To Trademark a Smell

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Biletsky Law - Scent trademark

Trademarks are more than just logos and catchy phrases…

When a trademark comes to mind, people typically think of logos, brands, and the names of products or services. But that’s not all that is capable of being trademarked. In the United States, non-conventional trademarks are capable of being registered as well. These non-conventional trademarks include colors, sounds, tastes, and scents.

For scent trademarks (or olfactory marks), it wasn’t until 1990 when the first smell was successfully trademarked. That first scent trademark was for a brand of sewing thread and embroidery yarn which contained a scent “reminiscent of Plumeria blossoms” (In re Clarke, 17 U.S.P.Q.2d 1238 (T.T.A.B. 1990).

Although there has been successful registrations (mostly on the Supplemental Register) of scent marks since then, it is not necessarily the easiest thing to trademark. In the United States, a valid trademark must not be functional and must be distinctive. Proving non-functionality requires a showing that the scent be not “essential to the use or purpose of the article or if it affects the cost or quality of the article.” (Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 165 (1995)). This essentially means that those naturally occurring smells of a product are likely functional as they perform a significant function in the existence of the product.

Take for instance the scent of perfume. The scent of a perfume is inherent to the product since it is the function of the smell that is the basis for the product. In other words, if the product has a natural scent or if the product’s scent is what makes consumers buy the product, then the scent will likely not be able to be trademarked.

Even after being able to show that the scent is not functional, the distinctive component can be another hurdle in the trademark process. Distinctiveness is one of the core concepts of trademark law and deals with how “descriptive” the mark is of the product. How distinctive the mark is depends on whether there is a relation between the mark and the product or service. For instance, if a lawn mower company was named “Lawn Mower” the name would be very descriptive of the product and therefore, the trademark would not be distinct from the product and the trademark would likely be refused.

Distinctiveness can also be acquired through use and a show of evidence that consumers are readily able to identify the product or service. As you can see, distinctiveness is not just a complex concept, but it can also be difficult to prove.

It is because of the hurdles of non-functionality and distinctiveness that trying to trademark a scent can be such a difficult task. To make matters a little more difficult, you must also provide a description of the mark in the trademark application. Descriptions of scents are difficult in that not only are scents subjective, but putting words to smells can sometimes be difficult as well.

Keep in mind however that these obstacles for scent trademarks are specific to the United States. In Europe, it is a much different story for olfactory trademarks. The Office for Harmonization in the Internal Market is the governing body in the European Union. There, the issue is not functionality, but rather that the trademark needs to be “represented graphically” and be “capable of distinguishing the goods or services of one undertaking from those of other undertakings.”

The biggest hurdle with obtaining a scent trademark in the EU is the “represented graphically” part. One court has held that if the mark can be graphically represented “by means of images, lines or characters” in a “clear, precise, self-contained, easily accessible, intelligible, durable and objective” way, the sign may be eligible for registration. Ralf Sieckmann v. Deutsches Patent- und Markenamt (Case C-273/00, [2002] ECR I-11737 (ECJ Dec. 12, 2002)).

Beyond the United States and the EU, the status of scent trademarks vary from country to country and before attempting to trademark a smell, it is best to consult an intellectual property attorney.

For more information on scent trademarks or for assistance with your trademark, contact Biletsky Law.

Pilot and TV Series Agreements

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Biletsky Law - Television Pilot OptionBeing given an opportunity to be an actor on a television series can be an exciting stage in an actor’s career. While the level of excitement will vary depending on the role that you are given, and the show that you are being cast on, there still is an air of excitement regardless of the project.

But what happens to this excitement if this is a show that you’ve never heard of, or even more so if it is a show that has never been aired? *Cut to close-up*, congratulations, you’ve been cast on a pilot!

For (almost) every television show, there is a pilot. A pilot is the developer or producer’s way to show the world what the new show will be about and who will be the regulars on the show. Although the world of television is changing due to new technologies and platforms such as Netflix, Hulu, and Amazon, the basic premise of a pilot still exists.

So what happens if you land a role on a pilot? Well, it is first important to understand what you’re starring in. The number of shows that are pitched to different networks and companies each season can be nearly unimaginable. People and companies from around the world spend months (or at least they should spend months) preparing pitches and sizzle reels all in the hopes of being picked up by a network or production company. Those few concepts which do make it through the heart aching process of selection are then given the opportunity to put everything they have on the line and to create a pilot for the networks and/or public to view.

