“Its” Mystery Is Solved

 

I get this question probably once a year: What does I T S mean under my signature on the contract?

They are looking at the signature block at the end of an agreement and see this:

SELLER:

By:_______________________________________

Name: ___________________________________

Its:_______________________________________

Yeah, right there. I T S, otherwise, better known as “its,” the possessive form of “it.”  The blank is for the person signing the contract to write in his or her title to show why they have authority to bind the company to the contract.  So it might be its president, its managing member, or its chief marketing officer.

The reason for the title to be there is to confirm that the person signing CAN actually sign and obligate the company to act in accordance.  If the person signing is the slushie-machine filler, they probably don’t have the authority to make a decision about a commercial during the Super Bowl.  It’s a way to make sure the contract is binding.  The reason it says “Its” instead of “Title” is a choice of the drafter.  It doesn’t have to be “Its,” and most people don’t even notice or ask about it.

However, those who do notice, are puzzled, and ask are the best clients.  They are the ones actually reading and thinking about the contract.  They want to understand what is going on, and by asking, they are sending the signal that they care.  Once I explain the “its,” I usually get an embarrassed, “Oh, jeez! That was a stupid question. I should have known” in response.  But I always assure them that it wasn’t stupid to ask and to ask more questions.  Nothing is worse than not understanding what you are signing.  It is never a stupid question if it helps you understand your contract.

That means if you have a question, ASK!  I promise it won’t be the silliest one that I have heard.  I would rather you ask and know the answer, than you sit and wonder what something means.  Trust me, we will look much more stupid if the question comes up in litigation due to a misunderstanding than it does before everything is signed.

That Which We Call A Rose

That which we call a rose
By any other word would smell as sweet

Juliet argued that it didn’t matter what Romeo’s name was for she would love him anyway.  And, by the way, if he wasn’t Romeo, they could be married.  But as we know, that’s not what happened.  Let’s just say, it went downhill for them.

But what about names in contracts?  How important is it to get Romeo Montegue’s name right? Would the deal smell so sweet if he signed it under a pseudonym?  Well, (here it comes!) it depends.

Contracts are promises between parties to act.  You need to be able to identify who promised what, and if they fail to follow through on their promise, be able to enforce the action.   Therefore, the better the identification, the better the ability to get the correct party to act in accordance with the contract.  After all, you don’t want a valid defense to be one sung by Shaggy (It wasn’t me!).

For businesses, that means knowing the company’s name, entity designation and often the address and state of incorporation.  For example, Simple Soaps for Simple Folks, LLC, a Minnesota limited liability corporation located at 1121 Co Rd 10 NE, Dover, MN 55929.  I now know what the official name is, where to find it, and if it moves (or changes name) where to look for its new information – Minnesota’s Business Search.

If there is a trade name involved, you can note that simply by saying the company does business by that name:  Alphabet Inc. d/b/a Google.

For people, it is pretty similar.  We want their name, state of residence, and an address.  For example, Mr. Bruce Wayne, a New Jersey resident, living at  1007 Mountain Drive, Gotham City, New Jersey.

Mr. Wayne, however, may be better known by an alias.  Often, you simply note that much like the trade name:  Mr. Bruce Wayne a/k/a Batman.  Or if it is a nickname, we might put it this way: Katherine (Kate) Mulgrew.  Still easy to recognize who really is held to the promises.

Every once in a while, a person wants to only disclose the pseudonym.  Fears of FOIA may prevent Mr. Wayne from disclosing his name in his contract with Gotham PD.  As we have learned, some people stick by pseudonyms.  It doesn’t prevent them from being held to the contract; it just can make it harder to be sure that you are chasing after the correct party.  Some parties are pretty well known.  J.K. Rowling likely doesn’t need Joanne spelled out.  However, having the actual name makes the Shaggy defense much harder.

Therefore, if you are confident that you can identify who each party is and can use it to enforce a contract against that party, then it works.  The easiest way to do so is to identify the party with details.  And, good luck getting “It Wasn’t Me” out of your head.

Don’t Cross the Streams

When talking with people starting businesses, one question that we get is a lot is “How do I limit my liability?”.  First, we talk about creating a business entity.  And don’t forget about insurance.  But, one thing we always talk about is “Don’t cross the streams. It would be bad.

