Contracts – Page 4 – Attorney Evan Brown

November 8, 2021 Contracts, Copyright

Copyright ownership transfers must be in writing

If you are hiring an independent contractor to create copyrightable subject matter, and you want to own the copyright in the resulting work product, be sure to have that contractor sign a written contract that specifically states that copyright ownership is being transferred. Even if you have paid the contractor for the work, and you both intend that ownership be transferred, the contractor will still own the copyright in the deliverables unless there is a writing, signed by the contractor, to the contrary. This is a key concern if your contractor has created subject matter that will be critical to your business – software, graphics, text, photos, any kind of protectable digital asset. If you do not secure ownership, the contractor may later object to how you are using the works differently than intended at the time of the contract, and claim infringement. Or the contractor could grant a license in the same work to another party, even one of your competitors.

The Copyright Act contains a couple of provisions that relate to this issue. The first one pertains to the definition of “work made for hire”. If an employee creates copyrightable subject matter within the scope of his or her employment, that is a work made for hire, and the employer owns the copyright. But note how that relates to employers and employees. Contractors are in a different category. There are other kinds of works that are “ordered or commissioned” that can be considered works made for hire, even if created by an independent contractor. But in any event, the Copyright Act says that these are works made for hire only “if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”

Let’s say you have not established that the contractor’s work is a “work made for hire”. You could still have the contractor assign his or her rights in the deliverables. Again, the Copyright Act requires this to be in writing. You cannot just agree on a handshake that ownership of copyright has been transferred. The statute provides that “[a] transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” Note that the contractor – the one making the assignment – has to sign the written document.

Paying attention to these issues on the front end of hiring an independent contractor will help ensure clear rights in the future, avoid future tangles and disagreements, and ultimately save time and money by avoiding costly dispute resolution.

Evan Brown is a technology and intellectual property attorney in Chicago. Twitter: @internetcases

June 8, 2021 Contracts

No contract formed via URL to terms and conditions in hard copy advertisement

Online terms of service found at URL in hard copy advertisement were not enforceable.

Plaintiff visited a Subway restaurant. One of the Subway employees referred plaintiff to an in-store, hard-copy advertisement. On the advertisement, Subway offered to send special offers to plaintiff if she texted a keyword to a short code. Plaintiff sent the text message to Subway, and Subway began responding, including by sending her, via text message, a hyperlink to an electronic coupon.

Later, plaintiff wanted to stop receiving the messages, so she requested that the messages cease. But they kept arriving. Plaintiff then sued under the Telephone Consumer Protection Act (“TCPA”). Subway moved to compel arbitration, arguing that a contract was formed because the printed in-store advertisement that contained the keyword and short code to text included a reference to and URL for “terms and conditions”. Those terms and conditions required plaintiff to settle the dispute by arbitration.

The lower court denied the motion to compel arbitration. Subway sought review with the Second Circuit Court of Appeals. On appeal, the court affirmed the denial of a motion to dismiss, finding that plaintiff was not bound by the terms and conditions.

The appellate court held that plaintiff was not on notice of the terms and conditions, which contained the arbitration clause, because Subway failed to demonstrate that such terms and conditions would be clear and conspicuous to a reasonable person in plaintiff’s position. More specifically, the court held that the following facts showed plaintiff did not know what the terms said:

Subway failed to provide evidence regarding the size of the advertisement at issue, or the print size contained within that advertisement;
the reference to “terms and conditions” was buried on the advertisement in a paragraph that was printed in significantly smaller font relative to the other text on the advertisement, and the reference itself was surrounded by a substantial amount of unrelated information;
the advertisement only vaguely referenced “terms and conditions,” and did not state that a consumer would be agreeing to those terms if she sent a text message to Subway’s short code, nor did it otherwise direct the consumer to such terms;
access to the terms and conditions on the Subway website required plaintiff to type in the URL text provided on the hard-copy print advertisement into an internet browser on her cell phone or some other device with internet browsing capabilities; and
once linked to the Subway website, the heading stated that it contained “terms of use for this website,” thus potentially suggesting to a reasonable person (searching for conditions of the promotional offer) that the website did not contain any terms or conditions beyond those relevant to the use of the website.

