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July 29, 2011 / gavinlaw

The Art of Selling Photos and Paintings: Not as Straightforward as You Think.

by Tony Guo

The goal for many artists is to continue creating. In order to do so, an artist has to sell or license his or her artwork. In a recent post, Copyright Law: Who Owns a Photograph or Piece of Artwork: Work Made for Hire, we discussed work made for hire. If a piece is a work made for hire, it typically means that the employer or the commissioner owns the artwork. The artist trades the rights away at inception for monetary security down the road. In this blog entry we discuss a different type of artist, the artist who sells his or her artwork after it is completed.

In this scenario the artist keeps his or her bundle of rights for the artwork and must try to sell or barter the sticks in the bundle. Selling individual sticks in the bundle (such as limited use licenses) may be difficult because an artist has to understand what each stick means and how selling one stick may affect another. The easiest way for an artist to make a profit is to sell the entire bundle. Imagine a collection of a hundred comics. You could sell each comic on ebay individually. Some comics may sell well (Spiderman Issue 1) while others do not sell at all (Marville Any Issue). The point is that while you may come out a head by selling individually you are still left with comics that did not sell. But the more important factor is you spent a great deal of time selling. Remember you are a comic collector (not a comic seller), you should be spending most of your time discovering comics.

The goal of many artists is to keep creating. If the artist spends too much time selling it hurts the creating aspect. In the worst case the artist becomes a Sell-Out (legal humor). The artist could hire an agent to help him or her sell. But most artist are not profitable enough to pay for an agent (imagine your neighborhood photographer or the local painter). Or the artist could enroll in an online service that sells prints (however profit margins are low). The easiest method may be to sell the entire bundle or the most valuable sticks as quickly as possible and then return to creating new pieces of artwork. The more the artist creates the more the artist will become recognized (a popular theory among artists).

The above assumes that it is a seller’s market. However, in real life artists are nickled and dimed from the true value of their work. The most common way artists are tricked is when a buyer purchases the most valuable stick at a discount. Imagine a buyer telling an artist: “I only want to buy the right to use this image in my book and nothing else. I know that your price for this image is 1,000 dollars but I do not want to buy the entire bundles of rights (I am assuming the buyer is a lawyer). I will give you 50 dollars to use the image. I am not stopping you from selling the image to other parties.” If the artist accepts the offer thinking that he or she can sell another 19 sticks of this type, the artist has made a grave mistake. The mistake is once the first stick is sold the value of the remaining sticks plummet. Imagine bargaining for an image where the artist told you someone was using in a book. There are rare scenarios where the book may make the image famous and more valuable but in many cases the buyer will not want to use an image someone else has used.

Copyright law is tricky. When navigated corrected, it protects artists and their artwork. But artists need to be wary of buyers and publishers who try to entice them into selling the most important rights and leave behind a rotting bundle of sticks.

July 28, 2011 / gavinlaw

Copyright Law: Who Owns a Photograph or Piece of Artwork: Work Made for Hire

by Tony Guo

Artists often have stronger copyrights then they know. As soon as a work takes a tangible medium, the artist gains a copyright over the work. It is not difficult for a work to become tangible. When a photographer takes a picture with a digital camera, the work becomes tangible (saved to a memory card) as soon as the picture is taken. There is nothing else the artist has to do to ensure that he or she has copyright; copyrights are elegantly automatic for each photo.

Copyrights can and should be viewed as a bundle of sticks (each stick symbolizing a right). An artist can exchange her entire bundle or certain sticks within the bundle for compensation. This is an important concept because unless the artist knows what each individual stick is, the artist will not know what they are selling away. Are you selling a license stick? Are you selling a one use stick? Or are you selling a multiple use stick? Each stick is different in texture and value. There are many online websites that will sell a photo or picture for you or to you. Although many policies are similar, small differences may become important.

However, if the work is considered a work for hire, the bundle of sticks may not belong to the artist.

Section 101 of the copyright law defines a “work for hire” as a work prepared by an employee within the scope of his or her employment or a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a “supplementary work” is a work prepared for a publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes; and an “instructional text” is a literary, pictorial, or graphic work prepared for publication and intended to be used in systematic instructional activities.

Whether a particular piece is a work for hire depends on what the artist and employer agreed to. Work for hire was defined by the Supreme Court in Community for Creative Non-Violence v. Reid (490 U.S. 730 1989).

The first step is to determine whether the work was created by an employee or an independent contractor.

