Copyrights of the firm

A copyright is a form of intellectual property protection that grants to the owner of a work of authorship the legal right to determine how the work is used and to obtain the economic benefits from the work.22 The work must be in a tangible form, such as a book, operating manual, magazine article, musi- cal score, computer software program, or architectural drawing. If something is not in a tangible form, such as a speech that has never been recorded or saved on a computer disk, copyright law does not protect it.

Businesses typically possess a treasure trove of copyrightable material, as illustrated earlier in Table 12.1. A work does not have to have artistic merit to be eligible for copyright protection. As a result, things such as operating manuals, advertising brochures, and training videos qualify for protection. The Copyright Revision Act of 1976 governs copyright law in the United States. Under the law, an original work is protected automatically from the time it is created and put into a tangible form, whether it is published or not. The first copyright in the United States was granted on May 31, 1790, to a Philadelphia educator named John Barry for a spelling book.

1. What is protected by a copyright?

Copyright laws protect “original works of authorship” that are fixed in a tan- gible form of expression. The primary categories of material that can be copy- righted follow:

Literary works: Anything written down is a literary work, including books, poetry, reference works, speeches, advertising copy, employee manuals, games, and computer programs. Characters found in literary works are protectable if they possess a high degree of distinctiveness. A character that looks and acts like Garfield, the cartoon cat, would infringe on the copyright that protects Garfield.

Musical compositions: A musical composition, including any accompa- nying words, that is in a fixed form (e.g., a musical score, CD, or an MP3 file) is protectable. The owner of the copyright is usually the composer and possibly a lyricist. Derivative works, which are works that are new rendi- tions of something that is already copyrighted, are also copyrightable. As a result of this provision, a musician who performs a unique rendition of a song written and copyrighted by Miley Cyrus, Katy Perry, or Bruno Mars, for example, can obtain a copyright on his or her effort. Of course, each of these artists would have to consent to the infringement on its copyright of the original song before the new song could be used commercially, which is a common way that composers earn extra income.

Computer software: In 1980, Congress passed the Computer Software Copyright Act, which amended previous copyright acts. Now, all forms of computer programs are protected.

Dramatic works: A dramatic work is a theatrical performance, such as a play, comedy routine, newscast, movie, or television show. An entire dramatic work can be protected under a single copyright. As a result, a dramatic work such as a television show doesn’t need a separate copy- right for the video and audio portions of the show.

Pantomimes and choreographic works: A pantomime is a performance that uses gestures and facial expressions rather than words to communi- cate a situation. Choreography is the arrangement of dance movements. Copyright laws in these areas protect ballets, dance movements, and mime works.

Pictorial, graphic, and sculptural works: This is a broad category that includes photographs, prints, art reproductions, cartoons, maps, globes, jewelry, fabrics, games, technical drawings, diagrams, posters, toys, sculptures, and charts.

Other categories of items covered by copyright law include motion pictures and other audiovisual works, sound recordings, and architectural works.

Copyright law provides broad protection for authors and the creators of other types of copyrightable work. The most common mistake entrepreneurs make in this area is not thinking broadly enough about what they should copyright.

2. Exclusions from copyright protection

There are exclusions from copyright protection. The main exclusion is that copyright laws cannot protect ideas. For example, an entrepreneur may have the idea to open a soccer-themed restaurant. The idea itself is not eligible for copyright protection. However, if the entrepreneur writes down specifically what the soccer-themed restaurant will look like and how it would operate, that description is copyrightable. The legal principle describing this concept is called the idea–expression dichotomy. An idea is not copyrightable, but the specific expression of an idea is.

Other exclusions from copyright protection include facts (e.g., population statistics), titles (e.g., Introduction to Entrepreneurship), and lists of ingredients (e.g., recipes).

3. How to obtain a copyright

As mentioned, copyright law protects any work of authorship the moment it assumes a tangible form. Technically, it is not necessary to provide a copyright notice or register work with the U.S. Copyright Office to be protected by copy- right legislation. The following steps can be taken, however, to enhance the protection offered by the copyright statutes.

First, copyright protection can be enhanced for anything written by at- taching the copyright notice, or “copyright bug” as it is sometimes called. The bug—a “c” inside a circle—typically appears in the following form: © [first year of publication] [author or copyright owner]. Thus, the notice at the bot- tom of a magazine ad for Dell Inc.’s computers in 2016 would read, “© 2016

Dell Inc.” By placing this notice at the bottom of a document, an author (or company) can prevent someone from copying the work without permis- sion and claiming that they did not know that the work was copyrighted. Substitutes for the copyright bug include the word “Copyright” and the ab- breviation “Copr.”

Second, further protection can be obtained by registering a work with the U.S. Copyright Office. Filing a simple form and depositing one or two samples of the work with the U.S. Copyright Office completes the registration process. The need to supply a sample depends on the nature of the item involved.

Obviously, one could not supply one or two samples of an original painting. The current cost of obtaining a copyright is $35 if filed electronically and $55 if filed on paper. Although the $35 fee seems modest, in many cases it is impractical for a prolific author to register everything he or she creates. In all cases, however, it is recommended that the copyright bug be attached to copyrightable work and that registration be contemplated on a case-by-case basis. A copyright can be registered at any time, but filing promptly is recom- mended and makes it easier to sue for copyright infringement.

