by eclewis | Nov 25, 2009 | Business News
The Statue of Our Legal System In Three Paragraphs
As many of my readers know, I typically refer little to laws outside of Colorado, much less outside of the United States. However, after reading several articles on England’s proposed Digital Economy Bill, I thought the proposed law was a topic that deserved mention. However, before discussing the proposed law, a brief history of how our legal system intertwines with England is in order first. Later this week, I am going to speak about the Digital Economy Bill to give a brief overview of it and my thoughts on it.
As a former English colony, the United States adopted what is known as a “common law” legal system.* Common law refers to the idea that our law is based on the prior interpretation of laws by the courts. Each judge or jury, in theory, is to look at past precedent (cases that have already been settled) and determine if it should be used in the case at hand. (See here for more on being on a jury!) Simplistically, precedent ideally is based on local law, i.e. in Colorado state courts, precedent would be the rulings that had been reached in the Colorado Court of Appeals or the Colorado Supreme Court; in Colorado federal courts, precedent would be the rulings of the 10th Circuit. In the United States, except in limited circumstances, what has been decided by the United States Supreme Court is the highest precedent for all courts.
So with that background, you are probably asking yourself, why the heck does England’s law matter here? I mean, really, we haven’t been an English colony for over 200 years. Why that is true, in order to help a court reach a decision in a case, attorneys write what are called briefs or motions – an outline of the law that applies to their case. When there is not precedent in the local jurisdiction, attorneys sometimes look to other jurisdictions or even other countries’ laws. They may also cite what other countries are doing to show a majority of countries are changing their ways on certain issues. All of this is with the hope of influencing the court to make a decision one way or the other if there isn’t in precedent (or an attorney wants the court to decide differently than precedent) regarding the matter at hand.
In addition to being used as precedent, sometimes politicians point to other countries to help strengthen their position on laws that they introduce. Although courts look to common law to interpret laws, if there is a law passed that changes common law, the new law, and not common law, is the law of the land. Therefore, even if other countries’ laws do not influence the court systems, they can influence the legislative process. (A good example of this is the current health care debate. Many politicians argue that we are one of only a few Western countries without government health care. Although this won’t influence the courts, it can potentially influence the legislative process.)
So there, in a very, very, very brief nutshell is why foreign laws can matter in the US. Stay tuned to learn a little more about the Digital Economy Bill!
* Well, most of the US. Because Louisiana is a former French colony, Louisiana uses what is called constitutional law in many instances. For a brief look at the type of law used in Louisiana, please click here.
by eclewis | Nov 14, 2009 | Business News, IP Law
So, how do you protect your IP from being stolen online? Unfortunately, the only way to make sure that someone does not steal it is not to place it online. Once it is online, there are very few, if any, ways to make sure someone does not steal it. Considering for many this isn’t an option (partly because many create IP specifically to put it online in the case of graphic artists and website designers or because people want to show off their work in the case of musicians and writers), there are some best practices for putting things online.
1. Watermark your work. If you are placing something like a drawing, cartoon, or photograph online, you can put a watermark on your picture to make it so that people may be less likely to steal the work (since your watermark will be on it). In addition, if it is stolen, it will be easier to prove (as long as the watermark isn’t removed somehow).
2. Post only part of your work online. If you are placing something like a novel or song online, you can put only part of it online and then send the full work by email (and you can charge for the full work if you are enterprising). Although this won’t guarantee that the work won’t be placed online by someone else equally as enterprising, you will have a record of who received copies and a note with the copy you send them may deter the person from placing the work online (something nice yet professional stating you have a copyright on the work).
3. Place smaller versions of your work online. If you are placing images online, you can put thumbnails online rather than larger files. By doing this, the work may be high enough quality to show your audience what you can do, put low enough resolution that someone else may not want to take it.
4. Read Terms of Services. If you are placing IP anywhere except your website, make sure you know who owns the rights to the IP by placing it on the site. The last thing most artists want is to find out that by placing a photo or article on a site means they have given up rights in that work.
