IP Law Primer

The information presented here is a brief overview of copyright, patent and trademark law, and is intended to give a basic understanding of the way copyright (in particular) works.  Contrary to popular belief, work does not require any form of "registration" or other legal recognition - copyright exists automatically when a work is created.  The material here is from the US perspective, but be aware that there are often significant differences in Australia (my location and where the majority of the ESP site material was written) and in other countries as well.

Readers will notice that almost all articles have a copyright notice, and that most restrict the reader to reading or printing the material.  Copying the material (text and images) to another website is not permitted, regardless of you thinking that it "should be alright" - it isn't.  As noted below, there is no legal requirement for a copyright notice, and note that nothing on this site has expired copyright.  Where multiple copyright dates are shown, that simply indicates that changes have been made since the article was written, and these changes or additions are also protected by copyright.

An understanding of legal issues is essential to success in the Internet and multimedia industries.  Mistakes can cost the developer tens or even hundred of thousands of dollars in legal fees and damages.  For example, Delrina lost hundreds of thousands of dollars and had to recall all of the copies of its screen saver last fall when it lost a copyright suit.  Delrina distributed a screen saver in which one of the 30 modules showed the comic book character Opus shooting down Berkeley Systems' "flying toasters" (made famous in Berkeley's "After Dark" screen saver program).  Berkeley Systems sued Delrina for copyright and trademark infringement.  The court ruled for Berkeley Systems, prohibiting further distribution of Delrina's product and requiring Delrina to recall all of the product not already sold.

The copyright ownership dispute between two leading multimedia developers, Michael Saenz and Joe Sparks, provides another example of the importance of dealing properly with legal issues.  The dispute focused on whether Joe was an employee or independent contractor of Reactor, Inc. (Mike Saenz's company) when they developed the successful game "Spaceship Warlock." If Joe was right in claiming that he was an independent contractor, he is co-owner of the copyright and had a right to half of the profits from the game.  These profits could be worth hundreds of thousands of dollars.  The court did decide that Joe Sparks was a co-owner of the copyright and the suit was later settled.

This primer will help you understand the legal issues in developing and distributing multimedia and online works.  It is based on the Multimedia Law and Business Handbook (1996) and Internet Legal Forms for Business (1997) from Ladera Press.  This summary of the law should not be viewed as "answering" most questions (the Multimedia Law and Business Handbook discusses these issues in more detail in 320 pages and includes twenty-two sample agreements to show how these issues are dealt with actual transaction and the Internet Legal Forms for Business includes twelve forms for Internet only transactions).  You can order the books by going to our website www.laderapress.com or calling 800-523-3721 or faxing 810-987-3562.

Legal matters in multimedia and the Internet are frequently complex and you should not rely on the information in this primer alone.  You should consult with experienced counsel before making any final decisions.

OVERVIEW

There are four major intellectual property laws in the United States that are important for multimedia developers:

• Copyright law, which protects original 'works of authorship'.
• Patent law, which protects new, useful, and 'non obvious' inventions and processes.
• Trademark law, which protects words, names, and symbols used by manufacturers and businesses to identify their goods and services.
• Trade secret law, which protects valuable information not generally known that has been kept secret by its owner.

This primer will focus on U.S. copyright law because copyright law is the most important of these laws for most online and multimedia developers and publishers.  The other three intellectual property laws are discussed in less detail, as are several other relevant laws.  The primer concludes with a hypothetical which applies the laws discussed in the primer to a fictitious online and multimedia project.

COPYRIGHT LAW

There are two reasons why it is important for you as a online or multimedia developer or publisher to be familiar with the basic principles of copyright law:

• Multimedia works are created by combining 'content' - music, text, graphics, illustrations, photographs, software - that is protected under copyright law.  Developers and publishers must avoid infringing copyrights owned by others.
• Original multimedia works are protected by copyright.  The Copyright Act's exclusive rights provision gives developers and publishers the right to control unauthorised exploitation of their works.

Copyright law is a federal law, and so the law does not vary from state to state (although the interpretation of the law may be different in different courts).

