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Trademark and Copyright Notes

February 24, 2013

**This is informational only and is not intended to be legal advice and does not confer attorney-client privilege nor create any attorney-client relationship.**

There is a lot of confusion about intellectual property as provided in roller derby because of the open sharing that occurs.  This sharing allowance that is common in derby does not negate that law exists regarding all of the intellectual property created by derby (and there is quite a bit out there).  I have provided my raw notes from the talk I gave at Rollercon in 2011 about Trademark and Copyright. I cannot go every year because of time and budget constraints but I think a basic understanding helps.  This should in no way substitute for the actual retaining of a lawyer for your organization if you need one regarding these issues.   I’ve summarized these topics very broadly (because these were just my outline notes so I could explain things). They get complicated quickly depending on what you may have already done.

Copyright – ©

 Copyright is a body of federal law that extends exclusive rights over fixed works of authorship by statute for a limited time.

Copyright protects created products (e.g. books/movies/music).  For copyright to attach, the work of authorship must be fixed in a tangible medium of expression. Fixation essentially means that a work of authorship is capable of being reproduced. Additionally, fixation only counts if it is made by or under the authority of the author.

Examples of Copyright –            Game Footage, Flier Artwork, and Photos

Authorship
Copyright emanates from authors.  For copyright to exist the work of authorship must be creative and original.  Originality has two elements: 1) minimum of creativity; and 2) the work must be original to the author.

Works of authorship include: 1) literary works; 2) musical works, including any accompanying words; 3) dramatic works, including any accompanying music; 4) pantomimes and choreographic works; 5) pictorial, graphic and sculptural works; 6) motion pictures and other audiovisual works; 7) sound recordings; and 8) architectural works.

Exclusive Rights
Copyright has six exclusive rights: 1) Reproduction; 2) Adaptation; 3) Publication; 4) Performance; 5) Display; and 6) Digital Performance.

These six rights can be thought of as a bundle of rights; Each of them can be licensed separately.

Duration
Under the current statue, copyright is limited to the author’s life plus seventy (70) years [L + 70]

If the work is a work-made-for-hire, the employer or person for whom the work was prepared is considered the author and such person owns the copyright to the work (absent an agreement to the contrary). Works-made-for-hire have a longer duration of protection: 120 years from creation or 95 years from publication, whichever ends earlier.

Transfer
A transfer of copyright ownership, other than by operation of law, is not valid unless such conveyance is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.

Recordation
Recordation is memorialization of copyright related transactions with the Copyright Office. A submission to the Copyright Office must include who the parties are, what they are transferring, and the original signature of the owner.

Infringement

-       Infringement =

• Copying + Improper appropriation
  • Evidence of Copying =
    • Direct evidence of copying, OR
    • Proof of access to the work + probative similarity of the works, OR
    • Striking similarity of the works
  • Improper appropriation =
    • Improper taking +
    • Substantial similarity

 Trademark – ™

A trademark is any word, phrase, symbol, design, sound, color or non-functional appearance of an article which identifies the source of goods and distinguishes that source from other sources.

Trademarks can be word(s) (i.e. name, tagline); design (i.e. logo); color; sound (sound cannot be trademarked if it is functional, i.e. Harley Davidson engine); smell (as long as it is not functional, eg. a perfume is functional).

Trademark deals with goods and services.  Trademark laws are designed to protect consumers.  Trademarks identify sources of goods.  Trademarks attach to the source of the product, not to the actual product.

The goals of trademark are to enhance brand protection and to foster competition.

Examples of Trademark – League Logo, Skate Name

Protection
The scope of protection afforded to a particular trademark varies with the distinctiveness of the mark.  The more distinctive a mark is, the greater the scope of protection it can enjoy.

Duration
Trademarks do not have a finite term; they can theoretically last forever (unlike patents and copyrights).

