Benefits of Copyright Registration

If your company’s core products are original works of authorship — like software, websites, video games, music videos, graphics, photographs, musical compositions, cartoons, on-line publications, articles, books, or even automated databases — you may want to get enhanced benefits by filing a formal copyright registration with the Copyright Office.

There are several important reasons to file a federal copyright registration before infringement.  First, registration is necessary to even get to court. Second, if you win, the court may award statutory damages –- from $750 per infringed work to as high as $150,000 for willful infringement — and attorneys’ fees, which alone can be hundreds of thousands of dollars.

This big statutory hammer is very important when you send a cease and desist letter to an infringer.  If an infringer may face paying hundreds of thousands of dollars (or even millions) to the copyright owner pursuant to the statute, they should be more likely to stop infringing and settle out of court.

And the hammer is relatively cheap.

The registration fee for a simple work filed electronically is $35. (Fees vary depending on the type of work and method of filing.)

To get the statutory benefits, however, you must file for copyright registration before infringement or within three months of publication of the work.  If you file late, you will have to prove the amount of actual damages you have suffered because of the infringement and pay all of your own costs and attorneys fees. In some cases, without registration, the costs of enforcement may be too high to justify going to court.

The difference between statutory damages and actual damages can be astronomical and the copyright litigation in the music industry is illustrative.

Really, what are the actual damages from illegally downloading a song? 99 cents?

In one case, however, a jury found that a single mother who willfully downloaded 24 songs on the KaZa’s file sharing network liable for $1.9 million in statutory damages. Now, that’s a big hammer.

For software developers it’s especially important to note that to get the full statutory benefits you need to file registrations for new versions of your work that may be infringed.  For example, it’s not enough that you have a registration on an original version of your software when the work that is actually infringed is a newer version.  A common defense in a software copyright infringement case and a reason for dismissal is that the registration does not cover the software at issue in the lawsuit.  It can be a very, very expensive mistake to fail to file new registrations when you revise or update your work. (See the article Version Control Blues, about Airframe’s System’s legal woes for failure to register the new version of its software).

Of course, new registrations are a hassle when the copyright is for a work that is frequently updated, like software or a website. But it can be well worth the trouble.

Take Time to Review Your IP Strategy and Protection

As I explained in my last post, January is a great time of year to review your IP protection strategies and see if you need to file additional copyright registrations (and trademark registrations and patent applications)!  You may think this is a simple point but you may be amazed at how many companies screw up protection by not reviewing the status of their filings as their startup grows and changes.  All too often they find out too late that another company has beaten them to the PTO and filed a trademark or patent on a key part of their business. Or they lose in court because they screwed up and didn’t get their registrations up to date for new versions.

Filing with the Copyright Office

The Copyright Office has tried to make things simple.  Go to www.copyright.gov for more extensive information.  They have many circulars and brochures explaining what you need to do to file registrations for your specific type of work. Some brochure examples include:

• Copyright Registrations for Computer Programs
• Copyright Registration for Online Works
• Copyright Registrations for Multimedia Works

Registrations require filing out the proper form, paying a fee, and giving the Copyright Office a deposit of the work – a good copy of what you are registering.  And registrations for many works can be done electronically through the electronic Copyright Office (eCO), saving time, money and a trip to the Post Office.

Filing Considerations

There are several things that give people trouble when filing.

Type of Work. First, people tend to be confused and think they can register ideas, concepts, procedures, methods, short phrases, titles, or software program logic or algorithms.  You can’t.  Make sure you are registering a type of work that can be registered like software source code, literary works, photographs, artwork, text, sculpture, choreography, or music.

Publication.  Second, you also need to identify the first date of publication.  Publication of on-line material is confusing, even to the courts, but it basically means when you distribute copies of the work to the public for sale, rental or lease or an offering to others for further distribution or public display.  Just figure out the first date you sold the work or allowed others to freely distribute or download it.

