Updating Your Outdated Terms of Use

You just looked at your business website’s Terms of Use and Privacy Policy (I’ll use the word Terms to refer to both of them together) for the first time in ages and realized that they have been in place since the (first?) Clinton Administration. It’s time for an update. What do you need to consider?

Don’t copy and paste. Terms should be tailored to your website. Your site will need different terms depending on whether you accept posts from users, how you want users to be able to use the site, what kinds of information you collect from users, whether you wish to allow sharing, and more. If you merely find a website similar to your own and copy its Terms, you risk creating Terms that you do not wish to bind your users, let alone your business.

Follow any requirements for your industry. If you are in an industry that is subject to regulations, you should make sure that your site’s Terms allow you to follow those regulations. For example, some industries are required to keep certain records about customer interactions for a certain amount of time. Make sure that your Terms disclose that you are keeping those records, and for how long.

The FTC regulates privacy policies. The Federal Trade Commission has been very aggressive about enforcement of privacy policies for the past few years, and it updates its regulations fairly regularly. Make sure your attorney looks at the latest regulations in drafting your Privacy Policy.

State laws. If your website is aimed at residents of more than one state, make sure you are complying with the laws of every state you are doing business in. California has generally been the most aggressive state in terms of legal regulation of website Terms.

Consider your timing. Pinterest has recently become a very popular site. If you want to, for example, update your Terms to allow you to share your users’ content via Pinterest, you will have to choose your timing carefully. If your current Terms do not grant the license needed for such sharing, you will need to make sure that your users are bound by your updated Terms before you add a “Pin It!” button or other means of sharing to your site. Otherwise, you may be risking a law suit for facilitating the violation of your users’ copyrights.

Inform your users of the update—email them if you can. It has become more and more common for websites to provide some notice before changes to their Terms go into effect. One might even say it is swiftly becoming a standard practice in the industry, especially for social sites. Facebook has a Site Governance Page where users can learn about and weigh in on changes before they are made. Pinterest gave its users more than two weeks’ notice, both by email and by notice on the Pinterest website, that it was going to make changes to its Terms of Service (and still makes the old terms available on the site in case users want to know how they have changed). Google gave users more than a month to review the changes it made to the Terms for its many services, informing them via pop-up when they visited a Google site as well as via email. If at all possible, you should take similar steps to inform your users of your changes. You don’t want your business to be left behind, if for no other reason than your users will expect this level of service.

Updating your Terms requires some consideration, but can be a painless process with the proper planning.

Introducing the Socratic Guide

Today, I’d like to share a project I have been working on for a while: the Socratic Guide. It is a blog that provides basic information about legal concepts. It is designed to give you the background information you need before you talk to your lawyer. There is no reason for you to spend hundreds of dollars getting basic background information before you can even get into the meat of your specific legal issue; it is a waste of your time and your money. The Socratic Guide aims to provide that basic background information so you can walk into a conversation with your lawyer and go straight to getting advice about your specific situation.

The Socratic Guide is starting out with Intellectual Property and moving on from there. Please check it out and let me know what you think. If you have suggestions for topics the Socratic Guide should cover, please let me know. I’d love to get your feedback either by commenting here or by sending me an email.

Congress Gets Serious About Defending Trade Secrets

The Defend Trade Secrets Act (DTSA) has been slowly wending its way through Congress, and it is looking as though it has a good chance of becoming a law at this point. It has bipartisan support and has now passed the Senate 87-0. It is now being considered by the House of Representatives.

Currently, there are two levels of laws governing trade secrets, and they have very different benefits for trade secret owners. The federal law is a criminal law that focuses on preventing international espionage. At the state level, the Uniform Trade Secrets Act (PDF), which has been adopted by most of the states, is a civil law. It focuses on providing monetary and injunctive remedies for trade secret owners who have experienced or may soon experience trade secret theft, regardless of the source. Some states also provide for criminal penalties. The end result is that most companies that are not operating in either agriculture or high technology (two areas particularly susceptible to international espionage) rely on a patchwork of state laws to help them protect their trade secrets.

