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License is Required for Playing Music in Public Establishments

Posted: April 23rd, 2013

Business owners should be advised that a license is required for any public performance of music. Some owners are unknowingly playing music in their restaurants, bars, gyms, and storefronts from CDs, iPods, or MP3 players in violation of Copyright Laws.

What is needed are public performance rights — the right to play music that the general public will hear in one way or another. Public performance rights licenses are handled by two very large companies named ASCAP (American Society of Composers, Authors and Publishers) and BMI (Broadcast Music Incorporated). Each one handles a catalog of about 4,000,000 songs. Their fees depend upon the type of establishment, size, etc.

Further information on how to obtain a license from BMI and ASCAP can be found at:

www.bmi.com/licensing and www.ascap.com/licensing/generallicensing.aspx

The penalty for failing to obtain a license is a potential lawsuit for copyright infringement. Under the Copyright Law, the violator can be subject to sanctions, which can include an injunction and the copyright owner’s actual damages, as well as the infringer’s profits, or statutory damages of up to $30,000 for each copyrighted song performed without a license (up to $150,000 if the infringement is willful). The infringer can also be required to pay the copyright owners’ legal fees. The law further provides for criminal sanctions against those who willfully infringe on a copyright for commercial advantage or private gain.

Being caught without a license is a risk that some establishments are taking every day. The license fees, however, are nominal compared to the potential penalty, if caught. Although music may not be a major part of a business, any public establishments that plays or wishes to play music for their patrons should be aware of the license requirement.

Supreme Court Holds that the “First Sale” Doctrine Applies to Copies of Copyrighted Works Lawfully Made Abroad

Posted: April 21st, 2013

Copyrighted works imported into the United States from abroad are subject to the same “first-sale” rules as items purchased in the United States, according to a Supreme Court decision issued last month (Kirtsaeng v. John Wiley & Sons, Inc., No. 11-697).

Supap Kirtsaeng, a citizen of Thailand, came to the United States in 1997 to study mathematics at Cornell University and the University of Southern California. While working on his degrees, Kirtsaeng asked friends and family in Thailand to buy copies of foreign edition English language textbooks in Thailand, where they were sold at low prices, and mail them to him in the United States, where he then sold the books, reimbursed his family and friends, and kept the profit.

Publisher John Wiley & Sons commenced a copyright infringement lawsuit against Kirtsaeng in 2008, alleging that Kirtsaeng’s resale of the books infringed on Wiley’s exclusive right to distribute under §106(3) of the Copyright Act. Kirtsaeng countered that he had acquired the books legitimately and that the “first-sale” doctrine codified in §109(a) of the Copyright Act allowed him to resell or otherwise dispose of the imported books without permission from the copyright owner.

The first-sale doctrine is a limitation on the exclusive right of copyright owners to distribute copies of their work under the Copyright Act. The first-sale doctrine provides:

Notwithstanding the provisions of §106(3) [the section granting the owner exclusive distribution rights], the owner of a particular copy or phonorecord lawfully made under this title . . is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.

Kirtsaeng’s defense, therefore, was that although §106(3) forbids distribution of a book without the copyright owner’s permission, once he lawfully obtained a copy, he was free to dispose of it as he wished. Essentially, that “first sale” in Thailand, Kirtsaeng argued, exhausted the copyright owner’s exclusive distribution right under §106(3).

However, the District Court sided with Wiley at trial, finding that the first-sale defense did not apply to “foreign-manufactured goods.” On appeal, the Second Circuit agreed, noting that the first sale doctrine applies only to “the owner of a particular copy . . lawfully made under this title.” According to the Second Circuit, works made abroad could not have been made “under this title” or under American law, and thus the first-sale doctrine was inapplicable.

But the Supreme Court rejected this argument last month, holding that the first-sale doctrine indeed applied to copies of copyrighted works lawfully made abroad. Writing for the majority, Justice Breyer noted that the phrase “lawfully made under this title” was not intended to exclude works made overseas. (The Court also observed that “geographical interpretations create more linguistic problems than they resolve.”) Instead, the Court focused on the serious consequences of upholding the Second Circuit’s analysis, such as preventing a buyer in the United States from selling or giving away copies of a foreign film or a dress made abroad, finding that this scenario could not possibly have been the legislative intent.

