The Law and Terms of Use: FAQs

Originally posted on December 26, 2006

by Tichelle Sorensen

What are Terms of Use

The website “terms of use” are contractual relationships that website operators create with the visitors to the website. Depending on the importance of the relationship, certain disclosures and validations re required. Typically the courts enforced these contracts in varying degrees based on several factors. Some of these factors include what industry the website serves, consumer versus producer orientation, the risk involved (e.g., disclosure of personal information) and dollars involved.

What is the difference between “Terms of Service” and “Terms of Use”? Usually, “Service” indicates a site where something beyond information is offered. I have a very basic website – is it necessary to post terms for my website? Every website should include some basic terms. What specific Terms do I need to include?

This depends on what you are posting or offering. Most website Terms address the following basic categories of information:

Introductory information and site overview.

The date of the last update.

Privacy Policy (sometimes a separate link.)

Account specific terms (such as payment of fees and technical support.)

Intellectual property notices, and policies for compliance with the Digital Millennium Copyright Act.

Licensing information and conditions.

Warranty information and any service or product guarantees.

Disclaimers and limitations of liability.

General and technical rules and regulations for use of the site content and, if applicable, services.

Legal terms, such as governing law.

However, the content of each website should be carefully evaluated for compliance with specific legal requirements and risk.

Is necessary to read the Terms for every site?

Terms are usually framed as a contract between the company operating the website and the user, so it is always recommended. Additionally, there are circumstances where reviewing the Terms is especially important, including the following (1) any time you are relying on the information obtained from the site to be accurate; (2) if you are posting content, or using any content posted on the site; (3) if you are accessing any services or tools available on the site; (4) when any of your personal information or is collected by the site; and (5) whenever you are paying for the services or products offered on the site.

What if a site does not have Terms posted?

As with any company, if you want to know policies that are not easily determined, look for a contact address and email the webmaster or site directly, requesting a copy of their Privacy Policy and Terms of Use.

Oregon Art Consignment Law: Managing Artists, Galleries and Dealers

Originally posted on December 12, 2006

By Kohel M. Haver

When you give your work to someone else to sell, or advertise to sell for you, you set up a legal relationship called a consignment. This is true for art galleries but also true for the corner coffee shop displaying your work to decorate its walls. When it works everybody wins. You get to sell your work and the galleries have some art on the wall, new and fresh work to sell. In my experience, when there is money involved it’s a good idea that everyone “is on the same page.”

These sales arrangements work best is everyone has a clear understanding of the promises they make and what the law says about those transactions. First, here is the scorecard (who is who)

“Art dealer” means an individual, partnership, firm, association or corporation, other than a public auctioneer, that undertakes to sell a work of fine art created by another.
“Artist” means the creator of a work of fine art or, if the artist is deceased, the artist’s personal representative, heirs or legatees.
“Gallery” means an art dealer who receives and accepts a work of fine art from an artist for the purpose of sale or exhibition, or both, to the public on a commission or fee or other basis of compensation.
“Consignment” means delivery of a work of fine art to an art dealer for the purpose of sale or exhibition, or both, to the public by the art dealer at other than a public auction.
“Artist” also means an artist or any person who delivers a work of fine art to an art dealer for the purpose of sale or exhibition, or both, to the public on a commission or fee or other basis of compensation.

What kind of work is covered? The Oregon Consignment law will cover the transaction if the consigned items are Fine Art which means it is an original work of visual art such as a painting, sculpture, drawing, mosaic or photograph; or a work of calligraphy; a work of original graphic art such as an etching, lithograph, offset print, silk screen or other work of similar nature; a craft work in materials including but not limited to clay, textile, fiber, wood, metal, plastic, glass or similar materials or work in mixed media such as a collage or any combination of the art media.

What is a consignment? Whenever an artist delivers a work of the artist’s own creation to an art dealer in this state for the purpose of exhibition or sale, or both, on a commission, fee or other basis of compensation, the delivery to and acceptance thereof by the art dealer constitutes a consignment. When the work is delivered for consignment, the artwork is considered trust property in the hands of the art dealer, who is trustee for the benefit of the artist until the work of fine art is sold to a bona fide third party.

The proceeds of the sales are just as much yours as the artwork was. The proceeds of the sale of a work of fine art are also trust property in the hands of the art dealer who is trustee for the benefit of the artist until the amount due the artist from the sale is paid. This means that the Gallery does not own, but merely holds, the artwork for the artist and the same goes for the proceeds from the sale of the art. Both belong to the artist. This is true even if the gallery is buying the work itself. It’s trust property until the artist is paid.

What does the term “trust property” mean? The gallery is considered to be the agent of the artist for the purpose of the exhibition or sale, or both, of the work of fine art within this state. The work of fine art, or the artist’s portion of the proceeds from the sale of such work is subject to the claims of a creditor of the gallery. It also means that a gallery is liable for the loss of or damage to the work of fine art while it is in the gallery’s possession where such loss or damage is caused by the failure of the gallery to use the highest degree of care.

If the art gets damaged who pays for it? If the artwork is damaged or destroyed, the value of the work of fine art is the value established in a written agreement between the artist and gallery prior to the loss or damage or, if no written agreement regarding the value of the work of fine art exists, the artist’s portion of the fair market value of the work of fine art.

Removing the art from the gallery. Take the work out of the gallery after the show is finished because the gallery will not be held liable for the loss of, or damage to the work of fine art if the artist fails to remove the work within a period of 30 days following the date agreed upon for removal of the work. This agreement can be made in the written contract between the artist and the gallery or, if no written agreement regarding a removal date exists, 30 days after notice to remove the work of fine art is sent by registered mail or by certified mail with return receipt to the artist at the artist’s last-known address.

The artist can know who bought the work. The artist is entitled to know the name and address of the purchaser. Upon written demand from the artist, the gallery shall furnish the artist with the name and address of the purchaser of the artist’s work, and the date of purchase and the price paid for the work, for any sale totaling $100 or more. If the gallery refuses to furnish that information specified above, the artist shall be entitled to obtain an injunction prohibiting such conduct and in addition, receive money damages in an amount equal to three times the artist’s portion of the retail value of the work.

What the artist should have in a contract between an Artist and Gallery.

Artist and art dealer should execute a consignment contract, which includes consent to display, the artwork. An art dealer may accept a work of fine art, on a fee, commission or other compensation basis, on consignment from the artist who created the work of fine art only if prior to, or at the time of, acceptance the art dealer enters into a written contract with the artist establishing:

(a) The retail value of the work of fine art;

(b) The time within which the proceeds of the sale are to be paid to the artist, if the work of fine art is sold;

(c) The minimum price for the sale of the work of fine art; and

(d) The fee, commission or other compensation basis of the art dealer.

