THE MULTIMEDIA LAW HANDBOOK A PRACTICAL GUIDE FOR DEVELOPERS AND PUBLISHERS by J. Dianne Brinson and Mark F. Radcliffe LICENSE NOTICE: This selection may be copied in its entirety for personal or educational use (the copy should include a License Notice at the beginning and at the end). It may posted on gopher and FTP sites, but please provide notice of such posting to the authors at the addresses below. It may not be modified without the written permission of the authors. This selection is from the Multimedia Law Handbook which is designed to provide accurate information on the legal issues in multimedia. This selection is provided with the understanding that the authors are not engaged in rendering legal services. If you have a legal problem, you should seek the advice of experienced counsel. You can order the book by calling 800Ð523Ð3721 or faxing 810Ð987Ð3562 (for more details see the information at the end of the selection). TABLE OF CONTENTS Introduction Part 1: Building Blocks 1 The Legal System in the U.S. 2 Copyright Law 3 Patent, Trademark, and Trade Secret Law 4 Ownership of Copyrights and Other Intellectual Property 5 Contract Law Basics Part 2: Production Relationships 6 Development Agreements 7 Employees 8 Independent Contractors and Consultants Part 3: Other Production Issues 9 Using PreÐexisting Works: Determining Whether You Need Permission 10 Clearing Rights and Obtaining Licenses 11 Licensing in the Entertainment and Publishing Industries 12 Using Music in Your Multimedia Product 13 Avoiding Violations of the Laws of Publicity, Privacy, and Libel 14 Dealing with Unions Part 4: PostÐProduction Issues 15 Choosing a Name for Your Product 16 Protecting Your Intellectual Property Rights 17 Laws Governing the Sale of Multimedia Works 18 Negotiating Distribution Agreements 19 Publisher Concerns APPENDICES Appendix A Selected Statutes Appendix B Form Contracts Appendix C Clearing Agents Appendix D Stockhouses and Other Content Sources Appendix E Multimedia Organizations Appendix F Multimedia Publications ACKNOWLEDGMENTS We would like to extend our profound thanks to all of the individuals who generously provided their assistance in writing this book. In many ways, this book was a collaborative project. It depended on the willingness of many people to provide us with information and keep us informed of the almost daily changes in this area. We wish to thank particularly Craig Sheumaker for urging us to undertake the project and the partners of Ware & Freidenrich (now Gray Cary Ware & Freidenrich) who generously provided the form contracts in Appendix B. We also wish to thank Mary Clyde, who spent her weekends organizing the appendices. This book includes our opinions. They should not be interpreted as those of Ware & Freidenrich or its clients. We have done our best to accurately reflect the practices in this rapidly evolving industry, but any errors are solely our responsibility. We would like to thank the following individuals for their assistance: Warren Adler Directors Guild of America Ed Bernstein The Software Toolworks, Inc. Joel Block Writers Guild of America Brian Blum The Software Toolworks, Inc. John Campbell Media Vision Technology, Inc. Vincent Castellucci The Harry Fox Agency, Inc. Dominique Claessens Image Smith, Inc. Gary Culpepper Law Offices of Gary Culpepper Richard Curtis Richard Curtis Associates Bob Derber Maxis John Evershed Mondo Media Darlene deMontfreid Media Vision Technology, Inc. Halle Eavelyn Hyperbole Dick Gabriel American Federation of Musicians Ted Grabowski The Software Toolworks, Inc. Craig Harding Kaleida Labs, Inc. Bob Kohn Borland International, Inc. Jake Myrick Image Smith, Inc. Jim Myrick Image Smith, Inc. Deirdre O'Malley Mondo Media Jeannine Parker IICS Randy Parker Clearing House, Ltd. Michael Prohaska Screen Actors Guild Greg Roach Hyperbole Jim Roberts Image Smith, Inc. Lionel Sobel Loyola Law School Allen Thygessen Media Vision Technology, Inc. Karen Stuart AFTRA Chuck Warn Warn Communications Group BIOGRAPHIES J. Dianne Brinson has Bachelor of Arts in Political Science and Russian, summa cum laude, from Duke University and a law degree from Yale Law School. She is the author of a number of articles in the intellectual property field and is a former member of the Executive Committee of the Intellectual Property Section of the State Bar of California. She has practiced law at firms in Los Angeles and Atlanta. She is a former tenured law professor at Georgia State University and has taught at Golden Gate Law School and Santa Clara School of Law. She is now in private practice as a consultant in Menlo Park, California. She can be reached at laderapres@aol.com Mark F. Radcliffe is a partner in the law firm of Gray Cary Ware & Freidenrich in Palo Alto (formerly Ware & Freidenrich). He has been practicing intellectual property law, with a special emphasis on computer law, for over ten years, and has been chairman of the Computer Law Section of the Bar Association of San Francisco and the Computer Industry Committee of the Licensing Executives Society. He is a member of the Multimedia Law Group at Gray Cary Ware & Freidenrich and represents many multimedia developers and publishers. He has spoken on multimedia legal issues at the American Association of Publishers, American Magazine Conference, National Association of Broadcasters annual convention, Game Developer's Workshop, SeyboldÐSan Francisco, and IEEE. He has a Bachelor of Science in Chemistry, magna cum laude, from the University of Michigan, and a law degree from Harvard Law School. He is the author of the chapter on legal issues in the National Association of Broadcasters' book Multimedia 2000 He has been quoted in the New York Times, Wall Street Journal , Daily Variety and San Francisco Chronicle on legal issues in multimedia. He can be reached at mradcliffe@gcwf.com. CHAPTER 1 THE U.S. LEGAL SYSTEM In the United States, laws are made at the federal and state levels. Laws adopted by legislative bodies Ð Congress and state legislatures Ð are called "statutes." The federal and state courts enforce statutes. They also create law. This chapter describes some of the basic concepts of our legal system, and the roles played by legislatures and courts. FEDERAL STATUTES The U.S. Constitution gives Congress to power to enact federal laws ("statutes") on certain subjects. The Copyright Act (discussed extensively in Chapter 2) is one example of a statute adopted by Congress. Congress's power to enact the Copyright Act stems from Article I, Section 8, of the Constitution, which authorizes Congress to establish laws giving "authors and inventors the exclusive right to their respective writings and discoveries" to encourage progress in the arts and sciences. According to the Constitution, all powers not expressly delegated to Congress are reserved to the states. The "commerce clause" of the Constitution (which concerns interstate commerce) is generally viewed as giving Congress broad power to regulate matters affecting interstate commerce Ð trademarks used in interstate commerce, for example. Federal lawÐmaking begins when a member of the Senate or the House of Representatives introduces a bill. Most bills are referred to standing committees (for example, the House Committee on the Judiciary) and to subcommittees for study. Bills are later brought before the Senate or House for debate and vote. Differences between the Senate and House versions of a bill are resolved in joint conference committees. After the House and Senate have approved a uniform version of the bill, the bill is sent to the President. If the President signs the bill, it becomes law. If the President vetoes the bill, it becomes law only if the Senate and House override the veto. This requires the consent of twoÐthirds of the members of the Senate and House. STATE STATUTES State legislatures can pass laws on matters for which they share jurisdiction with Congress. Trademark law is an example of a shared jurisdiction. In other matters, the federal government has taken exclusive jurisdiction. Copyright is an example: The Copyright Act prohibits the states from granting copyrightÐlike protection. States can also pass laws on matters in which the Constitution does not grant jurisdiction to the federal government. State lawÐmaking occurs through a process that is similar to the federal process. THE COURTS The courts enforce statutes and interpret them. They also invalidate unconstitutional statutes, and make law in areas not covered by statutes. Here are some examples of the four main roles played by our courts: ¥ Enforcement The Copyright Act gives a copyright owner the exclusive right to reproduce the owner's work. A copyright infringement suit is an example of court enforcement of a statute. (Copyright infringement is discussed in "Infringement," Chapter 2.) ¥ Interpretation. According to the Copyright Act, the copyright in a work created by an employee within the scope of his or her employment is owned by the employer. The Copyright Act does not define the term "employee." The Supreme Court case that defines the term is an example of court interpretation of a statute. (That case is discussed in the "The Work Made for Hire Rule," Chapter 4.) ¥ Invalidation. The courts invalidate unconstitutional laws. Unconstitutional laws are laws that conflict with provisions of the Constitution. The Constitution is the supreme law of the United States. Many "constitutionality" cases