Earlier this week, the Supreme Court of the United States of America issued an important decision on the case of American Broadcasting Cos. Inc., Et Al. v. Aereo, Inc. The key issue in this case was whether Aereo could broadcast copyrighted content (which it did not own the copyright to) that appeared on TV without obtaining a license to distribute the content. The Supreme Court ruled against Aereo, holding that its broadcasting of copyrighted content without a license from the copyright holder was unlawful.
Although the case hinged on technical, copyright law concepts which are too lengthy for discussion here, the Aereo case serves as a reminder for a very basic copyright law principle:
DON'T USE ANOTHER'S COPYRIGHTED MATERIAL UNLESS YOU FIRST OBTAIN THE LICENSE TO DO SO
But what is a copyright? According to the U.S. Copyright Office, a copyright is a "form of protection grounded in the U.S. Constitution and granted by law for original works of authorship fixed in a tangible medium of expression. Copyright covers both published and unpublished works."
This means that a work must be:
Copyrightable subject matters include, but are not limited to:
Notably, copyright law does not protect:
However, copyright law may protect how facts, ideas, systems and methods of operation are expressed.
Additionally, copyrights do not need to be registered anywhere for protection to exist. However, there are benefits to registering a copyright with the U.S. Copyright office, such as having the facts of the copyright on public record and also granting the copyright holder certain legal remedies such as statutory damages and legal fees in litigation.
It does not take very much for someone to have copyright protection, so people/businesses should be extra careful when using content in any way that they did not create. When it comes to using material this kind of material, err on the side of caution, and don't be like Aereo. Seek a license to use the work, which you will likely have to pay for, but will come far cheaper than any potential copyright infringement lawsuit.
As the internet has grown, businesses have had to contend with a multitude of websites that allow users to post reviews of their experience with a business. One of the most popular consumer-review websites is Yelp. Its understandable that every business will have a few dissatisfied customers, but what if a dissatisfied customer posts a negative review that is full of lies?
It is difficult enough for a business to deal with negative reviews that are truthful, but there are only two options for dealing with a negative review that is a lie: If the lie is not particularly scathing, the business could respond to the review; or, if the lie if is so harmful to your reputation that you believe it will harm your business, you can sue the reviewer for defamation (or at least threaten to do so.)
In order to prove defamation in this scenario, it must be shown that:
Earlier this year, in Virginia, a jury found that a homeowner defamed her contractor when she posted two reviews stating that the contractor botched her home renovation and stole from her. The sole reason the contractor was not awarded the $750,000 he should have won was because the jury found that the contractor also defamed the homeowner in responding to her negative reviews with accusations. This case opened the eyes of many business owners across the country.
Yelp has correctly stated that "litigation is not a good substitute for customer service," and business should only sue for defamation as a last resort. In this scenario, filing suit should only be reserved for blatant and serious lies.
Further, the idea of being sued for defamation may be enough to encourage the posting-user to take down their false damaging comment. As long as the business could have a conceivable defamation suit against the user, it may be more cost-effective for a business to have an attorney send a letter to the user demanding the removal of the comment, or otherwise be sued for defamation. However, this strategy should not be abused to suppress truthful free speech.
Businesses have a difficult enough time finding ways to manage and appropriately respond to truthful negative reviews online. They should not be subject to harmful lies as well, without recourse.
The World Cup is in full swing in Brazil and soccer fans around the world have been glued to their TVs/social media platform of choice to follow the games. So far, Team USA is 1-0 in a tough division, but the country is ever hopeful.
Major sporting events such as the World Cup always create a global uptick in sports betting. In particular, Asia has seen a large increase in illegal sports betting (See here).
As you may be aware, sports betting in the United States is extremely limited. Currently, the only state that has legal sports betting is Nevada. However, in 2011, a sports betting referendum was passed by voters in New Jersey. Subsequently, the NCAA, NFL, NBA, MLB and NHL filed suit against New Jersey, attempting to block the state from allowing sports betting.
The District Court for the District of New Jersey held that the State's sports betting initiative was preempted by the Professional and Amateur Sports Protection Act ("PASPA") and that PASPA was constitutional. This ruling meant that New Jersey's implementation of sports betting was in violation of PASPA, which are a preexisting series of federal laws that were found to be legally created by Congress. Interestingly, New Jersey had the opportunity to become exempt from PASPA after its adoption, but failed to do so. New Jersey appealed the District Court's decision, but it was upheld by the Third Circuit Court.
New Jersey is now attempting to appeal the Third Circuit's decision to the United States Supreme Court, and is currently awaiting the Supreme Court's response as to whether they will take the case. The State is confident that the case will be accepted and that the Court will find in its favor.
