May 21, 2015

Ten Key Copyright Issues and Pitfalls Every Nonprofit Should Know

15 min

This article was published in The Licensing Journal on July 2015.

For many nonprofits, copyright is the often lesser-known intellectual property (IP) relative to trademark. If you use the terms trademark and copyright interchangeably, you are not alone. Read on for some useful copyright tips.

Put simply, trademarks are your "brand" and copyrights are your "content." Trademarks are most often words or symbols (or a combination of both) that are prominently used on one's goods or services and carefully protected. In contrast, copyrights are often misunderstood and overlooked. Whereas a patent can protect the idea itself, a copyright protects the original expression of the idea. Because only a minimum level of creativity is required for something to be copyrightable, many things are capable of being copyrightable "works." Examples include written works, websites, marketing materials, music, photos, videos, software programs, artwork, and even logos in some instances.

Copyrights can be very powerful rights. Once properly understood, copyright owners can leverage their copyrights for great value and benefit. On the flip side, those who do not understand copyrights or who misuse the copyrights of others can face significant legal exposure for copyright infringement.

Below are ten key copyright issues and pitfalls with which your nonprofit should be familiar, in connection with protecting and maximizing its own copyrights, and with minimizing the risk of infringing others' copyrights:

1. Apply to Register Your Copyrights within the 90-Day Window

It is a best practice to have an internal system to ensure that you apply to register your nonprofit's copyrights with the U.S. Copyright Office within 90 days of the publication of your "work." In contrast to federal trademark registration, copyright registration is a much simpler, and much less expensive process (the Copyright Office fee is $35-55 for a basic application, and the forms are available on the Office's website), typically without any back-and-forth with the Copyright Office. Assistance from legal counsel is optimal for avoiding certain issues later, but registration can be done without involving counsel, if necessary. Here is why copyright registration—and when you do it—is so important:

If you (1) applied to register your work before the infringement occurred, or (2) the infringement occurred before you applied to register your work, but you still filed your application within the first 90 days after the publication of your work (which generally means when it hit the market, went live, or was first distributed), you are permitted to seek both statutory damages and attorney's fees in litigation. As background, a copyright owner who proves liability can elect either (a) actual damages or (b) statutory damages from an infringer. Actual damages (e.g., what the infringement really cost you in dollars) can be extremely hard to prove, particularly for nonprofits. Even if you can prove actual damages, they can sometimes be very low and/or very expensive to prove up in litigation. In contrast, the copyright statute sets forth the minimum and maximum statutory damages that a court can award per work infringed. Except for very unusual circumstances, by statute, a court must award an amount between a minimum of $750 and a maximum of $30,000 per work infringed if the infringement was "non-willful." Where a court finds that an infringement was "willful," which is often the case, the court can award up to $150,000 per work infringed. These are powerful numbers.

Provided that either (1) or (2) above applies, you are also permitted to seek your attorney's fees in court. Attorney's fees can be significant, and an alleged infringer may be on the hook to pay both your legal fees and the infringer's own legal fees. A cease-and-desist letter pointing out the possibility of having to pay both (a) sizable statutory damages, and (b) the copyright owner's attorney's fees often will stop an infringer in his tracks. A large potential court award also can encourage a quick and efficient settlement and/or put your nonprofit in a strong position in the event of litigation.

If you did not (1) apply to register your work before the infringement occurred, or (2) file your application to register your work within 90 days after publication of your work (even if the infringement occurred in that 90-day period), then you can only seek actual damages, which are very difficult and expensive to prove, and you cannot seek attorney's fees. If you do not apply in a timely manner to register your works and find yourself in a dispute, a seasoned copyright lawyer will be well aware of the significant limitations of any claim you might threaten to file—and assume that you may not follow through with any litigation.

2. Place Appropriate Copyright Notices on Your Works

Under current law, a copyright owner is not required to place a copyright notice on his/her copyrighted work. However, it is highly advisable that you place an adequate notice on your works for several reasons. First, as a general rule, if an alleged infringer had access to your copyrighted work, and this work had an adequate copyright notice, the infringer will not be found to be an "innocent" infringer, which can otherwise mitigate actual or statutory damages. Second, you make it clear to the average person that you claim a copyright in the particular content and put them on notice that they should not copy the material without your permission. Third, having a copyright notice gives others information as to whom to contact should they wish to seek a license, or permission, to use your copyrighted work (sometimes for a fee).

The copyright statute requires that a proper notice must include:

  1. The symbol ©, or the word "Copyright" or abbreviation "Copr.",
  2. The year of first publication of the work (Note that the year or date may be omitted where a pictorial, graphic, or sculptural work, with accompanying text matter, if any, is reproduced in or on greeting cards, postcards, stationery, jewelry, dolls, toys, or any useful articles.), and
  3. The name of the copyright owner, or an abbreviation by which the name can be recognized, or a generally known alternative designation of the copyright owner.