This combination of barriers led the court to conclude that the terms and conditions were not reasonably conspicuous under the totality of the circumstances and, thus, a reasonable person would not realize she was being bound to such terms and conditions by texting Subway in order to begin receiving promotional offers.

Soliman v. Subway Franchisee Advertising Fund Trust, Ltd., — F.3d —, 2021 WL 2324549 (2nd Cir. June 8, 2021)

May 18, 2021 Contracts

Murdered Uber passenger’s mom can keep her case in court and out of arbitration

An Uber driver murdered plaintiff’s son. So plaintiff – the Uber user’s mom – sued Uber for wrongful death. The lower court threw out the case, saying that the Uber terms and conditions required the matter to go to arbitration. Plaintiff sought review with the Georgia Court of Appeals. On review, the court reversed and sent the case back to the lower court.

The appellate court found that it was improper to dismiss the case because it was not clear that plaintiff’s son – the one killed by the Uber driver – actually agreed to the Uber terms and conditions that contained the provision requiring arbitration.

First, there was a dispute as to whether he even saw the link to the terms and conditions when he signed up for Uber in 2016. That’s because he was using an Android phone, and plaintiff alleged the on-screen keyboard within the app may have covered up the link to the terms and conditions.

Second, the court noted that even though Uber submitted evidence it emailed updated terms and conditions to plaintiff’s son, and that he continued using Uber thereafter (thereby binding him to the terms), it was unclear that the email was ever sent to plaintiff’s son. If the customer never saw those terms, they would not apply, and therefore arbitration would not be proper.

Thornton v. Uber Technologies, Inc., 2021 WL 1960199 (Ct. App. Ga. May 17, 2021)

February 11, 2021 Contracts

What’s going on legally with Jeep pulling the Bruce Springsteen ad?

Morals clauses in talent agreements can fuel cancel culture.

Jeep featured Bruce Springsteen in an ad that aired during Sunday’s Super Bowl. Since then, news broke that Springsteen had been arrested almost three months prior for drunk driving. So Jeep pulled further use of the ad.

This scenario shines light on a key provision in the contract that celebrities and brands typically sign. An agreement of this sort will contain a “morals clause”. Here is the language of a typical clause like this (this is just an example of such a clause – not the one in the Jeep/Springsteen agreement):

Company will have the right to terminate this Agreement for cause, which includes, without limitation, . . . commission of any act (in the past or present) which degrades Talent, Company or the Products or brings Talent, or Company or the Products into public disrepute, contempt, scandal or ridicule. Upon termination for cause, Company shall have no further obligation to Talent (including, but not limited to, any payment obligations).

Companies want these provisions for obvious reasons – if the face of the company comes under public scrutiny for any bad reason, the company needs a method to part ways. Talent with more negotiating power may be able to narrow the scope of the circumstances in which the company can terminate the agreement. For example, it could require actual conviction of a serious crime.

One problem, however, particularly for talent, is how broadly morals clauses can be written. The example clause above is broad and vague. And note how the language in this example pulls in past conduct as well (old tweets, anyone?). Given the polarized character of modern public discourse, just about everything done in public is subject to contempt, scandal or ridicule by at someone. These clauses provide the means for the commercial side of cancel culture to flourish.

Evan Brown is an intellectual property and technology attorney in Chicago.

February 8, 2021 Contracts

Court finds clickwrap independent contractor agreement enforceable

Plaintiffs were companies that sued some of their former independent contractors who worked for the companies in a “direct sales community”. The court needed to determine whether defendants had entered into a valid contract with plaintiffs. Applying Texas law, the court observed that other courts have recognized the validity of electronic contracts. It found that the agreements at issue were valid clickwrap agreements and that plaintiffs had – through screenshots they submitted – at minimum, made the requisite showing that contracts existed between plaintiffs and each defendant.

Elepreneurs Holdings, LLC et al. v. Benson et at., 2021 WL 410001 (E.D. Tex., February 5, 2021)

This post originally appeared on evan.law.

October 26, 2020 Contracts

Intellectual property issues in a speaker’s agreement

Let’s say you’re going to host a conference — these days that would be an online conference — and you want to invite people to give presentations. You will want to enter into a contract with those presenters to cover some of the obvious logistical items: the presenter is obligated to show up, the presentation will be on a certain topic, it will last for a certain amount of time, and there may be payment. And there are some important intellectual property issues that the speaker’s agreement should also address.