However, if the case is not accepted by the Court, State Senator Ray Lesniak has claimed that he will introduce an amendment to state law that will allow "legal" sports betting in casinos and racetracks within New Jersey. On June 16, 2014, Lesniak appeared on a radio show and announced that the State will move ahead with its plans to implement sports betting should the Supreme Court decline to accept the case. During his interview, Lesniak went so far as to say that sports betting will be in place by Week 1 of the NFL season in September.
Lesniak likened New Jersey's challenge of PASPA to Colorado's legalization of marijuana, which is unfair. Marijuana reform had growing support across the country and within the federal government, whereas sports betting has been largely seen as an illegal activity outside of Nevada. In any event, it would not be surprising for the Supreme Court to take this case as a means of clarifying states' rights in the face of federal legislation.
Lesniak's latest comments have raised the stakes in this already interesting litigation, and it appears as if New Jersey is ready to defy federal law and the collective will of the major sports leagues. This litigation will certainly be interesting to follow, whether or not the Supreme Court decides to take the case.
One thing is for certain, should New Jersey legalize sports betting, its casinos stand to make even larger sums of money. Perhaps more importantly, if New Jersey succeeds in legalizing sports betting, other states may soon follow.
I will be following this story closely over the next several months.
Being a sports agent is a tough, cutthroat, profession, where agents must be mindful of their clients' professional and personal endeavors, of other agents poaching their clients, and of recruiting new clients. All of this is supposed to be done in accordance with the rules governing agents that are established by each professional sport's players' unions.
Unfortunately, too often are there reports of some agents flouting these rules. Disputes between players and their agents are generally handled in arbitration, away from the prying eyes of the media and the public. However, one recent player has decided to sue his agent in court, alleging that the arbitration process is biased towards agents after he was ordered to repay a loan that he argues was not a loan. By that player taking his agent to court, the proceedings are now public record, and have drawn attention to the practices of a well known NFL agent and perhaps the industry at large.
One of the rules that NFL agents must abide by is that agents cannot provide money, or anything of value, to induce a player to sign with them. However, agents are allowed to provide loans under certain circumstances. Here lay the critical question in this case: Does money given to a player immediately after signing a representation agreement with an agent qualify as an inducement, or a loan?
Rosenhaus met DeSean Jackson at midnight, the time he was free from his former contract, beside a highway to sign a representation agreement. Rosenhaus then gave Jackson a large sum of money in a Luis Vuitton bag. Subsequently, a loan agreement was signed. After several years, Jackson fired Rosenhaus, and Rosenhaus is now attempting to collect the outstanding balance on the alleged loan.
Although the money was qualified as a loan, the Court may view the money as an inducement for representation. If that's the case, then Jackson may not have to repay any of the money. Only time will tell what the result of this lawsuit will be.
As a result of this litigation, the NFL Players Association (NFLPA) has strengthened its sanctions against agents who violate its rules. Now, an agent who violates the agent rules three times can have their certification revoked, effectively ending their career as an NFL agent.
So what can agents do to ensure that a loan to a player is actually deemed a loan in any potential arbitration or lawsuit? Simple. Create a paper trail. If a player requests a loan, have them do it in writing. If an agent raises the possibility of a loan, they should also put the loan proposal to the player in writing. Simply put, do not rely on a loan agreement contract to be the sole evidence that a loan exists. By creating a paper trail surrounding the contract, an agent has now created additional evidence in their favor should the player ever attempt to have the loan invalidated.
Certainly, the timing of the loan does not assist Rosenhaus' claim that the money was in fact a loan. If a player immediately signs with an agent, under what circumstances would that agent know that the player needs a loan and be prepared to give a specific sum? Hypothetically speaking, if the agent was aware that the player needed a loan for a specified amount prior to signing with him, then the agent may have broken other rules such as impermissible contact with represented players. Before issuing a loan to a player, agents should be sure that a reasonable amount of time has passed to become fully aware of the player's need.
No agent should put their careers at risk by creating the perception that they have broken the rules governing their profession.
Recently, several startups I've spoken with have informed me that they use independent contractors instead of traditional employees. However, many startups are not aware that independent contractors can still be deemed employees by the Courts.
So why are the startups hiring independent contractors as opposed to employees? Here are some of the benefits:
Due to these benefits, some businesses abuse the label of 'independent contractor.' For that reason, New York courts have employed two different tests to determine whether a worker is an independent contractor or employee.
The Economic Realities Test is as follows:
This test looks at the totality of the answers to the above questions to determine whether an employee/employer relationship exists.
The Common Law Test is as follows:
The factors of the Common Law Test are not exhaustive, and the Court will explore additional inquiries if it feels necessary. An example of an additional factor that could be considered is whether the worker is required to wear a uniform. In the Common Law Test as well, no single factor itself is dispositive of an employee/employer relationship.
Effectively, this means that workers who are classified by a business as being an independent contractor may not be classified as independent contractors by the Court. Should the Court find that an employee/employer relationship exists, then a business loses all benefits of hiring the independent contractor (with respect to that person only) and is subject to the totality of laws involving employee/employer relations. Therefore, the business incurs increased costs and liability.
