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The Basics of Copyright

Business Guest Posts Legal Issues The Writing Life 1 Comment

A guest post by Scott Boone.

Why are we talking about copyright?

As a writer, copyright is one of your primary assets. I’d put it right next to your reputation. If you are trying to build a career, copyright provides you with a legally enforceable means to reap monetary benefits from your work. It also gives you a high level of control over what is done with your work. Realize that what that means is that once you give up the copyright (by transferring it to someone else), you lose both, and you are limited to whatever the contract gives you.

What is copyright?

Copyright is a set of rights in a work of authorship. The exact scope of those rights differs slightly from country to country, particularly with respect to limitations and to moral rights, but the basic ones are the same. In the US, copyright gives the owner the exclusive right to reproduce the work, to prepare derivative works based on the work, and to distribute copies of the work. US copyright also gives additional rights depending on the types of work: to publicly perform the work (conduct a book reading, put on a play), to publicly display the work (hang a painting in a gallery), and to digitally transmit an audio work (streaming a sound recording).

These rights are “exclusive.” That means that they give the holder of copyright the power to prevent others from doing them. They do not affirmatively give the copyright owner the right to do them. So, the owner of a copyright in a work might not be able to distribute the work if some other law made it illegal to do so (e.g. because it was obscene or defamatory).

The rights last for a long time. In most countries, the duration is set at the life of the author plus an additional 70 years.

Importantly, copyright can be transferred in small bits and pieces. In other words, you do not have to transfer all the rights as one unitary block. You can limit a transfer by time (e.g. 6 months from publication for a short story) or by geography (e.g. North America) or by type of copy (e.g. hardback or trade paperback or eBook). The key is not to give away more than what a publisher is paying you for it.

 What does it take to get copyright?

For the vast majority of countries, you simply need to either (1) create the work or (2) create the work and fix it in a tangible medium of expression. That’s the standard set for countries that are members of the Berne Convention (166 countries and the Holy See). That’s it. Now, the US gives you some nice benefits for doing more (registration and notice), but it’s not required for obtaining copyright.

 US Copyright Law

I’m going to focus the rest of the discussion on US copyright law. Partly because that is what I know best and partly because the US cut its own path in copyright law for a long time and so has some differences in its law and lingering confusion among its creative professionals. Essentially, most of the rest of the world agreed on the basics of copyright in the late 19th century and the US dragged it feet screaming it didn’t want to play for the better part of a hundred years.

 Registration – Not required, but recommended

Registering your work with the Copyright Office is not required for you to obtain copyright. Remember you have copyright in your work as soon as it is fixed in a tangible medium of expression. However, registration does convey significant advantages that you may want to consider. First, after five years, registration of the work serves as prima facie evidence in a lawsuit that the registrant owns the rights in the work. In other words, it shifts the burden to the other party in the lawsuit to prove you don’t own the copyright. Second, timely registration of your work makes statutory damages available to you in an infringement lawsuit. Actual damages are often quite hard to prove. So having the option of statutory damages, where the court just sets a dollar amount for each work infringed, can be quite helpful. Third, timely registration also makes attorney’s fees available if you prevail in an infringement suit. If you win a suit, the infringer has to pay your attorney’s fees. The latter two benefits can make a huge difference in whether it is financially worth it to pursue an infringement claim. They can also serve as a large sword hovering over infringers, making them more amenable to settlement.

So what constitutes “timely registration”? A published work is timely registered for these purposes if it is registered either within three months of first publication or before the infringement begins. An unpublished work needs an effective registration date prior to the infringement.

 Copyright Notice – Not required, but useful

Copyright notice is either the word “copyright” or the copyright symbol (a ‘c’ in a circle) followed by the date of first publication and the name of the copyright holder.

Before the US became a signatory to the international copyright treaty, the Berne Convention, copyright notice used to be required for obtaining any federal copyright protection. If you published the work without copyright notice, it was dedicated to the public. In other words, it was not protected by copyright and was free to all. However, since 1989, the US has not required copyright notice. This was a part of the US harmonizing its law to the international standards set by the Berne Convention.