involve claims that a law violates the Constitution's Bill of Rights (the first ten amendments). In Roe v. Wade, the Supreme Court invalidated a state statute restricting women's access to abortion. According to the Court, the statute violated a pregnant woman's constitutional right of privacy. ¥ Making Law. The courts create the law for "common law" subject areas. Common law covers areas not covered by statutes. In many states, for example, individuals' rights of privacy and publicity (discussed in "The Rights of Publicity and Privacy," Chapter 13) are protected under common law rather than under statutory laws. Types of Courts There are several types of courts. The federal and state court systems consist of two levels of courts: Trial courts and appellate courts. Cases are tried in trial courts. Appellate courts review the decisions of the trial courts. (Appellate and trial courts are discussed in "Civil Lawsuits," later in this chapter.) The federal court system is divided into 13 judicial circuits. Eleven of the circuits are numbered. Each of the numbered circuits contains more than one state. The Ninth Circuit, for example, covers California, Oregon, Washington, Idaho, Nevada, Arizona, Alaska, and Hawaii. The 12th and 13th circuits are the District of Columbia Circuit and the Federal Circuit. The Federal Circuit handles appeals in patent cases and Claims Court cases. Each federal circuit has one appellate court. These courts are known as Courts of Appeals or Circuit Courts. The Supreme Court reviews the decisions of the Courts of Appeals. Each federal circuit is divided into judicial districts. A district can be as small as one city or as large as an entire state. The trial courts are known as the United States District Courts. Jurisdiction The federal courts have jurisdiction over cases involving federal statutes (the Copyright Act, for example) and other "federal questions." They also have jurisdiction over cases in which the party filing the suit and the party being sued reside in different states. This type of federal jurisdiction is known as "diversity" jurisdiction. Other types of cases must be brought in state court. Civil and Criminal Cases A criminal case is brought by the federal government or a state to prosecute a defendant (the party sued) for violations of the government's criminal laws. Murder and burglary are examples of violations of criminal laws. If the defendant in a criminal case is found guilty by the jury, he or she is sentenced by the court to serve a jail sentence or pay a fine as punishment for the crime. A civil case is a case brought by one party (the "plaintiff") against another party (the "defendant") to resolve a legal dispute involving rights based on statutory law or common law. A copyright infringement case is an example of a civil case involving statutory law. A suit seeking damages for a writer's breach of a contract (in which the writer promised to create a script for a movie but failed to do so) is an example of a civil case involving common law rights. (Breach of contract is discussed in "What Is a Contract?," Chapter 5.) While certain violations of the Copyright Act and the Lanham Act (the federal trademark statute) are criminal violations, multimedia developers and publishers will be concerned primarily with civil cases. Civil Lawsuits There are several stages in civil lawsuits, from initiation to trial and then on to stages of appeal. We'll discuss these stages in this section. Initiation A civil lawsuit is initiated when the plaintiff files a "complaint" against the defendant alleging that the defendant has wronged the plaintiff in some way recognized by the law. In most civil lawsuits, the plaintiff asks the court to award the plaintiff "damages" (a remedy for the defendant's wrongdoing Ð usually money) or to order the defendant to do something. The defendant responds to the allegations in the complaint by filing an "answer" (a document in which the defendant admits or denies the complaint's allegations and states defenses). The defendant can also file a "counterclaim" against the plaintiff (allegations that the plaintiff has wronged the defendant). Trial If the parties do not "settle" the case (reach their own agreement on how to resolve the dispute), the case eventually goes to trial. In most types of civil cases, the Constitution gives the parties a right to a jury trial. The role of the jury is to decide questions of fact. However, in some complex cases, the parties choose to dispense with the jury and have the case decided by the judge. Appeal If the losing party in a civil lawsuit is not satisfied with the decision of the trial court, the losing party can appeal the case to the appropriate appellate court. In the federal court system, the appeal generally must be filed with the Court of Appeals for the judicial circuit in which the trial was held. A case tried in the United States District Court for the Northern District of California, for example, must be appealed to the Court of Appeals for the Ninth Circuit. An appellate court's job in reviewing a trial court's decision is to look for "mistakes of law" made by the trial court. Appellate courts do not "second guess" factual issues decided by trial courts. In our legal system, factual issues are supposed to be resolved by the jury, not by the appellate court. So long as there is adequate factual evidence to support the verdict, an appellate court will not reverse a trial court's decision or "remand" the case (send it back to the trial court for retrial) unless they find that the trial court made a "mistake of law." Filing an appeal is probably a waste of money unless a losing party can reasonably hope to convince the appellate judges that there is insufficient evidence to support the trial court's decision, or that the trial court misapplied the law. Example: Plaintiff's lawsuit alleges that Defendant infringed the copyright on Plaintiff's song by copying the melody of the song. The jury found that Defendant did not infringe Plaintiff's copyright. If the jury reached its decision after being told by the judge that a song's melody is not protected by copyright (a mistake in the applicable law, copyright law), Plaintiff has a good basis for appeal. However, if the jury reached its decision after listening to Defendant's song and concluding that the melody of Defendant's song is not similar to the melody of Plaintiff's song, Plaintiff does not have a strong basis for appeal. (Whether or not the songs have similar melodies is a factual determination.) Appellate courts generally issue written opinions explaining how they reached their conclusions on whether to affirm (uphold), reverse, or remand a case. These opinions are important parts of the development of the law because our legal system is based on "precedent" (reliance on previously decided cases). (The role of precedent is discussed in "Precedent," later in this chapter.) Supreme Court Review There are two ways to get a case reviewed by the U.S. Supreme Court: by appeal and by certiorari. The losers in certain types of cases Ð for example, cases involving claims that state statutes are unconstitutional Ð have a right to appeal to the Supreme Court. For most cases, though, there is no right of appeal to the Supreme Court. However, a party who has lost a case at the federal Court of Appeals level can file a petition for certiorari with the Supreme Court. A petition for certiorari is a document explaining why the Supreme Court should review a case. If the Supreme Court grants certiorari, the appeal proceeds. If the Court denies it, the Court of Appeals' decision stands. Thousands of petitions for certiorari are filed each year and most are denied. The Supreme Court is likely to grant certiorari on a case only if the case involves a matter of national interest or the Court believes that it must decide the case to resolve conflicts among the Circuit Courts and create uniformity in federal law. Precedent An appellate court's decision on an issue is binding on lower courts in the appellate court's jurisdiction. Thus, an appellate court's decisions are "precedent" that the lower courts in the appellate court's jurisdiction must follow (apply). Example: In Effects Associates, Inc. v. Cohen, the United States Court of Appeals for the Ninth Circuit held that the grant of a nonexclusive copyright license can be implied from the copyright owner's conduct. (Implied licenses are discussed in "Implied Licenses," Chapter 8.) This decision is binding on the federal district courts located in the Ninth Circuit. Those courts are not free to decide that a nonexclusive copyright license cannot be implied from conduct. A lower court's decision is not binding on a higher court. In fact, appellate courts frequently reverse decisions made by trial courts to correct the trial courts' "mistakes of law." Because the United States Supreme Court is the "highest court in the land," the Supreme Court's decisions are binding on all courts in the United States. Example: In Community for Creative Nonviolence v. Reid, the Supreme Court decided how to apply the Copyright Act's "work made for hire" rule to works created by independent contractors. That decision is binding on all courts in the United States. (Work made for hire is discussed in "The Work Made for Hire Rule," Chapter 4.) A court's decision may "be persuasive" outside its region. For a decision to "be persuasive" means that other courts, while not