Basic Principles

This section summarises the basic principles of copyright law, including the types of works that are protected by copyright, how copyright protection is obtained, and the scope of the protection.

Works Protected

Copyright protection is available for 'works of authorship'.  The Copyright Act states that works of authorship include the following types of works which are of interest to the multimedia developer:

• Literary works. Novels, nonfiction prose, poetry, newspaper articles and newspapers, magazine articles and magazines, computer software, software 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.

Obtaining Copyright 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, and registering early will make you eligible to receive attorney's fees and statutory damages in a future lawsuit).

Here's what 'original' and 'fixed' mean in copyright law:

• Originality: A work is original in the copyright sense if it owes its origin to the author and was not copied from some preexisting work.
• Fixation: 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'.  Even copying a computer program into RAM has been found to be of sufficient duration for it to be 'fixed' (although some scholars and lawyers disagree with this conclusion).

Neither the 'originality' requirement nor the 'fixation' requirement is stringent.  An author can 'fix' words, for example, by writing them down, typing them on an old-fashioned typewriter, dictating them into a tape recorder, or entering them into a computer.  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 - 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.

Scope of Protection

Copyright protects against copying the "expression" in a work, not against copying the work's ideas.  The difference between "idea" and "expression" is one of the most difficult concepts in copyright law.  The most important point to understand is that one can copy the protected expression in a work without copying the literal words (or the exact shape of a sculpture, or the exact "look" of a stuffed animal).  When a new work is created by copying an existing copyrighted work, copyright infringement exists if the new work is "substantially similar" to the work that was copied.  The new work need not be identical to the copied work.

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'.  Sound recordings - recorded versions of music or other sounds - do not have a public performance right.
• 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'.

In addition, certain types of works of "visual art" also have "moral rights" which limit the modification of the work and the use of the author's name without permission from the original author.

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 in his work).

A copyright owner can recover actual or, in some cases, statutory damages (which can be as high as $100,000 in some cases) from an infringer.  In addition, courts have the power to issue injunctions (orders) to prevent or restrain copyright infringement and to order the impoundment and destruction of infringing copies.

The term of copyright protection depends on three factors: who created the work, when the work was created, and when it was first distributed commercially.  For copyrightable works created on and after January 1, 1978, the copyright term for those created by individuals is the life of the author plus 50 years.  The copyright term for "works made for hire" (see below) 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.

Generally, the copyright is owned by the person (or persons) who create the work.  However, if the work is created by employee within the scope of his or her employment, the employer owns the copyright because it is a "work for hire." The copyright law also includes another form of "work for hire": it applies only to certain types of works which are specially commissioned works.  These works include audiovisual works, which will include most multimedia projects.  In order to qualify the work as a "specially commissioned" work for hire, the creator must sign a written agreement stating that it is a "work for hire" prior to commencing development of the product.  (Remember that this primer deals only with United States law; most foreign jurisdictions do not recognise the "specially commissioned" work for hire, and you need an assignment to transfer rights in those countries).

Avoiding Copyright Infringement

Current technology makes it fairly easy to combine material created by others - film and television clips, music, graphics, photographs, and text - into a multimedia product.  Just because you have the technology to copy these works, that does not mean you have the legal right to do so.  If you use copyrighted material owned by others without getting permission, you can incur liability for hundreds of thousands or even millions of dollars in damages.

Most of the third-party material you will want to use in your multimedia product is protected by copyright.  Using copyrighted material without getting permission - either by obtaining an "assignment" or a "license"- can have disastrous consequences.  An assignment is generally understood to transfer all of the intellectual property rights in a particular work (although an assignment can be more limited).  A license provides the right to use a work and is generally quite limited.  A discussion of the terms of licenses and assignments is beyond the scope of this primer (this discussion takes up several entire chapters in our book).