Copyright Claimant or Author. To file a registration you need to be the author or the owner of the copyright, the Copyright Claimant.  A super common mistake for startups is that they don’t own the copyright to the works created for them.  Remember you must have a signed, written assignment agreement with the proper language from the author of the work – like the logo designer or software developer – before you can register the copyright for the work.  You must also identify all authors of the work even if you are the owner. You must also own all of the rights to the parts of the work you are registering.

Don’t get tripped up when they ask if the work is a “made for hire.”  Unless you have a contract specifying the work as a “work made for hire” or the author is your employee, the made for hire doctrine does not apply.  See related posts.

Deposit. Third, sometimes the deposit requirement trips people up because they don’t know what to deposit or they don’t want to give a deposit.  For example, software is special and the filing is frequently screwed up.  This is why you need to read the circulars carefully and follow the directions.  Generally, for a software deposit of a program with more than 50 pages of source code, you can file the first and last 25 pages of a printout of the source code, which can uploaded electronically in PDF format.

In your software source code deposit, you can black out trade secrets and vary what you file.  But of course, you need to be able to identify a trade secret to block it out.

Ask yourself:   Are there any special sections of the source code for a cool features you want to keep secret because it gives your company a competitive advantage over other programmers who don’t know the code?  Black out those sections with a magic marker.

If you unwittingly disclose a trade secret, you lose legal trade secret protection.  Because some developer’s don’t want anyone to have any of the source code and they choose to forgo statutory benefits of an early filing or file object code.

Short on-line works can be uploaded in the electronic system very simply.  Long on-line works need to be sent in on a CD-ROM with representative paper copies and the length required varies.  Again the Copyright Office has brochures trying to explain what you need to do.

Make sure you use an acceptable file type of electronic submissions like .jpeg or .pdf or logos or art; .wav or .mp3 for audio files; and .pdf for text and .ppt for presentations.  The Copyright Office has a list.  The wrong file format is a common trip up. If you can’t upload the file, check the file format.

Taking the time to file copyright registrations can give your little company a big statutory hammer and help protect its valuable works.  Just remember to update your filings, especially in the new year.

As an IP attorney who has conducted due diligence for VCs, Angels, and acquiring companies, I’m wondering:

Is your startup ready for due diligence?

Do you even know what that means?

Let me explain what IP due diligence is and why your preparation today is important.

If you are very fortunate and a savvy investor or company wants to invest in or buy your company, your startup will likely be subject to a process called “due diligence.” This means that one or more attorneys will carefully examine your IP and company records — its contracts, licenses, assignments, and IP filings.  They will ask a lot of questions about what you have done in the past and they will judge your credibility and IP knowledge.

The attorneys will be trying to find out what you have done right and what you have done wrong. They will be trying to find potential liability and risks for the investors.

Don’t kid yourself.  It is highly likely that the attorneys will find where you have screwed up.

Importantly, the attorneys will be ascertaining whether your startup owns the IP it says it does or whether it has failed to do what is necessary to nail the IP to the company.

• Do you have proper signed, written IP assignment agreements with all founders, key contractors, and employees that transfer all IP to the company?
• Have you used cheap, sketchy foreign contractors to create your key technology with self drafted contracts?
• Do you really have the right to use the IP you say you do or are you missing a critical license from a university or consultant?
• Are former employers of the founders threatening to sue for trade secret misappropriation and ownership of the key technology?

These are just a few of the issues the attorneys will examine.

If the attorneys find problems, like your startup doesn’t own the IP or it’s at high risk for potential liability, your deal may be derailed.

Sometimes the problems can be fixed and sometimes they can’t.

Moreover, it can be a huge headache for you to try and track down what you are missing, like IP assignments from a departed founder or stray licenses to part of your code. For example, if you don’t know who created your software code or where it came from, you can be in big trouble if the code with the questionable genealogy is the foundation for your business. Or if you have an offer for a million dollars for your great website, your deal may collapse because your site is loaded with infringing material and you only have weak implied licenses to the content.

