Pied Piper’s Trademark Problems

On a recent episode of HBO’s new show Silicon Valley, the hapless coders find themselves in a bind when they realize that the “placeholder” company name “Pied Piper, Inc.” was already in use by Pied Piper Irrigation, another California company. The problem is that they received a check from a venture capitalist in the name of the Pied Piper Inc. – humorous situations then ensue as the protagonist tries solve the problem – and then, I began ranting at the television to the chagrin of my wife.

Why, you might ask, does this drive me crazy? Not because it is a common and overused plot point, but more notable because it gets both state registration laws and trademark laws completely wrong by muddling the laws of business registrations and trademarks.

Someone already registered my business’ trade name – what do I? A trade name is the name used to identify the business. States have varying restrictions on registration of similar names when forming a new business – primarily, they need to see that the name (along with the designated business form – inc, corporation, limited liability, etc) is not already in use. This means that while an exact match of something like “Pied Piper, Inc.” will not be allowed, other variations might be. So in some states “Pied Piper, Corp”, “Pied Piper Holdings, Inc”, or even “Pied Piper 2, Inc. will likely be acceptable for registration of a different business. Some states even allow it to go as far as “Pied Piper Inc.” vs “Pied Piper Incorporated”. As an example, there is currently an active company registered in California with the name Pied Piper, Inc.” – there is also “The Pied Piper Exterminators, Inc.”, “Pied Piper Players, Inc.”, and “Pied Piper Play Center” – there are also suspended businesses using similar variation on the theme. Simply put, the standard of what variation of name is acceptable is not that high and the problem for the boys in Silicon Valley aren’t real in regard to the business trade name. In the TV show the issue came up because the protagonists had received a check made out in the name they had been using as a placeholder; the reality is that most banks aren’t concerned with minor variations in the corporate name and “Pied Piper IP Holding Company”, will most likely be able to cash a check made out simply to Pied Piper, Inc.

But that other company is using my trademark. On Silicon Valley, the episode moves forward to discover that the company trademark PIED PIPER is the company name of a nearby irrigation company. My response — so what? Trademarks are not simply the name associated with any business, but rather a name associated with specific goods or services. Is there any likelihood that someone buying software using the mystery algorithm that is the core of the tech companies’ product is going to confuse that it originated from the irrigation company services? – not likely. Both companies can simultaneously use the mark PIED PIPER without any concern of trademark infringement, because there is little likelihood of confusion by consumers.

But my trademark has to be the same as my trade name. Nope – not true – while the two are often related, there is no rule that says they have to be the same. The best example for this is Doctor’s Association, Inc. Who is Doctor’s Association? – well you probably know them better by their SUBWAY trademark. What this means is that our newly minted entrepreneurs can register whatever business name they want, and still operate under the trademark PIED PIPER, and there is no need for them to go and purchase the name from the cranky irrigation company owner.

So what is the take away here? – don’t take legal advice from TV sitcoms – then again I hope you already knew that. By the way, it is a funny show.

France – Where Everyone Has the Right to Privacy

Article 9 of the French Civil Code provides that: “everyone has the right to privacy.”

A little while back Kate Middleton was spotted (via a long range lens) topless at a private residence in France.  The resulting photos ended up in the French magazine Closer. The ensuing outrage by the British and the French demonstrates an important issue when works of authorship cross international borders: namely, the U.S. expectations of privacy and Freedom of Speech laws are not embraced in the same ways in other nations and cultures.

For example, the French maintain some of the strictest privacy laws in world.  These laws leave little room for arguments of news worthiness.  In fact the French go so far as to prohibit “theft of personal image,” which can theoretically be used to ban the taking of photos of individuals even in public spaces.  While the U.S. states have many comparable types of laws, the extent of the French laws is illustrated by the fact that the images of Ms. Middleton are no different than what you might see on most beaches in France, however the French laws still provide little leeway for these arguments – arguing instead that this is a private matter and not for public consumption.  Similarly, the British courts have a distinctly different view of libel that favors parties making such claims.

Beyond the civics lesson, what is important to take from this is the fact that as we are in a global economy, laws of other countries may be in  play and when dealing with more sensitive topics, a few minutes of research may be beneficial in keeping you out of trouble.

Uncle Fester and Justin Bieber

Coogan in The Kid

Well before before Uncle Fester shaved his head and joined the Addams Family, the actor Jackie Coogan was appearing in silent film alongside Charlie Chaplin.  Unfortunately for Jackie, his parents spent all the money from his work and when he  turned 18 he had little to show for his time on stage and screen.  The spectacle  of a child star of Coogan’s stature being exploited in that way led to a California Law requiring that child performers be paid in such a way that around 15% of their pay is automatically placed into an untouchable trust fund that only they will be able to access when they turn 18 – many states around the country now have similar laws and they are typically referred to as Coogan Laws.  It is estimated that Bieber is worth around 100 million dollars.  While its impossible to know how much of that is held in a Coogan Trust, it is likely that upon his 18th birthday upwards of 15 million will available to him to spend freely and without oversight – not a bad birthday present.

