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Supreme Court determines Aereo violates copyright – back to the drawing board

This morning, the U.S. Supreme Court ruled in a 6-3 decision that Aereo violates copyright law by retransmitting over-the-air programming without authorization.  This will shut down the controversial start-up or force them back to the drawing board to come up with a new system.  The sound you heard was a huge sigh of relief of all over-the-air networks, cable carriers and content creators because this would have caused everyone to re-evaluate how programming is broadcast, and more importantly, paid for.

For those not familiar with Aereo, it essentially allowed users to “rent” an antennae that would pick up a signal at a certain point.  Aereo would then take that over the air signal and send it to the user’s phone so they could stream the content from their phones.

The issue was whether this was a “public performance” of the copyrighted works.  Aereo said it was not because the users could receive the same content for free if they had antennas attached to their TV at home.  Aereo merely re-transmitted the same content to allows users to access it on their phone privately.

The networks sued Aereo almost as soon as it launched in 2012.  They argued the simultaneous broadcasts to thousands of paying customers represented an illegal retransmission of protected works — even if you called it renting an antenna.

Actually, everyone can give a sigh a relief.  Had Aereo won, the broadcast networks said they would stop providing content.  The cable companies pay the networks a lot of money to retransmit the over the air channels and this would have changed everything.

While this is a blow to Aereo and possibly innovation – at least through this specific model – the world as we knew it before Aero will continue.

 

The Law and Unpaid Interns – Repost

Originally published last year, but worth revisiting

As the summer arrives in full force, I am watching a lot of my start-up friends take advantage of the unpaid internship to help with some needed coding, design or marketing projects they haven’t gotten to.   These kids are smart, hungry, can use the experience and wouldn’t it be nice to have someone pick up coffee and donuts for you once in awhile?

As my Gray Reed colleague Michael Kelsheimer explains in a prior post on his Texas Employer Handbook blog, you have to be careful when using unpaid labor.

 