compelled to follow it, choose to follow it. For example, if the Court of Appeals for the Eleventh Circuit has never decided whether a nonexclusive copyright license can be implied from the copyright owner's conduct but the Ninth Circuit has, the Eleventh Circuit may reach the same conclusion as the Ninth Circuit when it decides that issue because it believes that the Ninth Circuit's decision was correct. Earlier court decisions are generally "followed" by the deciding court in all later cases involving the same issue. For example, if the Ninth Circuit decides a case that involves the same legal issues that were involved in a previous case, it is likely to decide those issues as it did in the previous case. The reliance that our courts put on previously decided cases in deciding new cases is known as stare decisis. That is Latin for "let the decision stand." The doctrine of stare decisis does not prevent a court from "overruling" its own previously decided cases. However, stare decisis discourages rapid and radical changes in the law. As Supreme Court Justice William O. Douglas once wrote in the Columbia Law Review, "stare decisis provides some moorings so that men may trade and arrange their affairs with confidence....It is the strong tie which the future has to the past." The doctrine of stare decisis is the reason that an attorney performs legal research hoping to find cases supporting the attorney's position on a legal issue. FINDING THE LAW Because law is made by the courts on a precedent basis following the doctrine of stare decisis, and also made by Congress and the state legislatures, knowing the law on a given topic generally requires a review of both statutory law and case law. Statutes Federal and state statutory laws can be found by consulting published "codifications" of laws in law libraries maintained by law schools, law firms, courts, and bar associations. To find a federal law such as the Copyright Act, for example, you would look in the United States Code, which is divided into "titles." Federal and state statutory laws can also be obtained "onÐline" from Westlaw or Lexis, two computerized legal research services. Recently adopted laws may not be included in the published codifications of statutes. While the publishers of these codifications add new material regularly (in "pocket parts" inserted at the back of appropriate volumes), even the pocket parts may not include laws adopted in the most recent session of the legislature. Court Decisions Court decisions (also known as "case law") can be found in publications called "reporters." For example, decisions of the United States Supreme Court are published in the United States Reports, the Supreme Court Reporter, and the Lawyers Edition (three different "reporters" from three different publishers). These decisions are also available from computerized services such as Westlaw and Lexis, which provide onÐline research assistance for locating cases on desired topics. "Digests" that divide decide cases into topics are also helpful for locating relevant cases. Other research resources help lawyers determine whether cases in which they are interested have been reversed by a higher court or overruled (modified by a later decision of the same court). Various publishing companies publish "annotated" statutory codes, which bring statutes and relevant court decisions together in one source. West Publishing Company, for example, publishes the United States Code Annotated, which lists the court decisions enforcing or interpreting each provision of the United States Code. ARBITRATION The parties to a dispute sometimes choose to resolve a dispute through arbitration rather than through court litigation. In arbitration, a dispute is resolved by a neutral arbitrator rather than by a judge or jury. Arbitration is generally quicker and cheaper than court litigation. Specially qualified arbitrators are often used to resolve technical disputes. Both parties must agree to submit their dispute to arbitration. Many contracts require that disputes be resolved through arbitration rather than through litigation. In the United States, many arbitration cases are handled by arbitrators approved by the American Arbitration Association, which has offices in a number of cities. Arbitration is similar to a trial in that both parties present their cases to the arbitrator, who renders a decision. Appeals of arbitrators' decisions are generally possible only if the arbitration was conducted improperly. GOVERNMENT OFFICES AND AGENCIES Government offices and agencies play an important role in our legal system. The Copyright Office and the U.S. Patent and Trademark Office are the key federal government offices for multimedia developers and publishers. (The Copyright Office is discussed in "Copyright Protection," Chapter 16. The U.S. Patent and Trademark Office is discussed in "Patent Law" and "Trademark Law," Chapter 3.) CHAPTER 2 COPYRIGHT LAW There are four major intellectual property laws in the United States that are important for multimedia developers and publishers: ¥ Copyright law. ¥ Patent law. ¥ Trademark law. ¥ Trade secret law. In this chapter, we discuss copyright law, the most important of the intellectual property laws for developers and publishers of multimedia works. Patent law, trademark law, and trade secret law are discussed in Chapter 3. Ownership of copyrights and other intellectual property is discussed in Chapter 4. In Chapter 16, we discuss ways in which you can use the four intellectual property laws to protect your multimedia works. Other laws that create rights somewhat like intellectual property law rights Ð privacy, publicity, and dilution laws Ð are discussed in Chapters 13 and 15. INTRODUCTION Copyright law in the U.S. is based on the Copyright Act of 1976, a federal statute that went into effect on January 1, 1978. We'll refer to this statute throughout the book as the Copyright Act. Excerpts from the Copyright Act appear in Appendix A. States cannot enact their own laws to protect the same rights as the rights provided by the Copyright Act. For example, a state cannot pass a law to extend copyright protection on works in the state beyond the term of protection given by the Copyright Act. State "copyright" laws exist, but they are limited to works that cannot be protected under federal copyright law. (Requirements for federal protection are discussed in "Standards," later in this chapter.) Copyright law is important for multimedia developers and publishers for two reasons: ¥ Original multimedia works are protected by copyright. The Copyright Act's exclusive rights provision gives developers and publishers the right to control unauthorized exploitation of their works. (Steps to maximize your protection are discussed in "Copyright Protection," Chapter 16.) ¥ Multimedia works are created by combining "content" Ð music, text, graphics, illustrations, photographs, software Ð that is protected under copyright law. Developers and publishers must avoid infringing copyrights owned by others, as explained in Chapter 9. TYPES OF WORKS PROTECTED BY COPYRIGHT Copyright law protects "works of authorship." The Copyright Act states that works of authorship include the following types of works: ¥ Literary works. Novels, nonfiction prose, poetry, newspaper articles and newspapers, magazine articles and magazines, computer software, software documentation and manuals, training manuals, manuals, catalogs, brochures, ads (text), and compilations such as business directories ¥ Musical works. Songs, advertising jingles, and instrumentals. ¥ Dramatic works. Plays, operas, and skits. ¥ Pantomimes and choreographic works. Ballets, modern dance, jazz dance, and mime works. ¥ Pictorial, graphic, and sculptural works. Photographs, posters, maps, paintings, drawings, graphic art, display ads, cartoon strips and cartoon characters, stuffed animals, statues, paintings, and works of fine art. ¥ Motion pictures and other audiovisual works. Movies, documentaries, travelogues, training films and videos, television shows, television ads, and interactive multimedia works. ¥ Sound recordings. Recordings of music, sounds, or words. ¥ Architectural works. Building designs, whether in the form of architectural plans, drawings, or the constructed building itself. STANDARDS To receive copyright protection, a work must be "original" and must be "fixed" in a tangible medium of expression. Certain types of works are not copyrightable. Originality The originality requirement is not stringent: A work is original in the copyright sense if it owes its origin to the author and was not copied from some preexisting work. A work can be original without being novel or unique. Example: Betsy's book How to Lose Weight is original in the copyright sense so long as Betsy did not create her book by copying existing material Ð even if it's the millionth book to be written on the subject of weight loss. Only minimal creativity is required to meet the originality requirement. No artistic merit or beauty is required. A work can incorporate preexisting material and still be original. When preexisting material is incorporated into a new work, the copyright on the new work covers only the original material contributed by the author. Example: Developer's multimedia work incorporates a number of photographs that were made by Photographer (who gave Developer permission to use the photographs in the multimedia work). The multimedia work as a whole