An art dealer who accepts a work of fine art on a fee, commission or other compensation basis on consignment from the artist may use or display the work of fine art or a photograph of the work of fine art or permit the use or display of work or photograph only if:

(a) The art dealer gives notice to users or viewers that the work of fine art is the work of the artist; and

(b) The artist gives prior written consent to the particular use or display. If display rights are a concern to you please address this issue in your agreement.

The proceeds of the sale. Payments of sale proceeds of consigned work due the artist are not subject to claims of dealer’s creditors. The proceeds from a sale of a work of fine art on consignment shall be paid to the artist within 30 days of receipt by the gallery unless the artist expressly agrees otherwise in writing. If the sale of the work of fine art is on installment, the funds from the installment shall first be applied to pay any balance due the artist on the sale, unless the artist expressly agrees in writing that the proceeds on each installment shall be paid according to the percentage established by the consignment agreement. The artist’s portion of funds received on the sale of the work of fine art or on installment shall not be subject to the claims of a creditor of the gallery.

You can’t be tricked into signing away these rights. In Oregon a contract provision waiving protections for artist is void.

It’s your money. It is unlawful for a gallery to willfully and knowingly secrete, withhold or appropriate a work of fine art or the proceeds from sale thereof for the gall
ery’s own use or the use of any person other than the artist, except pursuant to a bona fide sale or as otherwise consistent with the terms of consignment. Violation can be a Class C felony.

Penalties for not following the law: An art dealer violating the consignment law can be liable to the artist for $100 plus actual damages, including incidental damages sustained as a result of the violation.

And, if the art dealer violates, the artist’s obligation for compensation to the art dealer is voidable by the artist.

You can recover your attorney fees if you need to file a lawsuit. In any action under any provision of the Oregon Consignment Law, the court may award reasonable attorney fees and costs to the prevailing party. To the ears of this lawyer, Oregon has a very strong consignment law. As an artist you do have a lot of power in these transactions.

In Conclusion: Good luck with your ventures and before you conclude the deal:

- Get it in writing

Remember the value of the confirming thank you note which restates your basic agreement.

Personal Information Concerns for the Employee/Customer: Part 1 – Who Owns Customer and Employee Information

Originally posted on December 11, 2006

by Tichelle Sorensen

1.0 Defining Customer Information as Property

In the wake of a recent privacy policy update by AT&T Corporation defining customer information for some of its products as corporate property,[1] consumer advocates expressed concern over the possible implications for customers of companies who adopt these types of policies.[2] Although subsequent retractions indicate that concern over the perceived breadth the AT&T policy may have been premature (the AT&T policy will only apply customers of certain products), the debate remains relevant.

This concept of personal information as corporate property is especially interesting in the context of employment. Some employers, spurred by concerns of declining productivity, potential liability, or loss prevention have implemented policies designed to closely monitor much of their employees work life. Outside of work, most people follow the expectation that their activities are personal, and not subject to the disapproval of their employer – despite several recent examples demonstrating that this is not always the case.

2.0 Customer as an Employee

Where an employee of a company is also a customer, the implications are even more significant, as employees are clearly more identifiable and have more at stake. Companies routinely gather detailed information about their customers, with increasingly sophisticated technology used to track shopping habits and brand preference. Many supermarkets now use club-type cards, often required to access sale prices and other perks. At some stores, this creates easily accessible and highly detailed customer records. Where a company provides telephone or internet based services, the ability to review a person’s calling records and internet habits can be incredibly revealing – and somewhat uncomfortably so – about their personal habits, beliefs, and practices.

With this amount of information available, both the employee and company should be aware of how these details can be used in the context of employment policies and actions.

As an example, in 1997, the Seventh Circuit Court of Appeals was presented with a case involving Ameritech Corporation,[3] which was sued by a former employee who was fired for violating a company policy following an internal investigation based substantially on the employee’s home telephone records.[4] Ultimately, the court found no basis for Federal Jurisdiction and remanded to Illinois State Court, but expressed concern over the potential implications of the company policy:

“Ameritech’s response is eerily reminiscent of Orwell’s Big Brother…Ameritech’s lawyer stressed at oral argument that the MUD records “belong” to Ameritech, and from that he reasoned that Ameritech had the right to consult those files in the course of its internal management of the company. This means, in essence, that every Ameritech employee, from the CEO on down to the lowliest worker, can expect to have Ameritech reading the records of telephone calls placed from his or her line (which is what MUD records are) at any time, for any reason. Furthermore, the logic of Ameritech’s ownership argument suggests that Ameritech could listen in to anyone’s telephone calls whenever it wants, calling employees on the carpet for spending too much (or too little!) time in the evening on the telephone, criticizing them for patronizing the wrong “900” numbers, and reviewing their calling records every time they take a sick day off.”[5]

The court also indicated that the absolute ownership policy might be overly broad, in violation of the federal Communications Act.[6]

In a subsequent appeal following remand, the Illinois Court of Appeals found that the federal Electronic Communications Privacy Act[7] authorized the actions of the employer, Ameritech, to use or disclose communications to protect “..the rights or property of the provider of that service.”[8] The court held that “right or property” includes protecting the company’s “monetary resources” which, in the context of Schmidt, would be depleted because the employee took an additional paid vacation while on disability leave (despite a company policy to the contrary.)[9] The court further reasoned that the investigation into the employee’s activities during the time he was on leave – which included visits by supervisors to his residence, and reviewing records of calls made from his home number and personal calling card – was “reasonable in light of federal case law that requires an employer to conduct a documented investigation into an employee’s alleged misdeeds before the employer may discipline that employee.” [10]

3.0 Employee Expectations

What expectation should employees have of privacy in their personal telephone records? If the employer is a telecommunications provider, and the records are reviewed in order to investigate employee fraud or protect some financial interest of the employer, the ECPA seems to provide protection for the use of personal information in this context.

However, employers should be cautioned against implementing blanket policies of monitoring the private actions of employees without seeking the advice of counsel. Schmidt involved an isolated reviewing the calling records of one employee, in the course of an investigation into whether that employee lied about taking a vacation while he was on disability leave. Had the company monitored all employee’s home telephone records on a random and continuous basis – perhaps the court might have responded with the “Big Brother” analysis.

Employees signing up for the services of their employers should expect that the information contained in those records could be used in the course of an investigation affecting their employment. Similarly, this would also apply where the employer provides and pays for cellular telephone service, calling cards, or even credit cards. If records are submitted to the company for payment, employees should not expect that they will not be carefully reviewed by the employer.

