By Attorney Edward Jesson
Copyright and trademark are two different areas of the law that often intersect with each other. A trademark can be any word, phrase, design, or combination of these things that identifies a business’s goods or services. A copyright is an original work by an author with at least a minimum level of creativity, such as a book, painting, photograph, or song. A recent lawsuit involving SweetWater Brewing Company brings some of the nuances and risks involved in these areas of the law to light.
SweetWater Brewing has been using a trout image in its trademarked logo since 1996 after it paid a friend of the founders, Mr. Fuss, $500 to draw the trout in question. Mr. Fuss is now claiming he owns a copyright to the drawing of the trout, and that there was an “understanding” between himself and SweetWater that the value of his rights to the copyright would grow as the value of SweetWater and its intellectual property grew. When SweetWater was recently bought by another company, Fuss sued SweetWater, claiming that he was owed $31 million dollars for the value of the trout drawing. SweetWater has, in turn, sued Mr. Fuss in federal court requesting a declaration from the court that SweetWater can continue to use its trademarks moving forwards without interference from Mr. Fuss.
Had Mr. Fuss been an employee of SweetWater when he drew the trout, or had a comprehensive agreement been entered into between Mr. Fuss and SweetWater at the beginning, the current litigation could have been avoided, saving all the parties lots of money and time.
Generally speaking, under copyright law, the author of the original work owns the copyright. An exception to this general rule is where the work is made for hire. Thus, if the work was made by an employee in his or her scope of employment, the employer holds the copyright to the work. However, if the individual creating the work is an independent contractor instead, that independent contractor will own the copyright to the work. Therefore, it is very important that companies dealing with independent contractors have them sign agreements whereby the independent contractor assigns the copyrights to the company who is paying them.
The trout image was created long before SweetWater grew into the company it is today, and that spotlights a reason why planning for these eventualities before they become bigger issues is so important, even when a business is in its startup phase.
Should you need assistance with navigating the sometimes complex law surrounding copyright and trademarks, the attorney at Jesson & Rains will be happy to assist.
By Attorney Kelly Jesson
We previously wrote about the importance of keeping good business records in order to avoid personal liability for business debts. However, did you know that certain business records can act as estate planning tools?
Your interest in your business, whether an LLC interest or corporate stock, is personal property that you can leave to a family member when you pass away. Unfortunately, it will go through probate unless you transfer it to a trust or enter into a transfer-upon-death (TOD) or joint with rights of survivorship agreement with your heir. The court collects a fee based on the amount of personal property that goes through probate, so if your business is worth some money, you want to avoid this.
What if you have a business partner? Perhaps you don’t want to do business with his/her spouse or child if your partner passes away? That’s where an operating agreement or a shareholder’s agreement comes in handy—in either of these agreements, the owners can agree that if one of them passes away, the other will buy out their interest. This is helpful for the survivor, who will remain in control of the company, and this is helpful for the deceased owner’s family, who will get a sum of money. These agreements (also called buy-sell agreements) are oftentimes funded with life insurance, to ensure that there is liquid cash available to pay the family.
In either of these agreements, the owners can promise the other not to transfer their business interest to third parties while they’re alive, which is also helpful for control purposes. The parties can agree to buy the other out when other “triggering events” happen, such as a partner’s bankruptcy or divorce. You don’t want one of these events to cause the forced sale of all or part of the business. It is important to put a plan in place to prepare for the unexpected (that frequently happen).
If you or someone you know needs assistance putting an operating agreement or shareholder agreement in place, or incorporating their business into their estate plan, please give Jesson & Rains a call! We offer flat fee packages for these formation documents. We also offer flat fee annual plans that include preparing annual meeting notices and minutes, filing annual reports with the Secretary of State’s office, and other legal services. More information can be found here.
By Attorney Kelly Jesson
While surfing through social media, have you ever seen someone post a photo or video set to music and add the caption “I do not own the rights to this music”? We assume people are doing this in hopes of getting around copyright laws. We assume they think that, by disclaiming ownership, they won’t get in trouble, but that is incorrect.
A copyright protects an original work of authorship, whether in writing, video, or audio form. A person infringes on a copyright if the person uses the work without permission, even if they put out a notice that they don’t own the music. To be clear, simply using the work is infringement; not pretending you created it.
A copyright owner can seek damages if you use its work without permission. There is a narrow exception called “fair use,” but it only applies when people use a work for criticism, comment, news reporting, teaching, scholarship, and research. Most social media posts are not going to fit into this category.
Also, taking a picture from someone else’s website or social media and sharing it yourself is also copyright infringement. You may have heard of celebrities getting sued for posting pictures of themselves that someone else took.
Bottom line: If you didn’t create it, don’t post it without permission. If you have any questions about getting a federal copyright for your original work, please give Jesson & Rains a call!
What is a Patent?
Written by Jesson & Rains attorney, Kelly Rains Jesson
This is the third installment out of our intellectual property series. The fourth and final article will be about protecting trade secrets and confidential information using contracts.
A patent is a federally-issued form of intellectual property protection granted to inventors of unique designs and processes. The patent prevents other individuals and companies from making or selling the invention for 14 to 20 years. An inventor must apply for a patent within one year of publicly disclosing the invention. A patent is public record information, so while the invention is protected, it is not secret.