3. The Fact That You Are a Nonprofit Does Not Necessarily Mean It Is a Fair Use

The doctrine of "fair use" is a defense to unauthorized copying and could be a means of avoiding liability for copyright infringement when you otherwise copy or use without permission. However, the fact that you are a nonprofit does not automatically mean that your use of another's copyrighted work is "fair use." Case law has clarified that nonprofits have no special immunity from copyright infringement liability and that the nature of the "use"—not the nature of the "user"—is what matters to a fair use analysis. The fair use defense is a very fact-specific, often very complicated defense. Many tend to rely too liberally on this defense. For that reason, it is important to obtain an analysis from a copyright lawyer of whether your particular desired use is likely a fair use before you proceed without permission.

4. Make Certain That You Have Appropriate Written Agreements in Place That Cover Ownership or Use of the Copyrights with Non-Employees Who Create Materials for Your Nonprofit

A very common misconception by nonprofits (and many for-profit corporations as well) is that if the nonprofit paid for an outside contractor to create the copyrighted material, then the nonprofit owns the copyright to that material. This is not necessarily the case. The only way that a nonprofit owns the copyright in a work created by an individual is if: (a) the individual is/was an employee of the nonprofit who created the work within and during the scope of his or her employment by the nonprofit, (b) the work created qualifies as a "work made for hire" under the fairly narrow definition within the copyright statute and you have an agreement signed by the person who created the work stating that it is a work made for hire, or (c) you have a written agreement signed by the person who created the work stating that he/she has assigned (transferred ownership of) the copyright to your nonprofit. In the absence of at least one of the above three circumstances, your nonprofit does not own the copyright.

However, you may still have an express or implied license to use the copyright. And, in some cases, that may be all that your nonprofit needs, and all you may be able to obtain from a volunteer contributor. But because the scope of the license can vary greatly, it is important that you obtain a solid license in writing with the necessary scope included. At one end of the spectrum, as to scope, is a nonexclusive license just to reproduce, distribute, or display the material for one particular purpose, such as a one-time use, only at one event, only on one date, and in one location. Toward the other end of the spectrum is an exclusive license that is perpetual, royalty-free, worldwide, irrevocable, and for any use whatsoever. It is important that you have clear documentation of the scope of any license, otherwise you could find yourself uncertain about whether you can use the material, or worse, involved in a copyright dispute. Copyright law requires exclusive licenses to be in writing. While nonexclusive licenses are permitted to be oral and even implied, without something in writing you would be relying on memory and potentially later disputing as to what was previously agreed, with no documentation to support your understanding; this is not advisable.

5. Have Agreements Covering both Copyrights and Rights to Use an Individual's Likeness with Volunteer Authors, Speakers and Reviewers, and Releases from Attendees being Photographed or Recorded

In addition to your paid consultants, do not forget to have an agreement in writing with your volunteer authors, speakers, and reviewers, as well as other volunteers who may be creating or contributing to your nonprofit's copyrightable works. The same rules apply as above. A volunteer author or speaker, for instance, may not be inclined to transfer copyright ownership to your nonprofit entirely, but a properly drafted license generally can cover the necessary rights for your nonprofit's desired use, and it does not need to be legalistic or overly verbose. In addition, if you wish to take and use the photo, video, or voice of an individual, or obtain and use his or her testimonial or endorsement, you should have a written release from the individual permitting you to do so. (This relates to the common law rights of privacy and publicity, not to copyright rights.) When photos or videos will be taken of attendees at nonprofit events, it is a common and efficient practice to include a blanket release and permission as part of the registration process. You also would need a license (or ownership, if applicable) from the copyright holder who took the photo or shot the video of the individual, as it is the photographer or videographer who owns the copyright in the photo/video. It is a very common mistake to obtain rights from only one of the two parties.

6. Ensure That Your Organization Is Properly Licensing Rights to Use Content from Third Parties, Such as on Your Website and in Other Materials

If your nonprofit is using third-party content (i.e., copyrighted material from other sources), it is important that your nonprofit obtain written permission from the third party for the permitted use. It is very common to want to use photos, video footage, or music, for example, on your website, as part of presentations or in other materials. As a general matter, absent a fair use exception, this must be properly licensed or your nonprofit has potential liability for copyright (and/or trademark) infringement. If necessary, a brief, clear email can be sufficient, although, in some cases, it is advisable to have an actual written agreement, even if it is short.

Today, everyone is repurposing content. For-profit corporations do it. And nonprofits with limited budgets may particularly feel the need to reuse or repurpose the same content in various different ways. Where your nonprofit can get into trouble is if the party that created the content gave you a narrow license to use its material in only a specific, limited way and your nonprofit unwittingly exceeds the scope of that license when reusing the material. Fully understand the terms of the licenses you have. And try and obtain a broad, written scope of use in the first place if at all possible (and it usually is very possible). Also, make sure to keep good and clear records of your licenses; one day you will need to find that license.