owes its origin to Developer, but the photographs do not. The copyright on the multimedia work does not cover the photographs, just the material created by Developer. Facts owe their origin to no one and so are not original. A compilation of facts (a work formed by collecting and assembling data) is protected by copyright only to the extent of the author's originality in the selection, coordination, and arrangement of the facts. Example: Ralph created a neighborhood phone directory for his neighborhood by going doorÐtoÐdoor and getting his neighbors' names and phone numbers. The directory's facts (names and phone numbers) are not original. Ralph's selection of facts was not original (he "selected" every household in the neighborhood). His coordination and arrangement of facts (alphabetical order by last name) is routine rather than original. The directory is not protected by copyright. Fixation According to Section 101 of the Copyright Act, a work is "fixed" when it is made "sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration." It makes no difference what the form, manner, or medium is. An author can "fix" words, for example, by writing them down, typing them on an oldÐfashioned typewriter, dictating them into a tape recorder, or entering them into a computer. A live television broadcast is "fixed" if it is recorded simultaneously with the transmission. Uncopyrightable Works Works prepared by federal government officers and employees as part of their official duties are not protected by copyright. Consequently, federal statutes (the Copyright Act, for example) and regulations are not protected by copyright. This rule does not apply to works created by state government officers and employees. The design of a useful article is protected by copyright only if, and to the extent that, the design "incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article." For example, while a "normal" belt buckle is not protected, a threeÐdimensional beltÐbuckle design with a dolphin shape qualifies for limited protection. Uncopyrightable works and works for which copyright protection has ended are referred to as "public domain" works. (These works are discussed in "Public Domain Works," Chapter 9.) PROCEDURE FOR GETTING PROTECTION Copyright protection arises automatically when an original work of authorship is fixed in a tangible medium of expression. Registration with the Copyright Office is optional (but you have to register before you file an infringement suit). The use of copyright notice is optional for works distributed after March 1, 1989. Copyright notice can take any of these three forms: ¥ followed by a date and name. ¥ "Copyright" followed by a date and name. ¥ "Copr." followed by a date and name. The benefits of registering a copyright and using copyright notice are discussed in "Copyright Protection," Chapter 16. The role of notice for works distributed prior to March 1, 1989, is discussed in "Public Domain Works," Chapter 9. THE EXCLUSIVE RIGHTS A copyright owner has five exclusive rights in the copyrighted work: ¥ Reproduction Right. The reproduction right is the right to copy, duplicate, transcribe, or imitate the work in fixed form. ¥ Modification Right. The modification right (also known as the derivative works right) is the right to modify the work to create a new work. A new work that is based on a preexisting work is known as a "derivative work." ¥ Distribution Right. The distribution right is the right to distribute copies of the work to the public by sale, rental, lease, or lending. ¥ Public Performance Right. The public performance right is the right to recite, play, dance, act, or show the work at public place or to transmit it to the public. In the case of a motion picture or other audiovisual work, showing the work's images in sequence is considered "performance." ¥ Public Display Right. The public display right is the right to show a copy of the work directly or by means of a film, slide, or television image at a public place or to transmit it to the public. In the case of a motion picture or other audiovisual work, showing the work's images out of sequence is considered "display." The exclusive rights are discussed in more detail in "Myths," Chapter 9, and in the "Determining What Rights You Need," Chapter 10. INFRINGEMENT Anyone who violates any of the exclusive rights of a copyright owner is an infringer. Example: Developer scanned Photographer's copyrighted photograph, altered the image by using digital editing software, and included the altered version of the photograph in a multimedia work that Developer sold to consumers. If Developer used Photographer's photograph without permission, Developer infringed Photographer's copyright by violating the reproduction right (scanning the photograph), the modification right (altering the photograph), and the distribution right (selling the altered photograph as part of the multimedia work). A copyright owner can recover actual or, in some cases, statutory damages from an infringer (see "Copyright Protection," Chapter 16). The federal district courts have the power to issue injunctions (orders) to prevent or restrain copyright infringement and to order the impoundment and destruction of infringing copies. DURATION OF THE RIGHTS For works created on and after January 1, 1978, the copyright term for works created by individuals is the life of the author plus 50 years. The copyright term for "works made for hire" is 75 years from the date of first "publication" (distribution of copies to the general public) or 100 years from the date of creation, whichever expires first. Works made for hire are works created by employees for employers and certain types of specially commissioned works (see "The Work Made for Hire Rule," Chapter 4). The duration of copyright for preÐ1978 works is discussed in "Public Domain Works," Chapter 9. LIMITATIONS ON THE EXCLUSIVE RIGHTS The copyright owner's exclusive rights are subject to a number of exceptions and limitations that give others the right to make limited use of a copyrighted work. Major exceptions and limitations are outlined in this section. (They are discussed in detail in "When You Don't Need a License," Chapter 9.) Ideas Copyright protects only against the unauthorized taking of a protected work's "expression." It does not extend to the work's ideas, procedures, processes, systems, methods of operation, concepts, principles, or discoveries. Facts A work's facts are not protected by copyright, even if the author spent large amounts of time, effort, and money discovering those facts. Copyright protects originality, not effort or "sweat of the brow." Independent Creation A copyright owner has no recourse against another person who, working independently, creates an exact duplicate of the copyrighted work. The independent creation of a similar work or even an exact duplicate does not violate any of the copyright owner's exclusive rights. Fair Use The "fair use" of a copyrighted work, including use for purposes such as criticism, comment, news reporting, teaching, scholarship, or research, is not an infringement of copyright. Copyright owners are, by law, deemed to consent to fair use of their works by others. The Copyright Act does not define fair use. Instead, whether a use is fair use is determined by balancing these factors: ¥ The purpose and character of the use. ¥ The nature of the copyrighted work. ¥ The amount and substantiality of the portion used in relation to the copyrighted work as a whole. ¥ The effect of the use on the potential market for, or value of, the copyrighted work. INTERNATIONAL PROTECTION U.S. authors automatically receive copyright protection in all countries that are parties to the Berne Convention for the Protection of Literary and Artistic Works, or parties to the Universal Copyright Convention (UCC). Most countries belong to at least one of these conventions. Members of the two international copyright conventions have agreed to give nationals of member countries the same level of copyright protection they give their own nationals. Example: Publisher has discovered that bootleg copies of one of its multimedia works are being sold in England. Because the United Kingdom is a member of the Berne Convention and the UCC, Publisher's work is automatically protected by copyright in England. When Publisher files a copyright infringement action in England against the bootlegger, Publisher will be given the same rights that an English copyright owner would be given. Works of foreign authors who are nationals of Berne or UCCÐ member countries automatically receive copyright protection in the U.S., as do works first published in a Berne Convention or UCC country. Unpublished works are subject to copyright protection in the U.S. without regard to the nationality or domicile of the author. CHAPTER 3 PATENT, TRADEMARK, AND TRADE SECRET LAW While copyright law is the most important intellectual property law for protecting rights in multimedia works, you need to know enough about patent, trademark, and trade secret law to avoid infringing intellectual property rights owned by others and to protect your multimedia works. These three intellectual property laws are discussed in this chapter. In Chapter 16, we discuss ways in which you can use these three laws and copyright law to protect your multimedia works. Ownership of intellectual property is discussed in Chapter 4. Choosing product names is covered in Chapter 