Intellectual Property Law: Difficulty with the Company Techno Web Design - Case Study Example

Intellectual Property To whom it may concern at LMI Records: As your barrister, I have decided that there are nine issues present in your current difficulty with the company Techno Web Design (TWD). Here they are: 1. LMI commissioned TWD to produce a promotional website for Yello. This aspect does not automatically mean that there is any sort of contract at this point between LMI and TWD. An exchange of money has to take place in order for some sort of deal to be signified that it has been brokered. 2. Negotiations took place at a wine bar in London. This fact is negligible. Wherever the deal took place is irrelevant. As long as there was some verbal agreement, that could still be considered a contract, as will be shown in the next point. 3. No formal contract was signed between TWD and Yello. Even though TWD and Yello did not sign a contract, LMI and TWD made the agreement that LMI would arrange it so that they would pay TWD to set up a website for the band. “Such relationships are termed quasi-contract. Although there is no contract or agreement between the parties, they are put in the same position as if there were a contract between them.”1 The definition of what a quasi-contract is can be given here. As defined in Black’s Law Dictionary, a quasi contract is “an obligation which law creates in absence of agreement; it is invoked by courts where there is unjust enrichment… [The] [f]unction of ‘quasi contract’ is to raise obligation in law where in fact the parties made no promise, and it is not based on apparent intention of the parties.”2 Also, contracts do not have to be written down to be enforceable. A contract, by definition, is “[a]n agreement between two or more persons which creates an obligation to do or not to do a particular thing. Its essentials are competent parties, subject matter, a legal consideration, mutuality of agreement, and mutuality of obligation.”3 Additionally, a contract “is formed in any transaction in which one or both parties make a legally enforceable promise. A promise is a commitment or undertaking that a given event will or will not occur in the future and may be express or implied from conduct or language and conduct. A promise is legally enforceable where it: was made as part of a bargain for valid consideration; reasonably induced the promise to rely on the promise to his detriment; or is deemed enforceable by a statute despite the lack of consideration.”4 There are several types of contracts, in addition. Contracts may be one of three types: express (an agreement brought about by words); implied-in-fact (an agreement brought about by conduct); or implied-in-law, also known as a “quasi-contract” (which is “not a true contract but an obligation imposed by a court despite the absence of a promise in order to avoid an injustice.”5 Since it has been shown that there was a quasi-contract between LMI and TWD, TWD is now committed to performing services for LMI under the deal that was hammered out in the Wine Bar—even though nothing was put down in writing in a formal sense. However, this could indeed hurt LMI later as one shall see. 4. The website includes photos of Yello given to TWD, and three (3) short extracts of songs from Yello’s first album. TWD does not necessarily own the images or the three (3) short extracts of music given to TWD in order to market the band Yello. The copyright of the music belongs to LMI since they had a deal signed with them. Whoever took the photographs (one would presume that would be the photographer) who would own the copyrights to the band Yello’s photos. However, if Yello purchased the copyright of the images, then the images belong to them—or if the Yello band’s image is already copyrighted. This can be a complex issue. If Yello’s image is not copyrighted, it may be able to be distributed other places. Also, the copyright on the song excerpts must also be copyrighted in order to make sure that if there is any type of infringement, then the people or person infringing upon the copyright of Yello (and, subsequently LMI) can be prosecuted to the fullest extent of the law. 5. LMI paid TWD £50,000 for the site going live in August 2009. LMI paid for the service of TWD, for which payment was rendered, in order to produce the promotional website. This implies that the website was bought for its production, as well as rights to the website. The copyright will be discussed further in another point below. Basically, however, LMI owns the website because they paid for its production. They paid for the domain name to be created, so, technically it is theirs (LMI’s), even though TWD produced it because it was LMI’s idea to develop the website (not TWD’s). In addition, conferring payment to TWD definitely seals the deal as far as copyright issues are concerned. LMI clearly owns the website since it has paid for its creation, and TWD is acting as a third party which comes in and produces the product. However, that does not give them any licence over the copyrighted material that is on the site or ownership of the website. 