Somewhere between the pitch, the sizzle, and the pilot, there comes a time where the developers need to attach talent in order to increase the value of the production. Herein comes the “Pilot Services Option.” This option essentially attaches you as talent for the production in the event that the idea gets the thumbs up and a pilot (and hopefully the rest of the season) is produced.

The Pilot

At this point, the developers don’t even know if the pilot is to be produced, but they want to have the option to attach you as talent in the event that it is. This option will set out the basic terms such as the length of the option, the compensation that is to be paid to you, the credit that you are to be afforded, and other provisions such as merchandising.

Once they have you secured as talent on the option, they need to go one step further and also secure you for the series, if it is to be produced. After all, a pilot which is successful would need to retain its original cast to keep the chemistry that was displayed in the pilot.

The Series

The series will also likely be in the form of an option since at this point, the developers are usually unable to commit to whether the series will also be developed. The series options will secure your place as an actor for one firm contract year, usually with as many as six annual options thereafter (coming soon, an article about the limitations of Personal Services Agreements). This section of the agreement will also lay out common terms such as compensation, credit, and other provisions related to the projects exploitation of your image.

Compensation

Generally speaking, your compensation depends largely on one thing: union or non-union. Union productions are governed by the terms of the union’s collective bargaining agreement and include certain minimums that union members must be paid. In the motion picture and television industries, it’s most likely going to be the Screen Actors Guild (SAG) whose minimums you must be paid, if you are a member.

Beyond whether you are union or non-union, other factors such as who you are as an actor, what kind of role you will be playing, and what kind of production you are being featured in will have an impact on your compensation as well. For actors who are more established, compensation will also be based on prior rates that you’ve received.

For an actor, prior rates received is an important part of the gig because in many instances your compensation will be based on what you were paid before. There are of course other facts that go into basing your new compensation off of your old pay in that it depends; what kind of role you played, what kind of production the project was, and how old the rate is. You can see why these factors matter as basing compensation for a lead actor in an action series based on an actor’s 6 year old rate for a drama where the actor played a minor role will not be an accurate portrayal of the actor’s worth.

Pay or Play

Another important aspect of compensation is whether you are “pay or play.” As it sounds, “pay or play” requires that the actor be paid regardless of whether the actor’s services are ever actually used. An actor who is given a pay or play clause is in a good position as regardless of the development of the project, the actor is being compensated. Due to the risk that projects never make it, producers are hesitant to grant pay or play unless the actor is a key component of the production. For larger, well-known actors, they will almost always be pay or play as it would not be worth the actor’s time commitment if they were not guaranteed compensation.

And so on…

There are many other provisions that go into these agreements, the more important of them being what happens in case you breach the agreement and if they are deemed to have breached the agreement. Typically, if you breach the agreement, you’re probably not going to be working on the project and may be liable for certain consequences resulting from your breach. On their side, you will not be able to stop the production or have any kind of equitable remedies in the event they breach. That’s just how the business goes.

For more information on television actor agreements, or for assistance with your television acting career, contact Biletsky Law.

The Talent Agency Act and You

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Biletsky Law - TAA“Procure employment.” These two words are something every artist and manager (and possibly others acting on behalf of an artist) should be aware of. In 1978 the Talent Agency Act was passed in California which required that any person acting as an artist’s agent be licensed. Most importantly, these laws broadly defined those who act as agents as those who “procure employment” for another. Also important is the repercussions for those who violate the Talent Agency Act (TAA).

One of the most famous of these cases is the 1996 case of the musical band the Deftones versus their former manager, Dave Park. Dave Park had sued the Deftones for failure to pay earned commissions. In return, the Deftones filed a complaint with the California Labor Commissioner regarding Park’s violation of the TAA. The Labor Commissioner’s investigation found that Park had violated the TAA on 84 occassions by procuring employment without a license. The result? All commissions earned by Park in relation to the Deftones was disgorged and returned to the Deftones and all management agreements were cancelled.

This hasn’t been the only instance where the TAA has caused headaches for managers though. Matthew Katz, the former manager of Jefferson Airplane, forfeited more than $12,000,000 resulting from his violation of the TAA. Other sizeable cases can be found in almost every corner of the entertainment industry from music, to movies, to theatre.

From the above examples, you would think that managers across the board would be inclined to attempt to keep their distances from any kind of activity that could potentially violate the TAA. But, that’s not necessarily the case. The roles of managers between industries are very much the same, yet vastly different, depending on the industry.