15. PATENT LAW Patent law in the U.S. is based on a federal statute, the Patent Act. States are prohibited from granting protection similar to that provided by the Patent Act. Types of Works Protected Patent law protects inventions and processes ("utility" patents) and ornamental designs ("design" patents). Inventions and processes protected by utility patents can be electrical, mechanical, or chemical in nature. Examples of works protected by utility patents are a microwave oven, genetically engineered bacteria for cleaning up oil spills, a computerized method of running cash management accounts, and a method for curing rubber. Examples of works protected by design patents are a design for the sole of running shoes, a design for sterling silver tableware, and a design for a water fountain. Standards There are strict requirements for the grant of utility patents and design patents. We'll discuss the requirements in this section. Utility Patents To qualify for a utility patent, an invention must be new, useful, and "nonobvious." To meet the novelty requirement, the invention must not have been known or used by others in this country before the applicant invented it, and it also must not have been patented or described in a printed publication in the U.S. or a foreign country before the applicant invented it. The policy behind the novelty requirement is that a patent is issued in exchange for the inventor's disclosure to the public of the details of his invention. If the inventor's work is not novel, the inventor is not adding to the public knowledge, so the inventor should not be granted a patent. Meeting the useful requirement is easy for most inventions. An invention is useful if it can be applied to some beneficial use in society. To meet the nonobvious requirement, the invention must be sufficiently different from existing technology and knowledge so that, at the time the invention was made, the invention as a whole would not have been obvious to a person having ordinary skill in that field. The policy behind this requirement is that patents should only be granted for real advances, not for mere technical tinkering or modifications of existing inventions. It is difficult to obtain a utility patent. Even if the invention or process meets the requirements of novelty, utility, and nonobviousness, a patent will not be granted if the invention was patented or described in a printed publication in the U.S. or a foreign country more than one year before the application date, or if the invention was in public use or on sale in the U.S. for more than one year before the application date. If you think your multimedia work involves technology that might be patentable, you should contact a patent attorney before you display or distribute your work. In the multimedia field, an example of an invention that might be patentable is a software engine for multimedia works. An example of a process that might be patentable is an instructional method for using interactive video technology in classrooms (Optical Data Corporation was recently granted two patents covering such a process). Unrealized mental conceptions are not patentable. Methods of transacting business and printed matter without physical structure are not patentable. Discoveries of scientific principles, laws of nature, and natural phenomena are not patentable (although applications of such discoveries are). The discovery of a new use for an old product is not patentable. Design Patents To qualify for a design patent, a design must be new, original, and ornamental. Design patents may be an option for protecting some elements of multimedia works (user interfaces, for example, which can also be protected through copyright law). However, design patents are considered rather weak intellectual property protection, and owners of design patents rarely sue to enforce their patents against infringers. Procedure for Getting Protection Patent protection is obtained by demonstrating in an application filed with the U.S. Patent and Trademark Office that the invention meets the stringent standards for grant of a patent. The patent application process is an expensive, timeÐconsuming process (it generally takes at least two years). Although you can file a patent application yourself, the application process is very complex. You should consider using an experienced patent attorney or patent agent (a nonlawyer who has passed the special patent bar exam given by the U.S. Patent and Trademark Office). Exclusive Rights A patent owner has the right to exclude others from making, using, or selling the patented invention or design in the United States during the term of the patent. Anyone who makes, uses, or sells a patented invention or design within the United States during the term of the patent without permission from the patent owner is an infringer Ð even if he or she did not copy the patented invention or design or even know about it. Example: Developer's staff members, working on their own, developed a software program for manipulating images in Developer's multimedia works. Although Developer's staff didn't know it, Inventor has a patent on that method of image manipulation. Developer's use of the software program infringes Inventor's patent. Duration Utility patents are granted for a period of 17 years. Design patents are granted for a period of 14 years. Once the patent on an invention or design has expired, anyone is free to make, use, or sell the invention or design. Limitations on the Exclusive Rights There are two major limitations on the patent owner's exclusive rights. They are discussed in this section. Functionally Equivalent Products A patent owner can exclude others from making, using, or selling products or using processes that do substantially the same work as the patented invention in substantially the same manner. However, a patent does not protect the patent owner from competition from functionally equivalent products or processes that work in different ways. Example: Microco owns a patent covering a laser printer. While Microco can prevent others from making, using, or selling laser printers that work in substantially the same manner as Microco's printer, it cannot prevent others from making, using, or selling laser printers that operate in a different manner. Invalidation The validity of an issued patent is subject to challenge in an infringement proceeding. Defendants in infringement suits usually raise the defense of patent invalidity, asserting that the invention covered by the patent was not novel or nonobvious. It is not unusual for a patent infringement suit to result in a determination that the U.S. Patent and Trademark Office made a mistake in granting the patent. TRADEMARK LAW Trademarks and service marks are words, names, symbols, or devices used by manufacturers of goods and providers of services to identify their goods and services, and to distinguish their goods and services from goods manufactured and sold by others. Example: The trademark Wordperfect is used by the Wordperfect Corporation to identify that company's word processing software and distinguish that software from other vendors' word processing software. For ease of expression, we will use "trademark" in this book to refer to both trademarks (used on goods) and service marks (used for services). For trademarks used in commerce, federal trademark protection is available under the federal trademark statute, the Lanham Act. (We will refer to this statute as the Lanham Act in this book.) Many states have trademark registration statutes that resemble the Lanham Act, and all states protect unregistered trademarks under the common law (nonstatutory law) of trademarks. Types of Works Protected Examples of words used as trademarks are Kodak for cameras and Burger King for restaurant services. Examples of slogans used as trademarks are Fly the Friendly Skies of United for airline services and Get a Piece of the Rock for insurance services. Examples of characters used as trademarks are Pillsbury Dough Boy for baked goods and Aunt Jemima for breakfast foods. Sounds can be used as trademarks, such as the jingle used by National Public Radio. Product shapes and configurations Ð for example, the distinctively shaped bottle used for CocaÐCola Ð can also serve as trademarks. Standards Trademark protection is available for words, names, symbols, or devices that are capable of distinguishing the owner's goods or services from the goods or services of others. A trademark that merely describes a class of goods rather than distinguishing the trademark owner's goods from goods provided by others is not protectible. Example: The word "corn flakes" is not protectible as a trademark for cereal because that term describes a type of cereal that is sold by a number of cereal manufacturers rather than distinguishing one cereal manufacturer's goods. A trademark that so resembles a trademark already in use in the U.S. as to be likely to cause confusion or mistake is not protectible. Geographically descriptive marks Ð "Idaho" for potatoes grown in Idaho Ð are not protectible trademarks for products that originate in the geographical area (all Idaho potato growers should be able to use "Idaho" in connection with selling their potatoes). Procedure for Getting Protection The most effective trademark protection is obtained by filing a trademark registration application in the Patent and Trademark Office. Federal law also protects unregistered