claim. That is, can you demonstrate that your use of the dialog is transformative -- for example, Woody Allen's use of dialogue from Casablanca in Play It Again, Sam, was transformative (though Allen likely acquired permission for that and the film clips).
Speaking of great movie dialogue ... we're partial to Things Change (Don Ameche's swan song). It's got dialogue -- written by David Mamet and Shel Silverstein -- with some serious staying power.

Monday, November 28, 2011

Is My Publisher a Piracy-Denier?

Dear Rich: I am a writer and my publisher recently sent out an email telling authors not to worry about illegal downloads. It makes me mad to see how easy it is to obtain free copies of my book. How do I tell whether piracy affects book sales? Gee, this is a tough one to answer for a few reasons: (1) Our bodies are still clogged with post-Thanksgiving metabolism-slowing leftovers. (2) Our books have been pirated so we may be too close to the issue to provide a balanced response. (3) When talking about piracy we're never sure which statistics to trust. (4) More importantly, we're not sure whether the statistics even exist currently to answer your question. In general, we don't think anyone really knows the answer, but here are some things to consider:
Using the music industry as a paradigm. One theory about illegal downloads is that the people who download them would not have bought the product in the first place. In other words, no sales are lost. Using that line of thinking, the 95% of international music fans who downloaded an illegal copy of the latest Katy Perry album would never have purchased it. Hmm. Even if that number is inflated by the music industry, it's hard to believe all these Katy Perry fans wouldn't pay for her recordings. Even a small conversion rate would double Katy's sales. Of course, book readers and music lovers are different types of consumers (like they say, we don't need to carry a copy of every book we like in our pocket) so analogizing to the music business may not be proper. But it's also possible that the book industry has not yet reached the same digital precipice (from which the music biz has already fallen).
Does DRM have an effect?  Digital rights management (DRMs) built into all eBook readers probably doesn't have too much effect on piracy (and nor will SOPA, if passed). The train has left the station, so to speak.
What about surging eBook sales? It's true that eBook sales are rising dramatically. But that's a measurement of the popularity of iPad and Kindles and only partially counterbalances the disappearing physical book (and physical bookstores). As digital devices become the choice du jour for readers, piracy will probably have an increasing impact on eBooks (just as the popularity of MP3 players triggered the end for the music biz). More importantly, even if not directly, unauthorized digital downloads will be one of the indirect forces causing legitimate revenue to diminish (see below). 
Where is the book industry headed? The content business is heading away not just from physical products, but from downloads too (both legal and illegal). The new model is to replace individual purchases with subscription/streaming services as exemplified by Spotify, Netflix, and Rdio. Of course, there will still be print books, but for the most part, consumers won't possess individual units of content; they will subscribe to a service that provides a content library. No doubt Amazon and Google will eventually drag us to library subscription models for books (though there are still piracy problems with that as well). But in any case, we may be headed for a world where all downloads, not just illegal downloads are irrelevant when offered a fulltime streaming/subscription model. 
Check's in the mail dept. Alas, all of this digital transition doesn't bode well for author revenues (musicians, take a look at a Spotify accounting statement to see the diminishing profit margin). And that's why, as authors, we admire piracy-deniers like your publisher. We may not know for sure what those diminishing royalty checks mean, but denying that the end is coming allows us to still have a nice day!

Friday, November 25, 2011

Can Photographer Control Photos From Fashion Shoot?

Dear Sir/Madam: I am a freelance photographer and I am also working on an upcoming online fashion magazine. Recently I organized a photo shoot with a few models I have founded via Internet and a designer who agreed for the models to wear his clothes for the photo shoot purposes. The designer refurbishes and sells branded clothes. Everyone agreed to the photo shoot on these terms:
  • Everyone gets the photos for their own usage 
  • I will use the pictures however I want, and also the ones I choose will be featured in the online magazine 
  • No fees charged on anyone including models, designer and myself 
It's a verbal agreement with everyone and not written. It may not have any value in the eyes of law. Now however the designer (the person who allowed us to use his clothes for the shoot) is giving me trouble setting me deadlines and choosing the pictures I can use for the magazine or anywhere else. I want to use the photos that I want to use, the way I want to use them and whenever I want to. He claims it would be illegal if I used the photos anywhere without his permission and supervision. He hasn't got any photos from me yet so he can't use any either for his own purposes. I would like to know whether I am allowed to use the photos that I took that day, the way I want to and without any restrictions. Or would I have to at least mention his name or his shop's name? We haven’t signed any copyright releases etc. Also would I need to get the models release if I want to upload the pictures? I would like to add that the photos will be used for editorial purposes only and non-commercial. We're back with the "Dear Sir/Madam" that starts your letter. What prompted your uncertainty as to gender? Can Rich be used as a woman's name? There is a female equivalent for Richard -- Richelle (and we were excited to see that a Richard and a Richelle recently married). But we're not clear whether a woman writing this column would be addressed as Dear Richelle, or Dear Rich (or perhaps the more endearing Dear Richie). As a further digression, our research unearthed some surprising data regarding the number of serial killers named Richard.*
Right, you had a question. Unless there is a written document evidencing copyright transfer, you, as photographer own copyright in the photos. You control the reproduction and distribution and you're free to choose and reproduce the photos you want for your magazine. If the verbal agreement is enforceable -- that depends whether there is sufficient evidence to prove the terms and conditions -- you would have to abide by those terms, as well. Even if the verbal agreement is valid, it doesn't preclude you from doing what you want -- choosing the photos you wish to use in the magazine. (And you would be obligated to provide copies of the photos to the other parties.)
Do you need to mention the designer? We're not sure why you have to mention the designer or the designer's store, unless you're contractually bound to do so. The designer has no copyright in clothing design unless he's stitched in some unique artwork--for example, he's added intricate needlepoints. In any case, it might be a nice professional touch to credit the designer as fashion readers expect that information.
What about model releases? Releases are needed to head off two types of problems: invasion of privacy (you may be invading the model's privacy, for example, by showing her partially nude); or violation of the right of publicity (you're using the model's image to sell something). Typically, editorial non-commercial uses wouldn't trigger the right of publicity but with Google AdSense and similar Internet schemes, it's difficult these days to tell sometimes whether an image is being used for commercial exploitation.

