Upcoming Talk: Legal Issues for Online Sellers

September 27, 2012

Update: The article from the talk is now available on my law firm website here.

My next scheduled talk is on Legal Issues for Online Sellers,  at the Sellers’ Conference for Online Entrepreneurs (SCOE) 2012 this Sunday, September 30, 2012 here in Seattle.

I am going to provide an overview of the legal issues you need to be aware of as an on-line seller. I will start with the basics, including what form of business entity you should be and why and where to register that entity, and a review of the Amazon and eBay seller agreements. Then I will cover a number of other important legal issues facing the on-line seller. These businesses touch upon many different areas of law. Most of them are technology related. The law is constantly changing as it tries to keep up with the changes in technology.

I hope to turn that talk into an article available for download on my law firm website and into a series of blog entries.


Top Ten Intellectual Property (IP) Law Traps

November 2, 2011

Intellectual property (IP) law is a deceptively complex area of law. IP law is very rules based, and the rules vary depending on the type of IP protection. Non-IP attorneys and individuals who attempt to practice IP law without the assistance of an IP attorney often run into trouble. Here are ten common traps.

Copyright

1. Copyright law is one of the few areas of law where transfers of rights must usually be in writing (real estate is the other obvious example.)

2. The owner of the copyright is the person who created the work, not the person who paid for it. You hire someone to design a website for you. It is your website. You paid for it. But absent a written agreement to the contrary, the website developer owns the copyright in the website.

3. It is deceptively easy to end up accidentally jointly owning the copyright instead of owning it outright. Say you write a software game program, but you hire an outside firm to handle the sounds. It is quite possible for the outside firm to own part of the copyright in the entire software game program. (This is called joint authorship.) This is easy to fix with a written agreement that covers copyright ownership.

Trademark

4. The right to register a federal trademark belongs to the person who used the mark first in interstate commerce, not the person who filed a registration first. But if the first person to use does not object to the other person’s improper federal registration within five years of registration, they may permanently lose the right to object.

5. You do not lose copyright rights by not policing your rights, but you can lose trademark rights by not aggressively policing your rights.

6. One way you can fail to police your rights and lose your trademark is if you license someone to sell your widgets under your trademark and the license agreement does not allow you the right to police the other party’s use of your mark.

Copyright and Trademark Registration

7. Copyright rights and trademark rights are both created automatically. Copyright rights exist as soon as you create something. Trademark rights exist as soon as you use a trademark in commerce. But in each case, you gain considerable additional protection by registering your rights. People often neglect to register.

Copyright registration is only at the federal level. It is fairly straightforward and can usually be done by a non-lawyer. (Practice Tip: Have you registered the copyright in your website and other marketing materials?) Trademarks can be registered at both the state and federal level. State trademark registration is also fairly straightforward but does not help much. Federal trademark registration is deceptively complex. Sometimes a federal trademark registration will be approved as submitted, but quite often it will not. You may need to negotiate with the Trademark Office, and there is a specialized technical language that they use and expect you to use as well. When trying to register a trademark federally, it is best to use an attorney who is familiar with the federal trademark registration process.

Trade Secret

8. A customer list is considered a trade secret. An employee cannot take a physical copy of the list with them when they leave a company. If the employee memorizes the list, that is considered the same as taking a physical copy.

Non-Compete Agreements

9. In Washington, where I practice law, a non-compete agreement entered into after the employee has started working for a company is not enforceable unless the employee is given new consideration for signing the agreement. The right to continue working for the company and to not get fired is not considered new consideration. Labriola v. Pollard Group, Inc., 152 Wn.2d 828, 834,100 P.3d 791 (2004).

Family Law and Estate Planning

10. Intellectual property is property. Yet I often see a divorce property settlement agreement or a will where there is no mention of intellectual property. Have you written a book, or painted a picture, or created other intellectual property? If so, it should be accounted for in the legal documents.

 

(These examples are oversimplified. Although they apply most of the time, I omitted all of the caveats for when they do not apply. Do not rely on these rules without seeking specialized IP law advice first. )

 


Copyright Enforcement on the Internet – Where should we draw the line?

October 26, 2011

In this week’s news a woman is suing Apple for copyright infringement because two of the iPhone apps it sells are using pictures that belong to her. She complained to Apple but they did not remove the pictures. Details here.

.When should we hold a company liable for contributing to copyright infringement by others on its web site? I am not talking about direct infringement, when the company itself uses someone’s copyright protected work without their permission. That one is easy. They should be liable. But what if somewhere on the company’s web site someone else has posted material that violates someone’s copyright? In the early days of the Internet we still held the company liable, although we usually gave them a chance to fix the problem. They were not liable unless they were notified of the infringement and we gave them an opportunity to correct it, and they still failed to fix the problem. (See in particular the Digital Millennium Copyright Act (DMCA)).

These days web sites are so large, and the databases that drive the web sites are even larger. We have a company like Google that is trying to put every book ever written on its web site. Now we are starting to see cloud storage of music, and important files, and perhaps eventually cloud storage of everything. Has the Internet become too big to expect individual companies to be able to police their own web sites?

I was talking to an attorney from Facebook recently. I am paraphrasing what he said. If Facebook had to search its own web site for all the instances of a particular item, it would take months, or perhaps even years, even at computer speeds. Their database is that large.

In the case in the news, the woman used an iPhone app to take pictures which she then uploaded and posted on a picture sharing web site with the appropriate copyright notice. The iPhone app she had used copied her pictures, after removing the copyright notice, and posted them on the Apple App store web site to help market its app. She claims to have notified Apple at least six times prior to filing the law suit. I am not privy to the actual details of the case, but I find it hard to believe that Apple would intentionally ignore her complaints. I suspect they just have too much ‘stuff’ out there, and can no longer effectively police it all. According to Wikipedia, as of May 2011 the Apple App store had over 500,000 third-party apps officially available. That number is growing all the time.

So what is the answer? Do we let Apple get away with contributing to copyright infringement? Do we require that companies with large web sites/databases develop new techniques to police their sites? Or do we require companies to keep their web sites/databases small enough that they can effectively police them with today’s technology? I suspect that the answer will come from new technology, not from new laws. These companies will get better at policing their sites, and we as a society will get more tolerant when they do not do so as effectively as some people would like.

I would have advised this woman that once she posts something on the Internet, her ownership and control is effectively gone, no matter how aggressively she tries to police its use. That may not be fair. That may not be legal. But that is the way it is.