ALG at Design Week Portland 2017

ALG attorney Bryan Wasetis will be moderating "Let's Talk About Butts: A Conversation on Copying" at this year's Design Week Portland. This panel discussion is presented by Oregon Volunteer Lawyers for the Arts and features artist and illustrator Sabrina Elliott and panelist attorneys Susan Ford and Jia Feng of Res Nova Law.

Sabrina will share stories about her experiences with being copied and how she approached it, and Susan and Jia will talk about options and tools that you can use to help you in these situations.

Space is limited, so get your tickets early!

Signs That You Shouldn't Sign That

ALG attorney Bryan Wasetis will be presenting "Signs That You Shouldn't Sign That", a workshop on contract negotiation, on behalf of the Oregon Volunteer Lawyers for the Arts for this year's Secret Knowledge Conference. The conference is on Saturday, November 19th from 10:00am to 8:00pm at the Jupiter Hotel in Portland, OR. Check it out and buy tickets here!

Writing an Effective Scope of Work

Writing an Effective Scope of Work

Any time you’re working with a client or vendor on a project, you should have a contract in place that clarifies what each of you are going to do for the project. This helps to start a conversation about your roles and creates a record that you can look back on. The portion of the contract that lays out your roles is called the “scope of work”.

Contracts generally

A contract is an agreement between two or more parties in which the parties agree to do something. An agreement doesn’t have to be written down in a formal contract to be legally enforceable – agreements through conversations, text messages, email chains, etc., can all be considered legally enforceable contracts.

However, having a more traditional written agreement with the other party is always encouraged, especially when the relationship requires that the parties meet certain goals, timelines, or phases. These situations require a mutual understanding of the work to be done, and the contract should clearly define the work.

This is also important if a dispute happens over the contract terms. In a contract dispute, courts typically only look at what the contract actually says, and not what the parties to the contract intended. This is called the “objective theory of contracts”.

What is a scope of work?

A scope of work (also called a statement of work) is the section of a contract that lays out core responsibilities for you and the other party. It's the conversation you've been having with each other - the "I'll do this and you do that" part of the agreement.

The scope of work is often attached at the end of the contract so that it's easy to reference, but can also be included as a section of the main contract. Either way, as long as the scope of work is obviously a part of the contract, then that will work.

What is included in a scope of work?

A scope of work should cover the unique aspects of the work between you and the other party, as opposed to the "boilerplate" terms within the main contract (not to say those aren't important, because they definitely are).

A scope of work can include the term of the agreement, any timelines or milestone dates, the services or products to be delivered by those dates (also called "deliverables"), payments terms, the amount of time or revisions spent on a deliverable, any meetings or correspondence between the parties during the term of the agreement, and anything else the parties want to require of each other.

Be specific

The scope of work should be as clear as possible so that both parties understand what they need to do. This will avoid any confusion down the road, which is important because people tend to forget exactly what they agreed to.

You should try to draft your scope of work with other people in mind. Would someone unfamiliar with the agreement between the parties be able to read the scope of work and understand what each is supposed to do? That's what you're aiming for.

State minimums and maximums

Something I often see lacking in a scope of work are minimums and maximums. You should clarify "how much" for any deliverable. Will the client receive unlimited revisions until they're happy, no revisions, two revisions and then hourly payments after that, etc.? Will your contractor satisfy its requirement to post social media content each week by posting one post, posting two to three posts, posting at least five posts, etc.? This also works well for time based line items - "review and analyze SEO analytics (30 minutes to an hour each month)".

You can include examples

If you feel that any line item in the scope of work still isn't clear, you can add examples of how it's supposed to work. Just say "For example," and insert one or two scenarios that you think are appropriate or foreseeable. This can also help the other party feel more comfortable with the agreement.

The take away

A scope of work is normally not a complicated or difficult portion of a contract to write, but does require some thought and attention to detail. The effort you put into it before agreeing to the contract with the other party will pay off later on if either of you need to refer back to your obligations for any reason.

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

Show & Tell: Legal questions for designers with Bryan Wasetis from Aspect Law Group

Missed the talk? Check out the video and download the slides.

Aspect Law Group attorney Bryan Wasetis will be giving a talk at Portland State University School of Art + Design about legal issues that designers and artists face. If you're in Portland on Thursday, May 5th, come by to check it out!