Make sure you do what you need to do to ensure that your startup owns it’s IP or has proper licenses–NOW. It may be simple to do today and impossible tomorrow.

You want to be prepared for IP due diligence and not delay or derail your future deals.

Jill Hubbard Bowman is an intellectual property attorney who helps startups do things right.

Related posts:

Analyzing the Risk: Will My Current Employer Claim Rights to my Startup’s IP

Does Your Startup Own the IP Created by the Founders

Who Owns the IP Rights to Custom Software?

How to Avoid Trademark Infringement When Selecting Business or Product Names

One of the biggest, most frequent mistakes I see as an intellectual property attorney is a startups’s lack of ownership to all of the exclusive rights to the intellectual property created for it.

One of the most damaging omissions is not taking the proper steps to ensure the company owns all of the rights to the IP created by all founders.

You should all sign the IP assignment agreements at the very beginning when everyone is committed to the company’s success.

If your company does not own the rights to the founders’ work, a founder may walk off and take their IP rights with them. This may leave the company in a precarious position if the founder’s IP is central to the company’s key technology.

For the company to own all of the IP rights, all founders must sign an IP assignment agreement that transfers the IP to the company.

And the contract must have a provision that sweeps back and captures work done before incorporation.

Most standard form agreements don’t have this provision. It is special to the needs of startups. If a corporate attorney gives you the IP assignment forms, make sure you ask about this type of retro-provision and get it included in the agreements signed by the founders. Also, beware of do-it-yourself contracts drafted by non-lawyers. They usually don’t have the proper “magic” legal language that transfers the IP to the company despite the attempts to do so.

If you don’t have a written assignment agreement that sweeps back and captures the IP created before and after incorporation, your company won’t own all of the IP rights of the founders.

Lack of proper contracts may have very serious consequences.

If the departing founder created the work on his own before incorporation or when he was not a company employee, he may own all of the IP rights to his work. And when he walks out the company may be left with shallow arguments about fiduciary duties and his obligation to transfer the IP back.

Worse yet, the departing founder may start a new company in competition with the old company and transfer his IP rights to the new company.  Leaving the prior partners with a worthless, empty shell of a company.

Reports say this is exactly what Mark Zukerberg did with Facebook.  The original Facebook company was incorporated in Florida but Mark did not assign the IP rights to the Facebook software to the first company.  And after Mark had a falling out with his partner Eduardo Saverin, Mark hired a real startup lawyer, incorporated Facebook in Delaware (like a savvy startup would do), and assigned the IP rights for the software to the new company.

The resulting lawsuit was eventually settled. But I bet the legal bills were huge.

Similarly, if the work of the founders was a joint work, and the remaining partners assign their rights, the company may have rights to exploit the work. But the rights won’t be exclusive.  The departing founder may exploit the work too, without any obligation to make an accounting or pay the other creators. This scenario makes most investors run scared.

Do your startup a favor. Get all founders to sign a decent contract drafted by a professional that transfers all IP rights to your company. And do it before the founders walk out the door.

Jill Hubbard Bowman is an intellectual property attorney who helps startup companies own their IP.

Savvy investors hire lawyers to conduct IP due diligence before investing in a software startup for a very good reason:

All too often the startup does not own the exclusive IP rights to its software!

Usually the startup doesn’t own the IP rights to its software because of carelessness, a cavalier attitude toward contracts, and a basic misunderstanding about the law.

Many parts of IP law are counterintuitive and defy what people consider “common sense.”

It’s important for startup founders to learn a little about IP law to protect their hard work and investment and keep them out of legal trouble.

WARNING:  If your startup does not own the copyright to its software or have a proper license from the developers who created it allowing the startup to sublicense the software and make derivative works, the startup may be committing copyright infringement when it copies or modifies the software and sublicenses it to others.

And the startup’s customers may be committing copyright infringement too.

Ignorance of the law is not an excuse that will get you off the legal hook.