*Serial killers named Richard: Richard Angelo - The Angel of Death, Richard Biegenwald - The Thrill Killer, Richard Chase - The Vampire of Sacramento, Richard Cottingham - The Torso Killer, Richard Macek - The Mad Biter, Richard Ramirez - The Night Stalker (and speaking of notorious killers, there's also Richard Loeb (of Leopold and Loeb infamy).

Tuesday, November 22, 2011

What is SOPA and Should I Care?

Dear Rich: The web's buzzin about SOPA. Are you going to do a post about it? What's your opinion? The Stop Online Piracy Act (SOPA) comprises two distinct pieces of legislation (one awaiting a vote in the House and the other already passed in the Senate) that will need to be conformed. The legislation would enable the Department of Justice (or private parties) to "blockade" pirate sites outside U.S. jurisdiction by cutting them off from search engine results and AdSense revenue, among other things. The legislation has triggered a battle between content providers -- frustrated that they can't shut down rogue pirate movie, software, ebook, and music sites  outside U.S. jurisdiction -- and content aggregators who are concerned that the broad language in the legislation would remove the safe harbors of the DMCA and make non-pirate sites (such as Yahoo, Flickr and Scribd) liable for infringement. Opponents are also concerned that SOPA will diminish investment, cause revenue losses, create unnecessary legal expenses, and send jobs overseas. (Similar arguments were made in the battle over "patent reform"). As with the DMCA, those who pursue infringers based on misrepresentations are liable for damages and attorney fees.
Will it pass? Surprisingly, for a Congress that can't seem to get traction on crucial national issues, the SOPA legislation has remarkable cross-party support and is expected to pass the House. The president is reportedly in favor of the legislation while vice-president Biden appears to be opposed.  Among those legislators lined up against SOPA are Darrell Issa, Ron Paul, and Nancy Pelosi. (Copyright battles make for strange bedfellows -- remember when Justices Blackmun, Marshall, Powell, and Rehnquist united in their Betamax dissent?)
Cutting off AdSense. Do you wonder why SOPA includes a provision cutting off ad revenue from pirate sites? That's because ad revenue is often the only source of income for the folks who post illegal content. Think about it. How else can they earn money if they're giving away stuff for free?
What's our opinion? Although we are concerned about government injustice and intellectual property (check out this example of stifling innovation), our mission at Dear Rich HQ is to provide practical information that helps readers solve problems. So, we discourage the staff from presenting opinions. Other reasons why we don't have an opinion include:
  • it takes time to come up with a logical well-thought out opinion and we're already pretty busy. 
  • in terms of human evolution, we're convinced our opinion doesn't matter
  • also, we're tired of everybody else's opinions (like they say, if I wanted your opinion, I'd give it you.)
What do we have an opinion about? We think Terrence Malick's Tree of Life would have been better without all that dinosaur stuff (although others differ).

Monday, November 21, 2011

Can We Sell Irish Street Art

Dear Rich: The attached photo was taken in Dublin Ireland. Someone had added a little graffiti and the overall look was pretty cool so we took some photos. It was out on the street, no trespassing involved here. I’m wondering if we would be in the clear to publish a series of these photos to sell as open edition print reproductions? We agree; this is some pretty cool street art. As we've discussed before, art (unlike architecture) that's publicly viewable from the street is protected by the same copyright rules as art that is hanging within a museum. The only exception is that there might be a tendency for judges to be more liberal applying fair use rules. For example, reproduction of this image as one element in a Dublin street scene would probably be fine. But featuring the photo and selling individual prints would likely violate the artist's copyright (we assume the graffiti is not by the same artist and in any case, it is not protectible). We're not experts on Irish copyright law but from what we've read, it seems as if the same basic rules apply in Ireland as in the U.S. (We're also not sure whether the copyright holder is Irish (as Dublin attracts foreign street artists). But in any case, most countries including the U.S. are treaty partners meaning that foreign copyright holders can claim certain rights in the U.S. For all these reasons, resale of this artwork could make you an easy target for an infringement claim.