Types of Trademarks

1. Fanciful (Most Distinctive) → Strongest protection; most valuable of marks
These marks are inherently distinctive.  They are often coined terms, having no meaning other than to serve as mark.
EX: Nokia; Nike; Motorola

2. Arbitrary
These marks are inherently distinctive.  They are often real words but used with goods/services unrelated to the common meaning.
EX: Shell (oil); Apple (computers); Ivory (soap)

3. Suggestive
These marks do not explicitly describe the associated goods/services but suggest some characteristic or quality of the goods/services.
EX: Red Lobster (restaurant); Sparkle (window cleaner); Grey Hound (buses)

4. Descriptive (least distinctive) → Weakest protection
These marks identify a feature, functional purpose or use of goods/services.  They are generally not enforceable unless they have become recognized among potential consumers (“secondary meaning”)
EX: Windows (Microsoft); Reader’s Digest

5. Generic → No protection

Other rights roller derby implicates that are not Trademark or Copyright but should be kept in mind:

Right of Publicity: commercial use of name and likeness; exclusive right to license the use of their identity for commercial promotion.  If you are putting your skaters names and images out there to sell tickets, you are using them for commercial purposes.

Right of Privacy: access to personal information (eg. Bio.) and personal autonomy. (reproductive rights – not really an issue here)

501(c) and LLC notes

February 24, 2013

The two entities requested most for roller derby leagues are 501(c)s and LLCs.  There ARE other entity forms out there but these two are the ones I am most contacted about.  I have provided my raw notes from the talk I gave at Rollercon in 2011 about the two entities. I cannot go every year because of time and budget constraints but I think a basic understanding helps.  This should in no way substitute for the actual retaining of a lawyer for your organization because everyone has different organizational needs including administration constraints and how much time you can devote to maintaining your entity status (translation: devotion to the paperwork and meetings that goes along with these entities) and making sure your Articles and Bylaws match how your organization actually operates.

**This is informational only and is not intended to be legal or tax advice and does not confer attorney-client privilege nor create any attorney-client relationship.**

 Limited Liability Company (LLC) form

LLC is a non-corporate form of business. Owners are called “Members”.  Combines the benefits of limited liability and continuity of business like a corporation with the “pass through” taxation on profit like a partnership.

LLC laws vary widely from state to state.  There are restrictions on the types of business that can be LLCs based on the state. (eg. California does not allow professional services LLCs, doctors, lawyers)

Important to have:
-       Adequate capitalization
-       Separate bank account
-       An Operating Agreement

• Member managed v. Manager managed
  • Members are owners; if chose Manager managed: Members do not participate in management or risk losing LL aspect
• Always have dissolution provisions, preferably written.

Organizing document is the Operating Agreement. Defines the basic structure of the LLC such as setting up:

-       Managerial responsibilities
-       Governance
-       Compensation
-       Distribution
-       Admission/Withdrawal of Members
-       Dissolution provisions

Flexible management and operational structure.

Limited liability is not absolute.  Members can still be personal liable if they:
-       Personally guarantee debts of the LLC
-       Participate in tortious conduct
-       Receive improper distributions
-       Commingling personal assets with the LLCs

LLCs are not subject to federal or state income taxes because of the pass through taxation to members unless it elects to be taxed as a corporation.
-       There may be state and local taxes specific to LLCs that must be paid.

 501cs

Nonprofits are not allowed to operate to the benefit of any specific individual.

***Prior to deciding to become a tax exempt organization get a good CPA who understands TEOs. They will be able to strategically assess whether it is worth it for your league.***

Nonprofits have to be some form of entity before applying for tax exempt status.  There must be en entity because you have to be able to make contracts, own property, exercise legal rights, etc., and because no one owns a non profit, but it still needs management function. The common types are:
-       Unincorporated associations – established by mutual consent of parties involved (social clubs, lodges, athletic orgs)
-       Trusts
-       Non Profit Corporations (Most Common)
-       LLCs***(not really – the members/owners of a non profit LLC must be exempt organizations; non ownership of a not for profit and LLC ownership are contradictory so there may be resulting confusion from your state and federal agencies if you go this route)

Corporations are creatures of statute and so close attention has to be paid to what it is you are forming.
-       Voting provisions – quorums
-       Board requirements (eg. 3 outside independent board members; officer requirements)
-       Paperwork and filing requirements -  minutes, bylaws, articles of incorporation, SEPARATE BANK ACCOUNT with EIN.

