In our previous post, we discussed what a trademark is, how you select one, and how you protect it. In this post, we examine copyright protection. Again, this post concerns a startup business’s intellectual property from a U.S. perspective, and although U.S. law (17 U.S.C. § 101), is different from Icelandic law, this information generally is applicable in Iceland.

And how might copyright protection be relevant for a startup? Here are some scenarios discussing the relevancy of copyright.

Scenario 1. You launched your revolutionary computer software product. All of a sudden a competitor appears that is doing the same thing you are. One of your team members screams, “they cannot do that because we have a copyright”. Is that correct?

Your coworker doesn’t fully understand what copyright means. Copyright is a type of intellectual property right that protects “original” works of human authorship that are “fixed” in a tangible form. Protected works include:

(1) literary works;
(2) musical works, including any accompanying words;
(3) dramatic works, including any accompanying music;
(4) pantomimes and choreographic works;
(5) pictorial, graphic, and sculptural works;
(6) motion pictures and other audiovisual works;
(7) sound recordings;
(8) architectural works; and
(9) compilations.

To qualify for a copyright, the work must be “original”. This means that the author must independently create the work and it must be more than a trivial variation over preexisting works. Additionally, the work must be “fixed,” which means that the work is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. For example, an impromptu stand-up comedy routine that is not recorded is not copyrightable because it is not fixed. Thus, almost anything fixable in a tangible form which is an author’s non-trivial expression is protected by copyright.

Despite this, copyright does have its limits. Although, copyright does not protect ideas, methods, systems, and procedures; it does protect an author’s particular expression of an such concepts. For example, while the idea of a boy wizard coming of age in a world of magic and non-magic users is not protected, J.K. Rowling’s particular expression of that idea, the Harry Potter series, is protected. Copyright also does not protect slogans, short phrases, titles, and logos. If you want to protect those, then you would seek protection under trademark law. Finally, copyright, does not prohibit independent creation; thus, it would be possible for two authors to independently create identical works, such as a sculpture, and each would have their own copyright.

Your team member is correct that your business has a copyright over the way it expressed its ideas in its software code, databases, web sites, proposals, newsletters, training materials, marketing materials, and its internal and customer facing documentation. However, copyright does not prohibit another business from seeing a great idea and independently creating their own works. If your business wants to protect an idea, you should consider patent protection, which we will discuss in our next post.

Scenario 2A: While attending a trade conference, a presenter hands out some incredible presentation materials that are relevant to your business. Can you use parts of those materials in your own presentations?

Scenario 2B. You are working on preparing some marketing content for your business’s blog and are on a tight deadline. You need an image. You don’t have time to create a new image, so you perform a Google search and find one on the internet. Can you use the image?

Probably not. Copyright holders are granted exclusive rights to:

reproduce or duplicate their work;
display or post their work publicly;
distribute copies of their work;
perform their work publicly;
sell, license, rent rights to others; and
create a derivative work (create a new work from an existing work)

The general rule is that you cannot use another person’s work unless you have permission from the copyright holder. You can obtain permission by requesting it from the author, or if the author released the work under a permissive license — such as a Creative Commons license or the MIT software license. In such a case, you can download the work with the license. You would want to review the permissive license to ensure that your use is permitted under the license, and you would want to retain a copy of the license terms for proof that you are within your rights as a licensee.

Additionally, there are exceptions to the general rule. First, if the work is in the public domain, meaning that the work is no longer protected by copyright, you can use it freely. Second, you can use a work under the “fair use” doctrine, which allows for the limited and transformative use of a work. Classic fair use examples are commentary and criticism, or parody (for example, Trevor Noah on the Daily Show juxtaposing clips of politicians and commentators). However, fair use is a fact-specific determination, and an expensive defense to a charge of copyright infringement.

Thus, before you lawfully can use another author’s works, you need permission or you need to fall within one of the exceptions.

Scenario 3A: You hired an employee to help write software code for your software products. During the hiring process, you exchanged basic employment terms in emails (but did not mention copyright) with the intent of later memorializing the terms in an employment agreement. But because work was busy, you never got the chance to do so, and now the employee recently quit. Do you own the materials that the worker created?

Scenario 3B: You hired a web developer as an independent contractor to develop and to design your business’s website. Unfortunately, the relationship was fraught with troubles and you terminated the developer’s employment. Do you own your website?

The starting point for any copyright ownership discussion is that copyright automatically vests with the person who created the work, i.e., the author. When there are multiple authors, they hold the copyright jointly. The next point is that to transfer ownership there needs to be an agreement in writing.

In the U.S., there is an important exception to the normal rule. This exception is for a “work made for hire”. For a work made for hire, copyright ownership flows to the employer or the person for whom the work is prepared because they are considered to be the author. Work made for hire applies in two limited circumstances: (1) where the employee prepares the work within the scope of their job, or (2) the parties agree in writing that the work shall be a work made for hire that is specially ordered or commissioned for use as:

(i) a contribution to a collective work,
(ii) a part of a motion picture or other audiovisual work,
(iii) a translation,
(iv) a supplementary work,
(v) a compilation,
(vi) an instructional text,
(vii) a test,
(viii) answer material for a test, or
(ix) an atlas.

Read more here on independent contractors and work-for-hire. To our knowledge, there is no work made for hire exception in Iceland. However, you should speak with a local lawyer about specific contract language to include in employment agreements, such as a copyright assignment provision.