In the motion picture and television industry, the role of a manger is more confined to that of how the role of the manager is defined. The manager will look after the day-to-day operations, ensure that all of the projects are lined up and running smoothly, and make sure that all of the jobs that the agent had obtained for you are on your calendar and ready to go.

In the music industry, the role of the manager can sometimes be a bit more blurred. Your manager will do similar tasks such as ensuring that your recording projects are lined up and going smoothly, but from time to time, a manager may be able to book you a gig or an appearance. Although this seems to be within the normal realm of a manager’s duties, you can see why “procuring employment” could be as simple as booking a gig for your client or arranging an appearance where the client gets paid (autograph signing, product sponsorship, etc.).

So, after all the problems that the TAA can cause a manager, you may be asking yourself, why don’t these managers just obtain a Talent Agency license to make it so that they don’t have to deal with these sort of problems? In many instances, companies may offer both managerial and agency services and may be equipped with the necessary licenses. But for the most part, it is usually a pretty good bet that your manager does not also simultaneously have their agency license.

California has enacting somewhat strict guidelines and regulations for agents to be licensed. Although not prohibitively expensive or complex, the process is somewhat costly and lengthy enough to deter your average manager from also pursuing an agency license without having a legitimate agency business to run.

So where does this leave you? Well, if you are on the talent side, you can rest assured knowing that the law is usually on your side when it comes to keeping your team compliant with the law. On the management side, you need to walk a thin line in providing your services to your client to ensure that you do not run afoul of the TAA.

For more information on the Talent Agent Act or for assistance in a matter related to the TAA, contact Biletsky Law.

Fitness Releases

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Biletsky Law - Fitness LawWhen going to work out in a gym, compete in a competition, or perform on the set of a production, you will likely be confronted with a release document to sign. While these release documents come in many shapes and sizes, the basic function of all of the releases is the same, which is to relieve the other party from liability.

In gyms, the predominant concern is that the gymnasium is providing a facility and equipment which you could potential injure yourself on. Gyms often require releases when signing up or when visiting to help shield themselves from liability.

When competing in a fitness or athletic competition, you are usually required to sign a waiver and a release form as well. With a competition, there is additional concerns beyond providing the facility and equipment in that you are also pushing your abilities to the limit and are at a greater risk of injuring yourself.

With regards to filming releases, regardless of the type of filming that you are involved with, there is undoubtedly going to be some kind of release or waiver which protects the production company from liability (and also allows them to use your image, amongst other things). This is even more so the case when dealing with productions that involve some kind of athletic or fitness performance. The importance behind these types of releases is the fact that you are being given access to certain facilities. Furthermore, you may also be given instructed to perform  certain activities where there is a high risk of death or serious bodily harm.

So, what’s in these agreements that act to protect these gyms, competitions, and productions from liability?

Acknowledgment of Risk

One of the first parts to the release is going to be a section where you formally acknowledge the inherent risk in participating in whatever it is that you are signing up for. Whether it be the 30 foot rock wall at the gym or the sword fight scene that you are featured in. If there is some kind of activity or thing that carries with it a risk of injury or death, this paragraph will make you acknowledge that such a danger exists.

Assumption of Risk

This section comes with it more history and controversy than most other sections. There have been cases upon cases dealing with the assumption of risk and whether they are against public policy and therefore invalid. One of these arguments is the fact that although the activity may be inherently dangerous, the operator of the activity still has a duty of care to keep you safe.

There are other logical considerations to take into account as well. For instance, sky diving has an inherent risk of harm that comes with partaking in the activity. In a world where the assumption of risk always prevails, the sky diving operator wouldn’t be held to such a high duty of care since you already assumed the risk. In such scenarios, what need is there to keep all of the safety procedures in place or the maintenance of the plane at top performance?

Release of Liability

You’ve acknowledged the risk, you’ve assumed the risk, and now you’ve taken the next step and released the other party from liability. This is the third step in the release where you agree that regardless of what happens, that the operator is not liable and that neither your nor anyone who may succeed you (in the event of death or serious bodily harm) will be able to bring any claims against them. Some of these releases will go pretty far as to release any kind of liability, even so far as to release them from liability resulting from their own negligence.

Disclaimer and Waiver of Warranties

Depending on the service or product, there are certain inherent warranties that come with the product or service. In certain instances these may apply more towards products themselves (think vitamins and supplements) where you are signing off that you do not expect the product to perform in a certain manner.