If an employee created the work it will often be considered a work made for hire. In this context employee means an employee as defined by agency law.

If the work was created by an independent contractor and the work was specially ordered or commissioned than it is often a work made for hire. There are two additional requirements. The work must be one of nine possible types listed in the above definition and there must be a written agreement explicitly stating the work is a work made for hire.

If the Court finds the work is a work made for hire this means the employer or person commissioning the work owns the bundle of sticks. In most cases, the Court will determine the owner based on the language of the contract and what can be reasonably implied.

July 21, 2011 / gavinlaw

Chinese Infringement, How Bad is it? The Story of a Fake Apple Store.

By Tony Guo

As Nightly News and Adrienne Mong report (see here) entire Apple stores can not be counterfeited in China. China is not just counterfeiting pursues and DVDs. The fake store was found courtesy of a blog. The blogger posted several pictures of the store. The store looks like a real Apple store from the trendy sitting areas to what the employees are wearing. But as the blogger notes, the devil is in the details. The store is called “Apple Store” which would be like Facebook going back to being called “the Facebook.” Apple doesn’t refer to itself as a store; it isn’t trendy. The biggest clue that the store is fake is the cheap building materials that are likely safety hazards. However if you never visited a real Apple store you wouldn’t be able to tell this store was fake. And ironically the products might be real (either that or they are so well counterfeited that even a discerning Apple fan could not tell the difference).

The most disturbing thing about this store is that the employees honestly believe they are working for Apple (large egos and hipster attitudes included).

July 21, 2011 / gavinlaw

The US Internet Service Providers Six Strikes Rule; A Gift from the French

by Tony Guo

Internet Service Providers (ISPs) recently aligned themselves with the movie and music industries in the fight against piracy. Under the agreement, users will have six strikes before their internet may be shut down. Shutting down internet is not new (see the history behind bit torrent users). What is new is the ISPs involvement. The probability of being caught increases drastically. The US may have gotten this idea from the French.

If the US models the French, pirates may find themselves in hot water. French authorities received over 18 million reports of unauthorized file sharing. Each of these reports had information on what was downloaded and the corresponding IP address. French authorities sent 1 million requests to ISPs to identify the subscribers. From these requests, an impressive 900,000 subscribers were identified. French authorities promptly sent 470,878 emails warning subscribers that they were downloading illegal material. Most receiving the email stopped their illegal activities. 20,598 subscribers continued infringing and were sent second warnings.

While the French have not sought damages yet, they can. With evidence provided by ISPs it is easy to convict and find. French infringement fines go up to 2,100 dollars.

ISPs in the US are on the record saying they would not provide subscriber information even if asked. However, this policy may chance with time.

If we extrapolate the French statistics to the US, the results are a little frightening. The population of France in 2011 was 63 million. 18 million people were reported for infringement or about 28.6 percent of the French population. French authorities only investigated 1 million requests but were able to identify 90 percent of the subscribers.

In the United States there are almost 309 million people ( based on the 2010 census). For our extrapolation we assume Americans infringe as much as the French. In the US there will be 88.4 million reports of infringement. If the US decided to investigate all of these cases (it is unclear how or why France chose to investigate only 1 million of the 18 million cases) and successfully traced 90 percent of the subscribers than 79.6 million people will be on the hook.
Assuming each of the 79.6 million people pay a 2,100 dollar fine for copyright infringement, the total fines collected would be over 167 billion. But let’s go crazy with our figures. Let us assume each infringer settles for 4,000 dollars (a typical settlement offer), the settlement would net 318.4 billion dollars for the media industry. That figure is almost six times what Bill Gates is worth or equivalent to making Transformers Movie (the first one) two thousand times.

July 19, 2011 / gavinlaw

LSAT Question: If a Monkey Takes a Picture Who owns the Copyrights?

by Tony Guo

Professional photographer David Slater went to Indonesia for a nature shoot. He left his expensive camera unguarded and a monkey took it. The monkey shoot a few amusing pictures which caught the attention of online blog Techdirt. Techdirt thought the pictures were funny and posted them online without consulting David Slater or the monkey. David Slater asked for the pictures to be taken off Techdirt. Techdirt refused to take down the pictures. Who owns the copyrights to the pictures?

This could easily be a new LSAT question for potential law students. We even include the following choices. Choose the best answer.

A. David Slater

B. Monkey

C. David Slater and Monkey

D. Techdirt

E. The Public

David Slater has a compelling argument for ownership. He went to a different country with the purpose of taking pictures. He brought expensive photography equipment and took the time to find a location. David Slater set up the photo shoot and deserves the copyrights resulting his efforts. But is David Slater the best answer?

