Copyright Office To Require Online Registration of DMCA Agents

If you have a website with any user-generated content, you want to take full advantage of the protection provided by the Digital Millenium Copyright Act (DMCA). This has two components. The first is posting (and following) a takedown policy for potentially infringing content in your terms of use. The second, often-overlooked, component is registering an agent with the US Copyright Office. The agent is the person designated to receive notices of claimed infringement. If you fail to do both, you lose the benefits of the safe-harbor protection under the DMCA. In the past, registering an agent required filing a paper form and paying a fee of at least $105, plus $35 for each group of 10 additional names (such as alternate domain names). This process is about to get a lot easier, and less expensive too.

Starting December 1, 2016, you will be able to register an agent online, bringing the Copyright Office into the late 20th century. Even better, the registration fee will be $6, and there will be no additional fee for alternate names. This online registration process, and the lower fee, will make it easier to keep your registrations up-to-date – for example, if your designated agent was an employee and that employee quits. There are two catches, however. The first catch is that you will have to renew your agent listing every 3 years. That’s designed to ensure that the listings are current and accurate. The second catch is that the Copyright Office will be phasing out the current directory, populated by paper filings, by the end of next year. Every company that has already registered an agent will need to update their registration with a new online filing, which must be done by December 31, 2017.

So I strongly recommend that you mark your calendar for the first week of next month, to update your existing registration with an online filing. If you let it go, thinking that you have plenty of time, you will likely forget to take care of it. And if you haven’t registered an agent, I strongly recommend that you do so in early December. As I mentioned above, it is an essential element of insulating you from claims of copyright infringement.

If I Lie To My Lawyer, Will It Save Me Money?

Not a chance. Even so, I occasionally find a client or prospect holding back important information, presumably because they think it will complicate the project and cost them more money. But that’s exactly why it should cost more money – because it makes things more complicated. Let’s see it in action…

First Call

Prospective Client: Hi, I’m working on a startup with a cofounder, and we are ready to move forward. We think the idea is viable. We formed an LLC about a year ago, and now we want to form a Delaware corporation. What will it cost to incorporate with two cofounders?

Lawyer 1: You’ll need to convert the LLC to a corporation. If you are lucky, and you formed the LLC in a state that allows conversion, forming a new corporation and converting the LLC into it will cost $2000, plus about $350 in filing fees. If you formed the LLC in a state that does not allow for conversion, we’ll have to do a merger. That will cost between $2500 and $3000, plus about $500 in filing fees.

Prospective Client: Wow, that’s a lot of money. We’ll have to discuss it and get back to you.

Second Call

Prospective Client: Hi, I’m working on a startup with a cofounder, and we are ready to move forward. We think the idea is viable. We want to form a Delaware corporation. What will it cost to incorporate with two cofounders? [Notice how the client left out that information about the existing LLC?]

Lawyer 2: It will cost you $1500 to incorporate, plus $150 in filing fees.

Prospective Client: Sounds good, let’s do it!

Now let’s flash forward 6 months, when the startup is trying to raise money from investors. They’ve signed a term sheet for an $800,000 investment, and the investors are doing their due diligence check on the company. During the due diligence, the investors discover that a year and a half earlier, the cofounders had formed an LLC, which they neglected to mention to Lawyer B. They also discover that there had originally been three cofounders, and one of them left on bad terms within the first 3 months. Now she’s moving around various hippy beach communities in Thailand, and doesn’t even have a cellphone. Even worse, it isn’t clear whether everyone signed intellectual property assignments, and Gone Girl happened to have developed the most important part of the code that is the startup’s product. Making a bad situation worse, the cofounders used Legalzoom to form their LLC, and even if they got an operating agreement, there isn’t a chance in Hell that it contains vesting provisions that would allow them to recapture Gone Girl’s unvested ownership interest in the LLC.

Here’s what it all adds up to:

  • The corporation doesn’t own most of the software code and other IP that is the core of the business. That belongs, at best, to the LLC, if everyone signed IP assignments.
  • If everyone signed IP assignments, that’s not going to help much, because they still need to convert (or merge) the LLC into the corporation. But they need Gone Girl’s approval to do so, and she was last seen on a beach in Bora Bora, smoking weed with an actor who may or may not have been in Titanic.
  • If there are no IP assignments, then it really doesn’t matter whether they can convert the LLC into the corporation, because Gone Girl owns the core of the business. And when word gets out that the business is worth $1.2 billion, guess who’s going to show up with some very mean lawyers in tow?

Of course, the truth of the matter is, that company will never be worth $1.2 billion, because the cofounders were too cheap to do things right. They thought that if they withheld important information from their lawyer, they could save a few hundred dollars. Instead, that little lie is going to cost them $5000 to $10000, at best, in legal fees to try and sort out the mess. At worst, the lie will cost these guys the $800,000 they were hoping to get from the investors, who are now walking away and looking to invest in a business run by someone with brains.

So the moral of the story is, keeping information from your lawyer will not save you money, it will cost you much much more.

Follow me on Twitter @PaulHSpitz

Website Protection from Copyright Infringement Claims

shortcuttingIf you operate a website, you may have to worry about copyright infringement claims. This is particularly true if you have a blog, or if you allow visitors to post photographs, music clips, videos, or written content. The visitors may be posting content that infringes on someone’s copyright, and you don’t want to be responsible.