Miscellaneous

There are of course other provisions. Depending on the activity or situation, there may be terms which require you to pay for all of your own medical expenses, but which authorizes the establishment or company to call emergency personnel in the event of your injury. One reasons for this is that they do not want to pay your medical expenses. However, they also do not want your condition to worsen while you are injured on their premises. So instead, they want to have the authorization to be able to call and get you out of there as soon as possible.

Whether you own the establishment, are in charge of production, or are the athlete that is signing off on the waiver, it is important that you be aware of what kind of terms you are agreeing to with liability waivers and releases.

For more information on liability releases or for legal assistance regarding releases, contact Biletsky Law.

Live Performance Agreements

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Biletsky Law - Live PerformanceWhile making music is certainly one of the life lines of an artist’s music career, it is the live performances that many rock stars, DJs, singers, and other musicians dream about. Nowadays, the way the industry works has shifted in such a way that live performances have become even more essential than they used to be.

What was once the complement to album sales is now the bread and butter for some artists. Although the performance aspect of a musicians career is exciting, it is also one of the most important agreements that needs to be negotiated for an artist. Without negotiating the proper terms and conditions of the agreement, an artist may end up losing or owing money after going on tour. So what are some of the more important parts of a live performance agreement that you need to be aware of?

Place of Performance

The place of performance is important for many reasons. For one, you need to know where you are playing (and also if it is an acceptable venue for you), second you will likely be receiving complimentary tickets and kills (seats or spots that are unable to be occupied for some reason) based on the net capacity of the venue.

Date of Performance

The date of the performance will also cover the number of performances (if multiple), the time of performance, and the length of performance. Related to the date of performance, but not necessarily included in this provision, may also be a restriction on where else an artist is able to perform for a certain length of time. These restrictions may be based geographically or by the type of venue.

Billing

For some arists, the billing aspect of the performance is as important, if not more important, than the compensation. Billing is essentially how the artist’s name or likeness is displayed in advertisements for the performance. The billing provision of the agreement will state whether the artist is headlining, whether billing is sole or shared, and may even include how the artist’s name or logo is to be displayed.

For certain events, headlining artists are able to receive a percentage of tickets sold, so it is important that the billing provisions include that the artist is headlining.

Compensation

How and what you get paid can be the determining factor of whether an artist will perform at an event or not. Compensation can come in various ways but is generally either a flat fee, a versus deal, a guarantee and door split, or profit percentage.

A flat fee, as it sounds is where an artist is given a flat rate for their peformance.

A versus deal is where the artist is given two figues, a flat fee guaranteed amount and a percentage of the net ticket sales. The artist will be given whichever amount is higher.

A guarantee and door split is where the artist is guaranteed a certain flat fee, but also recieves a portion of net ticket sales.

Lastly, a percentage deal will be where the artist receives an overall percentage on the ticket sales, usually with the house nut (what the venue has to earn to break even) subtracted.

There are of course other compensation methods, but these are some of the more common ones.

Rider

While billing and compensation are amongst the most important provisions in a live performance agremeent, the rider can be the most exciting part. The rider can be seen as the artist’s lists of demands in exchange for playing the venue.

As you can imagine, what goes into a rider varies greatly depending on the type of event, the venue, and most importantly…the artist. Riders may include everything from airplane and hotel accomodations to catering and meal requirements. Riders can specify almost everything from how the stage will be set up, to how advertising will be conducted and how opening acts will be selected. Those artists at the very top of the industry can, and have been known to, include more outrageous demand including everything from what color M&Ms are allowed, specifics on the furniture to be included in the green room, and even to have people dress as the Seven Dwarves.

Other – Exclusivity and Cancellation

There are many other imporant provisions to a live performance agreement. Two of these such provisions are exclusivity and cancellation. As mentioned above, exclusivity relates to the date of the performance in that there may be a black out provision where the promotor wants to have a monopoly of the venues that the artist plays. A restriction such as one that prohibits the artist from playing within a certain region (or at all) for 90 days prior to the event may be common to help build anticipation for the performance.

On the other hand is also cancellations. Things do happen and there are certain situations where the event must be cancelled. Generally, these are separated by those where the cancellation was due to force majeure (an act outside the control of the parties) where everyone losses, or where the artist has cancelled purposefully. In the event that the artist has cancelled, the artist will have materially breached the agreement and the venue’s remedies will be dependent on what terms were negotiated.

