Copyright Law v. Trademark Law: Commonly Mixed Up — Basic Difference between Copyrights and Trademarks in the United States

Too often a journalist for a well-known publication will publish an article that confuses copyright protection with trademark protection or copyright infringement with trademark infringement. This misnomer and incorrect application of law oftentimes confuses the general public and inaccurately communicates an otherwise newsworthy story.
  • Copyright laws generally protect the work of an author in his or her original, fixed and tangible expression of an idea as opposed to simply an idea itself.
  • Trademark laws generally protect the identity of the origin of the party providing specific goods or services to the marketplace.
For example, a band with a unique name composes an original song. In this example, generally, the original song may be protected under copyright laws as the song is a fixed expression of an idea that the band reduced down to writing, while the unique name of the band may be protected under trademark or unfair competition laws.
  • Copyright infringement attempts to seek relief for an unauthorized violation of the exclusive rights of a copyright holder in commercializing their work.
  • Trademark infringement attempts to seek relief for the unauthorized use of a trademark holder’s rights in a unique name, used by the trademark holder, in selling specific goods or services to the marketplace.
For example, a third party, without authorization, copies a band’s exact song and sells it on CDs over the internet. Further, the same party who is selling unauthorized copies of the band’s song is doing so under the same name as the band despite having no authorization to use the name. In this example, the copyright holder, which may be the band or record label, may seek relief against the unauthorized party selling the CDs under a claim of copyright infringement. Further, the trademark holder of the band name, which is usually the band itself, or the record label on behalf of the band, may seek relief against the unauthorized party using the band’s name to sell the CDs under a claim of trademark infringement or unfair competition. There are additional criteria that oftentimes need to be met to have a valid copyright or trademark as well as specific requisites which must be met to bring a claim for copyright or trademark infringement. It is important to consult a copyright lawyer or trademark lawyer to assist you in determining whether you have a valid copyright or trademark and whether your rights in either have been violated.

Innocent Copyright Infringers: The Importance of an Adequate Copyright Notice to Defeat Them

In a previous blog entry we discussed the importance for photographers (and other artists) to digitally watermark their photographs. By digitally watermarking their work, photographers could seek additional damages in some situations in a copyright infringement lawsuit for the removal or alteration of such watermark under section 1203 of the Digital Millennium Copyright Act (DMCA). This is far from the only reason why artists of any variety should place an indication of ownership on their work. For copyright holders, an adequate copyright notice, whether digital watermark or standard imprint, may be even more important than the ability to potentially seek additional damages with respect to section 1203 of the DMCA.

When a work is federally registered and published, a copyright holder will often place a copyright notice on the work (i.e., © Year Published, Name of Owner) as prescribed under sections 401 and 402 of the Copyright Act. The purpose of copyright notice, as highlighted by section 405(b) of the Copyright Act, is to protect innocent infringers. Koontz v. Jaffarian, 617 F. Supp. 1108, 1112 (E.D. Va. 1985) aff’d, 787 F.2d 906 (4th Cir. 1986). An innocent infringer is one or more parties who innocently violate an exclusive right under section 106 of the Copyright Act of a copyright holder in a valid copyright without knowledge of a copyright. Works in the public domain are primary examples of artistic expression that usually bear little or no copyright protection.

Prior to the effective date of the Berne Convention Implementation Act of 1988 (BCIA), the owner of the copyright was required to comply with notice formalities when a work was published or with one of the savings clauses, or forfeit the copyright. Morgan v. Hawthorne Homes, Inc., CIV.A. 04-1809, 2009 WL 1010476 (W.D. Pa. Apr. 14, 2009). For works published before March 1, 1989, the effective date of the BCIA, that do not bear an adequate copyright notice, section 405(b) of the Copyright Act in some cases essentially restricts any liability for actual or statutory damages under section 504 of the Copyright Act provided that the work was publicly distributed under the authority of the copyright owner. This restriction on liability applies to any person who innocently infringes a copyright for any infringing acts committed before receiving actual notice that the work has been federally registered so long as he or she proves that he or she was misled by the omission of notice.

