Fool.com: Get Your Copyrights, Here![Rule Maker] May 2, 2000

RULE MAKER PORTFOLIO
Get Your Copyrights, Here!

By Rob Landley (TMF Oak)
May 2, 2000

Intellectual Property (often abbreviated IP) is the legal concept that certain types of ideas may be owned by individuals, corporations, or in some cases even governments. Ideas that nobody owns (the default case unless a specific law says otherwise) are in the "public domain," which means anyone can legally do whatever they like with them.

Intellectual property laws are laws that fence off portions of the public domain and give them to specific owners. The three major types of laws that create intellectual property are trademarks, patents, and copyrights. Yesterday's column was about trademarks, which deal with names, slogans, mascots, and other ways of uniquely identifying oneself and one's products to customers. Today's topic is a brief and oversimplified introduction to copyright and licensing, which is the type of law that turns original creative works into intellectual property.

Copyright is "copy right," or the right to make copies of an original, creative work such as a piece of software, writing, art, music, etc. The copyright holder is the only one who has the right to make copies, and they can sue anybody who makes copies without permission for monetary damages (assuming, of course, they can prove in court that the unauthorized copying damaged them monetarily). They can also sue to have the court order those unlicensed copies to be destroyed.

The creator of a work doesn't have to apply for a copyright, or even publicly state that the work is copyrighted (although that doesn't hurt). Any copyrightable work is automatically granted a copyright, which must be sold or given away (to someone else, or into the public domain) in order to be lost. For example, each time you write an e-mail, you as the author automatically get a copyright on it. If somebody else uses your e-mail without your permission, you technically have grounds to sue them (although in most cases it wouldn't be worthwhile). You may not know how to enforce the rights your copyright legally reserves to you, but you still have a copyright anyway.

The actual author isn't always the owner of the copyright. If somebody else hired them to create it, then it qualifies as "work for hire" and the copyright on that creation belongs to the one who commissioned and paid for it, not the one who actually designed or implemented it. This is how corporations wind up with most of their copyrights: when their employees create things as part of their jobs, the resulting copyrights belong to the corporation.

A work has to be an original creation to be copyrightable, and a certain amount of creativity is required. You can't, for example, copyright newly discovered digits of the mathematical constant Pi because there was no creativity involved. Anyone who did that would have gotten exactly the same result. But different photographs of the same landscape differ slightly depending on the photographer, and as such would be copyrightable.

Copyright deals with the expression of an idea, not the idea itself. Two singers who each record a performance of the same song would produce two different, separately copyrighted works. Neither singer would have rights to the other one's performance, only their own, assuming of course they had the permission of the composer of the song to perform and record it in the first place. The composer of the song would have a copyright on the song itself, and performance is a form of copying. The end result is certainly a derivative work of the composer's copyrighted material, and if the lyrics were written by someone else, that's another copyright. Members of the band could have copyrights on their performances as well, and if studio technicians mixing tracks contribute to the finished recording... It can get quite complicated.

Sometimes collaborations are works for hire, in which case the employer owns the copyright to all the various contributions to the whole work. Sometimes one person buys the copyrights from the various contributors after the fact. But the individual contributors can retain their copyrights and still allow others to use their work as long as the contributors all grant compatible licenses allowing copies of their work to be created.

Permission to make a copy of a copyrighted work is called a copyright license. Licensing is the standard way the copyright holder delegates some or all of their rights to a work to someone else. When you buy a book, or a music CD, or software, what you're really buying is a license that allows that copy of the copyrighted work to exist. The actual copy you get is basically a courtesy detail, since with modern technology like computers and photocopiers, copies are easy to make for yourself. But without the license, you would be breaking the law by doing so.

A license is a legal agreement stating under what conditions someone other than the copyright holder can use the copyright. Without a valid license, copies of the work cannot legally exist, and licenses can have a lot of strings attached to the rights they grant. One common clause is that if the owner of the copy sues the copyright holder, the license is terminated and the copy must be destroyed. Another common clause says the license isn't valid unless the copy has been paid for. This doesn't mean the copyright holder can control what somebody does with their copy: the right to use your own property is not something the copyright license granted in the first place, therefore it is not something the license can take away. The copy can be bought and sold like any other property unless the license contains language forbidding it (such as specifically naming who the license is valid for, or declaring itself to be "non-transferable").

The legal doctrine of "fair use" even says the owner of a copy can make more copies in certain circumstances, if that's a normal part of using the work. Thus making a backup copy of software, copying a CD to audiotape to listen to in the car, and videotaping television programs to watch them later have all been upheld in court as examples of "fair use." (The people who got bored one afternoon and broke the DVD copy controls are defending themselves from the Motion Picture Association of America's lawsuits by, among other things, pointing out that the copy controls violate their fair use rights to the copies of DVDs they have purchased licenses to.)

Copyrights last for the lifetime of the work's creator, and for decades afterwards. As a consequence, in the case of a copyright owned by a corporation -- for example, Microsoft's (Nasdaq: MSFT) Windows -- that copyright remains in force for the shorter of 95 years from the date of first publication or 120 years from creation. Unlike trademarks, copyrights do not have to be defended to remain in force. In the late 1980s, the copyright to the song "Happy Birthday" began being enforced by its owner, to the general annoyance of the millions of people who had been using it for decades and had assumed it was in the public domain. (This is why movies and restaurant employees and such have stopped using it. They don't want to get sued by the new owner, demanding royalties.)