While contracting with minors is always an issue when considering the enforceability of the agreement,  you also have to be aware of whether your state requires a portion of funds to be paid directly to a trust fund.  This is a matter handled on a state by state basis – presently performers in California, New York, Louisiana, and Arizona are subject to the trust requirements.  Other states have addressed the concern raised in the Coogan case by affirming that the earnings of the child are the child’s property (not the parents as was the argument of Coogan’s mother and father), and that the parents have a fiduciary obligation to safeguard the property.

Public Performance and Ringtones

As if to demonstrate why the general public continues to question the validity of all copyright claims in music, ASCAP recently provided us with one of the stupidest and greediest copyright cases in the recent past. (opinion at www.eff.org). After being sued in relationship to the reasonableness of its blanket licenses (related to its antitrust exemption), ASCAP argued that when someone’s cell phone rings with a musical ringtone, the ring is a public performance of the composition and therefore the phone companies owe licensing fees for each call. The Electronic Freedom Foundation, who filed an amicus brief in the case, noted that: “Under this reasoning from ASCAP, it would be a copyright violation for you to play your car radio with the window down!” While I am not sure it is quite this bad, the arguments advanced by ASCAP do require a great deal of legal gymanstics in order to work.

While the law of copyright is intended to be largely technology neutral, with any newer technologies, the courts are often called upon to interpret how copyright applies in new circumstances. – ringtones are no exception. For example, a few years back the recording industry obtained clarification from the Copyright Office over whether a mechanical royalty was necessary for creating the digital files that make up ringtones – the outcome was a decision that ringtones were in fact subject to a statutory/mechanical license payable by the makers of the ringtones. The arguments made by ASCAP for performance licenses, however, are much less persuasive than those made for mechanicals. ASCAP made several legal arguments to support its position, some more technical than others, but all them largely coming down to a discussion of whether the activation of the ringtone by an incoming call constitutes a public performance that is not exempt for claims of copyright infringement. ASCAP basis its arguments on two separate theories: 1) that the downloading of the ringtone is the same as a public performance, and 2) that sending the signal activating the ringtone is part of a performance authorized by cell phone companies.

Downloading Ringtones is Not a Performance
ASCAP argues that under the “Transmission” clause of Section 101, which provides that the transmission of a protected work that is made available to the public is an act of infringement. ASCAP first argues that the Verizon allows its customers to download songs, and that these downloads are public transmissions. Wisely, the court points out that the download is being made to one party and is not to the public at large. ASCAP, however, goes an additional step and argues that the download is also the first step in a two step process whereby the performance is shifted to such times as when a phone company customer receives a telephone call which others may overhear. In an odd bit of irony, this argument strikes me as ASCAP attempting to use a time-shift argument FOR infringement.

Playing of compositions: Direct and Secondary Liability
ASCAP also argues that even if the transmission by the cell companies is not infringement, the playing of the music by the owner of the phone is, and that the phone company is either directly or indirectly liable for the infringement due to its participation in the process of the music being played. Perhaps the strangest argument made by ASCAP is the one that the court notes is their primary argument – ASCAP argued that the playing of any ringtone was in effect a direct performance by Verizon on the basis that Verizon sends a signal that triggers the playing of the music and therefore they are the instigators and the source of the performance in some Rube Goldberg like manner. ASCAP’s second argument is based on secondary liability, which requires a finding that there has been a direct or primary infringement by one party (the cell phone owner), and is aided in some way by the second (Verizon).

While the court addressed many sub-issues related to their claims and every theoretical possibility, the majority of its analysis were based on a finding that playing of ringtones are generally just intended for use by person who’s phone it is on, and is therefore not a public performance as defined by Section 101. The court backed this argument up by noting that even if the playing of the ringtone was loud enough to be heard by a general audience and constitute a public performance; Section 110(4) exempts the public performance from liability if there is no commercial intent in making it public.

ASCAP cited many cases to support its position in this case – the majority of which were cases involving mechanical rights to reproduce a copyrighted work rather than ones dealing in issues of performance, which the court points out are not in dispute and in fact have already been paid. While in many cases the payment of performance royalties in addition to mechanical is entirely proper and appropriate, the attempt of ASCAP to apply a secondary license in this context is clearly overreaching, and it is this type of overreach that causes the general public to begin to question all copyright protections, which in turn only serves to hurt the very people that ASCAP is suppose to be working for – the artists.

Public Performance

What is a performance license?

One of the exclusive rights of composers of songs is to control the right to publicly perform the song publicly. Of course with the way that the music industry has developed, it is not practical in most cases to go to the composer each time a radio station or concert hall wants to play a song for their customers. Coming to the rescue (Debatable, but that’s another post) are the folks at ASCAP, BMI, and SEASAC (and a few others). These organizations, commonly referred to as Performing Rights Organizations (“PROs”), have entered into agreements with thousands of composers and music publishers for the right to represent them and to license their music to radio stations and venues. While technically everyone involved (DJ, sponsor, and venue) can be held to jointly infringe a copyright, in practice the venue and promoter is most often the one that is expected to have obtained a license for music performed.