trademarks, but such protection is limited to the geographic area in which the mark is actually being used. Federal Protection Federal registration is limited to trademarks used in interstate commerce (or intended for use in interstate commerce). Before November, 1989, a trademark application could be filed only after the trademark's owner had actually used the trademark in commerce. Under current law, a person who has a "bona fide" intention to use a trademark in commerce may apply to register the trademark. For federally registered marks, the use of notice of federal registration is optional. A federal registrant may give notice that his or her trademark is registered by displaying with the trademark the words "Registered in U.S. Patent and Trademark Office" or the symbol . State Protection State trademark protection under common law is obtained simply by adopting a trademark and using it in connection with goods or services. This protection is limited to the geographic area in which the trademark is actually being used. State statutory protection is obtained by filing an application with the state trademark office. Those relying on state trademark law for protection cannot use the federal trademark registration symbol, but they can use the symbol "TM" (or, for a service mark, "SM"). Exclusive Rights Trademark law in general, whether federal or state, protects a trademark owner's commercial identity (goodwill, reputation, and investment in advertising) by giving the trademark owner the exclusive right to use the trademark on the type of goods or services for which the owner is using the trademark. Any person who uses a trademark in connection with goods or services in a way that is likely to cause confusion is an infringer. Trademark owners can obtain injunctions against the confusing use of their trademarks by others, and they can collect damages for infringement. Example: Small Multimedia Co. is selling a line of interactive training works under the trademark Personal Tutor. If Giant Multimedia Co. starts selling interactive training works under the trademark Personal Tutor, purchasers may think that Giant's works come from the same source as Small Multimedia's works. Giant is infringing Small's trademark. Tips on how to avoid trademark infringement in naming your multimedia products are given in Chapter 15. One of the most important benefits of federal registration of a trademark is the nationwide nature of the rights obtained. For the registrant, federal registration in effect reserves the right to start using the mark in new areas of the U.S. Example: Small Multimedia Co., a California corporation, obtained a federal trademark registration on the trademark Abra for videogames. Small Multimedia Co. did not begin using the trademark on videogames in New York until two years after it obtained its federal registration. In the meantime, Giant Co. had started using Abra on videogames in New York. Because Small Multimedia Co.'s federal registration gives Small a right to use Abra that is superior to Giant Co.'s right to use Abra, Small Multimedia Co. can stop Giant Co. from using Abra on videogames in New York Ð even though Giant started using Abra on videogames in New York before Small did. Other advantages of federal registration are discussed in "Trademark Protection," Chapter 16. A trademark owner's rights under state trademark law (and the rights of an unregistered trademark owner under federal law) are generally limited to the geographical area in which the owner has used the trademark. Example: (For this example, we changed just one fact from the previous example.) Small Multimedia Co. did not get a federal trademark registration. Now Giant's right to use Abra on videogames in New York is superior to Small Multimedia Co.'s right to use Abra on videogames in New York, because Giant was the first to actually use the trademark on videogames in New York. Duration A certificate of federal trademark registration remains in effect for 10 years, provided that an affidavit of continued use is filed in the sixth year. A federal registration may be renewed for any number of successive 10Ðyear terms so long as the mark is still in use in commerce. The duration of state registrations varies from state to state. Common law rights endure so long as use of the trademark continues. Limitations of the Exclusive Rights Trademark law does not give protection against use of the trademark that is unlikely to cause confusion, mistake, or deception among consumers, but dilution laws may provide such protection (see "Dilution," Chapter 15). Example: Western Software has a federal registration for the use of Flash on multimedia development tool software. If Giant Co. starts using Flash on desktop publishing software, Giant Co. may be infringing Western Software's trademarks because consumers may think the desktop publishing software and the multimedia development tool software come from the same source. If Giant Co. starts using Flash on fire extinguishers, though, Giant Co. is probably not infringing Western's trademark. Consumers are unlikely to think that the Flash software and the Flash fire extinguishers come from the same source. TRADE SECRET LAW A trade secret is information of any sort that is valuable to its owner, not generally known, and that has been kept secret by the owner. Trade secrets are protected only under state law. The Uniform Trade Secrets Act, in effect in a number of states, defines trade secrets as "information, including a formula, pattern, compilation, program, device, method, technique, or process that derives independent economic value from not being generally known and not being readily ascertainable and is subject to reasonable efforts to maintain secrecy." Types of Works Protected The following types of technical and business information are examples of material that can be protected by trade secret law: ¥ Customer lists. ¥ Designs. ¥ Instructional methods. ¥ Manufacturing processes. ¥ DocumentÐtracking processes. ¥ Formulas for producing products. Inventions and processes that are not patentable can be protected under trade secret law. Patent applicants generally rely on trade secret law to protect their inventions while the patent applications are pending. Standards Six factors are generally used to determine whether material is a trade secret: ¥ The extent to which the information is known outside the claimant's business. ¥ The extent to which the information is known by the claimant's employees. ¥ The extent of measures taken by the claimant to guard the secrecy of the information. ¥ The value of the information to the claimant and the claimant's competitors. ¥ The amount of effort or money expended by the claimant in developing the information. ¥ The ease with which the information could be acquired by others. Information has value if it gives rise to actual or potential commercial advantage for the owner of the information. Although a trade secret need not be unique in the patent law sense, information that is generally known is not protected under trade secrets law. Procedure for Getting Protection Trade secret protection attaches automatically when information of value to the owner is kept secret by the owner. Exclusive Rights A trade secret owner has the right to keep others from misappropriating and using the trade secret. Sometimes the misappropriation is a result of industrial espionage. Many trade secret cases involve people who have taken their former employers' trade secrets for use in new businesses or for new employers. Trade secret protection endures so long as the requirements for protection Ð generally, value to the owner and secrecy Ð continue to be met. The protection is lost if the owner fails to take reasonable steps to keep the information secret. Example: After Sam discovered a new method for manipulating images in multimedia works, he demonstrated his new method to a number of other developers at a multimedia conference. Sam lost his trade secret protection for the image manipulation method because he failed to keep his method secret. Limitations on the Exclusive Rights Trade secret owners have recourse only against misappropriation. Discovery of protected information through independent research or reverse engineering (taking a product apart to see how it works) is not misappropriation. INTERNATIONAL PROTECTION To obtain patent, trademark, and trade secret protection in another country, you must comply with that country's requirements for obtaining protection. For these intellectual property rights, there are no international conventions that provide automatic protection for U.S. rights owners. CHAPTER 4 OWNERSHIP OF COPYRIGHTS This chapter covers the Copyright Act's ownership rules, and, in less detail, the ownership rules for patents, trademarks, and trade secrets. Ownership rules discussed here apply only in the United States (other countries have their own rules of intellectual property ownership). Ownership issues that arise in specific types of relationships are covered in Chapters 6, 7, 8, 18, and 19. UNDERSTANDING THE COPYRIGHT ACT If you are a multimedia developer or publisher, you should become familiar with the Copyright Act's ownership rules. Multimedia works and many of their components Ð music, graphics, text, software, and video, film, and television show clips Ð are protected by copyright. If you fail to deal with ownership issues while creating a multimedia work, you may