Business Law for Entrepreneurs & Managers - Intellectual Property - Copyright

Intellectual Property Overview

Copyright is a protective right given to authors of creative original works to protect against most forms of unauthorized copying, distribution, and derivation.  Generally, copyrights are one type of protection for intellectual property.  Intellectual property, or IP, generally refers to intangible assets that someone claims ownership in by virtue of creating those assets.  Additionally, intangible assets may be transferred from the original creator to another person or entity.  

Independent Copyright Systems

Copyright systems are administered by governments and international organizations to allow inventors to receive exclusive protection for their works of authorship.  Different countries and international organizations have their own laws, rules, and procedures to apply for or enforce copyright protection.  

In addition to forming their own copyright systems, many countries also participate in international treaties or agreements that specify procedures for protecting the rights of foreign works from other countries.  The protection of foreign works often depends on “points of attachment” which show a connection between an eligible work to be protected and member countries participating in a particular treaty.  For example, an author’s nationality can provide a point of attachment.  Similarly, the location where the work is first published can provide a point of attachment.  However, some countries offer little or no copyright protection to foreign works.  A list of countries and applicable relations maintained by the US with those countries can be reviewed in Circular 38A, International Copyright Relations of the United States, available online from the US Copyright Office.

The copyright laws and regulations established and administered by different governing bodies can change over time.  Copyright laws, rules, and procedures can change as new laws are passed, new regulations are adopted, or new interpretations are established through the courts.  This post focuses primarily on the copyright system currently established in the United States (as of the original book publication date in 2016), with some additional discussion of the international patent application system.

Original Works of Authorship

The fundamental premise of the U.S. copyright system is to offer authors a mechanism to protect their “original works of authorship” from unauthorized copying and use.  Under constitutional and statutory authority, the U.S. government agrees to give certain rights to authors in a number of different artistic categories, including:

• Literary works

• Musical works, including any accompanying words

• Dramatic works, including any accompanying music

• Pantomimes and choreographic works

• Pictorial, graphic, and sculptural works

• Motion pictures and other audiovisual woks

• Sound recordings

• Architectural works

These categories can be interpreted very broadly, for example, to cover computer programs as “literary works” or architectural plans as “pictorial, graphic, and sculptural works.”  Also, the original works of authorship must be fixed in a tangible form of expression.  For example, a performance of a dramatic work must be recorded, lyrics of a musical work must be written or recorded, and sculptural works must be sculpted.  The intangible concept of an artistic work by itself cannot be protected under copyright laws.

Ineligible Works

Some categories of material are not eligible for federal copyright protection.  Some examples of ineligible works include:

• Works that are not fixed in a tangible form of expression

• Titles, names, short phrases, and slogans

• Familiar symbols or designs

• Mere variations of typographic ornamentation, lettering, or coloring

• Mere listings of ingredients or contents

• Ideas, procedures, methods, systems, processes, concepts, principles, discoveries, or devices

• Works consisting entirely of information that is public property or information

Protection for the Author

Copyright protection rests with the author who creates the work.  This protection begins when the author places the work in a fixed or tangible form.  Only the author or those deriving their rights through the author can rightfully claim copyright.  

Copyright protection can be subdivided into several independent exclusive rights.  These exclusive rights include reproduction, distribution, preparation of derivative works, public display, and public performance.  

Publication of the work by the author is not required for copyright protection.  But if a work is published, copyright protection may require the author to have certain ties to the United States (e.g., be a citizen or resident), require the publication to occur in the United States or a foreign country participating in a treaty or agreement, or require the publication to be by the United Nations or another authorized international organization.  For unpublished works, copyright protection is available regardless of the nationality or domicile of the author.

Co-Ownership for Co-Authors

For works created jointly, the co-authors are co-owners of the copyright in the work.  For collective works, or collections of individual works that are combined into a single form, the authors of the individual works hold the copyright to their own work, while a separate copyright for the overall arrangement of works (the collective work) is held by the author of the overall arrangement.