Whether your business owns the copyright to any works created by its workers depends on a few factors, such as (a) the location of your workers, (b) the governing law of your employment agreements, and (c) whether there was language transferring copyright ownership to the business in your employment agreement. If your employment agreements are under U.S. law and the worker was an employee as opposed to an independent contractor, the business probably owns the materials under the work made for hire doctrine. If the worker was an independent contractor, then the business may own the materials if the work falls into the work made for hire exception, or if there was a copyright assignment provision in the contractor agreement.

Two last points:  first, you may want to include in your employment agreements a warranty that the works being created do not and will not infringe any third-party intellectual property rights, such as copyright. Further, you also may want to include an indemnification provision that the worker will indemnify the business if that warranty is breached. If you do not include these provisions in your agreement, your business may be liable if a work violates a third-party’s IP right. Second, copyright assignments may be terminated after 35 years. Therefore, a business needs to know whether it obtained copyrights through an assignment to understand the latent risk that an author could terminate the copyright assignment many years later. Read more here on copyright termination rights.

Scenario 4. Your business recently created an iconic advertisement for its product. Several months later, you notice that other businesses seem to be copying elements of that advertisement. Can they do that? How long does copyright protection last?

The term of a copyright depends on several factors, including whether a particular work has been published, and, if so, the date of first publication. As a general rule, in the U.S., for works created after January 1, 1978, the law automatically protects a work for a term starting from creation through the author’s life plus 70 years.

Similarly, in Iceland, copyright protection lasts for the life of the author plus an additional 70 years. See Iceland Copyright Act (English translation), section 43.

Scenario 5. A team member asks, “do we need to register our copyright in all of the countries we are selling our copyrighted products?” Another asks “why should the business divert its limited resources to register its copyrights with the U.S. Copyright Office?”

You don’t have to register your copyright in the 170 countries that signed the Berne Convention. That international treaty entitles an author to the same copyright protection in a foreign country as that foreign country accords its own authors. Moreover, such protection is not conditioned based upon compliance with any formalities.

Although the U.S. is a signatory to the Berne Convention, registering your copyright in the U.S. offers substantive and procedural benefits. First, U.S. registration fees are not expensive ($35 or $55 to register a work online). Second, for U.S. authors, registration is a prerequisite to bringing a lawsuit for copyright infringement. Third, upon timely registration of a copyright, the copyright holder may claim statutory damages instead of having to prove actual damages and the actual infringer’s profits. Statutory damages range from $750 – $30,000 per infringed work, and can go up to $150,000 per work if the infringement was willful. Fourth, the copyright holder may recover its litigation costs and, if it is the prevailing party, reasonable attorney’s fees. Furthermore, the availability of statutory damages and the recovery of attorney fees are strong negotiating tools that can make enforcing your copyright financially viable.

If a work was created originally outside of the U.S., it does not have to be registered before you bring a lawsuit for copyright infringement. However, timely registration of a foreign work still is required to receive statutory damages and reasonable attorneys fees. Read more here on the issue of registering foreign works in the U.S.

Scenario 6. You are putting the final touches on a document, and a team member asks if you need to include a copyright notice. Do you need to include a copyright notice?

You don’t need to include a copyright notice (e.g., the letter C in a circle — © ) on your materials. However, a copyright notice could be helpful because it puts third-parties on notice that your materials are copyrighted, which may help to prevent infringement.

Scenario 7. Like most businesses, your software programmers incorporate a lot of open source software into your products. After all why reinvent the wheel? However, are you properly tracking your usage of open source?

Most businesses do not have an open source software usage policy governing what open source software they use.

Your business should be keeping track of any open source software being used for a few reasons. First, you need to know the license terms for the open source software you are using. This way, you can avoid incorporating open source software under the General Public License (GPL), or a similar license, which would force you to open source your entire software code to the public (which is not good if you are selling your products). Second, you need to know the version of the open source software you are using in order to make sure that you are keeping the open source software updated with bug fixes and security updates. Third, this information is requested during the due diligence process for an investment or for an acquisition, so maintaining it will help move the due diligence process along. Additionally, because the software you’re using likely changes over time, you should establish a periodic audit to make sure your information is up to date.

Scenario 8. One of your key developers forgot their laptop on the bus. The laptop wasn’t password protected. Someone used that laptop to access your network and to steal your business’s source code. The unscrupulous person then released a “new” competitive product using your source code. You know the competitive product uses your source code because it has the same bugs that your product has. What can you do?

Let’s start with the obvious non-copyright related issue: you need to improve your business’s security practices.

Now, onto the copyright issues. First, because the person took your source code and is using it to create a “new” product, they violated your business’s exclusive rights concerning its work, such as, the right to copy and to distribute. Second, hopefully, you have been registering your source code with the U.S. Copyright Office. You don’t have to register every possible version of your source code, but we would recommend registering the major versions or versions with large amounts of new code.

Although your source code may contain trade secrets, there are ways to register it and not reveal those secrets. Read more here on registering source code containing trade secrets. Again, the reason for registering your source code before there a problem occurs is that timely registration provides benefits like statutory damages and reasonable attorneys fees. Third, you would want to retain an attorney to evaluate your case and to send a cease and desist letter and to potentially file a copyright infringement lawsuit.

Henry Park is the founder of The Law Office of Henry Park, PC a boutique law firm specializing in intellectual property law, corporate law, entertainment law and gaming law; and with offices in New York, New Jersey, and Switzerland.