Category: Articles

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Don’t Lash Out

I heard about a case recently that made me think about all the people, especially the small artists, who get angry when they find a (potential) infringement and go onto social media to rip the, um, lets just call em badguys. Short answer is, even though you think it will help or at least make you feel better, youd be wrong. In fact, you could be inviting a lawsuit filed by the badguys.

Heres the very generalized skinny on the case (because really, unless you are a geeky lawyer like me, it is a dull read). One business (a kind of review site) publicly published that another business was a copyright infringer and that it had adult movies on its site. That arguably hurt the second business, so that onesued the first for various things that roughly amount to the business version of defamation. The court threw out that suit, under the California Anti-SLAPP law, which which exists so that people cant use the judicial system as a way to silence legitimate speech.

Okay, you may be thinking, the allegedly name-calling business didnt lose so whats the big deal? The big deal was that it wasnt a slam-dunk. Proving that the publication of something (potentially) defamatory was protected speech and that the lawsuit had to be dismissed under Anti-SLAPP wasnt easy. Similar cases have not been dismissed and you don’t want to be one of those.

Lots of people think they have a First Amendment right to say[1] whatever they want about whomever they want. Trouble is, that isnt so. There are limits. You cant defame someone (or a business), for example. And if someone sues you in California[2] for what you said, then, to get the case kicked out, you are going to have to prove that your speech was (1) an exercise of your First Amendment free speech right and (2) that it was made in connection with a public issue or an issue of public interest. Thats a pretty high bar to get over. In fact, youre going to have to show that the subject person (business) was famous/a pubic figure, or that the subject matter of the speech is of great interest to enoughpeople not affected by the case, or that the topic was of general widespread interest. Just because you and your drinking buddies think something is important isnt going to cut it.

After you, as the defendant in the original law suit, prove all that, then the other side (plaintiff in the defamation suit) gets a chance at a save–if it proves that it would probably win, then, even after you proved the above, the case will not be dismissed. See, not so easy.

So, going back to anaggrieved artist who tweets about the evil bastard Joe Doe who stole my illustration and then, worse, follows up with No one should shop at his store because he is a lying thief! well, that artist may be facing a lawsuit for those tweets and one s/he may not win. Think about that second part of the Anti-SLAPP–the potential save for the plaintiff–maybe Joe Doe had an implied license or a legitimate fair use defense that you, as a non-lawyer, didnt know would gut your infringement claim.

Better to sit on your tweeting/social media hands than run the risk of getting sued. Even if you did win, youd have to go through the unpleasantness of litigation. Instead, register your copyrights regularly and, if something gets used without your permission, talk to an attorney about your infringement claim and what your options are.

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[1] And by say I mean speech made in any medium–wrote, recorded, painted, shouted in a public space, etc.

[2] Some other states have similar laws.

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Forming an Entity: The Other Stuff

I wrote recently on some of the copyright considerations related to running your business as an entity. Today, I want to address some of the other things you have to do whenyou decide to form an entity. First, a quick reminder that I am speaking generally here and with California law in mind: each state has its own laws so your mileage may vary, so to speak.

Most creative pros start their businesses as sole proprietorships. As Ive explained before, there are no formalities required to do that, outside of maybe having to register a fictitious business name (DBA) with your county or city. Forming an entity requires filing various papers with the state, but after that is done, are you done? Not by a long shot.

Assuming youve been running your business like a business, you may have things like business banking accounts, credit cards, or insurance policies. When you have a new entity, you are going to have to convert all of these to the new entity. In some (probably most) cases, youre going to have to close existing accounts and open new ones. Youll also have to get new checks printed.

Its particularly important to talk to your insurance provider to get your policies worked out. You dont want to get caught with those proverbial pants down. This may also mean your auto policy, dont forget.

Speaking of your car, did your CPA tell you it would be best to have your company own your car? Then, youll have to transfer it (and yes, we all love the DMV, but do it). What about your other assets? Computers? Cameras? Furniture, etc.? Even if you own these things outright, it would be best to document the transfer of the assets to your new entity. Talk to your CPA before doing any of this to make sure you dont do anything to mess up her/his careful tax planning for you.

You also need to think about your IP licenses. No, not your licenses out (those you sell to other people to permit them to use your work–although you will need to update those moving forward) but the one ones you purchased for things like the software that you use in your business. Some of those will be non-transferable and you will have to purchase new licenses. Dont get angry about it and dont skip this–especially if you issue non-transferable licenses, you should understand this.