4.0 Lessons Learned

If there is a lesson to be learned from the AT&T announcement, it may be that a clear policy is the best path to take. Companies who chose to characterize their customer information as corporate property can disclose their intent in the context of privacy statements or employee handbooks. This may not prevent litigation questioning the boundaries of the use, but employees who are aware of these policies, like all customers, should have the option to take their personal business – and information – elsewhere.

[1] The full text of the AT&T Policy is available online at [2] Sara Kehaulani Goo, Concerns Raised Over AT&T Privacy Policy, Wash. Post, Friday June 23, 2006, at D05 [3] Ameritech, one of the divested AT&T Regional Operating Companies, merged with SBC in 1999; in 2005 SBC merged with AT&T Corp. to create AT&T Inc. =”_ftn4″ id=”_ftn4″>[4] Schmidt v. Ameritech, 115 F.3d 501 (7th Cir. 1997) [5] Schmidt at 504 [6] Codified in, 47 USC §605 [7] Codified in, 18 USC §2511 [8] Schmidt v. Ameritech Illinois 329 Ill.App3d 1020 (2002) [9] Schmidt at 1034 [10] Schmidt at 1034, citing Babb v. Minder 806 F.2d 749, 756 (7th Cir. 1986)

Purchasing Residential Real Estate in China: Recent Controls

Originally posted on May 30, 2007

by Eric van Naerssen

Investment for Residential Use

Residential real estate prices in China experienced meteoric growth in recent years, particularly in cities along the eastern seaboard. In response, China’s central government created regulation to place limits on the market that distinguish speculative buying from purchases for individual residential use. This article describes rules on the purchase of realty by foreign individuals and foreign entities for their own residential use. It is useful for foreign individuals in China, or for companies formed outside of China that already have a representative or branch office in China seeking to secure housing.

The term “foreign entity” or “foreign enterprise” is commonly misunderstood to refer any business in China owned by a foreign individual or legal person. A “foreign entity” or “foreign enterprise” is simply a business registered in some territory outside China with a branch office or representative office inside China. In contrast, a wholly-foreign owned enterprise (WFOE) is a Foreign Invested Enterprises (FIE) and is an entity formed under Chinese law within China even though it is owned in whole or in part by non-Chinese individuals or other legal persons.

The most important thing for a non-Chinese person to know about investing in real estate in China is that investment by foreigners is still permitted under Chinese law; however, it must now be conducted through a WFOE, joint venture (JV) or by buying stocks in a Chinese real estate development company. Purchase of housing for strictly residential use is also permitted and is the subject of the rest of this article.

When the newly enacted Property Law (物权法) enters into force October 1, 2007, natural and legal persons will have clear ownership rights in property in China (these rights already exist, but the new law clarifies and consolidates previous regulations). An individual or legal person can own buildings and fixtures on the land outright, and possess nearly exclusive use rights in the land that last 40 years (for recreational purposes), 50 years (industrial) and 70 years (residential). Residential land-use rights are renewed at the end of their term. Ultimate title to the land remains in the state.

Foreign entities (branch offices and representative offices) operating in China can purchase residential housing if they have a genuine need, for example, to accommodate foreign staff. In accordance with the State Administration of Foreign Exchange & Construction Department’s Notice In Regards to Certain Issues in the Regulation of Real Estate Market’s Foreign Exchange Management (国家外汇管理局、建设部关于规范房地产市场外汇管理有关问题的通知), foreign capital used to purchase such housing requires approval from a branch of the Bank of China. The applicant must bring to the bank the housing sale contract or presale contract, effective approval and registration documents obtained to establish the branch or representative office, documentation from the local real estate authority, and a written pledge that the purchase is for self-use only. Foreign currency used to make the purchase is then transferred directly by the bank to the account of the real estate developer in RMB. Representative offices may not use their current accounts to buy housing in China.

Foreign individuals who have worked or studied in China for over one year can purchase housing for their own use. The procedures for foreign individuals purchasing housing with foreign exchange are the same as for foreign entities, but instead of the approval and registration documents required for foreign entities, the individual will need to bring their passport and either a contract of employment for a term greater than one year or their school registration documents. If the purchase falls through for either an individual or a foreign entity, there are procedures in place to recover the foreign currency through the original settlement bank.

On the resale or transfer of the home, the RMB obtained can be used to repurchase foreign currency by taking the following documents to the local State Administration of Foreign Exchange (SAFE): (1) Foreign exchange purchase application, (2) housing transfer contract, and (3) documents certifying that tax on the transfer of rights in the housing is fully paid.

Foreign entities and individuals specifically are not permitted to invest in real estate through the purchase of equity in a real estate enterprise. Foreign entities or individuals that use equity transfers or other methods to merge with or acquire a domestic real estate enterprise, or purchase the Chinese equity in a joint venture, are not permitted to use their own disposable capital to fund the transfer, and SAFE shall not register foreign capital or foreign currency received from such transfer. These measures were designed to limit speculation, especially by individuals, and to direct real estate investment activities through foreign invested enterprises and other vehicles.

Registration determines ownership rights, so it is vital to register all purchase transactions with the local real estate administration offices. There is a host of taxes imposed on real estate transactions, some designed to further curb speculation. Payment of these taxes and adherence to the registration requirements is critical in order to be able to remit the proceeds abroad.

Noncompete Agreements – Are they Valid in Oregon?: The Oregon Legislature significantly changes Employment Laws including Noncompetition Agreements

Originally posted on October 22, 2007

By Robert Swider and Steve Leasia

Oregon employers need to be aware of changes made by SB 248 which the Governor signed into law after a protracted battle in the Legislature. This Bill makes several significant changes to two areas of Employment Law for employment agreements entered into after January 1, 2008.

The law provides that employment arbitration and noncompetition agreements are voidable unless one of two conditions is met:

(1) The employer must inform the employee of the agreement’s requirements in a written employment offer received by the employee at least two weeks before the first day of employment, or

(2) The agreement is entered into upon a bona fide advancement of the employee if the requirements are disclosed in a written notice of advancement at least two (2) weeks prior to the effective date of the employee’s advancement.

The law also provides that other agreements, such as nonsolicitation agreements, are not subject to the bill’s requirements.

The new law establishes additional requirements for enforcement of noncompetition agreements. Such agreements are non enforceable unless:

(1) The employee is an individual engaged in administrative, executive or professional work who: (a) performs predominantly intellectual, managerial or creative tasks; (b) exercises discretion and independent judgment; and (c) is paid on a salary basis.

