Month: July 2010

Myths Regarding Integrating Internet Data Into Applications

Lookin’ for information on a chemical, well there’s a database for that. Looking for barcode information, well there’s a database for that. Lookin’ for a local restaurant, … you get the point. There is a lot of useful published data available on the internet in a convenient format. And there are lot of potential applications out there hoping to make that data even more useful.

In questions/comments after presentations, phone calls, intellectual property inventories, due diligence, and even on the internet (gasp!), I have heard many tales regarding use, reuse, and commercial use of published internet data. Frequently someone asserts that integration of the internet data into an application is a non-issue because it is posted on the internet. Some of the various reasons given include:

  • The data was made available for download.
  • The data was changed by 10/20/30 per cent.
  • The data was posted in XML format.
  • The data was semantically marked.
  • The data was reformatted.
  • The data didn’t have a copyright notice.
  • The creator of the data couldn’t be located.

Generally, a content creator has rights in original works as soon as it is saved. And generally these rights include exclusivity in copying the content, distributing the content, and creating derivatives of the content. In other words, if rights vest, the content creator substantially controls the use of the data. For these reasons the blanket statements above are myths.

It may be that the published internet data may not be be eligible for protection or have a very limited scope of protection. It may also be true that the content creator doesn’t care how the data is used or that it may licensed for commercial use. However, just because data is published on the internet, available for download, or accessible in a convenient format does not in and of itself mean that it is available for use in an application. Not only might the possibly impermissible use lead to the failure of your application, it may lead to liability for copyright infringement or violation of the terms of service. Due diligence should be performed before integrating the published data into an application. You should at least analyze whether the data is subject to copyright, whether there is a fair use of that data, whether it is being used in violation of the terms of service, or whether you are knowingly accepting some risk.

3 Key Terms in a Copyright License

Licensing is one method of commercializing copyrighted material. A license is an agreement which permits another (“the licensee”) to use the intellectual property of the owner (“the licensor”) in a certain manner, typically to sell products based on the intellectual property. A license can be a lengthy document with many options to negotiate, but three key terms will be discussed in this post:

1. The Grant – What is being licensed?

The first step is decide what is being licensed. This may not be as simple a questions as it seems. Take the scenario where a “song” is being licensed. The valuable components of a song might include music, lyrics, artwork, video, and the name of the band. If a licensee only seeks to “sample” the song, the license may only grant rights to use a derivative of the music.  If the song is being used in a commercial, the license may only grant rights to the chorus of the music and lyrics. In a complex software system with multiple APIs and interfaces, perhaps a license might grant rights in a single interface.

2. Terms of Payment – Who, What, When, How?

The terms of payment should vary with the situation. The most commonly discussed approach is royalties, where the amount remitted to the licensor is based on sales of a product based on the licensed material. This may make sense where the subject of the copyrighted subject matter is simply being resold, such as the song of an artist. Even then further details need to be addressed, such as the frequency of payment and allowance for returns.

A royalty may not be appropriate for some situations. If the license involves use of part of a song in advertising, a royalty . Perhaps the terms of payment require the licensee to pay the licensor based on the number of times the advertisement is broadcast.

3. The term of the license – When does it end?

Many a content author has been disappointed by failure to consider this term. Those authors have entered in an exclusive license with a perpetual term and were unable to pursue alternate means to monetize their intellectual property when no sales (and thus no royalties) were being generated. For this reason, a licensor may use alternate approach to terminate the license. Perhaps the license may be for a certain time period or if net sales drop below a threshhold amount for a certain period of time, the license is terminated.

There are many other terms to negotiate, such as the scope of use, territory of use, warranties, and choice of law. However, these three terms are an excellent starting point for discussion between a potential licensor and licensee.

Licensing is a method of commercializing your invention. When you strike a licensing deal, you grant another company the right to make, use, and/or sell products based on your “intellectual property.” The intellectual property at the heart of any such licensing agreement is typically covered by a patent you’ve been issued. The party granting the rights is the “licensor,” and the party acquiring the rights is the “licensee.”