The monkey has a more compelling argument. If photography is art, then the medium of the work is not as important as the artistic inspiration. Imagine Claude Monet going to a friend’s house. He becomes bored and begins to paint on a nearby empty canvas. Although he uses the friend’s art supplies, he adds something to the empty canvas that can only be described as art. Our gut feeling is that Monet should pay his friend for the art supplies but it would be unfair for the friend to claim the painting.

Yes, David Slater could have taken similar pictures, but those pictures would not have the same artistic value. While I am sure David Slater is a wonderful photographer, the pictures in question are famous because they were taken by a monkey. The monkey added an artistic element to the pictures. Further, the monkey was never employed by David Slater. The monkey is a poor artist and David Slater is the investor. We can cross out choice A and leave choice B and C to work out later.

Choice D is one of those choices we can immediately cross out. Techdirt did not provide the camera nor did it take the picture.

Choice E (which is Techdirt’s defense for using the picture) is the best answer. We, the public, own this picture. The U.S. Copyright Office thought that monkeys taking pictures would one day be a serious issue so to avoid costly litigation they created a section in this area. See below

503.03(a) Works-not originated by a human author.

In order to be entitled to copyright registration, a work must be the product of human authorship. Works produced by mechanical processes or random selection without any contribution by a human author are not registrable. Thus, a linoleum floor covering featuring a multicolored pebble design which was produced by a mechanical process in unrepeatable, random patterns, is not registrable. Similarly, a work owing its form to the forces of nature and lacking human authorship is not registrable; thus, for example, a piece of driftwood even if polished and mounted is not registrable

Of course, the LSAT logic is simple. Monkeys want the public to appreciate their artwork without worrying about copyright laws (they have no use for human money anyways). Techdirt is happy. The monkey is happy. And David Slater has learned a valuable lesson about being more careful with his expensive photography equipment.

July 16, 2011 / gavinlaw

The Rise of the ISP Copryight Right Alert System: The End of Online Piracy

by Tony Guo

The end of online piracy and copyright infringement is approaching. The movie and music industries for years have tried to stop illegal downloads with no success and often massive backlash. The new ISP copyright agreement however may be the solution. What makes the ISP copyright agreement different from encrypting digital files and past enforcement efforts is internet service providers. Internet service providers will prove to be a powerful ally in identifying and punishing infringers.

According to the New York Times Verizon, Comcast, AT&T and Time Warner Cable have agreed to help copyright holders protect their intellectual property. The ISP copyright agreement’s original purpose was to inform internet users that they are doing something illegal. But as the New York Times states in their editorial A New Try at Curbing Piracy, service providers will “identify Internet users who downloaded copyrighted content illicitly, warn them about the piracy and punish recalcitrant abusers.” Whether punishment will take a monetary form is still unknown.

With the power to cut off internet to unwieldy users, service providers have full autonomy over who to punish and how to punish. While it is true that customers will be able to challenge complaints, in many cases this is a risky proposition. Who can say what will happen when service providers bring evidence of infringement to light? Will copyright holders become involved and demand monetary compensation? Many important details on how the policy will be enforcement are still unknown. The policy is likely to evolve further in the near future.

Downloading or streaming free music and movies is a huge problem. There are many cases where pirates were sued for hundreds of thousands of dollars (the student from Boston University is one example). For the last decade, the recording industry alone has sued thousands of infringers. The litigation cost for copyright holders has been huge. By leaving the enforcement to service providers, copyright holders will save heavy lawyer fees. Many cases cost copyright holders more in terms of time and money than they can gain back. Hence the much lower settlement offers that copyright holders often accept. Service providers are in the best position to identify infringers.

The real power behind the ISP agreement has gone largely unnoticed by the media. If service providers can shut off internet they can shut off uploads. If no one uploads than no one can download. BitTorrent and similar downloading cites rely on users to upload very large data packets. Service providers have records of users who frequently upload large packets of data. Even the largest pdf and powerpoint does not come close to the size of a movie (often 8 gigabytes or more). Data uploads and downloads can be monitored (for example a cell phone data plan monitor how much data is exchanged). Service providers are in a better position than copyright holders when it comes to identifying who the biggest data users are. While there will be large data users who play videos games and are involved in other legal activities, service providers can use statistics to narrow down who is most likely to be uploading illegal material.

