Everything a Software or SAAS Company Needs to Know About Copyrights!

Ok, maybe not everything, but as a software copyright attorney I suggest that you read these five blog posts if you run a Software, SAAS or IT company. Let me summarize why.

First, you need to know how copyright fits in with other intellectual property.

- What is Intellectual Property?

Second, you should understand the basics of copyright law.

- 4 Things to Remember About Copyright Law.

Third, you should think through the benefits of registering your copyrights.

- 4 GREAT Reasons to Register Your Software for Copyright Protection.

Fourth, is it worth trying to obtain copyright protection for your software's GUI?

- Can You Obtain Copyright Protection for Your Software's GUI?

Fifth, do you know the difference between copyright and contract protection?

- Contracts vs. Copyright Protection. What is the Difference?

If you make it through these five, you should have a good sense of some of basics and important issues to consider regarding copyrights.

Great job! Class dismissed.

Legal Disclaimer: This is for informational and educational purposes only, and is not legal advice.

4 GREAT Reasons to Register Your Software for Copyright Protection!

Most people may not realize that there are 4 GREAT reasons to register your software for copyright protection with the US Copyright Office.  As a software copyright attorney or lawyer, I recommend this for every software based company, whether you are licensing your software or providing it as a service.  So here goes.

1) EASY. It can be done by yourself or with the help of a software copyright attorney. Your call, but any good lawyer will tell you to consult with a software copyright attorney before you file.  In general though, it is not hard to file for copyright protection, so this is not an issue.

2) INEXPENSIVE. The filing fee is low (less than $100) so that is not a barrier either.

3) REIMBURSEMENT OF ATTORNEY'S FEES.  If you file a claim for infringement based on a registered copyright that existed before the infringement, federal copyright law provides that you could be reimbursed for your attorney's fees. If you think about it, this is really a big deal, as it is extremely rare that plaintiffs in a case are reimbursed for their attorneys fees. This can be a double edged sword though, as if you lose you may be paying for the defendant's attorney's fees (i.e. something to definitely discuss with your lawyer before you file the case). To have a shot at being reimbursed for your attorney's fees though, you need to file within 3 months of the work being published (if it is a published work). Talk to a software copyright attorney about it.

4) AWARD OF STATUTORY DAMAGES. What statutory damages provide is a fixed amount of damages awarded to you, without having to go through the difficult (and expensive) task of having to prove your actual damages. This is a big deal too, as proving your business harm of someone infringing your copyrights can be tricky and often difficult, so you have an alternate way of being compensated for the infringement. These damages can be as high as $30,000 per work, and up to $150,000 per work for willful infringement; these are set by a judge, who has some discretion here. To make a claim for statutory damages, you also need to file early (within 3 months for published works), so again talk to a software copyright attorney about the timing issues.

Any software based company should consider filing for copyright protection of their software early, as it can make a real difference to their overall protection of their IP.

Here are some resources:

US Copyright Office: FAQ

Can you Obtain Copyright Protection for your Software's Graphical User Interface (GUI)?

4 Things to Remember About Copyright Law

Contracts vs Copyrights

Legal Disclaimer: This is for informational and educational purposes only, and does not constitute legal advice.

Can You Obtain Copyright Protection for Your Software’s Graphical User Interface (GUI)?

As a software copyright attorney/lawyer, I think every Software, SAAS or Cloud company should think about this issue, even though this is a complex legal issue.

Think about it. Most software companies know that they can obtain copyright protection for their source code, but what about their GUI? Well it depends (as any good lawyer would say).

The BASICS of Copyright Law in Relation to GUIs

1)  Expressions are Protected, but Not Ideas. The ideas contained in a GUI layout will not receive copyright protection, but if there is a unique expression of an idea then there may be some protection.

