Tax Deductions for Creatives

As Tax day approaches its important to take into account targeted deductions that benefit Creatives. One such deduction is the Domestic Production Activities Deduction (AKA Section 199 deduction) which was meant to encourage U.S. job creation. The deduction was created in 2004 as a part of the American Jobs Creation Act of 2004 and is one of those nice benefits that is targeted at small businesses operating as sole proprietors, partnerships, LLC, or S Corps. So What? For many creative based businesses, this deduction may provide a significant deduction on gross income, based on the amount of W-2 wages spent in the production of their work. The deduction specifically singles out wages paid out in the sound recording, software (including websites), and film (excluding porn) industries, as well as producers of personal tangible items (clothing, books, etc.) for an additional tax credit against profits. What to do? Simple - if you are engaged in one of these categories, had a profit, and paid W-2...
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Forum Selection in Creative Commons Licenses

Users of Creative Common's licenses beware!Chang v. Virgin Mobile USA, LLC 2009 WL 111570 (N.D.Tex. January 16, 2009)Texas plaintiffs posted a photo to a popular picture sharing website using a Creative Commons licenses. The photo was then down loaded by an Australian company who used the photo inconsistent with the Creative Commons 2.o license and Plaintiff's wishes. Plaintiff sued Defendant in a Texas court and Defendant moved to dismiss for lack of jurisdiction. While many factors were considered, of particular note is how to court pointed out that the license did not require the license to take place in Texas.In fact, the Creative Commons license used specifically does not contain either a forum selection clause or a choice of law clause that would outline where cases should be heard and under what state law a dispute will be analyzed. T he Creative Commons FAQ specifically notes that the selection of jurisdiction in the...
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Business and the Law Seminar

This evening I had the pleasure of giving a presentation at Women Venture to several women working to develop and start new businesses. I gave a presentation entitled Business and the Law which covered a variety of issues related to protecting the business owner's rights and managing their liability risks.While it is easy to focus on the doom and gloom of the big picture economy, hearing the plans of these business women highlights the importance of not allowing the stories in the news to prevent businesses from moving forward. Opportunities do exist -people simply need to keep an eye out for the right situations. People wiling to take the risk at this point will be well situated when better economic times come along.For more information on Women Venture and their programs, go to www.womenventure.org....
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Barbie v. Bratz: Scope of employment and tainted copyrights

Think that idea that you put together in your free time is free for you to use? Think again. While not binding in any court here in Minnesota, the legal battles between Barbara Millicent Roberts (Yes, that's her full name) and Cloe, Sasha, Yasmin, and Jade recently took a turn for the worse for Bratz manufacturer MGA Entertainment Inc. and are a good example of why creative professionals need to understand what their employers view as their work responsibilities, and why companies hiring creatives need to make sure they know the origins of those great ideas coming from new employees.After a large number of Mattel employees, including Bratz designer Carter Bryant, defected and came to work at MGA and MGA launched its Bratz line, Mattel filed suit claiming the Bratz dolls were designed on their dime and therefore they held the copyright for their design. After a jury trial that resulted in a jury finding...
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Liability for Withholding Passwords

Update (6/8/10): Terry Childs was found guilty of one felony count of denying computer services. Does your company have a clear policy concerning who may receive admin passwords? The city of San Francisco apparently has some problems in this area. Terry Childs IT manager Terry Childs was arrested earlier this year for refusing to provide administrative passwords for the city's computer network. The city alleges that he was setting up a network that he could take over remotely and take down at his whim - Mr. Childs claims that the policies of the city did not allow him to provide the passwords to his managers and that once he turned them over to the Mayor, the management simply didn't understand the technology enough to understand how to use them. Apparently out of fear that his release will result in a melt down of the city's computer network, the judge in the case has set bail at 5 million dollars, as opposed to a lower...
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Jacobsen v. Katzer – Open Source infringment

In August, the Court of Appeals for the Federal Circuit issued a ruling (Jacobsen v. Katzer) that has been widely discussed as acknowledging the rights of developers of open source software. This opinion, while not necessarily binding in Minnesota, is helpful in illustrating important issues that relate not only to open-source software licensing and development but to general contracts that apply to everyone.The dispute involved an open-source developer and a company that used the open-source code as a part of their own software. Despite a license that required that the open-source developer be credited and copyright information retained in subsequent use of the code, the defendant stripped out this information. The issue was whether failing to provide this information caused the subsequent software to be an infringement of the plaintiff’s copyright, or whether it was simply a breach of contract - the difference meaning considerably different remedies.The opinion contained an extensive discussion on the importance of “conditions” verses...
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Morals Clause

What does a "morals clause do?MoralityThe basic idea is simple - if you are in the public eye and you do something stupid and doing that stupid thing makes the purpose of the contract frustrated, then the other party can say I'm canceling the deal. For example, lets say the Queen of England enters into a contract with a department store to endorse its new clothing line "Queen." She might have a clause in her deal that says something likeQueen agrees to conduct herself with due regard to public conventions and morals, and agrees that she will not do or commit any act or thing that will tend to degrade her in society or bring her into public hatred, contempt, scorn or ridicule, or that will tend to shock, insult or offend the community or ridicule public morals or decency.She then gets arrested for soliciting men in a downtown Minneapolis hotel. The Department store has an interest in protecting its...
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Non-compete is based on customers, not location.

While worker non-competes have are generally construed against the employer, the standard of enforceability in the sale of a business in more liberally interpreted in favor of the party seeking to enforce, as it is focused on whether the restriction is reasonable to protect the goodwill of the business that was sold.When selling his optometry business, Jay Peterson agreed not to “participate, compete or be engaged in the business of optical goods . . . within a five-mile radius of . . ." the location of his former business. After a dispute arose concerning the terms of the sale, Peterson opened a new practice ten miles away, which would have been fine except for the fact that he then took out advertising in the newspaper located in his old town encouraging clients to come and see him at the new location. In February, the Minnesota Appellate court ruled that the Peterson could be prevented from placing those advertisements even though...
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The Human Side of the Deal

It was recently speculated that the settlement of a $60 million dollar royalty lawsuit against EMI by the Apple Corp. was partially driven by a desire of Paul McCartney to begin having Beatles music available for downloads, which in turn was also a factor in the exit of Beatle's executive Neil Aspinall who, according to reports, had largely opposed allowing the Beatles catalog to go online. [See]This just goes to show that business may be business, but it also has a very human aspect. Business decisions are made by people, who make decisions for business purposes -- but in the end, decisions are often driven by factors outside the business. In this case the divorce and lack of antenuptual agreements by Paul McCartney may, as is speculated, been a factor the ouster of a top executive, driving the settlement of a multimillion dollar lawsuit, and a future milestone in digital distribution....
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