You may also have issues with any office/studio space you lease (landlords often will be fine with updating a lease) and definitely youll need to set up new payroll accounts if you have employees, including getting a new EIN number for the entity not to mention new workers comp., etc. Also, if you have a business license with the city (or county) you’ll have to get a new one for the new entity, too.

Finally, you need to learn how to sign documents properly for your entity. You may no longer sign justBetty Smith, but rather must sign as Betty Smith, Managing Member, Smith Creative, LLC, a California LLC, if you formed an LLC; or, if you did the corporation thing, Betty Smith, President, Smith Creative, Inc., a California Corporation. Yes, it’s a pain in the butt but if you don’t sign properly you can personally be liable for things. No, I’m not kidding.

Relatedly, you will need to update all your business paperwork to reflect the new entity–like your licenses you offer clientsand your contracts/estimates/invoices/model releases/etc. Also be careful in the contracts you are offered: make sure they are naming the entity and not you as the party and that there are no “Personal Guarantees” or other clauses that effectively remove the protections of the entity.

Your CPA should provide you with a lot of guidance on the financially related changes you needs to make. An attorney can help you with the rest.

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One Year

Yesterday, July 1, was the first anniversary of Burns the Attorney.
Ive been incredibly lucky. Its been a really good first year.

I have wonderful clients, both new and old, who honor me with their trust. I take very seriously their reliance on me to do my best for them because, in very important ways, it means I help them focus on being creative professionals. Think about it: which would an artist rather do, make new art or chase down people who have used existing art without permission or payment?

That is most of what I do, helping artists with copyright infringement matters. But I do other legal work as well, of course. In the past year, Ive helped clients with contracts and releases, discussed business formations and the effects of community property on clients copyrights, and, well, lots of other things too.

Not everyone gets the opportunity to do what she really loves. I do, and I am so grateful for it.

I want to thank all of my clients and, in advance, all of those who will call on me to help in the future. I intend to be here for some time, serving artists of all sorts.

If you ever need me, you know where to find me.

And thanks.

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WMFH Affects More Than Copyrights

Creative pros have been understandably angry at the words work made for hire (WMFH) for some time. I mean, clients try to sneak that into contracts all the time and it means you, creative pro, have to carefully watch out for it, lest you sign that bad boy and end up making the client the author and owner of what should be your copyrights. So sure, those words tend to raise a creative pros hackles.

But this post isn’t about how your copyrights are affected with a WMFH contract; it’s about other effects of such an agreement.

Now, before I go any further, I’m only talking about California law here. If you are in another state, the rules (probably) aren’t the same. That being said, if you ever work in California or for a company in California, you might want to pay attention.

There is another side to WMFH agreements in the Golden State. If you are a sole proprietor business (that is, not an entity of some kind, like a corporation or an LLC), and someone hires you as an independent contractor, and the signed contract includes a WMFH clause, then you are statutorily an employee and the employer has to follow the laws regarding unemployment, disability, and workers compensation insurance as if you were a regular employee. According to the California Labor Code[1], if a person is hired to create a commissioned work and the parties agree in a signed writing that the work shall be considered a work made for hire, as defined in Section 101 of Title 17 of the United States Code, then, boom, the hired person is a statutory employee. Moreover, the California Unemployment Insurance Code[2] says almost exactly the same thing. Basically, every code that deals with unemployment, disability (including paid family leave) and workers comp has something about WMFH like this.

Anyway, failure by the employer to follow the rules means the employer can be hit with substantial fines and even jail time! Yikes!

“So what?” you may be thinking, “only the state cares but it doesn’t really affect me,” but you’d be wrong. Those are rights to which you are entitled under California law. If you get injured on the project, for example, Workers Comp should pay your medical bills (roughly speaking). Also, the law is unclear[3] about other benefits that employers in California must supply to such employees, so it may be that you, as the employee, are entitled to other things beyond being paid as an employee (including having the employer pay its half of FICA) rather than an independent contractor, like having limits on time/overtime, etc.

If you live and generally work in some other state but come to California for a WMFH project, then you too would likely be considered a statutory employee under California law as well[4], and maybe if the company is here but you aren’t. Also, if you work physically here, your pay would probably be subject to California personal income tax withholding[5].

Most importantly, if you are in California (resident/business) and you hire assistants or other independent contractor workers and you have a WMFH clause in the contract you have these people sign, you also need to know this info. You have to follow these same rules! There are ways to avoid some of these issues (for example, maybe an assignment clause instead of a WMFH), but there are downsides to the other options as well. Talk to an attorney to get the best advice for your particular situation.

Oh, and don’t forget, if you are in California, you really, really must pay your people on time.
[**UPDATE** There is more time to pay now, but it’s still faster than you might think]

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[1] California Labor Code Section 3351.5(c).