2) An 'Artistic' Layout Should Receive Protection, but 'Features' Won't. If there is only one way to express an idea (say a drop down menu list with Save and Print), then that drop down menu will likely not receive copyright protection. However, if the drop down menu can be expressed in a more artistic manner, then copyright protection could attach. This is a hot legal issue, and a February 2010 Federal court just ruled in a copyright GUI case that the artistic and original nature of a CAD software's GUI design (look of the icons, layout of the toolbar, etc.) provided copyright protection.

Microsoft Office's New Ribbon. Haven't you wondered why Microsoft made that dramatic change to Word, Excel, etc. to the new ribbon layout in Office 2007? I did, and I think that part of the decision (I am sure that usability had a lot to do with it) to redesign the layout of the Office 2007 GUI had to do with the fact that Microsoft wanted to differentiate its product from its open source and free competitors (Open Office, Google Docs, etc.), and it could use copyright law to help. Isn't the new ribbon layout pretty artistic and original?  I think so.

Key Takeaways to Protect Your Software's GUI

1) The more original and artistic the layout, design, icons, etc…. the more likely you will be able to obtain copyright protection and prevent a competitor from simply copying your GUI.

2) Don't forget to register your copyright. This can make a big difference.

3) If largest software companies are doing this, why aren't you thinking about it? Take a look at the new ribbon in Microsoft Office. The ribbon sure looks original and artistic to me, so maybe copyright law had something to do with it.

Every software company with a GUI (and that is about all of them) should think about this and talk to their software copyright attorney (at least before their competitors copy  their GUI).

Resources:

4 Things to Remember About Copyright Law

Contract vs. Copyright. What is the Difference?

Disclaimer: This issue is quite frankly one of the most complex and difficult software copyright issues out there, so talk to your software copyright attorney or lawyer about this before you make any changes.

What is a Software License, and How is it Measured?

Every software company should understand what the term 'software license' actually means (i.e. what is a software license?).

As a software attorney that tries to keep it simple, let me briefly explain this: it is the right/permission to use the software from the owner. Remember that the user is not provided with 'ownership' to the software (as that is retained), but they do receive the right to 'use' the software.

Q: What are the boundaries of the right to use software?

A: Well, that depends on what the license agreement says…usually in the GRANT section… (e.g. x grants to y non-exclusive, non-transferable, license to operate the software on …….). There are literally thousands of possible license metrics (ways to measure usage), so a software company should communicate its license metric inside and outside of the license agreement (e.g. on the product webpage, in an FAQ).

• For example, here is a list of the Oracle license metrics: Software Investment Guide.

• Here is another example from another company: Licensing Guide.

So the key things to remember in defining your software license and metrics are:

1) Know what your license agreement says, as you are granting you users specific legal rights.

2) Grant the users the 'correct' usage rights (but not necessarily more), as that is what they are expecting.

3) It would be really great if your software operated 100% consistently with those license rights (i.e. if the license is limited to one module, then don't allow them to use other modules; if the license is limited to one user, then don't allow more users access; maybe have a counter in the software so the user can tell if they are within their license rights or exceeding them).

 

Of course this summary only addresses one type of legal definition of a license, as there are other legal uses of the term 'license' (government license, professional licenses, license to enter property, etc.).

While defining software licenses can get very complicated, this is a simple summary from a software attorney, that may help you understand what is a software license and how they are measured.

Is Your Software Agreement Airtight?

I find that most clients believe that they have an airtight software agreement and their liability is limited to the contract value. Well, from the perspective of a software copyright attorney, as a general matter they are right, but of course there are exceptions (at least from the perspective of a software licensing attorney). Once of the exceptions is fraud claims.

Fraud Claims: While there are many different flavors of fraud, essentially all of them are based on some type of ‘misrepresentation.’ Under certain strong legal theories no fraud claim/damages should be allowed when there is an underlying contract, but needless to say these claims are made to try to get around the contractual limitation on liability.

