The High-touch Legal Services® Blog • For Startup/Early-stage Companies

Almost a year ago, I wrote about why independent contractors (as contrasted to employees) own the copyrights in works that they create, so a prudent customer will ensure that the contractor assigns its copyrights to the customer (Why “Work Made for Hire” is a Term Made for Confusion). This post discusses the implied copyright license that is granted in the absence of an assignment.

If there is no assignment provision, a court will determine that there is an implied license under the copyright, because it would be unfair to deprive the customer of all rights in a work for which the customer has paid. The issue, then, will be the terms of the implied license.

The one certain characteristic of the implied license is that it will be non-exclusive rather than exclusive. The reason: Under 17 U.S.C. Section 101, an exclusive license is considered a transfer of copyright ownership, and under 17 U.S.C. Section 204(a), a transfer of copyright ownership must be in writing and must be signed.

All other characteristics of the implied license, however, will be determined by the court based on interpreting the intent of the parties as evidenced by their conduct. These characteristics include, for example:

• Whether the implied rights are limited to use, or include other rights such as  reproduction, distribution, public performance, and preparation of derivative works (see Copyright Protection in One Easy Lesson)
• Whether the license includes a right to sublicense
• Whether the customer’s license rights are restricted to a specified industry
• Whether the license is irrevocable

The bottom line: An independent contractor agreement should expressly either assign copyrights or specify the terms of a copyright license, because a court-inferred implied license likely will not match either party’s needs or expectations.

Photo credit: stock.xchng

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

This post is based on an answer that I provided on Avvo. The user wanted to know, among other things, whether he could assign a fictitious business name (FBN – or, colloquially, a DBA, short for “doing business as”) from his sole-proprietor business to a limited liability company (LLC) that he was about to form.

He probably would assign all of the sole-proprietor assets (and liabilities) to the new LLC. However, there are special considerations with respect to assigning a business’s FBN.

California Business & Professions Code Section 17920(b) provides that if any of the facts (other than certain addresses) set forth in the FBN statement filed with the county clerk change, the FBN expires 40 days later.

Upon assignment of the FBN to the LLC, the facts pertaining to who is using the FBN will change. Accordingly, the LLC should file a new FBN statement promptly following the assignment, and in any event within 40 days. Furthermore, every FBN expires in any event after five years (Business & Professions Code Section 17920(a)), so it is important file a new FBN statement before the end of the five-year period.

Related posts:

• Should I form an LLC or a corporation?
• Can I form an LLC without a lawyer?

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

We all are familiar with well-known  franchises, such as McDonald’s restaurants. What many people do not realize, however, is that a trademark license agreement, if it has certain characteristics, can be considered a franchise agreement under state or federal law, creating huge potential liabilities for the unwary licensor.

In California, Corporations Code Section 31005(a) says that a franchise exists if three elements are satisfied:

1. A franchisee is granted the right to engage in the business of offering, selling or distributing goods or services under a marketing plan or system prescribed in substantial part by a franchisor; and
2. The operation of the franchisee’s business pursuant to such plan or system is substantially associated with the franchisor’s trademark, service mark, trade name, logotype, advertising or other commercial symbol designating the franchisor or its affiliate; and
3. The franchisee is required to pay, directly or indirectly, a franchise fee.

The second and third elements (the right to use a mark, and the obligation to pay a fee) are routine components of trademark license agreements. The first element – the franchisor’s “marketing plan or system” – thus is what distinguishes a franchise.

I was reminded of this point, recently, when a prospective trademark-licensee client showed me the licensor’s proposed Trademark License Agreement. The agreement included an obligation for the licensee to operate its business “in compliance with” the licensor’s “policies, specifications, procedures, and instructions”. To me, that looks like a “system prescribed…by a franchisor” as specified in the statute.

The good news for the prospective licensee is that the penalties for failure to comply with franchise laws are directed toward the franchisor (licensor) rather than the franchisee (licensee).  Nevertheless, any investigation or action related to franchise laws could be disruptive to the licensee, so I consider it appropriate for the licensor to agree to indemnify the licensee against any resulting costs or liabilities.

Lesson: If you are a trademark licensor, be careful about whether and how you control the licensee’s management of its business.

Photo credit: stock.xchng

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Copyright protects works of authorship and, in the U.S., subsists from the time the work is created in fixed form (see Copyright Protection in One Easy Lesson).

Demonstration in Sweden in support of file sharing, 2006

In certain circles, however, there is fervent opposition to copyright (see the Wikipedia entry for Anti-copyright).

Suppose that an anti-copyright author wants to abandon the copyrights in his works. Can he do so under U.S. law? Although there is no statutory basis for abandonment, there is widely-accepted case law stating that a copyright owner may abandon his copyright by an overt act that manifests a purpose to surrender his rights to the work and let the public copy it.

An example of language that should satisfy this requirement is provided by the Creative Commons CC0 Waiver:

To the greatest extent permitted by, but not in contravention of, applicable law, Affirmer hereby overtly, fully, permanently, irrevocably and unconditionally waives, abandons, and surrenders all of Affirmer’s Copyright and Related Rights and associated claims and causes of action, whether now known or unknown (including existing as well as future claims and causes of action), in the Work (i) in all territories worldwide, (ii) for the maximum duration provided by applicable law or treaty (including future time extensions), (iii) in any current or future medium and for any number of copies, and (iv) for any purpose whatsoever, including without limitation commercial, advertising or promotional purposes (the “Waiver”). Affirmer makes the Waiver for the benefit of each member of the public at large and to the detriment of Affirmer’s heirs and successors, fully intending that such Waiver shall not be subject to revocation, rescission, cancellation, termination, or any other legal or equitable action to disrupt the quiet enjoyment of the Work by the public as contemplated by Affirmer’s express Statement of Purpose.

Bottom line: One cannot abandon a copyright accidentally or halfheartedly; one must intentionally express an unambiguous desire to abandon the copyright and make the work available to members of the public to use as they see fit.

Photo credit: Wikipedia

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.

Several months ago (Copyright Registration: Whether, When and Why), I wrote about the benefits of registering a copyright. A recent case in the U.S. District Court for the Northern District of California (Dongxiao Yue, et al., v. Chordiant Software, Inc., et al.) shows that if you are going to register a copyright, you should register it right away.

Plaintiffs accused defendants of copyright infringement with respect to two pieces of software that were covered by registered copyrights.  The defendants moved for a summary judgment that plaintiffs were not entitled to statutory damages and attorney fees because the alleged infringement began before the plaintiffs registered their copyrights.

Plaintiffs countered that because defendants distributed plaintiffs’ software with a different defendant software package, and copied plaintiffs’ software to a different directory, after the registration date, defendants committed two new types of infringement after that date. The court disagreed, stating that, as a matter of law, these acts were not materially different from the earlier alleged infringement (i.e., unauthorized distribution of the same file), so the “new” acts did not create a separate date for commencing infringement.

The court, thus, granted the summary judgment, which was highly detrimental to the plaintiffs because:

• Instead of the having a right to statutory damages of up to $30,000 per infringement (or $150,000 in the case of intentional infringement), plaintiffs will have to prove actual damages – which might be quite limited, and in any event could be expensive to prove.
• Plaintiffs will have to pay their own attorney fees without the possibility of recovery from defendants.

Important lesson: If there is any likelihood that you will want to enforce your copyright in a work against an infringer, register that copyright with the U.S. Copyright Office – and do so right away.

This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.