[2] California Unemployment Insurance Code Section 686.

[3] The statutes don’t seem to say explicitly one way or the other; a court could possibly make the analogy and apply the same rules to pay, time off, etc.

[4]See http://www.edd.ca.gov/pdf_pub_ctr/de231d.pdf.

[5] Id. (That means, same source as I just cited, for the non-nerdy readers).

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Forming an Entity: Watch for Issues

Most creative professionals start their businesses without doing anything more than accepting the first freelance project offered. That is, they don’t bother to do anything about forming a legal entity like a corporation. That’s fine; if you don’t do anything and you work solo, you are a sole proprietor. After that first project, if you continue doing business, getting projects, cashing checks, you probably won’t think about your business structure any further.

At least for a while.

One day, you, the now-successful creative pro hires an accountant to do your taxes and that CPA tells you you should incorporate or form an LLC. The accountant is concerned about the relative tax burdens and, often, it does make immediate financial sense to form an entity; that is, you can save a bundle on your taxes. But, the accountant doesn’t (probably) know about the copyright ramifications, and (usually) neither does the average creative pro.

Yes, there are copyright ramifications.

Overall, there are a whole host of legal issues to consider when it comes to potentially forming an entity. Most people focus on the tax issues, and that makes sense, but there are other legal issues and I highly encourage anyone considering forming an entity to talk to a lawyer before taking that step. Anyway, for this post, I’m only going to focus on the copyright one as it is most often totally ignored, and it shouldn’t be.

So, let’s imagine you have formed a single-member LLC and, as per your CPA, you’ve made yourself an employee of that LLC. Your tax bill thanks you. Now, however, when you make your art (whatever kind of art you make–doesnt matter), who owns its copyright?

If you said you do, you’d be wrong. Even though you are the only member of your entity (the LLC), it’s that entity that owns the copyright in the art you make as an employee of that entity. It’s an automatic work-made-for-hire. No writing required.

Well, I hear you saying, but I am the entity so it’s the same thing. Nice try; but, under the law, no, you aren’t and no, it isn’t at all.

First, since the entity is now the author of the work, the length of the copyright is no longer life of the author plus 70 years. A copyright authored by an entity lasts either 95 years after its first publication or 120 years after its creation, whichever is shorter[1]. By the way, there is an exception to this to get back to the authors death +70 years length, but it requires more paperwork and I know how much y’all love paperwork.

Second, when you register that copyright, you need to do it correctly. You have to name the entity as the author and the claimant because you, as an individual, by law did not create and do not own the copyright. While screwing this up doesnt necessarily totally void a registration, it certainly will be an issue if you ever get infringed. You (and your lawyer) don’t want to have to fight about the validity of your registration. I’ve seen it in cases and it could result in a great case becoming a loser. Remember, if you sue for infringement and lose, you might end up being required to pay the other side’s attorneys’ fees and costs; you don’t want something like this to scuttle your otherwise watertight ship.

Third, let’s say you get hit by a bus and shuffle off the mortal coil, who gets the copyrights your entity owns? And what about existing licenses and royalties based off those copyrights–who gets the money? It’s not so easy, if you havent planned ahead. Do you have a succession plan in place for your entity?

None of these issues are insurmountable at all. For example, you can have a writing that keeps the copyrights created after the entity is formed as your own (if you want to do that and there are reasons to do that, or not). Overall, the issues beyond the tax ones that come up when you form an entity, including copyright ones, do require some thought and there are decisions that need to be made and new processes need to be learned if you decide to go ahead and incorporate.

Don’t go it alone and hope it all works out–thats a lousy business strategy. Talk to your own attorney and get good, personalized advice.

[1] 17 USC 302(c).

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Safe Harbors, Piracy, and Your Value

I could write on this issue, but I’ll save the time and point you toDavid Newhoff over at Illusion of More. In this post, Mr. Newhoff discusses the differences and, importantly, the similarities facing artists in the USA as compared to the Canadians when it comes to the (false) promises made by tech to improve the lives of artists. Miranda Mullholland made a wonderful and passionate speech to the Economic Clubof Canada about her (and others’) life as a musician–one who works her ass off but who barely makes a living. Watch her video and read Newhoff’s comments. I won’t reiterate it all here.

I will say this, though:

  • You make the art, be it music, photographs, design, illustrations, and it is art–the platforms can’t be successful without you.
  • Stop calling the art you createcontent and stop letting people rip you off both directly and by devaluing what you do (like, by calling it content).
  • Don’t rip off anyone else and support all other artists, yes, even (especially) when it costs you more.
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Registration? Application? What’s the deal?

