Frequently Asked Questions
Copyright Law:
What is copyright protection?
Under federal law, if you have created an original work of authorship, such as an article, drawing, or song, and fixed it in a tangible medium of expression (for example, wrote the work on paper, took a photograph of it, or made a recording), you probably own the copyright to the work. I say "probably" because you must have created the work and it must possess a level of originality. That means that you did not just make a list of names and put them in alphabetical order. The general categories of subject matter which may be protected by copyright include: books, articles, compositions, plays, pantomimes, dances, paintings, drawings, sculpture, films, sound recordings, buildings.
Who owns the copyright in a work?
Generally, ownership of the copyright in a work belongs to the human being who initially created the work. However, if the person is an employee when he or she created the work, most likely the employer will own the copyright. This situation is known as a "work made for hire."
What is a “work made for hire?”
A “work made for hire” is a special term defined in the Copyright Act. There are two possibilities. First is a work that is created by an employee within the scope of her employment. Second is a work that is specially commissioned and which falls within one of nine general categories specified in the law. These categories are: collective work, motion picture or other audiovisual work, translation, supplementary work, compilation, instructional text, test, answers to a test, atlas. In the case of a commissioned work there must also be a written agreement between the author and the entity acknowledging that it is a work made for hire.
How long does copyright protection last?
All of the following time periods refer to works that were created on or after January 1, 1978. In the case of a work created by one human being, the copyright lasts for the life of the author plus 70 years. If more than one person was involved in the creation of a work, the copyright will last until the last of the creators has died plus 70 years. If the work is owned by a corporation because it was a "work made for hire," then the copyright exists for 95 years from its first publication, or 120 years from its first creation, whichever situation expires first.
What must I do to get a copyright?
As the law now exists, you do not need to do anything special to have a work you create be protected by copyright. However, in order to make your rights easier to establish, should there be any problems, it would probably be wise to include a notice on the work that indicates you are asserting copyright protection. Frequently such a notice appears as follows: © + year of creation + name of the owner of the copyright. By way of example: © 2003 Barbara I. Berschler. It would also be a good idea to register the work with the U.S. Copyright Office, located in Washington, D.C. Registration within three months of publications gives you added protection if you have to sue someone for infringement of your copyright by allowing you to seek attorney fees and claim "statutory" damages, which may be easier to prove than actual damages.
What is the public domain for purposes of copyright?
In the context of copyright law, the public domain encompasses: facts, ideas, works for which copyright expired, works for which the owner has abandoned their copyright, and many federal government publications. If a work is in the public domain, it is available for anyone to use. We see countless books using classical works, like Shakespeare. No one has to ask permission or pay a fee. Likewise, people can develop derivative works based on public domain material without permission. An example of that is the musical "Westside Story" which was based on "Romeo and Juliet."
Individual words, names and short phrases (slogans) are not protected by copyright. But they may be protected by trademark law, so be careful. Titles to works are not protected by copyright but may be by laws against unfair competition if the title is strongly identified in the public’s mind with the author.
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Computer Software Licensing
What does Open Source Software mean?
In the late 1980's some computer science academics working on computer operating systems, believed it would be good to give access to the program's source code so that other software engineers could study, improve, debug, and make it more nimble. All of this access was free from requiring any monetary payment by the user. As more and more source code was released on the Internet, in order to avoid misunderstandings about what this new freedom meant, some in the free software movement adopted the term "open source" to emphasize that the freedom being promoted was software freedom by readily giving access to the source code and that it did not mean "freedom" from all obligations, as the code being released was protected under copyright and in some cases patent law.
What does Open Source (OS) Licensing mean?
The promoters of the open source movement decided it would be useful to clarify the underlying principles that would support the exchange between one software developer freely giving access to her source code and the circumstances under which another developer could make use of that code. By consensus, the open source promoters adopted an Open Source Definition which identified the principles which must be incorporated in any qualified OS license. Any computer programmer wishing to release software source code must use a form of OS license that has been approved by the board of directors of the Open Source Initiative. With this stamp of approval for an OS license, others in the open source community are willing to use and work on the released software.
What is the General Public License (GPL)?