UNPAID INTERNS, VOLUNTEERS AND TRAINEES

Who, What, Why . . .
Who does it apply to: Every employer who has or intends to hire unpaid interns.
When must an intern be paid: All “employees” of a business must be paid at least minimum wage unless they are a “trainee” under the law, regardless of whether they are called an “intern.”  So, what makes a trainee? The United States Department of Labor (DOL) has established a six-factor test couched in terms of – you guessed it – training – to determine whether an unpaid intern should be considered an employee or trainee under the Fair Labor Standards Act (FLSA):
  • the training is similar to that which would be given in a vocational school (even though it includes actual operation of the facilities of the employer);
  • the training is for the benefit of the trainees;
  • the trainees do not displace regular employees, but work under their close observation;
  • the employer that provides the training derives no immediate advantage from the activities of the trainees, and on occasion operations may actually be impeded;
  • the trainees are not necessarily entitled to a job at the conclusion of the training period; and
  • the employer and the trainees understand that the trainees are not entitled to wages for the time spent training.
When can I hire an unpaid intern or volunteer: The six-factor test is primarily used in the, “for profit,” private sector. State and local government agencies and non-profit organizations can generally utilize interns or volunteers without an obligation to pay them under the FLSA. It is important, though, that the volunteers understand they are not to be paid for their time. Volunteer work at non-profit, religious, charitable, and civic organizations have specifically been cleared by the Texas Workforce Commission.
What about true student interns: Student interns are not evaluated differently by the DOL. They should easily meet the trainee test. That said, there are special rules for individuals who have completed a professional degree like physicians, attorneys, and therapists, generally allowing them to volunteer their time as they choose.
What do these factors really mean: The more an internship program can be structured around a classroom or academic type experience the better. It is better if the employer can provide the individuals with skills applicable to various employment settings, not just skills particular to the employer’s business. Essentially, the employer needs to provide the intern or volunteer with valuable training. Ideally, the training would make them more marketable in the open job market. The employer must pay any intern or volunteer that is used as a replacement for a regular employee or to reduce their workload. The intern or volunteer should receive more supervision than a regular employee.  If the employer would have to hire additional employees if the intern or volunteer were not performing certain work, the intern or volunteer would be considered an employee. Don’t rely on unpaid interns to do work of any real significance to your business. The work done by an unpaid intern should be secondary to their training. An intern that is hired by an employer on a trial basis with the expectation that they will eventually be hired full time will likely be considered an employee under the FLSA. Employers should indicate prior to the start of the internship that there is no guarantee or expectation of hiring the interns upon completing the internship. A written agreement indicating this is advisable. Employers should indicate prior to the start of the internship that there is no intention to pay the intern. A written agreement indicating that the intern will not be paid and does not expect to be paid is advisable.
What happens if I don’t follow the test: An employer violating the rule is subject to the same damages available to an employee who is not paid all of the wages they are owed. This may include minimum wage and overtime for all hours worked, plus an equal amount in liquidated damages for all interns over the past two or three years.
What about discrimination laws: It depends on whether the person in question receives “significant remuneration” for their efforts. The EEOC has stated that things like a pension, group life insurance, workers’ compensation, or access to professional certifications constitute significant remuneration. However, Courts have determined that things like academic credit, practical experience, and scholarly research do not constitute significant remuneration. Because this point is subject to interpretation, however it is best to treat all interns and volunteers as though they are employees with respect to discrimination laws.
Common Situations:
Required training: Safety First is ready to hire a new class of security guards.  The company requires that security guard trainees receive 40 hours of training prior to performing any regular work under their service contract.  According to their contract, the training is focused on “company practices, policies, and rules.” Does Safety First have to pay the trainee security guards even though they are not yet performing regular work?  Yes. These trainees would be considered employees because: (1) the employer is directly benefiting from their training, (2) the training is given to security guards who will work on contract, and (3) Safety First can only employ specifically trained guards.
Homegrown hiring: Maverick Finance hires interns each summer.  Maverick’s intern program is structured much like an academic program.  The interns do not do the work of regular employees and are heavily supervised.  The interns are not paid and are aware there is no guaranty of employment.  However, Maverick hires its first year analysts almost exclusively from the unpaid interns it has each summer. Does the FLSA require Maverick to pay these interns at least minimum wage? Probably.  Although Maverick substantially satisfies the six factor test, its practice of hiring analysts from the intern pool is likely enough to tip the balance against the company in the face of a DOL audit.
What should I do:
Good: Paying minimum wage to all interns probably is the safest bet. You avoid the risk of an audit of all your employment practices because of one dissatisfied intern that calls the DOL.  If you go the trainee route, be sure to meet all the factors.
Better: If you have true “trainees” taking into consideration all the factors, it makes sense to put that understanding in writing in a short half-page agreement outlining the factors. If you use volunteers, it makes sense to have them sign a one-paragraph agreement acknowledging their status as a volunteer without expectation of pay or other “significant remuneration” to avoid the possibility of an EEOC complaint.
Best: In addition to the items above, require that the trainees keep track of their hours so you have a record of how much they might be entitled to if the DOL audits and rules them employees. Be sure they do not work more than 40 hours to avoid increasing the risk to include overtime. Have the trainees and their supervisors keep a log of their activities so that there is no confusion regarding the type of work they did.

 

Copyrights, Fair Use and Elections

The mid-terms are coming up, so you know there will be stories of politicians getting into clashes with artists over the use of songs and other content in ads and at rallies.  In Texas, for better or worse, the real competition is often in the Republican primary and several run-offs have already brought up some copyright issues.

But it’s a fair use!

Many ads use snippets from copyrighted TV news stories or headlines from local papers often citing fair use.   Fair use is an affirmative defense to a copyright violation meaning, it is the campaign’s burden to prove the use was fair.   Fair use is a factually-specific inquiry and there is no bright line test. Courts consider these four factors:

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(2) the nature of the copyrighted work;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work.

A Texas Showdown Example

Dan Branch is a candidate in a run-off for Texas Attorney General.  NBC-owned Dallas station KXAS is arguing the Branch campaign used too much footage from its copyrighted newscast in this letter.

Specifically, NBC says the ad features “extensive use” of the story and features the voice and likeness of their anchor.  All but two seconds of music at the beginning is the TV news story.  NBC also says the use of the footage makes it appear the anchor and the station support the candidate and creates questions of journalistic integrity.

You can see the ad here for yourself.

NBC has demanded that the campaign cease further dissemination of the ad.  As of today, the video was still up under TexansforDanBranch on YouTube.

The run-off for the Republican primary in the race for Lt. Governor has gotten more attention including this ad:

Parody is also a defense to a copyright claim.  Yes, even bad parodies can be protected. Just think what happens when the ads start focusing on the people in the other party.