The Court’s decision in Kirtsaeng affirmatively settled a long ambiguous question as to whether the first-sale doctrine applied to copyrighted works manufactured abroad and imported into the United States. The Supreme Court had previously held in Quality King Distributors, Inc. v. L’Anza Research International, Inc., 523 U.S. 135 (1998) that the first-sale doctrine applied to works manufactured in the United States but first sold outside the United States, then imported back. But the Quality King court never resolved the issue ultimately decided in Kirtsaeng as to the more common situation in which copyrighted works manufactured abroad are then imported into the United States.

The Kirtsaeng decision may result in lower prices in the United States on copyrighted works such as books, because publishers can no longer use American copyright law as a basis to sell similar versions of the same work at greatly varying prices depending on the country. But, copyright owners may respond by localizing their offerings in particular markets so that, for example, the English language version of a textbook sold in Thailand would no longer serve as an adequate substitute for the American version of the same book. Others may rely more heavily on encoding products in region-specific formats, so that a DVD purchased in one country will not play on a player in another country. Undoubtedly, although long awaited, the Court’s decision will not be the last word on this issue.

Estate Planning: Does Your 18-Year-Old Need It?

Posted: April 19th, 2013

By: Martin Glass, Esq. email

Tags: estate planning

The quick answer to that question is “yes.” When your child turns 18 years of age, he is considered a legal adult. As such, he should have an estate plan. This includes a health proxy, power of attorney, and even a will or trust. While it is difficult for parents to think about this as being necessary, failure to take these measures can have unexpected or severe consequences. When your child reaches the age of maturity, HIPAA (Health Insurance Portability and Accountability Act) prevents even you, his parents, from obtaining confidential medical information. He needs to have communicated that he wishes for you to still be involved through HIPAA release documents. Additionally, if your child is unable to communicate his desires for his own medical care (or decisions regarding life support) you would need to be appointed as his health care proxy to make these decisions on his behalf. Otherwise, it could require years of litigation before you can make those types of decisions.

While it may be difficult to do, it is important that you discuss with your young adult their end-of-life wishes. You should know whether or not she wishes to be kept alive by heroic measures, even if it means she would not have a meaningful quality of life. As hard as it may be, you should even discuss with her other issues such as burial preferences, organ donations and cremation. Other important decisions, such as who may receive her important tangible property (her “stuff”) and her financial assets need to be worked out and documented as well.

It is important to note that not every person has the capacity to make decisions. In those cases you, as the parent, must now seek legal guardianship through the courts. You do not have the power to make medical and financial decisions on your child’s behalf without it. But even then, in a situation where your child still has the ability to state her preferences, goals, and objectives, and also supply input as to whom would make her decisions, her input should be considered, even if you are appointed as her guardian.

You should also be aware that often a parent or grandparent has given funds to a minor, and upon the age of 18, these funds are vested and are now owned by this young adult. In the unfortunate event that your child should predecease you, these assets may have to be probated and will pass to that person’s heirs-at-law. Assuming that they don’t have a spouse or child, in New York the next in line are his parents. In many situations, you have set up an estate plan for yourselves divesting assets in order to reduce your estate. This is typically done for estate tax or for asset protection purposes. The unplanned receipt of assets from your child could greatly impact your plan. A straightforward will, directing that the assets be left to individuals other than you, possibly siblings, or a charity, would alleviate this unintended problem.

So, whether it’s to make sure their wishes are being carried out or to further accomplish your planning goals, it may become important for your child to create an estate plan. This usually would simply be a straightforward will, power of attorney, health care proxy and living will. Of course, if your young adult has already accumulated some assets, his or her estate plan may be more complex and require the use of trusts. A qualified estate planning attorney would be able to help create the best plan of action.

Death of a Tenant

Posted: April 10th, 2013

By Patrick McCormick

Suppose you are a landlord and lease space, commercial or residential, to an individual tenant. Tenant timely pays rent for a while but, suddenly, rent payments stop. Upon investigating, you learn that the tenant has died. Does the death terminate the lease? Is a nonpayment proceeding available to obtain possession of the premises?

While not a common occurrence, this simple fact pattern raises several issues regarding when, and against whom, a nonpayment proceeding may be brought.

Initially, while perhaps not well known, but certainly well settled, the death of a tenant does not terminate an unexpired lease or the tenant’s leasehold estate. In such situations, generally, the executor, administrator or legal representative is permitted to remain in possession of the demised premises until the expiration of the lease.