While the defense of innocent infringement can impact the remedies available against a defendant for copyright infringement, it “will not constitute a defense to a finding of liability.” 4-13 Nimmer on Copyright § 13.08. Phoenix Renovation Corp. v. Rodriguez, 439 F. Supp. 2d 510, 517 (E.D. Va. 2006). Consequently, a copyright holder may still be able to recover actual profits obtained by the innocent infringer and may prevent future infringement now that the innocent infringer is on actual notice or require the innocent infringer to pay a license fee to continue exploitation of the work.

An adequate copyright notice, with some specific exceptions, essentially nullifies the defense of innocent infringement in a copyright infringement action insofar as the defendant had access to published cop(ies) that bore an adequate copyright notice. Consequently, it is extremely important to provide an adequate copyright notice on any work being published in order to adequately defend against an innocent infringer defense. Such good practice will likely allow the copyright holder or rights holder, in many circumstances, to seek actual or statutory damages under section 504 of the Copyright Act in an action for copyright infringement.

Copyright Registration and Copyright Claimant: What Happens If a Publisher, Studio, or Producer Mistakenly Puts Itself as Claimant?

Under Section 201 of the Copyright Act, copyright in a work vests initially in the author or authors of the work. The author, however, is not always the party who claims ownership of the copyright when federal registration of the work is sought. Section 409 of the Copyright Act requires a copyright claimant to provide in an application for copyright registration the claimant’s name and address, and if claimant is not the author, a brief statement of how the claimant obtained ownership of the copyright.

What is a Copyright Claimant?

Unfortunately, the Copyright Act does not expressly define “copyright claimant.” Shortly after the Copyright Act was enacted, the Copyright Office published interim regulations that included a definition of “copyright claimant” for purposes of copyright registration. Under Chapter 37 of the Code of Federal Regulations, a copyright claimant is either: (i) the author of a work; or (ii) a person or organization that has obtained ownership of all rights under the copyright initially belonging to the author. The latter category, offered as a footnote in the Federal Regulations, which may soon be removed, includes a person or organization that has obtained, from the author or from an entity that has obtained ownership of all rights under the copyright initially belonging to the author, the contractual right to claim legal title to the copyright in an application for copyright registration. See 37 C.F.R. § 202.3(a)(3).

As the definition indicates, in the circumstance that the copyright claimant is not the author of the work, the party claiming ownership must have obtained all rights in the work that originally belonged to the author. Further, as case law suggests, a ‘copyright “claimant’ in whose name registration is made “must be either the author of the work or one who obtained ownership of the copyright, not merely one who obtained ownership of certain exclusive rights under the copyright.” Morris v. Business Concepts, Inc., 259 F.3d 65, 72 (2nd Cir.2001); see also Bean v. McDougal Littell, 669 F. Supp. 2d 1031, 1035 (D. Ariz. 2008) (further quoting Morris in that “the copyright ‘claimant’ for purposes of copyright registration is the author of the work for which registration is sought or a person or organization that has obtained ownership of all rights under the copyright initially belonging to the author”).

We discussed in a previous blog post that publishers, studios, and producers, will often incorporate language into a written agreement by way of assignment or license to obtain ownership in the copyright of a work. However, in some agreements, the assignment or license does not effectively transfer all rights under the copyright from the author to the organization. Consequently, when the publisher, studio, or producer, applies for copyright registration on behalf of the author, it incorrectly marks itself as the copyright claimant, believing that all rights have been transferred, when that simply is not the case.

What happens if the publisher, studio, or producer, puts down the wrong claimant on the application for copyright registration?

The fear is that if there is ever a dispute regarding the work (i.e., claim for copyright infringement against a third party), the copyright registration will be held invalid, which could have drastic implications for the copyright holder, including the author as well as the publisher, studio, or producer. In many circumstances, a valid copyright registration, or certificate of registration, is evidence that both the copyright is valid and that the copyright claimant owns the copyright. Courts may find a registration invalid if the copyright claimant willfully misstated or failed to state a fact that, if known, might have caused the Copyright Office to reject the application for copyright registration.