As you can see, the importance of knowing the terms of a live performance agreement can make or break your touring success. For more information on live performacne agreements or for assistance in your entertainment career, contact Biletsky Law.

Securities Exemption

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Biletsky Law - Securities ExemptionThe Securities and Exchange Commmission (“SEC”) is a federal regulatory agency in charge of, amongst other things, securities. Broadly defined, securities includes: “any note, stock, treasury stock, security future, bond, denture, evidence of indebtedness, certificate of interest or participation in any profit-sharing agreement…investment contract”…and so on (15 U.S.C § 77b).

The definition then continues on for an entire paragraph listing over 20 different “scenarios” that constitute a security. While what the definition of what is considered a security is a topic for another article, a security is generally anything that a person or entity gives to another, without actively being involved in the control of operations, while expecting a return. This pretty much encompasses most types of investment that a business may receive in starting their operations.

Businesses that receive these types of investments are typically required to register the security offering (the offering of the investment opportunity) with the SEC. The registration process can be complicated and expensive to the point of being cost prohibitive for many small businesses. It is because of this that the SEC has set out several exemptions where smaller or more limited investment offerings do not require such complicated filings.

The exemptions that will be discussed in this article are based out of Regulation D of the Securities Act of 1933. Keep in mind that there are other possible exemptions and also, in addition to having to fulfill the requirements under the SEC exemptions, that you will still need to comply with state “Blue Sky” laws which govern securities at a state level.

Within Regulation D are several rules. Rule 504, 505, and 506 will be the basis of discussion for this article. Within each rule there are several requirements, each of which must be met in order for the offering to qualify under the exemption. Keep in mind that this article is meant to be a very brief overview of the securities exemptions. Each rule has many nuisances and before relying on any rules, it is always best to speak to a securities attorney first.

Rule 504

Businesses relying on Rule 504 may offer and sell up to $1,000,000 of their securities in any 12-month period. Under Rule 504, the company generally cannot solicit or advertise their securities to the public. Also, those who purchase the securities may have “restricted securities” which means that they may not sell the securities to a third party.

Companies wishing to rely on Rule 504 and who wish to advertise or solicit their securities must meet the following requirements:

• Registering the offering in a states that requires a publicly filed registration statement and delivery of a substantive disclosure document to investors;

• Delivery of the disclosure documents required by the state where the company registered the offering to all purchasers; or

• Selling exclusively according to state law exemptions that permit general solicitation and advertising, so long as the company sells only to “accredited investors.”

An accredited investor is a person or entity with a certain level of sophistication or net worth to where the investor is likely aware and capable of taking the risks involved with the investment.

Rule 505

To qualify under Rule 505, a company:

• Can only offer and sell up to $5 million of its securities in any 12-month period;

• May sell to an unlimited number of “accredited investors” and up to 35 other persons who do not need to satisfy the sophistication or wealth standards associated with other exemptions;

• Must inform purchasers that they received “restricted” securities, meaning that the securities cannot be sold for six months or longer without registering them; and

• Cannot use general solicitation or advertising to sell the securities.

As far as the information that is required to be given to investors, the company must give non-accredited investors disclosure documents that are equal to those used in registered offerings. Companys may determine what information to give to accredited investors so long as it does not violate the antifraud prohibitions of the federal securities laws.

Rule 506

Under Rule 506, a company can raise an unlimited amount of money. There are actually two distinct exemptions that fall under Rule 506.

Under Rule 506(b)

• The company cannot use general solicitation or advertising to market the securities;

• The company may sell its securities to an unlimited number of “accredited investors” and up to 35 other purchases.

Unlike Rule 505, all non-accredited investors must be sophisticated

• Companies decide what information to give to accredited investors, but companies must give non-accredited investors disclosure documents that are similar to those used in registered offerings. Any information that is provided to accredited investors, must be available to non-accredited investors as well;

• The company must be available to answer questions by prospective purchasers; and

• Financial statement requirements are the same as for Rule 505.

Under Rule 506(c), a company can broadly solicit and generally advertise the offering, but still be deemed to be undertaking a private offering within if:

• The investors in the offering are all accredited investors; and

• The company has taken reasonable steps to verify that its investors are accredited investors.

For more information about securities or for assistance in your business needs, contact Biletsky Law.

Music Synchronization

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Biletsky Law - Music SyncMusic that is featured in your favorite television show, motion picture, or even commercial can create a unique connection between you and the production. In many instances, you may identify the production through the song or visa-versa. The fact that such a connection can be created just by synchronizing a song with a particular production makes certain songs that much more valuable to a production.