To become a 501(c)(3) must be one of the following: Public Benefit, Mutual Benefit, Religious

-       Public benefit: charitable or public purpose, may not make any distribution of corporate assets to members at any time, and are subject to extensive governmental regulation and supervision
-       Mutual benefit: (frats, social clubs, homeowners assoc.) may be formed for any lawful purpose, may make distributions of corporate assets to members on dissolution, and are subject to less stringent state regulation and supervision
-       Religious: primarily or exclusively for religious purposes, may not make any distribution of corporate assets to members at any time, and are subject to less stringent governmental regulation and supervision.

Being not for profit is not the same as being tax exempt. You must apply for them separately. It is not automatic.
-       Tax exempt = exempt from income tax and donors can give tax deductible donations
-       No money to political campaigns; lobbying has restrictions
-       There is no reason not to apply for tax exemption if you are a not for profit unless you are not eligible.

Federal Tax Status
-       Incorporating at the state level is separate from getting and maintaining your federal tax status – must include in your articles of incorporation your non profit purpose for the federal purposes

• 27 months from incorporating.  Can go back during that time to get the tax exemption and refund for the 2 years.  You must pay taxes until granted exemption.
• lots of different categories under section 501(c); not just amateur athletics.
• the application to get tax exempt status will cost you some money.

Nonprofits and Dissolution: No one technically owns a non-profit or its assets, and therefore if dissolved, there is no distribution of assets.  Must pay off all debts and the assets must go to another tax exempt not for profit.  Technically running a business for the benefit of society which is why you are given exemption. This also means there is oversight by the state – usually by the State Attorney General and additionally by the IRS.  There are filing requirements and you must pay attention to the notices sent.  Make sure the agent for service of process actually gets her mail and pays attention to the oversight agencies.

 

Cheap Online Forms

January 12, 2013

You had a great idea to start a business and then you went and did it with little to no budget. Maybe you even researched online whatever you could think of based on all the advice you have received, invited or not, and then decided that you did not need some fancy legal services that you could not afford anyway. After all, you are small and the people you are going to deal with are not going to be litigious because you are cool and nice, as are they. Even if they did sue, you thought there was not enough money to make it worth their while. You got your DBA filed and a simple form contract from a cheap online provider that you thought fit your needs. You even modified it a little bit by yourself to match your process and product. You went off and running and it has worked just fine. So what is the big deal with these expensive attorneys saying it is not good enough when you obviously were capable of doing it yourself?

First off, you are correct that if paying an attorney would have exhausted your capital to the point you could not have started the business itself, it defeats the purpose of hiring that attorney. It seems silly to get a nice document to protect a business you cannot start now because all the money is gone. It is also true that it is unlikely that anyone is going to file suit over that $500 in your savings and your cat (entertaining as he or she might be). Second, you only know if that form “works” if it has been challenged in court and you ended up getting your way. If that has not happened, you cannot say yet that it works.

Fast-forward to now where your business has become stable through your blood, sweat and tears. As I always tell my clients, “it does not matter when there is no money. It matters when there is money.” This applies whether that money is in the bank or it is owed. It is absolutely true that money changes people and those folks that were so nice and cool when you began, may not be so nice and cool once you have picked up some steam and recognition. And it is irrelevant whether they are your clients, vendors, partners and/or your best friend of many years. Even if your company goes bankrupt, you can be sure that people are going to come out of the woodwork for whatever they think they are owed, from wherever they can get it, even if there is nothing to distribute. Your documents are meant to help you when those challenges come.

Whether it is meant to reflect the price paid for your goods or the bylaws for your company’s ownership and operation, those documents are there to say what is agreed to, what you can do in case someone does not do as promised, and/or to protect your assets. Sadly, waiving around a piece of paper at a non-performer (or a judge in court) does very little. You need to make sure your agreement is enforceable. If you did not care about having an enforceable agreement, then why did you write it down to begin with? A handshake and a nod works the same as a vague, unenforceable agreement, and is cheaper. It is time to reinvest in your business and yourself, and to hire an attorney to help.