By that, we mean keep your business money and your personal money separate.  That means separate bank accounts and separate books.  It definitely means pay your business debts using your business account and your personal debts from your personal account.

If you have two businesses, pay each one separately.  If you are going to give money to one from another, it has to be a loan – yes, with interest.  These are separate legal entities.  You wouldn’t loan your neighbor’s business money without interest, which means you shouldn’t do so between your own.

The more you treat the entities as distinct from you and each other, the more likely courts will follow your lead and do the same.  So, unless you are faced with a giant, flaming marshmallow man and a gateway to Gozer, don’t cross the streams.

It All Comes Around

We started on this fair use train to answer a question someone asked me:  When can you use music in videos and podcasts?  I think you can make some guesses as to the answer.  First, you can certainly use music if you get permission from the owner of the music.  Second, there are companies that provide a license for a catalog of songs for videos.  Third, there are songs that are open source or under the Creative Commons license.  Fourth, if the songs are old, they are in the public domain and no longer protected by copyright.  Therefore, go ahead and use that Mozart Piano Sonata.

But, can you just turn on the radio and hope for a good song?  Unless you are doing WPR’s morning classics, that is probably a bad bet.  As we have learned, it is not likely fair use – especially if you are purposefully putting the music in your video and podcast.

Now, what if you are shooting a scene and someone – out of your control – is playing music in the background?  If that use is truly incidental, you have a fighting chance to say it is fair use if you do not focus on the music.  Extra bonus points if it plays for a short period and it’s in the background.  But again, that gets you a defense, not a free pass.  Therefore, think carefully before choosing your mood music and how it is supplied.

Sorry For Partying

Last week was a bit of a let down, wasn’t it?  Here’s all of these interesting facts, and then thbbt! No resolution.  This week is better.  This one also involves the manipulation of a photograph but with a lot more humor.

This time, Sconnie Nation, a t-shirt company, used a photo taken by Michael Kienitz of Paul Soglin, the mayor of Madison, Wisconsin.

While a student at the University of Wisconsin in the 1960’s, Paul Soglin wasn’t into “the establishment.”  He even attended the first Mifflin Street Block Party, whose theme (according to Soglin) was “taking a sharp stick and poking it in the eye of authority.”  However, over the years, his views have changed, especially on the Mifflin Street Block Party. He wants to shut down the annual event. For the 2012 Block Party, Sconnie Nation made some t-shirts and tank tops displaying an image of Soglin’s face that was based on Kienetz’ photo and the phrase “Sorry for Partying.” Sconnie Nation made a whopping 54 sales of those shirts.  Kienitz sued claiming Sconnie Nation infringed his copyright by using his photograph without his permission.

When reviewing if Sconnie Nation did infringe, the court looked at the factors to determine if a  work in any particular case is a fair use.  While it could have argued about the “transformative” nature as we saw in the Fairey case, the court decided it didn’t need to do so.  It stuck to the tried and true statutory factors.

It noted that “A t-shirt or tank top is no substitute for the original photograph. Nor does Kienitz say that defendants disrupted a plan to license this work for apparel. Kienitz does not argue that defendants’ products have reduced the demand for the original work or any use of it that he is contemplating.”

Judge Easterbrook, who has a penchant for writing interesting opinions, went on to say:

Defendants removed so much of the original that, as with the Cheshire Cat, only the smile remains. Defendants started with a low-resolution version posted on the City’s website, so much of the original’s detail never had a chance to reach the copy; the original’s background is gone; its colors and shading are gone; the expression in Soglin’s eyes can no longer be read; after the posterization (and reproduction by silk-screening), the effect of the lighting in the original is almost extinguished. What is left, besides a hint of Soglin’s smile, is the outline of his face, which can’t be copyrighted. Defendants could have achieved the same effect by starting with a snapshot taken on the street.

In Kienitz’ favor, the court pointed out that Sconnie Nation didn’t need to use the copyrighted work. They wanted to mock the Mayor, not to comment on Kienitz’s skills. “There’s no good reason why defendants should be allowed to appropriate someone else’s copyrighted efforts as the starting point in their lampoon, when so many non-copyrighted alternatives (including snapshots they could have taken themselves) were available.” Also, this use may injure Kienitz’s long-range commercial opportunities, even though it does not reduce the value he derives from this particular picture.

