Crowdfunding’s Impact on Start-Up IP Strategy

[The following is summarized from my forthcoming article in the George Mason Law Review]

Crowdfunding has been heralded as a revolutionary and democratic way to connect ordinary individuals with innovative projects they would like to support. The version involving equity investments in start-ups will be regulated under the U.S. JOBS Act of 2012.[i] But start-ups who use this legal pathway will become essentially “junior” reporting companies under the securities laws with significant public disclosure requirements. This blog post argues that such disclosures may negatively impact start-ups’ intellectual property (“IP”) portfolios.
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Categories: Art, Commerce, Commercialization, Corporate/Securities Law, Creativity, Entrepreneurship, Intellectual Property, Law, Technology

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Congressional testimony on Sec 512 of the DMCA “notice and take down” for websites

Testimony of Sean M. O’Connor, Professor of Law and Founding Director, Entrepreneurial Law Clinic, University of Washington (Seattle)

Before the Committee on the Judiciary
Subcommittee on Courts, Intellectual Property, and the Internet

Notice and Takedown Provisions under the DMCA, § 512

March 13, 2014

Chairman Goodlatte, Chairman Coble, Ranking Member Nadler, Members of the Subcommittee, thank you for the opportunity to testify today about the current state of notice and takedown provisions under the DMCA.

I am a law professor at the University of Washington in Seattle and the Founding Director of its Entrepreneurial Law Clinic. We deliver a full range of corporate, IP, and tax services, focusing on business planning and transactions, to start-ups, artists, and nonprofits. I have also served as Director of UW Law School’s Law, Technology & Arts Group and its Law, Business & Entrepreneurship Program. I currently also serve on the Academic Advisory Board of the Copyright Alliance. Before academia, I was a full time attorney at major law firms in New York and Boston. I have continued an active private legal practice, with current social media clients such as Kolidr, and was General Counsel to, a nonprofit arts organization for the digital and net art community. Before law school I was a professional musician and songwriter for 12 years, receiving airplay on college and commercial stations in the Northeast. Because of my multiple affiliations, it is especially important to state that my views here are my own and do not necessarily represent the views of any of the organizations I am or have been affiliated with.


The current litigation over the Innocence of Muslims video provides a timeliness to the hearing today, as the dispute started with a takedown notice from the actress, Cindy Garcia, to YouTube demanding that it remove the infamous video from its site. Putting aside the more complicated issues in that case, one of the defenses offered by Google (the owner of YouTube) was quite telling. Google asserted that taking down the video from YouTube would provide little relief to Ms. Garcia because it was so widely available on the Internet. Whatever the practical truth of this contention, Google’s claim that relief from infringing online content is essentially impossible reflects a common, disturbing narrative that we live in a post-copyright world where everything is available everywhere and there is nothing we can really do about it.

This attitude is both a cause and a result of the main failure of the notice and takedown system that I want to address today: the relentless reposting of blatantly infringing material. This is not material that the poster believes he has rights to, either by ownership, license, or transformative fair use. It is simply posted as an end run around copyright law for fun or profit. This end run is largely made possible by notice and takedown and the safe harbor for online service providers.
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Categories: Art, Commerce, Commercialization, Creativity, Electrical & Digital Arts, Entrepreneurship, Fine Arts, Information Technology, Innovation, Intellectual Property, Law, Technology, Technology Entrepreneurship

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Tel Aviv presentation and conference

Chief Judge Rader and I were in Tel Aviv in November at the “From IP to NP (Net Profit)” conference.

Here is my presentation on “Managing Know-How in Global Value Chains and International Tech Transfer.”

And of course, because we were at the same conference together, the Chief and I put on a Denovo concert!

Denovo Tel Aviv (2013)

We really missed our regular bandmates, Jon Knight, Joe Newman, Darrell Stark, and Mike King. But the young Israeli musicians who stepped in to back us up did a great job. Shout out to Nava Swersky Sofer, who connected us to a music teacher, Yahel Goldschmidt, who then arranged the players.

Israeli musicians: Almog Tebeka (bongos etc), Erez Ram (drums), and Yonatan Rozen (bass)

Also thanks to Seth Heller, Tal Band (and his firm S. Horowitz and Co.), Dorit Korine, AIPPI, WIPO, Israel Patent Office, Israel Ministry of Justice, and UW Law for organizing and/or supporting my participation at the event.


Categories: Art, Commerce, Commercial/Contract Law, Commercialization, Fine Arts, Intellectual Property, Law, Technology, Technology Transfer, Uncategorized

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Madison, IP and the Creative Class

In the emerging conflict between creators and content repackagers and conduits (e.g., social media and Google), it is good to remember what James Madison said about IP:

“With regard to Monopolies they are justly classed among the greatest nusances [sic] in Government. But is it clear that as encouragements to literary works and ingenious discoveries, they are not too valuable to be wholly renounced? . . . Is there not infinitely less danger of this abuse on our Governments than in most others? Monopolies are sacrifices of the many to the few. Where the power is in the few it is natural for them to sacrifice the many to their own partialities and corruptions. Where the power, as with us, is in the many not the few, the danger can not be very great that the few will thus be favored. It is much more to be dreaded that the few will be unnecessarily sacrificed to the many.