6. Tom, a Yello fan, uploaded the three music extracts on Bitorrent, a peer-to-peer file sharing system for his friends to download. As long as Tom did not sell the file of the song excerpts, he is well within his rights of the fair use policy in order to promote the music through the file sharing system. “The fair dealing exceptions under UK law, and the fair use defence under both UK and US law, offer limited protection to [the creator]” for reasonable usage (also called fair use, which is not excessive).6 Fair use law basically says that if a copyrighted piece of artwork or writing or music is shared, it must follow certain rules. In this case, the pieces of music cannot be shared for commercial distribution, profit from sales of said pieces, or any other kind of sharing that would infringe upon the copyright of the band Yello or its label LMI. If more downloads were to happen upon Bitorrent than just Tom’s immediate circle of friends, Tom could be sued by LMI for putting the downloads on Bitorrent in the first place. Not only that, but Bitorrent could also be sued for allowing copyrighted material to be put up on its own file sharing system. File sharing systems are not necessarily illegal, but the sharing of copyrighted material without the permission of the record company LMI would be considered illegal. So, if Bitorrent has not approved the sharing of LMI’s band Yello’s music beforehand, it may find that it has a lawsuit on its hands. Tom’s actions are relatively harmless unless the song excerpts are commercially distributed by other users (such as his friends) or copied in any way, shape, or form. So, Tom could be potentially liable if anyone he associated with illegally shares the files. If the song excerpts are not copyrighted, however, that could pose a problem for LMI in terms of not being able to sue anyone for copyright infringement since their band’s music was not copyrighted. 7. LMI and TWD are fighting over who owns the copyright. Obviously, copyright law is continually evolving. “Copyright law is undergoing rapid transformations to cope with the new international digital environment.”7 There is a law that was formed in 1988 to stop the facilitation of copyright infringement. “The British Copyright, Designs, and Patents Act [of 1988] makes it an act of primary, direct infringement for one without licen[c]e from the copyright owner nnot only to do an act restricted by copyright, also to authorize another to do any restricted act. In addition, a defendant may be held…liable….for importing, possessing, or dealing with an infringing copy…”8 Since LMI made a payment to TWD, in essence they bought the rights to the website as domain owner even though TWD created (read: developed) and set up the website for them. However, just because TWD developed the website does not mean that they have any sort of control over the profits that will be generated through the download of the band’s songs on Bitorrent, any profits that the band may earn, or any royalties on the music or images provided to TWD, as these rights all belong to other people. Even though TWD was paid for creation of the site, that was just for technical purposes. TWD owns no rights to the website. Further, there is no written contract stating that TWD would have been able to earn a percentage of royalties from any profits generated from the music or the images on the website. As such, unless there was an enforceable verbal agreement between an LMI official or Yello band member, TWD has no rights whatsoever with regard to ownership of the copyright of the website or its subsidiary profits. 8. TWD did not sell the site to LMI—but TWD paid for permission to use the site, according to TWD. TWD did not pay for permission to use the site. As for TWD claiming that LMI simply paid money in order to use the site but not own the copyright, that is a ludicrous statement. Once LMI exchanged some form of payment with TWD (the £50K), this means that LMI effectively owned the domain name and thusly the website. It’s certain that LMI owned the exclusive rights to the site. 9. Yello has written a cover for the band Queen’s “Bohemian Rhapsody” to be included in the next album. Even though Yello has written a cover song, the song “Bohemian Rhapsody” is no doubt a song for which the band Queen holds the copyright. Therefore, since the song “Bohemian Rhapsody” is not within the public domain, it is the responsibility of Yello (or LMI) to negotiate some sort of either: a) permission to use the song in order to perform a version of the song (Yello’s own version); or b) arrange for a payment to be made in order so that a certain percentage of royalties for the cover go to the band “Queen”; or c) have the band arrange for a lump sum of money to go to Queen to cover the fee for covering the song without having to pay subsequent royalties for the sales of the covered song “Bohemian Rhapsody.” TABLE OF SUGGESTED CASES UK Cases Cooper v McKenna, ex p Bishop [1986] WLR 327 (CA) Donoghue v Stevenson [1932] AC 562 (HL Sc) Douglas v Hello! Ltd (No.1) [2000] EWCA Civ 353, [2001] QB 967 Dunlop v Higgins (1848) 1 HL Cas 381, 9 ER 805 Nagy v Weston [1965] 1 WLR 280 (QB) Pepper (Inspector of Taxes) v Hart [1993] AC 593 (HL) Sinclair (Deceased), Re [1985] Ch 446 (CA) European Cases Case C-247/87 Star Fruit Co SA v Commission of the European Communities [1989] ECR 291 Case C-491/01 R v Secretary of State ex p BAT and Imperial Tobacco [2002] ECR I-1453 Case T-342/99 Airtours plc v Commission of the European Communities [2002] E.C.R. II-2585 Case T-344/99 Arne Mathiesen AS v Council [2002] ECR II-2905 Ferrovie dello Stato/Georg Verkehrsorgani (Case COMP/37.685) Commission Decision 2004/33/EC, [2004] OJ L11/17 TABLE OF SUGGESTED LEGISLATION List of Statutes Criminal Justice Act 2003 Theft Act 1978 s 1(2) BIBLIOGRAPHY HC Black, JR Nolan, and MJ Connolly, Black’s Law Dictionary: Definitions of the Terms and Phrases of American and English Jurisprudence, Ancient and Modern (West Publishing Co., US 1979). P Goldstein, International Copyright: Principles, Law, and Practice (OUP US, US 2001) LexisNexis, ‘LexisNexis Contracts Capsule Summary: Sources and Definitions of Contract Law,’ accessed on 5 May, 2011. F Macmillan, New Directions in Copyright Law (Volume 6 Edward Elgar Publishing, UK 2007). Arun Kumar, Mercantile Law (Atlantic Publishers & Dist., India 2002). P Torremans, Copyright Law: A Handbook of Contemporary Research (Edward Elgar Publishing, UK 2007). Read More