Morality Clauses, Part II: The Family Law Edition

When couples divorce, often the most difficult part is how the children are affected by the process and the behavior of the divorcing parents.  No one wants someone else raising their children.  However, that can be a very harsh reality to face for divorced people with minor children. 

Previously in this space, we looked at employment contracts for executives and high visibility employees or representatives, and how a company can manage the risk of illegal or otherwise improper behavior of those key persons.  With some foresight, and smart contractual drafting, the company can protect itself from bad behavior through morality clauses.   

Surprisingly, this very same issue - guarding against the poor judgment of others - appears in many, many divorce cases, particularly when there are minor children and custody issues involved. These issues can have a profound impact on many people, regardless of social status, wealth, religion or any other demographic category.

Even the most amicable divorce matter can be psychologically and emotionally challenging at times.  More often than not, those challenges can become extreme when mixed with the financial pressures that divorcing couples also face.  Add to that the difficulty of navigating custody issues, and the parties’ differing perceptions of what is in the child’s best interest, and you have a powder keg waiting for ignition.  Eventually, more often than not, this issue explodes into conflict.

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Morality Clauses & Employment Agreements: What Employers Need to Know

Employers take risks every day with the people that the company hires - including top level managers and CEOs.  So do brands and sports teams when they hire spokespeople or athletes on multi-year, multi-million dollar contracts.  Anytime there are significant dollars committed to a single person over a long period of time, real risk exists.  

One of the most impactful traits of the people you hire is their moral character.  This is especially true when the person you hire is your spokesperson, or your chief executive, or otherwise is the face of your organization.  One of the most impactful tools you have to control your contractual relationships are called morality clauses.

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The EU Parliament Rejects the Copyright Directive Proposal; Interesting Battle Between Tech Companies and Creators on the Horizon; Sir Paul Weighs In

EU Parliament Rejects the Copyright Directive Amendments

As a follow up to my previous article regarding a proposed massive copyright law overhaul in the European Union, the EU Parliament sounded rejected the proposed amendments by a 318-278 vote.  The proposed amendments go back to the committee for revision.  

The European music industry establishment calls the vote a "missed opportunity."  It is interesting to note in this article the amount of money spent on lobbying by Google and YouTube (hint: it's a lot). 

Sir Paul McCartney Weighs In

Sir Paul wrote a letter to the EU Parliament urging them to back the Copyright Directive and address the Value Gap, which is the space between content platforms that compensate artists and creators, and content platforms that refuse to do so. 

“You hold in your hands the future of music here in Europe,” writes McCartney, stressing the importance of music and culture as “our heart and soul.” 

“Unfortunately, the value gap jeopardizes the music ecosystem,” he warns. “We need an internet that is fair and sustainable for all. But today some user upload content platforms refuse to compensate artists and all music creators fairly for their work, while they exploit it for their own profit.”

Expect some form of this debate to hit the United States soon. 

 

 

Copyright Law Update: the EU Copyright Directive Roils the Internet

In Europe, the EU’s Legal Affairs Committee (JURI) voted in favor of several new amendments to the Copyright Directive, which was originally adopted by European Parliament in 2001.  The amendments contain, among other things, two provisions entitled Article 11 and Article 13, respectively.  

Article 11 would essentially impose a "link tax" - yes, you read that right -  that would require  online platforms like Facebook and Google to buy licenses from media companies before linking to their stories.

Article 13 would require large platforms like Facebook and Reddit to introduce filters to flag copyrighted material that is uploaded by their users.  The companies would have to prevent such content from being published.  Currently in the EU, internets sites observe a notice and take down regime.  In other words, if a creator notices his or her copyrighted content is being posted without permission, then the internet site is required to take the infringing content down upon notice from the creator/rights holder.  This is similar to the practice in the United States. 

ANALYSIS: The European Parliament has to vote on JURI recommendation.  Currently, there is no date set for that vote.  These amendments have big implications for any business that hosts third party content and creators who are users of such sites.  While these rules have no immediate applicability in the United States, this issue is worth watching. 

Copyright Law Update: All About Fair Use

(The following is an excerpt from my book risk, create, change: a survival guide for startups & creators, now available here at Amazon.com.)

    One of the key doctrines of copyright law is the concept of fair use.  Fair Use is, simply stated, a defense to a copyright infringement claim.  This doctrine allows for, in certain, limited circumstances, the unlicensed use of copyrighted works. 

    The Copyright Act provides provides the statutory framework for determining whether something is a fair use and identifies certain types of uses—such as criticism, comment, news reporting, teaching, scholarship, and research—as examples of activities that may qualify as fair use. 

    Generally speaking, only a federal court after a copyright infringement case has been filed can really determine if one’s actions in using a copyrighted work constitutes Fair Use and is thus permissible.  From a startup or entrepreneur’s standpoint, if you are in the educational space or publishing space involving artistic criticism, Fair Use becomes a significant debate at the office.  For the purposes of this paragraph, “publishing” could include not only the written word but also video blogging and related content production. 

    There are four factors that courts will consider in determining if the unlicensed use of a copyrighted work constitutes Fair Use:

  1. the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
  2. the nature of the copyrighted work;
  3. the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
  4. the effect of the use upon the potential market for or value of the copyrighted work.

    Since Fair Use is such a generally applicable topic, it bears some additional explanation.  The first factor in the fair use analysis focuses on what the purpose and character of the use is, including whether the use is of a commercial nature or is for nonprofit educational purposes.  A key part of the analysis here is how the party claiming Fair Use is using the copyrighted work.  Courts are much more likely to find that nonprofit organizations using copyrighted material for educational and noncommercial uses qualify as Fair Use.   One should not automatically assume, however, that all nonprofit education and noncommercial uses are automatically fair and all commercial uses are not fair.  This first factor is only part of the four part analysis, and it is the court’s analysis of all of the factors as a whole that will determine the outcome.

    “Transformative” uses are more likely than not to be considered fair.   Transformative uses are those that add something new, furthering the purpose of the original work or imbuing the original work with a different character.

    The second factor focuses on the nature of the copyrighted work.  This can be a slippery concept.  The analysis here is the degree to which the copyrighted work that was used relates to the overarching purpose of copyright law in encouraging creative expression.  In other words, when someone uses a copyrighted work that is a novel, movie or song - all forms of creative expression - that person is less likely to be entitled to argue the Fair Use doctrine.  If the copyrighted work was a news story or a technical article, the it is more likely that Fair Use could be found in that circumstance.

    The third factor focuses on the amount and substantiality of the portion used in relation to the copyrighted work as a whole.  In short, how much of the copyrighted work was used?  Here courts would look at both the quantity and quality of the copyrighted material that was used.  Not surprisingly, the larger the portion of the copyrighted work used, the less likely it will be that Fair Use will be found.  Also, the converse is also true.  The smaller amount of the copyrighted work used, the more likely that a court would determine Fair Use was applicable in the situation.  In some contexts, using even a small amount of a copyrighted work was determined not to be fair because the selection was an essential part—or the “heart”—of the work.

    The fourth and final part of the Fair Use analysis focuses on the effect of the use upon the potential market for or value of the copyrighted work.  Does the use harm the copyright holder’s asset?  The court would have to examine the existing or future market for the copyright owner’s original work. Does the use  harm the copyright owner by displacing sales of the original owner’s work that would have happened but for the infringing user’s activities? This is probably the last place on earth where you would want the monetary value of your property to be determined, especially if your work is avant garde or there is no clearly established market (yet) for your product.  

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