Marketing and promotion of the event

One important intellectual property issue in a speaker’s agreement has to do with the marketing and promotion of the event. This involves primarily the right of publicity. You are likely going to want to generate materials, such as social media posts, that have the name and the image of the presenter. You will want to seek to get a release from the presenter that authorizes you to use his or her name and image in connection with the marketing and promotion of the event.

Handout materials

A second issue that you will need to deal with has to do with handout materials or other accompanying documentation for the presentation. You will want to make sure that you have the appropriate copyright license from the presenter allowing you to copy and distribute those materials. You should also consider getting assurances from the presenter that those materials will not infringe any third party intellectual property rights. And you may want to have the agreement say that the presenter will indemnify you and pay the cost of the defense if you get sued by a third party because the handout materials infringe.

Video or audio of the presentation

A third intellectual property issue that you will want to think about in connection with a speaker’s agreement has to do with any content that you generate at the event. Say, for example, you film the presentation and you want to make the video available to the world so it can see what the event was like. On this point we are back to the discussion of the right of publicity. Obviously the presenter’s name and image is going to be in that content. So you want to make sure that you have a release for that.

As the host of the event, you will likely want to own the copyright in the video. The presenter may ask for a carveout — that is, clarification that though you own the copyright in the video, the presenter retains ownership of the underlying content presented.

Need help with intellectual property issues in a speaker’s agreement?

Please feel free to give me a call or send an email. Dial (630) 362-7237, or email ebrown@internetcases.com.

September 23, 2020 Contracts, Trade Secrets

Why parties should enter into nondisclosure agreements

Nondisclosure agreements (or NDAs) are important contracts. There are a number of reasons why parties may want to enter into them.

The first reason is probably the most obvious reason. Parties have proprietary or sensitive information that they don’t want to become publicly known, or known to a competitor. So they enter into nondisclosure agreements to put restrictions on how the parties use or disclose confidential information The agreement contains provisions that give remedies such as injunctive relief if there is a breach or a threatened breach of the nondisclosure agreement. This is an important tool.

A second reason for entering into a nondisclosure agreement is related to the first one. Having a nondisclosure agreement gives the parties the confidence to meaningfully collaborate. If there is a nondisclosure agreement in place, the parties can freely exchange information, and that makes the potential innovation from their collaboration much more robust.

And a third third reason for entering into a nondisclosure agreement relates to the law of trade secrets. The parties may trust one another completely, and may not even think for a moment that the other side would misuse its confidential information or disclose it in a way that is harmful. But it is important to enter into nondisclosure agreements to protect the trade secret status of information. The law of trade secrets only protects information that has been the subject of efforts to keep secret. So the nondisclosure agreement can be important evidence that the party has taken the right steps to protect its trade secrets.

Let’s talk

Nondisclosure agreements can be complex. There are a number of issues to consider and appropriate strategies to take. If you have questions about a nondisclosure agreement, give me a call at (630) 362-7237, or send me an email at ebrown@internetcases.com.

About the author:

Evan Brown, nondisclosure agreements Evan Brown is a technology and intellectual property attorney in Chicago. This content originally appeared on evan.law.

Is a website liable for leaving up content that violates its terms of service?

In a recent post, we discussed how Section 230 protected a website from liability for trade libel. The court held that third parties, and not the website itself, provided the offending posts. If the court had believed the posts were written by the site itself (or one of its agents) that may have turned the site into an information content provider and thus outside Section 230’s protections.

Terms of service violation?

This case – East Coast Test Prep LLC v. Allnurses.com, Inc. – had some other interesting aspects of interest to website operators seeking to effectively regulate content. For example, plaintiff claimed the website breached its own terms of service by failing to take down content prohibited by those terms of service. And the site allegedly breached its terms by closing a discussion thread, denying plaintiff the opportunity to respond to libelous content. The court dismissed plaintiff’s breach of contract claims.

The website’s terms stated, in relevant part, that users were not allowed to post libelous information. And it said the site operator would immediately take down content violating the law or invading another’s privacy. The terms also said that the website promoted the “idea of lively debate”.

