The Problem With Net Profits Deals: Ask the Tolkien Heirs

Whenever we have clients consult us about a movie, TV, book or other deal where they are supposed to be paid for their work on a net profits basis, our red flags start going up. Here's an example of why that happens to us. As you will see, even after all this time and three hugely successful films, the heirs of "Lord of the Rings" author J.R.R. Tolkien are yet to receive any of the net profits they are entitled to.

COMIC-CON UPDATE: "Comic Book Law School"

Like the "Attack of the Killer Tomatoes" that took over the countryside back in the 80's, Comic-Con has arrived once again in San Diego and is taking over the town for the next few days. What started as a small little geek-fest some 20 years ago has become a cultural epicenter for all kinds of entertainment, science fiction, movies, music, and - of course - comic books. We are pleased to have been invited again to speak at Comic-Con on current legal issues relevant to the Comic-Con crowd. Here is the entry from the Comic-Con programming guide about the panel discussion we will be participating in today:

3:30-4:30 Comic Book Law School: Hot Topics— Move over Whoopie and Barbara! It's time for these savvy legal minds to share their views on the ever-evolving legal world, spotlighting cutting-edge, evolving issues being faced by the creators, publishers and distributors of creative works. An all-star panel of attorneys—David Branfman, Alexander Harwin, and David Lizerbram, with moderator Michael Lovitz—shed light on important issues facing individuals and companies alike. Topics will include the new online copyright application process, preregistration of copyrights, fair use, piracy, and the growing popularity of the CopyLeft movement. (Please note: The Comic Book Law School seminars are designed to provide relevant information and practice tips to practicing attorneys, as well as practical tips to creators and other professionals who may wish to attend. This program is approved for one credit of California MCLE.) Room 10

For any of you who will be at Comic-Con today, please stop by and let us know what you think about all of this.

Internet Radio, Royalties, Musicians, and Record Labels:

I was raised on radio. By that I mean I can barely remember a time when I didn't listen to music on the radio. The idea of hearing something new I've never heard before - along with something I loved a long time ago that I haven't heard in a while - has been part of the soundtrack of my life for a long time. But somewhere along the way - I don't know exactly how or when it happened - I stopped listening to music on the radio at work. At least when it comes to old-fashioned over-the-air broadcast radio, that is. In fact, I still listen to music on the radio all day at work - except that now it's Internet streaming radio that I play through my computer speakers. With a few keystrokes on my keyboard, I can change the station without hardly moving. But behind that simple act there is a lot of money to be made and lost by Internet radio stations, record labels and recording artists. Here is an article that describes a new deal that has been cut to dole out some of the money that is being made. This deal means that Internet radio is going to be around for at least a while longer.

Copyrights & Music: ASCAP Files Lawsuit Over Ringtones in Public

Should cellphone companies have to pay a public performance royalty each time a music ringtone plays in public? ASCAP (the American Society of Composers, Authors and Publishers) thinks so and has filed a lawsuit against AT&T to prove the point. Here is a brief article that discusses this issue.

Copyrights: Copyright Office Application Backlog

The U.S. Patent & Trademark Office ("PTO") implemented an online trademark application filing system years ago. But it took the U.S. Copyright Office until last July to develop and implement an online copyright application system. That was the good news. But while the new Copyright Office system was supposed to make things simpler and quicker, it has had the exact opposite effect. Instead of taking 6 to 8 months for the Copyright Office to process a copyright application and issue a copyright registration certificate, it is now taking upwards of 18 months - three times as long as it used to. Here is an interesting article about the problem.

There are, however, two bones we have to pick with the Washington Post article. First, the article implies that the copyright owner shouldn't perform or display their work until the copyright registration is officially registered with the Copyright Office. We think that is an overly restrictive approach. Why? Because once the copyright registration is issued by the Copyright Office, it will be given an effective date of registration retroactive to the date the copyright application was filed. Additionally, you can put the world on notice that you consider your work to be protected by copyright law by placing a proper copyright notice on your work. For example: Copyright 2009 David P. Branfman.