What does the DTSA do, exactly? It creates, for the first time, a private cause of action for misappropriation of trade secrets at the federal level. This means that trade secret owners will be able to sue for trade secret violations in federal court rather than in state court, which will in turn create a more uniform treatment of trade secrets nationwide.

This bill will benefit most, but not all, trade secret owners by opening up a federal forum for litigation. This is because the federal law applies only to trade secrets that are currently used, or intended to be used, in interstate or foreign commerce. (Congress has the authority to regulate interstate, but not intrastate, commerce under the Constitution.) If your business is small enough that it operates only within one state, and you cannot make a showing that you have some effect on interstate commerce, you are stuck with whatever body of law your state has in place about trade secrets. The states generally have broadly diverging case law despite the near-uniformity of the statutes. And if you are in one of the states that hasn’t adopted the Uniform Trade Secrets Act, you might not like the outcome; older laws tended to be very skeptical of trade secrets as a form of intellectual property. All that said, at least you know what you have to do to protect your trade secret because the laws of only one state apply; the federal bill, if it becomes law, offers that kind of reassurance to businesses that operate in more than one state.

If the bill becomes law, it will create a more stable atmosphere in which to do business, as it will be clearer what constitutes a “reasonable” level of protection for a particular type of business or type of trade secret. If your business relies heavily on trade secrets and you like the idea of uniformity, this is a good time to contact your House of Representatives delegation and let them know that you support the Defend Trade Secrets Act.

What do you think? Would you rather be able to sue in federal court for trade secret violations, or are you happy with the current “50 ways of doing things” setup?

Star Trek v. Axanar: Copyright Infringement or Permissible Fan Work?

Star Trek vs Axanar: CBS and Paramount sue Axanar Productions
Star Trek vs Axanar: CBS and Paramount sue Axanar Productions

If you are a Star Trek fan, know a Star Trek fan, or are merely vaguely aware that you need to be very careful about whether you call Star Trek fans “trekkies” or “trekkers,” you are probably aware of the Axanar project and the litigation surrounding it.

For those who spend slightly less of their time contemplating the wonders that Gene Roddenberry created than I do, here is the nickel summary: In 1966, the television show Star Trek first aired. It was cancelled after three seasons but went on to gain popularity in syndication. From these humble beginnings, the property has ultimately expanded into multiple spinoff television series, movies, books, websites, merchandising, and pretty well any kind of copyrightable work you can think of. In terms of the depth and breadth of the copyrighted properties and the fictional geography, it can only properly be called a “universe.” Today, there are two companies that own the copyright rights to Star Trek, CBS and Paramount. CBS owns the television rights and Paramount owns the movie rights, though according to Axanar Productions’ attorneys, this may not be the full picture due to the ways in which the copyright ownership has changed hands over time. CBS and Paramount have, according to numerous news articles, allowed fans to make short films, written fictional works, elaborate and accurate costumes, and other tributes, all without pursuing legal action against the fans. Corroborating this claim is the fact that Paramount lists Star Trek fan sites on its official website for the Star Trek movies. CBS and Paramount could have taken legal action against these fan uses at any time because these fan works are derivative works, meaning copyrightable works that are based on another copyrighted work. Only the owner of a copyright has the right to create or authorize creation of derivative works of the original copyrighted material; if anyone else creates a derivative work, that constitutes copyright infringement.

