Creativity Life Cycles : Canadian Trademark Agent and Lawyer : Joshua MacFadden : MacPherson Leslie & Tyerman Law Firm : Patents, Intellectual Property

*

A recent Internet controversy concerning the successful social networking site Facebook highlights the challenges in amending website Terms and Conditions following changes to the web site's Terms of Service have resulted in numerous challenges, questions, and protest groups users over the ownership of user-generated content. 

In a story which broke on the consumer rights advocacy blog, Consumerist.com , Facebook Inc. attempted to clarify its Terms of of Service resulting in confusion concerning the legal implications for the new provisions, particularly where users elect to close or otherwise inactivate a user account.  Whereas both documents essentially provide for a grant of license from a user to Facebook for the use of user-generated content (i.e. photos, videos, posts, applications, etc.), the new agreement deletes a prior clause which read:

You may remove your User Content from the Site at any time.  If you choose to remove your User Content, the license granted above will automatically expire, however you acknowledge that the Company may retain archived copies of your User Content.  [emphasis added]

Effectively, the changes appeared to suggest that Facebook Inc. intended to assert ownership of user content or, at the very least a non-exclusive, perpetual license to continue to use, post and distribute such content even if a user account is closed. 

In an effort to resolve concerns over the issue, Facebook Inc.'s founder and CEO Mark Zuckerberg announced a re-introduction of the earlier agreement while stating on the corporate blog that  "[o]ur philosophy is that people own their own information and control who they share it with... When people share information on Facebook, they first need to grant Facebook a license to use that information so that we can show it to the other people they've asked us to share it with."

Generally speaking, the ownership of user-generated content will be governed by copyright protections and thus such materials are owned by their originating author unless transferred to a third party by way of assignment.  In Canada and many other countries, such a transfer must also include a waiver of moral rights which refer to rights to attribution and rights to protect the integrity of the work.  

This story certainly serves as a cautionary warning to businesses utilizing customer or user-generated content and the challenges which may result when introducing new contractual terms to an existing relationship - particularly one with a wide and online following.  For users of social networking websites this story highlights the need to closely reviewTerms of Use/Service and Privacy Policies in order to gain a full appreciation for the impact of such provisions on your existing legal rights.

 *Facebook and the Facebook Logo are trademarks of Facebook Inc.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The Government of Saskatchewan recently introduced Bill 68 to provide legislative protection for artists and their intellectual property.  Significantly, the legislation, entitled The Arts Professions Act, affirms and recognizes:

• the important contribution of artists to the cultural, social, economic, and educational enrichment of Saskatchewan;
• the value of artistic creativity in advancing Saskatchewan's cultural, social, economic and educational life;
• the valuable contribution of artists to Saskatchewan's cultural heritage and development; and
• the importance of professional artists of being fairly compensated for the creation and use of their artistic works.

Notably, the Act requires the execution of written agreements when engaging qualifying "Professional Artists" for goods and services including clauses addressing the financial consideration due, the terms of payment, dispute resolution mechanisms, copyright waivers (if applicable), the transferability/assignability of the agreement, etc.  It is anticipated that once the Act comes into force June 1, 2010, the certainty provided by the legislation will formalize and standardize contracting between Professional Artists and engagers thereby mitigating against prolonged disputes over the terms of sale or transferability of artistic goods and services and the underlying intellectual property rights relating thereto. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

“Due diligence” in corporate transactions simply means the careful attention and analysis necessary to accurately investigate and determine the value of intellectual property assets, liabilities, the integrity and vulnerability of those assets, and potential exposure to risks of infringing third party rights and/or the erosion of a company’s trade secrets. 

For any company whose success and competitive advantage relies upon intellectual property rights or when considering a transaction touching upon intellectual property rights (whether they are owned or licensed) due diligence should always be conducted. While the dollar amount involved in the transaction may dictate the depth or level of review conducted, due diligence may result in an adjustment of the value of a transaction and thus appropriate investigations should be conducted as early as possible in order to allow for follow up investigations and adjustments to the agreement.

When reviewing intellectual property rights it will be necessary to review, at a minimum, the subject company’s records and publicly available records to assess the following:

1. The subject company’s systems for protecting intellectual property generally including patents, trademarks, copyright, designs, trade secrets, etc. including contracts with third parties (i.e. license agreements), independent contractors and employees to review the sufficiency and enforceability of confidentiality and non-compete commitments;
2. The intellectual property owned, used, licensed and/or being developed by the subject company to determine validity, exposure to infringement and other potential problems, potential liability for infringing a third party’s rights, accuracy of chains of title, pending and/or existing litigation, etc.; and
3. Contractual arrangements to utilize the intellectual property rights of third parties to assess the grant of rights, limitations on use, the exclusivity of such rights, and most importantly in this context, the transferability of such rights

While conducting such strategic reviews may appear intimidating, the results of due diligence have the potential of providing valuable insight into the scope of rights, limitations on those rights, gaps in protection, the enforceability of such rights and, ultimately, the value of the intellectual property assets to be acquired. Indeed, without appropriate investigation a target for acquisition may be greatly overvalued by the vending party so it is essential to receive the vendor’s claims with scepticism and proceed with your own independent due diligence investigations prior to finalizing the financial terms of a transaction.

• Email This
• Print
• Comments
• Trackbacks
• Share Link