And herein lies the synchronization license. A synchronization license is an agreement that allows the creator or producer of a type of visual media to use a particular song, or part of a song, in synchronization with a visual media project, or in the form of advertising for the visual project.

If you are either the creator or owner of a song or a visual production, there are several factors that you need to consider:

The Length of Use

The cost of a synchronization license will depend upon the length of the song and whether the entire song is being used or just a few seconds of a song. The length that the song is being featured in the visual production will largely dictate what kind of influence the song will have. Having a song featured in its entirety will often leave a bigger association between the song and the visual production.

In some instances, where an entire song is to be featured in a visual production, a hybrid license is used where the producer of the visual media pays for the entire cost of a song for the privilege of being the first to use the song. After the song’s use, the ownership of the song will then go back to the owner of the song.

Where is the Song being Used?

Another issue to be considerate of is where the song is being used. The impression that a song gives when being featured in the opening or closing scenes is substantailly different from the situational impression that a song being used only in a specific scene gives. Since music that is being featured in the opening and closing scene of a television show or movie commands such an important role, there are premiums that must be paid for obtaining permission to use the song in such a position.

On the other hand, music that is being used for small durations will vary in cost depending on the actual length of the use and the type of use. For the use of a song in certain controversial or explicit scenes, there may need some negotiation to use more popular songs in such a scene.

The Type of Synchronization

In addition to where the song is being used and how long of the song is being used, another pivital concern is the type of use. Type of use generally refers to how the song is going to be used in the production.

Background Instrumental
Generally, instrumental music is cheaper to license than music that has a singing component to it. With a background instrumental sync, the viewers cannot see where the music is being played from and only the viewers, not the characters, can hear the music.

Background Vocal

Slightly more expensive than background instrumental is background vocal. This type of synchronization is where there are words being sang, but you cannot see where someone is singing. This is music that only the viewers can hear but the characters in the movie cannot.

Source

More expensive than background sync is a source synchronization where again, you can hear the singing, but you cannot see the the singer. However with this type of synch, the characters in the movie can hear the song. This plays a different role in the production since the characters are able to interact with the music.

Visual Instrumental

In contrast to the types of synchronization mentioned above are visual synchs. Visual instrumental is a type of synchronization where the viewer can hear the music and also see where the music is coming from.

Visual Vocal

Probably the most expensive type of sync license is a visual vocal license where you can see the person who is singing the song that is being played. The license will be even more expensive where the original singer or band of the song is playing the music.

Visual Dance

Yet another type of licensing is a visual dance sync license. This license, as it sounds, has dance components which are visable to the viewer.

As you can see, there are many different issues that come together when negotiating a synchronization license. Before you decide upon what kind of music to use in your visual production, take into consideration exactly how you plan to use the song.

For more information, or for assistance with a synchronization license, contact Biletsky Law.

Business Entity Choices

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Biletsky Law - Start your businessDeciding which type of entity is right for your business can be a tough decision. There are many factors to take into consideration such as costs, taxes, liability, and legal fees. With the different choices that are available to you, it can sometimes be daunting to try to figure out which entity type is ideal for your business.

But don’t worry, you’re not alone. While entity specifics do vary from state to state, there are general similarities and differences between the states. This article will provide you with a brief description of some of the different entity types that are available to you. Although this article will give you a breakdown of the common characteristics of each type of entity, it is always best to consult a business or corporate attorney to help you decide on the best entity type to choose.

Sole Proprietorship

Regardless of the reasons that you may choose to go solo, a sole proprietorship is certainly the easiest business entity to set up in that you are the company. If you are operating your business using your last name, the process is even more simple. This is because you will only need to file a Doing Business As (DBA) of Ficticious Business Name with the county if you are using a name in which the owner is not easily identifiable. While the cost and ease of a sole proprietorship is alluring, one of the biggest downfalls is that there is no protection from personal liability. Since you are the company, there’s nothing to shield you from liability.

Partnership

A partnership can come in several different forms but the most common is a general partnership. One thing that you may not know is that although a partnership agreement is highly recommended, there does not need to be any kind of agreement between the parties for a partnership to exist. Rather, partnerships can be implied based on the actions of the parties (such as the sharing of profits and losses). General partnerships do not provide protection from liability for the partners, however there are several types of partnerships which do offer such protection. Without going into too much detail, there are limited partnerships where there is a general partner who is subject to liability and the rest of the limited partners who are shielded from liability. Depending on the state, there are also limited liability partnerships, and limited liability limited partnerships. The important aspect of each type of partnership is that there are two or more parties who are working together and either dividing profits, losses, or workload in such a way that a partnership can be implied.

