WEB SITE COPYRIGHTS: Liabilities for the Web Designer, Site Owner and Others

Ivan Hoffman, B.A., J.D.


        Designing and putting up a web site create lots of legal issues.  Doing it wrong can create liabilities for many parties.  A case out of the Eleventh Circuit serves to illustrate several points that I have been writing about for years:

1. It never matters…until it matters…and then…it matters!TM

2. Web designers who are using either no written contracts or hand-crafted, do it yourself contracts copied from the Internet or colleagues are exposing themselves to potential significant legal liability.  Correspondingly, site owners who fail to use a valid, thorough and written agreement face equally significant legal issues.  Read “The Need for a Written Web Design Agreement.”

3. Filling out copyright forms incorrectly can create significant legal problems for the applicant.

        In St. Luke’s Cataract & Laser Inst. P.C. vs. Sanderson et. al., these were the facts in summary form:

        In 1993, defendant Sanderson, who was an ophthalmologist, joined St. Luke’s to perform eye care and cataract surgery.  After a brief leave, Dr. Sanderson rejoined St. Luke’s in 1995 “as a full-time employee” and established the St. Luke’s Cosmetic Laser Center (“Center”).  St. Luke’s paid for the equipment necessary to establish the Center.

        In 1998, Dr. Sanderson worked with the Center’s web designer, Mark Ericson, to build a web site for the Center.  Ericson registered the domains laserspecialist.com and lasereyelid.com in the name of Dr. Sanderson as the registrant.  (see point 2 above)  St. Luke’s paid the registration fees and hosting fees for the site.  Ericson regularly provided Dr. Sanderson with backup copies of the site.  (see point 2 above) Along with other  St. Luke’s employees, Dr. Sanderson provided content for the site.  Mark Ericson provided the programming and worked with Dr. Sanderson on graphics and other content for the site.  (see point 2 above) The site bore a copyright notice in the name of St. Luke’s.   Ericson and Dr. Sanderson also created and added a logo to the site. (see point 2 above) Ericson included a copyright notice on the site in the name of St. Luke’s.  [Note: nothing was mentioned in the case about who owned the rights to this content or the logo insofar as Mark Ericson is concerned.  If he was an independent contractor, without a valid, written and signed agreement, all the Center got was non-exclusive rights.  Read “The Fundamental Principle Under the United States Copyright Law.”  See point 2 above]

        In 2003, Dr. Sanderson left St. Luke’s to establish his own practice even though he denied he was going to be doing so when asked by St. Luke’s just prior to his resignation.  (see point 1 above) When he left, he sought to transfer the administrative contact information in the WHOIS database to himself and when the registrar requested confirmation of the change, Ericson approved the same.  Dr. Sanderson then moved the hosting of the site to another host.  Dr. Sanderson used another designer to create his new site using large parts of the prior site (that he had on backup disks) and had that designer change the watermark on the videos to display Dr. Sanderson’s name.  The new site bore a copyright notice in Dr. Sanderson’s name.  (see point 1 above)

        When the dispute began with Dr. Sanderson, St. Luke’s registered a copyright claim in the 2003 web site indicating that it was the sole owner as a “work made for hire” and that its contribution was as to the “entire web site.”  In the section of the copyright application calling for information about derivative works and prior works, St. Luke’s indicated:

“Previous version in which claimant, St. Luke’s Cataract and Laser Institute, is owner and author.” On the follow-up question asking the applicant to “[g]ive a brief, general statement of the material that has been added to this work and in which copyright is claimed,” St. Luke’s wrote only, “Editorial revisions.”
The Court went on to explain:
Houser [a St. Luke’s administrator] said St. Luke’s claimed a copyright over the “[e]ntire website”in the First Application because “[a]t the time, we thought that the entire website was original material.” Houser conceded, however, that several things on the LaserSpecialist.com website were not original, such as stock photographs, Dr. Sanderson’s thesis paper, and maps and directions from the Internet website mapquest.com. In fact, Houser, who was designated as St. Luke’s corporate representative at trial, did not know which photographs on St. Luke’s LaserSpecialist.com website were stock photographs and which were original. Houser also did not know the scope of St. Luke’s ownership claim in parts of the LaserSpecialist.com website, such as the introductory page that contained Dr. Sanderson’s photograph and biography. Houser admitted that Dr. Sanderson and Erickson used literature from Botox to draft the Botox page on St. Luke’s LaserSpecialist.com website and that St. Luke’s was not claiming a copyright in the maps and directions from mapquest.com, even though St. Luke’s copyright registration claimed ownership of the entire website. Houser also conceded that several parts of the deposit copy, submitted with the First Application, did not match the date of publication listed on the application. For example, Houser testified that the page on Cymetra injections was dated December 6, 2003 by the Wayback Machine Internet archive and thus was not on St. Luke’s LaserSpecialist.com website on February 15, 2003. Houser admitted that the Cymetra injections page was put on the LaserSpecialist.com website in December 2003, well after Dr. Sanderson left St. Luke’s in June 2003. Houser described this as a “clerical mistake” in the First Application. Houser also testified that the dates on the pages obtained from the Wayback Machine Internet archive indicated that some of the pages submitted to the Copyright Office were dated from earlier than February 15, 2003. When asked about other parts of the website, Houser explained, “I think what we claimed . . . was the layout of the page and the way that it was put together. I believe that constitutes -- again, I’m not a copyright expert, but I believe that constitutes something that you can claim with copyright.”
        (See point 3 above)