not have clear title to the work and all its components. If there is uncertainty concerning your title to the work, it may complicate distribution of the work. Example: April hired Don, a freelance software designer, to develop the software for April's multimedia work. April and Don did not discuss who would own the copyright in the software. According to the Copyright Act's "default" rule for works created on commission by independent contractors, Don owns the copyright in the software. The Copyright Act's default rules on ownership apply if the parties Ð employer and employee, employer and independent contractor, developer and client, or developer and publisher Ð do not reach their own agreement on ownership. Those rules are discussed in "Initial Ownership" and "The Work Made for Hire Rule" in this chapter. INITIAL OWNERSHIP Ownership of copyright initially belongs to the author or authors of the work. Example: Sarah, a photographer, took a photograph of the Lincoln Memorial. Sarah is the author of the photograph and the initial owner of the copyright in the photograph. The "author" is generally the individual who created the work, but there is an exception for "works made for hire." This exception is discussed in the next section. THE WORK MADE FOR HIRE RULE The "author" of a work made for hire is the employer or hiring party for whom the work was prepared. This default ownership rule is known as the work made for hire rule. Unless the parties have agreed otherwise in a signed written document, the employer or hiring party owns the copyright of a work made for hire. There are actually two branches to the work made for hire rule: one covering works made by employees, and one covering specially commissioned works. We discuss these in this section. Works Made by Employees A work created by an employee within the scope of his or her employment is a work made for hire. The employer for whom the work is made is the "author" of the work for copyright purposes and is the owner of the work's copyright (unless the employee and employer have agreed otherwise). Example: As part of his job, John, an employee of Big Co.'s training division, created a training film using Big Co.'s facilities. Even though John created the film, Big Co. is the author for copyright purposes. Big Co. owns the copyright in the film (unless John and Big Co. have agreed in a signed contract that John owns the copyright). The work made for hire rule does not give employers ownership of works made by employees outside the scope of their employment. Example: Darryl, an engineer at Productions, Inc., wrote the script for Productions' newest multimedia work on his own initiative on weekends. Because Darryl did not write the script within the scope of his employment, the work made for hire rule does not apply. If Productions wants ownership of the copyright in the script, it must get an "assignment" (discussed in "Assignments," later in this chapter) from Darryl. Specially Commissioned Works The second category of works made for hire is limited to eight types of specially ordered or commissioned works. These are works commissioned for use as: ¥ A contribution to a collective work. ¥ Part of a motion picture or other audiovisual work. ¥ A translation. ¥ A supplementary work. ¥ A compilation. ¥ An instructional text. ¥ A test or answer material for a test. ¥ An atlas. For these types of works, if the hiring party and independent contractor creating the work agree in writing to designate the work as a work made for hire, the work is a work made for hire. If the parties do not have an agreement to treat the independent contractor's work as a work made for hire, it's not a work made for hire. Example: April hired Don, a software developer, to design the software for April's multimedia work. April and Don did not agree in writing to consider the software a work made for hire, so the software is not a work made for hire. Don owns the copyright in the software. Even if the hiring party and independent contractor agree in writing to consider the independent contractor's work a work made for hire, the work is not a work made for hire unless it falls into one of the eight special categories listed in the first paragraph of this subsection. Example: Sarah commissioned John, a freelance painter, to do an oil painting of Sarah's home. Although Sarah and John agreed in writing that the painting would be considered a work made for hire, the written agreement does not make the painting a work made for hire because the painting is not in one of the eight categories of works that can be specially commissioned works made for hire. The rules governing ownership of copyrights in works created before January 1, 1978 (the effective date of the Copyright Act of 1976), were different from the rules described in this chapter. The 1909 Copyright Act did not distinguish between employees and independent contractors (works created by both independent contractors and employees were automatically owned by the employer or hiring party unless the parties agreed otherwise). In a 1989 case, Community for Creative NonÐ Violence v. Reid, the U.S. Supreme Court made it clear that the current Copyright Act does distinguish between employees and independent contractors. The issue in Reid was who owned the copyright in a sculpture created by the artist Reid for the Community for Creative Nonviolence (CCNV). The Court concluded that the work made for hire rule did not apply for two reasons: Reid was not an employee of CCNV, and the sculpture was not one of the eight types of works that could be designated a work made for hire by written agreement of the parties. Foreign Copyright Law The work made for hire rule discussed in this chapter and in other chapters of this book applies to copyrights in the United States. Other countries have different rules on copyright ownership. Although many countries have rules similar to the first branch of the Copyright Act's rule (works made by employees), the second branch (specially commissioned works) is not covered by most countries' work made for hire rules. To obtain international copyright ownership for works that fall within the second branch of the Copyright Act's work made for hire rule, parties that commission works should obtain "assignments" of copyrights (see "Assignments," later in this chapter) from independent contractors. Ownership of independent contractors' works is discussed in "Copyright Ownership," Chapter 8. JOINT AUTHORSHIP AND OWNERSHIP According to the Copyright Act, the authors of a joint work jointly own the copyright in the work they create. A joint work is defined in Section 101 of the Copyright Act as "a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole." Example: Ann and Bruce worked together to create a multimedia work, with Ann developing the software and user interface and Bruce developing the content. The work is a joint work, and Ann and Bruce jointly own the copyright. You do not become the author of a joint work merely by contributing ideas or supervision to a work. You do so by contributing material that meets the standards for copyright protection (see "Standards," Chapter 2). Example: Susan suggested that John write a book on how to beat the stock market, and John did so. Susan is not a joint author of John's book. When the copyright in a work is jointly owned, each joint owner can use or license the work in the United States without the consent of the other owner, provided that the use does not destroy the value of the work and the parties do not have an agreement requiring the consent of each owner for use or licensing. A joint owner who licenses a work must share any royalties he or she receives with the other owners. Many foreign countries (Germany and France, for example) require that all joint owners consent to the grant of a license. Generally, joint ownership is not recommended because of the complications it adds to licensing worldwide rights. In addition, it is unclear what effect the filing of bankruptcy by one joint owner would have on coÐowners. COMMUNITY PROPERTY In nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), any property acquired during a marriage is jointly owned by the husband and wife. Several years ago, a court in California held that the copyrights in several books created by a man during his marriage were jointly owned by the man and his wife. The court's reasoning Ð that the copyrights were community property because they were the result of one spouse's expenditure of time, effort, and skill during the marriage Ð could apply to patents, trademarks, and trade secrets as well. ASSIGNMENTS A transfer of copyright ownership is known as an assignment. When a copyright is assigned, the assignee (individual or company to whom it is assigned) becomes the owner of the exclusive rights of copyright in the protected work. (These rights are discussed in "The Exclusive Rights," Chapter 2.) Example: Tom, an individual working on his own, created multimedia software and then assigned the copyright in the software to Developer. After the assignment, Developer has the exclusive right to reproduce and publicly distribute the software. If Tom starts selling the software, he will be infringing the Developer's rights as copyright owner. The ownership of copyright may be transferred in whole or in part. Examples of partial transfers are an assignment of the copyright for a term of 10 years (time limitation) and an