Sorry for the gap in posts.  I’ve been in the Pacific Northwest watching killer whales.  Although I’m still on vacation, I wanted to quickly answer a question by a reader in the North who wondered:

Why would a Website owner want to require a Website user to agree to a license in a contract regarding copyrighted material?

Isn’t statutory copyright protection enough?

Does a license provide a legal remedy in addition to copyright infringement?

Good questions.  A Website owner may want to require users to agree to a contract that includes a restricted content license because of litigation procedures.

If a Website user copied copyrighted material in violation of the copyright statute and in breach of the licensing terms of the Website’s on-line contract, the Website owner would have at least two causes of action in a lawsuit:  copyright infringement and breach of contract.

Why would a plaintiff want two causes of action in a lawsuit?

The elements of proof, required evidence, and damages are different for copyright infringement and breach of a specific contract.

For a breach of a contract:

• It’s easy to sue for a breach of contract.
• A contract can dictate where the litigation occurs.
• By agreeing to a contract, a user can agree to submit to jurisdiction in a remote court where the Website owner resides.
• A contract can also require attorneys’ fees for the prevailing party in a lawsuit for breach of contract.

In contrast, for litigation for copyright infringement:

• A federal copyright registration is required before a plaintiff can file a lawsuit for copyright infringement.
• Statutory damages and attorneys’ fees are only available if the copyright to the work was registered within 3 months of publication and before infringement.  Many companies don’t register their works in time and statutory remedies are not an option.

Although in the end you usually won’t get more total damages for multiple causes of action (and damages experts are expensive because the calculation can get complicated), multiple causes of action can help a Website owner win its case.

Google won a huge victory last week when a federal judge decided that Google was not liable for copyright infringement perpetrated by its YouTube Users.

In 1996, Viacom, the owner of Paramount Pictures and MTV Networks, filed a $1 billion lawsuit against Google alleging that thousands of videos on YouTube violated its copyrights.

Google fought back asserting that as a service provider it was entitled to the safe harbor protection of the Digital Millennium Copyright Act (“DMCA”) and therefore not liable for copyright violations of YouTube users.  Google asserted that it had acted expeditiously and removed allegedly infringing materials when notified of the specific material by the copyright owner as required by the DMCA.

Viacom asserted that Google was not entitled to the DMCA safe harbor because it knew that material infringing Viacom’s copyrights was posted on YouTube.

The critical issue was whether Google had met the DMCA’s safe harbor requirements:

Did Google’s general knowledge of possible infringement negate  protection?

Courts have been very clear regarding the necessity of strict compliance with the DMCA’s requirements.  For a service provider to qualify for safe harbor protection, the service provider must take a variety of actions including:

• designating an agent with the Copyright Office;
• providing and following a copyright infringement notification/take down procedure; and
• a counter-notification procedure.

In general the DMCA states that “A service provider shall not be liable for monetary relief . . .for infringement of copyright . .if the service provider

(A)(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;”

The judge decided that the phrases above meant more than general knowledge of the prevalence of infringement.  They meant “specific and identifiable infringements of particular individual items.”  In short, Google had a safe harbor.  The burden to identify and notify the service provider of alleged infringement is on the copyright owner.

The bottom line is that service providers don’t have to actively monitor their sites for infringing content.  They may presume user material is not infringing unless notified otherwise.  If they follow the DMCA guidelines and act promptly to take down material alleged to be infringing, they may have protection from claims of big damages.

My old law school friend Jason Mendelson, the Managing Director of the VC fund the Foundry Group, takes issue with a recent claim that “76 percent of startup managers report that venture capital investors consider patents when making funding decisions.”

In his blog Mendelson’sMusings, Jason refutes this stat  and discusses how it has been misreported as indicating that VC’s care about patents.  Jason explains that the real report is only about what entrepreneurs think that VC’s think about patents — as if entrepreneurs really know what VCs think.  Apparently, the report doesn’t have any stats about what VC’s actually think about patents.

From his perspective as a VC, what Jason thinks about software patents is that “the vast majority of the time, they are a deadweight loss on innovation and our economy.”

From my perspective from defending companies against trolls with amazingly absurd patents, I agree that they can be terrible for innovation and defensive litigation costs can be a  drag on a company’s finances.  I think there was a decade when the PTO really blew it and allowed some unsubstantiated, ridiculous software patents.

In my career as an IP attorney,  I’ve also seen where software patents have helped a startup negotiate better deals and gain leverage with a mega-company.  I’ve also had clients who successfully licensed their patents to the wider industry and sold their patents to a mega-company for millions.  Some patents can add tremendous value and some aren’t worth the cost of drafting and filing them.