        St. Luke’s then filed suit against Dr. Sanderson (see point 1 above) and importantly the web designer Mark Ericson (see point 2 above).  Although Mark Ericson was dismissed from the case at the time the trial started, by that time it is likely that Mark Ericson had already spent many tens if not hundreds of thousands of dollars in attorneys fees, deposition time, other discovery time, worry, loss of sleep etc.   (see point 2 above).  Had there been a thorough, written and signed agreement, it is possible that all that money could have been saved.  In addition, there are the issues related to the rights of Mark Ericson in the web site, also as discussed above. (see point 2 above).

        That the parties got into this litigation in the first instance is yet another example of the countless examples of “It never matters…until it matters…and then it matters.”TM   When parties are starting a business relationship, they think they will always be “in love” with each other and therefore, no written agreements are necessary.  Statistics being what they are, that assumption is quite foolish.  As long as the parties are “in love” of course it never matters that things are not properly documented.  And it never matters until the parties stop being “in love.”  And then it matters that things are not properly documented.  The best way to preserve business relationships is to write things down.  The things that break up relationships are not contracts…those are just easy targets.  The things that break up relationships are the “I thought you said…” stuff that comes from no contracts or poorly written ones.

        The suit against Dr. Sanderson was for copyright infringement, trademark infringement, violation of the Digital Millennium Copyright Act (“DMCA”) for having removed the watermark protection from the videos, violation of the Anticybersquatting Consumer Protection Act (“ACPA”) and other claims.

        Dr. Sanderson filed a counterclaim alleging, among other things, that the copyright obtained by St. Luke’s was invalid because it contained misrepresentations. (see point 3 above)

        After filing the litigation, St. Luke’s filed another copyright registration for a 2000 version of the web site.  The Court stated:

St. Luke’s Second Application again listed itself as the author and claimed that the website was a “work made for hire.” St. Luke’s Second Application, however, differed in several other respects from the First Application. First, the second copyright registration form, as did the first registration form, asked the applicant to “[b]riefly describe [the] nature” of the material in which copyright is claimed. St. Luke’s responded, “Text, compilation, photos & audiovisual excluding third-party photos, text, marks and illustrations,” as opposed to its claim of the “[e]ntire website” in the First Application. Second, unlike the First Application, St. Luke’s did not provide any response to questions 6A or B in the section titled “Derivative Work Or Compilation.”

In response to the question, “Has registration for this work, or for an earlier version of this work, already been made in the Copyright Office?” in the section titled “Previous Registration,” St. Luke’s answered, “No.” Although the 2000 and 2003 versions of the website were substantially similar, St. Luke’s did not mention its First Registration of the LaserSpecialist.com website.

        Dr. Sanderson claimed that this registration was also invalid.

Court’s Discussion

        One issue was the ownership of the web site and the domain names.  The Court did not refer to any written agreements between St. Luke’s and Dr. Sanderson or Mark Ericson so we can assume none existed (see point 2 above).  Furthermore, for reasons that are not stated in the opinion, the parties apparently never raised the question of the “full time employee” status of Dr. Sanderson.   The federal copyright law defining what is a work made for hire states in part:

A “work made for hire” is—

(1) a work prepared by an employee within the scope of his or her employment;

        St. Luke’s might have claimed that the work on the web site was part of the scope of Dr. Sanderson’s employment and if that were so, then any ownership claims to the site and the accompanying domains would likely be resolved in favor of St. Luke’s.  But that was apparently not raised in the litigation.

        The jury returned a verdict in favor of St. Luke’s on all of it claims except for the copyright infringement claim, finding that the registrations were invalid because they were filled out incorrectly.  (See point 3 above).  The trial court refused to set aside that verdict, finding that the jury could reasonably conclude that the misinformation in the copyright applications was intentionally incorrect.

        The Court discussed the language and interpretation of 17 U.S.C. § 410(c) and upheld the trial court’s denial of a new trial, concluding that it was within the province of the jury to find that the errors in the copyright applications rendered them void (see point 3 above).  The Court stated:

A certificate of registration satisfies the registration requirement in § 411(a) “regardless of whether the certificate contains any inaccurate information, unless . . . (A) the inaccurate information was included on the application for copyright registration with knowledge that it was inaccurate; and (B) the inaccuracy of the
information, if known, would have caused the Register of Copyrights to refuse registration.” Id. § 411(b)(1). “[O]missions or misrepresentations in a copyright
application can render the registration invalid” where there has been “intentional or purposeful concealment of relevant information.” Original Appalachian Artworks, Inc. v. Toy Loft, Inc., 684 F.2d 821, 828 (11th Cir. 1982). Thus, there must be a showing of “scienter” in order to invalidate a copyright registration. Id. “In general, an error is immaterial if its discovery is not likely to have led the Copyright Office to refuse the application.” Data Gen. Corp. v. Grunman Sys.
Support Corp., 36 F.3d 1147, 1161 (1st Cir. 1994).