Under our facts, how can the landlord obtain possession of the premises? The answer lies buried in RPAPL §711(2). The last sentence of RPAPL §711(2) provides: “Where a tenant dies during the term of the lease and rent due has not been paid and no representative or person has taken possession of the premises and no administrator or executor has been appointed, the proceeding may be commenced after three months from the date of death of the tenant by joining the surviving spouse or if there is none, then one of the surviving issue or if there is none, then any one of the distributes.”

In Poulakas v. Ortiz a nonpayment proceeding was commenced against respondent, the son of the deceased rent-stabilized tenant. In this case, it was not disputed that there was no administrator, executor appointed or surviving spouse of the tenant; that 3 months had elapsed from the date of death of the tenant before commencement of the nonpayment proceeding; and, the lease had not yet expired. In moving to dismiss, among other things, the respondent argued that he occupied the premises and therefore the statute was inapplicable causing the Court to examine the portion of the statute that provides “and no representative or person has taken possession of the premises . . .”

In denying the motion, the Court held that this phrase “should be construed as meaning that there is no person either in possession of the premises on behalf of the estate of legally authorized to act on behalf of the estate.” The Court specifically found that “the legislature did not intend that the ‘deceased tenant’ section of §711(2) be applied only in situations where the premises are vacant, as this would limit the remedial nature of the statute.”

Thus, when a tenant dies, a little investigation by the landlord is necessary to determine the date of death and whether an administrator or legal representative of an estate of the deceased tenant has been appointed and, if not, to identify the “issue” or distributes. Once this investigation is completed, a landlord is able to commence a nonpayment proceeding to obtain possession of leased premises. The Court’s analysis of the issues in Poulakas is must reading.

1 Dolan, Rasch’s New York Landlord and Tenant including Summary Proceedings, �32:12 (4th ed); Marine Terrace Associates v. Kesoglides, 24 Misc.3d 35 (App. Term 2d, 11th and 13th Judicial Districts, 2009)

2 25 Misc.3d 717 (NYC Civ. Ct., Kings Co. 2009)

Basso quoted in LIBN article “Noncompete Clauses Gain Focus in Digital World”

Posted: April 9th, 2013

by Gregory Zeller, Long Island Business News

When RBR Melville Contractors’ sales manager left the snow-removal company last year to form his own plow-for-hire business, he took a lot with him.

Not just experience and knowledge, alleges RBR President Robert Wesolowski, but several longtime RBR customers – plus the only hard copy of a noncompete agreement that would have prevented such a coup.

That’s the crux of an ongoing lawsuit pitting RBR against Patrick Feehan, founder of Carle Place-based Professional Snow Management. Wesolowski claims things “disappeared right out of the office” when Feehan left, including the noncompete agreement signed by Feehan.

Feehan denies the charge. “I never signed any noncompete clause,” he told LIBN, “nor was any ever presented to me the entire time I worked there.”

These are not simply guys with plows, but contract-driven corporate entities targeting shopping centers, multiunit residential communities and other lucrative accounts.

Wesolowski insists the noncompete agreement existed and claims Feehan defied it to steal “customers that have been with us for years.” Citing the ongoing lawsuit, he declined additional comment, adding only that the Feehan affair has been “tremendously damaging, financially.”

While litigation of the case continues in Suffolk County Supreme Court, the court has already dismissed RBR’s motion for preliminary injunctive relief, allowing Professional Snow Management to continue to do business during the trial.

Whether a signed noncompete agreement actually existed and mysteriously vanished, the court’s denial of RBR’s injunctive-relief motion “establishes the need for business owners to put safeguards into place,” according to attorney Jeffrey Basso of Bohemia corporate law firm Campolo, Middleton & McCormick.

Restrictive covenants – including non-compete, nondisclosure and nonsolicitation agreements – are nothing new. But new technologies are generating new emphasis, as it becomes easier for employees to surreptitiously swipe proprietary information before jumping ship.

“You’re seeing a lot more of these situations where employees are getting out and forming new companies, and taking with them a lot of electronically available information,” Basso said. “It’s just easier, technologically, to transfer information that you wouldn’t have been able to transfer previously, so it’s more important than ever to have [restrictive covenants] in place.”