If you use copyrighted material in your multimedia project without getting permission, the owner of the copyright can prevent the distribution of your product and obtain damages from you for infringement, even if you did not intentionally include his or her material.  Consider the following example:

Productions, Inc. created an interactive multimedia training work called You Can Do It.  The script was written by a freelance writer. You Can Do It includes an excerpt from a recording of Julie Andrews singing Climb Every Mountain.  It ends with a photograph of Lauren Bacall shown above the words, "Good luck."

In this example, if the Productions staff did not obtain permission to use the recording of Climb Every Mountain or the photo of Lauren Bacall, You Can Do It infringes three copyrights: the copyright on the song, the copyright on the Julie Andrews recording of the song, and the copyright on the photograph.  Productions is also infringing Lauren Bacall's right of publicity (which is separate from copyright) by the commercial use of her image.  Furthermore, if Productions did not acquire ownership of the script from the freelance writer, Productions does not have clear title to Do It, and distribution of Do It may infringe the writer's copyright in the script.  Any of the copyright owners whose copyrights are infringed may be able to get a court order preventing further distribution of this multimedia product.

There are a number of myths out there concerning the necessity of getting a license.  Here are five.  Don't make the mistake of believing them:

• Myth #1: "The work I want to use doesn't have a copyright notice on it, so it's not copyrighted.  I'm free to use it."

Most published works contain a copyright notice.  However, for works published on or after March 1, 1989, the use of copyright notice is optional.  The fact that a work doesn't have a copyright notice doesn't mean that the work is not protected by copyright.

• Myth #2: "I don't need a license because I'm using only a small amount of the copyrighted work."

It is true that de minimis copying (copying a small amount) is not copyright infringement.  Unfortunately, it is rarely possible to tell where de minimis copying ends and copyright infringement begins.  There are no 'bright line' rules.

Copying a small amount of a copyrighted work is infringement if what is copied is a qualitatively substantial portion of the copied work.  In one case, a magazine article that used 300 words from a 200,000-word autobiography written by President Gerald Ford was found to infringe the copyright on the autobiography.  Even though the copied material was only a small part of the autobiography, the copied portions were among the most powerful passages in the autobiography.  Copying any part of a copyrighted work is risky.  If what you copy is truly a tiny and non memorable part of the work, you may get away with it (the work's owner may not be able to tell that your work incorporates an excerpt from the owner's work).  However, you run the risk of having to defend your use in expensive litigation.  If you are copying, it is better to get a permission or a license (unless fair use applies).  You cannot escape liability for infringement by showing how much of the protected work you did not take.

• Myth #3: "Since I'm planning to give credit to all authors whose works I copy, I don't need to get licenses."

If you give credit to a work's author, you are not a plagiarist (you are not pretending that you authored the copied work).  However, attribution is not a defence to copyright infringement.

• Myth #4: "My multimedia work will be a wonderful showcase for the copyright owner's work, so I'm sure the owner will not object to my use of the work."

Don't assume that a copyright owner will be happy to have you use his or her work.  Even if the owner is willing to let you use the work, the owner will probably want to charge you a license fee.  Content owners view multimedia and the Internet as a new market for licensing their material.

In 1993, ten freelance writers sued the New York Times and other publishers over the unauthorised publication of their work through online computer services.  In 1997, the court decided that the magazines had the right to publish the articles in certain databases due to a rarely used section of the copyright law.  The plaintiffs are appealing.  And the Harry Fox Agency and other music publishers sued CompuServe, an online computer service, over the distribution of their music on certain forums of the service.  CompuServe settled the suit without admitting responsibility, but paid a large amount to the Harry Fox Agency as a settlement; it also arranged a system for its forum managers to pay royalties to the Harry Fox Agency in the future for transmission of these musical compositions..  CompuServe agreed to guarantee the royalty payments by its forum managers.

• Myth #5: "I don't need a license because I'm going to alter the work I copy."

Generally, you cannot escape liability for copyright infringement by altering or modifying the work you copy.  If you copy and modify protected elements of a copyrighted work, you will be infringing the copyright owner's modification right as well as the copying right.

Special Myths about the Internet

Much public domain material is available on the Net -- government reports and uncopyrightable factual information, for example.  However, much of the material that is on the Internet is protected by copyright.