Another aspect of a partnership is the manner of taxation. Partnerships have a “pass-through” taxation structure in that they are treated as disregarded entities and you will only be taxed once. This is in comparison to some forms of corporations where there is a double taxation, which will be discussed more in the corporation section below.

Limited Liability Companies

Recently, one of the most common entity choices are limited liability companies (LLCs). LLCs are attractive entity types because they offer the protection that a corporation offers, but also offers more flexibility in the structure of the company than what is possible to do with a corporation. LLCs are also unique in that you are able to elect how the LLC is taxed. This means that you can either be subject to double taxation, like a corporation (see below) or you can be taxed as a partnership or disregarded entity would be taxed.

Other forms of flexibility that an LLC has is the structure of the company itself. LLCs can be structured or managed in a variety of ways which helps the business be controlled in a customized manner that is best for the company.

Corporations

Corporations are generally divided into two different types of entities a C-corp and an S-corp (there are other types of corporations, such as a B-corp, but this article will focus on these general types). C-corps are generally used by larger corporations and do not have the certain limitations that an S-corp has. With an S-corp, you are limited to only 100 shareholders and can only have one class of stock. Whereas a C-corp does not have such restrictions. An S-corp further has some characteristics which are similar to LLCs. Such charecteristics include the option of being taxed as a partnership and therefore having single taxation. C-corps do not have the option of receiving pass-through taxation and are subject to double taxation. Double taxation means that those earning revenue from the corporation are taxed both at the corporate level and then at the personal level.

In addition to the taxation aspect, corporations are generally seen as the most favorable busines entity by investors and shareholders. One of the reasons for this is because of certain formalities that the corporation needs to follow in order for the corporation to retain its liability barrier.

There are many different charactersitics of each entity that is not discussed in this article and it is important to be aware of all of the nuisances of each before deciding on an entity. While the decision of which entity to form is certainly very important, choosing the wrong entity and figuring that out early enough can be a saving factor as many states allow conversions between entity types (for a fee).

For help with your business entity formation needs, contact Biletsky Law.

DMCA Takedown Notice

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Biletsky Law - DMCAIn 1998 the United States enacted the Digital Millenium Copyright Act (DMCA). The DMCA updated various parts of the then current copyright laws. One such provision that was updated was the Online Copyright Infringement Liability Limitation Act (OCILLA). OCILLA provides a conditional safe harbor for Online Service Providers and similar “middlemen of the internet” (think content hosting sites such as Youtube, Vimeo, etc.).

While there are many different parts of the OCILLA which provide certain protections from liability, this article will focus in particular on the Takedown Provisions. The Takedown Provisions require that in order for an Online Service Provider to be able to take advantage of the safe harbor provisions, they must comply with certain notices and in particular, any Takedown Notices. These Takedown Notices act as an easy way for content owners to be able to protect their intellectual property by notifying the service provider that their intellectual property has been infringed upon.

Once the content owner has made the service provider aware of the infringment, it is now up to the service provider to take action to stop the infringment. When a service provider complies with the Takedown Notice and removes the content, the service provider is deemed to have fulfilled their obligations under the law and they can then take advantage of the safe harbor provisions which protect them from being liable for the infringement.

If the service provider is made aware of the infringement and does not take action to prevent it, if such infingement is occuring, then the service provider may not be in compliance with the law and therefore may not be able to take advantage of the safe harbor provisions.

So how do you file one of these Takedown Notices? It is advised that if you do find out that your intellectual property is being infringed that you contact an intellectual property or entertainment lawyer immediately. However, to explain what the process is:

First, it is important to determine whether the content provider provides a way for content owners to send a Takedown Notice. Usually, this will be found in the very bottom of a website and will be under the “Terms of Use” (or similar worded page) or there may be a “DMCA” link. Within the terms or in the DMCA page, there will be a list of statements that must be sent to the service provider in order for hte Takedown Notice to be in compliance with the law:

Worded in one way or another, the following is required in order for the Takedown Notice to be effective:

(i) A physical or electronic signature of a person authorized to act on behalf of the owner of an exclusive right that is allegedly infringed.
(ii) Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site.
(iii) Identification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material.
(iv) Information reasonably sufficient to permit the service provider to contact the complaining party, such as an address, telephone number, and, if available, an electronic mail address at which the complaining party may be contacted.
(v) A statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.
(vi) A statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed.