Myriad types of information can benefit unscrupulous ex-employees. Customer lists, pricing plans, insider product-development knowledge, even the personal preferences of longstanding clients are all exploitable – hence, the evolution of the three main types of restrictive covenants.

Nondisclosure agreements basically forbid former employees from revealing R&D secrets, business strategies and other inside information. Nonsolicitation agreements stop former employees from marketing directly to the company’s current – and sometimes former or future – clients, while noncompetes prevent them from launching rival enterprises in the same market.

“The courts are very strict in interpreting these agreements,” Basso said. “They don’t want former employees to be restricted from earning a living. If an agreement is unreasonable or isn’t created expressly for the protection a business’ interests, the courts will strike it down.”

For instance, no court is going to enforce a lifetime noncompete agreement – two years is the current standard, Basso said – and clauses concerning factors like geography change fluidly from industry to industry.

Basso hypothesized a doctor leaving a medical practice: A noncompete might stop her from opening another practice within 25 miles, because that’s where the old practice’s patients physically exist, but that’s very different from a software company defector who can theoretically service clients anywhere.

“You can’t just restrict a person from competing anywhere in the world – there has to be a limited geographic scope,” Basso said. “Courts will basically take it on a case-by-case basis, consider the facts about what companies do and how they interact with customers, and use all that to determine what’s reasonable.”

Similarly, employers are within their rights to require restrictive covenants as an employment condition and can legally deny employment to anyone who won’t sign, “but if it’s anything you wouldn’t have another employee sign based on race, gender or anything discriminatory like that, that’s illegal,” Basso noted.

And if an employee is forced to sign something without having an opportunity to review it – or, if necessary, have an attorney review it – “that’s something the court is likely to consider later,” he added.

The risks of operating without restrictive covenants can be especially large for small businesses, where the “impact of losing a key employee with confidential information can huge,” according to Basso.

“If an ex-employee takes confidential information and starts soliciting all of a small company’s customers, it could completely destroy the business,” he said.

Read it on LIBN.

Building Rapport During Negotiations

Posted: April 9th, 2013

By: Joe Campolo, Esq. email

Tags: negotiation

IMPORTANCE OF RAPPORT

If you are like most busy professionals, you are typically pressed for time and would prefer to not waste time on small talk and just get to the issues at hand. This “small talk,” however, if used correctly, has value and should not just be dismissed or glossed over. When bargaining parties take the timeto establish some rapport and develop personal relationships, they tend to behave more cooperatively and enhance the likelihood they will achieve mutual agreements. It’s important to remember that you shouldn’t build rapport simply to win the upper hand in negotiations. Only building a sincere and genuine rapport can promote trust and credibility.

Many believe that the ability to connect with people is a natural gift — either you can build rapport or you can’t. However, developing rapport, like all negotiation skills, is something that anyone can learn, and then use. Here are some tips.

HOW TO BUILD RAPPORT

Non-Verbal
Unconsciously mimicking each other’s gestures, facial expressions and tone of voice. Keeping your arms uncrossed, the occasional head nod to assure your attention. Maintaining eye contact, leaning toward the other person, and smiling are indications of openness and interest in each other.

Meet in Person
Easier to build rapport face-to-face rather than via email or over the phone, many of the above mentioned non-verbal communication cues are lost via email.

Common Interests
These can be found via casual conversation and “small talk” or actively researching the other person’s bio or background. The more you know about your counterpart before you meet them, the more likely you are to find a common bridge that builds trust.

Thoughtful Gestures
Remembering birthdays, alma maters, favorite sports teams, details of family life & children all show genuine interest. Compliment your counterpart.

Self-Disclosure
Share information about yourself, your background and interests. This may uncover common interests and experiences, and sets the stage for open communication.

Beware of Ethical Pitfalls
Once a friendly, positive rapport has been established, negotiators may be more reluctant to share bad news and be tempted to sacrifice ethical values in the interest of maintaining rapport and reaching an agreement. Always keep in mind the potential long-term consequences of your decisions during important negotiations.

March 2013 Legal Brief – Firm Newsletter

Posted: March 28th, 2013

Planning for One!