In addition to the general copyright myths discussed above, there are a number of myths about how copyright law applies to copying material from the Internet and posting material on the Internet.  We'll discuss some of them in this section.

Copying Material from the Net

Don't make the mistake of believing these myths about copying material from the Net:

• Internet Myth #1: If I find something on the Net, it's okay to copy it and use it without getting permission.

While you are free to copy public domain material that you find on the Net, generally you should not copy copyrighted material without getting permission from the copyright owner - whether you find the material on the Net or in a more traditional medium (book, music CD, software disk, etc.).

• Internet Myth #2: Anyone who puts material on a Web server wants people to use that material, so I can do anything I want with material that I get from a Web server.

Individuals and organisations put material on a Web server to make it accessible by others.  They do not give up their copyright rights by putting material on a Web server.  Also, the person who posted the material may not own it.

• Internet Myth #3: It's okay to copy material from a Home Page or website without getting permission.

Much of the material that appears in websites and Home Pages is protected by copyright.  If you want to use something from someone else's Home Page or website, get permission -- unless permission to copy is granted in the text of the Home Page or website.

Posting Material

And don't believe these myths about how copyright law applies to putting copyrighted material owned by others on the Net:

• Internet Myth #4: It's okay to use copyrighted material in my Web site so long as no one has to pay to visit my Web site.

Unless your use of the copyrighted work is fair use (see 'Fair Use', later in this article), you need a license to copy and use the work in your website even if you won't be charging people to view your website.  (You also need a public display license.)

• Internet Myth #5: It's okay to make other people's copyrighted material available on my Web server so long as I don't charge people anything to get the material.

Copying and distributing copyrighted material without permission can be copyright infringement even if you don't charge for the copied material.  Making material available for others to copy can be contributory infringement.

When You Don't Need a License

You don't need a license to use a copyrighted work in three circumstances: (1) if your use is fair use; (2) if the work you use is in the public domain; or (3) if the material you use is factual or an idea.

Fair Use

You don't need a license to use a copyrighted work if your use is "fair use." Unfortunately, it is difficult to tell whether a particular use of a work is fair or unfair.  Determinations are made on a case-by-case basis by considering four factors:

• Factor #1: Purpose and character of use.  The courts are most likely to find fair use where the use is for noncommercial purposes, such as a book review.
• Factor #2: Nature of the copyrighted work.  The courts are most likely to find fair use where the copied work is a factual work rather than a creative one.
• Factor #3: Amount and substantiality of the portion used.  The courts are most likely to find fair use where what is used is a tiny amount of the protected work.  If what is used is small in amount but substantial in terms of importance, a finding of fair use is unlikely.
• Factor #4: Effect on the potential market for or value of the protected work.  The courts are most likely to find fair use where the new work is not a substitute for the copyrighted work.

If your multimedia work serves traditional 'fair use' purposes - criticism, comment, news reporting, teaching, scholarship, and research - you have a better chance of falling within the bounds of fair use than you do if your work is a sold to the public for entertainment purposes and for commercial gain.

Public Domain

You don't need a license to use a public domain work.  Public domain works - works not protected by copyright - can be used by anyone.  Because these works are not protected by copyright, no one can claim the exclusive rights of copyright for such works.  For example, the plays of Shakespeare are in the public domain.  Works enter the public domain in several ways: because the term of the copyright expired, because the copyright owner failed to "renew" his copyright under the old Copyright Act of 1909, or because the copyright owner failed to properly use copyright notice (of importance only for works created before March 1, 1989, at which time copyright notice became optional).  The rules regarding what works are in the public domain are too complex for this primer, and they vary from country to country.

Ideas or Facts

You don't need a license to copy facts from a protected work or to copy ideas from a protected work.  The copyright on a work does not extend to the work's facts.  This is because copyright protection is limited to original works of authorship, and no one can claim originality or authorship for facts.  You are free to copy facts from a copyrighted work.