Once a Takedown Notice which includes all of the above is sent to the servie provider, it is up to them whether or not to comply. Many of the larger service providers will have certain procedures in place to determine whether there actually has been infringement and whether they should remove the content.

While what goes into the Takedown Notice is pretty much the same for every service provider, each service provider has their own protocol for dealing with the notices. You may or may not receive any kind of confirmation or response. You may eventually notice that the infringing content has been removed, or not.

If you have sent a service provider a DMCA Takedown Notice but the infringing content has not been removed, it is important that you contact an attorney to take the next steps necessary to protect your intellectual property.

Has your content been posted without your permission? Contact Biletsky Law to ensure that your intellectual property rights are protected.

2257 Regulations

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Biletsky Law - 2257Back in 1984, Penthouse Magazine caused a tidal wave of events which led to Congress enacting 18 U.S.C. §2257 and 18 U.S.C. §2257A, also known as §2257 Regulations (also, a part of the Child Protection and Obscenity Enforcement Act of 1988). If you are a creating and/or distributing adult content, this is something very important that you need to be aware of.

How it All Started

It all started when Penthouse Magazine featured the then 15 year old Traci Lords in their September edition. The success that Lords received from being featured in this edition led to bigger productions which, when discovered, turned into an industry nightmare. To make a very long and complicated story short, the public outcry and lawsuits that resulted from this situation resulted in Congress passing Title 18 United States Code Section 2257 to prevent the distribution of child pornography. While the law has its own long and complex history, the important takeaway is that the law, in its modified and amended form, is a vital component to any production or website hosting adult content.

May I have your attention?

Individuals found to violate Section 2257 for their first time are subject to up to 5 years imprisonment. A second offense, will get you 2-10 years imprisonment. Hopefully, that first sentence was enough to get your attention to see how these statutes are not to be taken lightly. Furthermore, if you are in the adult entertainment industry, it is very important that you are aware and compliant of these laws.

So what is in this Section 2257?

The law itself starts out with “Whoever produces any book, magazine, periodical, film, videotape, digital image, digitally- or computer-manipulated image of an actual human being, picture, or other matter which— (1) contains one or more visual depictions made after November 1, 1990 of actual sexually explicit conduct; and (2) is produced in whole or in part with materials which have been mailed or shipped in interstate or foreign commerce, or is shipped or transported or is intended for shipment or transportation in interstate or foreign commerce; shall create and maintain individually identifiable records pertaining to every performer portrayed in such a visual depiction.”

What does this mean?

What this all comes down to is if you are producing adult content, you need to maintain records for each performer that is featured. These records must sufficiently show that at the time of the performance, the performer was 18 years old or older. Furthermore, these records need to be available for federal inspection at all reasonable times.

Does this Apply to Me?

Whether these statutes apply to you depends on your role in the industry. Producers of adult content absolutely fall under this category. In fact, in 2009, the law was expanded to include secondary producers, which are those who: produces, assembles, manufactures, publishes, duplicates, reproduces, or reissues a book, magazine, periodical, film, videotape, digitally- or computer- manipulated image, picture, or other matter intended for commercial distribution that contains a visual depiction of an actual human being engaged in actual sexually explicit conduct, or who inserts on a computer site or service a digital image of, or otherwise manages the sexually explicit content of a computer site or service…”

Just hosting?

Distributors or providers of “web-hosting services who does not, and reasonably cannot, manage the sexually explicit content of the computer site or service” are said to not fall within the category of those required to keep records. But that doesn’t necessarily get you off the hook. The industry standard (or at least, what should be industry standard) is for any distributor or host of adult content to include within their “Terms of Use” a special Section 2257 disclaimer which either provides for a link to the producers who should have the records, or a disclaimer stating that the website has no control over the material or was not responsible for its’ creation.

Conclusion

If you are producing adult content, you are playing a dangerous game if you do not have a proper record keeping protocol for your performers. Distributors and content hosts are in a somewhat better position, but it is still essential that a Section 2257 disclaimer be somewhere visible on the hosting platform as an extra step towards protection from liability.

For more information on Section 2257 regulations or for assistance with becoming 2257 compliant, contact Biletsky Law.