1. Protect what you can under existing intellectual property law - at the edge of IP, so to speak.  Diane Von Furstenberg has begun protecting her copyrights to fabric patterns (as opposed to the entire garment itself), as art.  Shoe designer Stuart Weitzman patented a shoe's buckle and ornamentation.  Both Von Furstenberg and Weizman have sued to enforce their intellectual property rights.  (Similarly, blue jeans companies have for years registered and sued to protect their trademarks in the ornamental stitching on the back pockets of their jeans.  For example, see Levi Strauss's U.S. trademark registration number 1,139,254.)

The article does not provide any detail about underlying legal theories or court cases to prevent data scraping, such as those based on the Computer Fraud and Abuse Act (CFAA) or court cases concerning unfair competition.

Source: Should Web Giants Let Startups Use the Information They Have About You?, by Josh McHugh. 

No mention of Cupertino, where my office is located, which has an eclectic mix of hardware, software and great design: Apple Computer, Symantec, and the U.S. office of open source database developer, MySQL, among others. 

Source:  A Social Order Shaped By Technology and Traffic, by Steve Lohr, The New York Times, December 20, 2007.  "Silicon Valley is a collection of remarkably local clusters based on industry niches, skills, school ties, traffic patterns, ethnic groups and even weekend sports teams."

Recognizing the opportunities and challenges of globalization facing startups and other small businesses, the Wall Street Journal reports that consultants, such as High Street Partners of Annapolis, Maryland, now are advising them on how to expand abroad, such as dealing with tax issues, foreign employee benefits and local-currency transactions. 

I think that such consultants, especially for international finance and operations issues, would be a good complement to the advice of an international lawyer.

Source: Small Firms Hire Guides as They Head Abroad, by Phred Dvorak, The Wall Street Journal, November 5, 2007. 

Not so obvious is the fact that these services depend on a little-known statute to protect their providers from legal liability for copyright infringement.  That statute is Section 512 of the Digital Millennium Copyright Act (DMCA).

Section 512 is crucial for online services such as YouTube, where users have been placing third parties' content (such as clips from a TV show or move) without authorization from the copyright owner.  Under the copyright law, the user placing the content on the site without authorization can be liable as a "direct" infringer.  Absent Section 512, the online service provider that hosts such content could be liable as a "contributory" or "vicarious" infringer -- roughly analogous to being an accomplice of the user.  The business impact is that the provider could face large damages in a pre-set statutory amount.  And, officers and directors of corporations and other entities face personal liability for their role in infringing activity.

Typically, the provider posts a policy regarding its copyright law compliance along with contact information for an agent to receive notices of copyright violations.  Providers also must register the agent in a public database at the U.S. Copyright Office to take advantage of Section 512. 

Owners of works that may be infringed then send what is known as a "takedown" notice, following detailed requirements in Section 512, for the work to be removed from the provider's service. The original user may submit a "counter notification" to have the work reinstated on the online service (and face a lawsuit from the copyright owner), again following detailed requirements in Section 512.

I recently attended a seminar of specialists on Section 512, and took away some practical tips on how providers can use the protections of Section 512.  These takeaways are a composite of panelists' opinions:

1. Many sites and services can face issues with user-generated content.  Content sharing sites such as YouTube and Myspace are obvious examples.  Even simple blogs, wikis or guestbooks that permit visitor comments can create similar issues, however.
2. Some copyright owners have hired rooms full of employees to search for infringing works and send take down notices.  One major media company sends more than 100,000 takedown notices -- per day.
3. Users rarely send counter notifications when their works are taken down.  Typically the works that are taken down, remain down.  (Unless, of course, the same or another user re-submits them separately later.)
4. Many providers fail to register their designated agents with the U.S. Copyright Office, and thus miss out on the benefit of Section 512.  (I often assist clients with this simple and inexpensive filing.)
5. Providers need to adopt a policy providing for termination of repeat infringers.
6. Providers should keep good records of all take downs, such as the number of terminated works and user accounts, the reason for termination and the date of notice and date of termination.  This can be very helpful in demonstrating that the provider has a reasonable policy of terminating infringers.
7. Because providers can face liability based on their actual knowledge that the works are infringing, they should be wary of reviewing the user-generated content more thoroughly than required by law. Some seemingly obvious situations (such as a human editor choosing featured content on a home page) might create actual knowledge.
8. Obtaining a financial benefit directly tied to individual pieces of user-generated content is risky. Receiving fees for an overall service (such as setup or periodic subscription fees) should be less risky.  The financial benefit from advertising is currently an open question, so many providers currently do not place ads directly in any problematic content.
9. Several groundbreaking lawsuits are pending in this area in New York federal court. Google and other web services are introducing filtering technology to keep infringing works off of their sites, but such technology is still in early stages.  Web site operators and other online service providers need to keep an eye on this rapidly changing area.