SAP is learning a lot more about this issue, as they are facing a fraud claim for over $500 million arising from a $30 million software deal with Waste Management (the contractual price)…yes the claim is more than 10 times the contract value. So even though SAP negotiated their contract well and had it reviewed by their lawyers, they are facing a claim for more than 10 times the contract value. Read more here.

Q: So what can a company do to avoid these claims?

1) Get Involved Early in Customer Problems. What I mean by this, is have someone in senior management work closely with the people on the ground to ensure that this gets worked out.

2) Use your Best People. This is not the time to use junior employees or less experienced sales teams, as by their nature these type of disputes need custom solutions and out of the box thinking.

I bet you that someone high enough at SAP did not get involved early enough in this dispute, as this case could have been avoided and the customer relationship rescued. So remember, your software agreement can’t protect you from every claim, and take care of customer problems early on with your best people.

Contract vs. Copyright Protection. What is the Difference?

While this is a complex legal issue, as a software copyright attorney,  let me try to simplify it so it can be useful for software company or IT based company (i.e. do I need a software licensing agreement or not)

Essentially, one way to protect and provide information technology is via copyright law alone, which means that there is no contract and the IP owner is relying on federal copyright law to provide the buyer with their necessary rights (and to protect the owner).

- For example, if you buy a book you own the tangible book (that is what you bought), but the author/publisher still owns the copyright to the book. You can read the book, write on the book, tear up the book, and transfer the book, but you can’t copy, prepare derivatives works (e.g. movies), publicly perform, etc. the book. You have to look at copyright law for more answers.

- On the other hand, if you buy software and agree to a license agreement (=contract) then the contract and federal copyright law protect the owner of the software and determine your rights. If you want to use the software, you should read agreement first as it will explain what you can and can’t do. You probably can use it and destroy/delete it, but how you can use it, whether you can transfer the software and in general what your rights are depend on the contract and copyright law (you can see that this can get complicated).

Music owners learned about this issue the hard way (remember the original Napster), that not having a contract (and only relying on copyright law) can have a real negative consequence in the digital world (i.e. it is really easy to copy and transfer digital files). As a result, right now music provided through iTunes is licensed, digital images are licensed (e.g. istockphoto.com), and software is still licensed.

All software and IT based companies should understand how their contracts and copyright law (1) protect their IP and (2) provide the users with the rights to use the technology. The key here is to have the right mix of contract and copyright law, and to understand the benefits to your users and the risks to your IP. Prystar sued Apple over this issue (I think they were a little confused between contracts and copyrights), and got the short end of the stick (i.e. they currently have an injunction against them).

Note: I am not addressing open source copyright licensing (without contracts), as that is something for another blog post.

Disclaimer: This is for informational and educational purposes only, and is not legal advice.

4 Things to Remember About Copyright Law!

Here are the 4 things to remember, from the perspective of a software copyright attorney.

1) Copyright Attaches Easily. It is relatively easy to get basic copyright protection (you know that (c) Copyright Notice on the bottom of text, articles, websites, etc.) This is something to keep in mind, as claiming that a work is protected by copyright is a good first step. While providing the notice is not technically required, it puts people on notice that someone is claiming ownership of the work. So this is something to use often with works you want to protect.

2) There are Essentially 4 Rights. If you own a copyright, you have the exclusive right to:

• Reproduce,
• Distribute,
• Create Derivative Works (creating another work based on the work), and
• Display/Perform Publicly the work.

So this means that the copyright owner has the right to stop someone from reproducing, distributing, creating derivative works and displaying/performing the work publicly, and it will be a violation of federal copyright law if someone were to do so without permission.

3) Lots of Exceptions. This is where it gets more complicated. Copyrights

• do not apply or protect ideas, concepts, methods ideas or discoveries, etc.,
• do not apply to common properties in nature (calendars, charts, etc), and
• do expire.

Also there is a concept called Fair Use, which essentially says that someone can use your copyrighted work without permission in certain situations.