Related:

The DMCA and campaigns

You’ve looked at my site and now you have waived your right to sue me. Is that legal?

I’ll admit, General Mills did not go that far.  What they did, according to The New York Times was notify customers that if they downloaded a coupon, joined a forum or entered a sweepstakes, the customer would waive their right to sue in court and would have to go through an online “informal negotiation” or arbitration.

Since the story broke, General Mills is trying to backtrack.  For example, General Mills admitted it would not apply if you interacted with the company on Facebook or simply purchased one of its products at a store, but that the company could enforce it if you interacted on the company’s website.

However, there was a pop-up notice on the company’s home page that “require[s] all disputes related to the purchase or use of any General Mills product or service to be resolved through binding arbitration.”  Consumer watchdogs were concerned General Mills was trying to escape all liability for mislabeling claims or damages related to product recalls just because you “liked” a Facebook page or purchased a product at your local grocery.

In two recent cases, the Supreme Court has held related clauses to be enforceable.  In June 2013, in American Express v. Italian College Restaurant, the Court enforced an arbitration clause between AmEx and the merchandisers.  Two years before that in AT&T Mobility vs. Concepcion, the Court upheld a class action waiver.

Yet, there is still, and always will be, the issue of consent.  When I buy Lucky Charms for my kids (I know, Dad of the Year), I am not consenting to a long list of terms of conditions.  I am buying cereal.  A court would be hard-pressed to find I consented to a long list of terms and conditions on the General Mills website.  That would not be magically delicious in the least bit.

On the other hand, if I download a coupon, or enter a sweepstakes, I would not be surprised to have a pop-up that requires me to agree to terms and conditions no one reads. I might waive my rights to file a class action or a jury trial as it relates to that particular transaction.  In fact, I would not be surprised if this practice becomes more prevalent.

There may be some issues as to whether downloading a Cheerios coupon means I agreed to waive claims against Haagen Dazs in an unrelated transaction.

Despite the fact social media and the internet have made things a little more complicated and hard to keep up with, the basics of contract law still apply.  To bind a consumer, you need to show they consented to the terms which is why a click-wrap agreement is preferred over a browse-wrap agreement.  On top of that, especially when it comes to jury and class action waivers, you need to satisfy both procedural and substantive conscionability.

 

Infographic: The Use of Images From The Web on Your Site, Newspaper or Broadcast

We created this infographic for some of our media clients to give them a one-page cheat sheet on the analysis they need to do when trying to decide whether they can use an image from the internet in a pinch.

The infographic includes all the caveats because rarely can a legal issue be discerned down to one page with so few words.  In fact, I wrote a three-part series on this very topic last year.  

To view this as a pdf, click Use of Images InfoGraphic.

 

#SMH-butnotacontestorsweepstakes – Check your online promotion hashtag or face scrutiny from the FTC

As we have reported before, the Federal Trade Commission requires the disclosure of any “material connection” offered in exchange for an online endorsement or post in their Online Endorsement Guidelines. Now, they are applying those rules to online promotions that require contestants to post, tweet or pin certain message to participate.

For those of you with short attention spans, this means that you should make all contestants post, pin, hashtag or use some method that notifies everyone that whatever content the contestants are submitting is part of a contest or sweepstakes.  It could require the use of the word “contest” or “sweepstakes” in all hashtags or posts. Otherwise, the FTC believes consumers are misled by your friend’s endorsement of a product if they don’t know you endorsed it to enter a contest or sweepstakes.

The guidance comes to us courtesy of the FTC’s recent investigation of Cole Haan. The shoe and fashion company conducted a Pinterest contest where contestants had to use the hashtag #WanderingSole. In addition, contestants had to pin five images on the board posting their favorite places to wander. Cole Haan was giving away a $1,000 shopping spree to the most creative entries.

The FTC investigated. Although the FTC decided not to act in this instance, it indicated future contest sponsors may not be so fortunate. Under Section 5 of the FTC Act, the FTC has the ability to pursue claims for “unfair or deceptive acts or practices in or affecting commerce.” By not disclosing a “material connection” between an online endorsement and anything of value the brand may be offering, the FTC suggests you may be engaging in unfair or deceptive acts.

