IP Tech Knowledgy

Remember and record where you obtained every type of copyrightable work you use in your business. At some point in the future, you are going to want to know whether you have the right to use the materials.  Similarly, if you sell your business or have other transactions, you are going to need to represent and warrant to the purchaser or other party that you have all necessary rights to use and transfer the materials you are using or selling. Without knowing the origin, and being able to determine whether you own or properly licensed the materials, you are creating for yourself potential liability and an indemnification obligation to anyone that acquires your business or you allow to use the work.

This situation relates to any type of creative work whether it is software, coding, or data used in your operations, written works or music on your website or in your materials, or photographs and videos that you use for graphics or entertainment. 

The issue is that anyone who uses works created by someone else should obtain the right to use the work, either by an assignment or license from the owner. Without that right, the user is infringing on the owner’s copyright and is subject to both an injunction to stop the use and a court awarding damages. The potential peril is dealing with an entity that may want to buy your business that uses the product, or may want to buy or license the particular product, and you do not have the necessary rights to transfer or license the copyright in the materials.  

To remedy the situation, you could go to the current rights owner who could assign to you all rights, or grant a license that retroactively provides you with the rights you need and ratifies your prior usage. The trouble here could be finding the original rightsholder, and possibly paying a high price if the owner takes advantage of your acute need to obtain the rights.

To avoid the liability, you could include in any document where you assign or license the work that you make no representations and warranties about the ownership. However, in a transaction, the other side may refuse to deal with you if you try to avoid the risk of infringement.  In the marketplace, customers may not buy or license your product if you are not standing behind the ownership of the works.  

You should also review the Terms of Use and other agreements that come with any online software or data, or other creative work you may use to be sure the license allows your intended use, transfer or sublicense.  

All of this gets back to the original proposition that anyone obtaining copyrightable work from a third party that is not a “Work Made For Hire,” should be sure to have a written assignment from the copyright creator — whether it is an artist, musician, software developer, architect, photographer, or writer, — that grants ownership of rights to all of the creations, or at least grants a license to use the work in all ways intended. You should also keep a record of those works and agreements.
 

Ned T. Himmelrich
410-576-4171 • nhimmelrich@gfrlaw.com