Copyright in Characters: What Can I Use? Part II

First, thanks to everyone that read and commented on the original post! The comments were great and touched on a few subjects that weren’t discussed in the post, so I wrote this follow up post to expand on a few of the copyright issues that were brought up. I’ll also be posting Part III soon, which will cover trademark issues.

Copyright Law

Let’s first dig a little deeper into copyright law:

I explained in the previous post that copyright is a form of protection given to authors of “original works of authorship”. The author is typically the person that makes the work, but can also be an employer if the work is considered a “work made for hire”. I won’t discuss “works made for hire” in this article, but you can read more about that on the Copyright Office’s circular on works made for hire.

The works need to be “fixed in any tangible medium of expression” for copyright protection, which means that the work needs to be recorded somehow – essentially, something more than an idea. A painting satisfies the requirement, as does a video or audio recording, and so do video games (although video games have many different copyright involved).

Copyright is actually a bundle of rights that give the author of the work the exclusive rights to reproduce (i.e. make copies), prepare derivative works (i.e. make new works based on the original work), display, distribute, and perform the protected work. These rights are granted automatically to the author but registering the copyright has certain advantages, which are discussed in the Copyright Office’s circular on copyright basics.

Copyright, along with trademarks and patents, is a type of intellectual property. This means that the rights granted to an author are treated as property that can be transferred by the author in a number of ways, such as licensing and assignments. Also, each right is an individual right that can be transferred on its own.

For example, an artist can allow someone to show the artwork in a gallery (display the work) but not make prints of the work (reproduce). Or, keeping in line with characters, a game developer can allow a publishing company to distribute copies of the game, which include the individual copyright in the character itself, to different platforms such as Steam (reproduce and distribute), but not allow the publishing company to make new games based on the original game or change the character in some way (which would be making derivative works).

What doesn’t copyright protect?

Copyright is limited in its scope and specifically does not protect “any idea, procedure, process, system, method of operation, concept, principle, or discovery”. Patent law typically covers these instead of copyright.

Copyright also doesn’t protect names, titles, or short phrases, which is explained in this Copyright Office circular. However, these can be protected as trademarks, which I’ll explain in Part III.

In the games and characters context, this means that things such as game rules, game mechanics, and basic plot are not protected by copyright. Nor does copyright protect the name of the game or character names. The Copyright Office has a helpful article on the subject that’s worth reading.

Copyright and Fair Use

We’ve covered what copyright protects and what it doesn’t, but sometimes works that are protected by copyright but can still be used in certain situations defined in the “fair use” doctrine.

Fair use is a legal doctrine that permits limited use of works protected by copyright without requiring permission from the copyright holder. However, fair use is a defense to copyright infringement, which means a jury in a federal lawsuit must answer the question as to whether the use is fair use (i.e. you’ve already been sued). That’s why I always recommend seeking a license first.

Fair use comes in many flavors. The most typical examples are commentary, criticism, and parody. To determine fair use, Courts look at the following factors:

• The purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
• The nature of the copyrighted work;
• The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
• The effect of the use upon the potential market for or value of the copyrighted work.

In the character and game context, fair use is often used in order to make game commentary or critique videos. Some of the “Let’s Play” videos are good examples of this.

For the sake of keeping this article on the shorter side, I’ll refer you to this Stanford article for more examples and a good breakdown of what each of the fair use factors are supposed to mean.

De Miminis Use

In certain situations, you can also use copyright protected works in small portions without the author’s consent. This is because of a legal doctrine called “de minimis use”. De minimis use is tricky because, like fair use, there are no clear lines for when a use qualifies as de minimis and you also have to prove this in court.

The term “de minimis” is from a shortened Latin phrase that translates to “the law does not concern itself with trifles”, which essentially means in the legal context that not enough of the copyrighted work has been used to amount to copyright infringement.

This is different from fair use because de minimis use relates to uses that are so small that courts won’t bother with them, while fair use is intended to provide avenues for the public to use works in a way that would otherwise be considered copyright infringement.

In the character context, de miminis use might allow for a character to briefly appear in the background or be mentioned in a factual manner.