In the Cole Haan case, The FTC determined that each “pin” was an endorsement of the brand and the opportunity to win $1,000 in exchange for the pin was a material connection that should have been disclosed. Simply requiring “#WanderingSole” was not enough to inform other consumers who may view the pins, that they were part of a contest.

Despite these findings, the FTC decided not bring an enforcement action and therefore closed the investigation. The main reason for the lack of enforcement is this was the first time the FTC addressed the issue of whether contests provide a “material connection” offered in exchange for a social media or online action. You can therefore consider this to be the FTC’s warning. If you are doing a contest that requires posting, pinning, tweeting or something similar, then make sure the hashtag includes something that tells the market, this is a contest or sweepstakes. It could be as simple as “#WanderingSoleContest” or “#WanderingSoleSweeps”.

In addition, contest and sweepstakes rules should be prominently displayed so consumers know people are being asked to submit content as part of the contest.

While this may be taking the Online Endorsement Guides a little too far, and the FTC may not prevail in an enforcement action, you are better off letting someone else fight that battle as opposed to you.  The safest course is to require contest or sweepstakes in your user generated content.

This guidance is just one more thing to consider when engaging in online marketing and contests. If you are offering anyone, anything of value (which, apparently now is the opportunity to win a prize, but was more traditionally free product) in exchange for content, then you need to consider including a disclosure of the connection.

You can find read the FTC Closing Letter here, the Online Endorsement Guidelines here, a discussion of the guidelines here, more about appropriate social media policies to address these issues here, and read more about legally compliant online promotions and contests here.

 

The Law of Online Promotions

I recently did a CLE presentation on making your online promotions legally compliant.  I hope to be able to share some video with you soon, but if you like reviewing PowerPoints (and who doesn’t?), then enjoy.

 

Online Promotions

You can read more here from a previous post.

When Online Behavior Crosses the Line – The Law on Threats, Libel and Just Being Rude

A frequent question we get is what can we do about the online posting about me?  Often times, the answer is not much.  Lawyers can only help when the online conduct crosses the line into a cognizable cause of action.  Figuring that out is the hard part.

The Threatening or Harassing Post

Is there an ex spewing hate against you on Facebook?  Is a disgruntled fan or customer telling the world what they would like to do you?  Many times, the First Amendment will protect their conduct.  Sometimes, however, the law can help.

Take for example, a “fan” of the New York Knicks who suggested the owner of the team needed to die with posts that included naked pictures of the poster with a gun.  The police arrested him.

Sports often bring out the worst.  I’ve seen some of it with my own sports teams with the Michael Sam story and the question of whether the Houston Texans will use the first pick on Johnny Football.

Most fan rants are protected by the First Amendment, but threats of immenint harm or immediate calls to illegal actions are not.   Jack Greiner of the Graydon Head Out of the Box Blog blog breaks down the law on threats versus free speech in this case here.  The oversimplification is that if a reasonable person would believe the speaker has an intent to cause actual harm, then it can become a threat and not mere protected speech.   Moreover, when the target of the threat is a sport figure or politician, it may not be realistic to think the person would actually act it out, but there are enough crazy people out there for law enforcement to take a close look at some of these cases.

In addition to threats, may states, like Texas, have online harassment laws.  Perhaps, your ex knows better than to make a physical threat, but continuously harasses you. In Texas, a person commits an offense if the person “uses the name or persona of another person to create a web page on or to post one or more messages on a commercial social networking site: (1) without obtaining the other person’s consent; and (2) with the intent to harm, defraud, intimidate, or threaten any person.”

It is also crime to: “send[] an electronic mail, instant message, text message, or similar communication that references a name, domain address, phone number, or other item of identifying information belonging to any person: (1) without obtaining the other person’s consent; (2) with the intent to cause a recipient of the communication to reasonably believe that the other person authorized or transmitted the communication; and (3) with the intent to harm or defraud any person.”

Revenge Porn

The American Bar Association recently wrote an excellent article on revenge porn you can read here. For the uninitiated, revenge porn is when the ex publishes what were supposed to be private nude pictures for the world to see often including full names, addresses, phone numbers and links to social media profiles. There is a whole cottage industry bubbling up of websites who encourage posters to provide this information.

As a victim, you can bring civil claims like invasion of privacy, intentional infliction of emotional distress and copyright claims if you took a selfie because the copyright usually belongs to the photographer and not the subject. But, these claims are expensive to bring and there are no guaranties because a lot of people blame the victim for having nude pictures in the first place.