Sometimes the founders just don’t care. They know they are playing fast and loose with IP ownership of the startup’s alleged software.  But they don’t want to find or pay for proper contracts and do things right. In these cases, the startup’s licensing campaigns, contract warranties to other companies about IP ownership, and sale of stock in the company with a valuation based on the value of the software, simply smacks of fraud.

Frequent sad scenarios where the startup does not own the IP rights include the following:

• The founders don’t sign IP assignment agreements that capture the IP they created before incorporation and transfer it to the company.  A founder may walk off and assign their IP to another company, like Facebook’s Mark Zuckerberg did. Of course he got sued.

• The startup thinks that because  it paid for the software’s creation and had an NDA with the developers they own the IP rights.

Wrong! It doesn’t matter that the startup paid for the creation of the software. Payment doesn’t transfer IP rights.

Without a proper contract assigning the IP rights to the startup that is signed by the developers, the startup usually has nothing more than a revocable, implied license, which is almost worthless.

• The startup hires a software development company that uses independent contractors who have not assigned their IP rights to the software development company. The development company can’t pass through IP rights they don’t own to the startup. The startup does not own the rights.

• The startup and an independent developer sign a contract but the contract does not have the correct language transferring the IP rights to the startup. The developer retains the IP rights.

• An entrepreneur incorporates a new startup  to sell IP created by her former company.  Without proper IP transfer or license agreements, the new startup does not own or have the proper rights to agree to contractual IP warranties with the new company’s software customers. It’s another implied license scenario.

In the circumstances above, no smart company would pay money for a license to the startup’s alleged software or buy it as an asset.

The moral of the stories is the startup must have proper written contracts signed by all software developers.

The contract must have proper IP transfer language (not simply a statement that the job is a work for hire) and be physically signed by all developers.

IP assignment contracts preserve the value of the startup’s software asset and help avoid legal liability for infringement and fraud.

Jill Hubbard Bowman is an intellectual property attorney who helps companies own the rights to the software created for it.

For related posts explaining copyright law see the following:

• Who owns the rights to custom software?
• How to destroy the value of your software
• Critical legal issues for your website

For Happy Business Marriage Part 1: The Background Check

Although the Secret Third-party Infiltrator is a huge threat, the individuals to a collaboration have several other things to iron out before dancing through the daisies hand in hand.  To review – under both the patent and the copyright laws:

If there is more than one inventor or creator – each inventor or creator owns an equal and undivided interest in the whole invention or creation.  This means that each of the co-inventors or co-creators can exercise any of the rights that patents or copyrights bestow. 

More importantly, each of the co-inventors or co-creators may exploit those rights without the consent of and without sharing the profits to the other co-inventors or co-creators!

Therefore, prudent collaborators iron out their relationship ahead of time and address, in writing, such issues as:

1. How are we going to protect the Intellectual Property in the Work we create?
   • If you are going to seek patent or copyright protection for the product of the collaboration, it is important to get everyone on the same page.  There will be expenses involved, but more importantly there will be duties involved – for example, you have to agree ahead of time to keep good notes and not publish or otherwise disclose the invention before a patent application is on file.
   • Case in point – three fantastic scientists, each from a different continent, get together at a Research Institution to collaborate for a few weeks.  They create an amazing application that allows doctors to examine and diagnose patients remotely.  When the collaboration party is over, each of the collaborators goes back to her home country.  One of them submits an invention disclosure to the Research Institution.  One of them just goes back to playing the guitar on her porch in north Georgia.  However, before the other two have even stepped off the airplane, the third collaborator has fully disclosed the invention on her blog.  While the Research Institution would like to protect and commercialize the resulting product (and shoot some money back to the three collaborators) the publication has destroyed novelty in several countries, which prevents patent protection in those countries
2. How are we going to exploit the work that we create?  Are we going to exploit jointly or are we all going to go our separate ways and exploit it in competition with one another?
   • Unless the collaborators have an advanced agreement, each of them can exploit the entire work (regardless of their respective contribution to the work) in competition with the others.
   • It is important agree in advance that, for example, all of the collaborators must agree on how the invention is exploited.  This type of agreement give confidence to potential investors that a “wild man” co-inventor won’t go out selling the invention to competitors, thereby destroying it’s valuHow are we going to split the profits from the collaboration?
3. In the absence of an agreement, there is no duty to split profits. If you are a co-inventor with a Behemoth due to a collaborator’s employment agreement – Behemoth has no duty to give you a cut of its profits.

