It is hard to believe that March 2008 is half over. The year is shaping up to be a year of content but also a year of new beginnings. After inserting and then removing myself from various Writers’ Guild related projects, I have happily found new beginnings in a project that calls upon forming sounding partnerships. While I’m on that topic, I’d like to go over some basic does and don’ts that often require repeating:

1) Partnerships are everywhere. Any two people doing business together, or any two entities doing business together that have not formed a separate corporate form, as “partners.” Yup, it’s that simple.
Subchapter K of the IRS Code will dictate how income is characterized as well as the treatment of distributions to and from the “partnership.” I won’t get into the state law requirements of filing requirements, or the lack their of. BUT, if you’re in business with another and you haven’t formed a C corp, S-corp, or LLC as the operate your unit, welcome to partnership. Many of you will scoff at the reality that I’ve called your work with that person sitting in the office next to you, a partnership and may continue in denial, but trust me, your in a partnership and if you don’t take it seriously, things may turn out tough.

2) Partnerships require a writing. No, there isn’t a law that requires a writing. Rather, there is a rule and it is called the rule of good sense. A simple writing is imperative to describe (a) how decisions shall be made about day to day and big decisions; (b) how net income will be allocated; (c) how and who will pay for expenses; (d) what happens when one of the partners wants out, a new partner wants in, or one of the partners goes away (e.g. death); (e) a writing IS however required to get any copyrights into the partnership and other property that will be the basis of the partnership’s business; and (f) competition and moonlighting. Will the partners allow each other to do “non-partnership work” or are all energies to be devoted to the partnership.

Red Flags. This is not a sailing reference. By this I mean, items you should consider reasons for not joining with another, reasons for getting out of what you know to be a partnership or reasons to quickly attempt to mend fences before things get out of hand.
- Single signor of bank account and single reviewer of accounts payable. While it is great to have one partner run the books, all partners must be informed by way of monthly reporting of uses and sources of cash. Unless you know why certain expenses are being incurred and how they flow into creating the top line, get a handle on the finances of your partnership asap.

- No meetings. Meetings for no reason are a waste and meetings when things are sailing perfectly seem to be a waste too BUT if you only meet when there is a problem or your partner won’t meet with you unless there is a problem, there is a problem. If no meetings are not your problem the point of this item is that personality conflicts, inability to talk to each other about the goals, plans and strategies of working together on a regular basis will make decision making incredibly difficult down the line.

- The Veto Partner. Partners that veto every idea brought to them are a red flag. Wait until it comes time to distribute net proceeds or increase a draw. If “veto”, as I’ll call him/her, also runs the books, this is double trouble. Unless of course, you were brought in to be a junior partner and have little expectation of making any decision until Veto retires.

- Income distribution not clearly understood. Like most businesses, a partnership distributes netincome after expenses. Each partner however generally receives a draw on income EXPECTED to be obtained by the partnership. Thus, it is technically a draw against future income. If this month you draw $10,000 but your net income allocation this month is less, you are in the negative. That is the easy part. Every partnership (nearly) determines net income differently. Some are origination based, some are hours worked plus origination based, to compensate service partners who do the work brought in by the origination-based rainmaker partner. If you cannot easily determine how income is distributed, do not take that ignorance as bliss. Sit down with the CFO or the partner of the firm that manages the books and have them walk you thru it. Are you able to be successful in that model?

Our practice focuses on helping established private technology-based companies or creators who are frustrated by being ripped off! They may, for example, be concerned about a competitor who uses unfair tactics, an employee who leaves with copies of their files or a business partner who fails to live up to a promise. In some cases, we have represented investors and businesses regarding their obligations to perform in an investment setting. We also have experience in contentious business and partnership dissolutions and tax related litigation representing professionals in related litigation. Most of Gregory’s litigation work takes place in the federal court. However, Gregory has litigated in state court too. After first starting as a litigator and then practicing as a transactional lawyer, Gregory brings both sides of the puzzle together.

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On Monday, Google (nasdaq: GOOG - news - people ) announced the arrival of that panacea, a new video filter designed to stem the massive flow of copyright-violating clips mixed into YouTube’s user generated content. Schmidt’s promise that the filter would sort out YouTube’s mounting legal problems, however, hasn’t materialized.

Google faces a $1 billion lawsuit from Viacom (nyse: VIA - news - people ) over thousands of ComedyCentral and MTV clips uploaded by users to YouTube, as well as a class action lawsuit that includes several major European sports leagues. On Thursday, a group of media companies including CBS (nyse: CBS - news - people ), NBC and Disney joined Viacom in setting out a list of demands outlining how their content could be fairly used online. Video sites like Dailymotion and Veoh participated in the partnership. But Google–and YouTube–were conspicuously absent.