Copyrights last a long time. According to current law, any work created on or after January 1, 1978, is protected for the life of the author plus 70 years. For works made for hire, the duration of the copyright is 95 years from publi- cation or 120 years from creation, whichever is shorter. For works created be- fore 1978, the duration times vary, depending on when the work was created. After a copyright expires, the work goes into the public domain, meaning it becomes available for anyone’s use.

4. Copyright infringement

Copyright infringement is a growing problem in the United States and in other countries, with estimates of the costs to owners at more than $25 billion per year. For example, less than a week after the film was released in the United States, bootleg video discs of the original Harry Potter movie were reported to be for sale in at least two Asian countries. Taking this a step further, we note that a recent study showed that as of 2013, Internet infringement in the enter- tainment industry “accounts for almost one-fourth of all bandwidth in North America, Europe and Asia.”23 Copyright infringement occurs when one work derives from another, is an exact copy, or shows substantial similarity to the original work. To prove infringement, a copyright owner is required to show that the alleged infringer had prior access to the copyrighted work and that the work is substantially similar to the owner’s.

There are many ways to prevent infringement. For example, a technique frequently used to guard against the illegal copying of software code is to embed and hide in the code useless information, such as the birth dates and addresses of the authors. It’s hard for infringers to spot useless information if they are simply cutting and pasting large amounts of code from one program to another. If software code is illegally copied and an infringement suit is filed, it is difficult for the accused party to explain why the (supposedly original) code included the birth dates and addresses of its accusers. Similarly, some publishers of maps, guides, and other reference works will deliberately include bits of phony information in their products, such as fake streets, nonexistent railroad crossings, and so on, to try to catch copiers. Again, it would be pretty hard for someone who copied someone else’s copyrighted street guide to ex- plain why the name of a fake street was included.24

Current law permits limited infringement of copyrighted material. Consider fair use, which is the limited use of copyrighted material for purposes such as criticism, comment, news reporting, teaching, or scholarship. This provision is what allows textbook authors to repeat quotes from magazine articles (as long as the original source is cited), movie critics to show clips from movies, and teachers to distribute portions of newspaper articles. The reasoning behind the law is that the benefit to the public from such uses outweighs any harm to the copyright owner. Other situations in which copyrighted material may be used to a limited degree without fear of infringement include parody, reproduc- tion by libraries, and making a single backup copy of a computer program or a digital music file for personal use. Case 12.2, titled “Protecting Intellectual Property: Elvis’s Memory and Intellectual Property Live On,” focuses on a copyright infringement case in which the courts ruled that fair use was not being employed appropriately. A more recent case, involving GoldieBlox, a 2012 start-up, and the hip-hop band the Beastie Boys, also involved fair use. The case involved GoldieBlox using a Beastie Boys song in a video ad without obtaining the Beastie Boys’ permission, and claiming fair use as justification. The case was closely followed by the media and is profiled in the nearby “What Went Wrong?” feature. It vividly portrays the types of legal entanglements that start-ups can get into if they don’t understand or if they push the boundaries of intellectual property laws.

5. Copyright and the internet

Every day, vast quantities of material are posted on the Internet and can be downloaded or copied by anyone with a computer and an Internet connec- tion. Because the information is stored somewhere on a computer or Internet server, it is in a tangible form and probably qualifies for copyright protection. As a result, anyone who downloads material from the Internet and uses it for personal purposes should be cautious and realize that copyright laws are just as applicable for material on the Internet as they are for material purchased from a bookstore or borrowed from a library.

Copyright laws, particularly as they apply to the Internet, are sometimes difficult to follow, and it is easy for people to dismiss them as contrary to com- mon sense. For example, say that a golf instructor in Phoenix posted a set of “golf tips” on his website for his students to use as they prepare for their les- sons. Because the notes are on a website, anyone can download the notes and use them. As a result, suppose that another golf instructor in a different part of the United States or in a different country ran across the golf tips, downloaded them, and decided to distribute them to his students. Under existing law, the second golf instructor probably violated the intellectual property rights of the first. Arguably, he should have gotten permission from the first golf instructor before using the notes even if the website didn’t include any information about how to contact the first instructor. To many people, this scenario doesn’t make sense. The first golf instructor put his notes on a public website, didn’t include any information about how to obtain permission to use them, and didn’t even include information about how he could be contacted. In addition, he made no attempt to protect the notes, such as posting them on a password-protected Web page. Still, intellectual property rights apply, and the second instructor runs the risk of a copyright infringement suit.

There are a number of techniques available for entrepreneurs and web- masters to prevent unauthorized material from being copied from a website. Password protecting the portion of a site containing sensitive or proprietary information is a common first step. In addition, there are a number of techni- cal protection tools available on the market that limit access to or the use of online information, including selected use of encryption, digital watermarking (hidden copyright messages), and digital fingerprinting (hidden serial num- bers or a set of characteristics that tend to distinguish an object from other similar objects).

Source: Barringer Bruce R, Ireland R Duane (2015), Entrepreneurship: successfully launching new ventures, Pearson; 5th edition.

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