Works Made for Hire

In the case of works made for hire by an employee, the employer is considered to be the author.  A “work made for hire” is specifically defined in copyright law as:

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,

• a part of a motion picture or other audiovisual work,

• a translation,

• a supplementary work,

• a compilation,

• an instructional text,

• a test,

• answer material for a test, or

• an atlas,

if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

Term of Copyright Protection

The term of protection available for copyright depends on when the work was originally created and whether the work was published.  

For works originally created on or after January 1, 1978, the term of protection runs for the life of the author plus an additional 70 years after the author’s death.  For co-authored works, the term is measured by the last surviving author plus 70 years.  For works made for hire, the term is 95 years from publication or 120 years from creation, whichever is shorter.  Anonymous and pseudonymous works have the same term as works made for hire.

For works originally created before January 1, 1978, the term depends on the publication status of the work.  If unpublished by January 1, 1978, the term is the same as for works originally created on or after that date (see above), with some additional minimum terms depending on whether the work was later published after that date but before December 31, 2002.  If published or registered before January 1, 1978, the term varies depending on automatic renewal periods, but currently grants up to 95 years of protection.

Congress holds the power to alter the term of copyright protection available under federal statute, and has changed the term multiple times over the years.  Many speculate that changes in the statutory copyright term are driven by the pending expiration of rights held by prominent entertainment industry conglomerates.

For more information on the duration of copyright, see Circular 15A, Duration of Copyright published by the US Copyright Office.

Fair Use

Although federal statutes grant exclusive rights to copyright owners, there is also a federal statute that allows "fair use" of a copyrighted work without permission from the author or owner.  The statute generally states that uses of a copyrighted work for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research are not considered infringement of the copyrighted work.  For specific cases, the statute establishes a set of factors that might be considered by the courts.  These factors include:

1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

2. the nature of the copyrighted work;

3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

4. the effect of the use upon the potential market for or value of the copyrighted work.

The following explanations describe examples of each of the above factors that tend to favor a finding of fair use (instead of infringement):

1. noncommercial, nonprofit, and transformative uses;

2. the original work is published and less creative (or more factual);

3. use of smaller portions, unless it's the 'heart' of the original work; and

4. limited commercial harm to the market of the original work.

The US Copyright Office is prohibited from offering legal advice about specific fair use situations, but has compiled a list of cases that discuss fair use situations in different jurisdictions.  

Copyright vs. Possession of a Work

The ownership of a copyright is distinct from the ownership of the work itself.  Mere ownership of a book, manuscript, painting, software program, digital music file, electronic recording, or other copy of a work does not give the owner of the work the copyright to the work.  This allows an author to transfer the ownership rights of the work to another person to possess the actual work, without transferring the copyright to the new possessor.

Transfer of Copyright

A copyright is a personal property right.  While its existence derives from federal statutes, the ownership of a copyright is subject to state laws and regulations that govern person property rights.  In general, a copyright can be transferred between people or other legal entities through sale, gift, inheritance, or other typical forms of ownership transfer.

A copyright owner may transfer some or all of his or her copyright.  To transfer rights on an exclusive basis, the transfer must be in writing and signed by the owner of the rights conveyed (or an authorized agent) in order to be valid.  No written agreement is required to transfer rights on a non-exclusive basis.  In instances where written contracts are used, the transfer of copyright ownership can be recorded with the US Copyright Office.  As with other recordations, recording a copyright transfer provides legal notice of the new ownership to third parties who might express an interest in the copyright.

Under certain circumstances, it is possible to terminate a grant of rights after 35 years.  For older copyrights, other termination rights or timeframes might apply.

Copyright Registration

An author or owner of copyright has a certain level of protection available without obtaining federal copyright registration.  However, federal copyright registration is a relatively simple legal formality that is accompanied by several advantages.  These advantages include:

• establishing a public record of the copyright claim

• accessing federal courts to bring an infringement suit

• establishing prima facie evidence in court of the validity of the copyright and facts stated in the certificate (if filed within five years of publication of the original work)

• making it possible to assess statutory damages and attorney’s fees (if filed within three months of publication or prior to an infringement of the work)

• reserving the right to record the registration with the U.S. Customs Service for protection against the importation of infringing copies

Registration Procedures

Compared with patents and trademarks, the copyright registration process is very simple.  U.S. copyright registration requires submission of an application form, a filing fee, and a copy of the work to be deposited with the Copyright Office.  The fee is nonrefundable, and the deposit is nonreturnable.  Also, the type and form of deposit will depend on the type of work for which registration is requested.