I hope that helps and, again, feel free to leave a comment below if you have any questions!

Read the original post, "Copyright in Characters: What Can I Use?"

Read the final post, which covers trademarks and characters.

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

Form 1023-EZ: The Faster, Easier 501(c)(3) Application for Small Nonprofits

Great news for new small nonprofits – the IRS recently streamlined the process of applying for 501(c)(3) status by introducing Form 1023-EZ. The new form applies to certain small organizations seeking federal tax exemption under Internal Revenue Code (“IRC”) § 501(c)(3), and reduces the application down to three pages instead of the full 31-page Form 1023.

What is 501(c)(3) Status?

When you start a nonprofit organization, regardless of whether you formally incorporate with your state, you are creating a legal entity that is subject to federal tax regulations.

The IRS has determined that certain nonprofit organizations should be exempt from some federal income taxes. Specifically, IRC § 501(c) lists 26 types of exempt organizations. The third category on the list, 501(c)(3), is for nonprofit organizations that are organized and operated exclusively for charitable, scientific, literary, religious, or educational purposes.

These types of organizations are able to accept contributions and donations that are tax-deductible to the donor, and apply for grants and other public or private financial allocations available only to IRS-recognized 501(c)(3) organizations. However, an organization generally must apply for recognition under 501(c)(3). This is where Form 1023 and 1023-EZ come in.

Form 1023-EZ

Up until the summer of 2014, most nonprofit organizations seeking tax exemption under 501(c)(3) had to file Form 1023, which requires a substantial amount of input from the applicant, including a written narrative, financial data, and specific organizational documents. On top of that, applicants typically had to wait six months or more to have the application processed by the IRS.

Form 1023-EZ, however, provides a faster and easier method of obtaining 501(c)(3) status. The form is significantly shorter and does not require a narrative description or other documents, and the cost and approval time are reduced as well.

As of this article, Form 1023-EZ has a filing fee of $400.00 and can be approved in as fast as one month. Compare that to the full Form 1023, which costs up to $850.00 and can take six or more months to be approved.

Requirements

Only certain nonprofit organizations are able to obtain 501(c)(3) recognition through Form 1023-EZ. Before completing Form 1023-EZ, applicants are required to complete an eligibility worksheet that asks 26 “yes or no” questions about the applying organization. Applicants must be able to answer “no” to all questions in order to qualify. Fortunately, the questions are favorable for many small nonprofits.

The first few questions are the most relevant to small nonprofits since they ask about the financial size of the organization. The questions ask whether the organization anticipates its annual gross receipts to be more than $50,000 in any of the next 3 years, had annual gross receipts over $50,000 in any of the past 3 years, or has assets exceeding a fair market value of $250,000. If you can answer “no”, then Form 1023-EZ might be for you.

Other Considerations

While Form 1023-EZ greatly reduces the burden of seeking 501(c)(3) status, there are some possible shortcomings:

First, nonprofit organizations can and should actually attempt to make a profit in order to better fulfill their missions. Consequently, an organization that originally qualified as tax exempt under 501(c)(3) by filing Form 1023-EZ may find itself grossing more than $50,000 in a year. This creates the possibility of being audited by the IRS. While good record keeping should avoid any issues, organizations can preemptively avoid the $50,000 threshold by using the full Form 1023.

Second, Form 1023-EZ’s lack of a requirement for documents may not always be beneficial since some nonprofit organizations have complicated structures and programs that need to be explained to the IRS. Form 1023-EZ does not allow for these explanations but Form 1023 gives an organization space to explain its operations.

Take Away

Form 1023-EZ provides an excellent opportunity for small nonprofits to gain the benefits of tax exemption under IRC § 501(c)(3). With a reduced time and financial burden, many nonprofit organizations will find this form a welcomed addition.

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

The Consequences of Collaboration

We’re sometimes approached by artists who have undertaken a project with collaborators that have been asked to help the artist achieve their vision. However, the collaborators hadn’t worked out ahead of time who will own the resulting copyright and plunge into the project, or they have only the loosest agreement. By the time we see them, they’re trying to sort out who owns the resulting rights and may even be in the midst of an acrimonious dispute. The good news is that many ownership disputes can easily be avoided by having a written agreement in place prior to the project’s start.