Even if you use best practices for putting things online, if it is something that people want, there is a chance it will be taken and used somewhere else. If you find out your work on a site with a copyright policy, such as Facebook, MySpace, Google, or Yahoo, you should contact the site and ask them to remove it. In any case, if your work is something that is likely to be stolen (i.e. professional photographs, novels), it is a good idea to register your works with the U.S. Copyright Office. (I say this because you may not want to pay for a copyright on every photo you take on that trip to your grandmother’s house, but that is a call you should make with the help of your attorney.) By registering your work, if someone does steal it, it increases the amount of damages you may be eligible for and be able to get attorney fees.
If you find that the above post interests you, I invite you to come and listen to the Mile High Social Media Club presentation Thursday, November 19th at Strings in Denver at which myself and two other individuals will be on a panel discussing these types of issues. You can RSVP for the event at http://novembermhsmc.eventbrite.com.
by eclewis | Nov 12, 2009 | Business News, IP Law
Who owns the intellectual property that is put on social networks? Unfortunately, it isn’t as easy as saying that the person who created the IP owns it. Two things come into play. First, before the IP is put onto the social network, the owner of the IP must be determined. Second, once the IP is placed onto a social network, it must be determined if the site has any rights to the IP.
So who owns the IP to begin with? Many people think because they create something, they own it. For instance, a graphic artist may think because he created a logo that he owns the logo. However, he may not. There may be a clause in the contract he has with his client giving ownership to his client. It could also be that the work would be considered a work for hire, again, with the client owning it if the contract doesn’t specify. However, it could also be the graphic artist owns it if the contract states so or if the work does not fall under the work for hire doctrine. In addition, there is also a question if the person that originally owns it has given any rights to the IP to someone else. For instance, in the case of an author, did the author give a publisher the rights to the book in return for publishing it? It is only once one establishes who owns the IP prior to someone placing it on a social network that someone can start to establish who has rights to it after it is placed on the site.
So how does one go about figuring out who has rights to the IP after it is placed on a social network? The answer usually lies in the website’s terms of service. To determine if the owner of the IP has given any rights in the IP to the social media site just by placing it on the site, a careful reading of the site’s TOS both at the time it was placed on there and any updates or changes in the TOS since then is necessary. By just placing IP on some websites, users give a license to the website to use their IP for various things and for various amounts of time. A TOS may say that a user gives a limited use in the IP to the site. For instance, the TOS may say the site can use the IP in any way it wants why the IP is on the site, including in advertisements. A TOS may also give an unlimited use license in the IP once it is placed on the site. This would mean that the site could use it for any reason even after the user removes it.
So the short answer is to who owns the IP on a social network is, as lawyers like to say, it depends. To figure out who owns it, it is important to find out who owned the IP first and then to look at what the TOS states.
by eclewis | Nov 11, 2009 | Business News, IP Law
Next week, I will be speaking at the November Mile High Social Media Club’s monthly event. I will be joined by attorney Kristin Diamond and internet photographer Jerome Shaw and the panel will be discussing intellectual property laws, business laws, and social media policies.
As a preview, the next few days I am going to highlight my views on some of the issues that may (or may not depending on the audience) be discussed.
Tomorrow’s post will go over the basics of what are the IP ownership issues if individuals put info out on social networks.
Saturday’s post will go over how do individuals protect their IP from misappropriation by others (namely from theft on other sites).
Monday’s post will go over what policies and procedures should be in place to protect IP.
After reading and/or listening to these posts, I invite you to come and listen to the presentation November 19th at Strings in Denver. You can RSVP for the event at http://novembermhsmc.eventbrite.com.
If you are unable to attend, Friday I will be posting a short summary of how the night went.
by eclewis | Nov 9, 2009 | Business News, Misc. Legal Tidbits, Random Thoughts
As individuals and families get ready for the holidays and parties that come with this time of year, it is important for business owners to do their own preparation. For most small businesses, December 31 isn’t just the time to pop the cork on the champagne bottle, but also time to make sure that the year-end business tasks are finalized and start preparations to have a great 2010.