(2) The employer has a “protectable interest”. A “protectable interest” means either the employee (a) has access to trade secrets; (b) has access to competitively sensitive confidential business or professional information (i.e. product development plans, product launch plans, marketing strategy or sales plans); or (c) is employed as on-air talent.

(3) The total amount of employee’s gross salary and commissions on an annual basis at the time of termination exceeds the median family income for a family of four as determined by the United States Census Bureau. According to the Federal Register of March 28, 2007 the median family income for a four-person Oregon family will be $61,945 for 2008.

This new law further establishes that noncompetition agreements may not exceed two years. The new law also permits employers to enforce an otherwise voidable noncompetition agreement for up to two years, in certain instances, if the employer compensates the employee for the time the employee is restricted from working. The employer must pay the employee compensation the greater of an amount equal to 50% of the employee’s annual income from the employer at the time of termination or 50 percent of the median family income for a four-person family as published by the Census Bureau for the most recent year available at the time of termination. According to the Federal Register of March 28, 2007 the median family income for a four-person Oregon family will be $61,945 for 2008.

It is important to note that this law is not retroactive and significantly for employers, it does not apply to a covenant not to solicit employees of the employer, or solicit or transact business with customers of the employer. Employers can require that their employees sign these covenants, as long as they are separate from the noncompete agreements.

What Does This Mean For Employers?

Employers need to determine whether they have a “protectible interest” with respect to their departing employee (e.g. is there a valid basis for imposing a noncompetition covenant upon specific departing employees.) They will also have to ascertain whether it is proprietary information such as trade secrets that the employer is trying to protect or valuable customer information and/or relationships.

If an employer seeks to protect customer relationships, as is often the case for a departing sales representatives, it should consider using a separate nonsolicitation agreement that prohibits the departing employee from transacting business with the employer’s customers or soliciting the employer’s employees for a reasonable period of time.

If an employer is trying to protect proprietary information, they will need to strictly follow and document the two-week advance notification requirement and limit the term of the noncompetition agreement to two (2) years.

Employers can expect to pay more money to enforce noncompetition agreements against any employee who earns under about $62,000. Of course, for employees who earn less than $62,000 at the time of their departure, the employer can elect to waive the noncompetition agreement and not make severance payments if it determines that the economic benefit does not warrant the added severance costs.

Employers are well-advised to review the terms and conditions of their current offer letters, employment agreements, employment policies and notifications of advancement and should seek the assistance of qualified legal counsel.

Data Security Breach – How to Comply with Oregon’s New Privacy Law

Originally posted on January 29, 2008

by Martin F. Medeiros

The Oregon Legislature has recognized the need to protect the personal information of customers and employees. Senate Bill 583 sets forth a new standard for protecting personal information in Oregon. If you are the victim of an intentional or negligent data security breach, either electronic or otherwise, you must notify those affected as soon as possible. The new privacy law is complex, and there are many compliance issues to consider. It will take a while for the ambiguities in the statute to be clarified in the courts. The following presents an overview of the new law. This overview by no means constitutes, nor should it be construed as, legal advice. Rather, it is an opinion of what you should be doing generally to comply with the law that went fully into effect January 1, 2008. But organizations should consult individuals who can inform them of the law and establish business processes and training to ensure any potential loss is eliminated or minimized.

1.0 Social Security Numbers
Those who hold social security numbers may not disclose them on mailings, identification cards, or documents unless certain circumstances exist where the customer requests that the number be displayed. There are other exceptions for administrative, judicial, and public record use of the social security number. If you identify your customer records or accounts by social security number, you should change this process immediately to eliminate the risk of improper disclosure.

2.0 Protecting “Personal Information”
The new law defines “Personal Information” as an individual’s name in combination with one of the following: a social security number; an Oregon driver’s license or Oregon ID card number; or a payment card or account with a security code or password that allows access to funds. If any Personal Information is compromised, the new law requires you to notify the affected customer or employee of the breach.

3.0 Notice of Breach
If you maintain or possess Personal Information that has been compromised by a data security breach, you must notify the affected person as soon as possible by one of three methods. The first method is by written notification, such as a letter. The second method is by electronic notification; this method may be used if electronic communication is how you customarily communicate with your employees or customers. The third method is by telephone contact, provided that you can validate that you contacted the affected person directly.

If you outsource the provision of certain services to a third party, and the third party experiences a data security breach, the service provider must notify you of the breach so that you may fulfill your notice obligations under the new law.

Prompt notice of a data security breach is almost always required. However, there are a few exceptions.

First, notice may be delayed if in interferes with law enforcement activities, such as if the notice would interfere with an ongoing investigation where a perpetrator was about to be apprehended.

Second, if you can demonstrate some type of hardship, you may be permitted to give “substitute” notice by posting the notice or an informative link on your Web site and notifying major, statewide television and newspaper media of the data security breach. Qualifying hardships are: (1) the cost of providing individual notice to all affected individuals will be greater than $250,000; (2) more than 350,000 individuals are affected by the data security breach; and (3) there is no other method of sufficiently contacting the affected individuals.

Third, notice may not be required at all in certain circumstances. For example, if the Personal Information that was compromised was encrypted or otherwise made unreadable, the breach may be harmless. You must document this determination. Similarly, if the Oregon Department of Consumer and Business Services (a division of Finance and Corporate Securities) conducts an investigation and determines that there is no reasonable likelihood of harm, notice to the affected persons is not required.

If you are required to comply with Gramm-Leach Bliley or HIPAA, you are already required to give notice of a data security breach to consumers. However, those laws do not contain the same notice requirement for employees, a group that is covered by the new Oregon law.

4.0 Data Protection Planning
The new law imposes affirmative duties on those who handle Personal Information. You must develop, implement, and maintain “reasonable safeguards” to ensure the security, confidentiality, and integrity of Personal Information in your possession. These reasonable safeguards may include having and complying with a document destruction policy that comports with the records retention laws of the various federal, state, and local governments and agencies.

4.1 Investigate and Inventory
If you hold Personal Information, you should map how information flows into and out of your organization, which includes physical and electronic documentation and devices as well as policies. You should inventory and document your locks, laptops, storage devices, disaster recovery sites, backup storage, and network security, and have policies regarding passwords, taking work home, telecommuting, and contractor access to Personal Information.

4.2 Assess and Protect
You must then assess the effectiveness of your safeguards in minimizing both internal and external risks. In order to adequately protect Personal Information, your safeguards may need to be contractually guaranteed with vendors, employees, and others. The new law requires that you employ reasonable safeguards. It does not define specifically what those are, so you need to do what is appropriate for your industry and risk level. If there is ever an enforcement issue, having good documentation of your efforts to protect Personal Information will go a long way to showing that you used appropriate diligence.