Creating Your Own Works

Naturally, you don't need a copyright license for material which you create yourself.  However, you should be aware that the rules regarding ownership of copyright are complex.  You should not assume that you own the copyright if you pay an independent contractor to create the work (or part of it).  In fact, generally the copyright in a work is owned by the individual who creates the work, except for full-time employees working within the scope of their employment and copyrights which are assigned in writing.

PATENT LAW

While copyright law is the most important intellectual property law for protecting rights in multimedia works, a multimedia developer needs to know enough about patent, trademark, and trade secret law to avoid infringing intellectual property rights owned by others and to be able to take advantage of the protection these laws provide.

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 computerised 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.

Obtaining Patent Protection

There are strict requirements for the grant of utility patents and design patents.  To qualify for a utility patent, an invention must be new, useful, and "non obvious." 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.

To meet the non obviousness 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 non obviousness, 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.

Scope of Protection

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 - 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.

Before June 8, 1995, utility patents were granted for a period of 17 years.  After that date patents are issued for 20 years after filing with certain extensions available.  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.

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 trademarks used in commerce, federal trademark protection is available under the federal trademark statute, the Lanham Act.  Many states have trademark registration statutes that resemble the Lanham Act, and all states protect unregistered trademarks under the common law (non statutory law) of trademarks.

Availability of Protection

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 protectable.

Example: The word 'corn flakes' is not protectable 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 protectable.  In addition, trademarks that are "descriptive" of the functions, quality or character of the goods or services must meet special requirements before they will be protected.

Obtaining Protection

The most effective trademark protection is obtained by filing a federal 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.  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.

Scope of Protection

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.

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."

Works Protected

The following types of technical and business information are examples of material that can be protected by trade secret law: customer lists; instructional methods; manufacturing processes; and methods of developing software.  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.

Six factors are generally used to determine whether information 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.

Obtaining Protection

Trade secret protection attaches automatically when information of value to the owner is kept secret by the owner.

Scope of Protection

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 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.

Trade secret protection endures so long as the requirements for protection - generally, value to the owner and secrecy - 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.

RIGHTS OF PUBLICITY, LIBEL AND OTHER LAWS

In addition to the intellectual property laws discussed above, you must also be familiar with the several other areas of law that deal with the right of the individual to control his image and reputation.  The right of publicity gives the individual the right to control the use of his name, face, image or voice for commercial purposes.  For example, Ford's advertising agency tried to persuade Bette Midler to sing during a Ford television commercial.  She refused.  They hired her backup singer.  The performance of the backup singer was so similar to Bette Midler that viewers thought Bette Midler was singing.  On the basis of that confusion, she sued and won $400,000 in damages.

Libel and slander protect an individual against the dissemination of falsehoods about that individual.  To be actionable, the falsehood must injure his or her reputation or subject them to hatred, contempt or ridicule.  The individual can obtain monetary losses as well as damages for mental anguish.

If you intend to use pre-existing material from television or film, you may also have to deal with the rights of members of the entertainment unions to get "reuse" fees.  These unions include the Writers Guild, the Directors Guild, the Screen Actors Guild, American Federation of Musicians, and the American Federation of Television and Radio Artists.  Under the union agreements with the film and television studios, members of these unions and guilds who worked on a film or television program have a right to payment if the work is reused.  This topic is discussed in more detail in our book.  Although you as the multimedia developer are not signatory to these agreements and may not be directly liable for these payments, the license from the film and television studio will generally make you responsible for paying them.  These payments are generally modest.  However, if you are using many clips these payments can become quite expensive.

If you use professional actors, directors, or writers in developing your product, you will also need to deal with these unions.  Most of the unions have very complex contracts developed specifically for their traditional film and television work.  They are still trying to understand how to deal with the multimedia industry, although both SAG and AFTRA have developed a special contract for multimedia projects.  You should be aware that if you use professional talent, you should be prepared for the additional complexity arising out of these union agreements.