These are just a few considerations to be aware of when you are beginning your collaborative relationship.  There are many others.

The take home message is to get a written agreement while you are still in love, don’t wait until the million dollar baby is born and you are fighting over who gets the arms and who gets the legs.  The patent and copyright laws won’t be as generous as King Solomon – they won’t split the baby in equal parts.  Rather, its every collaborator for herself – may the best exploiter win!

Heather N. Schafer is an intellectual property attorney who hates to break bad news to inventors with soured co-inventor relationships.

The creative endeavor is one of the most beautiful relationships that two or more people can enter into together.  Creative ventures thrive on collaboration and there is no law against how many can join the venture.  However, it is important to know a sobering effect of joint works and inventions under both the patent and the copyright laws:

If there is more than one inventor or creator – each inventor or creator owns an equal and undivided interest in the whole invention or creation.

This means that each of the co-inventors or co-creators can exercise any of the rights that patents or copyrights bestow (e.g., making, using, selling, and importing patentable inventions and reproducing, distributing, performing, and making derivative works of copyrightable inventions).

More importantly, each of the co-inventors or co-creators may exploit those rights without the consent of and without sharing the profits to the other co-inventors or co-creators!

Therefore, in the honeymoon bliss that occurs at the genesis of a creative project, it is important to get a few things straight up front.  Such as:

For each party to the collaboration – what kind of contracts might we have entered that would give a third party ownership interest in our creations, be they patentable or copyrightable?

1. Think – employment agreements, independent contractor agreements, our spouse (especially if one party has a pending divorce), University policies (if the parties are graduate students or faculty).  We can refer to these as STI’s (Secret Third-party Interests).
2. If one of your collaborators is subject to, say an employment agreement or University IP policy, all of a sudden your database expert, Jane, is no longer at the table – instead you are a co-owner with her Behemoth employer or her University.  These entities may have very different ideas about how to exploit the work and may make exploitation of the work complicated if not impossible.
3. Case in point – two engineers get together to work out a novel method of cleaning up oil spills.  Each engineer works for a different company.  One works for a small local company that provides the skilled ground crew to clean up the oil spill.  The other engineer works for an international Behemoth company that manufacturers oil remediation equipment.  The engineers, being at the bottom of the totem pole, envision leaving their companies and starting their own venture around the method – one in which they merely buy equipment from the Behemoth and then set out to save the world and receive 100% of the market share.  However, Behemoth has a different idea – it owns the rights to the invention through its employee agreement with the co-inventor engineer.  Even though the Behemoth cannot stop the small co-inventor from practicing the invention, it can practice the resulting invention in competition with the small co-inventor.  With its international distributors everywhere on earth, it quickly dominates the market for the method and leaves the two inventing engineers empty handed.

The importance of a Background Check (firmly scrutinizing your future collaborator’s existing agreements to identify STI’s) is lost on many in the first blush of love.  The important problems that can be raised by unrevealed third party interests will be further explored in the next post.

Until then – the take home message is to (1) keep copies of your contracts and policies, (2) if you don’t have copies, go ask for them, (3) ask to see the paperwork showing that your collaborators are clean of STI’s before things get hot and heavy.

Heather N. Schafer is an intellectual property attorney who helps entrepreneurs keep their IP interests straight.

