Small Business and Intellectual Property-Copyrights and Trademarks in New York.

Increasingly, small businesses use the Internet to sell, to launch, to inform, to market, to complain, . . . . [to do just about anything]. There are so many rules, regulations, statutes, concerns, and other worries, that it is impossible to address them all. Many arise without expectation. That said, here are some “basics” about copyright.

Intellectual property refers to the set of rights an owner has to creations of the mind. Generally, a copyright is a set of exclusive rights granted to the author – or owner – of an original work. Original works may include literary, dramatic, musical, artistic, and certain other intellectual works. Any unauthorized use of a copyrighted work is an infringement of a copyright holder’s exclusive rights to control who can reproduce, distribute, and display his or her works.

There are exceptions to the general rule (aren’t there always). Fair use allows the use of copyrighted materials for purposes of criticism, comment, teaching, scholarship, or research to serve as a balance between protecting intellectual property rights and the free exchange of information and opinion.

The courts determine whether a case is a copyright infringement or fair use on a case-by-case basis taking into consideration all relevant circumstances and weighing four factors:

1) purpose and use of copy,
2) nature of copyrighted work,
3) amount copied, and
4) copy’s effect on the copyrighted work’s potential market.

If the matter reaches court, the small business loses (my opinion). Courts, however, will likely rule use of copyrighted work is “fair use” if the purpose of the copy is for noncommercial personal use, education or research, the nature of the copyrighted work is more factual than artistic, the amount copied is not a substantial portion of the work, and the potential market for the copyrighted work would not negatively impacted by the copying. [As an aside– how is it that advertising uses of copyrighted material on a web-site would be considered “non-commercial]?

Applying traditional understandings of fair use to the Internet has posed to be a recent challenge for Congress and the American courts. Although Internet technologies have made copying, sharing, and transforming copyrighted content more efficient, search engines have also made the copying, sharing, and transforming easy to identify and locate. Internet content providers argue their use of copyright works is fair use; Copyright holders and content creators cry infringement.

Thus far, courts continue to determine infringement claims under all the circumstances of the case with particular attention to the four factors. Internet content providers have been held liable for copyright infringement in some cases where the use of the copy for commercial use, the nature of the copyrighted work was more artistic than factual, the amount copied was substantial, and potential market for the copyrighted work would be negatively impacted by the copying.

A second safeguard is Section 512 of the U.S. Digital Millennium Copyright Act holding Internet content providers will not be liable for contributory infringement if there is prompt removal of copied copyrighted works in response to a ‘take-down’ letter. Contact an attorney to write a letter demanding the removal, and follow the procedures in that law.

The Bottom Line — small businesses should be careful not to use copyrighted material. Even when there’s a strong case to use copyrighted material based on the fair use defense, it’s wiser to err on the side of caution– get permission from the copyright owner or don’t use the copyrighted material.