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There are lots of moving pieces when it comes to building a startup. And while it’s easy to get caught up in the whirlwind of bringing a new product or service to life, failing to protect this intellectual property can have major consequences: It can prevent you from staving off copycat products, expose you to potential lawsuits and lower the valuation investors/acquirers would put on your company.
Owning copyright provides a certain set of exclusive rights, including the right to copy the work, the ability to create derivative works and the rights to distribute, publicly perform and/or display the work. All of these rights exist for the duration of the copyright ownership.
Whether you are a startup or a large, established company, if you are developing creative work, copyright protection can be an important part of your overall IP strategy.
What is copyright?
Copyright is a type of intellectual property protection afforded to “original works of authorship” and is protected under federal law. Whether your original work is computer software documentation, website content, artwork, book or song, you can potentially secure a copyright to protect it.
While some courts have referred to the work as needing a “creative spark,” to be considered for copyright protection, there must be a tangible medium, meaning the work must also be fixed in a permanent medium so that it can be perceived, reproduced or communicated to others. In other words, you can’t copyright an idea in your head. You need to express it in a book, on a computer or something like that.
How long do copyrights last?
Like patents, copyrights last for a limited period of time. Generally, the copyright lasts for the life of the author plus 70 years. The copyright can also last for 95 years from publication or 120 years from the creation of the work, whichever is earlier.
However, the author of the copyrighted work that is licensed or assigned to a third party (like your startup) may have the right to terminate the license or assignment 35-40 years after its creation.
So, how do you obtain copyright protection? It’s simple. Create an original work, and fix it in a tangible medium.
How does your startup become the owner of copyright in the work created by employees/contractors? It depends. There are two ways a company can become the owner of copyright to works created by employees/contractors:
as a work made for hire
Generally, when an employee creates a copyrighted work within the scope of their employment, it is considered a “work made for hire.” As a result, the employer is the legal author for copyright purposes. But it may not always be clear whether an employee created something within the scope of their employment. So, it is not necessarily the case that just because your employee developed something for your startup that the startup owns the copyright.
For contractors, a narrow set of types of works can be deemed works made for hire, but it requires a written agreement with the contractor. Many types of works are simply not permitted to be deemed works made for hire under copyright law.
If a startup wants to own the copyright to a work that is not a work made for hire, the author can assign the copyright to the startup. A copyright assignment must be evidenced in writing.
The upshot is you should have a written agreement to confirm copyright ownership for your startup with employees and contractors. For employees, it is necessary, because it may not be clear that the copyright material was made within the scope of their employment (and thus, a work made for hire). For contractors, it is always necessary to have a written agreement (whether it’s an assignment or a work made for hire).
One note: Remember how we noted above that if someone assigns a copyright to your startup, they may be able to terminate that assignment in 35 or 40 years. That’s a potential risk to your copyright ownership. That right to terminate an assignment doesn’t apply to works made for hire.
Business owners should always make sure their service providers are “assigning” their copyright interest to the IP they create. The Copyright Act requires any copyright assignment to be in writing.
Do I need to register my copyright?
There is no registration required for copyright protection. However, there are major benefits to copyright registration, an easy and uncomplicated process.
All you have to do is file an application with the Copyright Office and submit a copy of the work.
In addition to creating the assumption of validity, registration is also required to sue someone for copyright infringement. Technically, you can even register right before a lawsuit. But you can’t get an award of attorneys fees if the infringement occurred before registration. You also can’t get statutory damages unless infringement happened after registration, but it’s important to note that you can get actual damages (i.e., lost profits) for infringement occurring before registration. But those can be hard to prove. The Copyright Act provides for thousands of dollars in statutory damages that are easier to get in most cases.
Are there exceptions to copyright protection?
Yes, even if you own a copyright, others can still make some use of your work. There are “fair use” defenses available to third parties who want to use copyrighted works, though these are most powerful in educational settings. Fair use is a very fact-specific area and one that you should discuss with a lawyer.
Someone can independently create a work that is remarkably similar to yours but not infringe on your copyright. Copyright infringement can be proven only by showing that the “infringer” copied your work.
Remember — you can’t copyright ideas. So, just because a work embodies ideas you developed, it does not mean that work infringes on your copyright.
The bottom line is: Copyright protection is a great way for startups to protect their intellectual property and creative works. Whether you are seeking copyright protection for source code or other programs and work that are susceptible to infringement, legally protecting your creative materials provides an added safeguard for your work and is worth considering.