Contract Consideration – FAQ

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What does it mean for a contract to be not enforceable because of a lack of consideration? Answer: In order for a contract to be enforceable, the mutual promises of the parties must be supported by "consideration." Considerations means each party gives something of value to the other.  The reason that the courts and legislatures generally require some form of consideration is to insure that the promises being made are not merely a casual statement, and accident, or gratuitous – in short – to make sure the people making the agreement really mean it. Consideration looks at whether the parties have assumed an obligation on the condition of an act or forbearance of another. Except in cases of employment matters, Minnesota courts generally do not look at the adequacy of the consideration being offered – only whether some consideration has been exchanged. For written agreements, the court presumes valid consideration. While adequacy of consideration is not usually analyzed, vague or indefinite terms...
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Sometimes They Don’t Quite Get It.

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Courts sometime get the right answer for the wrong reason. In a recent case in the US Tenth Circuit (Enterprise Management Limited, Inc. v. Warrick); the court discussed a diagram of a basic idea which was the basis of the defendant copying a similar diagram to explain the same concepts.    While the end result was correct in this circumstance, the reasoning used falls short. Where concepts or ideas are being presented there is a general rule that expression and ideas are sometimes merged and therefore the copying is allowed to not allow the copyright owner to weld exclusive rights to the idea.   The Enterprise Management court articulated this by noting: “In short, the copyright law is not a patent law: it protects the expression of ideas rather than the underlying ideas themselves. Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 344-45 (1991) (“The most fundamental axiom of copyright law is that no author may copyright his ideas or the...
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I am NOT a Gleek – Glee on Copyright

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First off, I am not a "Gleek"; however after watching a recent episode with my family, I got to thinking about what a great illustration about copyright law that the show and the production of the show provides. The first issue that came to mind was - beside the producers of Glee, who is making money off the music?  Under US copyright law, royalties for music generally fall into three categories: (1) For reproductions (CD, downloading), (2) Grand Performance Rights (commonly known as sync rights), and (3) performance rights (radio play). There are other categories but rest assured sure I doubt that copies of "Glee for ukulele" sheet music is making ton of money. So let's use a hypothetical, let's say I have a band and we record and make popular a new song written solely by our bassist. The bassist is the sole copyright holder. Under our recording agreement, all the band members get a percentage of all sales...
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Gray Market Goods in Legal Gray Area

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In what is perhaps a fitting end to the only copyright case before the Supreme Court during this term, the Court sitting without Justice Kagen issued its first split decision of the term – leaving the issue of “gray-market” goods in a gray area. ‘Gray-market’ goods, or ‘parallel imports,’ are genuine products possessing a brand name protected by a trademark or copyright. They are typically manufactured abroad, and purchased and imported into the United States by third parties, thereby bypassing the authorized U.S. distribution channels.” Parfums Givenchy, Inc. v. Drug Emporium, Inc., 38 F.3d 477 The case centered on Costco’s sale of imported watches manufactured in other countries.  The watches manufacturer alleged that the unauthorized sale of the watches constituted a violation of their rights to control importation under 17 USC 602(a).   Costco’s defense rested on the “first sale doctrine” The case centered on Costco’s sale of imported watches...
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Audit & Record Keeping Provisions

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Whether you have partners, or are contracting for royalties from another party, one of the most common provisions in any licensing & partnership contracts is one that provides a means and method of keeping financial records of the project or business. The exact language will differ slightly depending on the specifics of your circumstances, but common terms will include what types of books are kept, how and when audits may occur, and a description of what is to happen in the event of a problem with the records.RecordsWhile there are a variety of record-keeping methods, typical contract provisions regarding record-keeping will simply provide that the books are complete and accurate. In most cases it is understood that the books will be kept in accordance with “generally accepted accounting principles.” Furthermore, in some circumstances, state statutes may regulate how the books are kept.AuditsOnce it is decided what and how records are kept, one of...
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Music Publishing Administrator

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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 forWhen 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...
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Work for Hire

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One issue that people often overlook when drafting agreements involving creative works is the copyright concept of “work for hire.” Failing to come to a clear understanding of the parties intention can cause unnecessary conflict that neither party really benefits from.What is Work for HireSimply put, work for hire addresses issues of copyright ownership when the work has been created for the benefit of someone other than the creator. Typically, the owner of a copyrighted work is the person who creates it, however, if a work is deemed to be a Work for Hire then ownership belongs to the hiring party. Work for hire situations occur in two basic ways; 1. works created by employees and 2. works created by independent contractors.Federal law states that Works Made for Hire is:(1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for...
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Forum Selection in Creative Commons Licenses

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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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