The surprised and dejected look on clients’ faces when we tell them their invention is no longer eligible for patent protection is not one a patent attorney likes to experience.  The look morphs between a huge exhale to fuming red face with fists pounding the table and screams of “This can not be so, you must be wrong!”  Each time I see this scene I want to rent a blimp and have it travel the skies streaming information about the Top Five Ways to Blow Possible Patent Protection.  Since I cannot afford a blimp, here it is, plain and simple.

Here are the Top Five Ways to Blow Patent Protection:

1. Not knowing that U.S. and foreign patent systems have “statutory bars” to patenting.

A “statutory bar” is a rule that says – if your invention is already “public” you cannot have a patent for it.  In the U.S., if the invention is public for one year before you file your patent application – your invention is disqualified from patent protection.  In many countries, the very minute that your invention becomes public – your invention is disqualified.  The next few points illuminate the nature of “public.”

2.           Before filing a patent application – publishing a journal article, magazine article, or giving a talk at a conference.

Academic inventors and companies both make this mistake.  They publish details about their invention in an academic or trade journal before filing a patent application.  Prior publications that predate the application by more than one year destroy novelty and render the invention unpatentable in the U.S. In many foreign countries, the inventor loses patent rights immediately, the moment the article is published or the invention is discussed or demonstrated at a public event.  It doesn’t even matter if no one read the article or if not a soul showed up to your talk!

3.         Before filing a patent application – offering to sell the invention to someone.

Offering to sell the invention before filing a patent application is a common mistake.  Inventors need money to get their invention off the ground, and they may try to find someone to “buy the idea” or they may make a few models and sell them on eBay to test the market.  Once you have offered to sell the invention, you have one year to file a patent application in the U.S.  In many foreign countries, you immediately lose the right to file.

4.         Before filing a patent application – publicly using the invention.

When you have invented a cool new device, of course you want to show it off, but the minute you pull it out during a house party, show it at your aunt’s wedding, send it to class with your kid for show and tell, or make a YouTube infomercial – the clock starts ticking.  One year to file a U.S. application.  Many foreign countries – rights lost immediately!

5.         Before filing the patent application – advertising and launching the product on the Internet.

This category is redundant, but too many times patentability is blown when the patent examiners find material on a company’s website that predates the filing date by more than one year.  If you haven’t filed a patent application, you should NOT launch your invention online.  You should not post pictures of it (if it is tangible), or descriptions of it, or video demos, or articles about it; you should not blog about it (in any descriptive manner); take pre-orders; or anything else that publicly exposes your invention.  If you are launching a beta web application, you should first talk to your patent attorney about how to ensure you do not destroy novelty.

At the end of the day, some people do “do it right.”  Recently, I went to visit one of our new clients.  The clients are a family start up, a mother, father, and son who invented a novel device.  The device is over 5 feet tall when fully assembled.  The family worked on the device in their basement, and each night they completely disassembled it, put it in a brown box, and stored it under their bed.  They didn’t tell a soul – they didn’t even show it to their daughter who lived across the street!  They read somewhere (thank goodness) that public disclosure was a bar to patentability.  Once the patent was on file, they threw a huge party – invited the whole neighborhood – and got lots of great YouTube footage.

As much as we hate to see the sadness when our clients do it wrong, we love the joy when they do it right.  If you have an invention you want to build a future on, file your patent before you tell people about it, use it outside, sell it, offer to sell it, or publish it anywhere

If you have an invention you want to build a future on, file your patent before you tell people about it, use it outside, sell it, offer to sell it, or publish it anywhere.

Everyday we see entrepreneurs struggling to prioritize time, money and resources. Unfortunately, many postpone dealing with complex, icky legal issues.  And few have a strategic IP plan.

A lack of legal strategy, however, can cost your company big bucks down the road and may even obliterate it.

Picking the wrong type of legal entity for investment or screwing up your securities can be expensive to fix. Although it may slow down funding and cost you a chunk of cash for legal fees, you can usually clean up the mess later.