But Axanar, unlike many fan films before it, has drawn legal action from CBS and Paramount. Theories on why Axanar is different range from timing (CBS has just announced another new Star Trek television show to begin airing in 2017, and Paramount has the next reboot movie coming out in summer 2016) to money (the crowdfunded Axanar raised an unprecedented $1 million for production online) to quality (Axanar is using professionals to make the film, while most prior fan films did not) to sour grapes (the studios fear that Axanar will be more popular than the reboot movies, which many fans felt failed to capture the spirit of Star Trek). The Axanar Productions legal team has taken the strategy of insisting that the plaintiff explain in great detail exactly which copyrights have been violated and exactly which plaintiff owns which copyrights. They are asking, essentially, that CBS and Paramount give the exact coordinates of the conflict within the Star Trek universe. The disconnect is that CBS and Paramount are contending that Axanar Productions is in essence violating (almost) the entire universe all at once. And such insistence on a detailed list of the exact elements that have been violated (which the amended complaint does provide) gives the appearance of being the refuge of an infringer that knows it has been caught and has no solid grounds for defense.

One concept I have seen repeatedly throughout news articles and fan website discussions is that CBS and Paramount have always been fine with fan works as long as they didn’t make any money–and that a lack of profits is a defense to infringement. The Axanar creators themselves have repeated this idea and are fighting hard in the court of public opinion to turn the fan community to their side. Both Prelude to Axanar, a 20-minute trailer to the new movie, and Axanar itself will be released to the public for free (assuming the movie ever does get released). This does not, however, mean that the movie is not a for-profit enterprise in any sense that would matter for a legal defense of Axanar. The professional production staff, producers, and others are certainly being paid, regardless of whether the money comes from donations to a Kickstarter campaign or from purchase of tickets, electronic files, or DVDs. This is also not a real legal test for whether a work is infringing. It is part of the legal test for the fair use defense to infringement, but it is only part of the test. Axanar likely wouldn’t make it past the first question in a fair use analysis, specifically whether the purpose of the use is “criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research.” Even if it did, there is a serious question about whether it would harm the market for the copyrighted works, another of the elements of the fair use test. The fact that fans have posited that Axanar better captures the spirit of the original Star Trek than the reboot movies certainly adds weight to CBS and Paramount’s position on that question.

Another defense of Axanar Productions that I have seen often is that CBS and Paramount have never sued before, so they should be barred from suing now. Legally speaking, this would be a defense for Axanar Productions in a trademark case, but it is not a defense in a copyright case like the one CBS and Paramount have filed. Trademark owners must police their trademarks to ensure that the marks do not become so diluted that they no longer serve as source identifiers; copyright owners have no such obligation and are perfectly free to pick and choose which infringers to take action against. This means that the fan theory that the money is the motivation may be at least a partial explanation: why bother pursuing an infringer who has no money? Hiring big-name litigation lawyers is quite expensive, and if you win an infringement case, the other side must pay your attorneys’ fees. If the other side has no money, you’re out your attorneys’ fees.

The other major defense of Axanar Productions I have seen is that CBS and Paramount have slapped fans in the face by bringing this lawsuit. The fan community is the lifeblood of Star Trek, the thinking goes, and for CBS and Paramount to bring a suit without so much as sending a cease and desist letter will only alienate fans. While I do understand this sentiment, and I enjoyed Prelude to Axanar as much as the next fan, I also appreciate that CBS and Paramount are businesses. They have a bottom line to consider, and when fans are saying things like “this captures the spirit of Star Trek better than the reboot movies!” that shows that Axanar is realistically a threat to their bottom line. Should they have explored a license agreement first? Maybe. But they also don’t want to encourage the “it’s better to beg forgiveness than to ask permission” approach from fan works. In addition, Axanar Productions is able to do things that older fan works have not: technology has been changing in ways that make fan works a realistic threat to the market for canon/copyright-owner-created works. CBS and Paramount may be navigating the changing landscape badly, but they are hardly alone in needing to find ways to deal with the changes.

What do you think? Are there other alternatives CBS and Paramount should have explored? Can fan films coexist with canon works without hurting the market for canon works? Will you stop watching new Star Trek because of the lawsuit?

On the Death of Justice Antonin Scalia

Justice Antonin Scalia, perhaps the most controversial figure of the modern Supreme Court, has unexpectedly passed away at age 79. Unfortunately, the political posturing over when and how to replace him began almost immediately following the public announcement of his death. For a lovely tribute to a man whose intellect, influence, and personal relationships deserved a great deal more time and attention than they received, check out what Ruth Bader Ginsburg had to say about her good friend Justice Scalia.