Maintaining and finalizing the year-end books and records can be a tedious task for small business owners, but it is also one of the most important. As soon as the Christmas wrapping paper is thrown away, tax season begins. For companies that have employees or independent contractors, it is important to talk to your tax preparer to ensure that W2s and 1099s are mailed to those individuals by the IRS deadline. By having all payroll records organized, you can make things easier for your accountant and your wallet. For companies with or without employees or independent contractors, having organized books and records (including receipts, mileage logs, and entertainment logs) ensures that your accountant can correctly prepare the business return and, many times, prevents having to file for an extension.
The end of the year is also a good time to have your company records reviewed by an attorney. For companies that are set up as sole proprietorships, a good business attorney can help you decide whether setting up a corporation or LLC can provide legal or tax benefits that you may be missing out on. A review of client contracts, lease agreements, and other legal documents can ensure that they comply with any changes in the law that may have come up in the last year (or longer if its been a while since you’ve had a good review).
Many business owners write a business plan when they start up and never review it again. For businesses that slow down during the holidays, it may be the perfect time to dust off that old business plan sitting on your shelf. Review it to determine whether you are where you want to be and, if you aren’t, what you need to do to get there. For most businesses, this has been a tough year; however, that doesn’t mean that you can’t look forward to building your business next year. Reflecting on what marketing has worked and what hasn’t can help you brew up new ideas to use next year. Whether it is a Facebook fan page for your business or sending holiday cards to clients, a renewed sense of purpose will give you something to work on while waiting for business to pick up. For business owners struggling, the Small Business Development Center and SCORE can both be great ways to get free help with business planning.
As always, this article is for informational purposes only and does not contain legal or tax advice. Please consult with your attorney or accountant for legal or tax advice to ensure that you end this year on the best possible note – and have a great 2010!
by eclewis | Sep 1, 2009 | Business News
What is an operating agreement?
An operating agreement is the blueprint for how your business operates. It describes what happens when disputes arise between members, how membership interests can be transferred, and who runs the business. For instance, it usually talks about whether an LLC is member-managed or manager-managed. It will also talk about the membership interest, who owns them, what compensation was paid for those interests, and how those interests are given up. In some cases, it may talk about what percentage of membership interest votes allows certain measures to pass. It may also state what happens if a member goes bankrupt, gets divorced, or dies.
Why do I need one?
If the LLC has more than two members, an operating agreement talks about what happens between the members. It talks about voting percentages, how much was paid for the membership interests, and how membership interests can be transferred. I like to think of it as the operating manual for a business – without, a business can still operate but has no idea what to do during a crisis.
So does a single member LLC need one? The single member LLC doesn’t need to worry about disputes between members. The single member LLC doesn’t need to worry about how a transfer occurs because the single member has full control of transfers. However, even with this in mind, a single member LLC does need an operating agreement!
An individual starts an LLC or corporation for two reasons: 1. to gain a tax break and 2. to gain limited liability. The tax break occurs because, depending on the tax structure chosen, an individual may be able to plan better for retirement, take more business deductions, or lessen the employment tax liability. The limited liability occurs when the LLC is treated like a separate entity. However, this limited liability is not handed out easily. An LLC must earn this limited liability. This means that an LLC must be treated as a separate entity from the business owner. When an LLC has multiple owners, it may be easier to show that the entity is separate from its owners. The business owners can probably show that they established a separate banking account and that control is vested in several people (i.e. the multiple owners). However, when the person is a single member LLC, it can be difficult to show the business was really operated in as a separate entity. For instance, even though the business has a separate business account, the person that controls that business account is the sole owner. Due to the nature of a single member LLC, it will be difficult to show that control is vested in multiple people.
This is why it is important to have all the paperwork in order to show that the individual operated the LLC as a separate entity. For an LLC, an operating agreement is the first of many documents that will show the entity truly is separate. The operating agreement, in addition to the correct state, federal, and additional documents that are kept by the business owner are the building blocks for showing the entity is truly separate. By showing that the building blocks are followed, along with the other things that need to be done to show that in practice it is separate, individuals who own LLCs can help ensure that the LLC keeps its limited liability.
To find out if you have everything in order to show your LLC is a separate entity for limited liability purposes, call Elizabeth Lewis at 720-258-6647 or email her at elizabeth.lewis@eclewis.com today.
