November 7, 2024
I talk a lot here about aspects of intellectual property law. It’s an area I find pretty fascinating because it has to do with how a society encourages people to create, and the law embodies beliefs about how to accomplish that. I also talk a lot about partnership disputes which, along with IP work, forms a big part of my practice.
Sometimes, when you put two good things together you get something great (Reese’s!). Other times, though, you just get a mess. (Melted chocolate in your pocket? OK, I’ll stop now.) Often, it’s my job to sort out the issues created when partnership disagreements intertwine with intellectual property issues — specifically, who owns a company’s IP when a partnership falls apart.
In such disputes, there are a few rules that usually apply. I’ve found these are often unknown to or misunderstood by the people involved in these scenarios. So let’s run through them.
- Just because two people or a larger group didn’t formally register a company doesn’t mean there isn’t a partnership. In New York (where I primarily practice) and in other states, courts can find that people entered into a partnership even if they never filed paperwork to create a business entity. There are a range of factors that can come into play here but, in general, courts will look at whether the parties shared the business’s profits and losses; jointly managed or controlled the business; contributed money to the business; and/or whether they intended to be partners. Why does this matter? Because, during the existence of a partnership, the partners owe each other fiduciary duties, meaning they must treat each other fairly and, importantly, no individual member of the company can claim the company’s property for herself.
- Thus, even if a partner registers a partnership’s trademark in her or his name, that trademark belongs to the partnership — not to her. For example, if a business operates under or sells a product with a name and/or logo, one of the members of the business can’t take ownership of that name or logo by individually obtaining a trademark registration for it. Nor can they exclude other members of the business from using the name or logo if the partnership breaks up.
- Copyright rules are different! Generally speaking, a copyright vests in the creator, not the company. This means that if partners (either individually or together) create a work that is copyrighted or copyrightable, the copyright goes to the creator or creators, not the business. Moreover, under copyright law, transferring a copyright requires a written document, so if any owner wants to transfer a copyrighted work from themselves to the business, they need to have a document that says so.
- On a related note, just because something is created by a partner under the auspices of the business doesn’t mean it’s a “work for hire” and thus belongs to the business from the moment of its creation. Something only becomes a work for hire in two situations: (a) if it’s prepared by an employee within the scope of his or her employment; or (b) if there’s a signed written agreement stating that the material is a work for hire.
- Finally, the idea for a business is usually not protectable because, in general, ideas are not protectable intellectual property (I know, that sounds counterintuitive). Copyright law protects the expression of an idea, not the idea itself. So if you say to a friend, “Hey, we should open a business making ice cream for cats,” and your friend goes out and starts up Kitty Kreameries, you’re not entitled to any ownership of it. You have to put in the work and actually do the thing, not just think of the thing.
No one starts a business with others expecting things to turn sour. But it happens a LOT. So the overall lesson here: If you’re entering into or already in a business with others, whether you’ve formally created it or not, be aware what belongs to you and what belongs to the business as a whole so you won’t be taken by surprise if it all comes crashing down someday.
October 22, 2024
First, a disclaimer: bear with me on this one. Even though I start off with descriptions of the various offices I’ve inhabited since 2021 and my struggles furnishing them, the tale does lead to some lessons that are worth thinking about as we prepare for the inevitable onslaught of articles and emails about how to plan for 2025.
Like many people with desk jobs, I worked from home during the pandemic. It wasn’t a big deal, as I was used to meetings on Zoom and my bookkeeper, assistant, and paralegal had always been remote.
In the fall of 2021, as COVID was starting to ease, New York City decided to install a new water main outside my bedroom/office. This ensuing construction cacophony was the end of my working from home.
I moved into a private office within a small shared space that was pretty great in many ways. It had a big window, a lovely view of the Manhattan skyline and one of my neighbors was a floral designer, which meant I frequently had fresh flowers in my office. However, there were rarely any other people around, so it still felt like I was stuck in my bedroom. After that, I moved to another space with the hopes that I would have a regular officemate. Unfortunately, that didn’t work out as planned and I found myself still mostly alone every day.
About a year ago, I moved once again to my current office, which is in downtown Brooklyn. Third time is indeed the charm. There’s a nice mix of having other people around, but a door I can close when I’m on the phone or need to concentrate.
Even with this upgrade though, my actual office was pretty bleak. My furniture amounted to a junky old filing cabinet, a hand-me-down bookshelf, and a depressingly blank Zoom background. Mostly, this was because I just haven’t had time to find furniture that I like.
Recently this changed. I finally had some time to buy a new bookcase and filing cabinet. They’re quite nice and certainly a big improvement over my prior decor.
Of course, these purchases meant I had to transfer everything from the old furniture to the new. That archaeological dig unearthed a bunch of articles I had printed out and hand-scrawled notes I’d thrown in a folder to come back to later. As I read through this collection, I quickly realized almost all this material had to do, in some way, with growing a business. I soon became thoroughly engrossed in reading, stopped checking my email, let my computer go to sleep, and left my phone on the other side of the room.