But, inevitably, on to the politics. One major point of contention has been whether there is historical precedent for either nominating and confirming a new justice in an election year (which the Republicans do not wish to do), or delaying a new appointment for nearly a year (which the Democrats do not wish to do). For those who are interested, my husband, Shannon Patrick, who is a data geek and an Excel whiz, has put together a spreadsheet showing relevant dates and gaps over the history of the Supreme Court. If you would like a copy of the Excel document so you can also manipulate the data, please email me.

The facts are these: There are 341 days between Justice Scalia’s death and the day the next president will be sworn in. She or he will not be able to appoint a new justice immediately, so there would be at least a few more days or weeks before a new justice could take office. According to Shannon’s data, there has been only one vacancy of that length in the last 150 years, when Justice Harry Blackmun was appointed following a 391-day vacancy. Before that, there was the 1862, mid-Civil War appointment of Justice David Davis, which filled a seat following a vacancy of 589 days (this happened to be the third-longest Supreme Court vacancy ever). The trend (PDF) since transportation has evolved beyond horse, buggy, and dirt roads, has been for appointments to take a shorter and shorter period of time. If you omit the outliers, the trend (PDF) becomes even more clear. The longest vacancies in the modern era have come about as a result of failed nominations (Robert Bork prior to Justice Kennedy, with a 237-day vacancy, and both G. Harrold Carswell and Clement Haynsworth prior to Justice Blackmun, with the 391-day vacancy).

We all know that there are some fairly major political elements at play here. Justice Scalia considered himself an originalist: that is, he believed that the Constitution should be interpreted the way it was meant by the men who wrote it, at the time that they wrote it. He usually, but not always, agreed with his fellow Republican-appointed justices, particularly in the politically controversial cases that garner the most attention in the news: political money, same-sex rights, abortion, presidential elections.

But there are purely non-political considerations: the fact that a seat is left open by his death, no matter how long it remains open, has the potential to result in some (possibly many) decisions that have no majority opinion. When there is a 4-4 decision by the Supreme Court, the result is that the lower court’s ruling stands but has no precedential value. These 50-50 splits at the Supreme Court level are a problem for our judicial system as a whole. Cases generally reach the Supreme Court only when there is disagreement among the circuit courts of appeals regarding how a particular law or part of the Constitution ought to be interpreted. Even then, the Supreme Court generally has to wait until a case comes up that gives it an opportunity to resolve the question. There is no guarantee that the opportunity to resolve the questions posed by some of the cases from this session will be repeated in the near, or even far, future. Circuit splits (where the law is interpreted differently in different jurisdictions) can be dangerous. They cause forum shopping, meaning that attorneys maneuver to ensure that litigation will take place in a forum that has advantageous law for their clients. While forum shopping may be good legal representation (a lawyer should always be a zealous advocate and endeavor to get the best possible result for her client), it is bad when forum shopping is possible because our nation’s top court is unable to tell us how to correctly interpret the law. I would not want to see that sort of chaos for the next year.

I am not going to try to claim that the Supreme Court is an apolitical institution. That would be disingenuous at best, for reasons that others have articulated better than I can here. (Disclaimer: The two linked books were written by one of my law professors and law school classmates, respectively.) But businesses thrive in a stable climate. It is not possible to figure out how to comply with the law, get your compliance regime set, and get down to business, when you do not even know for certain what the law says—or worse, when you do know that it is not possible to follow the same law in two different jurisdictions at the same time. We need a full complement of justices handing down decisions that let the American people, and our businesses, know what our laws say.

I am not given to urging politlcal action on this blog, but this is one time I would urge you to contact your Senators and let them know that leaving an open Court seat for nearly a year, as is nigh-unprecedented in modern times, would be bad for business and bad for our country.

What do you think?