Friday, November 18, 2011

Examiner Objects to Facebook Game Trademark

Dear Rich: I need to register a trademark, which is the title of a videogame that runs on the Facebook platform. The filing was made under IC041 (Entertainment services, namely, providing on-line computer games), but when I sent over a specimen (screenshots of the game featuring the title) I was told that such a game does not constitute a "service", but rather it constitutes "goods" (video game software), thus I should better restart the filing process under IC009 (Computer game software for use on mobile and cellular phones). Am I facing a hardball attorney or are the USPTO guys right and I should restart the process? We agree with the examiner. You would use Class 009 for registering the name for a game. (You would use 041 if you were registering a website that provides the game-related services, or if you were registering the name of the company that makes the game.) The best way to avoid problems in the future is to look up similar goods and see what classes were used for those marks (or check out our book for app developers). Use the basic Trademark Search and type in the name of a video game to see its classes. For example, scroll down to see the classes sought by the Angry Birds folks.
More places to search. To identify the class for your goods, you can also search the USPTO’s Acceptable Identification of Goods and Services Manual. From the Choose Field drop-down list, pick Class, and then type in a description – for example “video game”—into the Enter Search Terms field. The search results will tell you which class is recommended. Another way to figure out which class your product falls into is to check the Trademark Manual of Examining Procedure (TMEP).

Thursday, November 17, 2011

When is Abandoned Trademark Abandoned?

Dear Rich: I would like to use a trademark that was first used 2/2007 and has been deemed 'abandoned' since 8/2008. On your blog you note that the trademark is deemed abandoned if the owner does not use it for an extended period of time with the intent not to resume use. How can I find out if the owner intends to use it? What did the owner do/not do that caused the trademark to be deemed 'abandoned'? Thank you for your help! And thank you for triggering an ancient memory of watching "Seduced and Abandoned" in the local art theater with my dad. What a great movie -- even though it was a comedy, it was kind of scary, too.
Right, you had a question. There are three types of trademark abandonment:
  • an abandoned trademark -- this refers to the loss of trademark rights due to nonuse and it occurs when there is sufficient evidence that the owner intends to discontinue use of the mark. Under the Lanham Act, a mark registered with the U.S. Patent and Trademark Office is presumed abandoned if it is not used for a continuous period of three years or more.
  • an abandoned trademark application -- this refers to an application that is ditched during the application process.  We're guessing that's what your question is referring to because it fits best with your timeline. If you're wondering why a trademark application has been abandoned, you can do the detective work and find the reasons by checking the TARR status of the mark, or if necessary by reading through the documents you can access for free via the USPTO's TDR (Trademark Document Retrieval). This is accomplished by clicking around and reading the PDFs associated with the applicant's file. By reviewing the documents in the application file you can learn whether the applicant just ran out of steam at the USPTO or whether the  USPTO examiner had a good argument as to why the mark shouldn't be registered. Keep in mind that if an application was abandoned because an examiner objected to registration that could be a strong indicator that you will run into problems with the same mark.
  • an abandoned trademark registration -- this refers to a trademark registration that is canceled, usually because the owner failed to follow certain formalities such as a renewal. Again, you can find the reasons by searching trademark records. The most common reason is that the owner didn't file a statement of continued use, resulting in cancellation. Often it's okay to step in and begin a similar use but you should always check the marketplace to confirm that the previous owner is not still claiming rights even without the registration.
As for determining whether a company abandoned its use of a trademark, you need to do old-fashioned research. Check retail stores, search online, or -- as we used to do back in the day -- call the company and asking whether you can still buy the product or acquire the service.

Wednesday, November 16, 2011

How Long Can Ex-Employer Chase Ex-Employee?

Dear Rich: I stopped working for a small California tech company in 2008 and now I'm working for a competitor. My ex-employer recently found out about my job and is threatening to sue because he says I still have trade secrets and that I will disclose them at my new job. Can he still bring a lawsuit after all this time. Isn't there a time limit? There is a time limit for bringing trade secret claims in California. It's three years from the date the trade secret theft was discovered (or should have been discovered with reasonable diligence). So, depending on when you began working and other factors, your ex-employer can probably still bring the suit. That time limit also may depend on whether the ex-employer and you had a written agreement (which may establish its own time limits on secrecy).
Time limits may not be the main issue. According to your letter, your ex-employer is concerned about a prospective disclosure of secrets, not an actual disclosure. If that's the case, that's probably not going to fly in a California court. California law doesn't support claims based on "inevitable disclosures" by former employees (although an ex-employer may be able to get an injunction for a "threatened disclosure"). Here's more on California trade secret law.

