What startups should know about copyrights
Copyrights are important assets for all businesses and startups but, too often they are misunderstood and overlooked.
Significant assets for all businesses, are software, website content and layouts, digital applications for wireless devices, animation, compiled data/databases, technical reports and research, logos, brand identity, signage, marketing materials, annual reports and advertising, from client brochure to print and online promotional materials.
Given the increasingly dominant role that technology plays in business, protecting and maintaining these assets are a key factor for a long-standing and healthy business.
What “works” are protected by copyrights?
As a first principle, there is no copyright in ideas, concepts, methods of doing something, algorithms or raw facts or data. There may have been copyright on how these items have been expressed in an original way.
Any work must be “original” which, in the copyright sense, means it has not been copied from a prior work of anyone else, and that the author has exercised at least a small amount of “skill and judgment” in creating the work.
Skill means the use of knowledge, developed aptitude or practiced ability in producing the work. Judgment means the use of capacity for discernment or ability to form an opinion or evaluation by comparing different possible options in producing the work.
This exercise of skill and judgment required to produce the work must not be so trivial that it could be characterized as a purely-mechanical exercise. For example, merely changing a font generally will be too trivial of an exercise to produce a new “original” work.
Compilations (i.e., selections or arrangements) of any of these categories of library, artistic, musical or dramatic works are also protected as their own type of work. Compilations of data (for example, database) may also be protected by copyright.
Given the increasingly dominant role that technology plays in startup businesses, key copyrights assets for startups often include software, website content and layouts, digital applications for wireless devices, animation, compiled data/databases, and technical reports and research. Other significant assets for all businesses, including startups, are logos, signage, marketing materials, annual reports, and advertising, from client brochure to print and online promotional materials.
These items fit within the categories as literary works (software code, textual materials, product descriptions, written reports, website and advertising copy); artistic works (logos, website designs, animation, images, photographs, advertising) and compilations (websites, applications, web pages, databases, factual reports, brochures, product catalogues).
What rights are given by copyright?
The Act specifies a precise “bundle” of exclusive rights which make up copyright protection. First and foremost, copyright gives the owner an exclusive right to “produce or reproduce a work” in whole or substantial part, in any material form”. This primary “copying” rights allows an owner to permit or prohibit the making of copies, in any medium, of a work or a substantial part of a work. Copyrights also include rights to perform the work in public, or a substantial part of the work, and to publish the work.
Copyrights include the rights to:
Translate the work and convert it from one form to another (language or format such as novel into a play);
Make a sound recording or film from the work;
Publicly communicate the work by telecommunication (over any digital media);
Authorize anyone else to exercise these rights.
In addition to copyright, the act also provides authors with a separate type of rights, known as moral rights. Moral rights ensure that an author:
Will have his/her name associated with the work on all copies of the work, where reasonable in the circumstances, or alternately, remain anonymous, and
can prohibit modification to their works, or uses of their works with any services, product or institution, where such modifications or uses are damaging to the author’s honor and reputation. (Damages to author’s reputation or honor will be judged by a court on an objective-subjective standard.)
Moral rights, unlike copyrights, though, cannot be assigned or licensed by the author to third parties. They can be waived. Accordingly, even with employee-created works, where copyright is automatically owned by the employer, the employee will always still own the moral rights. Companies can only, and always should, obtain written moral rights waivers in these circumstances.
Does the company own these assets?
In most cases, the first copyright owner is the author. If more than one person created the work, each “co-author” owns the copyright, in its entirety, in an undivided manner.
It is generally accepted that being a “joint” author means that no one co-author can license or assign the copyright without dealing first with the other co-authors.
Employers automatically own copyright in works created by their employees, within the scope of their employees’ employment. In other words, where a company has an employee, and if that employee’s job responsibilities include creating the works in question, then under the Act, the employer automatically owns the copyright in the work, once it is created. It will be relevant if the author worked for the company only, if he/she was paid a salary and had income tax and benefit deductions, if he/she worked at the company’s offices and used company facilities to create the work.
A company should review, on an ongoing basis, the facts surrounding the creation of all copyright protected works by employees to ensure that a copyright assignment is not needed. For example, if the startup company is a software developer, who employs software coders on a full-time basis, extends salary and benefits, and requires that employees write code on the company’s premises, the Act will automatically confer copyright ownership in the code to the company.
However, if a company hires coder on less than a full-time basis, or allows that coder to “freelance” for another software developers, or to write code at home, or work on a non-salaried compensation arrangement, that coder likely will not be considered an “employee”. In that case, the coder will automatically be the first copyright owner of the code, not the company.
As a “best practice” solution, a company should address the copyright issue in an agreement, which states that:
1. All copyright and other intellectual property rights in code or any other works created by that employee are to be owned by the company;
2. The employee agrees not to contest or make claims to any rights in the code or other works, either during the employment period or afterwards, and
3. The employee is required to sign a confirmatory transfer of such rights, if requested by the company.
Outside Contractors and Assignments
Given that, except for clearly employee-generated works, the author automatically is the first owner of copyright, it is essential that companies obtain and use written copyright assignments form any outside contractors retained to create copyright protected works for the business. The document need not be in any particular form, but the meaning of the words must be clear that ownership of a copyright is being transferred to a third party.
As a “best practice” protocol, a confirmatory assignment with similar language should be signed by the outside contractor once all work on the copyrighted materials has been completed. This is an important step to take since, copyright does not legally arise until the contractor has created the work in a fixed form.
Licenses and Outside Contractors
In some instances, an outside contractor may be unwilling to sign an assignment. In these cases, the issue of rights ownership must be negotiated at the time such an outside contractor is retained to avoid any confusion or dispute later.
For example, it is not uncommon for a company to believe it can give its brand logo, which it paid for, to a different graphic artist to update and revise. However, if there is nothing in writing with the original graphic artist, the company may be violating the copyright by authorizing another to make changes. Where there is no written agreement with the original contractor, the law will imply that there was a right for the company to use the logo in association with promoting its business, but not necessarily a right to use the logo outside of that purpose or to make changes to the design. At that point, the company may have to negotiate a more expensive buy-out of the rights to evolve its branding than would have been the case at the time the logo design was created.
Similarly, when retaining an advertising agency to produce marketing materials and advertising spots for your company, it is essential to discuss upfront what rights the agency in intending to include for the contract price, and to ensure that the company gets the level of rights it needs to fully exploit the work product as it intends.
Registering the copyrights
Copyrights, unlike patents or trademarks, need not be registered to enforce the rights. However, there is a voluntary registration system which provides some evidentiary benefits under the Act. Registering copyrights is inexpensive and, generally speaking straight forward.
Other works, for example, software programs, may prove more challenging to register, since the very nature of these works mean they will change frequently as updates and new versions are written. Where significant changes are made to a program, this new version becomes, in copyright terms, a “derivative work”, which has its own separate copyright.
International Aspects of Copyright Enforcement
Generally speaking, every Treaty country recognizes and enforces the copyright of a national of another Treaty country as if the work had been created in its own jurisdiction by a national of its own country. Known as the principal of “national treatment”, the foreign work will be enforced under the copyright laws of the country in which protection is sought.
Although, generally speaking, it is not essential to register the copyright in any jurisdiction before suing, as an evidentiary matter, registration certificates are useful in proving an owner’s ownership and that the infringed work is subject to copyright protection.