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Welcome to Episode 2 of the “Law & Business” podcast: An Introduction to Copyrights.
In this edition, I talk about what a copyright is, what rights a copyright owner has, and some thoughts for businesses that create works that fall under copyright law.
It is a short and simplistic review of copyright law. If you have any questions, please send me an e-mail at anthony@vernalaw.com.
A lightly-edited transcript of the podcast episode:
Hi there. Welcome to the Law and Business podcast. This is officially episode 2. I’m Anthony Verna. I’m the Managing Partner at Verna Law, P.C.. You can visit the Law & Business podcast website at vernalaw.com and you can contact me with any questions at anthony@vernalaw.com.
Thanks very much for joining us and this is going to be one of those episodes where I’m talking all the time. I have plenty of guests coming up in upcoming episodes. I’ve been asked to talk about copyright law by a few listeners and friends as it is a big part of our practice, which focuses on trademark and copyright advertising and promotion law. I spoke earlier today to somebody with some copyright questions and I look to pass those on to you. But before I do, I’m going to define what copyright law is and it’s I know a little confusing for a lot of people, but a copyright law effectively protects works of art and it’s a right that an author or composer or writer or artist has and it allows that artist or author, I mean, I’m just going to stick to the word author because that’s what we do in copyright law.
It allows the author to take that work that falls under copyright law and make copies and sell copies and publicly perform copies of that work. It allows that author to receive royalties for the licensing that work when it appears in other forms. So, from that particular standpoint, copyright law is very powerful, especially for a business that owns copyrights and works in copyrights. Some of the articles that fall under copyright law are literary works and in today’s world, computer programs are defined as literary works, musical works, dramatic works, and that includes any music that’s in a dramatic work. Pantomimes, choreographic works, pictorial graphic sculptural works of visual arts, motion pictures, and other audio-visual works. Any sound recordings, and, by the way, the musical work is separate from the sound recording itself. There is a separate copyright in any sound recording as there is in the content of the sound recording.
Architectural works also count as works with copyrights, but it’s a little different. So, the person who asked me a copyright infringement question, it really was an infringement question, is an author and the author said, “I sell my book. And generally, I like to say, you know, I don’t have a problem if there’s a site out there that has taken my work and is giving it away because it creates other avenues of revenue for me. It creates more eyeballs, it creates more fans, it allows other work to be sold.” and that’s the wonderful, wonderful flexibility of copyright law. Enforcing it doesn’t really affect your, excuse me, not enforcing. it doesn’t really affect your business plan. You can choose to ignore any infringement. Now, I will say, I don’t particularly like the idea of ignoring infringement. If your business plan is to give away copies or to allow other mediums or other media, then it should be released under what’s called a creative common license.
The traditional copyright law says the author/ copyright owner, because they could be different, and I’ll explain that in a bit, has these rights and anybody who does not have written permission to sell copies, distribute copies, etc. has no rights whatsoever and is infringing. To look a little bit aside from the infringer is effectively what’s called a Creative Commons license. And that is if the person who traditionally would be infringing is not making money off that infringement, then we’ll look aside. One of the reasons we traditionally do not do that is because harming the market for the work is one of the effects of copyright infringement. And if two sources are selling the same product except one is not really selling it, one is giving it away, what is the effect of the proper channels of sale? One would think that it would harm that particular proper channel of sale and that sales would go down and that the author would not make any money whatsoever. So, from this particular standpoint, I actually don’t think it’s a good idea practically to let that go.
The other question that I would have to ask any author is if there’s an agreement elsewhere and does that agreement affect this particular copyright? For example, if the author has some kind of status, whether it’s you know through Amazon or through Barnes and Noble, the nook service, whatever it is, if there is a select status, if there’s a gold status, if there’s some kind of loyalty program out there and the author has made a contract, I have to ask, “How does that work?” Because if that contract says that it has an exclusivity clause, if that contract gives a duty to the copyright owner to enforce in order to keep an economic model, then you have state contract law that’s going to not necessarily interfere but work with federal copyright law.