Tuesday, November 15, 2011

Can We Upcycle Band T-Shirts?

Dear Rich: In an online selling venue, we have a thread going with a discussion about upcycling a t-shirt with touring band theme designs on them. One person wants to use these copyrighted shirts to "upcycle" them into another piece of clothing or a hand bag, that they would then offer for sale. Some of us say "no" because it's still a copyrighted image on the shirt. You bought the shirt, not the image. They say since they own the shirt, they can do anything that they want with it. They say that the shirt maker bought the right to use the image, therefore, the copyright owner has already been paid. We had to look up the definition of upcycling and as far as we can tell, it's recycling but with a bigger profit margin. Like, lately we've been capturing the cold water in our shower as the water warms up. If we just dump that water on to our plants, we're recycling, but if we flavored that water, froze it, and sold it as Fair Trade Popsicles, we would be upcycling. (We think lime flavored would be best as it would have a green color.)
Right, you had a question. You should be able to re-use band touring t-shirts in clothing or in a handbag without asking for permission. Copyright law permits the purchaser of a copyrighted work to resell, destroy, or do whatever they want to that work, as long as they don't step on any of the copyright owner's exclusive rights. This principle is known as the first sale doctrine, and that's why people can sell used books, movies, and music on eBay and Amazon. The term "first sale doctrine" comes from the fact that the copyright owner maintains control over a specific copy only until it is first sold. (One exception: If it's a limited edition artwork or fine art work -- for example, signed and numbered photographs created in limited editions of 200 or fewer copies -- you can't destroy it.)
But it's not so simple. The rules are a little different once you start to disassemble or reconstruct the copyrighted object. In one case, for example, it was okay for a company to make baby bedding from a copyright and trademark protected fabric. But there is a conflicting line of cases that makes things a little confusing. In one case, a company purchased a book of prints by the painter Patrick Nagel and cut out the individual images in the book and mounted them in frames for resale. A court of appeals in California held that this practice was an infringement and was not permitted under the first sale doctrine. (Mirage Editions, Inc. v. Albuquerque A.R.T. Co., 856 F.2d 1341 (1988).) (A similar result was reached in Greenwich Workshop Inc. v. Timber Creations, Inc., 932 F.Supp. 1210 (C.D. Cal. 1996).) In a different case, a company purchased note cards, mounted them on tiles, and resold them. A federal court in Illinois determined that this practice was okay. (Lee v. Deck the Walls, Inc., 925 F. Supp. 576 (N.D. Ill. 1996.) (The same result occurred in C.M. Paula Co. v. Logan, 355 F. Supp. 189 (D.C. Texas 1973).) So, under these rulings, a person cannot rip individual images from an art book and resell them in California, but a person can mount individual note cards and resell those in Illinois and Texas. We don't think these rules will affect your activities unless you were to cut up a shirt and take two or more separate images and repurpose them on multiple products. But reusing a single shirt to create a single item of clothing or a handbag should be fine.
Beyond copyright. There are some other rules for repurposed items that contain trademarks or infringe on a band's right of publicity. Most likely these won't be an issue but to be on the safe side, you can avoid any impression that the touring band endorses the shirt by advertising the items as Handbags Made from Upcycled Rolling Stones T-Shirts instead of saying  Rolling Stones Handbags.

Monday, November 14, 2011

Can We Pilfer Celebrity Photos From IMDB?

Marlon Brando and James Baldwin
at 1963 March on Washington
Dear Rich: I wanted to post some photos for a celebrity article at my website. I’ve totally forgotten rules regarding photos. Can I pilfer IMDB and give an attribute to them or do I actually need their permission? Are there any secret public domain photos for celebs you know about? The copyright in celebrity photos is owned by the photographer (or by the agency to whom the photographer has transferred rights). We doubt whether the IMDB owns rights in all the photos it posts. Most likely, it's acquired those rights from the copyright holders. Often large celebrity-styled sites have ongoing 'subscription' deals with the companies that own photo rights such as Getty Images, PR Photos, PictureLux, and Shutterstock.
Operating without clearance. If you work for a website company, you're best off not jeopardizing your job by using unauthorized photos. The price you'll have to pay -- time, threats, lawsuits and payments -- if you're caught will far outweigh the licensing costs. If you're just posting a photo occasionally to your personal blog, you're less likely to get hassled but beware that photo agencies employ various means of tracking digital photo use including digital watermarks and embedded metadata.
Right of publicity. The rules we provide here are for websites where you are using the celebrity photo as a means of illustrating a story about the celebrity -- for example, you're discussing the funny side of Mike Tyson. If you are using the celebrity photo to imply endorsement of your site or to sell a product or service, you'll need the celebrity's permission as well.
Public domain photos. There are some public domain photos of celebrities. Try sites such as Wikimedia and read and observe the terms of the licenses. We're not so sure about so-called public domain photos at other sites -- that is, whether the photos are actually in the public domain. We typed in "public domain celebrity photos" and found mixed results (including pictures of Dwight Eisenhower and Britney Spears -- we don't want to think about the potential mash-up!). Of course photos taken by government employees -- for example, Elvis shaking hands with President Nixon (soon to be a movie) are in the PD. We think that's the case with our photo of Marlon Brando and James Baldwin (above) -- perhaps taken by an FBI agent. (And here's a related video made around the same time).

