The widespread use and ease of access to digital content has resulted in some of the biggest changes in copyright law — both in terms of new statutes and case law. This can be attributed to the ease with which digital copies can be made and the fact that those copies do not result in any degradation of quality, leading to their widespread distribution — both legally and illegally.
“The nature of digital content makes the license agreement much more important than before,” says Stephen T. Kong, shareholder, Corporate and Intellectual Property Groups at Stradling Yocca Carlson & Rauth. “We as lawyers are always worried about what rights are granted to a client who wants to do something with the digital content because it often is only the specifics of the legal agreement that means the difference between a lawful and an infringing use.”
Smart Business spoke with Kong about licensing digital content to ensure proper legal protections are in place.
What is it about digital content that creates such unique legal issues?
The proliferation of high-speed Internet has made it easy for individuals to create and transmit digital content. Previously, the physical nature of the non-digital good acted as a practical deterrent to infringement. Booksellers couldn’t make illegal copies of books in an efficient and profitable manner for the purpose of reselling them. By contrast, Amazon has many licensing agreements in place to distribute digital versions of books formerly available exclusively on tangible media.
The reality of video streaming paved the way for services such as Hulu and Netflix, which are thriving because people care less and less about owning a copy of a movie as long as they can get a streamed version relatively on demand. All of this adds up to the need for copyright law to adapt.
What does it mean to ‘license’ digital content?
There’s a fundamental difference between licensed and owned content. Many companies are dealing primarily with licensed content, which is owned by someone who has given permission to another to display or distribute their content. Whoever owns the copyright rights can control aspects of the distribution, reproduction, modification and display of the copyrighted content. In the digital world, you generally can’t do anything with digital content that doesn’t involve exercising one of those protected rights.
What drives licensing lawyers crazy is when copyright owners of digital content grant to their licensee the right to ‘use’ digital content. Since ‘use’ is not one of the enumerated rights under copyright law, arguments can arise as to what rights are actually granted.
How is ownership determined?
The general default rule is the creator of a work owns the work; but for companies, there is a key exception. Generally, anything created by employees for their employer in the course of their employment results in the employer owning the copyright rights in the work product. So large media companies employing writers have a large amount of copyrighted works available for distribution in many avenues.
What are some important aspects of licensing digital content?
A licensor can ‘slice and dice’ copyright rights in many ways, usually to preserve markets for other licensees. Certain geographic markets may be set aside for others. The copyright owner may wish to have different licensees exploit different channels of distribution. All of this makes the role of the licensing lawyer very important because the license agreement needs to be carefully reviewed in the context of determining the scope of a licensee’s rights.
Making the licensing lawyer’s task a bit more complicated sometimes is the existence of agreements written before the advent of digital technology. There was no law governing Internet radio royalties until Internet radio became a reality, and older agreements reflect the fact that a freelance writer would not necessarily have thought to grant or explicitly deny rights for republication of an article in different digital formats.
Stephen T. Kong is a shareholder, Corporate and Intellectual Property Groups, at Stradling Yocca Carlson & Rauth. Reach him at (424) 214-7013 or firstname.lastname@example.org.
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While it may be tempting to snag an image from the Web and use it on your company website, that image is protected under copyright law and using it without permission could lead to significant losses.
“Copyright infringement is essentially a ‘strict liability’ offense,” says John Zanghi, a partner at Fay Sharpe. “In other words, if you infringe on a copyright owner’s exclusive rights you can be found liable for copyright infringement, even if you had no knowledge that an infringement occurred or did not make any money using the photograph.”
Smart Business spoke with Zanghi about copyright law and five strategies to protect your company from infringement.
Who is the owner of a photograph and what rights do they have?
The owner of a photograph is the creator of the work, which is generally the photographer. There are situations where an employer owns the photograph, for example, through a work-for-hire situation, or when the owner of the work transfers the rights to another via a written assignment.
Generally, however, an independent contractor or freelancer owns the work they produce. Being the owner means having exclusive rights to the work, such as the exclusive right to display it, prepare derivative works or modifications based on the original copyrighted work, and the right to distribute copies to the public through any means.
What is fair use of a photograph?
Fair use is an exception to copyright law that allows the use of a photograph without express authorization from the owner. Generally, fair use is limited to various specific purposes, such as criticism, teaching, scholarship, research, comment and news reporting.
Courts look at the purpose and character of the use to determine if an act truly constitutes fair use. Other factors are the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the work as a whole, and the effect of the use upon the potential market or value of the copyrighted work.
If a photograph is posted on the Internet, is it open to public use unless clearly marked as copyrighted?
A copyright owner doesn’t have to provide notice to preserve copyright protection because it’s protected through public display. A photographer could expressly state that a photograph is in the public domain, but it’s safer to assume it’s not and that the copyright owner needs to be contacted to use the photograph. Even if you’re trying to minimize your exposure by citing the source, you could still infringe the copyright in the photograph.
If I’m not the person posting the image to the website, am I still infringing on the copyright?
The company may be liable regardless of who posts the image. The company may try to say it wasn’t aware the Web designer was using a copyrighted image, but if the company had control over the Web designer, it could be vicariously liable for the infringement. Most likely both parties could be held liable. Ignorance is not an excuse for copyright infringement.
Do I have to make money from using the photographs to infringe?
No. Copyright infringement is a strict liability offense. However, the amount of money you made on a protected image could factor into damages for the infringement and could affect the extent to which the copyright owner is entitled to statutory damages. Those can range from $750 to $150,000 for willful infringement, presuming the copyright owner has timely registered the copyright. But even if they didn’t have a timely registration, the owner could still seek actual damages for the profits obtained by the copyright infringer.
What strategies should business owners keep in mind regarding photographs?
- When hiring a photographer, have a contract outlining the scope of use of the photographs including when and how you may use them. To take ownership of and any or all of the copyright owner’s exclusive rights in the photographs, ask for an express, written transfer of the rights from the photographer. It’s always best to get your rights on paper and up front.
- When posting images to your website, make it clear to the Web developers that they must secure the rights and proper licenses to any image they use. Advise them not to just lift photographs from the Web without receiving permission from the owners. An infringement could lead to a cease and desist order that causes you to pull the images you’ve used from your site or from other materials and subject you to possible damages. To avoid this, you could hire your own photographer to take the photographs, which allows you to control the content.
- In the event that you do produce your own photographs and you do own the exclusive rights in such photographs, you may want to protect them further with copyright registration. There are different rules of how to submit photographs or collections of photographs, so ask your Intellectual Property attorney about the best procedure. But generally, because of the timeliness required for registration and the advantages of getting protection, it’s something to consider right away. You may also consider embedding a copyright notice in the digital image metadata.
- When using images from the Web, assume they are not in the public domain unless there is an express statement to that effect. Just because they’re on the Web doesn’t mean they’re free. Assume there is a copyright owner because you could be liable.
- It’s always better to obtain and define your rights before a problem develops, so get contracts when working with contractors. Generally, legal issues develop because someone didn’t imagine there would be a problem and he or she moves forward with a handshake agreement. Then when someone finds there’s more value in a photograph than he or she initially thought, disputes arise. So define the agreement up front, and establish what you’ll pay and what you’ll get back in return.
John Zanghi is a partner at Fay Sharpe. Reach him at (216) 363-9000 or email@example.com.
Insights Legal Affairs is brought to you by Fay Sharpe LLP