So, while you traditionally don’t have a duty to enforce a copyright, you may have that in other business agreements because effectively a contract is an abridgment of your own rights. I agree to do something. You agree to do something, you agree to do some work, I agree to make it easy to pay you and I’ll pay you. Yeah. Cause ultimately you don’t have to do any of that. But when you create this agreement, you create that structure to do that and it’s an abridgment of rights. And another question, people talk to me often or ask me often is, how do you measure damages if there’s copyright infringement? And in other words, if there’s an impermissible sale or performance or duplication of any work that falls under copyright law as a couple of things. One, is the copyright registered? See effectively, when an idea is taken and put onto a medium, there’s a copyright. Copyright law just works.
However, you have to register your copyright with the Library of Congress in order, one, to file a lawsuit so you can’t even file a lawsuit without it. And two, if infringement happens before filing, then the plaintiff (the copyright owner) is not allowed to receive attorney’s fees, is not allowed to receive triple damages in a lawsuit. So it’s important to make sure that all of these steps are taken and so your damages can be properly calculated, properly requested in court.
So, there are actual damages. If a thousand copies were sold by an infringer, then the author or a copyright owner is allowed to ask for the damages. Actual sales numbers. The plaintiff can ask for statutory damages in copyright infringement. And the statutory damages are $750 or more than $30,000. We’re going to have this little gap in there for each infringement for each one or if it’s willful. And what willful copyright infringement is, of course, knowing, continuing to do so, even with the knowledge that the plaintiff knows about it. And that can be $150,000 per incident. But, of course, no statutory damages, no attorney’s fees if you don’t register the copyrights: the number one key is to register the copyright with the Library of Congress.
There are times when a business does not have the automatic right to a copyright and a business needs what’s called a work for hire agreement. And that work for hire agreement allows a business to be the owner of a work from upon the creation of the work. Cause traditionally it’s the author’s ability. Now if the author is an employee, the business automatically owns that particular work. So, if there’s a book that’s being written, if there is a sculpture that’s made, if there’s music that’s being written, if that author is an employee, it belongs to the business right away. However, if that business is an independent, or excuse me, if the creator, the author is an independent employee, independent contractor, then the author is the owner and the business needs what’s called a work for hire agreement. Meaning the work is made for the sole purpose of the business. So, that means the business needs to get this agreement and under federal copyright law, it must be written and it must state the work and it must state that the work is made as a work for hire. This is very important that the contract is picayune in its wording, but that work for hire agreement must be done properly.
Those are a couple ideas in thinking about copyrights. And I would say for a lot of businesses in areas that are not traditionally thought of, websites are definitely works that fall under the Copyright Act. And a lot of businesses have the website creators just create a website, put it up there and the business uses it. And technically the business is not an owner because no work for hire agreement is used. And yet, here’s where you know, here’s work that doesn’t necessarily belong to the business that’s being used as a part of the business plan and part of advertising. So, there might be issues there. I’d also say for a lot of advertising, especially in small business, agreements need to be made so that the advertising belongs to the business and that includes prototypes, first drafts. That’s very, very key for a lot of businesses to own the work that’s being done. And you know, ultimately the business needs control of that particular area, in order to control the message, in order to make sure advertising’s done properly, in order to make sure that a website looks properly. Those are a couple areas that most small businesses really, truly miss. Of course, there are bigger ideas when you’re thinking about advertising. All advertising used to belong to a business regardless of the medium. So, I would say for a business it’s important to understand what copyrights are created.
I don’t care if that business is one author or a conglomerate, what work is created that falls under the copyright law? Who’s going to be purchasing that and what is the business goal? That’s going to help create and draft a strategy for copyright monitoring and copyright understanding. And this way a business can easily make more money. So, I hope that you, as a business owner, when and whether, again, whether it’s a one person business or many people, multinational conglomerate, you plan well what works are going to be created and you plan and you understand how to protect those works, whether it’s registering now, whether it’s a work for hire agreement, whether it’s through contracts, there are plans for every business. And ultimately that’s the key. Again, I’m Anthony Verna. I’m the managing partner at Verna Law, P.C. We focus on patent, trademark, and copyright law. This is the Law and Business podcast. We’ll have a guest next time and I’ll speak to you soon. Again, you can reach me atanthony@vernalaw.com. Thank you.
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