assignment limited to California (geographic limitation). In addition, the individual exclusive rights (reproduction, modification, and so forth) can be transferred. Assignments are common in many industries Ð for example, music composers often assign copyrights in their compositions to music publishers. An assignment is not valid unless it is in writing and is signed by the owner of the rights conveyed or the owner's authorized agent. An assignment can be recorded in the Copyright Office to give others "constructive notice" of the assignment. Constructive notice is a legal term that means you are presumed to know a fact (because it is a matter of public record) even if you have no actual knowledge of the fact. (Constructive notice is discussed in more detail in "Obtaining a License," Chapter 10.) Recording an assignment in the Copyright Office to give constructive notice protects the assignee from future conflicting transfers. An assignment that is recorded properly within one month after its signing prevails over a later assignment. If the assignment is signed outside the U.S., the assignee has two months to record it. (The benefits of recording are discussed in more detail in "Determining Who Owns the Copyright," Chapter 10.) Example: Songwriter assigned the copyright in her song to Music Publishing Co. in Boston on August 1, 1993. On August 15th of the same year, Songwriter assigned the copyright in the same song to Media Enterprises. So long as Music Publishing Co. recorded its assignment properly in the Copyright Office by September 1, Music Publishing Co. owns the copyright because its assignment prevails over Songwriter's later assignment to Media Enterprises. A properly recorded assignment even prevails over an earlier assignment that was not recorded if the later assignment meets two criteria: ¥ The later assignment was taken in good faith and without notice of the earlier assignment. ¥ The assignee paid money or something of value for the assignment or made a promise to pay royalties. Example: Author assigned the copyright in his novel to Publishing, Inc. on November 1, 1993. Publishing, Inc. did not record the assignment. On January 15, 1994, Author assigned the copyright in the same novel to Media, Inc. for $10,000. Media, Inc. recorded its assignment in the Copyright Office. So long as Media, Inc. acted in good faith and did not know or have reason to know about Author's 1993 assignment to Publishing, Inc., Media, Inc. owns the copyright. The assignment to Media, Inc. prevails over Author's earlier assignment to Publishing, Inc. LICENSES A license is a copyright owner's grant of permission to use a copyrighted work in a way that would otherwise be copyright infringement. A copyright owner who grants a license is known as a licensor. A party receiving a license is known as a licensee. Implied in every license is a promise by the licensor to refrain from suing the licensee for infringement based on activities within the scope of the license. A copyright license can be exclusive or nonexclusive. An exclusive license is a license that does not overlap another grant of rights. Example: Author granted Publisher the exclusive right to sell Author's novel in the United States. She granted Movie Developer the exclusive right to create and distribute a movie version of the novel. Both Publisher and Developer have exclusive licenses. There is no overlap between the two licenses. Under copyright law, an exclusive license is considered a transfer of copyright ownership. An exclusive license, like an assignment, is not valid unless it is in writing and signed by the owner of the rights conveyed. A nonexclusive license is valid even if it is not in writing. An exclusive license, like an assignment, can be recorded in the Copyright Office to give constructive notice. Recording the exclusive license protects the license against unrecorded earlier transfers of copyright ownership and against later transfers. (See "Assignments," earlier in this chapter.) Licensing is discussed in detail in Chapter 10. TERMINATION RIGHT The author of a work other than a work made for hire has the right to terminate any license or assignment granted on or after January 1, 1978 during a fiveÐyear period that starts 35 years after the grant was made. If the grant involves the right to distribute the work to the public, the termination period begins 35 years after distribution begins or 40 years after the grant was made, whichever is earlier. For works published before January 1, 1978, the fiveÐyear termination period begins fiftyÐsix years after the work was first published. The termination right cannot be waived in advance. If the author dies before the termination period begins, the termination right can be exercised by the author's widow or widower, children, and grandchildren. OWNING A COPY OF A WORK Copyright law distinguishes the ownership of a copy of a protected work (a print of a photograph, a compact disc, a book, a diskette) from ownership of the intangible copyright rights. The transfer of a copy of a work does not transfer any rights in the copyright. Thus, purchasing a book (a copy of a literary work, in copyright terminology) does not give you permission to make copies of the book and sell those copies. There are two exceptions to the preceding paragraph's first sentence. If you buy a copy of a work, you have a right to resell (distribute) that copy. This exception is known as the "first sale doctrine." You also have the right to display your copy publicly, "either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located." These two exceptions do not give you any right to exercise the copyright owner's reproduction, modification, or public performance rights. (The five exclusive rights are discussed in "The Exclusive Rights," Chapter 2). Example: Don bought a copy of Publisher's multimedia work. Don can resell his copy of the work. The "first sale doctrine" gives him that right. If he makes copies of the work, though, he will be infringing Publisher's copyright. PATENTS, TRADEMARKS, AND TRADE SECRETS Patent law does not have a work made for hire rule. Patentable inventions created by employees within the scope of their employment are owned by the employee. However, the employee may have a legal obligation to transfer ownership to the employer under patent law's "hired to invent" doctrine. This doctrine provides that when an employee is hired to perform research or solve a specific problem, the employer is entitled to get an assignment of a patent received by the employee on the results of the research. Generally, as a condition of employment, employers require employees to agree to assign their interests in patentable inventions to the employer. The Patent Act implicitly recognizes the validity of such agreements, providing that a patent may be granted to the assignee of the inventor. A trademark is owned by the first party to use it in connection with goods or services or the first to apply to register it. A trademark can be owned by an individual, company, or any other legal entity. Trademark rights are discussed extensively in Chapter 15. An employer or hiring party generally owns trade secrets developed by employees and by independent contractors who are hired to invent. Ownership of patents, trade secrets, and trademarks, like the ownership of copyrights, can be assigned. As with copyrights, owners of these types of intellectual property frequently grant licenses authorizing others to do things that would otherwise violate the owner's exclusive rights. NO RISK GUARANTEE! The Multimedia Law Handbook comes with a 30 day money back guarantee! If you are not completely satisfied, just return the book for a full refund. The Multimedia Law Handbook is only $74.95 (plus $4 for shipping and handling). The contract diskette is $29.95. CA residents need to add 8.25% sales tax. You can order by phone (Visa and MasterCard accepted) by calling 800Ð523Ð3721. You can order by fax (please include your Visa or MasterCard number and its expiration date) by sending this form to (810) 987Ð3562. Or you can send this form by mail to: Ladera Press, c/o RLS Associates, P.O. Box 5030, Port Huron, MI 48061Ð5030. Special prices are available for associations or bulk purchases. Other inquiries can be directed to our editorial offices: Ladera Press, 3130 Alpine Road, Suite 200Ð9002, Menlo Park, CA 94025. ORDER FORM Name: Title: Company: Street: City/State/Zip: Telephone/Fax: Payment: __MC __ VISA __Check Enclosed Acct No. Exp. Date Signature: Rush me __ copies @ $74.95 _____ Diskettes $29.95 _____ Mac__ IBM __ IICS Discount ($10.00) _____ CA residents 8.25% tax _____ Please add $4 per book S&H _____ UPS Charge ($10 or $15) _____ ($15 for Alaska or Hawaii, $10 for Continental US) TOTAL: _____ LICENSE NOTICE: This selection may be copied in its entirety for personal or educational use (the copy should include a License Notice at the beginning and at the end). It may posted on gopher and FTP sites, but please provide notice of such posting to the authors at the addresses above. It may not be modified without the written permission of the authors. This selection is from the Multimedia Law Handbook which is designed to provide accurate information on the legal issues in multimedia. This selection is provided with the understanding that the authors are not engaged in rendering legal services. If you have a legal problem, you should seek the advice of experienced counsel.