4.3 Records Retention
You should have a records retention policy. Perhaps as important, you must follow your security policy. For Personal Information, the policy should state that such information will only be retained for as long as necessary to fulfill a “legitimate business need” or as required by federal, state, and local records retention laws.

Tangible documents must be physically destroyed by shredding, burning, or pulverizing. Electronic records must be erased and overwritten with blank or other data. There must be no possible way of reconstituting the data. All drives must be erased and overwritten prior to recycling. It is the data owner’s responsibility to destroy the data, not the recycler’s.

You should follow your records retention policy consistently. It is inappropriate, and often illegal, to begin following a neglected records retention policy when a data security breach occurs. Destruction of evidence in the face of an investigation can be a serious crime.

4.4 Training, Testing, and Monitoring
The new law imposes an ongoing obligation to train employees on aspects of the law such as what constitutes Personal Information and the notification procedures to use in the event of a data security breach. Without knowledge of this law and its requirements, any employee could potentially create huge liabilities for an organization. In addition, evidence of compliance necessarily requires documenting regular testing and monitoring of security processes, systems, and controls, including both physical and electronic safeguards.

4.5 Action Item: Create a Security Program
Organizations of all stripes must create a security program as primary evidence of compliance with the new law. Appoint a competent and high-ranking individual to be the security program coordinator. The security program should implement the elements described above: identifying risks, developing reasonable safeguards (administrative, technical, and physical), training, testing, and vigilantly monitoring for new threats. You should consider hiring a network security professional and/or private investigator to periodically test the effectiveness of your security system.

5.0 Small Businesses
A small business is defined as a manufacturing business with 200 or fewer employees or a non-manufacturing business with 50 or fewer employees. Small businesses typically do not have the capital resources that large businesses have. The new law recognizes this fact by allowing small businesses to do less than is expected of large businesses. In order to comply with the new law, a small business must implement administrative, technical, and physical safeguards that are appropriate to the size and complexity of the business, the nature and scope of its activities, and the sensitivity of the Personal Information it collects or holds.

6.0 Enforcement and Penalties
The Oregon Department of Consumer and Business Services, a division of Finance and Securities, is the state agency tasked with enforcing the new law. This agency has broad investigative authority and can require those involved in a data security breach to submit sworn evidence in judicial proceedings.

Failure to comply with the various provisions of the new law can lead to severe penalties. The agency can order you to pay compensation to consumers if private civil action would be burdensome to them. In addition, the agency can impose fines of $1,000 per violation per day. These fines add up very quickly, since each violation is considered a separate offense. The maximum penalty for any “occurrence” is $500,000. It is easy to see how multiple occurrences could ruin an organization, beyond any actual economic losses suffered by the affected.

7.0 Consumer Protections
The new law contains a number of options and a process for placing a security “freeze” on your credit report with the three major credit reporting agencies: Equifax, Experian, and TransUnion. A security freeze can be useful in preventing identify theft in the event your Personal Information is compromised because of a data security breach. To place or remove a security freeze on your credit report, you have to make your request in writing and pay a fee. No one, including you, will be able to establish new credit in your name while the security freeze is in effect. Though frozen, your credit report can still be accessed by the government and some private companies, generally those you do business with.

You should seek competent legal counsel if you have questions regarding this new Oregon law, require security consulting for process design or have jurisdiction-specific issues with the applicability of other state, national or international privacy laws to your situation.


Think You Know Your Washington Articles of Incorporation? . . . Think Again.

Originally posted on January 25, 2009

By Thomas Graves

The articles of incorporation are often referred to as the “constitution” of a corporation. All bylaws, resolutions, and other activities of the corporation must comply with the articles in order to be valid, and acting outside the articles risks uncertainty as to the status of the corporation’s business arrangements as well as its internal structure. In some cases, acting outside the articles can even lead to shareholder and principal liability.

If you are the founder of a Washington corporation, there is a good chance you completed and filed the Articles of Incorporation form provided by the Washington Secretary of State. This form contains the minimum requirements for filing effective articles, specifically (1) a corporate name, (2) the number of shares the corporation is authorized to issue, (3) the name of the initial registered agent and address of the initial registered office of the corporation, and (4) the name and address of each incorporator. By filing this form along with the appropriate fee, your corporation will have a valid and functioning set of articles that will govern the corporation’s activities, but there is a catch.

Unless your articles of incorporation specifically provide otherwise, the Washington Business Corporation Act automatically includes dozens of additional provisions that are not referenced in the Secretary of State’s form. These provisions have broad-ranging effects, which include everything from a requirement that all shares be of a single class in a single series, to granting a preemptive right for all shareholders to acquire the corporation’s unissued shares (which may raise complications in certain situations, such as when shareholders live in multiple states or when additional investors are sought). These provisions, whether you like them or not, will legally be a part of your corporation’s articles and govern the activities of the corporation, unless you take the appropriate steps to change them.

Although many of these “implied” provisions will be beneficial to your corporation, you cannot ensure that the activities of your corporation are fully compliant if you are unaware of them. Of course, there may also be certain provisions that you will want to change, and subject to some limitations the Washington Business Corporation Act allows you to do this. The bottom line is that you should get to know your corporation’s articles of incorporation, including those implied by statute, to ensure that all of your corporation’s activities are within their scope. If you feel that you need assistance in understanding and navigating these implied provisions, or wish to amend or restate your corporation’s articles of incorporation, you should consult an attorney.

New Regulatory Standards are Causing Concern Among Businesses in the Children’s Consumer Goods Market.

Originally posted on January 30, 2009

Forbes calls it “Retail’s Dagger in the Heart.” CNN has proclaimed the “New Law Could Wipe Out Handcrafted Toy Makers.” And the American Bar Association Journal says the “New Law to Make Child Products Safe is Dangerous to Retailers.” Although the Consumer Product Safety Improvement Act of 2008 (“CPISA”) was signed into law by President Bush on August 14, 2008, as the early compliance deadlines loom, businesses in the children’s product sector are becoming increasingly concerned. One of the stated purposes of the CPSIA is to “modernize” the Consumer Product Safety Commission. However, even in this, the age of information, the law has been criticized as confusing, and the CPSC so far has not quieted the critics.

Small manufacturers, craftspeople and resale shops are expected to be hit the hardest by the new regulations, with the former claiming the required testing costs are prohibitive and latter placed in a difficult predicament. The CPSC guidance is illustrative: these stores are not required to test products they sell for lead, but the law prohibits selling products containing unlawful levels of lead, so resellers are urged to “avoid products that are likely to have lead content.”