Meanwhile, it is hard to sue the websites where these pictures are downloaded because Section 230 of the Communications Decency Act gives immunity to websites based on claims related to user generated content.

California passed a law last month that seeks to punish “Any person who photographs or records by any means the image of the intimate body part or parts of another identifiable person, under circumstances where the parties agree or understand that the image shall remain private, and the person subsequently distributes the image taken, with the intent to cause serious emotional distress, and the depicted person suffers serious emotional distress.”

Professor Goldman on his Technology and Marketing Law Blog points out the faults of the law which include: (i) it does not apply to selfies; (ii) it does not apply to redistribution or websites which could have Section 230 issues; and (iii) the difficulty in proving beyond a reasonable doubt the parties’ expectations of privacy or the intent of the accused.

While there are some class action lawsuits against some of the sites that encourage this behavior that we will keep an eye on, one of the best weapons may be to shine the light on the scum who engage in revenge porn using the same social media tools and the let the markets take care of the websites.

Civil Claims

Most of the examples so far deal with criminal complaints.  To do that, you need to get the D.A.’s attention.  What about a civil lawsuit?  What can you do if the police or the D.A. won’t act?

You can follow the lead of a woman who is suing Sprint for invasion of privacy, infliction of emotional distress and identity theft after a Sprint employee posted explicit pictures of the customer who turned in a phone for an upgrade.  You can read more about the case here.

Intentional infliction of emotional distress can be a tough case to prove and the invasion of privacy of laws differ in each state.

Parents are also taking to the civil courts to address cyberbullying.

Related Posts

For tips on handling consumer reviews, go here and here.

Open Source Software: Goodwill To All or a Cancer?

Open source software sounds like a good idea.  Your create some code and then put it out there for the public to use and let people build on it and improve.  The only condition is that if someone improves on it and build from it, they often have to share their improvements with the world.  Everyone wins right?  Everyone except anyone trying to sell software or a company with proprietary customized software.

Great for inhouse customization

There is much more open source, also known as General Public License or copyleft software, than you may imagine.  According to a 2010 PC Magazine survey, 98% of companies use open source software.  Often times, companies customize the the open source software to fit their needs with in house programmers building from the publicly-available code.  These improvements are often valuable to the company.  Under most general public licenses, you don’t have to share the code when you are only using it in house.

Now we are selling, so do we have to show everyone our code?

But, what happens when there is a sale?  Under most general public licenses, once the improved code is used by anyone else other than the creator, it has to be shared with the public.  For private companies who go through major transactions, you can see the problem — disclosing what is a valuable proprietary asset to the world.  In most large transactions, there is going to be a code audit that will reveal the code subject to GPL’s.

What to do?

So, what do you do about this?  The best practice is to be proactive.  If you are working on a commercial proprietary customization, many GPL’s allow for dual licensing.  You can buy the commercial license of the GPL that gives you greater rights including the ability to keep your improvements secret.  You need to review the GPL and the dual license carefully.

You can try and keep the proprietary part separate from the open source software.  This is an extremely technical issue along with an analysis as to what is a modification versus an aggregation.   You need to have the development team work with legal if you plan on going this route.

I wish I called you back when I started.

What if it is too late?  You are probably not surprised that we get that a lot.  If you have been using software in house but now need to transfer it, what do you do when you discover it has GPL code?

You can go back and try and get the dual license from the last creator of the open source software.  Under the right circumstances, that will prevent you from having to disclose your improvements to the world.

You can also do a reversion.  That means going back to the software before the introduction of the open source software and then rebuilding it.  This, sometimes, is the only option.

When private companies are involved, you can see why some refer to open source software as a cancer.  Its innocent inclusion on a basic building block of software can destroy all the commercial value of what you have spent years building.

Because copyleft is relatively new, there are few cases interpreting these licenses.  You can read about a recent case here.  You need to think about these issues while building software and certainly when you are in the acquisition stage.

 

[Audio] Podcast Interview with Resonance Content Marketing’s Rachel Parker

I was a recent guest on the Content Marketing Podcast with Resonance Content Marketing’s Rachel Parker.  It is always entertaining and refreshing to visit with the people in the trenches and find out what is on their mind.  We covered privacy, intellectual property, employee relations, and much more.  You should listen to the whole thing, but the interview starts at 6:56.