Mcle Self-study Article: Intellectual Property in the Real Estate Industry

• Publication year: 2019
• Author: Shuan Lue, Esq.

MCLE Self-Study Article: Intellectual Property in the Real Estate Industry

Check the end of this article for information on how to access one MCLE self-study credit.

Shuan Lue, Esq.

Shuan Lue is Associate Counsel at the California Association of REALTORS^® ("C.A.R."), where she handles the organization's intellectual property matters. Prior to joining C.A.R., Ms. Lue practiced complex commercial litigation, with a focus on intellectual property litigation.

I. INTRODUCTION

In the twenty-first century, intellectual property has become more important than ever. These days, a business's intellectual property portfolio is often one of its most valuable—if not the most valuable—assets, with some worth billions of dollars. As such, it is no wonder that businesses are increasingly investing resources in creating, building, and protecting their intellectual property assets to the fullest extent possible.

Regardless of the particular industry, nearly every business is impacted by and interacts with intellectual property, and those in the real estate industry are no exception. Intellectual property issues can arise in commercial real estate transactions involving trophy properties (such as the former Sears Tower or Three Embarcadero Center), eponymous buildings (like Rockefeller Center), or hotels, which include elements of both real property and business. Commercial transactions often require the transfer or license of tradenames, trademarks, and logos used in connection with the property, and obtaining the proper rights is crucial. In addition, many practices that have long been used in the real estate industry, such as hiring professional photographers to photograph properties, touch on intellectual property rights. The real estate industry has also drastically changed over the last couple of decades with respect to the tools available to assist with real estate transactions. Real estate transaction software, online multiple listing services, and virtual staging are just a few examples of technological innovations that are becoming increasingly popular and which implicate intellectual property in some manner. Furthermore, the advent of social media has also changed the way in which information about real estate transactions is shared. Thanks to advances in technology and the widespread use of the Internet, it is now easier than ever for businesses to create their own intellectual property, use intellectual property created by others, or both; and on the flip-side, it is also now easier than ever to infringe (whether intentionally or not) on another party's intellectual property.

Although real property remains the primary focus of the real estate industry, it is important to be aware of related intellectual property rights. This article provides an overview of copyright and trademark law and discusses how those areas of law apply to the real estate industry.

II. COPYRIGHTS

A. The Basics

Whether we are aware of it, copyright is something that we encounter on a daily basis, from the books we read, to the software we use, to the movies and television shows that we watch—most of which are copyrighted. You may have noticed copyright notices in the form of the "©" symbol followed by a year and some language asserting ownership over particular material. But what exactly is a copyright?

Intellectual property rights were considered so vital to the success of the United States that the Founding Fathers granted Congress the power to award copyrights and patents "to promote the progress of science and useful arts," in Article I, Section 8 of the U.S. Constitution. Copyright is a form of legal protection that gives the owner of the copyright the exclusive right to do, and to authorize others to do, certain things with respect to the copyrighted work. These exclusive rights include the right to reproduce the work (e.g., make copies); the right to create derivative works (i.e., a new work that includes part(s) of a preexisting copyrighted work); the right to distribute the work to the public (e.g., sell or give away copies); the right to publicly display the work (e.g., post on the Internet or social media); the right to publicly perform the work; and, in the case of sound recordings, to publicly perform the work by means of a digital audio transmission.¹ The primary basis of copyright law in the United States is the federal Copyright Act of 1976, 17 U.S.C. §§ 101-810 (the "Copyright Act").² Effective January 1, 1978, Congress preempted all common law or statutes of any state which are equivalent to any of the exclusive rights within the Copyright Act.³

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Copyright protection applies to a broad range of materials, but it does not extend to anything and everything. Copyright protects the following types of original works:

• Literary works;
• Musical works;
• Dramatic works;
• Pantomimes and choreographic works;
• Motion pictures and other audiovisual works;
• Sound recordings; and
• Architectural works.⁴

While this does encompass a broad range of materials, it is important to keep in mind that many types of materials are not protected by copyright, including but not limited to, the following examples:

• Works in the public domain;
• Works created by the United States government;
• Titles, names, short phrases, slogans, and simple logos;
• Ideas, procedures, and methods;
• Facts and data; and
• Compilations of facts and/or data without a minimal level of creativity.⁵

B. The Lifespan of a Copyright

Copyright protection extends to "original works of authorship fixed in any tangible medium of expression" that can be perceived either directly or with the aid of a machine or device.⁶ There are two key elements that must be satisfied. First, the work must be "original," meaning that it was independently created by the author and possesses at least a minimal degree of creativity. Originality is not to be confused with novelty; a work can be similar to, or even the same as, another work so long as the similarity is the result of independent creation and not of copying. Second, the work must be "fixed," meaning that its embodiment is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.

Copyright protection automatically exists from the moment that an original work is fixed. Registering a copyright with the U.S. Copyright Office is not necessary, but doing so confers significant benefits, such as creating a public record of copyright ownership and allowing the copyright owner to be eligible for statutory damages and attorney's fees. Perhaps most importantly, having a registered copyright is a prerequisite to filing an infringement lawsuit.⁷ As such, obtaining copyright registration is recommended if the author or owner of a copyright anticipates that the work might have value, and even more so if the author or owner anticipates using litigation to combat infringement.

In general, copyright protection lasts for the lifetime of the author plus seventy years. If a work was a joint creation among two or more authors, the countdown of the seventy years starts upon the death of the last surviving author. For works made for hire, which are discussed in Section C immediately below, copyright protection lasts for ninety-five years from publication or one hundred twenty years from creation, whichever comes first.

C. Works Made for Hire

A work made for hire is (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, and there is a written agreement signed by the parties that the work will be a work made for hire.⁸ The main result of a work made for hire, which differentiates it from other types of copyrightable works (in which the copyrights are owned by the creator of the work), is that the employer or other person for whom the work is prepared is considered to be the author, and therefore owns the copyrights to the work.

Dealing with works made for hire can be tricky and, if not careful, can lead to unintended consequences. First, the employee/independent contractor distinction is critical in a work made for hire situation. A work created by an independent contractor can be a work made for hire only if it falls within one of the categories of specially ordered or commissioned works listed above, and there is a written agreement between the parties that it is a work for hire. If both of those requirements are not met, then the independent contractor remains the author of the work, and anyone who wants to use the work will need to get a license or assignment of rights from the independent contractor to do so. This is especially important to keep in mind in the real estate industry, where agents and brokers often hire photographers and other independent contractors to provide content for real estate listings.

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The second potential issue to be aware of is that a work-for-hire clause in an independent contractor agreement renders the independent contractor an employee for some purposes under California law. For example, California Labor Code Section 3351.5(c) provides that a person who creates a work under a contract that expressly provides that the work shall be a work for hire is an employee. Similarly, California Unemployment Insurance Code sections 686 and 621(d) state that a party who contracts for the creation of a work under an agreement that expressly states that the work shall be a work made for hire is considered an employer. As such, including a work for hire clause in an independent contractor agreement can create significant unintended consequences and, if for some reason you must do so, consulting an employment lawyer may be a wise choice to ensure full understanding of the...