Starting Up Right: Common Pitfalls Startups Can Avoid in Copyright Law

AuthorGiselle Girones
PositionGiselle Girones is an associate in the Jacksonville office of Shullman Fugate PLLC, where her practice focuses on intellectual property and business litigation. She also handles content-gathering and publication advice, as well as defends content providers in complex defamation, privacy, and other publication-related claims. Contact her at...
Pages18-64
Published in Landslide® magazine, Volume 10, Number 6 , a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Common Pitfalls Startups
Can Avoid in Copyright Law
By Giselle Girones
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F orming a business is quite the challenge. In the hustle and
bustle of making sure all the proper documentation is signed,
employees are hired, and the vision for the business is developed and
honed, entrepreneurs commonly forget to dot their i’s and cross their t’s
when it comes to copyright law. Although the suggestions for avoidance of the
most common pitfalls are addressed below, a startup entity should always con-
sult an intellectual property (IP) attorney, to ensure that all bases are covered.
Image: iStockPhoto
Published in Landslide® magazine, Volume 10, Number 6, a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
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of the copyrighted work.9 A court will weigh the factors
listed in §107 in order to determine whether the use in ques-
tion falls under this category, and no one factor is dispositive.
In this regard, Pearson Education, Inc. v. Boundless Learn-
ing, Inc. illustrates an interesting cautionary tale for startups,
particularly those looking to rely on straightforward applica-
tions of the fair use doctrine. The case involved a startup that
was in the business of distributing web-based versions of col-
lege textbooks as replacements for the plaintiffs’ textbooks.10
To an uninitiated startup, this seemingly would fall under fair
use based on educational purpose. Boundless learned other-
wise. Although the matter ultimately settled, the plaintiffs’
allegations that Boundless’s textbooks copied the arrangement
of the plaintiffs’ textbooks, right down to the subtopics, and
advertised its books using images of the covers from the orig-
inal books, created a sizable problem for Boundless, which
attempted to rely on a fair use defense because of the scientic
nature of the text in the books.11 Boundless paid a hefty fee for
this problematic business model, $600,000 to be exact.12
The issue with startups that use others’ content similar
to that in Boundless goes back to the exclusive rights pro-
vided by the Copyright Act and the fact that such use would
infringe on a copyright owner’s reproduction, display, and
publication rights, among others. Furthermore, the use would
almost certainly not constitute
fair use, especially if the entity
is using it to promote its busi-
ness, unless it falls within the
factors discussed above. Start-
ups typically do not appreciate
the heavy burden to fall within
this defense.
Although no one factor
weighs more heavily than
another, the rst factor—
whether the new work “merely
supersedes” the original or is
instead transformative—can
be benecial to a startup when
determining whether the use can
be qualied as fair. Ultimately,
however, the importance of any
one factor will vary depending
on the facts at issue.13 The issue
of crediting sources will be further discussed below.
The DMCA and Online Content
Whether a startup operates as an Internet service provider
(ISP), manages comment boards, or is simply operating its own
website, the Copyright Act and the Digital Millennium Copy-
right Act (DMCA) are of great importance. The DMCA affects
Giselle Girones is an associate in the Jacksonville ofce of
Shullman Fugate PLLC, where her practice focuses on intellectual
property and business litigation. She also handles content-gathering
and publication advice, as well as defends content providers in
complex defamation, privacy, and other publication-related claims.
Contact her at ggirones@shullmanfugate.com.
The Copyright Act
Copyright law protects “works of authorship” that are xed
in a “tangible medium of expression.”1 What this means is
that a work must be originally created by a human and pos-
sess some modem of creativity. Copyright law does not
protect facts or ideas, although the manner in which facts are
arranged can sometimes be offered limited protection if they
are arranged in an original way.2
The Copyright Act governs not only what “works” can be
copyrighted, but also what rights are protected. Specically,
the Act protects the owner’s right to reproduce, prepare deriva-
tive works, distribute, perform, display, and publish his or her
work.3 The Copyright Act is a strict liability statute, meaning
that the law does not care about an accused infringer’s state
of mind when the infringing action occurred. In other words,
innocent infringement is not a defense.4 Innocent infringement
may, however, help reduce damages.5 This concept can some-
times be hard for individuals not versed in copyright law to
understand. Startups should be particularly aware of the nature
of the Act because simply giving credit to a source does not
offer protection from liability. An infringement suit can be det-
rimental to any business but particularly acute for a new one.
In addition to the incorrect assumption that intent is nec-
essary for copyright infringement liability to attach, startups
may also misunderstand several
other defenses available under
copyright law. Fair use is a com-
monly misconstrued concept that
can get startups into trouble. The
fair use doctrine is aimed at the
overall notion of “promotion of
the sciences and useful arts.”6
Courts are guided to “avoid rigid
application of the [Act] when,
on occasion, it would stie the
very creativity which that law
is designed to foster.
7
Despite
these pronouncements suggest-
ing liberal application of fair
use, the doctrine is not a blanket
authority allowing the copying
of someone else’s work and is
a very fact-specic inquiry. As
discussed by the Supreme Court
in Campbell v. Acuff-Rose Music, Inc., the Act provides a pre-
amble paragraph that contains guidance about the kinds of
copying that Congress most commonly has found to be fair
uses, including uses for criticism, commenting, news report-
ing, teaching, scholarship, or research.
