IP/Internet/New Media Blog

Solid Legal Advice Can Give You A Leg Up In the Burgeoning App Industry

By Kevin Mills

Does your client have an idea for an App?  A really cool one that is even better than the one your friend told you about just yesterday?

You are not alone.  As everyone knows, Apps are big.  And now we have an idea of just how big.  A little-reported study from TechNet,  a technology trade group,  finds that the demand for applications for games and other things has created 466,000 jobs in the U.S. since 2007.
Currently,   nearly one-half of mobile phones are smart phones. New uses for Apps will tie the phone to home appliances, other home uses and to new uses in the workplace.

Today,  there are more than 500,000 Apps available for the iPhone and Apple’s iPad tablet alone. Add to that a proliferation of other mobile devices designed to run on operating systems made by Google, Research in Motion and Microsoft.

It is amazing to think that this economy didn’t exist until 2007 when the iPhone first made its debut and Facebook turned its website into a platform for other programs designed for its rapidly growing audience.

The natural focus of discussions about Apps is on technology and functionality but there are significant legal issues  that should not be ignored.

 Every mobile software application has three distinct parts,  all of which have legal implications:  (1) the software that runs the application; (2) the “toolkit” that allows the application to operate on the mobile platform (such as Google’s Android and Apple’s iOS);  and (3) the application’s launch icon.

 (1) Usually the developer owns the rights to the software that runs the App. Care needs to be taken in forming the entity that owns that software. Depending on factors such as the source of development financing,  the people involved in the project,  the source of intellectual property used in the creation of the App,  the allocation of revenues generated, a different entity may need to be formed for each App developed.   In any event, whether a company structure is used or not,  there needs to be a written agreement between the parties developing the App as to how revenue and profit from each App will be split.

(2) In order to become a “registered developer” for a mobile device platform owner such as Apple or Google,  a software toolkit that will enable the App to run on that platform will need to be licensed.  That license agreement must be read carefully as sometimes ownership rights to the App software are granted in return for the toolkit license.  In addition,  other provisions in the license agreement need to be considered such as exclusivity, termination rights, reverse engineering of the App and prohibitions against developing Apps whose “look and feel” are too similar to other Apps already in use on the platform and the right to license the App to a competing platform.

(3) Regarding the icon used,  trademarking or copyrighting will be required.

Beyond that,  there needs to be a software developer agreement with each person working on the development of the Apps. The terms of such agreements can vary widely and need to be negotiated carefully.

There are also customer and consumer issues that need to be considered. Examples include privacy issues and involve stated privacy policies and, very importantly, subsequent changes made to them. Certain issues are too significant to be left to the terms of the privacy policy alone.  Instead, they should be brought directly to the user’s attention.  Privacy issues also spring from the use of information collected from people using the App.  In certain circumstances,  privacy obligations attach even to information in analytics reports that are seen by no one other than the owner of the App.

Of course, it needs to be specifically mentioned that any App designed for use by children requires special attention and needs to satisfy additional criteria.

 If you are forming a new start-up company to jump into the app fray, there are the usual corporate and company matters to be tackled; the elements of which are beyond the scope of this article.

Kevin Mills is an owner of the law firm of Kaye & Mills where his practice focuses on advising clients with transactions across a full range of issues in entertainment, media, technology, Internet and general business. His practice encompasses copyright; trademark; trade dress; trade secret; brand protection; content creation, protection and distribution; and general corporate, organizational and business matters.

EXPANDING COPYRIGHT PROTECTION FOR SOUND RECORDINGS

by George M. Borkowski[1]

 It may come as a surprise to some that sound recordings – the actual performance of music and lyrics fixed in a recording medium, as opposed to the underlying composition – were not protected by federal copyright law until 1972 – and then only prospectively.  The Copyright Office has now recommended that the Copyright Act be amended to encompass such sound recordings. 

The reasons for the exclusion of sound recordings from the Copyright Act until 1972 are not entirely clear.  To protect sound recordings created prior to 1972, record companies and other rights holders had to rely on a variety of state statutory and common law, which is specifically permitted by the Copyright Act.  In California, for example, Civil Code section 980 grants the author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, exclusive ownership of the sound recording until February 15, 2047. 

This situation obviously makes it more difficult for owners of pre-1972 sound recordings to protect their rights to those recordings.  State laws that may offer some protection have been described as a patchwork of often vague and inconsistent rights.  In addition, there is no presumption of validity that is accorded by a copyright registration from the Copyright Office, and chain of title thus may be more difficult to establish.  This is a significant limitation, given that these are older works and include, for example, recordings of old radio broadcasts.  It is also harder to have pre-1972 works that are being infringed on websites removed from those sites, given that the notice and takedown provisions of the DMCA (section 512 of the Copyright Act) apply only to copyrighted works.  Also, statutory damages (and often attorneys’ fees) are not available to plaintiffs in infringement actions of pre-1972 works.  Moreover, after February 15, 2067, the Copyright Act provides that all pre-1972 sound recordings will enter the public domain at once.  Ironically, this gives pre-1972 sound recordings – which are not protected by copyright – a longer term of protection than many old works that are subject to the Copyright Act for which protection expires after a set number of years.

In response to this issue, in 2009, Congress instructed the Register of Copyrights to conduct a study as to the “desirability and means” of extending federal copyright protection to pre-1972 sound recordings.  The Copyright Office took comments from numerous interested parties, including sound recording and other libraries, recording industry associations, broadcasters and satellite radio, music publishers, songwriters, universities, as well as other organizations and individuals.  It also conducted public hearings and met with interested parties.

The study has now been completed, and the Copyright Office has released several recommendations based on its results.  These recommendations include the following:

• Federal copyright protection should apply to sound recordings fixed before February 15, 1972.  (Special provisions will be needed to address ownership issues, term of protection, and registration.)
• All rights and limitations of the Copyright Act applicable to post-1972 sound recordings would apply to pre-1972 recordings, including a public performance right for digital audio transmissions, fair use, DMCA safe harbor for Internet service providers, and the anti-circumvention provisions of the DMCA.
• Authors of pre-1972 sound recordings would have the right to terminate grants of transfers or licenses of copyright that are made after (but not before) the date federal protection starts.
• The term of protection for pre-1972 sound recordings would be 95 years from publication, but in no event beyond February 15, 2067.
• A transitional period would be instituted during which owners of pre-1972 sound recordings would be able to seek statutory damages and attorneys’ fees in infringement litigation notwithstanding the lack of registration of those works prior to filing suit.

There are several other recommendations as well.  The full report can be accessed at http://www.copyright.gov/docs/sound/pre-72-report.pdf  If accepted, these recommendations should go a long way toward harmonizing copyright protection for all creative works of original authorship, regardless of the medium (and regardless of the reasons why pre-1972 sound recordings were treated differently to begin with).

Mr. Borkowski is a partner at Freeman Freeman & Smiley LLP.  He represents major entertainment and technology clients at the intersection of content creation and protection with technology, focusing on the impact of technology on traditional intellectual property rights and business models.  Mr. Borkowski has handled the full continuum of intellectual property, technology, and entertainment litigation, as well as anti-piracy and rights enforcement, and counseling.  He can be reached at george.borkowski@ffslaw.com