The seminar was "Viacom v. YouTube (Google) Case: A Review of Section 512 (DMCA)" at the High Tech Law Institute (HTLI) of Santa Clara Law School, on October 23, 2007.  The panel consisted of Mindy Morton, associate, Bergeson LLP; Professor Tyler Ochoa of Santa Clara Law School; Fred von Lohmann, Senior Counsel of the Electronic Frontier Foundation (EFF); and Jenny Lynn Cox, Moderator and Executive Director of HTLI.

My resources page contains other articles that I've written.

Those organizations use technologies such as Skype, video conferencing, instant messaging and viral marketing to reach customers and collaborators globally.

The article discusses RockYou, a 14-employee startup that has subcontracted to engineers in China, India, Japan and Romania and partnered with Gizmoz, an Israel-based maker of online avatars.  It mentions that over 20% of the 50 employees at Slide, a leading widget maker, are foreign nationals, including engineers from Guadalajara, Mexico.

Source: Rise of the Micro Giants, by Scott Duke Harris, San Jose Mercury News, July 14, 2007.

Wikis are online collaboration tools that enable multiple users to post articles and to edit one another's postings.  The most famous example is Wikipedia, an online Wiki-based encyclopedia that news reports say is now larger than proprietary encylcopedias, such as Encylopaedia Britannica.

A good list of legal wikis is available at www.editthis.info, and another at the Wiki Index, according to the article.

Wikis could make sense for collaborative drafting of agreement forms, legislation and regulations, among other things. 

• Typical cost to obtain a U.S. patent: $5,000 to $25,000. 
• Cost to invalidate a patent: Legal fees average $4.5 million in patent disputes where more than $25 million is at risk.
• Cost of obtaining a patent versus invalidating one: You do the math.
• Number of inventions under active patent in the U.S.: 1.6 million
• Number of patents owned by International Business Machines Corporation (IBM), the 14 year recordholder of the largest number of patents awarded to a single company: 3,651.
• Percentage of software patents to total patents awarded in the early 1980's: 2%
• Percentage of software patents to total patents awarded today: 15%

(I am not a registered patent attorney, and do not prosecute or litigate patents.  I've worked on many patent licenses and agreements over the years, though.)

(Source: "Businesses Battle Over Patent Laws," The Wall Street Journal, June 9-10, 2007.)

• U.S. businesses invest about $1 trillion in intellectual property and other intangible assets, according to a study by the Federal Reserve Board.  That's as much as they invest in equipment and other tangible investments.
• Intangible assets, including intellectual property, constitute nearly 1/3 of the value of all U.S. stocks, or 45% of U.S. Gross Domestic Product (GDP).

(Source: "Businesses Battle Over Patent Laws," The Wall Street Journal, June 9-10, 2007.)

In sum, "while process excellence demands precision, consistency, and repetition, innovation calls for variation, failure and serendipity."  According to Management Professor Vijay Govindarajan, "the more you hardwire a company on total quality management, [the more] it is going to hurt breakthrough innovation.... [t]he mindset that is needed, the capabilities that are needed, the metrics that are needed, the whole culture that is needed for discontinuous innovation, are fundamentally different." 

The article mentions one Wharton/HBS study that found Six Sigma leads to incremental innovation rather than "blue sky" work.  After a quality program, patents issued based primarily on prior work (incremental improvements) made up a "dramatically larger" share of the subject companies' portfolios than patents not based on prior work.