St. Luke’s argues that the district court abused its discretion in denying its motion for a new trial because the jury’s finding that its First and Second Registrations were invalid was against the great weight of the evidence.  We disagree because there was evidence from which the jury could have inferred that St. Luke’s made intentional, material misrepresentations in the First and Second Applications and the deposit copies it submitted to the Copyright Office.

The testimony from Bradley Houser, St. Luke’s administrator and representative at trial, revealed that St. Luke’s made numerous misrepresentations about authorship and originality on its copyright registration applications. For example, on the First Application, St. Luke’s stated that it claimed a copyright over the entire February 15, 2003 version of the LaserSpecialist.com website. However, Houser admitted that the February 15, 2003 version of the LaserSpecialist.com
website contained numerous things that were not original, such as stock photographs, Dr. Sanderson’s thesis paper, and maps and directions that were obtained from the website mapquest.com. In fact, Houser still did not know which photographs were stock and which were original when he testified. Despite the many items whose originality was questionable, and others that clearly were obtained from other Internet sources, Houser indicated that St. Luke’s did not make
any inquiry to determine the source of these questionable items. More importantly, St. Luke’s did not disclose in its First Application that it was unsure whether some of the information on the website was original or from third parties. Rather, St. Luke’s represented that the “[e]ntire website” was created by St. Luke’s.
The deposit copy submitted with the First Application revealed further misrepresentations. Houser admitted that the deposit copy contained a page on Cymetra injections that was added to the LaserSpecialist.com website after Dr. Sanderson resigned from St. Luke’s and was not on the website on February 15, 2003. In addition, Houser acknowledged that the date on several pages of the deposit copy showed that they appeared on the LaserSpecialist.com website before February 15, 2003. Nevertheless, St. Luke’s represented to the Copyright Office in its First Application that the date of the first publication of the work being registered was February 15, 2003. The date of the first publication is highly relevant because it affects whether the five-year presumption of validity applies.

The Second Application also contained material misrepresentations. For example, St. Luke’s responded “No” to the question on the copyright registration form asking, “Has registration for this work, or for an earlier version of this work, already been made in the Copyright Office?” St. Luke’s provided this answer even
though 90 to 95 percent of the content on the June 9, 2000 version of the LaserSpecialist.com website was the same as the February 15, 2003 version covered by the First Registration. At trial, defense counsel showed Houser both versions of the website, and Houser testified that they were “substantially similar.” Defense  counsel asked Houser, “So, it’s true, isn’t it, that St. Luke’s has registered two copies of the same website that are fundamentally the same but said that they are—one is a February 15th, 2003 version and the other is a June 9th, 2000 version, correct?” Houser responded, “Yes.” Even though St. Luke’s acknowledges the overwhelming similarities between the June 9, 2000 and February 15, 2003 versions, it failed to advise the Copyright Office of the First Registration when asked if registration for “this work” already had been made.  While there were some differences between the two registered versions of the LaserSpecialist.com website, the jury was free to decide as a question of fact whether these were fundamentally the same versions of the website and whether it was a material omission for St. Luke’s not to disclose that it had registered substantially the same version of the website several months earlier.

        In other words, what the above means is that by not filling out the forms properly, the applicant (St. Luke’s) turned its legal destiny over to other parties, in this case a jury, to decide what St. Luke’s meant in the applications.  By filling the applications out properly, St. Luke’s might have been more able to control its own destiny…and the outcome.

        This article does not discuss the damages issues or some of the other issues involved in the case since such a discussion would take us off the point of the article.

Conclusion

        1. It never matters…until it matters…and then…it matters!TM

        2. Web designers who are using either no written contracts or hand-crafted, do it yourself contracts copied from the Internet or colleagues are exposing themselves to potential significant legal liability.  Correspondingly, site owners who fail to use a valid, thorough and written agreement face equally significant legal issues.

        3. Filling out copyright forms incorrectly can create significant legal problems for the applicant.

        Doing it right in the first instance could have saved the parties millions of dollars (there was evidence produced that attorneys fees exceeded $2,000,000.00) including the damages, lost time, worry, loss of sleep etc. that attends doing it wrong.  I have practiced both preventive law and remedial law and have found that the former is almost always infinitely less expensive than the latter.  As I have said many time, “Help me is cheaper than fix me.”TM

Copyright © 2009 Ivan Hoffman.  All Rights Reserved.

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This article is not legal advice and is not intended as legal advice.  This article is intended to provide only general, non-specific legal information.  This article is not intended to cover all the issues related to the topic discussed.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This article is based on United States law.  You should consult with an attorney familiar with the issues and the laws of your country.  This article does not create any attorney client relationship and is not a solicitation.

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