A prime example is a musician who has composed a piece and wants to record a demo for purposes of shopping the demo to a record label or the underlying composition to a publisher. As part of that, the musician has sought out an engineer or perhaps other musicians to assist in the recording process.

Will the collaborators have any copyright ownership interest in the composition or resulting sound recording? In the absence of an employee/employer relationship (which will not be addressed here) or agreement to the contrary, the answer could very well be “yes”.

Copyright Law

Would-be authors, regardless of artistic discipline, should be aware of when and how copyrights come into existence. Copyright automatically attaches when a creative work is fixed in a tangible medium of expression. That is, the work is no longer just an idea in the author’s head and has been committed to a format viewable by the unaided eye or with the aid of a machine. Nothing additional is required of the author.

Ownership of the copyright is fixed with the author at the same time the work is made. If more than one person contributed to creation of the work, ownership will be held jointly amongst all of the co-creators.

Legal Effects of Collaboration

In the absence of an agreement that states otherwise, any artistic contributions made to either the composition or sound recording by the collaborators would make them co-authors and joint owners of any copyrights to which they’ve contributed. This could be as simple as modifications to the melody or lyrics, the addition of a solo, or production choices made during the recording process.

So what does this mean for our musician/composer? As a co-owner of the demo recording, the collaborators would be free to make use of the materials as they see fit, other than to assign or exclusively license the copyright to another party. Further, if our solo musician plays the demo for a record label and the label decides to re-record the composition, collaborators on the composition would have an interest in the resulting royalties.

Obviously, this would be a disaster for a young solo musician as they’ve lost artistic control of what was originally their work or are splitting royalties with collaborators when they didn’t intend to. So what’s the best way to avoid these worst case scenarios?

Avoiding Co-Ownership

To that end, our musician has a couple of options to maintain ownership from the outset of the project: (1) record the demo by themselves or (2) put in place an agreement with collaborators that all of their contributions are owned by the musician.

To avoid any issues, it’s best to have a written agreement in situations where you want to completely own the final product without question or subject to outside claims. Ideally, any artist preparing to undertake a collaborative project should consult put in place an agreement assuring full ownership of the resulting works.

If an artist has already completed a project with collaborators and no agreement was in place, they should immediately try to sort out issues of ownership. In either case, it’s best to consult with an experienced attorney who can guide the process.

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

Negotiating Contract Terms: Kill Fees

Aspect Law Group is collaborating with Design Week Portland for a column called "Creatives Ask a Lawyer". Head over here to find out more. Q: “What is the recommended kill fee for independent contractors to put in their client contracts?”

You can read the full post and answer to this question on the Design Week Portland tumblr.

This is a great questions because it touches on several topics. In the post, I cover the importance of a contract, contract terms such as kill fees and alternatives, and negotiating contracts.

Thanks for the question!

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

Logos: to Inc. or not to Inc.

Aspect Law Group is collaborating with Design Week Portland for a column called "Creatives Ask a Lawyer". Head over here to find out more. Q: "Do logos need to display ‘Inc’ or ‘LLC’? I have a client that has been told by his lawyer that his logo has to have ‘Inc’ somewhere in it. I have run into this many times, as well as clients insisting that they have to have the ‘LLC’ in the logo. All the information on the web says that it is not needed on the actual logo, but must be on trademark and corporate filings."

You can read the full post and answer to this question on the Design Week Portland tumblr.

In the post, I cover trademark law basics, business law, and general business practices issues. The short answer is that logos do not need to have the business designation but certainly can, and business should use their full legal name when conducting business.

Thanks for the question!

Notice: This post is for informational purposes only and is not a substitute for professional advice based on a review of individual circumstances. Please contact an attorney regarding your particular legal issues.

Creatives Ask a Lawyer

Aspect Law Group is working with Design Week Portland to bring you "Creatives Ask a Lawyer"! From DWP:

Do you know when you need a contract? Or how to register a trademark? Bryan Wasetis from Aspect Law Group works primarily with artists, designers, and makers on issues we face, like licensing and protecting intellectual property.

He's here to answer all of your burning legal questions and will be working a few responses into a column on our blog.

You can send us questions through Twitter or email.

Keep an eye out for our answers!