HYPOTHETICAL MULTIMEDIA CD-ROM AND WEBSITE

This section will apply the legal rules just discussed to the creation and distribution of a new multimedia work based on a retrospective of the Academy Awards.  The work is being created by a new company, Hollywood Productions.  Its intended market is individuals and film students.  It will be distributed on a CD-ROM and as a website.  The work, in addition to "story" text created by Hollywood Productions and video footage which it shot at the Academy Awards ceremony, will consist of the following elements:

• Magazine articles about the winning movies and excepts from various books about the awards and the film industry, including Final Cut, Reel Power, and History of American Film.
• Still photographs.
• Excerpts from winning motion pictures.
• Music, including some of the hit songs from the winning motion pictures.

A.  TEXT WORKS.

From a legal point of view, the "story" text created by Hollywood Productions is treated differently from the magazine articles and book excerpts.  As the creator of the new text, Hollywood Productions will probably own the copyright in the text, either through the work-for-hire doctrine or assignments.

For the magazine articles and book excerpts, however, Hollywood Productions is most likely not the copyright owner.  Hollywood Productions must go to the owners of the copyrights in the articles and books to get permission to use the articles and book excerpts.  (How to do this is discussed in more detail in our book.)

B.  PHOTOGRAPHS.

Copyrights in photographs are initially owned by the photographer, although they may either be assigned to another party or transferred to the photographer's employer under the work-for-hire doctrine.  The determination of who owns the appropriate rights in the photograph can be very difficult and time consuming because of fragmentation in this industry.  For example, the fact that a photograph appeared in Forbes magazine does not necessarily mean that Forbes owns the copyright in the photograph.  Forbes may only have a license to use it once in its magazine.  Common limitations in the licensing of photographs include the colour of reproduction, the medium (i.e. newspapers, magazines, etc.), and attribution as well as those relating to numbers of copies.

The rights required for an interactive multimedia work would be quite different from those which are normally granted to use photographs.  For example, the photograph may appear several times throughout the work and the number of its appearances could be controlled by the viewer.  Such flexibility is quite different from the rights traditionally granted in the photography industry.

C.  FILM AND VIDEO.

Once again, Hollywood Productions must distinguish between film or video which it has created (the footage which it shot at the Awards ceremony) and film or video owned by third parties (the excerpts from the winning motion pictures).

As to the material it created, the Awards ceremony footage, if the legal issues are properly structured, Hollywood Productions owns the copyright.  The "authors" of a videotape may include the actors, directors, scriptwriters, music composers and the cameramen.  To avoid the problems of joint ownership of copyright, Hollywood Productions should obtain the appropriate agreements from the individuals involved in creating its videotapes.  Even if Hollywood Productions owns the copyright in the footage of the Awards ceremony, the use of the video clips from such footage of the ceremony may require multiple clearances, including clearing the music used in the video clip, paying fees to the entertainment unions such as SAG and Directors Guild, and clearing the rights of publicity of the participants.  In addition, if Hollywood Productions uses "scripted" performances from the Awards ceremony, it will have to pay reuse fees to the writers if they are members of the Writers Guild.

Hollywood Productions must obtain permission to use the excerpts from the winning motion pictures.  The use of feature films in multimedia can be particularly complex and expensive and generally requires multiple permissions.  Feature films are frequently based on a novel whose use is licensed to the studio.  The film may also use music developed by a third party.  Consequently, the owner of the copyright in the film may not have the necessary rights to the music or the underlying novel to permit their use in the multimedia work.  Union reuse fees may also apply.  Hollywood Productions may also have to obtain rights of publicity releases from the individual actors depending on their contract with the studio.

D.  MUSIC.

To use music in the new work, Hollywood Productions must get permission from the owners of the copyrights in the songs.  Musical composition copyrights are usually owned by music publishers.

If Hollywood Productions wants to use excerpts of existing recordings of music - from the recorded sound tracks of the winning films, for example - it must get permission from owners of the copyrights in those sound recordings, in addition to getting permission from the song copyright owners.  A sound recording copyright covers the expression added by the record developer in creating the recording - the way the song is sung or played, the arrangement, the mixing, and so on.  Sound recording copyrights are generally owned by record companies.