[Letter from Madison to Thomas Jefferson, October 17, 1788 (emphasis added)]

Madison was one of the drafters of the “IP Clause” in the US Constitution. He seems to have recognized that the many would want free access to the valuable creations of the few, and that thus this risk was far greater than the risk of the smaller creative class dominating the many through patent or copyright grants.

Today we have big social media and content repackaging sites treating creative works as just so much commodified, fungible stuff to feed the voracious appetite of the many. Meanwhile, the smaller creative class is trying to maintain some level of premium pricing for what are distinct individual creations. The creative class is losing the war, just as Madison feared.

Categories: Art, Commerce, Commercialization, Creativity, Electrical & Digital Arts, Fine Arts, Information Technology, Intellectual Property, Technology

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The World I Live In

The world I live in is a very surreal space. I’m a tenured law professor at a decent university. I make a good salary and people pay for me to travel the globe and pontificate on pretty much whatever I feel like talking about. Sweet.

But I see myself as first and foremost a service provider. I still practice law and I make my clients’ problems my own. I am proud to to be able to do something useful for them, and I am keenly aware that they could go elsewhere for legal services.

I am also a “maker.” I bake bread, make other foods, and even constructed a bow and arrows for my kids from “scratch.” I compose and improvise music and believe in the power of music to be a transcendent experience between the performer and listener.

But most importantly, for many years I had to earn a living *directly* through performances, sales, and services. A regular, livable salary was a dream. If I could not sing or play guitar for a gig, I did not get paid. If I failed to make my quota in door-to-door cold call sales, I did not receive the commission that got me beyond a minimum wage. If I was too sick or tired to bartend, wait tables, shuck oysters, park cars, bag groceries, wash dishes, flip burgers, or wash floors (all jobs I have held), I did not get paid. If I could not get law clients after leaving established law firms, I did not get paid.

And even when I *did* perform, make quota, or serve clients, if the club/customer/client decided to welch on paying, it was very hard to collect. So I was still out the money and couldn’t pay rent/mortgage or buy food.

Yet, I now live in a through-the-looking-glass world where everyone has a salary and gets paid regardless of what they actually do on a given day, or what customers/clients/students think. Tonight at a conference dinner with some wonderful academics, not one could think of a time in their lives where they had to actually collect their money directly from customers/clients/students, nor where if they did not perform on a given day, they did not get paid that day.  Not one of the law professors had ever been directly liable to clients for their advice or for whether they or their law firm actually received amounts billed to clients. They were on salary and had never thought/worried much about receivables. (In fact one had no idea what I meant by the terms “receivables” or “accounts receivable”!).

Yet, they were all adamant that law school should not become a “trade school.” That it should not teach students how to practice law, or at most should leave that to upper division electives or clinics. That one professor’s experience with a patent class that actually taught students how to prosecute patents was boring and worthless.

“Where will they learn how to practice law?” I asked.

“They don’t need to learn that, it is more important they learn the principles and theory.”

“OK, but would you hire a lawyer who did not know how to practice?” Would you submit to open heart surgery from a doctor who had learned only principles and not how to operate?” I asked.

Well, they will learn somewhere else.”

Where?” I pressed.

“Law firms will teach them, I suppose.”

“Ah, now we are getting somewhere. Law firms can no longer do this because clients such as Walmart will not pay for junior associates’ time anymore.”

“We are concerned about a world in which Walmart has an influence on legal education.”

“Fair enough, *but* the point is that the world–and the economics–have changed. The legal profession used to get away with hiding its “residency” program in fancy firms that could get clients to subsidize it. That world is gone. Law firms can’t bill out junior associates anymore so they go home and kick the dog–they tell law schools we have to produce “practice ready” students. This is actually good. I have always thought we should teach students to practice law (along with the principles and theory of law).”

“Why does it matter what law firms get paid . . . ? ”

And that is the point where I lose it. For colleagues who know and embrace economics in their scholarship, they flunk “practical econ 101.” If law firms cannot collect money on associates’ time, they cannot pay associates. When they cannot pay associates they do not hire associates. When they cannot hire associates, law schools have alumni who cannot get jobs. When alumni cannot get jobs, prospective students don’t come to law school. When students do not come to law school, tuition revenues drop. When tuition levels drop, law schools cannot pay their faculty.

This is hardly about full employment for law professors. Far from it. The point is rather that it very much does matter whether law firms get paid for associates’ time. And that ability now rests squarely in our hands as law faculty. We can maintain the status quo of “publish or perish” at all costs, and continue cranking out metaphysical articles on “law and X,” or we can get serious about teaching policy, principles, *and* how to practice.

In the end it comes down to viscerally knowing what it means to have to deliver a product or service *and* collect money directly from clients. Not through an intermediary like a firm or university that pays our salary even if the client/student does not pay her bills. But *directly* from the client or student. And where you won’t make rent or your mortgage, or be able to buy food, if you fail.

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