The CPSIA provides for severe civil penalties as well as criminal penalties for certain violations, so compliance is mandated. Regulatory compliance in the area of children’s products has always been a concern, and the new law underscores the necessity for manufacturers, importers and private labelers to ensure they are in compliance with all applicable laws and regulations. If your business is selling products aimed at children, it is advisable to seek counsel to determine your obligations under these laws.

Podcasting: What Video Streamers, Podcasters, Webcasters (and the Like) Should Know About Copyright Law

Originally posted on December 26, 2006

By Martin Medeiros [1]

Never before has the power of production and distribution of intellectual property been so great, and the related costs so low. The Internet is the distribution tool for the masses. This does not mean, however, that legal principles have been thrown out the door. Indeed, the intent of the founding fathers of America, and the western concept of intellectual property law that was forged on the anvil of Medieval Europe is almost identical to the one today. The facts have changed dramatically, and are much more interesting, but the right to incentives for a creative class of citizens is the hallmark of intellectual property.

There are important concepts regarding the choice of content such as using images of others, portrayal of images, libel, slander, defamation, privacy and its expectations and obscenity. All of these concepts are not addressed in this article, which is intended to be a brief discussion of the area of law.

A number of cases applying these new, fast-evolving facts are making this area of the law interesting although, perhaps, confusing to some producers and distributors as old laws, new laws and new facts collide. This distinction and many others, govern the nexus between copyright law and the Internet.

1.0 What is Covered by Copyright

Copyright exists the moment expressive ideas are affixed in tangible form. These tangible forms (such as writings, recording, still photographs and motion pictures) confer on the creator six exclusive rights: the rights to copy, make derivative works, display, perform, distribute and to perform audio works digitally.

The enabling right is found in the first part of the United States Constitution.[2] The essence of the copyright law is exclusivity of control over one’s content. First, one should know what is protected. While ideas are not protected in copyright law, facts and ideas may be protected on free speech grounds under the First Amendment.[3] Registration with the U.S. Copyright office affords various benefits, among them, it creates a presumption that the work is that of the registrant, allows more financial recovery in the form of damages and legal costs, and permits the Customs Service to seize infringing goods before they enter the stream of commerce.

2.0 Contracts Matters

2.1 A Bundle of Rights. In copyright law, well-drafted contracts can trump many ambiguous common law or statutory rights. We should think of the copyright as a bundle of rights that can be sold or licensed one at a time. A contract that conveys limited rights to the various “sticks” in the “bundle” of rights given to you at law is called a “license.” Gone are the days when copyright applied only to books, maps and charts, as in the formative years of the United States of America. Now, this bundle of rights has increased by statute to include motion pictures, sound recordings and, most recently, digital rights. Effective agreements must address all of the various rights in modern productions, such as synchronization rights[4], performance rights and others. The issue of what rights are conferred is important as some are afforded copyright protection, and others are not. There is a misconception that all rights are implied in a contract.

2.2 Some Limits to a License. A similar misconception is that general music licenses include synchronization rights to images and even different audio works. When you use music from others, you must know how you are permitted to use it. Litigation can result if the rights licensed are not clear[5]. Synchronization licenses typically address two separate elements: permission to reproduce the music in connection with a particular visual work (e.g., a movie, a video recording of a concert); and limits on how the audiovisual work may be used. These limits may restrict the medium (e.g., Internet, broadcast, or cable), the territory (e.g., United States of America) and the duration of the license (e.g., one year). Sometimes, statues do fill gaps in terms, including royalties in the compulsory licensing dynamic. Other rights are left to the contract and the marketplace, for example, a synchronization license.

2.3 Synchronization Example Expanded. This license may be financially rewarding, as rights are set in the free market or between two bargaining parties, unlike a mechanical license, which permits reproduction of the music by using a mechanical device[6], which is set by federal statute. A mechanical license permits the reproduction of music in a form that may be heard with the aid of a “mechanical” device, without visual images.

2.4 Recurring Problems in Licenses Generally and Webcasters Specifically. Most cases that lead to litigation involve three scenarios between the copyright owner and the person using the copyright: (1) the license as drafted by the parties was not clear or precise enough to specifically involve digital copies, digital broadcasting, and data distribution; (2) one party regrets the transaction and seeks to get more or give less than stated in the license; or (3) someone is infringing, and has no agreement and no contractual right but relies on a statutory or common law right to infringe, such as fair use.[7] Webcasters are no exception to these generalities. Often the first attack in a copyright case challenges the subject matter of the copyright. As mentioned above, ideas themselves are not copyrightable, but facts and legal allowances can complicate things. In this context, the question is whether the content is expressive, or just and idea or data?

3.0 Can Data on the Internet Be Protected if Pushed by Webcast?

Even if the data is in the public domain, meaning the intellectual property right expired or does not exist, the compiler of data can limit the dissemination of that information through contracts.[8] Also, the investment made and time of delivery may confer additional rights depending on the facts and contractual relationships.

An example illustrating how data, facts or information are protected arises in certain “real time” data displayed on the Internet. In these cases, the proprietary compilation of data is evanescent. In one case, the investment and system management of a data-capturing network allowed the ownership of facts for thirty minutes exclusively (pursuant to a contract) or anytime before those facts went into the public domain when broadcast or published on the Internet.[9] This right sprung not from copyright law, but from a proprietor’s right to control access to its private events at a private venue.[10] While this right is similar to a trade secret[11] there is no real “secrecy” component, but there is a market value and competitive advantage component. These laws are based on the “ticker cases[12]” at the genesis of real-time stock quotations at the beginning of the twentieth century. The facts in those cases differ, but the controversy is the same: what is the right to one’s ownership of facts, or the right to publish those facts from private venues to the public. One of the most important public knowledge areas highlights the conflict between the rights granted by the First Amendment of the United States Constitution, conveying rights to the press, free speech and copyright law. Now that everyone can have a “press” in the form of a Blog, bulletin board or Web Site, what are the limits? What if the news is really important? Are you a “news” reporter?

4.0 Five Conditions of “Hot News” Claims[13]

While the public good favors making facts available as soon as possible, the law does protect those who spend money and put effort into getting facts to the public. A “hot news” misappropriation claim may survive preemption by federal copyright law. There are generally five conditions central to allowing protection for those who accumulate facts, the so-called “hot news” exception. Those conditions are: the plaintiff generates or collects information at some cost or expense; the value of the information is highly time-sensitive; the defendant’s use of the information constitutes free-riding on the plaintiff’s costly efforts to generate or collect it; the defendant’s use of the information is in direct competition with a product or service offered by the plaintiff; and the ability of other parties to free-ride on the efforts of the plaintiff would so reduce the incentive to produce the product or service that its existence or quality would be substantially threatened.[14] This exception is important on the Internet as many things are “shared” without notice or acknowledgement of the intellectual property rights of the creators.