If your business decides to use independent contractors, ensure that the written agreement with the worker incorporates the factors the Courts could use in determining whether an employer/employee relationship exists.
This week is the E3 Expo in Los Angeles, an annual event that showcases the latest video game tech as well as new games that are in development. Although an exciting time for gamers across the globe (including myself), E3 is extremely stressful for some developers who have spent years creating a product that is not guaranteed success.
Recently, I watched an interesting documentary which touched on the stress faced by game developers, called Indie Game: The Movie. This documentary followed several game developers as they created their games, and offered some insight as to the psychological costs of their entrepreneurship. One developer went so far as to say that if the game that he spent years making did not sell well, that he would kill himself.
Much has already been made of the psychological price of being an entrepreneur (see here). However, the psychological costs of working for an entrepreneur can also be harrowing. This past Thursday I met with two gentlemen in the tech industry and discussed the concept of "burning out" within the industry. As they described it to me, its wholly expected for tech employees of entrepreneurs to burn out. This unfortunately makes sense, as the employees of startups and small businesses must oftentimes shoulder an increasing workload while the business is still growing.
Burning out is extremely dangerous to a business and a career, as productivity, efficiency, and happiness plummet. Here are some ways you can avoid burning out:
Additionally, when running a business, you should also be paying attention to whether or not your employees are burning out. This can easily be accomplished through meetings, or creating an open door policy where employees can voice any concerns they have. Once its established that an employee is beginning to feel burnt out, appropriate action can be taken. Burnt out employees will eventually harm the business in one manner or another, so it pays (quite literally) to have a feel for the pulse of the employees.
Neither the business nor the employee benefit from a burnout. Hopefully, you never find yourself in a position like the aforementioned game developer did in Indie Game. Take care of yourself, and take care of each other.
Effective negotiating is essential to the success of a business. Although there are several different negotiating styles, there are two key traits that effective negotiators share:
Preparing for a negotiation is simple, as you should examine all of your interests, determine your needs/wants, and try to identify the other party's needs/wants. This should be done until you are comfortable with all of the positions involved. Each negotiation will require a different amount of prep time based upon the complexity of the issues or positions involved.
Being creative throughout preparations is key to effective negotiating. This will allow the negotiator to determine multiple scenarios that will benefit his positions and perhaps even mutually beneficial scenarios.
Additionally, if you are refusing to budge from your predetermined position, being creative can allow you to present multiple offers that all reflect your immovable position, unbeknownst to the other party. For instance, if you are concerned solely about total cost, you can present multiple offers of varying subsidiary costs that all result in the same total cost. Presenting multiple offers gives the impression that you are flexible, despite not budging on your ultimate position. Further, one of these offers may satisfy a concern of the other party that was previously unknown to you. Simply put, you can never fully know what the other party's wants and needs are, so it pays to be creative and determine several functional solutions.
It is also important to be creative while negotiating. In times where all of your offers have been rejected by the other party, you have to think on your feet and reconsider both parties' wants/needs in the hopes of reaching an agreement. Certainly this is not a simple task, but you now have any added information learned from the other party during negotiations. This information may offer some clarity as to their wants/needs and help you formulate new offers.
For an in-depth read on becoming a more effective negotiator, I highly suggest reading Getting to Yes. The book is full of preparation and strategic advice that I, and many other negotiators, have found to be particularly effective.
Recently, a federal judge in the Southern District of New York granted conditional certification of a nationwide class of former and current unpaid interns for Warner Music Group. The class of roughly 3000 unpaid interns allege that they were actual employees of the company under the Fair Labor Standards Act, and thus entitled to minimum wages and overtime pay. Warner Music Group is among several companies to have recently been sued over their unpaid internship practices. Other companies being sued include NBC Universal, Conde Nast, Hearst Corporation and Fox Searchlight.
Although the recent ruling centered on whether conditional certification of the class would be granted and not whether the claims had merit, this case serves as an important reminder of what standards a company should meet in operating an unpaid internship program. The Department of Labor has previously outlined the following six criteria to determine whether an intern is exempt from the Fair Labor Standards Act, thereby allowing the company not to pay the intern. All of the criteria must be met, and include the following:
Prong 4 of this test is difficult to meet, as it seemingly requires the company to not benefit from the intern's work. The question as to how "immediate advantage" should be defined has caused some confusion and a hesitation towards hiring interns at some companies. What this prong likely entails is that interns can act in support roles, or work on pieces of larger projects, but should not create a final product from start to finish that is then marketed to consumers. In the latter scenario, the intern would be providing an immediate advantage through their activities.
Internships may be appealing to small businesses and startups who operate on tight budgets, but they should be the most careful as lawsuits can quickly derail their path to success. If your business is considering an internship program, or already has a program, make sure that the internship meets the Department of Labor test.
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