A whole generation grew up downloading illegally without realizing they were stealing. The success of the agreement will rest almost solely in the hands of service providers. Remember customers are paying service providers for internet. The bloodline of service providers are their customers. If customers are having their internet randomly cut off or the system is unfair they will flock to a different provider. This is especially true if one of the major providers acts as a safe haven or offers more protection for its users.

Internet pirates are already trying to find ways to cheat the new system, however the ISP copyright agreement marks the end of an era for online piracy.

July 12, 2011 / gavinlaw

Keyword Cases: What You Should Know

by Tony Guo

What can you do about a company that is buying your trademark on Google ads? Every time you enter your mark into Google or a search engine the competitor comes up in an “advertisement.” You are frustrated and concerned about losing customers because of this distraction. Is there anything you can do? One possibility is to litigate as a keyword case. To successfully win, the plaintiff must prove both use in commerce and likelihood of confusion.

Use of Commerce.

Before 2009 the Second Circuit rarely allowed plaintiffs past the use of commerce step. The Second Circuit dismissed cases for failure to state a claim on the grounds that keyword searching did not fulfill the necessary element of “use in commerce.”

This changed in 2009. In Rescuecom v. Google, the Second Circuit drew the opposite conclusion; keyword searching was use in commerce. Since then, the Circuit Courts have generally agreed that the use of keywords in searching and triggering advertisements satisfy the Lanham Act’s “use in commerce” requirement.

Rescuecom v. Google is cited favorably today, however few Circuit Courts have ruled directly on the issue. In 2010 the Fifth Circuit, in The College Network v. Moore Educational Publishers, Inc., declined to rule on the issue as a matter of law.

The Ninth Circuit however did not shy away and explicitly held in Network Automation vs. Advanced Systems that purchasing a trademark as a keyword is “use in commerce.” The Ninth Circuit also strongly implied that use of a keyword by a search engine was “use in commerce.” Use of commerce has for the most part been established in keyword cases and is no longer the high bar it used to be.

Likelihood of Confusion

The issue now plaguing plaintiffs is proving likelihood of confusion. Keyword cases are fact dependent; a good set of facts can go a long way. The list of factors a court looks at vary depending on which Circuit Court is handling the case. If the Ninth Circuit is any indicator, there will not be a complete list for a while.

The Ninth Circuit in Network Automation v. Advanced Systems laid out eight Sleekcraft (AMF Inc. v. Sleekcraft Boats) factors to consider in trademark infringement cases. Noting that flexibility was important, the Ninth Circuit weighted each factor differently.

Ninth Circuit ruled that district courts should apply the eight Sleekcraft factors but only by “assigning each factor appropriate weight in accordance with its relevance to the factual circumstances presented.” The specific fact pattern of the case will determine which factor is most important. Any one factor can dominate a case. The Sleekcraft factors are: “(1) strength of the mark; (2) proximity of the goods; (3) similarity of the marks; (4) evidence of actual confusion; (5) marketing channels used; (6) type of goods and the degree of care likely to be exercised by the purchaser; (7) defendant’s intent in selecting the mark; and (8) likelihood of expansion of the product lines.”

However, the biggest surprise was that the Ninth Circuit added a new factor. A ninth factor, the labeling and appearance of the advertisement and the surrounding context of the search result page makes it more difficult for plaintiffs to win. The Ninth Circuit noted that ads that appear in the “sponsored links” section reduces the possibility a consumer will be confused as to the source of the link. The rationale is that the more defined the “sponsored links” are, the less confused the consumer.

The list of factors will likely evolve with time. The importance of each factor will also change. Earlier decisions emphasized simultaneous use of the internet as a marketing channel as an important factor. Today this factor has little relevance. The Ninth Circuit held that “today it would be the rare commercial retailer that did not advertise online.” And while earlier cases found infringement from the use of third party names as domain names, the Ninth Circuit held that online customers were sophisticated enough not to be fooled: “They skip from site to site, ready to hit the back button when they’re not satisfied with a site’s contents . . . consumers don’t form any firm expectations about the sponsorship of a website until they’ve seen the landing page — if then.” (Toyota Motor Sales v. Tabari).

As a general precaution, potential plaintiffs should “print screen” and record each time they believe an infringement occurred. They should use different key words. For a company called X Y Z storage search on Google for X Y Z, X Y, X Z, or Y Z. Different searches may trigger different advertisements. Depending on how the Fourth Circuit case Rosetta Stone vs. Google comes out, plaintiffs may even be able to sue Google for infringement.