The two main types of patents are utility patents and design patents. A utility patent is a machine, process, or component part thereof used to make a product. A design patent is the unique design of the product itself. The design patent covers only the appearance of the product and not the structural or functional features (that would be a utility patent). An example of a design patent is a glass soda bottle. A design patent lasts for fourteen years.
A utility patent is the most common type of patent. In addition to machines, processes, and component parts, utility patents are also issued for inventors of improved existing patents. The improvement must be non-obvious to a person having ordinary skill in the same area of technology related to the invention. For example, a person cannot simply change the color of a machine and get approved for a new patent.
Utility patents must be useful, serve a legal purpose, and be “novel.” If a substantially similar process or product has been marketed in the past year, the application will be rejected. It must be man-made—naturally occurring things cannot be patented. Also, the product or process must actually work. Patents will not be issued for ideas, theories, and inventions that do not work. A utility patent lasts for twenty years.
Unlike copyrights and trademarks, there are no state versions of patents (only federal) and there is no common law protection. You do not get a patent simply by inventing something—you must apply and be granted a patent by the federal government.
If you have any questions about protecting your intellectual property, give Jesson & Rains a call!
What is a Copyright?
By Attorney Kelly Jesson Rains
A copyright protects an original work of authorship, whether in writing, video, or audio form.
Like trademarks, a common law copyright is created as soon as the work is authored. People should use the copyright symbol © to deter would-be infringers. Also like trademarks, despite the existence of common law protections, there are still numerous reasons for registering federally. To rely on federal copyright protections (versus state court), the work must be registered. This is important because federal law provides statutory damages, whereas in state court you might have to prove actual damages, which is difficult. If a registration application is submitted to the U.S. Copyright Office within five years after first publication of the work, it will be presumed that the copyright is valid. Finally, registering puts the world on notice that you own the work (and who to contact if someone wants to use the work for a fee). Copyrights last for the author’s life plus seventy years.
Sometimes, the author of the work does not own the copyright. This is true in two situations:
1) Work made for hire, and
2) Work commissioned.
These are two very narrow exceptions that are improperly overused. For the “work made for hire” rule to apply, an employee must create the work in the scope of their employment. This is oftentimes up for interpretation and dispute. A work that was not created within the scope of a creator’s employment cannot be made into a work made for hire by way of agreement.
Specially ordered or commissioned work is limited to the following uses:
Of course, an author can sell a copyright to another person. If the copyright is assigned or licensed to another, the author may limit the purchaser’s use.
While the Digital Millennium Copyright Act (DMCA) did not expand copyright protection, in 1998, it did make available a procedure whereby a person whose copyright is being infringed upon can send a notice to an internet provider, webhost, or search engine who must then take down the offending material. The law has specifics about what the notice has to include for it to be valid.
If you’re interested in getting more information about copyright or other intellectual property protection, please give Jesson & Rains a call.
What is a Trademark?
A trademark is a “word, phrase, symbol and/or design” that identifies and distinguishes the goods or services of the owner of the mark from another party. Examples include brand names, slogans, tag lines, logos, and design elements (think, Tiffany blue boxes). In order to get a federal, registered trademark, the mark has to be used in commerce, so normally the owner of the mark is a business or business owner. Someone can apply for a trademark before the mark is used in commerce if the owner intends to use it in commerce, but the United States Patent and Trademark Office (“USPTO”) will not register the trademark until the applicant shows that it is actually being used. Trademarks don’t expire, as long as the mark continues to be used in commerce and the owner files periodic documentation with the USPTO.
The trademark application process is fairly simple, but actually obtaining the trademark can be quite tricky. Not only does the applicant have to worry about the application being denied because the mark is too similar to another in a similar industry (“likelihood of confusion” according to the USPTO), but the applicant has to worry that the USPTO will deny the application for other grounds such as the trademark being “merely descriptive.” For example, the name “Northeast Interiors” merely describes the business (interior design in the Northeast). The strongest trademarks are “fanciful and arbitrary,” meaning they are words that have no relation to the good or service sold (like Apple computers), and the second strongest trademarks are “suggestive” meaning they suggest the good or service without literally describing it (think, Facebook). Unfortunately, most people name their businesses something that describes them for marketing purposes! Is marketing more important or trademarking? This depends on the nature of your business.
A business can also have a common law trademark, but there are benefits to federally registering: first, inclusion in the national database deters others from using similar marks in similar industries; second, there is a legal presumption that the registrant owns the mark and was the first to use it, meaning that in a dispute with another, they would be presumed to be the winner.
A common law trademark is established simply by a business starting to use the mark in commerce. The mark should be identified with the ™ symbol. Only a federally registered trademark can use the ®. A common law trademark is limited in geographic area, so you could have a competitor business open up with the same name in an entirely different state, as long as you didn’t share customers. If a competitor opens in your geographic area, you could sue them for trademark infringement if they did damage to your mark. You would have to prove you were the first to use the mark (unlike having a presumption in federal court).
If you’re thinking of trademarking something in your business, give Jesson & Rains a call!
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Kelly Rains Jesson