We’ve all heard any number of “Urban Myths”, such as the one about alligators living in the sewers in New York City and Little Mikey from the “Life” cereal commercial died because he mixed Coca-Cola with pop rocks. There are plenty of widely-held general legal myths too: “possession is 9/10 of the law” and “a verbal contract isn’t any good” are two common legal myths. In our experience, there are dozens of legal myths pertaining to copyrights, trademarks, patents and business in general. The following is a list of twelve of the most common myths we have heard over the years – and the truth about them:
“I don’t need to register my work with the Copyright Office; all I need to do mail it by myself”.
Reality: No, mailing your work to yourself has no legal effect at all. The copyright law in the US is very clear that in order to sue someone in court for copyright infringement you must have officially registered the copyright with the U.S. Copyright Office, not just something you mailed to yourself. There is an exception to the general rule in some jurisdictions where a copyright infringement lawsuit can be filed if you have filed your copyright application with the US Copyright Office, but even this exception requires that an actual written application is actually filed with the US Copyright Office. There is no such thing as a “poor man’s” copyright or common-law copyright. Similarly, filing your screenplay or treatment with the Writer’s Guild has no legal effect and is not a substitute for officially registering the copyright with the US Copyright Office.
“As long as I am the first one to register my trademark with The Trademark Office, I can stop anyone else from using my trademark – even if they actually started using the same trademark before me”.
Reality: No, at least in the U.S. the general rule is that the real owner of a trademark is the first person/company to USE a trademark by selling a product or offering a service with the trademark on it – at least in the geographic area(s) the first user can demonstrate they used the trademark in; in other words, legally it’s not about a race to The Trademark Office and who got there first. Having said that, using AND registering a trademark before anyone else does can create very significant legal rights for the true trademark owner.
“If I want to use someone else’s material, all I need to do change it by 12%”.
Reality: There is no magic numerical formula which establishes a safe harbor for copyright infringement. The test for copyright infringement is whether the allegedly infringing work is substantially similar to the copyrighted work. This test is intentionally vague and subjective and it has been the subject of hundreds if not thousands of legal disputes. For example, was George Harrison all the Beatles guilty of copyright infringement under the “substantially similar” test when the melody of his song “My Sweet Lord” was compared to the melody of “He’s So Fine” – a song made popular by the singing group called The Chiffons? There was no dispute about the lyrics, which were obviously completely different. This lawsuit was all about the melody. Answer: yes, George Harrison was found guilty of copyright infringement even though the judge believe it was “unconscious” and not intentional copyright infringement
“I’m legally in the clear as long as my product name/trademark is at least one letter different from a competitor’s”.
Reality: Not really. Two trademarks don’t have to be identical for there to be a finding of infringement; they only need to be similar enough that the public might be confused into thinking the two trademarks emanate from the same source. Thus ZERAX for photocopiers and photocopy paper would be too close to XEROX even though they are not identical.
“Even though I am in California, I am better off forming a corporation in Delaware or Nevada”.
Reality: No; in most cases the better choice is to form your legal entity in the state you are actually operating in. Reason: in California, for example, if you form your corporation in another state but operate in California, then you are required by law to register and qualify as a foreign corporation doing business in California. That registration and qualification procedure will cause your company to be taxed under California law and thus there is no real advantage to forming an out-of-state corporation. Having said that, many of our clients still inquire about forming a corporation under Delaware or Nevada law because they believe that their corporate records will be better protected and less subject to scrutiny under Nevada or Delaware Law.
“I don’t really need to bother registering my company or product and trademark; all I need to do is put the ® symbol next to my name”.
Reality: No; simply putting the ® symbol next to your company name or product name is not enough. First, using the ® symbol isn’t legal if you haven’t officially registered your trademark with the US Patent & Trademark Office (“PTO”). More importantly, when you register your trademark with the PTO you will be entitled to a number of additional legal benefits that will strengthen your brand and trademark legally. Chief among these is the presumptive light to national use of the trademark on the goods or services you have registered the trademark for.
“If I send them 1099 forms, I can treat all of my crew as independent contractors instead of employees”.
Reality: No; simply sending your independent contractors 1099 forms does not necessarily mean that they are legally independent contractors. First, as a starting point, the reality is that the state of California Employment Development Department and the federal Internal Revenue Service generally presume that anyone who works for you is an employee – not an independent contractor. Therefore, in the real world, it often becomes the duty of the party doing the hiring to prove that the people doing the work are independent contractors and not Employees. The mischaracterizing employees as independent contractors can have very severe financial consequences because the EDD and the IRS and impose fines and penalties. There are multiple factors that go into determining whether someone you hire is an employee or an independent contractor. Conduct a Google search for “IRS Form SS-8” and you will find a multipart questionnaire that the IRS uses to make these determinations. If you study the questions, you will get a flavor for the types of facts that the IRS and EDD use to make these determinations. In many respects, these factors all center around the issues of control over how the work gets done. So, for example, if you hired a company to paint your house and they tell you when they will be able show up to do the job, and they provide the equipment such as ladders, paintbrushes, etc., then they are acting as independent contractors. But if an independent video producer for a production company hires a lighting director and tells the lighting director when and where to show up for and how to handle the lights and related equipment, they are probably going to be treated as employees by the IRS and EDD. There are quite a few factors that go into this termination; we can’t discuss all of them here. These laws can have serious financial consequences and strongly suggest obtaining the advice of legal counsel to help you structure your relationship with your employees and contractors.
“If I am doing work for a nonprofit, I can use other people’s material without paying for it because my client/customer is a nonprofit”.
Reality: No; the fact that you are working for a non-profit entity doesn’t get you off the hook automatically. Legal liability for copyright infringement does not depend solely on whether the party accused of infringement makes money or not. The exclusive rights granted by US copyright law to the copyright owner include the right to control the distribution, display, performance, and adaptation of the copyrighted work. If you wrote a song, or novel, or produced a movie or TV show, you may not want it distributed and performed for free by the tens of thousands of nonprofit organizations that exist in this country and around the world.
“If I’m working for free on a project I can use other people’s material because I am not getting paid”.
Reality: No; see the answer to preceding question.
“If I own a CD or DVD or streaming content, I can incorporate portions of it into my project because I own the CD, DVD, streaming content”.
Reality: No; just because you legitimately own a copy of a CD or DVD, that does not give you the legal right to copy it. You can give away your CD or DVD; you can sell it; you can even throw it away. But you cannot copy it or rent it out.
“All I need to do to form a corporation is file articles of incorporation in the state I am in”.
Reality: Filing articles of incorporation for a corporation or articles of organization for a limited liability company are just starting points. To validly form a corporation you also need By-laws, Minutes of the first meeting of the Shareholders and the Board of Directors, and stock certificates, etc. For a Limited Liability Company you need a written Operating Agreement.
And the #1 Myth of all time, is………
“If I can access it on the Internet, I am legally allowed to use it for free”.
Got an urban legend or deeply held belief about copyrights, trademarks and patents you want to double-check? Write us at email@example.com and we’ll see if we can get to the bottom of it for you.