But you still probably want to put copyright notice on your published works. First, it tells the world that someone is claiming the rights in the work. There are still people out there who think what they find on the internet is free. Second, copyright notice removes the statutory defense of “innocent infringement,” a defense that can lessen damages in an infringement suit. Lastly, it is cheap. In fact, it’s pretty much free. So why not do it?

You will note that I did say “put copyright notice on your PUBLISHED works.” I specified published works because you can create confusion about the works publication status if you put copyright notice on something that has not yet been published. If you submit a work to an editor with a copyright notice on it, the editor may think it has been previously published because the industry practice is to use copyright notice after publication. At the very least, the editor will think you do not know how the industry works or think they may have a potential problem with prior publication. Do you really want to create more hurdles for yourself?

 

Guest Writer Bio:
M. Scott Boone lives in Atlanta, Georgia, where he works as a law professor in order to support a clowder of cats. He writes about legal issues affecting writers at writerinlaw.com. When not writing or teaching, he is a self-proclaimed soccervangelist.

Intellectual Property – What Is It?

Business Guest Posts Legal Issues The Writing Life 1 Comment

A guest post by M. Scott Boone.

One of the very first things I teach my first year law students is the difference between what a layman thinks property is and what a lawyer thinks property is. If we were to ask most non-lawyers what property is, they would give us examples like a ring, a car or a parcel of land. However, a lawyer (or at least one that has taken my property class) would say that property is a set of rights in a thing. So property is a bundle of rights that attaches to the ring, the car or  the parcel of land.

Intellectual property is also a bundle of rights, but unlike personal property (the rights in a car) or real property (the rights in a parcel of land), the thing to which the rights attach is not physical. Instead the thing is an intangible such as a work of authorship, an invention, or a source identifier.

Because intellectual property covers an intangible while personal property covers physical objects (called chattels), both types of property can be embodied in the same object. For example, a book is a physical object made of paper, ink and binding materials. As such, an individual can have personal property rights in it. At the same time, the book represents an embodiment of an intangible work of authorship. Thus, copyright applies to it as well. Note that each type of property is frequently owned by different people.  You might own the personal property rights in the book, but the author or publisher still owns the copyright rights in the work of authorship.

The three primary types of intellectual property are copyrights, patents, and trademarks. Trade secrets are a fourth type of intellectual property, though you will see debate as to whether they are better characterized as property or torts. Rights of privacy and publicity are torts often listed as types of intellectual property. Finally, there are a number of very subject matter specific types of intellectual property, referred to as sui generis protections; examples include federal protections for the designs of boat hulls and semiconductor chips.

Let’s look at the basis of the three main types: copyrights, patents, and trademarks.

Copyright subsists in any original work of authorship fixed in a tangible medium of expression. It is based almost exclusively on federal statutory law, primarily the Copyright Act of 1976. Examples of types of works that copyright attaches to include music, written works, visual art, computer software, and audiovisual works.

Copyright provides a set of six exclusive rights – to reproduce the work, to prepare derivative works based on the work, to distribute the work, to display the work publicly, to perform the work publicly, and to transmit a digital audio performance of the work. The last three apply to only certain types of works. Creation and fixation are the only requirements for obtaining copyright, but registration of the work and copyright notice placed on copies of the work can provide additional benefits.

Patents are grants of exclusive rights and can be gained in the US only through an involved application process before the United States Patent And Trademark Office. The US has three types of patents: utility, design and plant. Utility patents are what people typically mean when they say patent; for inventions that are novel, nonobvious and useful, utility patents provide the exclusive right to make, sell, use, or import the patented invention.

Both copyrights and patents provide exclusive rights. That doesn’t mean that they are kept behind a velvet rope and your name needs to be on the bouncer’s clipboard. What it means is that what you get is the right to exclude others. This distinction is best understood through what exclusive rights are not. Exclusive rights do not provide the holder a right to use the work in and of themselves. For example, you might have a right to exclude others from making copies of your book but might not be able to sell copies yourself if your book violates some other law (for example, if it is defamatory or obscene). In the case of patents, you might have exclusive rights to a new pharmaceutical drug but not be able to sell the drug because you do not have FDA approval.