Friday, November 11, 2011

Can I Get Away With Selling Counterfeit Goods?

Dear Rich: My cousin sells knockoffs from a famous fashion brand. She makes a quite a bit of money with this 'side busines's and she's offered to set me up. The initial investment is a few thousand dollars. I know it's illegal but what I'm trying to find out is the likelihood that I will get in trouble. What are the chances? We can't tell you the chances for getting caught for selling counterfeit goods. That depends on luck, geography, your online presence, whether you have any acquaintances who have a reason to turn you in, whether your supplier gets busted and decides to flip you, or whether you fall for a sting operation. The sad part of the story -- from a business plan POV -- is that the more successful you become, the more likely you will become a target of all this mishigas. We get similar questions occasionally, so we've posted an article on the subject detailing the legal rules.

Thursday, November 10, 2011

What's the "Right" Way to Post Cover Songs on YouTube?

Dear Rich: My band had a nice show at the Freight and Salvage and we'd like to post some YouTube video but all but one of our tunes is a cover song. What's the current custom on that score on YouTube? I've peeked at some stuff on the web about this, but am not getting very clear answers. The whole YouTube ethic seems to be post and ask forgiveness later, but I'd like to just do it right, if there is a "right" way. Remember the good old days when the "right" way to promote a band was to bribe a DJ or the person at Tower Records who reported to Billboard? But what happens now that radio programmers are out of the picture and record stores owners are MIA. Did digital music wreck the whole payola thing? Or is it more of a crowd-sourcing activity now -- like you bribe folks for YouTube views? Or you pay to get "Likes" at Facebook?
Right, you had a question. The short answer is to give up on doing it the "right" way. The proper way to post a video of a cover tune is to obtain a 'sync license' from the owner of the song -- usually a music publisher that owns songwriting rights. The chances of you, as an unsigned artist, accomplishing that task would be about as likely as obtaining John Lennon's tooth. (BTW, a book on celebrity teeth -- Keith Richards call your dentist -- is apparently available in Canada.). It's for that reason everyone including an aspiring Justin Bieber, apparently posts covers without permission. (Note, that all may change if new punishments are adopted.)
We're talking about covers, here ... YouTube does have a means of locating videos that use major label recordings -- for example if you use a Prince song as a soundtrack for your child's dance routine. YouTube seems to possess digital fingerprints for pre-recorded pop tunes because when we posted a video of our commute to Nolo and included a track by everybody's favorite, Rockwell, we received a notice within hours of posting. YouTube had found unauthorized material on our video (and as punishment was going to run ads over our video). YouTube reserves the right to take down our video but in the interim, the company apparently divides the advertising revenue with the rightsholders -- music publishers and record companies. We're pretty sure YouTube doesn't have similar method for detecting cover versions -- that is, when someone else performs a Prince song. Of course, these unauthorized uses could still be located via old-fashioned text searches or spot scanning of videos. And songwriters who discover covers of their material can still issue a DMCA notice to YouTube (although you don't hear much about that practice these days). So, in summary, the 'post now, deal with it later' approach is the default mechanism for covers.
What about Limelight and Harry Fox? Harry Fox and Limelight are companies that provide a means of obtaining a compulsory license -- the right to release CDs and MP3s of cover songs. These licenses do not apply to audio-visual works.

Wednesday, November 9, 2011

Lump Sum or Royalties?

Dear Rich: I'm trying to figure out whether to ask for a lump sum payment or royalties for a deal I am making. Is there some formula for figuring out what to ask for in terms of a lump sum? I've heard from someone that you multiply expected revenue for one year times four. Any help would be appreciated. Congratulations on your pending deal. Money in your mailbox -- what a great way to get paid. Except we guess that nowadays everybody has opted for direct deposit instead. And sadly, with everybody doing direct deposit, it's not so easy to simply drop your red state bank and walk over to the credit union and switch accounts as requested by our friends at Occupy Ocean Beach.
Right, you had a question. The Dear Rich Staff would never recommend one method of payment over the other because (1) if we recommended a lump sum and the licensed product was a much bigger success than you expected, you'd hate us, or alternatively (2)  if we recommended ongoing royalties and the sales were disappointing, you'd hate us. By the way, here's an article that explains the various types of royalties (per use, per item, etc.) and compares royalties to lump sums.
Why do some people prefer a lump sum payment? Without establishing a preference, we can tell you why some people prefer the lump sum. First, the licensor doesn’t have to be concerned with accounting or auditing records. Second, some licensors like the lump sum because they're not sure of the viability of the licensee or the long-term prospects for the product. Third, some licensors prefer lump sum payments for foreign licenses because of currency conversion rates. These rates -- which measure the foreign currency against U.S. currency -- may change dramatically, making your foreign royalty payments less valuable.
Why do some people prefer a royalty? The periodic payment of royalties rewards the licensor who has a successful product. So if it's a hit, you can quickly join the 1%. Getting paid royalties also may result in lower taxes, depending on how they're categorized on your tax return.
License or Assignment. A lump sum payment for a license is different from a lump sum payment for an assignment. A license may be limited in time, for example, for two or three years. Under an assignment, however, you lose ownership of your invention. The tax implications for the lump sum payment may be different for an assignment than for a license, as well.
Formulas for Evaluating Products. There are many formulas for evaluating product value although we've never heard of the "4X" system you describe (and we're wary of applying it). Such formulas are beyond the scope of our lowly blog and we recommend perusing a text such as this one.