7. Remove Content from Your Materials (Such as Your Website, Listservs, Controlled Social Media, and Printed Materials) Immediately upon Learning That Another Party Appears to or Claims to Own the Content

Once (a) you believe that the content you are using belongs to a third party and you did not have authorization to use it in the manner you did, or (b) you are put on notice by a third party that your materials contain its copyrighted material without authorization, immediately investigate and remove the allegedly infringing materials until you can have an attorney experienced in copyright law review the issue for you. Here are a few reasons: First, if you know that you did not obtain permission from the owner of the copyright, you could later be found to be a "willful" infringer, which carries with it increased monetary damages. Second, whereas many potential claimants will be satisfied if you cease the alleged infringement upon receipt of their letter, continuing to engage in the allegedly infringing behavior can invite a lawsuit; it also does not look good to a judge or jury determining the amount of damages that you should pay. Third, copyright infringement is a strict liability tort, which generally means that, regardless of intent, if you infringed the copyright, you are liable. (Intent, willfulness and innocence become relevant only to the amount of damages the infringer must pay.) But there are secondary infringement theories where knowledge does become relevant. For example, one can be liable for contributory copyright infringement if the plaintiff can prove both (1) knowledge of the infringement and (2) a material contribution to it. One can be liable for vicarious copyright infringement if the plaintiff can prove (1) financial benefit from the infringement and (2) the right and ability to control. Some plaintiffs also will sue the individual members of management under these secondary theories of liability.

8. Prominently List Your Digital Millennium Copyright Act (DMCA) Agent on Your Websites and Other Controlled Electronic Systems or Networks, Register Your DMCA Agent at the Copyright Office, and Implement an Internal Protocol so That You May Quickly and Fully Comply with the Copyright Statute if You Receive a DMCA Notice

As a general rule, if there is infringing content in your materials, whether print or online, your nonprofit could be held strictly liable even if a third party uploaded the infringing content to your website. However, section 512 of the Copyright Act has a very specific and very formulaic procedure that can potentially mitigate your liability by providing a "safe harbor" from the otherwise strict liability, provided that you carefully adhere to it. Put simply, section 512 of the Copyright Act sets forth a mechanism where your nonprofit can designate a DMCA Agent to receive what people typically refer to as a "DMCA Notice" and you must follow the procedure carefully. You must not only designate a DMCA Agent on your website (and other electronic systems or networks controlled by your nonprofit) and provide all of the information required by the Copyright Act; you also must file a Notice of Interim Designated Agent at the Copyright Office. In the event you receive a valid DMCA Notice, you must respond expeditiously and follow the requirements set forth within section 512 of the Act. An added benefit to the potential "safe harbor" from liability is that complainants have a straightforward, and very commonly used, method for contacting your nonprofit in the event they find content they believe to be infringing on your site, rather than going straight to a traditional dispute. If you receive a notice styled as a "DMCA Notice" or "512 Notice," or anything similar, do not ignore it.

9. Keep Good Records of Your Registrations, Publication Dates, and Licenses Granted and Received

Although your nonprofit's time and resources may be limited, it is important that you have a good recordkeeping system. You may need to rely upon it one day. First, put your Certificates of Copyright Registration in a safe place. In the event of a dispute, you may need an original to provide to a court. If you have misplaced yours, you will have to order new ones, which take time and money. Also, as explained above, because the date on which you filed your application can be critical to statutory damages and attorney's fees, you should have that information readily available. Second, keep records of when you first "published" your work (which is often when it hit the market, was first distributed, or was first posted on the Internet), because that information may be critical when it comes to establishing that an infringer had "access" to your content in order to prove liability, or to prove that you are entitled to seek statutory damages and attorney's fees based on the timeline of publication of your work, your application to register it, and the infringement. Third, keep records of the permissions or licenses you grant to third parties. You may see your content elsewhere and need to ascertain whether you granted the party in question permission to do this. A party also may contact you and ask for an "exclusive license" for some particular content; you will need to make sure that you have not already granted another party a license, or, if so, you will need to determine how long that extends or how you might terminate the license. Fourth, your nonprofit should keep records of the licenses and other copyrights that third parties grant to your nonprofit. You will likely need to determine at another point what rights you have if you want to continue using something you once licensed, or use it in another way. Of course, it also is critical evidence that you did not infringe in the event the other party alleges that you are infringing because he/she had no record of granting your nonprofit a license.

10. Be Sure That Your Current Insurance Policies Cover IP Claims

Typically, general commercial liability insurance policies do not cover IP infringement claims, but most nonprofit directors and officers’ liability insurance policies do provide for some IP infringement coverage (the policies and terms vary significantly, and certain exclusions are common). This can be an unpleasant surprise if you learn, after you receive an infringement claim, that no insurance coverage is available to your organization. Check with your insurance broker or agent, and your legal counsel, whether and the extent to which your policies cover the likely types of IP claims that could be asserted against your nonprofit (those claims will differ based on your programs and activities), and make changes—be it an endorsement to one or more existing policies, switching insurance carriers for a particular policy, or purchasing an additional policy, such as errors and omissions liability insurance—as appropriate.

In sum, copyrights and copyright issues arise routinely in the operations of every nonprofit, no matter how big or small, simple or complex. If copyrights are properly understood at all levels of the organization, your nonprofit can run more efficiently and effectively, build a solid portfolio of content that can be broadly and legitimately reused and repurposed, potentially generate revenue from the licensing of your copyrights, and avoid potential liability to third parties.