The purpose of both copyright law and patent law is to create incentives that ultimately benefit society as a whole. They exchange private property rights for the creation and publication of works of authorship and inventions. Essentially, both bodies of law say, “If you put in the work and tell us about it, we’ll give you exclusive rights that you can exploit in the market.” Note that modern US copyright law has removed publication component as a requirement for gaining copyright.

Trademarks serve as identifiers of source. In other words, a mark (in the broadest sense) is a word, image, product configuration, or product package that communicates to a consumer the source of a product or service. Examples include the term Xerox, the apple silhouette with a bite out of it used by Apple Computers, and the curved shape of glass Coca Cola bottles. Trademarks originated in the law of unfair competition but are treated very much like property today.

The owner of a trademark can stop someone else from using the same mark or a similar mark that is likely to cause consumer confusion as to the source of goods or services, and, in the case of famous marks, is likely to dilute the mark’s distinctiveness. The purpose of trademark law is to prevent consumer confusion and to allow entities to develop goodwill in their provision of products and services. The latter is then understood to create incentives to provide higher quality goods and services. Trademark rights are obtained by using a distinctive mark to identify the source of goods or services. As with copyright law, registration is not required, but registration can convey significant advantages.

Guest Writer Bio:
M. Scott Boone lives in Atlanta, Georgia, where he works as a law professor in order to support a clowder of cats. He writes about legal issues affecting writers at writerinlaw.com. When not writing or teaching, he is a self-proclaimed soccervangelist.

U.S. Taxes: Things to Keep In Mind, Part Two

Business Guest Posts Legal Issues Taxes The Writing Life 2 Comments

A guest post by Brenda Lindsey.

SHOULD I BE MAKING QUARTERLY ES PAYMENTS?

The rule for everyone is the same. The U.S. is a pay-as-you-go tax system. As you earn income, you must pay taxes. However, a common misconception is that every self-employed individual must make quarterly estimated tax payments. If you file your income tax return and have not paid throughout the year, you will be penalized. There are some general exceptions to the penalty: if you owe less than $1,000 in taxes for the current year; if you have already paid in 90% of what is due in the current year; or if in the previous year you have already paid in 100% of the tax due for the current year. (Look at last year’s Form 1040, Line 61.)

Not all writers are full-time writers.  As a writer, if you also have a wage or salary earning job, you get an added advantage to the pay-as-you-go rule. All payments to the IRS remitted through withholding by your employer will be considered remitted equally throughout the year – even if you change your W4 at the end of the year and have large withholdings to “catch-up” on taxes for income received much earlier in the year. Also, payments to the IRS when your status is “married filing jointly” are considered joint payments and will apply to the joint taxes owed. This is why, if possible (i.e. you or your spouse have another job with an employer), you should consider simplifying the process and avoiding penalties by making all your tax payments through increased withholding by an employer.

If increasing the withholdings through an employer is not an option, you will need to make estimated tax payments on Form 1040 ES. You should estimate the taxes you need to pay (estimated self-employment income less estimated deductions multiplied by your income tax bracket + approximately 15%) and divide by 4. These payments are due on an unusual schedule – April 15, June 15, Sept. 1, and Jan. 15. You can get a refund on your income tax return and still incur ES payment penalties because you did not remit timely payments on the “pay-as-you-go” system. (You can get a waiver if you can show – via Form 2210 – the actual amounts earned by quarter. This would be used, for example, if you received a large advance in the last quarter of the year.)

CAVEAT ABOUT CLAIMING DEDUCTIONS

Be very careful about what you claim as deductible expenses.  This is one of the areas where writers can most easily find themselves in conflict with the IRS.  Remember, only your expenses as a writer can be deducted from your self-employed writer’s income.  For example, if you and your spouse travel together to another city to attend a convention, unless your spouse is also a writer, only your travel, meal, and lodging expenses are deductible.

CONSIDER HIRING A CPA

While it is wise to understand the rules involved and the records you should be keeping, the paperwork should not keep you from your first love – writing. A Certified Professional Accountant can remind you of deadlines, file forms on your behalf and help you to avoid unnecessary penalties. Keep orderly and itemized records of receipts and expenses and consider letting a CPA worry about Uncle Sam.