8
Commercial use with
attribution of the source is not a use that automatically quali-
es as fair use.
Section 107 of the Act goes on to list several factors that
will assist courts in determining whether a use is consid-
ered fair, including: (1)the purpose and character of the use,
including whether such use is commercial in nature; (2)the
nature of the copyrighted work; (3)the amount and substan-
tiality of the portion used in relation to the work as a whole;
and (4)the effect the use has on the potential market or value
Attribution is
not a defense
to copyright
infringement.
Published in Landslide® magazine, Volume 10, Number 6 , a publication of the ABA Section of Intellectual Property Law (ABA-IPL), ©2018 by the American Bar Association. Reproduced with permission. All rights reserved.
This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
both content published by the startup and third-party content
(such as comment boards) hosted on the startup’s website.
With respect to the startup’s web content, one of the most
common errors startups commit is not making sure they own
the content that they publish on their website. When devel-
oping a website, a company should ensure ownership of the
content it publishes on its website. This includes layout or
design of the site, and not just the content displayed. A com-
pany should conrm that the web host they are using grants
them full rights to the content appearing on the site and that
any photos used are properly licensed. Ideally, a company
should ensure that it owns the rights to the content, via an
assignment or work for hire agreement, to avoid any traps of
revoked licenses if the company changes web hosts at any
point. A simple agreement that addresses these concerns at
the onset of the relationship with a web developer can miti-
gate any potential problems in the future.
Another issue that comes up with respect to the DMCA is
the embedding
14
of or provision
of access to content that is not
created by the startup company.
Examples of companies that pro-
vide such access include Twitter,
Instagram, or Shutterstock, or a
company that provides a platform
for and management of comment
boards, like Reddit. If an entity is
providing these types of services,
which allow for third-party indi-
viduals to post their own content
on a startup’s website, it is cru-
cial that the startup have terms of
use in place that apply to those
individuals or entities provid-
ing the content. The terms of use
for these third-party contributors
should include warranties that
contributors to the site own the
content they are posting, provide the entity a full irrevocable
license, and agree to indemnify the entity if they post something
that infringes on another’s IP rights. Importantly, it is also best
to ensure that the entity covers the “users’” use of its website in
its terms of use or licensing agreement. The “users” will typi-
cally involve individuals who may ultimately use the content
being provided to the startup by third parties, similar to web-
sites like Shutterstock or video editing applications like Vimeo
and Vine that allow “users” to create projects by using content
that has been uploaded to the applications’ website via a third
party. The terms as to the users would provide assurances as to
the content they post and include a disclaimer as to the warran-
ties being offered regarding IP infringement.15
The terms of use should also provide information that com-
plies with the DMCA, which includes provisions for limitations
on liability if an agent has been designated to receive notica-
tions of claimed infringement.16 DMCA policies must include
the name, address, phone number, and e-mail address of the des-
ignated agent.17 Entities may also submit information regarding
their designated agent through the Register of Copyrights for a
minimal fee.18 Once notied, companies seeking to limit liability
must investigate the notice19 and remove any infringing content.
An attorney can assist with writing terms that meet any DMCA/
Copyright Act requirements as well as other potential issues that
may arise, such as privacy concerns.
But It’s in the Public Domain
Aside from issues with online content, a common misconcep-
tion that startups rely on is the idea that pictures, songs, videos,
or other materials found online or on Google are in the “pub-
lic domain” and are free to use. “Public domain” works are
works not protected by IP laws and are open to the public to
use freely.20 For example, works become public domain when
their copyright terms expire. However, works may also enter
the domain for other reasons, such as if they were assigned
to the public domain by their author, or if the work was never
copyrightable to begin with. In the latter case, the work would
enter the public domain automatically upon creation.21 Deter-
mining whether a work is in the
public domain (and thus may be
used by a company without a
license) has nothing to do with
whether it is publicly available.
Startups and individuals should
be wary of websites that pro-
vide “stock” images, footage,
or audio claiming to be in the
public domain or “royalty free”
without reading the license and
terms of use on such websites to
determine what authorizations
these websites are providing.
If “commercial purposes” are
excluded from the scope of the
permissions granted, chances
are the materials are not useful
to the company. Likewise, busi-
nesses seeking to play music or
air a TV show in their waiting areas or at a restaurant/sports
bar should review the terms of use of their cable provider or
streaming service to ensure that they are within the licensing
and terms provided by such providers.22
It is always best to review the terms of use and licensing
agreements from these source websites in detail, instead of
automatically agreeing to such terms to determine what rights
are being warranted to the user for such works and what limita-
tions may be associated with the use of the work. In particular,
startups looking to obtain and use content from these source
websites should carefully search the agreement for language
limiting geographic scope. Because it is difcult for a company
to impose a geographic boundary online, geographic restric-
tions in licenses may preclude a startup’s use of the content on
the Internet. Printing and broadcasting reservations are also
important provisions to look for, especially when the entity
is looking to advertise its materials and needs to determine
how the audience size may affect the licenses granted by such
source websites. While YouTube does have a library of music
that is alleged to be royalty-free, titled “Audio Library,” it is
Publicly available
works are not
necessarily in the
public domain.

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