The fair-use privilege under § 107 is not designed to protect appropriators who take the easiest option for their starting point. Rather, its goal instead “is to facilitate a class of uses that would not be possible if users always had to negotiate with copyright proprietors. (Many copyright owners would block all parodies, for example, and the administrative costs of finding and obtaining consent from copyright holders would frustrate many academic uses.)”  However, that doesn’t truly apply here as a Sconnie Nation and Mayor Soglin are both from the same, relatively small city, and Mayor Soglin is no hermit.

But, alas, given that “almost none of the copyrighted work remained,” the court found Sconnie Nation did not infringe.  And the Mifflin Street Block party continues as well.

So the take away for you is that the safest bet is to be the originator of all of your media or get permission from the owner.  As these two cases show, a lot of modification may or may not get you a “win” in litigation, but it will get you litigation. Fair use is a defense that isn’t a “gimme.”   Therefore, to avoid litigation, consider avoiding the use of other people’s stuff without their OK.

When it goes Fairey, Fairey wrong

Fair use is a defense, but it isn’t always a slam dunk winning defense.  Shepard Fairey is a graphic artist and known for street art.  You may not recognize his name, but you likely recognize at least one piece of his work:  The Obama HOPE poster.

The photo is instantly recognizable and arguably iconic.  It also was based on a photograph owned by the Associated Press (the “AP”).  The AP is “an independent, not-for-profit news cooperative” and provides “content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands.”  That includes providing photos to newspapers around the world (and likely in your city).  In April 2006, Mannie Garcia, a professional photojournalist, was working for the AP and took a photo of then senator, Barack Obama.

Wanting to create a poster to support Obama’s presidential candidacy, Fairey used the Google Images search engine to hunt for publicly available photographic portraits of Obama. A search for images of “Obama” or “Barack Obama” generated lots and lots of “thumbnail” images showing the results of his search.   Fairey chose Garcia’s photo and began to play with it in Photoshop.*  The final result is the poster we all recognize.  He then sold some of the posters and gave many away at campaign events or donated them to campaign workers.  In addition, he granted a free license to the organization, Sticker Robot, to produce and distribute, at cost, large numbers of stickers and granted free, nonexclusive licenses to other organizations to make and distribute the poster as they were supporting Obama.  Don’t feel too bad for Fairey.  He made money by selling merchandise, like t-shirts, with the image and creating murals and paintings of it, as well.

So where there is money being made, there is a chance for a lawsuit.  Yup, after quite a bit of demands and negotiations came to nothing, the AP sued Fairey.  His main defense was fair use.  Fairey argued that he “transformed” the AP photo.  One way a work can be deemed “transformative” is where the purpose of the second “transformed” work is different from the purpose of the original work. Fairey argued that this was they case for his poster.  After all, Garcia’s aim had been to take a realistic portrait of Obama for news purposes, and Garcia even testified that he had no intention to promote Obama’s candidacy. By contrast, Fairey’s primary purpose in creating the poster was to promote Obama’s candidacy for president.  In addition, Fairey argued that he made many changes to the photo such that all that was left of the original photograph wasn’t really protected by copyright anymore.  In fact, what he made was fundamentally different from the original and because of his changes, people saw it in a completely different light.

Another factor weighed is the extent to which the defendant’s activity, if deemed fair, would adversely affect the market for the copyrighted work at issue in the case.  Fairey argued that no one wanting the original photo would have purchased his poster instead.  They clearly did not act as substitutes for each other.  Also, he argued that because he transformed the work, he wasn’t impairing the “potential market” for the copyrighted work either.

Unsurprisingly, the AP disagreed with those contentions.  Rather, they argued that he had acted in bad faith, the poster project was highly commercial, and his use was not transformative.  He removed the copyright notice, did not give any credit to the source of the original photo and did not identify any pre-existing material not owned by the applicant when Fairey applied for his own copyright registration on the poster.  He made plenty money (he could have made even more but chose not to do so with the posters themselves).  Finally, his intent for the poster was not truly “transformative.”  It wasn’t a parody or commentary on the photo.  Rather, both the poster and the photo tried to capture the essence of Obama; Fairey just used more Photoshop than Garcia used to get there.