Tuesday, November 8, 2011

Should I Give Gag-Givers Credit?

Cartoonist Jimmy Hatlo in a
Lucky Strike ad
Dear Rich: I write and draw a web comic involving a set of recurring characters. Sometimes I run a joke I'm working on by a couple of my friends, to see if the joke comes through clear, and, if not, how could it be improved. However, now everyone I know is starting to tell me their ideas for gags. Their contributions usually consist of either (a) suggesting a basic concept (man falls off horse) or (b) suggesting a change to my fleshed out joke (farmer falls off COW, dies, etc). In both instances, I am still the one laying out the panels, structuring the joke, coming up with the dialogue, drawing and coloring it. Being friends and all, I want to show my appreciation for their help by giving them credit on the individual strip, but I am worried that by putting his/her tag alongside mine, I am giving up sole control of my copyright on that strip. Is that the case? The Dear Rich Staff is wondering about jokes in which people fall off animals. We suppose that's an interesting niche although the idea of a farmer falling off a cow and dying seems sad to us. Maybe it could be funny if it was a zombie farmer, though frankly, we're not sure about all this "funny" zombie stuff. It must be tragic to be a zombie, worse than having dementia or even worse than being trapped on BART next to a woman iPhoning her friend about wedding invitations. Wait, here's a concept for a web comic strip -- a zombie wedding planner. Or did we see that movie?
Right, you had a question.  We doubt that you would need to share copyright with someone who gives you a gag for a comic strip. We think your contributors are providing concepts that are probably unprotectible under copyright because (1) the concepts are ideas, or, (2) the concepts constitute unprotectible short phrases. As we've written before, it's tough to protect gags and jokes. What's protectible is the manner in which you express your comic strip. If, however you are collaborating with someone and going beyond the basic gag idea -- say for example, discussing what the comic panels would consist of -- then you may be expanding into co-authorship and copyright co-ownership. So avoid going beyond a discussion of the basic gag. If you want to feel more secure, and if you're going to solicit ideas online, provide terms and conditions in which the contributor agrees to give up rights when submitting an idea.
A tip o' the Hatlo hat ... As for providing attribution, that's up to you. It certainly worked for cartoonist Jimmy Hatlo who encouraged readers to send in ideas and then gave the contributor a "tip o' the Hatlo hat" attribution.

Monday, November 7, 2011

Wants to Use Historical Photos in Book

Dear Rich, I have photos I want to use for a book I am writing. The photos were given to me by the photographers. As far as I know these photographs were never published. They photos were taken in various years including 1914, 1924, and 1965. The photographers are all now deceased. However, the people who gave me the photos were informed that I was writing a book about local history and were going to use the photos for research. Can I use these photos in my book? Do I need to try to contact the descendants of the photographers in order to get permission or can I just credit the source of the photographs? I also want to use a photo I found in a history book. The photo is a pre 1923 portrait of a local man. The caption for the photo reads “Courtesy of William B. Secrest, Fresno, California.” Secrest is the author of the book and owns the original photograph. Do I need to track down William Secrest or can I use the photo without permission since it is pre 1923? The history book was published in 2002. I would of course appropriately cite the photograph. We think you'll be okay to use all of the photos described, but it gets a little complicated.
The 1914, 1924, and 1965 photos. If the photos were never published and the photographers died before 1941, the works are in the public domain (Here's the official explanation). Otherwise, the unpublished photos will not become public domain until the author has been dead for 70 years. (Based on this rule, the 1965 photo could not be in the public domain.) Even though your one or more of your uses is likely to be unauthorized -- and an infringement --  we think that you will have a strong fair use argument, and we also think that the likelihood that the descendants of the photographer will learn of your use (or care) is slim. A commercial publisher may require that you indemnify the publisher if there is a problem. You may want to consult an attorney at that point.
As for the pre-1923 portrait. If the pre-1923 portrait was first published with authorization before 1923 it's in the public domain and you're free to use it. If it was first published after 1922 but before 1964, the photo is in the public domain if it wasn't renewed (and most were not). If the first publication was in 2002, and the author died before 1941, it is also in the public domain. (See, we told you it was complicated). As for the prolific California historian William B. Secrest, we think -- and we could be wrong -- that he owns the photo and lent it for use in the book. The "courtesy" he has extended is that he provided access to the photographic print. Was there a copyright notice associated with the publication in the 2002 book? That could also be indicative, though not decisive as to the photo's copyright status.