What the plaintiff claimed

When the site refused to take down the offending content, plaintiff (a member of the site who had agreed to the terms of service) claimed the site violated the terms of service. And he claimed that the site breached the terms by not allowing him to comment, thereby going against the site’s commitment to foster the “idea of lively debate”.

The court rejected these breach of contract claims. It held that defendant did not promise to identify and immediately remove any and all potentially false statements. Instead, it disallowed users from posting libelous information and merely informed users that it would remove illegal or inappropriate posts. And the statement that defendant promoted the idea of a lively debate was not a promise to keep the site’s discussion threads open, particularly in light of the provision that “[p]roblematic posts/threads may be deleted or closed.”

East Coast Test Prep LLC v. Allnurses.com, Inc., — F.3d —, 2020 WL 4809911 (8th Cir. August 19, 2020)

Let’s talk!

Evan Brown is a Chicago technology and intellectual property attorney. Call Evan at (630) 362-7237, send email to ebrown [at] internetcases.com, or follow him on Twitter @internetcases. Read Evan’s other blog, UDRP Tracker, for information about domain name disputes.

June 18, 2020 Computer Crime, Contracts

Click fraud might violate CFAA

Click fraud is a problem in online advertising and in situations where companies and advertisers use publishers to promote their content. A federal court in Delaware recently addressed this problem.

Plaintiff job search engine sued one of its former “publishing partners” and its owners. Defendants sent out email messages with links to job search results. Plaintiff paid defendants on a “pay-per-click” basis – a certain amount each time someone clicked on one of the links.

The Alleged Click Fraud

Eventually plaintiff noted that “conversions” were low from defendants’ activities. That means there were a lot of clicks on links but not many actual job applicants. Plaintiff began to suspect defendants were artificially inflating the number of clicks – that is, committing click fraud. The contract between plaintiff and defendants prohibited this conduct.

After investigating, plaintiff learned one of its employees was allegedly working with defendants to engage in the click fraud scheme. Plaintiff sued defendants, asserting a number of claims, including one under the federal Computer Fraud and Abuse Act, 18 USC 1030 (“CFAA”).

Defendants moved to dismiss. The court denied the motion.

CFAA and Click Fraud

The CFAA imposes liability when a plaintiff pleads and proves that a defendant:

has accessed a protected computer (defined in the statute);
did so without authorization or by exceeding such authorization as was granted;
has done so knowingly and with intent to defraud; and
as a result has furthered the intended fraud and obtained anything of value.

Defendant argued that CFAA liability should not apply because there were no allegations of “hacking” in this case. The court rejected that argument.

The court looked to the case of CollegeSource, Inc. v. AcademyOne, Inc., 597 F. App’x 116 (3d Cir. 2015) to hold that if a defendant accesses the plaintiff’s computers and uses information in violation of a contractual agreement with the plaintiff, that could be enough to impose CFAA liability. And the court believed that is essentially what is alleged to have happened in this case: that defendants violated the terms of contractual agreements with plaintiff by causing illegitimate clicks to be directed to plaintiff’s computer servers.

Juju, Inc. v. Native Media, LLC, 2020 WL 3208800 (D. Del., June 15, 2020)

May 27, 2020 Contracts

Statements of work: three key ideas

A statement of work – often called an “SOW” – is an important part of a technology contract. Here are three things to keep in mind when you are drafting and negotiating one.

Accurately define the services

The first thing to keep in mind when negotiating an SOW is to accurately and comprehensively define the scope of services. This benefits both the customer and the vendor. The vendor will know the SOW sets out a finite task list. That will help avoid scope creep. The customer can look at the statement of work and see whether the deliverables match the agreed-upon specifications.

Leave the legal language alone

The second thing to keep in mind when drafting an SOW is to focus on the technical, business and commercial issues, leaving the legal issues in the body of the agreement untouched. That way you don’t unwittingly affect the risk profile of the overall engagement.

You will amend the statement of work

The third thing to keep in mind is to recognize that you are likely going to amend the statement of work, or enter into subsequent statements of work. So you should use a good form that will enable you to add on these subsequent documents.

Category: Contracts