Screwing up your IP, however, can devastate the value of your company forever.  It may be difficult if not impossible to repair the damage.  For example, incorporating code that legally belongs to your current or former employer can make you and your startup liable for trade secret misappropriation claims and copyright infringement claims.  Your employer may claim it owns all of the IP  built on top of the old code. It is kind of like fruit of the forbidden tree. You may lose ownership of all of the IP of your key technology.

Moreover, failure to make sure your brand doesn’t infringe another’s can cost you dearly when you have to start over from scratch with a new name.

Disclosing an invention prior to filing a patent application can prevent you from obtaining foreign legal rights.

We’ve also seen startups delay getting critical IP assignment documents in place and spend over a hundred thousand dollars for development of code that they don’t own the IP rights to.  And these are just a few examples of the problems startups face when they delay dealing with legal issues.

It pays to think about IP law early and develop a strategic IP plan.

The next few posts will discuss the first steps.

Jill Hubbard Bowman is an intellectual property lawyer who helps startups increase the value of their company with the strategic use of IP.

A repeating theme on iplawforstartups.com revolves around the question: “Does my company have intellectual property?”

Our resounding answer is always, “Yes!”  Not only does every company we can possibly imagine have intellectual property, but often, intellectual property is the core corporate asset – the goodwill of the brand, a patented technology, copyrighted content, or valuable tradesecrets.

A savvy tattoo artist beautifully illustrates our mantra:

“Your company does have IP and it’s important to protect it.”

My friends tell me I am quite an amateur; I’ve only seen The Hangover one time.  The rest of the free world has been anxiously awaiting the opening of The Hangover Part II, to bask again in fresh hilarity and genius one-liners.  A savvy tattoo artist almost successfully put the breaks on our National Joy over Mike Tyson’s fabulous face tattoo! As we have all seen on the billboards, movie trailers, and movie posters, Stu – who woke up married to a gorgeous stripper named Jade in The Hangover – wakes up in The Hangover Part II with Mike Tyson’s face tattoo on his face!

Hilarious, correct? Not for Warner Brothers. Little did they know that the tattoo artist had taken steps to protect his intellectual property rights in the tattoo.  He sued Warner Brothers in federal court for copyright infringement and attempted to stop the release of The Hangover Part II. Here is a link to the official complaint with photos of the tattoos. The judge denied the motion for preliminary injunction that would have stopped the release of the movie because the harm would have been too great for Warner Brothers and the movie theaters.  Warner Brothers had already spent $80 million dollars to advertise the movie for Memorial Day weekend.  The judge, however, found that the tattoo artist was likely to succeed on the merits of the case as it goes forward in court.

The tattoo artist, S. Victor Whitmill, did several things correctly to protect his intellectual property rights:

• He recognized that he had intellectual property – a tattoo is an original work that is fixed in a tangible medium of expression. In this case, the tangible medium was Mike Tyson’s face.
• He recognized that his intellectual property was an important asset that he should protect.
• He identified the appropriate route of protection – a copyright.
• He used contracts to make sure the rights to his work were clean and clear – Tyson received the limited right to display the tattoo on his body – Victor retained all other rights in the tattoo.  In otherwords, Tyson received only the limited right to display the tattoo but Victor retained the broader more important rights to authorize copies, create derivative works, and to sublicense the work to others.

Victor did not register his copyright with the U.S. Copyright Office until April 2011, just before filing suit.  In order for Victor to assert his rights in the Tyson Tattoo, Victor had to have a Certificate of Registration.  Victor waited until the last minute to do this, which increases his litigation costs and increases his burden in litigation (he will only be able to recover the damages he can prove).  If he had registered his tattoo design with the Copyright Office within three months of applying the design to Tyson’s face – Victor would have been able to recover statutory damages, attorneys fees, and other remedies regardless of the amount of actual damage he could prove.