If Hollywood Productions will be recording its own version of each song, this second level of permission - permission to use an excerpt from a copyrighted sound recording - is inapplicable.

Rights in music are quite complicated.  The rights which Hollywood Productions must consider obtaining are described below:

1. Mechanical rights.  Mechanical rights are the basic right to use a musical composition.  They do not include the right to publicly perform the music (see below).  A mechanical license also does not permit the use of the music with still or moving images.  Such use requires a 'synchronisation' license (see below).  Although copyright law provides a compulsory license for mechanical rights, most licensees prefer to obtain these rights commercially through the Harry Fox Agency or other similar agencies.  This preference is based on the very onerous payment and accounting requirements imposed by the Copyright Act for 'compulsory' licenses.
2. Synchronisation license.  If the music is to be synchronised with still or moving images on a screen, the licensee must obtain a "synchronisation" license.  Although these rights may also be handled by the Harry Fox Agency, in some cases Hollywood Productions may need to contact the musical publisher directly.
3. Public performance rights.  Hollywood Productions will probably also need a license for public performance because its multimedia work will be shown to students and other audiences.  Such a showing would be considered a public performance.  A performance is considered public if it is "open to the public" or at any place where a substantial number of persons outside of the "normal circle of family and social acquaintances" gather.  Most music publishers permit either ASCAP or BMI to license their public performance rights (Harry Fox Agency does not handle the public performance right).
4. Right to a particular performance or recording.  As described above, if Hollywood Productions wants to use an excerpt from a particular recording of a song, it must get permission from the owner of the sound recording copyright.  The licenses described in 1 through 3 are limited solely to the right to use the musical composition.  Thus, unless Hollywood Productions is prepared to have new artists record the music, it must negotiate with the holder of the rights to the particular recording (a record company, most likely).

Special Website Issues

The use of these materials on a website poses a number of special issues.  First, the licenses of third party rights would have to be worldwide in scope because of the international nature of the Internet.  It may be difficult to obtain such broad rights, because they may be owned by different parties.  For example, many book publishers exclusively license or assign copyrights to different companies for distribution in different countries.  Consequently, you would have to obtain clearances from several different companies for a single work.  Second, you will need to license public display rights for text and photographs and public performance for video clips and music.  You generally don't need those rights for a CD-ROM because it is used in the privacy of a home, although you would need public performance rights to demonstrate the CD-ROM at trade shows.  You would also need to license such rights if the CD-ROM is to be used in a school or company where the audience will be not be limited to family and friends.

The creation of a website, just like developing a CD-ROM, requires careful attention to the legal as well as the technical aspects of the development.  The online industry is so new that it has few or no traditions of the roles of the parties.  The development contract needs to address the following issues: ownership of the copyright and other rights in the completed website, responsibility for the website design, definition of milestones in development process, definition of website performance specifications, method for confirming that the website meets the performance specifications, responsibility for licensing third party software, liability for the failure of the website to perform in accordance with the specifications, the responsibility for continuing performance and updating the website, method and timing of payment, remedies for failure to perform and liability for infringement of third party rights.

CONCLUSION

An understanding of legal issues is critical to success in the multimedia and online industry.  These issues are complex because of the youth of the industry and the many industries upon which it draws to create its products.  The failure to do so can result in spending thousands of dollars in legal fees.

Biographies

J. Dianne Brinson has a Bachelor of Arts in Political Science and Russian, summa cum laude, from Duke University and a law degree from Yale Law School.  She teaches the "Law for Internet Users" at San Jose State University's Internet Institute.  She is also 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 may 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 Intellectual Property and Technology Law Group at Gray Cary Ware & Freidenrich and represents many multimedia and Internet developers and publishers.  In April 1997, the National Law Journal named him one of the 100 Most Influential Lawyers in the United States.  He has spoken on multimedia and online legal issues at the AAP, National Association of Broadcasters annual convention, Game Developer's Workshop, Seybold -- San 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 has been quoted in the New York Times, Wall Street Journal and the San Francisco Examiner on legal issues and multimedia.  He can be reached at mradcliffe@gcwf.com

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