There are now numerous Open Source Initiative approved OS licenses, but in the beginning there was just one, the General Public License. The intent of the drafters of the GPL, was to bring more and more software under the OS umbrella. This would be accomplished by the hereditary nature of the GPL. Those who obtain access to OS software under the GPL are required to re-license the software under the exact same terms as the GPL. Important requirements in the GPL are that the user must not charge for the further distribution of the underlying software and must also make the source code, including their additions, available to the downstream users.
The General Public License, which is maintained by the Free Software Foundation, has gone through two modifications so that version 3.0 was released on June 29, 2007. However, because much software was released under the terms of the GPL, due to its hereditary nature, its terms remain profoundly influential.
What is a proprietary software license?
When a software engineer writes code for someone else, it may be that she does not want the user to know the inner workings of the product, thus it will be distributed in object code (machine readable only). Similarly, the business contracting for a software application may want to keep its operation confidential from those outside of the business. Those developing or using the applications would consider such software as proprietary and it would come under a license that would emphasize its confidential nature.
However, when creating proprietary software, the developer must be certain that all of the software in the program is either original to that developer or she has permission to use it which does not limit the subsequent use or distribution of it. If, in the process of writing code, a developer incorporates some OS software into the application, the whole program may be subject to the same licensing requirements under which that OS code was originally released.
Trademarks & Service Marks:
What is the difference between the symbols: TM, SM, and ®?
The "TM" stands for trademark and the "SM" stands for service mark. They indicate that the person is claiming a common law form of trademark protection. Only those who have obtained a registered trademark or service mark with the U.S. Patent and Trademark Office are allowed to use the "R" in a circle, which indicates that theirs is a registered trademark.
What does it mean to have a trademark or service mark?
These marks are a form of short hand that tells the public that a product or service comes from a certain source. We are surrounded by these marks. For instance, if you see the mark of "Apple" you most likely think of computers. And if you see the mark "Kodak," you likely think of a product that is connected with photography. Both of these are very "strong" marks and are therefore accorded a high level of protection by federal trademark law. Other types of marks are merely "descriptive" of the product or service being offered. An example could be "Brite" Cleaners. Descriptive marks are not as strong as the "fanciful" or "arbitrary" marks referred to above. For that reason, they may not be eligible for federal trademark protection.
If I have a trademark, how long can I keep it?
As long as you continue to use the mark in connection with your business, then it can remain a valid mark. (There may be periodic registration requirements to maintain a federal registration.) Even if you sell the rights to the mark, as long as it continues to be used in connection with the business, the mark can continue to exist. This differs from copyright protection which has a set period of time and then the underlying work loses protection and becomes part of the public domain for anyone to make use of it.
What can serve as a trademark?
Almost anything can be used as a trademark, as long as it does not become generic (meaning that it describes the product or service, such as what happened to the term “aspirin” which at one time was a trademark but became the word used to describe the type of medicine). It is best to let your imagination play with the idea for a mark and not settle on obvious connections. The strongest marks are those of made up words or fanciful associations. Here are some examples of famous trademarks:
| Words
Series of letters
Series of numbers
Picture
Design
Symbol
Sound
Name
Nickname
Color
Business Name | WordPerfect
NBC
(Model number of a machine)
Sunmaid’s girl with grapes
Burberry’s plaid
Nike’s swooch
NBC chimes
Dell (computers)
VW Beetle
Pink for insulation
Target |
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Trade Secrets:
What is a trade secret?
Basically, a trade secret is any information that a business collects which gives it an edge over its competitors. It can be a formula, pattern, compilation, program, device, method, technique or process. The point about the information is that it must be kept “secret.” Once it is generally known, then the originator of the trade secret has no claim against anyone else who uses it. Many states have laws which protect trade secrets that are based on the Uniform Trade Secrets Act.
What must you do to protect your trade secrets from misappropriation?
A misappropriation occurs when someone acquires the trade secret from another, knowing it to be a trade secret and using improper means to acquire it. As the owner of the trade secret, you must take reasonable steps to keep it secret. Therefore, you may disclose it to those who have a duty to keep the secret, for example your employees who have a “need to know” and those who have signed a confidentiality agreement. But otherwise, you must not let the information be disclosed in a way that it can become generally known.
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Business Starts-Ups:
How many people are needed to form a corporation?