The application may be submitted by the author, a person or organization with ownership of all the rights under the copyright, or the owner of an exclusive right (one of many subdivided and transferrable rights of the overall rights).  Additionally, a duly authorized agent of the preceding people or entities can act on behalf of the person or entity.

The application can be filed in either paper or electronic form.  Several advantages are given to the electronic form, including a lower filing fee, faster processing time, email confirmation of the submitted application, online payment, online status tracking, and electronic submission of certain types of deposits.  However, some specific types of applications must be filed in paper form.

After the application is filed, the author will receive a certificate of registration if the work can be registered.  The effective date of registration is assigned as the date on which the Copyright Office received all of the required submissions—the application, fee, and deposit.  Otherwise, if the work cannot be registered, the Copyright Office will send a rejection letter or contact the author via letter, telephone call, or email to request further information.

Preregistration

For certain categories of works that historically are subject to prerelease infringement, it is also possible to preregister a work.  Preregistration is not a substitute for registration, but allows an infringement action to be brought before the authorized commercial distribution of a work and full registration of the work.  In other words, preregistration makes it possible to enter the federal courts before actual registration is completed.  This makes it possible once the full registration is complete to receive statutory damages and attorneys’ fees in a related infringement action.  In order to qualify for preregistration, the work must be unpublished, in the process of being prepared for commercial distribution, and a type of work with a history of infringement prior to authorized commercial distribution (e.g., motion pictures, sound recordings, literary works, computer programs, etc.).  

Copyright Enforcement

Copyright law creates a federal cause of action for copyright infringement, or the unauthorized copying of an original work of authorship.  There are some basic requirements to consider before taking action against a potential infringer.

The infringement action must be brought in federal court by a party who has standing.  In order to have standing the party must be the legal owner or exclusive licensee of at least one exclusive right of a copyright.  Authors typically have standing to sue an infringer, unless the author has transferred his or her right to another person or entity.  Once an author transfers the exclusive rights, the new owner has the right to sue for infringement based on the exclusive rights the new owner holds.  When there are co-authors, it is possible under certain circumstances for either co-author to sue for infringement without obtaining permission from the other co-author.  

The infringement action must be based on a valid and registered copyright.  Although registration is not required to obtain copyright protection generally, registration is a prerequisite for filing an infringement suit in federal court.  

Also, the infringer must be notified of the infringing use.  The use of the symbol ‘©’ or other copyright information on a copy of the work can serve as the required notice.  Otherwise, the owner may notify the infringer in another manner.

The infringing action requires proof of copying of the original work and infringement of an exclusive right, such as reproduction, distribution, preparation of derivative works, public display, or public performance.  Copying can be shown by evidence of direct copying.  Alternatively, copying can be shown through circumstantial evidence showing the infringer had access to the original work and the infringing work is substantially similar to the original work.

Defenses to Infringement

If liability is found, the strict liability nature of copyright infringement does not give consideration to whether or not the copying was unintentional or inadvertent.  However, there are a number of other possible defenses that can be relied on to justify the otherwise infringing action.  These defenses include expiration of the statute of limitations (typically three years), fair use, first sale, grant of a license, DMCA safe harbors, and more.  The first sale defense refers to an owner’s right to use his or her own copy of a work, including reselling it or gifting it to another person, without infringing the rights of the copyright owner.  The DMCA safe harbor defense relates to claims against online copyright infringement and establishes specific procedures for providing notice and requesting that an internet service provider take down an infringing use.

Additional Resources

In addition to the information provided in this chapter, the US Copyright Office maintains several useful factsheets and circulars that discuss basic copyright procedures as well as more specific copyright situations.  For example, these resources discuss such issues as copyright registration of specific types of works, compulsory licenses, and obtaining permission to use a copyright.  The factsheets and circulars can be viewed at http://copyright.gov/circs/.