It was an interesting journey through the past few years of my practice. Some of these articles and ideas were no longer relevant, as they contained ideas or advice I’d tried that didn’t work for me, or experiences I’ve subsequently written about here. But a lot of it still resonated and, as I worked my way through this stuff, it became pretty clear that there were some recurring themes. Nothing particularly earthshaking or radical, but ideas that are definitely worth revisiting. More importantly, the process — particularly being separated from my phone and other distractions — allowed me to step back and see connections that I had forgotten about or previously missed.
So what are the lessons here? First, creating a strategy for growing a business isn’t a one-and-done deal. What worked a few months ago might not work now, or could be ripe for further improvement. Through my review of this collection of material, I could see the evolution in my thinking and approach, and sort out what didn’t work, examine whether improvements were possible, and chuck the stuff that didn’t work or was no longer relevant.
In the next two-and-a-half months we’re all going to be bombarded with articles, commercials, and general blather advising us to plan for 2025, and my experience reading my articles and notes reinforced how you can’t plan for the future without assessing where you’ve been. Looking back on decisions and moves I’ve made is essential for taking stock of what works (and what doesn’t) and how to deploy resources in the future. Simply having an idea once, implementing it and never reexamining it can too easily lead to stagnation.
And what’s the best way to do this? By freeing ourselves from distraction! Stepping back from our phones and computers (and even some of the idle office chitchat I now enjoy that I missed so much during the pandemic) allows you to get new perspectives and see the connections between what you’ve done before and the results they’ve led to. Because the past is the strongest foundation we can build upon for the future.
October 8, 2024
Over the last few years there have been several cases of professional models suing “gentlemen’s clubs” (a/k/a strip clubs) for defamation. These suits involve the clubs grabbing the models’ pics off the Internet and using them on social media to promote their entertainment. (Weirdly, all of these suits are against strip clubs in New England. Draw your own conclusions.) None of this is particularly surprising. However, one current case has raised the interesting question of when the statute of limitations begins to run on defamation claims stemming from social media posts.
In this case, five models are suing Club Alex in Stoughton, Massachusetts, alleging the club used their photos in Facebook posts, creating the impression the models worked as dancers there. That’s defamation!
The club pushed back, noting that the offending posts were made between 2013 and 2015, but the models didn’t bring the lawsuit until 2021 — well after the three-year statute of limitations for defamation claims in Massachusetts had expired. On those grounds, the federal Court hearing the case initially granted the club’s motion to dismiss.
The models asked the Court to reconsider that decision. And, amazingly, the Court did!
Why would a federal judge basically admit, “ok, maybe I was wrong”? In a nutshell, here’s why: In some cases, Massachusetts (and most other states) use a “discovery rule” to determine when the statute of limitations starts to run. This avoids the unfairness of having statutes of limitations expire before a “Plaintiff knew or reasonably should have known that she may have been harmed by the conduct of another.” The models argued that this should also apply here because the vast ocean of information on social media meant they didn’t know (and couldn’t be reasonably expected to know) about the misappropriation of their images until years after the posts. What’s more, even if they had suspected misuse of the images, it’s very difficult to manually search thousands of strip clubs’ social media pages and websites, especially when search engines can’t search images without names.
Recognizing the models’ point, the District Court sent the issue to the Supreme Judicial Court (SJC) of Massachusetts — the highest state Court in that state — asking “under what circumstances, if any, is material publicly posted to social media platforms ‘inherently unknowable’ for purposes of applying the discovery rule in the context of defamation, right of publicity, right to privacy and related tort claims?”
The SJC held that, in the context of social media posts, a determination of when the statute of limitations begins to run should not be based on the date of publication, but rather “requires a fact-intensive, totality of the circumstances analysis to determine what the Plaintiff knew or should have known about the social media publication.” (It noted that this is not required where postings are widely available and readily searchable).
The SJC instructed judges faced with this issue to consider things like: “how widespread the distribution was;” whether the posting could be readily located by a search; if there is technology that could assist in locating potentially offending posts; and how widely the images are distributed and, thus, how hard or easy it is to separate authorized uses from unauthorized uses.
Here, this means that the models can continue to pursue their defamation claims against the club.
A final thought: In a way, this is the flipside of the Netflix case involving their series Baby Reindeer and the lawsuit against them by Fiona Harvey, which I wrote about here. In that case, the information on social media enabled Internet sleuths to out someone whose identity was meant to be concealed, whereas in this case, the volume of information on social media makes it more difficult to find out when someone’s persona is being used without their knowledge. Whichever way you look at it, one thing is certain: Controlling our identities (and our lives) is waaay harder than it used to be.