It also mentions that several companies, including 3M and Young & Rubicam, have pulled back from their focus on quality methodologies.

What to do?  In the same issue, consultant Jeneanne Rae suggests creating an ambidexterous company, which would reserve process improvement approaches to cases where they are truly needed to cut costs and improve profitability.  She advocates maintaining a separate organization with its own incentives and talent to produce radical innovation.

Source: "At 3M, a Struggle between Efficiency and Creativity," by Brian Hindo, BusinessWeek, June 11, 2007.

It's obvious that copyrights are critical to our economy, as the legal underpinning of software, movies, music, books, newspapers, magazines, art and other intellectual works.  You might be surprised to learn that, here in the 21st century, in some respects our copyright system resembles the old west, after the title office has burned down.

Professor Hal R. Varian explains a new trend to bring back law and order in a recent article, "Copyrights that No One Knows About Don't Help Anyone." (The New York Times, 5/31/07).

He points out that under current law, a work is automatically copyrighted when it is "fixed" in a "tangible medium of expression" (e.g., words written on a piece of paper, music saved to a CD, video saved to an online digital archive).  No notice (c-in-a-circle) or registration is required.  This came about when the U.S. joined an international treaty in 1989 known as the Berne Convention.  Many clients do not understand this, because they remember the prior law, which did require notice and registration.  (There are still many benefits from notice and registration, they just aren't needed to obtain and maintain the basic copyright itself.)

Although this approach is great for authors, Varian explains that it makes it very difficult - or even impossible - if you are seeking permission to use a work, but can't determine who the owner is, or can't find the owner.  (If you don't believe me, see Copyright Office Circular 22, How to Investigate the Copyright Status of a Work.)  Such works are called "orphan works."

Re-enter the Title Office.  Varian describes proposals by the U.S. Copyright Office and Stanford University Law Professor Lawrence Lessig to introduce a limited registration system for orphan works.  This will reduce costs of finding the owners and obtaining permissions.  He mentions other limited registries for clearing rights that already work well - the Copyright Clearance Center for permissions for printed works and the Harry Fox Agency for certain song permissions. 

These are pragmatic proposals.  Until some reliable registry exists, the drama (and frustration) of the old west will continue well into our century.

The rub is that much of the content is protected by copyright, and the users who post the content have no legal right to do so.  This is especially true of television shows, movies, and other popular content that is posted with little if any justification as a fair use.  Truly fair uses might include postings of short portions of works along with critical or political commentary.

Since 1998, the Digital Millennium Copyright Act (DMCA) has provided legal protection (a "safe harbor") to web hosts who offer user-generated content, but who agree to remove it (or "take it down") in response to a valid notice (a "take down notice") from the copyright owner. 

This placed the burden of enforcement on the copyright owners.  It also may have aided the development of web 2.0 services that offer user-generated content. 

I often recommend to my clients that they utilize the DMCA protections if their websites include user-generated content (such as forums or postings open to user comments).  Clients need to follow a simple registration procedure with the U.S. Copyright Office, and publicly describe a take down procedure in their website terms and conditions.

Viacom's recent lawsuit against Google concerning YouTube may place these DMCA protections at risk.

The question could extend much further than Google.  "If Viacom wins it really casts doubt on a number of businesses that rely on hosting information for users.... Google has basically been following the advice of the best lawyers in Silicon Valley.  If Viacom wins, that would call into doubt all of the business models that relied on the same kinds of legal advice," said Fred von Lohmann, attorney with the Electronic Freedom Foundation, in a recent interview with The San Jose Mercury News.

The Wall Street Journals calls this "the $1 Billion Question".  Yes, that and more.

Additional resources:

Viacom vs. Google: Test of key online law, by Elise Ackerman, The San Jose Mercury News, March 14, 2007.

Viacom v. Google Could Shape Digital Future: Lawsuit Hinges on 1998 Act Protecting Net Copyrights: Does YouTube Qualify?, by Kevein J. Delaney and Matthew Karnitschnig, March 14, 2007.

Whose Tube? Viacom Sues Google Over Video Clilps on Its Sharing Web Site, by Miguel Helft and Geraldine Fabrikant, The New York Times, March 14, 2007.