You can have many people or as few as one person to form a corporation. Keep in mind that if there are many shareholders in the corporation, you may have to comply with state and federal security laws.
Should I incorporate my business in Delaware?
Probably not. Unless you are doing business in Delaware there is little reason to incorporate in that state. In fact doing so could cost you more money in the end. Probably the best place to incorporate is the state in which your corporation will be doing business most of the time.
What does the board of directors do?
The board sets the general agenda for the corporation. It elects the officers. It, in turn, is elected by the shareholders. The officers operate the day to day business of the corporation. Often, in small corporations, the shareholders, board of directors and officers are the same individuals. However, it is always important to know which "hat" you are wearing at the time you act on behalf of the corporation.
What is a Limited Liability Company?
As with corporations, limited liability companies or LLCs are created by the laws of the states in which they are set up. You must file Articles of Organization. The owners of the LLC are known as members. The members can run the LLC or allow other people called “managers” to run the business of the LLC. Limited liability companies share characteristics of corporations and partnerships. Like corporate shareholders, the members of the LLC are not personally liable for the debts of the LLC. However, like partners in a general partnership, one member can take steps that bind the LLC without necessarily obtaining the authorization of all the other members. The members of an LLC should have an Operating Agreement. It performs some of the functions of the bylaws and shareholder agreement for a corporation.
How is a Limited Liability Company taxed?
If it is a qualified LLC, its members may be taxed by the federal government in the same way that partners in a partnership are taxed, that is any net income or losses are passed through directly to the members, as the LLC is not considered a taxable entity. However, this kind of tax treatment may not be available to the members with respect to their state income taxes.
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Franchise Law:
What are Franchise Offering Documents?
If you are thinking of buying a franchised business, you will be presented with a disclosure document that should conform to the requirements of the Federal Trade Commission. The document is referred to as the Franchise Disclosure Document (FDD) formerly known as the Uniform Franchise Offering Circular or UFOC. The FDD will give you information about the history of the people involved in the franchise, what the franchisor says they will do for you, how much it will cost to get started with them, how much you will pay in royalties to be part of the franchise system. In addition, a number of the states have their own version of franchise laws. Therefore the FDD also must comply with those state laws if the franchisor is selling franchises in those states. It is important to have someone familiar with the various requirements to go through the FDD to point out issues you should be aware of before you sign this multi-year agreement.
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Registered Agent / Resident Agent:
What is a Registered Agent?
A “registered agent,” sometimes called a “resident agent,” is someone you designate to receive “service of process” should your business entity be sued. (Service of process refers to the legal papers that start a lawsuit.) The registered agent also may receive official papers from the state government which relate to keeping your business entity in good standing for that state. Most states require business entities that are operating in their borders to designate a registered agent.
Who can serve as a Registered Agent?
If your business entity is set up in one state, the register agent could be a principal of your entity who lives in that state. However, if your entity is doing business in more than one state, you will need to have a registered agent in each of those other states. Registered agents can be individuals who reside in the state or legal entities which are set up to provide such services.
Why do you need a Registered Agent?
There are several reasons why, as a business owner, you need the services of a registered agent. First, it is a requirement of the state where you set up your entity, whether you operate as a corporation, limited liability company, partnership, etc. The state wants to have a legal address where important papers can be sent and notices provided. Second, failure to have a registered agent with a current address could mean your entity was no longer in “good standing” in that state. Third, if you do not have a registered agent in every state where you do business, you will not know if your business is sued there. That could lead to the plaintiff obtaining a default judgment against your business in their state and then taking that judgment and having it recognized in your home state. Trying to undo that situation could be very costly.
Why is it a good idea to have a professional registered agent?
It can be worth the relatively small yearly fee to hire someone to be your entity’s registered agent, even in your home state, for a number of reasons. Providing that kind of service is their business, they will act promptly to deliver your papers to you once they receive them. If you act as your own agent or have a “friend” do it, this kind of important paperwork could get lost. If you move, you may forget to update the mailing address with the state. And another important consideration could be to give you anonymity. The articles of incorporation are public documents. If you would prefer to limit information about the ownership of your entity, especially in the case of smaller organizations, letting a professional act as your registered agent can help in preserving your privacy.
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