Friday, November 4, 2011

When Minor Children Own Stock in Small Business

Dear Rich: I own a small business. My children and I are stockholders. Since they are minor children, I presume, but am not certain, I can exercise any authority over their stockholder proxy at a corporate meeting. Does Nolo have any books are web links for information on this? This question is way far afield for the Dear Rich Staff. However, we work not far from knowledgeable corporate attorney and ultra-runner, Diana Fitzpatrick, who provided us with a helpful answer.
It all depends on how it's owned. Whether or not the parent can vote the stock held by a minor child depends on how the stock is owned or held by the minor. Minors can't purchase or open brokerage accounts because they can't enter into legally binding contracts until they reach 18 (or whatever the state law is for majority age). But they can own stock that they have received by gift or inheritance and may have all rights, including voting rights, with regard to that stock. If the minor has the voting rights then the minor could give a parent the proxy to vote those shares (provided proxy voting is allowed).
If you're in California ... If you're incorporated in California, take a look at Cal. Corporations Code Sec. 702 (d) which provides that shares standing in the name of a minor may be voted by proxy unless a guardian of the minor's property has been appointed and written notice of such appointment is given to the corporation.
Another possibility. If the stock is held in a custodial account under the Uniform Gifts to Minors Act or there is some other trust or fiduciary account set up, then the custodian or trustee or other fiduciary would have the voting rights for the stock. As you may be aware, parents often give stock to children under the Uniform Gifts to Minors Act. This allows the donor/parent to give the stock to the minor but the stock is held in a custodial account where the custodian (who can be the donor/parent) controls the account until the child reaches the age of majority. A custodian of stock held in accordance with the Act has sole voting authority over the stock held in the account.

Thursday, November 3, 2011

Can We Use 1920s Quotes from New York Times?

Dear Rich Staff Member Is Interviewed
for Saturday Morning Today Show.
Dear Rich: In a book I am writing I have used several lengthy quotes from news articles from the New York Times dated in 1921, 1922, and 1923. Actually, what I am using is the NYT quoting some individuals--I am not actually quoting the NYT, if this constitutes a difference. If published, I doubt that the book will be a commercial blockbuster. Am I protected by 'fair use' laws using material from the NYT that was published before 1923? The Dear Rich Staff chose your question for Thursday because that's the day we get the Nielsen sales numbers from Author Central at Amazon. What a sad day that has become. And because we're so depressed, we look for questions that we think won't take much time to answer. So the short answer to your question would be yes, you can use any authorized pre-1923 publication in the U.S. (because it's in the public domain). The quotation aspect --  that is whether an interviewee's statements become part of the intervier's copyright -- is a more complex subject and we think this article does a great job of summarizing this prickly issue.

Wednesday, November 2, 2011

Honk if You Want to Register Your Bumper Sticker as a Trademark!

Dear Rich: I am in the midst of applying for a trademark and am confused about which category in the trademark manual my item falls.  The item is essentially a slogan (code 045) which is being printed onto bumper stickers (no code found) and also onto baseball caps and hats (code 025). The intent is to expand the list of goods sold that are branded with the slogan. The bumper stickers and caps are the two initial items I will be selling. Which category I should enter on the application? We think you'll have a hard time registering a slogan with the USPTO unless you can demonstrate that the slogan is associated with a product or service -- that is, a product other than caps or bumper stickers. For example, a slogan like the one shown above would be difficult to register, as would variants such as

  • Honk if You Like Cheeses, 
  • Honk if You Would Like to See My Finger, 
  • Honk if You're Going to Run Me Over, 
  • Honk if you Like Prune Tacos (our favorite), 
  • Honk if You Like Peace and Quiet, 
  • Honk if You Are Living a Life of Quiet Desperation, or 
  • Honk if You've Never Seen a Gun Fired From a Moving Vehicle (scary). 
That's because these slogans are considered ornamental (they inspire, entertain, or amuse) or informational (they express a thought). To acquire registration they must create a consumer association with a product or service (for example, Honk if You Sell Car Horns for an applicant that sells car horns).
Honk If You Receive an Objection from A Trademark Examiner. Upon receiving an application for  a slogan, the trademark examiner will probably object on the basis of § 1202.03 or § 1202.04 of Trademark Manual of Examining Procedure or TMEP (excerpted below).