Good luck with your writing!

Guest Writer Bio:
Brenda is a Certified Public Accountant and has over 10 years in public accounting experience, specializing in taxes for small businesses. She is currently the Controller of New Gulf Resources, LLC in Tulsa, OK. She is not a writer, but she is a reader, and she is related to Fictorian David Carrico, so she has a connection with the writing life.

U.S. Taxes: Things to Keep In Mind, Part One

Business Guest Posts Legal Issues Taxes The Writing Life No Comments

A guest post by Brenda Lindsey.

You have finally finished that book you dreamed of writing. As you are showing off that first advance check from the publisher, don’t forget about Uncle Sam. He will want to see that check also.

WHERE DO I REPORT MY INCOME?

Yes, even if you don’t receive a 1099 statement from a publisher at the end of the year, you are still legally required to report writing income.  Amounts received as income from writing books, including but not limited to advances and royalties, are generally considered self-employment income. The Internal Revenue Service will want to see it reported on your Form 1040, Schedule C. (The exception would be if you are fortunate enough to continue receiving royalties after you have quit writing. In that case the royalties are “passive income” and would be reported on Form 1040, Schedule E.)

In addition to tracking the income you receive, you will also want to keep track of your expenses. A good rule of thumb is any expense that you would not otherwise have if you were not in this business, is a business expense. Items such as the business use of your computer, ink or toner, paper, legal fees, subscriptions and office rent are some examples of ordinary business expenses you might deduct from the income on Schedule C.  Other expenses would be things like travel, lodging, and meal expenses for attendance at conventions or seminars.  Get receipts for everything, and don’t lose them.  Or if you drive to a local book signing or conference, that mileage will be deductible.  Make sure you write down the beginning and ending odometer readings as backup for the deduction.

WHAT IF I LOST MONEY?

After deducting all your expenses, you will arrive at your net earnings. If your expenses exceed your income (and they may), then you will have a net loss. Net losses can be used to offset income from other sources. You do not have to have net earnings from your business every year. The rule is if you have net earnings in three out of every five years, the IRS will presume you are in business to make a profit (a requirement to deduct expenses on Schedule C). However, if your business does not have net earnings for three out of every five years, you should be prepared to convince the IRS that you are operating a business and not simply pursuing a hobby. Hobby losses are only deductible on Schedule A as an itemized deduction and have more limitations.

WHAT IS THIS SELF-EMPLOYMENT TAX I’VE HEARD ABOUT?

Net earnings from self-employment are not only subject to income taxes, but they are also subject to self-employment taxes. These “self-employment” taxes are comparable to the Social Security and Medicare withheld as FICA from a “wage-earner’s” paycheck by his employer. The percentage withheld is 7.65% and his employer matches it by paying in another 7.65%, for a total of 15.3%. The employer provides a form to reconcile the withholdings and the match to the IRS.

When you are self-employed, you are your own employer. You must remit the total 15.3% as self-employment taxes. This is reported on your Form 1040, Schedule SE. (There is a cap of $117,000 on the amount of earnings subject to Social Security.) If you forget about self-employment taxes, you may be unpleasantly surprised when you file your income taxes.

(Continued Tomorrow)

Editorial Comment:

The Fictorians are aware that many of our readers are not United States citizens, and consequently conduct their lives and businesses under statutes and regulations that are markedly different from those in the U S A.  Most of our posters for this month are American, and the few who aren’t are Canadian, so the perspective in this month’s posts will of necessity be somewhat limited.  Nonetheless, if you are one of those readers from somewhere other than North America, as you read of issues in our laws and practices, perhaps they will make you mindful of things you should be aware of in your situations as well.

Guest Writer Bio:
Brenda is a Certified Public Accountant and has over 10 years in public accounting experience, specializing in taxes for small businesses. She is currently the Controller of New Gulf Resources, LLC in Tulsa, OK. She is not a writer, but she is a reader, and she is related to Fictorian David Carrico, so she has a connection with the writing life.