However, Courts have held that an innocent misstatement or error, absent of fraud, does not invalidate the copyright. In Wales Industrial Inc. v. Hasbro Bradley, Inc., 612 F.Supp. 510, 515 (S.D.N.Y.1985), the Court held that where an exclusive licensee erroneously identified itself on the copyright registration as the ‘copyright claimant,’ that the alleged error didn’t invalidate the registration. Once a Court determines that an error was innocent, it will look to see if the error was immaterial. An error is immaterial if its discovery is not likely to have resulted in the Copyright Office’s rejection of the application for copyright registration. Consequently, in most cases, innocently identifying the wrong copyright claimant on an application for copyright registration will not invalidate the copyright registration or certificate of registration.

In any case, it is important for the publisher, studio, or producer to make sure that if it intends to transfer all rights in a copyright from an author to itself that it has a written agreement between the author and itself which includes the necessary language to confer all rights in the copyright. Such a written agreement is required as set forth under Section 204 of the Copyright Act to constitute a valid transfer and will allow the publisher, studio, or producer to mark itself as claimant in the application for copyright registration. This will help avoid unnecessary litigation and its associated expenses arising out of the validity of the copyright registration and whether the misstatement of identify to the copyright claimant was fraudulent and material or simply an innocent and immaterial error.

Artists, Musicians, Bands: Protect Your Personal Wealth through a Virginia Limited Liability Company

Many artists, musicians, and bands work to build their name, brand, and network the same way any business would.  When analyzed from a legal prospective, many of these same artists, musicians, and bands are working under an assumed or fictitious name and often operate as either a sole proprietor or, in the case of bands with multiple musicians, a partnership or, at the very least, a de facto partnership. In Virginia, whether you operate as a sole proprietorship or partnership, no person or partnership shall conduct or transact business in Virginia under any assumed or fictitious name unless such person or partnership signs and acknowledges a certificate with the statutory requisite information. See Virginia code § 59.1-69. Failure to comply with this statutory requirement may result in a fine of up to $2,500 or up to a year in jail, or both.

A sole proprietorship is a type of business entity with a single individual owner, whereby there is no legal distinction between the owner of the organization and the entity itself, meaning that the owner is personally liable for all debts and obligations of the company. A partnership is a type of business entity that includes the association of two or more persons to carry on as co-owners of a business for profit. This can occur whether or not the persons intend to form a partnership. See Virginia Uniform Partnership Act § 50-73.79 et al. A de facto partnership is when two or more persons appear to operate as a partnership, but have not officially established themselves as a partnership. In either partnership scenario, absent some written agreement, generally all partners are liable jointly and severally for all obligations of the partnership, meaning each partner is personally liable for all debts and obligations of the company (and the other partners), with some exceptions.

As a result of the exposed liability, especially to personal wealth, it is much better practice and protection for an artist, musician, or band to create a formal business structure to assume liability for their decisions. A Virginia Limited Liability Company (“LLC”) can help satisfy this objective. An LLC is owned by its members and is operated by either its members or one or more hired managers. In Virginia, no member, manager, organizer or other agent of a limited liability company shall have any personal obligation for any liabilities of a limited liability company, whether such liabilities arise in contract, tort or otherwise, solely by reason of being a member, manager, organizer or agent of a limited liability company. See Virginia Limited Liability Company Act § 13.1-1000 et al.

On its face, setting up a Virginia LLC and obtaining its tax identification number (TIN) in the form of a federal employment identification number (EIN) is a relatively simple process. However, there are many legal considerations that organizers fail to take into account when filing the necessary paperwork. Such considerations include the name of the organization, which may have costly trademark law implications; selecting the appropriate type of physical office address, as PO boxes and UPS boxes are not acceptable due to statutory requirements; selecting a proper registered agent, as some agents do not forward extremely important legal and tax correspondences; and electing the appropriate tax structure, as an LLC can elect several different tax options including applying for IRS Subchapter S treatment. Consequently, it is important to consult with an attorney knowledgeable about LLC organizations, business tax implications, and intellectual property considerations.