Second, the Washington Post article suggests that the ONLY way to stop someone from copying your work is to file a copyright application. That's not entirely accurate. What is important to understand is that the copyright owner can not sue someone for copyright infringement until the copyright application for the work in question has been filed. [Some courts require the actual registration certificate in order to maintain a copyright infringement lawsuit, but more and more courts are allowing a lawsuit to be filed as long as the copyright application has at least been filed - even if the registration certificate hasn't been actually issued at the time the lawsuit is filed. Those courts then require the copyright registration certificate before a copyright infringement case can go to trial].

Copyrights: Is The "Catcher In The Rye" Sequel Going To Be Allowed?

"Catcher In The Rye" is one of the most popular novels of the last sixty years, but it is shrouded in mystery because "Catcher" author J.D. Salinger has become one of the most famous literary recluses since the publication of the book. Now someone totally unconnected to Salinger has decided to publish a "sequel" to "Catcher In The Rye" without Salinger's approval. The resulting dispute is now in court. Here is an interesting article about the lawsuit. Why is this important? Because the court will have to decide whether a pure literary character like "Catcher In The Rye" protagonist Holden Caufield is subject to copyright protection. If so, publication of the sequel might be stopped unless the author can somehow get Salinger's approval. Whether or not a literary character like Caulfield is subject to copyright protection will involve an analysis of the "Fair Use" defense to claims of copyright infringement. For a fascinating overview of the "Fair Use" doctrine, see our February 1, 2009 blog entry.

TRADEMARK OWNERS NEED TO PROTECT THEIR TRADEMARKS FROM REGISTRATION AS USERNAMES ON FACEBOOK

Facebook has just announced that as of 12:01 AM (Eastern) this Saturday, June 13th, it is changing the way it creates and registers user names and their related URLs so that instead of a somewhat random number like “id=592952074” that is associated with a Facebook member’s user name, Facebook will be modifying the format to allow a much cleaner URL that can include the user’s real name or company name. For example, the new user name will appear as "facebook.com/branfmanlawgroup." Facebook claims that this will allow people to have an easy-to-remember way to find its members.

Sounds ok?

But here’s where it gets interesting and dangerous: Facebook is going to allow its members to register these new user names and URLs on a first-come, first-served basis and will allow the user name to include the user’s name OR someone else’s name or trademark – including yours. Why Facebook just announced this policy this week and is implementing it so quickly without giving trademark owners time to analyze and address the situation is something of a mystery.

We believe this means that trademark owners must immediately register their trademarks with Facebook as a way of stopping someone else from using your trademark as a Facebook username. Here is a link to Facebook’s Form for Preventing Registration of a Username:

It’s free!

Trademark owners must provide a trademark registration number. There is no mention by Facebook of how it will handle a trademark that is represented by a pending trademark application as opposed to an actual issued registration, but we are advising our clients to register marks that are the subject of a pending application by entering the application serial number where the registration number is asked for or to enter into their Fictitious Business Name Statement number if they do not have a pending application. We can all sort out later how Facebook is going to deal with this issue. Presumably Facebook is going to block the use of that trademark as a username by any of its members once the form has been completed and submitted.

If a company misses tonight’s deadline, Facebook will feature a grievance procedure allowing brand owners to report that someone's username infringes on their intellectual property or publicity rights. How that will work in the real world is anybody’s guess.

The new Facebook username policy is, of course, a two-sided coin: on the one hand trademark owners will want to register/protect their trademarks with Facebook today in order to protect their brands from cybersquatting by unauthorized third parties; on the other hand trademark owners may want to set up their own Facebook accounts in order to take advantage of owning some cyber real estate to promote their products and services on what is currently one of the most popular social networking websites around.

There is more that can be said about all of this, but given the shortness of time we are sending out this brief announcement now. We recommend that you take care of this now by either handling it yourself or assigning it to someone in your organization. If you would prefer that we handle it for you, please let me know. If you are already a client of ours, we obviously have a list of all of your trademark registrations and applications handy and can complete and submit the form fairly quickly and easily for you.