Recently, several clients with existing websites asked me to review their online Terms of Use (“TOU”). While the TOU were respectable, there were areas where each could be improved. Interestingly, the area where all of the clients had made mistakes was with regard to the Digital Millennium Copyright Act (the “DMCA”, a summary of which is available from the U.S. Copyright Office).
Copyright law gives the creator of an original work certain exclusive rights for a specified period of time. These include, for example, the rights to publish, distribute, adapt and copy the work. Anyone who exercises one of these rights without authorization from the copyright owner has committed copyright infringement.
Online service providers usually have little control over the content that their users post. Because some users are inclined to post others’ copyrighted works (such as music or videos) without permission, service providers can operate their businesses effectively only if they have protection against such infringing activities.
Let’s assume that you have a website with great content. When users sign up, they eagerly click the “I agree” button to accept your standard terms of use. In those terms, you give yourself the right to make future changes by including the following provision:
“We may change these terms at any time by revising them on our website. You agree to be bound by any such revisions. Therefore, you should review these terms periodically. If you do not agree with any revision, you must stop using our website.”
This approach is routine on the web and, until recently, was considered by many to have precisely the effect that was intended. In 2007, however, the United States Court of Appeals for the Ninth Circuit (which has jurisdiction over federal cases in the Western U.S.) stated that website owners must do more than just change terms online if they want the changes to take effect for existing users.
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From time to time, clients ask me questions about copyright, for example: Should I put a copyright notice on my work? What must the notice say? What about “all rights reserved”? Should I register my copyright? If so, when? Here is a brief overview of copyright formalities – why they are not required here in the U.S., but when, where and how they might help you.
Copyright protects works of authorship and subsists from the time the work is created in fixed form. The copyright owner has the exclusive right (as applicable) to reproduce, distribute, publicly perform, publicly display, and make derivative works of the copyrighted work.
As a general rule, for works created after January 1, 1978, copyright protection lasts for the life of the author plus an additional 70 years. For an anonymous work, a pseudonymous work, or a work made for hire, the copyright endures for a term of 95 years from the year of its first publication or a term of 120 years from the year of its creation, whichever expires first.
Like other Berne Convention parties, the U.S. does not require that copyrighted works have copyright notices. However, 17 USC Section 401 provides that works may have copyright notices that contain the following three elements:
- The symbol © (the letter C in a circle), the word “Copyright”, or the abbreviation “Copr.” [In contrast to U.S. law and the Berne Convention, Universal Copyright Convention requires use of the symbol ©. However, most UCC countries now are part of the Berne Convention, so the UCC today has little relevance.]
- The year of first publication
- The name of the copyright owner
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Anyone who has worked in technology is familiar with nondisclosure agreements (NDAs). Differences among NDAs usually are small; they tend to cover the same territory in similar ways. However, NDAs from large companies often contain what I consider a most pernicious provision: A “residuals” clause.
A residuals clause excludes from confidentiality obligations information that the recipient’s personnel retain in their memories. Here is a typical provision, from the Microsoft Confidentiality Agreement for Licensing Discussions:
“Further, the Receiving Party shall be free to use for any purpose the residuals resulting from access to or work with the Confidential Information of the Disclosing Party…. The term ‘residuals’ means trade secret information in intangible form, which is retained in memory by persons who have had access to the Confidential Information, including ideas, concepts, know-how, or techniques contained therein.”
At first glance, a residuals clause appears merely to acknowledge that people remember things that they see. The problem is that the clause gives any recipient with a good memory the right to use your trade secret information and reveal it to third parties!
Trade secret protection is inexpensive and easy to obtain. As a result, businesses rely on it routinely to protect information assets. California Civil Code Section 3426.1(d) says that a trade secret is “information…that [d]erives independent economic value…from not being generally known to the public…and…is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.” (Emphasis added.)
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Dana Shultz is a business-savvy lawyer located in Northern California's San Francisco Bay Area (in the East Bay, near Oakland) who has in-depth knowledge of law, business, technology, and the needs of startup and early-stage companies.