What is public?

The trick comes in when deciding what a “public” performance is. Section 101 of the U.S. Copyright Act notes that:

    To perform or display a work “publicly” means to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered. . .

As a result, most weddings, bat mitzvahs and the like would typically fall into this category of non-public performance and would not require approval by the composer and no PRO license would be necessary. With this said, a party involving 500 people who include many friends of friends or one in which some form of admission is charged will likely not fall into the category of “normal” and the use of admission will demonstrate “open to the public.”

Bottom line

Performers or venues that play to audiences other than “normal” families and their acquaintances should consider obtaining a blanket license form the PROs – an ounce of prevention is worth a pound of cure.

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 wages, make sure that your tax preparer is aware that you may have this additional 6% deduction available to you, or if you prepare your own taxes, be sure to look though the instructions for Form 8903 .

IRS Circular 230 Notice:
United States Treasury Regulations require me to disclose the following: Any tax advice included in this document is not intended or written to be used, and it cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.

Music Publishing Administrator

I recently had the opportunity to consider whether a US artist with airplay in Europe would be better served to find a publisher or to simply hire an agency to administer his rights overseas. While it is hard for any self-reliant musician to pay an extra percentage for doing something that they do themselves in the US, not considering such an arrangement might be leaving money on the table.

These agencies can provide independent musicians and small publishers with instant international reach, which includes their bookkeeping expertise, use of sub-publishers in other countries, administrative services to register the copyrights and to affiliate with performing rights groups, and options related to their services in shopping the music for other uses.

What to look for

When considering these groups, I recommend that you ask them about the following:

  • Do they have experience with your type of music? (Yes)
  • Will they register the copyright in the songs on your behalf? (Yes)
  • Will they handle the administration of registering you with U.S. rights societies? (Yes)
  • Will they collect mechanicals from foreign labels? (Yes)
  • Do they have affiliates in other countries where your music is popular? (Yes)
  • How often will they send statements (Quarterly)
  • Shopping (don’t expect it, but it can be added)

Foreign Administrative groups can be of great help in dealing with quirks of local/ non-US laws related to how royalties are calculated and paid. Having them work through the process on your behalf has its advantages and likely outweighs the extra percentage.

SPNN Presentation

I had the opportunity the other night to cover for another attorney in a presentation at the Saint Paul Neighborhood Network (SPNN) regarding copyright law, release forms, and fair use in video production. I typically enjoy these programs, as I always learn new things based on the questions I receive. As I experienced when I conducted a similar presentation last year to a national association of public media, the questions were well thought-out and addressed the many of central legal issues that new comers and old hands alike run into when creating video productions. Unfortunately, many of the questions necessitated the maddeningly frustrating answer of “it depends.” This a problem that aggravates many clients, because obviously if they are paying for your expertise, they expect concrete, text book response. Unfortunately, to fully resolve most people’s questions related to fair use and privacy rights requires a fuzzy answer, as various criteria must be weighed against one another and more than likely the answer is unclear absent taking the most conservative of courses. While the fuzzy answers may frustrate, they often provide a “teaching moment” for the client which can be used in the future to avoid problems. This type of educating of clients is important and clients looking to hire attorneys should look for this when working with their attorneys, so that the next time the issue comes up, they can sharpen the boundaries around some of these fuzzy legal issues.

Poor Man’s Copyright

A frequent comment I hear when talking with musicians is that they think mailing a copy of their music to themselves will work just like a copyright registration, but cheaper. This is sometimes known as a “Poor Man’s copyright.” While this might (and I use the term loosely” be helpful from an evidence standpoint, it doesn’t really help with who created it and it will likely run into all kinds of evidentiary problems. Writers are much better off going ahead and filling out the copyright application. By filing a registration you set yourself up to collect attorney’s fees and potentially higher damages if you have to file a lawsuit. By the way, in order to even get into a court on a claim of copyright infringement you have to file a registration, but if you wait to long to register you may lose out on some forms of damages.

The better advice is to always put together a song writer split agreement – i.e. write what contribution (or percentage) of each song each person contributed. In a band setting it is good to have all members sign off, even if they did not contribute.

It is much easier to do things right the first time then to get into a fight over it later.

Morals Clause

What does a “morals clause do?


The 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 like

    Queen 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 image and can cancel the deal by invoking the morals clause. A few real life examples include: Kate Moss – Chanel – photographed allegedly snorting cocaine – Michael Nade (“All My Children”) – ABC – cocaine arrest Sidney Ponson – Baltimore Orioles – third arrest for alcohol-related violations But wait, if you think this is a concern just for those big name types, think again, these clauses can pop up all kinds of places, from local TV weathermen, to mechanical contractors.

Reverse Morals

So is turn about fair play? Some folks think so and are putting “reverse morals clauses” into their deals so that if the company is tainted by scandal, they endorser can get out of the deal. Same concept applied to other types of arrangements such as naming rights, think Enron, but the same applies to smaller deals as well.