5.0 Is Webcasting “Broadcasting”?

Again, the law steps in where contracts fail or are silent. The Supreme Court is clear in distinguishing the Internet from broadcasters.[15] However, since that decision, much new legislation, and more new facts have come into the law. Since the Digital Performance Right in Sound Recordings Act of 1995, copyright owners enjoy the exclusive right in performances of their works by digital audio transmission. These rights were extended in 1998 by the Digital Millennium Copyright Act (DMCA) of 1998[16] to cover webcasters.

Like so many other agreements, the scope of the right matters. Generally, “non subscription broadcast transmissions” from digital audio transmission performance copyright coverage do not cover simultaneous Internet streaming of AM/FM broadcast signals. The issue here is the license granted to broadcasters by the Federal Communications Commission, does not license webcasters. Broadcast transmission is operated by what we think of as radio transmission facilities, and not webcasters. [17] Therefore, webcasting, even if simultaneous with a terrestrial radio broadcast of AM/FM, does not qualify under copyright law for an exemption from the digital audio transmission performance right. [18] So a contract that permits transmission via broadcast does not include webcasting, unless the contract specifically states otherwise.

6.0 Conclusion: What are My Webcasting Rights Worth?

Generally the free market will determine the rates – what people are willing to pay makes and controls the market. However, the DMCA promulgated a process to follow when parties cannot agree. After six months of negotiation[19], the Librarian of Congress may convene a Copyright Arbitration Royalty Panel (CARP) to set rates and terms.[20] The parties may appeal the resulting terms. While the appeal deals with cases of reasonableness, unfortunately, the Librarian may ignore real market data, as was the case in a recent dispute.[21] To limit this risk, and expense of the arbitration, parties may consider working out a deal is their best option.

More broadly, your rights are worth the care you take in creating evidence demonstrates you do care about their value. Accessing the enhanced protections available by registering the copyrightable materials is a start. Documenting permissions of those whose works you incorporate into your webcasts, and getting permissions of all those who appear in your works is also advisable. Finally, there is no substitute for a well-drafted license and “terms of use” on your website or webcast.

[1] Martin Medeiros is a Partner at Swider Medeiros Haver LLP; Chairman of the Oregon State Bar Computer and Internet Law Section; and Board Member, Vice President and Treasurer of Portland Community Media.[2] “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” U.S. Const., Art. I, sec. 8, cl. 8. [3] See, Video Pipeline, Inc. v, Buena Vista Home Entertainment, Inc., 192 F.Supp. 2d 321, 346 (D. N.J. 2002) citing, Harper & Row v. Nation Enters., 471 U.S. 539 (1985), at 559-569. [4] These rights are granted by the copyright holder, generally the songwriter, until those rights are given away. This involves the timing or synchronization of music with visual images. [5] See, e.g., Freeplay Music, Inc. v. Cox Radio, Inc. (S.D. New York 2005). [6] For example, a tape or compact disk. [7] Fair use “creates a limited privilege in those other than the owner of a copyright to use the copyrighted material in a reasonable manner without the owners consent.” Fisher v. Dees, 794 F.2d 432, 435 (9th Cir. 1986). [8] ProCD Inc. v. Zeidenberg, 86 F.3d 1447, 1451 (7th Cir. 1996). [9] In the Court allowed the exclusive holder of the publication rights in “real time” of golf scores to own the data, if only for thirty minutes, the time required in exclusivity of score publication. Morris Communications Corporation v. PGA Tour, Inc., 235 F.Supp.2d 1269 (M.D. Florida 2002). [10] Id. At 1281. [11] Trade Secret is a scion of unfair competition and is governed by state and federal law. The Uniform Trade Secrets Act (“U.T.S.A.”) was promulgated by the National Conference of Commissioners on Uniform State Laws. “Trade secret” means information, including a formula, pattern, compilation, program device, method, technique, or process, that: (i) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use, and (ii) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy. U.T.S.A. § 1 (4) (1985). [12] See, e.g., Board of Trade of the City of Chicago v. Christie Grain and Stock Company, 198 U.S. 236 (1905); Moore v. New York Cotton Exchange, 270 U.S. 593 (1926). [13] See, National Basketball Ass’n v. Motorola, Inc. 105 F.3d 841, 852 (2d Cir. 1997). [14] Id. at 854. [15] The three distinctions include, (1) the Internet has not historically been regulated by an agency familiar with the medium, (2) available frequencies on the Internet are not scarce as they are on radio; and (3) affirmative steps are required to access information on the Internet. See Reno v. American Civil Liberties Union, 521 U.S. 844 (1997). [16] DMCA, Pub.L. No. 105-305; see 17 U.S.C. § 114(f)(2). [17] Bonneville International Corporation v. Peters, citing 17 U.SW.C. § 114(d)(1)(B). [18] 17 U.S.C. 106(6). [19] 17 U.S.C. § 114(f)(2)(A). [20] 17 U.S.C. § 114(f)(2)(B). [21] LLC v. Librarian of Congress, 394 F.3d 939 (D.C. Cir. 2005).

Retelling Old Children’s Stories – Copyright and the Public Domain

Originally posted on October 4, 2007

By Kohel Haver

A walk through the children’s book section of a bookstore will reveal new children’s stories with wonderful illustrations. Among them will be retellings- new versions of old stories; these newer versions are commonly revived with updated illustrations. This raises the question, as a matter of US copyright law, what is a contemporary artist free to use and how circumspect should an illustrator or author be regarding copyright issues and copyright infringement with the retelling of old stories? How is a contemporary author or illustrator to know what they can and they can not use?

Most answers, with regard to copyright law and children’s stories are prefaced by “depending on all of the facts.” This is why: the root of the US copyright law, and the copyright law of most nations, is to grant authors illustrators the monopoly right to control the reproduction, in its many forms, of their original works or authorship for the duration of the copyright. The law favors their contribution and the right to profit from their original work. The law also figures ideals of free speech and free expression into the formula. A copyright is secured only for a limited time.

How long does copyright protection last?