Revisit, update, and get your documents in order before litigation happens. It is likely cheaper to get a transactional attorney to fix those forms than it is to hire a litigation attorney to defend an unenforceable agreement for months or years. If there is litigation, courts are going to interpret an agreement the way the law allows it to be interpreted. This may be different than what you wrote when you tweaked it yourself, or even different from what was meant when that form was originally drafted, because the law and legal interpretation of terms can change over time. It is also possible that tweak you made voids your entire agreement because the court found your final contract to be unconscionable. With proper review and drafting of an agreement, there is the added bonus that you may reduce your court costs by having a clear document that the court, or arbitrator, can interpret in your favor quickly, and also makes sure those litigation fees are paid by your non-performer.

If you formed a corporation or LLC online, you need an attorney familiar with corporate compliance to advise you on how to maintain your limited liability. A question I get a lot is “I formed a LLC so they cannot sue me now, right?”. The answer to that is no. The entity form is meant to give you a business structure to operate, but also to shield your personal assets from potential liability. Entities get sued. Their owners also get sued. You want to make sure that you are treating your entity properly. You then avoid the situation of personal liability because you thought it was fine to pay your mortgage out of your business bank account, because you are the only shareholder in your corporation anyway. Do not do that FYI. If something goes horribly wrong, bankrupting your company might happen, but having an attorney may help with some advice to prevent bankrupting your personal self.

It only seems like an unnecessary expense to hire an attorney when things are going well when there are such cheap online alternatives. The longer you are in business, the higher the probability something will go wrong. Be the smart savvy small business entrepreneur who started that business and protect it. It is the same reason you buy insurance. You want to minimize risks if things do go awry so that it does not result in the type of catastrophe that ends up shutting your metaphorical doors.

Bullcoming v. New Mexico, Decided June 23, 2011

June 24, 2011

The U.S. Supreme Court issued a 5-4 decision reaffirming the rights guaranteed by the Confrontation Clause in regards to evidence of scientific results.  Bullcoming v. New Mexico is a DUI case involving the expert testimony of a lab technician, who was not involved in any way with the actual testing of a sample for determining the blood alcohol percentage of a defendant.  The witness merely knew the routine that the lab techs used when testing a sample, and how results are produced.  This is actually a fairly common occurrence in the trial courts that have continuously allowed the testimony of supervisors and other technicians in regards to scientific test results based on familiarity with the procedure itself.  This is because even though these samples were taken for the purposes of trial,  somehow the amount of blood samples tested everyday make it so that it qualifies as a business record akin to medical records, and/or simply because it involves scientific evidence, making it more trustworthy because somehow scientists interacting with machinery make the result non testimonial.  This is so regardless of the multiple levels of interaction required by the tech to make sure an accurate sample is produced.

The rights of Confrontation exist regardless of how reliable a trial judge may opine that the evidence may be. Confrontation is for the purpose of testing that veracity and we all know that people do make mistakes,  even scientists.  As pointed out in the Bullcoming Opinion at p. 11:

“Accordingly, the analysts who write reports that the prosecution introduces must be made available for confrontation even if they possess ‘the scientific acumen of Mme. Curie and the veracity of Mother Teresa’.”  (Melendez-Diaz, 557 U. S., at ___, n. 6 (slip op., at 14, n. 6).

The Supreme Court recognized that if someone is going to be guaranteed their full panoply of jury trial rights, the right of Confrontation cannot be cast aside because of how difficult it may be to secure the attendance of a witness, combined with the idea that science somehow makes it okay to brush the right aside because numbers do not lie.  That was not the consideration when the right was granted to all citizens. Numbers can lie if the data they rely upon is incorrect which is why the actual witness inputting the data should have always been necessary. I look forward to courts requiring the actual tech who tested the samples to be present for cross-examination, to testify to the actual testing and whether it was done correctly, as opposed to someone else testifying that the tech who tested the sample has written down and documented that they did test correctly.

Full opinion here: http://www.supremecourt.gov/opinions/10pdf/09-10876.pdf

Copyright Crime & Punishment

June 3, 2011

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  • Trademark and Copyright Notes
  • 501(c) and LLC notes
  • Cheap Online Forms
  • Bullcoming v. New Mexico, Decided June 23, 2011
  • Copyright Crime & Punishment

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