Artists, Authors, Musicians: Be Wary of a Copyright Assignment or an Exclusive Copyright License

It’s an important day when an artist signs his first artist agreement, when an author executes her first publishing contract, or when a band strikes their first record deal. It’s even more important that the creative parties signing these agreements understand what rights they may be giving away. Too often creative parties realize after it’s too late that they have effectively transferred almost all rights in their work and even in future works.

Under Section 204 of the Copyright Act, a transfer of copyright ownership, other than by operation of law (including but not limited to corporate mergers, bankruptcy, foreclosure, court order, and intestate succession), is not valid unless an instrument of conveyance, or a note or memorandum of the transfer is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent. 17 U.S.C. § 204. Consequently, a publisher, studio, or producer, will often incorporate language into a contract that transfers all intellectual property rights and copyright rights in a work away from the creative party. Sometimes, the non-creative party will do this in the form of an exclusive license, which many times has the same effect of a copyright assignment.

Sometimes, agreements that provide for the transfer of or exclusive rights to such rights also include language that expressly states that all future works created by the creative party are considered a Work-Made-For-Hire and that if necessary, the creative party agrees to sign additional documents assigning or exclusively licensing their rights in the copyright of the work. A Work-Made-For-Hire means essentially as it sounds, in that the creative party is an employee of an organization and it is his or her job to create the specific type of work being commercialized or that the creative party has been specifically commissioned and hired to complete a specific piece of work, but not in an employer-employee relationship, but rather in an independent contractor role. In either case, the non-creative party is seeking and asserting ownership or exclusivity in all rights in the copyright for all future works before they are even created.

It is highly recommended that a creative party, whether author or singer, retain a skilled lawyer to review any contract that poses a threat to the ownership or rights in the copyright of a specific work or future works. It is not always a bad thing that these rights are transferred or exclusively licensed, but such rights should be understood by the creative party in the context of the overall agreement in order to provide the creative party with an exit strategy in case the relationship between the parties doesn’t work out. An artist, author, or singer, often spends his or her entire life trying to ‘catch a break’ or ‘make it big’ or ‘break out’, why not spend the time and minimal expense to protect what took in some cases a lifetime to achieve?

Entertainment Law: Growth and Innovation!

McClanahan Powers warmly welcomes you to its Entertainment Law Blog. The entertainment industry continues to grow at an alarming pace, especially with access to many forms of entertainment only a finger touch away through many of the latest smartphones and other gadgets. According to a study commissioned by the CCIA, the value of the worldwide entertainment industry grew from $449 billion in 1998 to $745 billion by 2010.

Economic and innovative growth in an industry brings new legal challenges, opportunities, and pitfalls. Entertainment law embodies many areas of the law ranging from contracts to intellectual property ownership, comprising of copyright, trademark, patent, and trade secret laws.

For individuals and organizations in the entertainment industry, the playing field continues to change. The global system of the Internet itself has led to the dissemination and exchange of information in such a rapid medium that artists oftentimes have trouble protecting their rights in a published or licensed work.

The construction of systematized ‘paparazzi’-esk organizations such as California based Thirty Mile Zone (TMZ) have led to an emerging focus on the rights to publicity. While the introduction of social media platforms such as Facebook and Twitter have led to concerns regarding rights to privacy.

Innovations in information sharing technology provide exciting opportunities for entertainers and fans alike. However, such technology comes with its pitfalls. File sharing platforms, referred to as peer-to-peer technology, has given rise to bit-torrent protocols, which is a file sharing platform much more advanced than its Napster predecessors. This technology enables users to exchange a wealth of content in a short amount of time, content in which is often protected by copyright.

This has further led to the conception of ‘copyright trolls’ litigating cases against an excessive number of internet subscribers for copyright infringement. Copyright trolls are essentially individuals or organizations that opt to commercialize their work, often in the form of a movie or photograph, by finding people committing copyright infringement through file sharing.  Then, through the legal system and threats of a lawsuit, they obtain money in the form of settlement from alleged infringers, as opposed to earning money through sales in the marketplace.

Whether you are a musician, actor, author, athlete, painter or programmer, it is important that as an artist and innovator you understand your rights and responsibilities in an industry being modernized through technology and how to protect those rights. It is our hope that in the years to come this blog assists new artists and reminds older artists of the legal implications within their industry.