Posted: March 19th, 2013

By: Martin Glass, Esq. email

Tags: elder law, estate planning

In some ways, estate planning for a single person can be more challenging for an estate planning attorney than planning for a couple. When a couple puts together an estate plan, the easiest and most natural thing to do is to entrust one another with all of the fiduciary responsibilities in the event of one spouse’s disability or death. Among these responsibilities are the execution of each other’s health care proxy, power of attorney, access to medical records in end-of-life scenarios and the administration of the estate.

The ease in dealing with these issues for couples is that the surviving spouse is most often the closest emotionally and geographically to the deceased and their assets. Spouses are uniquely qualified to speak for each other, because over the years they hopefully have had discussions concerning end-of-life scenarios with each other. Moreover, the surviving spouse is more likely to have been included in the financial decision making throughout the marriage, making the surviving spouse the best person to continue making the financial decisions beyond the marriage.

Those who never married and those who have been widowed do not have the luxury of entrusting emergency or end-of-life responsibilities to their spouse. These responsibilities typically fall to other members of the immediate family, such as children or siblings. In my experience, if there are children, the burden of these responsibilities tends to fall on the daughter. If not her, then the child in closest physical proximity to the surviving parent. Hopefully that child has had discussions with both parents and knows their wishes, no matter which one ends up the surviving parent.

Siblings and other family members are often less knowledgeable about one’s financial and medical wishes than a spouse or adult child might be. Therefore, a single person who is planning for his/her estate should make sure that any fiduciary responsibilities entrusted to a relative are clearly spelled out in the appropriate documentation. Medical emergencies and end-of-life scenarios are emotional times in which people must often make quick and decisive decisions. This is most easily achieved when there has been discussions between the planner and the person whom he or she is entrusting these decisions, along with a clear delegation of authority backed by the proper legal paperwork.

On that note, single people should bear in mind that the best people to entrust with medical responsibilities are often within relatively close geographic proximity. It makes little sense for a New Yorker to entrust the authority in a health care proxy to a relative living somewhere far, such as San Diego. People given financial responsibilities usually do not require that same proximity with the use of computers, overnight mail and the telephone.

Younger single people have even more estate planning considerations to think about. One such consideration is the unavailability of supplemental sources of income in case of disease, disability, or incapacity. Singles should consider these possibilities in their estate planning efforts. Those who are still working should ensure that they are covered by sufficient disability insurance, either privately or through their work. As single people get older, they should also consider purchasing long term care insurance to supplement any health insurance they may have. Long term care insurance typically covers expenses incurred in things like nursing home or hospice care that are typically not covered by normal health insurance coverage.

But of all things a single person needs to do, the most important is to talk to the people who are getting these fiduciary responsibilities. Make sure they not only understand your feelings and desires, but totally agree with them. This holds true for both medical and financial decisions. If they’re not on board, maybe you need to find someone else.

Copyright Claim Dismissed for Lack of Specificity

Posted: March 18th, 2013

Tags: intellectual property

A recent decision from the Southern District of New York demonstrates the importance of pleading sufficient factual allegations in a copyright infringement case.

In Kane LLC v. Scholastic Corp., Case No. 12-cv-3890, 2013 WL 709276 (S.D.N.Y. Feb. 27, 2013), the Court dismissed plaintiff’s copyright claim because it did not specify which works were at issue, which acts constituted infringement, and the time period that the infringement occurred.

Plaintiff was a stock photograph agency that licensed certain copyrighted photographs to defendant. The parties entered into a licensing agreement which granted defendant the right to use the photographs under certain limited terms. In the complaint, plaintiff alleged that defendant used the photographs without permission or beyond the scope of the licensing agreement. Plaintiff listed the works in the complaint, but indicated that the list was not exhaustive. Defendant moved to dismiss the complaint.

The Court granted the motion to dismiss on the grounds that the complaint did not specify which works were at issue and did not allege the acts that constituted infringement. Specifically, the Court noted that it was unclear whether the copyright registration numbers contained in the complaint corresponded to the list. Further, the complaint contained broad conclusory statements of infringement because it did not provide factual support that defendant exceeded the licenses and used the works without permission. The most significant deficiency in the complaint was its failure to specify a time period of the alleged infringement.

Although defendant’s motion to dismiss was granted, plaintiff was granted leave to file an amended complaint.

This case demonstrates that copyright plaintiffs must sufficiently plead the factual allegations regarding the works at issue, the infringing acts, and the relevant time period. Although a correctable error in this case, plaintiff suffered a loss at the offset.