Recently, there’s been a lot of discussion amongst us copyright law nerds about a circuit split on the requirement written in the statute that says you have to register the copyright before filing suit. The question is: what does “registration” mean in that statute? Seems obvious but, in law, we’re quite persnickety about word meaning so this is a big deal for us. I bet already some of you are fading out, thinking that this has little to do with you and your creative business. But it does! The good news is, you don’t need to know all the gruesome technical legal details.

Here is what you do need to know: if you want to sue someone for copyright infringement, you have to have registered the copyright before you file the lawsuit and the easiest way to make sure you’ve done that, no matter how they define it, is to register all yourworks as soon as possible after their creation. If you do that, then the complex legal question causing the circuit split won’t apply to you.

If you are one those who simplymustknow the details (and, if not, skip to the last paragraph), here’s the legal question: is applying for registration enough to mean “registered” or do you have to have the certificate in your hot little hands, before filing suit? We lawyer-types often call these two approaches application and registration, respectively. A couple of circuits have said that applying is enough to keep your lawsuit from being dismissed and a couple of others have said that you have to have the certificate.

So what? Well, thedifference means that, for example, if you file suit in California (9th Circuit), the courtswillsayif you’ve applied for your registration, you’re good to go; but, if you file the factuallyidentical* suit in Florida (11th Circuit) they will say you have to have the completed registration or your suit will be dismissed. So, you may be thinking, if you’ve only filed the application, you should just sue in one of the circuits that says that’s enough; but there is another part of the law that limits where you can file your suit, so that won’t work. That’s why I have an asterisk next to identicalabove, because one of the facts would bewhere the defendant is and if the defendant is only in Florida you can’t sue ’em in California.

Anyway, when there is a split like this, where some circuits say X and others say Y about the same statute, it falls on someone to appeal to the Supreme Court to get an answer. This means having a partywilling to do that (it’s not cheap) and then the court agreeing to review the case (which it probably would–SCOTUS likes to resolve circuit splits, usually). In other words, it’s not going to happen tomorrow so, for now, we have to live with the split.

Like I said at the beginning of this post, you can avoid all of this mess if you take the time to register your copyrights in your works as soon as you possibly can, after creation. That way you’ll make it impossible for the other side to bring up the application/registration question at all.

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The Drone Law Is Dead…Not

Last Friday, a Federal Circuit Court overturned the registration requirement for drones. Many people are hailing thisas the death of drone laws, but that’s not even vaguely accurate. At most, it may mean that people won’t need to register their drones at all or at least not if only used for hobby use (read: not as a part of your business). It may, however, be appealed or Congress could take action. DroneLife has a good article on the possible implications. Short answer: this still isn’t settled so don’t get too excited, yet.

Very importantly, this ruling, even if it stands, doesn’t affect operational rules that are tied to safety, like no-fly zones. It’s only about the registration requirement. Also, it is just about a federal regulation. States have their own and those are not affected by this ruling. Jonathan Rupprecht (Ruprecht Law) is an expert in drone law and has this page where you can look up your state’s laws and regulations. Do it.

I encourage any operatorto know her/his/theirapplicablestate’s laws (and federal ones) and to operate drones responsibly. Actually, I encourage people to reconsider using drones for the most part.Photographers and videographers have some legitimate uses for drones, but too often people are using them in ways that aren’t worth the downsides. Usinga drone inany sort of wilderness area, for example, makes for noise pollution for the creatures and the humans who are there to commune with nature. Drones generally are annoying to others and, often, an operator will be violating someone’s privacy in their use. I personally have experienced this–a neighbor buzzed me while I was in my own back yard. When I told him not to do that he was not exactly apologetic about his actions. He probably still believeshis right to fly isgreater than my right not to be buzzed and (probably) photographed. Don’t be that guy.

But if you do choose to use a drone, besides being a decent human about it, make sure you know all the applicable laws and regs–both fed and for your state and the state where you’ll be operating it (if you travel).

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The No-Pin Tag (who knew?)

I dont like Pinterest.

Anyone who knows me knows Ive complained about it since I first learned of it. In my opinion, its business model is based on exploitation of creative works, mostly without the authorization of the creators/copyright owners of the works. All its money has been generated on the back of creatives, few of whom ever get any real benefit from it.

One of the things I do not like about Pinterest is how it not only exploits the safe harbor of the DMCA (takedown process) to protect itself, but also it flips the entire idea of how copyright is supposed to work on its head. In short, rather than making its platform opt-in, it forces creators to opt-out.