In the US, the term of the protection has changed over the years from a just few years in 1800’s – in the 1909 revision the exclusive right lasted 28 years and was renewable, and since 1976 the protection lasts beyond the life of the author. Many children’s stories are original to the author, and original works of authorship written in the United States are now protected under the US copyright law for the life of the author plus 70 years. Original works of authorship are protected for a long time. But recall that the copyright law is a balance between the exclusive rights of the authors and the rights of everyone else to freely share in our common heritage – the public domain. When the work is no longer protected under copyright it enters the public domain – free for anyone to use. A general rule of thumb is that if the book was published over 75 years ago it is likely no longer protected by copyright law in any country.

Public Domain and Folktales

As well as originating in other countries, many children’s stories are based on traditional stories passed down through families and are by their nature in the public domain, free for the public to use. If they ever were, they are no longer protected under copyright law, which means they are free to anyone to tell and interpret without license or paying a royalty. Most authors of children’s books know that there are many themes for stories that have been around for many years. How is a new author to know whether their work is original and completely their own, or when it is based on a traditional story? What happens when their repetition is the product of some unconscious connection with a childhood story? Where is the line? What if one retells a traditional story but with original illustrations – in that latter case is the modern author entitled to exclusive ownership of only what they bring to the story? And what happens when that story inadvertently turns out not to be as original to the author as the author intended?

How does Disney do it?

As an example, the Disney Company has been bringing their versions of traditional children’s stories to the public for many years in the form of animated films. Many of these stories have their basis in the public domain, stories that are no longer protected under copyright and anyone is free to produce their version of the story. The Disney Company had been quite successful retelling old public domain stories. Lewis Carroll wrote the original Alice in Wonderland, Carlo Collodi wrote Pinocchio, The Grimm Brothers wrote Snow White and Cinderella, Rudyard Kipling wrote the Jungle Book, Victor Hugo wrote the Hunchback of Notre Dame, Hans Christian Andersen wrote The Little Mermaid, Kenneth Grahame wrote The Wind in the Willows, and AA Milne wrote Winnie the Pooh.

All of these examples illustrate that even when the initial story is in the public domain, a new author can own what they add to the story. Of all of those Disney films, Disney animation created versions of the stories unique to them, and Disney has a copyright interest in all of their animation. It’s also true that anyone is permitted to tell and publish his or her own interpretation of Snow White, but must do so without referencing the Disney animation. Playing in a theater this month is a teen story called “Sydney White.”

On the subject of duration of copyright, you can’t always rely on the statute. In the case of Peter Pan, when the copyright protection expired, the UK Parliament made a special exception for the law because the royalties for the copyright is held by the trustees of the Hospital for Sick Children, Great Ormond Street, in London. The copyright for that work is now, in effect, perpetual under the Copyright, Designs and Patents Act 1988, section 301, although the copyright technically expired in 1987.

No One Owns Fact

Another area where a new author would be free to use source material is when that source material is based on fact. The facts that a seed grows into a plant, ants live with some social order, bees make honey, squirrels are furry, and seals bark are all facts and as facts those characteristic points are available for anyone to write about. However, the precise manner of expressing those facts can be owned by one author – but only to the extent that the story goes beyond the facts (that is the protectable part.) So in the story “Our Furry Friend the Squirrel” about the squirrel that we call Fred Crackers who lives in the oak tree in our yard – the author can own anything that is not about a generic squirrel, oak trees and yards. Anyone can write their own story about a squirrel, but this author owns the amusing anecdote about Fred Crackers stealing a ride in the travel box on top of the car to the supermarket, where Fred goes through the open doors, jumps up on the peanut display, fills his mouth with nuts and runs back to the car roof waiting for his ride home.

There are other areas where copyright law presents some uniquely interesting issues – such as math and science stories. The general rule is that the facts are not protectable includes math and science facts. Bobby has one apple and Billy has five apples together they have six apples is mostly facts. One plus five equals six is a fact, and not protectable. Would this be true if the problem took five pages to explain? Here we must be able separate the facts, or the science, from the creative embellishment. Facts are in the public domain but the story may not be. This concept is made more difficult if the second author did not know about the work of the first. The question arises – is there only one way to describe that problem?

What is Infringement?

To understand the trouble you should know a little about copyright infringement lawsuits. The easy case of copyright infringement is with the unauthorized interference with the author’s exclusive right to control the copy, display, or preparation of derivative works of an original work of authorship that occurs when the infringer knowingly makes a copy of some protected material and sells it. If you make copies of that Disney DVD, without their permission, and sell them in the parking lot – that is certainly copyright infringement. Copyright infringement is a sort of a strict liability problem – meaning that it does not help your case that you didn’t know that what you did was wrong. If you made and distributed copies, you are liable for infringement, although the penalties might be less if you are innocent.

How much did you use?

While it would be unnecessary to remind an author that copying someone else’s work would likely be infringement, you also know that ideas are not protectable. Similarly taking a very small amount, a minimal amount, of published work might also be acceptable under a section of the law called “Fair Use”. Fair Use is a feature of the copyright law – it defines certain situation where one can use a small and reasonable amount of work without permission. News reporting, commentary (reviews) scholarly work are all considered a fair use of copyrighted work. The law also offers four considerations when making the decision if fair use applies. The considerations are 1. What kind of work was taken, 2. How much of it was used. 3. How are you using it? (what is the type of profit or non profit venture) and 4. What was the effect on the market for the original? Using this analysis if the new work is a substitute for the original that won’t be a fair use if it takes only what one would need to reference the original work that is likely to be fair.

Did you see it or hear before you copied it?

If the infringer had access to the original work and intentionally violated the rights of the author – the infringer will have liability. But what happens when the infringer does not have access – has never seen the original work but still comes up with a copy. It’s unlikely that this will happen, but to prove infringement you need to prove the infringer had access to the original work, copies were made and that the works are similar. If there is proof of access, the amount of similarity required to make the case is a lesser standard. If it is a completely independent coincidence that the two works are similar, both can exist without infringing the copyright of the other. George Harrison made that argument when he was accused of infringement in his song My Sweet Lord – it was too similar to the song He’s So Fine by the Chiffons. The case turned on the fact that a musician of his stature had likely heard the Chiffons tune, and while he didn’t recall doing so, that tune was copied in his song. The case settled. If you read a lot of children’s books and are a professional, the inference will be made that you had access to the original and that you intentionally or otherwise copied it.

Does that mean you are foreclosed from using the ideas or influences of another work? Certainly not – only the expression is protected. The ideas, like the facts and like the stories in the public domain, are all there for you to use.

It’s Not Complicated.

The rules you should follow are not that complicated, and if you follow them you will write something that you can publish without concern that you will receive that nasty letter telling you to cease and desist stealing from another children’s book author.