I look forward to Jason’s future discussion about when he thinks software patents can add value to a company.  Jason’s insight is very valuable to startups who wish to eventually seek VC funding.

Business coach Pam Slim of Escape From Cubicle Nation is hosting an Arizona retreat with productivity coach Charlie Gilkey for entrepreneurs who need to get their business off the ground and get focused.

See liftoffretreat.com for details.  Enrollment closes tonight at midnight.

Pam is an amazing coach who can help get you unstuck and clear about what you need to do to grow your business.  This retreat is an amazing deal!  You get an entire weekend to brainstorm with Pam and Charlie.

(And no she didn’t ask me to promote this.  It is an amazing opportunity that I wanted you to know about.)

Somehow I doubt that many of you really want to learn about the law when you’re starting a business.  You’re probably feeling swamped by the vast amount of information you need to know to get your company off the ground. The sheer number of logistical details and decisions can be overwhelming.

18 Rabbits founder and CEO, Alison Vercruysse has said, “Starting a business is like jumping off a cliff every day.”

Life Coach Susan Hyatt of Ideal Life Design says that “Being an entrepreneur is like jumping into a moving car.”

But learning about intellectual property (“IP”) law can be critical for your startup’s success.

Last year my sister Julie and I started a production company, Willard Peak Productions, Inc.  Our main project was to create a website for teenage girls, lookilulu.com, that profiles inspiring career women.  We grew up on a farm in Utah.  When we were young, we couldn’t see possibilities for ourselves.  With the knowledge we’ve gained over the last twenty years, we wanted to help young women see what they can do—with a little imagination and a lot of hard work.

When we started lookilulu.com, I really thought,  “How hard can it be to do a website?”

Yes, I was very uninformed.  It was incredibly hard.  But because I’m a lawyer, I knew many things we needed to do to set things up right.  Because I’ve spent years doing litigation and I’m married to a corporate lawyer, it was a no-brainer to create a corporate structure.

As a specialist in intellectual property law, I also knew what basic steps we needed to take to own the IP being created for our fledgling company. I was glad I knew how to protect the IP related to our business name, logo and website designs, graphics, trademarks and copyrights.  I also knew steps we could take to minimize the risk of IP infringement.

Although I’ve counseled startups for many years about IP issues, creating a company myself from the ground up gave me a new perspective.  The process reinforced my concerns about the lack of knowledge many entrepreneurs have about intellectual property law.

I started thinking that many entrepreneurs could really use more accessible information about IP law.  Most law blogs are written by lawyers for lawyers.  Even the law blogs targeted to companies are so jargon heavy they are hard if not impossible for non-lawyers to understand.

So I started thinking about writing a legal blog for startups that teaches the basics about intellectual property law and explains some of the major issues in short easily digested chunks.  I also created an Ebook that answers some of the most basic IP law questions and made it downloadable for free.

I wanted entrepreneurs to be aware of the legal dangers they face and understand how they can protect the intellectual property that they work so hard to develop.  Intellectual property law can make a fundamental difference to the value of a startup and its future growth and success.  With a little information you can avoid many mistakes and know what fears are realistic and what fears are unfounded.

Just as I want to help young women have information so they can take the best steps toward a rewarding career, I want to help entrepreneurs have more information about IP law so they can take the best steps to achieve a successful business.

Moreover, many entrepreneurs are women and very, very few women have access to venture capital or legal representation by the big firms with IP law specialists.

I thought a blog would be another avenue to help empower women who are starting companies.  This blog will be full of very useful, educational information for entrepreneurs and small business owners.

Although as an entrepreneur you may be feeling that you can’t quite face learning one more thing to help your business, rest assured that learning IP law will be well worth the effort.  Although it is a complex and convoluted area of the law, I’ll try to make it easy.

Later blog posts will explain the value of IP knowledge in detail.

Also, if you have general questions about IP law or something in a post doesn’t make sense, please send me a message.  I want to help you learn the fundamental information that is most important to know.  However, I can’t answer specific legal questions based on your specific facts or circumstances unless you are already a client.  So please don’t send questions seeking specific legal advice.

I’m not trying to be rude or unhelpful but because I’m a lawyer there a boatload of professional rules that I must follow.  I’ve spent an enormous amount of money, time and energy to get my law degree and licenses and I want to keep them.  So please read the legal disclaimer and terms of use carefully.

Also, if you send me a message, don’t send confidential information.  Nothing you send me is going to be considered or treated as confidential if you are not already a client.

Stay tuned if you want to help your startup and learn more about IP law.