Normally, to use (copy, publish, display, etc.) a creative work, first you have to ask permission. If Pinterest wanted to do things in a creator-friendly way, it would have set up its system so that creators could opt-in to have their works (that appear on their websites) eligible to be included on Pinterest. Instead, Pinterest will permit any work to be posted from any creators site onto its site unless the creator blocks her/his/its work or site. Essentially, that is an opt-out requirement. That is dirty pool, in my opinion; its flipping the burden.

Regardless of my personal feelings, that is how it works. According to Pinterest itself, if youd like to block your work, you can do so by virtue of including a bit of code into your websites code. That code is called the no-pin tag. See https://help.pinterest.com/en/articles/prevent-people-saving-things-pinterest-your-site, which says:

If you don’t want people to save things to Pinterest from your website, just paste this code into the <head> section of any page on your site:

<meta name=”pinterest” content=”nopin” />

When someone tries to save things to Pinterest from your site, they’ll see thismessage:This site doesn’t allow saving to Pinterest. Please contact the owner with any questions. Thanks for visiting!

You can also prevent any individual image from being used by (as the page cited above notes):

add this tag to [the single image]:

<img src = “foo.jpg” nopin = “nopin” />

Now, I had no idea until today that there was such a thing as a “no-pin tag.” I’m a copyright attorney and I’ve pursued infringers on Pinterest before, and yet even I didn’t know about this. Crazy. But now I do and that’s why I’m telling you about it, as soon as I could.

I honestly dont know any creative pro who is making money from her/his/their work being taken from her/his/their own site and used on Pinterest. At best, I know of a few who have shot for corporate or advertising clients who then used the work on Pinterest, but they got paid by their client(s) for the license. Pinterest is, I think, a trojan horse of a site that scares people into thinking “I have to let people pin my work so that they see it and I get hired!” but, really, it doesn’t work that way. Housewives in Podunk, USAare unlikely to hire you.

Putting on my marketing consultant hat for a minute, I would never recommend a creative permit work to be used on Pinterest without a paid license. Instead, keep your work on your own site, preferably with a watermark on each work and a proper copyright notice on or next to each work, too. Register the copyright in your works asap after creation. Embed the no-pin tag on your site. Then, if your work gets used, including pinned, without your permission, go after the infringer and protect your rights.

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Pros Hire Pros

Yesterday evening, I read a Facebook post by a photographer. The long post was all about releases and what he does or, more accurately, does not do. After the post there were several comments thanking him for his advice and help. The problem? It was bad advice. He got a lot of the law wrong and his legal advice is going to end up hurting others who rely on it.

This photographer, like some others, hasa side business offering advice to other photographers. I think that’s a great idea: teaching photographers about how to estimate and market or how to light is a great alternate revenue stream. Creative professional organizations like APA, AIGA, and the GAG regularly offer seminars/webinars and workshops with peers teaching peers how to be better pros. These are generally great programs and they can really help you be more successful.

However, when it comes to legal things, leave it to us lawyers.

I’ve written about this before, back in 2011. Back then I was a “baby lawyer,” freshly barred and idealistic. I’ve got lots more experience now and, probably surprisingly to some, I still have that idealism. I believe that we should leave medicine to doctors, taxes to CPAs, architecture to architects, and law to the lawyers. There is a reason that these professions (and some others) require all sorts of hoop-jumping to get and keep a license.

Now, that doesn’t mean you shouldn’t inform yourself as well or that as a layperson you can’t have a good level of knowledge on the law (or medicine, etc.). I encourage and try to teach my own clients to understand the law as it relates to their matters. But that is one of the big differences between a pro and a layperson: I understand that each matter, each case, is its own thing and my advice is for that person on that matter. Many laypeople who offer their well-meaning advice don’t get that what they learned from experiencing their own legal matteroften won’t apply to others’. They end up giving poor advice and that hurts people. Oh, and don’t get me started on how it can actually be illegal as well (the unlicensed practice of law is just as serious as the unlicensed practice of medicine, etc.).

Anyway, you all knowpeople think they are qualified but really aren’tin your own fields, too. People who can change a font in Word think they knowdesign. Anyone is a photographer because s/he can use a digital camera (or just an iPhone!). Someone with a hot glue gun is an artist. It’s frustrating! You as a pro know (or should know!) that the experience and education (and talent) you have is what makes you a pro. You know you bring a depth of knowledge to any of your projects that laypeople do not have. You correctly want to be respected and valued for your professionalism. Great! You should!

All I ask is that you do the same for other professions, including mine.

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