4) Many Benefits to Registration. If there is one thing to remember about copyright law, remember that it is inexpensive to register a copyright and there are lots of benefits from registration. It costs less than $100 to register, and you can do it yourself (no lawyer needed, but of course consult one if you have any questions). One of the often overlooked issues, are the benefits of registration. Without going into a lot of detail, think of it this way: you can get your attorney’s fees paid in a lawsuit and statutory damages (a significant fixed damage amount (could be a few $1,000 to over $100,000)) without having to prove your actual damage or harm. Also, if you wait too long you cannot file the registration after the fact (after you find someone infringing your copyrights) and receive the same benefits.

As a software copyright attorney/lawyer, I recommend software and IT based companies keep these 4 things in mind about copyrights.

What is Intellectual Property (IP)?

I get this question often as copyright lawyer, so I thought I would briefly explain what intellectual property is (at a high level). Intellectual Property or IP, should really be viewed when compared to other types of legal property, namely real property (i.e. real estate) and tangible property (i.e. things you can see, touch and feel (other than real estate)). IP is really an umbrella term, as it is broken down into copyright, trademark, patent and trade secret laws. When you hear people referring to IP, just think about these 4 areas of the law, as that is what they are really describing.

So why should an IT company care about these laws?   Well, these laws help to define/protect your rights in your important property.

• Copyright law protects and provides rights in various things, but to start with they must be ‘fixed in a tangible medium’ (i.e. can be perceived, reproduced, or communicated (written, images, etc.)). This means that copyright law protects source code, and other items that a software company writes or publishes. For example, if someone were to use your company’s source code without permission, copyright law will be one of the legal vehicles employed to identify the property, and right the wrong.

• Trademark law protects and provides rights in words, designs, logos, phrases and slogans that identify products, and distinguishes them from the products of others. This area of the law protects company/product names, logos and associated marketing phrases, and is much more important today, as these items are used globally as soon as they are placed on a website/picked up by a search engine spider.

• Patent law essentially provides inventors the right to exclude others from using their invention, in exchange for publicly disclosing that invention.   Patent law protection is often overlooked because of its complexity and cost, but in the right situations can be an extremely big stick/significant asset, even up against another inventor that independently came up with same invention.

• Trade secret law protects certain proprietary information, that is not disclosed to the public, and provides a competitive advantage by keeping it a secret. As to software companies, the classic trade secret is source code, but it can and should be applied to other information of the business (e.g. customer lists and company strategy plans).

At the end of the day, this description is very general and basic, as volumes have been written on each of these categories, and many lawyers devote their entire careers to just one of these categories. As an IT attorney, I suggest that every IT based company should consider looking at these legal rights (with their attorney) early in their maturity process, as questions regarding IP will definitely come up when you don’t expect it.

What is Fair Use?

People often ask me can I use this or that work of a copyright owner. Basically, as a copyright attorney, there is a legal concept called ‘fair use’ which allows non-copyright owners to use copyrighted works in certain situations.

What are the situations? Well, this is one of those it depends, as there is a 4 part test.

1. Purpose and character of the use.

• commercial nature (- for fair use) or nonprofit/educational (+ for fair use)
• commentary, criticism or news, as this is a + factor for fair use (the First Amendment kicks in here).
• transformative (adds something new) (+ for fair use) vs derivative (- for fair use)

2. Nature of the copyrighted work (factual (+ for fair use) or creative (- for fair use))

3. The amount and substantiality of the portion used in relation to the copyrighted work as a whole (less used (+ fair use) and more used (- fair use))

4. The effect of the use upon the potential market for, or value of, the copyrighted work (less of market effect (+ fair use) and more market effect (- fair use))

These factors are weighed in each situation to determine if it is a fair use, or not. If you are right and it is fair use, then you can use the copyrighted work without the permission of the copyright holder, but if you are wrong, then you may have some significant legal problems (if the copyright holder decides to pursue the matter).

The internet has really brought this issue to the forefront, and it is a good example of when technology and law come together to create fodder for disputes

More information here…