Fortunately, the Digital Millenium Copyright Act (DMCA) helps website owners insulate themselves from copyright infringement claims. There are two steps to this process, and both are equally important and essential. Unfortunately, too many website owners focus on the first step, and overlook the second. Without both, the website owner has no protection under the DMCA from copyright infringement claims.

The first requirement is that your website terms of service should have a process for people to notify you of potential copyright infringement claims. This is typically called a “takedown notice.” The notice informs you that there is material on your website that may infringe a copyright, and has to conform to specific requirements outlined in the DMCA. Your process must cover taking down or disabling access to the potentially infringing material, and giving the person who posted it an opportunity to challenge the takedown notice. That’s the first part of insulating yourself from copyright infringement claims.

The second part, which is often overlooked, is registering an “online agent” with the US Copyright Office. The online agent is a person designated to receive notices of potential copyright infringement. You go to this page at the Copyright.gov website, where you can download, print out and mail in what’s called an “Interim Designation of Agent to Receive Notification of Claimed Infringement” form. On the form, you list the full legal name of your company. There is a base fee of $105 that covers that one name. Then you can list additional names under which you are doing business. For example, here you would list your website address, or if you operate more than one website, all your website addresses. For each group of 10 or fewer, there’s an additional fee of $35. So if you have a corporation, and you run one website, you would list your corporate name, and the website address, and pay a fee of $140. When choosing your designated agent to list on the form, you want to pick someone who you know is going to be in that role for an extended period of time, because you must pay additional fees to change your designated agent.

By following both of those two steps, website operators can take advantage of the protections from copyright infringement claims provided by the DMCA.
Follow me on Twitter

Cybersquatter Protection 301 – The Uniform Rapid Suspension System

Speed LimitThis is the third entry in a series on how trademark owners can protect themselves from cybersquatters. The first post talked about the trademark clearing house, and the second post discussed the Uniform Domain Name Resolution Policy (“UDRP”). Today’s post will discuss the Uniform Rapid Suspension System, a/k/a URS. Contrary to what you might think, URS has nothing to do with cars, shock absorbers, or anti-lock brake systems. URS is a new, fast complaint system, set up by ICANN, that is modeled on UDRP. It is designed to be less expensive than a UDRP arbitration proceeding, and it applies to all global top-level domains (gTLD’s).

While it make take months to get a decision in a UDRP proceeding, URS is designed to provide a decision within days. The trademark owner has a relatively high burden of proof in URS proceedings. He must show by clear and convincing evidence that:

  1. The registered domain name is identical or confusingly similar to a validly registered trademark that is currently in use;
  2. The domain name registrant has no legitimate right or interest to the domain name; and
  3. The domain was registered and is being used in bad faith.

Because of these requirements, URS is best-suited to owners of well-known trademarks, and to cases where the alleged cybersquatter does not have an good claim to having a legitimate interest. If there are any key facts in dispute, the URS provider will dismiss the claim. Also, if the trademark is not registered, URS is not a good recourse.

If the URS provider finds in favor of the complaining trademark owner, the only remedy is suspension of the domain name until the registration expires. They cannot require that the domain name be cancelled or transferred to the trademark owner.

Finally, if you lose in an URS proceeding, you can appeal the decision. Thanks for reading, and stay tuned for the final installment in this series, covering the Donuts Domain Protected Marks List.

Follow me on Twitter @PaulHSpitz

Cybersquatter Protection 201 – UDRP

barbedwireThis is the second part of a series on trademark and cybersquatting. In the first part, I wrote about the Trademark Clearing House, an essential resource for trademark owners who want to protect their interests. Today I am writing about the Uniform Domain Name Resolution Policy, also known as UDRP.

The UDRP was established in 1999 by ICANN, the nonprofit organization that oversees the internet’s domain name system. UDRP is a system for resolving disputes about domain name registrations. It applies to all generic top-level domains, some country code top-level domains, and some legacy top-level domains.

When someone registers a domain name, he also represents and warrants that the domain name will not infringe upon or violate the rights of a third party, and agrees to submit to arbitration if a third party does bring a claim. The party bringing an infringement claim has to establish three things:

  1. That the domain name is identical or confusingly similar to a trademark that he has rights to;
  2. That the registrant does not have any rights or legitimate interests in the domain name; and
  3. The domain name has been registered and is being used in bad faith.

In the UDRP proceeding, the panel will look at a variety of factors to determine bad faith:

  • Did the person register the domain name primarily for the purpose of selling or renting the domain name registration to the trademark owner?
  • Did the person register the domain name to prevent the trademark owner from using the trademark in a corresponding domain name, and has the domain name owner engaged in a pattern of such conduct; and
  • Whether the person registered the domain name primarily for the purpose of disrupting the business of a competitor; or
  • Whether by using the domain name, the registrant has intentionally attempted to attract, for commercial gain, internet users to the registrant’s website, by creating a likelihood of confusion with the trademark owner’s mark.

If a party loses a UDRP proceeding, it can still challenge it in court, under the Anti-Cybersquatting Consumer Protection Act. However, if the domain name registrant loses the UDRP proceeding, it must file a lawsuit within 10 days to avoid having the domain name transferred to the other party.

In upcoming posts, I will write about the Uniform Rapid Suspension system (URS) and the Donuts Domain Protected Marks List (DPML). At that point, I will be out of acronyms, and will move on to something else. Thanks for reading!

Follow me on Twitter @PaulHSpitz