After a long, arduous, and expensive pre-trial period, the parties settled right before a three-week trial was to begin.  Unsurprisingly, the financial terms were confidential.  So we don’t actually know what the court would have found.  Was it transformative?  We don’t know for sure, but we do know that Fairey and the AP spent a lot of time and money arguing over a cut and pasted photo that was used without permission.

If you want a lot more detail and analysis, I highly recommend this piece by the Harvard Journal of Law and Technology.  It has exhibits and everything!

 

*There’s actually more drama there about how and when he picked the photo. And, more importantly, how and when he told others, including the court, which photo he picked.  He found out that if you lie to the court, you can be found criminally liable for that.

The Set Up

As we discussed earlier, courts look at the purpose and character of the use for both the original owner and the derivative use.  Courts look at how the party claiming fair use is using the copyrighted work.  Is the derivative use meant to make money?  If so, it is more likely to be found infringing, but if it is not intended to bring profits to the copier, then it has a better chance to be found as fair use.

While courts are more likely to find that nonprofit, educational and noncommercial uses are fair.  This does not mean, however, that all nonprofit, educational and noncommercial uses are fair.  Nor does it mean just because you make money on it that all commercial uses are not fair.  Rather, courts balance the purpose and character of the use against the other factors.

Additionally, “transformative” uses are more likely to be considered fair.  Transformative uses are those that add something new, with a further purpose or different character, and do not substitute for the original use of the work.

This can be closely related to another aspect:  The effect of the use upon the potential market for or value of the copyrighted work.  In this factor, courts review whether, and to what extent, the unlicensed use harms the existing or future market for the copyright owner’s original work. Questions asked include:  Is the use hurting the current market for the original work, and whether the use could cause substantial harm if it were to become widespread?

Next time, we’ll look at some specific cases looking at how these factors are reviewed in real life.

By the way, if you want to learn more about trademark and copyright, we have some upcoming webinars.  Register here!

Only Three Fairs in the World

Jeff likes to say, “There are only three “fairs” in the world: The county fair, the state fair, and the World’s Fair.”  However clever that is, in copyright law, we also have fair use.

I’ve been getting asked a lot of forms of, “If I do X, am I doing something wrong with someone else’s copyright?”  Most of the time, the answer is, if you are using something without the creator’s permission, yes, you are infringing.  But, I said “most of the time,” which means not all of the time.  When aren’t you doing something wrong if you are using someone else’s copyrighted creation?  One common answer is when it is “fair use.”  However, “fair use” is a really big concept with very few times when it actually applies.  It is a common defense, but not a common winner.  But it isn’t always a loser, so let’s explore a little bit of what fair use is and what it is not.

The fancy legal language says, “Fair use is a legal doctrine that promotes freedom of expression by permitting the unlicensed use of copyright-protected works in certain circumstances.”  Uh-huh.  So what does that mean?

First, it is a defense.  That means that someone doing something that is judged to be fair use is doing something that would be considered infringing, but because the action is determined to be fair use, it is not.  That means you are playing with fire a little bit.  You know you are using someone else’s work without their permission.  You just think you have a reason not to have to get their permission.  This sounds like an argument that you wouldn’t want your high-schooler to present to you.  “I know it would normally be wrong to do what I did and not to ask your permission, but I thought that this was an exception.”  Therefore, you probably want to think it through a bit rather than just claiming fair use on a whim.

In determining whether the use made of a work in any particular case is a fair use, Section 107 of the Copyright Act lets you know that “the factors to be considered shall include”:

  1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
  2. the nature of the copyrighted work;
  3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
  4. the effect of the use upon the potential market for or value of the copyrighted work.

None of these are clear-cut, stand alone things.  They are each looked at independently and in conjunction with each other.  In other words, just because you “only used a teeny-tiny bit,” it doesn’t mean you are in the clear.  I also wouldn’t want to stand only on the argument that “I didn’t make any money on it.”  That being said, sometimes those arguments go a long, long way.

To determine whether a particular use is a fair use, you have to balance each of the factors.  Ultimately, the only way to know for sure is to have a judge tell you, and judges have a great deal of freedom putting weight on different facts when making their determination about fair use.  Each case is very fact dependent, but, yes, I’ll discuss each factor in more detail in later posts.  So get ready for Faireys, Apologies for Parties, and a Pretty Woman.