§1202.03 Refusal on Basis of Ornamentation Subject matter that is merely a decorative feature does not identify and distinguish the applicant’s goods and, thus, does not function as a trademark. A decorative feature may include words, designs, slogans, or trade dress. This matter should be refused registration because it is merely ornamentation and, therefore, does not function as a trademark ...
§1202.04 Informational Matter Slogans and other terms that are considered to be merely informational in nature, or to be common laudatory phrases or statements that would ordinarily be used in business or in the particular trade or industry, are not registrable ... 
It's on these basis, for example, that the slogan THINK GREEN was rejected as a trademark because it was merely a statement of environmental awareness. The slogan, HAIR COLOR SO NATURAL ONLY HER HAIRDRESSER KNOWS FOR SURE was registered because consumers associated the slogan with a particular product. The only way to overcome this objection is to show that consumers associate the slogan with your products or services.
Honk if You've Used the Wrong Classification Codes ... Also, you referenced code 045 in your question. Class 045 is for legal services (Honk If You Like Litigation) so we don't assume that's what you meant unless you've come up with a slogan for a law firm (Honk If You Like to Pay For Overpriced Associates).
Honk if You've Tried Copyright Protection. Finally, a bumper sticker slogan cannot be protected under copyright law as copyright does not protect short phrases. A short phrase can be protected in conjunction with an illustration or it may be protected in some cases, if it is taken from a larger well-known work, such as taking a line from a movie.

Tuesday, November 1, 2011

Will NDA With Foreign Company Prevent Theft?

(c) Sasha Stim-Fogel
Dear Rich: I have a patent pending here in the states but I want a Chinese company to manufacture my product. Unfortunately, I don't have any intellectual rights overseas. Will a nondisclosure noncompete agreement keep a foreign company from stealing my idea? Neither a nondisclosure (NDA) or  a noncompete will keep anyone from stealing your idea whether in the U.S. or abroad. Agreements don't prevent wrongdoing, they merely establish the rules in the event wrongdoing occurs. An NDA is no different. For example, your NDA may establish the location of the lawsuit, whether the winner gets attorney fees, whether arbitration is mandatory, or the ease with which you can get an injunction.
Back in the U.S.S.A. NDAs enforced in the U.S. usually have a predictable outcome. But once you leave American jurisdiction, the results of enforcement are not as predictable and the costs of enforcement are far more expensive. That increases the odds that your NDA will be breached and that a foreign manufacturer will duplicate molds, copy packaging and send knockoffs out the backdoor and into countries in which you have no intellectual property rights.
Separating the good from the bad. Most foreign manufacturers rely on their credibility and trustworthiness to keep getting new business. So your first goal is to do your homework and try to figure out which ones are reliable and which ones are opportunists. The resources, below, may help you.
Protecting secret stuff only. Keep in mind that a nondisclosure will only protect against the disclosure of confidential information. Once your patent is published, it is no longer confidential. So the only thing your NDA can actually protect is confidential information regarding manufacture, sales and distribution, and know-how needed to produce and distribute the patented item. A noncompete is typically aimed at preventing ex-workers from competing against you and that's not likely to provide much benefit. However, some provisions, in conjunction with your NDA -- for example, an agreement that the manufacturer will not manufacture or distribute your product without your authorization -- can be crafted to deal with your specific situation. A lawyer's assistance may be required. In summary, get an attorney to make sure the agreement provides the best dispute-resolution procedures.
After you've found the best choice. Your lawyer may include provisions that will help you in a foreign deal. Here are some things to consider.
  • Jurisdiction. The only way to get a foreign manufacturer into a U.S. court—unless the company does substantial business in the States—is to include a provision in the NDA that requires the manufacturer consent to U.S. jurisdiction. This may prove difficult to negotiate (and to enforce), as foreign manufacturers are often hesitant about submitting to the U.S. judicial system. 
  • Choice of law. Every country has laws as to how contracts are interpreted. You would want the NDA to be interpreted according to U.S. law.
  • Arbitration. Arbitration is similar to litigation but with less formality and expense. You’ll usually benefit by agreeing to have disputes arbitrated. Hopefully, the manufacturer will agree to arbitrate the matter in the United States. If not, there are three popular (though expensive) spots for international arbitration: London (the London Court of International Arbitration), Paris (the International Court of Arbitration of the International Chamber of Commerce), and Stockholm (the Arbitration Institute of the Stockholm Chamber of Commerce). Also, if possible, your agreement should award attorneys’ fees to the victor in the arbitration.
Resources. These resources may help you sort out manufacturers in foreign countries:
  •  U.S. Department of Commerce (DOC) and the U.S. Small Business Administration (SBA) are interested in helping the sales of U.S. goods overseas. If an inventor has a track record and the possibility of actually placing a product in the market (or already has a product and is seeking to market it overseas), the DOC and SBA offer assistance. 
  • Check out the Department of Commerce site at the International Trade Association (ITA) or the DOC’s export information
  • National Trade Data Bank has the most extensive and detailed statistical information on trade in specific products and countries. It is not free, but you can enroll for a free guest subscription and try it out. 
  • The Federation of International TradeAssociations (FITA) has a website with many links, leads, and statistics that can be helpful for international businesses.