Copyrights and trademarks can overlap. Mickey Mouse is a trademark owned by the Walt Disney Company (NYSE: DIS), but "Steamboat Willie" is a copyrighted original work using that trademarked character. If someone puts one of Scott Adams' Dilbert comic strips on a T-shirt, they're violating both his copyright and his trademark. If they put their own original drawing of Dilbert on a T-shirt, they're violating his trademark. I don't know if JRR Tolkien's son used copyright, trademark law, or both as the basis for suing the British government for posthumously honoring his father by naming one of their navy ships "Shadowfax" (after Gandalf's horse). I do know that he won his lawsuit and collected a lot of money. Rather disappointing to the fans, but the court found he was within his rights to be a money-grubbing little... Ahem.

There's a lot more intricacy to copyright law than I have space to go into here. One good resource is the Usenet Copyright FAQ, which is unfortunately a bit stale but contains a lot of good information anyway. Stanford's page on copyright and fair use is much more readable. One innovative use of copyright law against itself is the GNU General Public License from the Free Software Foundation, which has a nice plain English preamble explaining how it uses copyright law against itself, to effectively keep software in the public domain, and prevent it from being taken OUT of the public domain. (This reversal is why this license is nicknamed "copyleft".)

This column is, of course, Copyright 2000 by The Motley Fool. (I wrote it, but it's a work for hire because they paid me to do it, so they get the copyright.) For the terms of the license by which you're viewing this thing, look at the very end of the Web page and click on the link. If you don't like the license terms, all you have to do is delete your copy of the column, thus terminating the license from your end no matter what the Fool's lawyers may try to say about it.

Tomorrow, I'll talk about patents, which cover original inventions and processes.

- Oak


 




Rule Maker Portfolio

5/2/2000 Closing Numbers
Ticker Company Day Chg % Chg Price
AXPAMER EXPRESS-3 5/16-2.19%$148.06
CSCOCISCO SYSTEMS-3 7/16-4.81%$68.00
GPSGAP INC15/162.46%$39.00
INTCINTEL CORP-5 15/16-4.67%$121.19
JDSUJDS UNIPHASE CORP-9 11/16-9.29%$94.56
KOCOCA-COLA COUnch.Unch.$46.25
MSFTMICROSOFT CORP-3 9/16-4.85%$69.88
NOKNOKIA CORP ADS-3 1/8-5.27%$56.19
PFEPFIZER, INC1/162.54%$42.88
SGPSCHERING-PLOUGH-1-2.45%$39.88
TROWT.ROWE PRICE ASSOC5/160.83%$38.13
YHOOYAHOO INC-8 5/16-6.35%$122.56

  Day Week Month Year
To Date
Since
2/2/1998
Annualized
Rule Maker -3.72% -2.11% -2.11% -2.93% 65.43% 25.10%
S&P 500 -1.50% -.42% -.42% -1.56% 47.54% 18.89%
S&P 500(DA) -1.50% -.42% -.42% -1.56% 49.31% 19.52%
S&P 500(DCA) n/a n/a n/a n/a 24.11% 10.08%
NASDAQ -4.36% -1.95% -1.95% -6.98% 133.76% 45.90%

Trade Date # Shares Ticker Cost/Share Price LT % Val Chg
6/23/1998150CSCO16.432$68.00313.82%
2/13/199865INTC53.762$121.19125.41%
2/17/199935YHOO70.647$122.5673.49%
5/1/199882GPS22.708$39.0071.75%
2/3/199866PFE27.433$42.8856.29%
2/3/199859MSFT49.352$69.8841.58%
5/26/199822AXP107.998$148.0637.10%
2/15/200068NOK47.500$56.1918.29%
2/3/199856TROW33.673$38.1313.22%
2/15/200032JDSU100.750$94.56-6.14%
8/21/199844SGP47.993$39.88-16.92%
2/27/199827KO69.107$46.25-33.07%

Trade Date # Shares Ticker Cost Value LT $ Val Ch
6/23/1998150CSCO$2,464.86$10,200.00$7,735.14
2/13/199865INTC$3,494.54$7,877.19$4,382.65
2/17/199935YHOO$2,472.64$4,289.69$1,817.05
5/1/199882GPS$1,862.06$3,198.00$1,335.94
2/3/199859MSFT$2,911.79$4,122.63$1,210.84
2/3/199866PFE$1,810.58$2,829.75$1,019.18
5/26/199822AXP$2,375.95$3,257.38$881.43
2/15/200068NOK$3,230.00$3,820.75$590.75
2/3/199856TROW$1,885.70$2,135.00$249.30
2/15/200032JDSU$3,224.00$3,026.00($198.00)
8/21/199844SGP$2,111.70$1,754.50($357.20)
2/27/199827KO$1,865.89$1,248.75($617.14)
  Cash: $218.42  
  Total: $47,978.05  


Notes
The Rule Maker Portfolio began with $20,000 on February 2, 1998, and it added $2,000 in August 1998 and February 1999. Beginning in July 1999, $500 in cash (which is soon invested in stocks) is added every month.