Therefore, all of our tattoo and creative-work startup friends out there (and there are some!) take note of the following lessons from The Hangover II lawsuit:

• Identify your creative works that may be protected by intellectual property law.
• Register your work with the Copyright Office.  IDEALLY register your work within the first 3 months of publication – for example:  You tattoo me on June 1, 2011 – you register your work BEFORE September 1, 2011.  Registering your work will make you eligible for statutory damages and attorneys fees if there is infringement.
• Have CLEAR CONCISE contracts with your client.  The contract should address:
  • Who owns the Copyrights in the work – you or the client?  (In the Tyson case – Victor the tattoo artist retained the copyright.)
  • The rights granted to each party;  (In this case, Tyson had the limited right to display the tattoo, Victor retained all other rights.)
  • Both parties should agree in writing that the amount the client paid for the rights received was fair and adequate.

And Finally, What happens in Vegas stays in Vegas, except for . . . tattoos! They will come back with you!

Heather N. Schafer is a tattooed  IP attorney who helps entrepreneurs protect their intellectual property.

Copyright law protects websites and their elements including creative graphics, logos, design elements, photos, advertising copy, blog posts, videos, music and the underlying software.

Copyright law does not protect short phrases, tag lines, or business and domain names.  Trademark law may protect those elements.  (See the Trademark category for posts on the subject.)  Copyright law also does not protect the ideas on your website.  Although patents may protect business methods involving websites, underlying, exposed ideas have no legal protection.

Copyright protection is automatic when the creative work is created.  Ownership of the copyright vests in the author of the work unless the author is an employee creating the work within the scope of her duties or there is a written agreement that transfers copyright ownership.

1.  Avoiding Copyright Infringement

Most critically for website owners, you should make sure that you are not infringing a third party’s copyright.

Ask yourself:

Do I have permission to use each and every element of my website?

If you don’t have the right or permission to use the work on your site, you may be infringing someone’s copyright.  And you may get a demand for damages or you may get sued.

You can use the work on your site if you created the work yourself or if you have the following:

• a license for a photo from a stock site
• a license for music or video that allows the use
• a website design agreement that transfer the copyright to your company
• a logo design agreement that transfers the copyright to your company
• a software license to the foundation for your site
• a license from a content creator in your website’s Terms of Use

Oral permission to use a work gives you a limited license and sometimes you may have an implied license if the work was created with the intention that you use it on your website.  This type of permission is shaky and may be revocable.

If you had someone else create your website, you must still make sure that you have permission to use every element of the site that the designer incorporated.  Did the designer get a proper license that is transferable to you?  If they got a license, get a copy.  If not, you may be infringing.

It is not a defense to infringement that your website designer put the photo or music or text on your site.

If you own the site, you are liable for copyright infringement that happens on your site!  As a precaution, I personally license all elements that are used on my sites.  The designer simply gives me the stock number and I get a direct license from the licensor.

If you allow others to freely post content on your website, WATCH OUT.   Even if your website is only a passive conduit for content, you may be liable for indirect infringement.  (See our next post on how Internet Service Providers can get a safe harbor under the DMCA.)

Importantly, if you ever want to sell you site, make sure you have solid copyright permission for every element in the form of a license or copyright assignment agreement. You want to make sure that your website can survive a due diligence examination by an IP attorney.  They will look very closely at copyright issues.  A lack of proper copyright licenses or assignments can stall or kill your deal.

2.  Protecting Your Website

To protect your website, there are several things you can do.

First, putting a copyright notice on your website is not required for protection but it is a good idea to prevent someone from claiming they are innocent rather than willful infringers.

Second, you may register your website with the Copyright Office.  A federal registration has many benefits including access to the courts, statutory damages and attorneys’ fees if registered before infringement.   (This is why you should be extremely careful not to infringe a registered work.  Beware, many professional photos are registered!)  Because most websites are dynamic and change frequently, however, registration can be tricky.  Your website registration will have to be updated periodically to get full protection.  See Copyright.gov for more information about registering a work.

Jill Hubbard Bowman is an IP attorney who helps emerging growth companies increase the value of their companies through strategic use of intellectual property.