Google’s video fingerprinting announcement has done little to assuage these increasingly vocal criticisms or to deflect Viacom’s legal assault. Some copyright watchdogs say Google’s proposed copyright managing system still places too much of the responsibility for policing content on the copyright owner. And more concretely, Google’s filter won’t erase the alleged copyright infringement that’s already occurred on the site for more than a year.

“We’re happy that Google appears to be stepping up to its responsibility and ending the practice of profiting from copyright infringement,” says Jeremy Zweig, a Viacom spokesperson. “But this case is only partly about future infringement–it’s also partly about past infringement.”

Viacom has already identified and asked Google to remove more than 250,000 clips from YouTube, Zweig says. Those potentially infringing videos are the real subject of Viacom’s lawsuit, according to Ken Boehm, an attorney and president of the National Legal and Policy Center, an ethics advocacy group. “The filtering technology may mitigate Viacom’s damages, but the clock mostly stopped ticking on new violations when this lawsuit began” in March, Boehm contends.

One telling precedent may be a recent case in a French court against the video site, Dailymotion. Paris-based Dailymotion was ordered in July to pay a director $32,000 for hosting a single pirated movie, even though the film had already been removed from the site when the lawsuit was filed.

Determining whether Google will face a similar fate is the Digital Millennium Copyright Act, a notoriously murky law created in 1999. According to the DMCA, a Web site can offer copyrighted content if the site’s administrators aren’t aware of it, don’t profit from it–and take the content down when requested by the owner.

Boehm argues that Google has clearly profited from Viacom’s copyrighted clips, using them to build traffic and displaying ads adjacent to them. “The facts simply don’t fall on Google’s side of the ledger,” Boehm contends. “This isn’t someone hosting a Web site in their basement. Google has made real money from this content.”

To reap greater profits from those infringing clips, Boehm argues, Google has dragged its feet in implementing filtering. Though YouTube partnered last January with Audible Magic, a Los-Gatos based company that identifies copyrighted content based on audio matching, that technology was only used to identify content offered by YouTube’s music industry partners. Meanwhile, other video sites including Dailymotion, MSN’s Soapbox and Myspace have all employed Audible Magic to filter all uploaded content.

YouTube spokesman Ricardo Reyes counters that YouTube doesn’t place in-video advertising on any clips that could potentially violate copyright laws, and that the site faces a challenge of content filtering on a much larger scale than other video sites. He also points out that YouTube was the first site to implement 10-minute limits on the lengths of clips–a restriction that has prevented the full-feature piracy common on other sites. “We were confident that we were operating above and beyond the law before this new tool was introduced, and we’re confident now,” he says.

But even with this new tool, YouTube’s filtering makes media companies work too hard to find and delete their content from the site, argues Gregory Rutchik, the founding attorney of the Arts and Technology Law Group. Rutchik says the YouTube filter only identifies the exact matches with fingerprinted videos–it doesn’t even use YouTube’s searching and tagging system to pick out similar content. “That means Google is putting the burden heavily on the content owner to do exactly what Google has said is so difficult to do–search through all of YouTube’s content to find infringing clips,” he says.

None of these issues are likely to ever reach trial. But they will factor heavily into any settlement terms struck by Google and Viacom, says Fred von Lohmann, senior attorney at the Electronic Frontier Foundation. Von Lohmann concurs with Google’s argument that YouTube is fulfilling its legal obligations and that copyright protection is the responsibility of content owners.

But there are always complications, he warns.Von Lohmann points to gaffes like the one reported in The Wall Street Journal last month: The story revealed that Google employees had sold more than $800,000 worth of advertising to two video piracy Web sites. Such incidents could erode a court’s faith in Google’s anti-piracy principles, von Lohmann suggests.

“Who knows what kinds of mistakes could be turned up in the thousands of e-mails revealed in this lawsuit? It’s hard to make sure that everybody gets the message in a company the size of Google,” von Lohmann says. “For YouTube, there are no guarantees.”

Wednesday, August 22, 2007

Santa Monica, CA — Leading California niche law firm, the arts and technology law group®, announced today that it has opened an office in Santa Monica, California. The new office will assist and support their growing base of clients in southern California. This will be the firm’s second office in California and will work directly with the San Francisco office.

The firm has established itself as a leader in IP piracy infringement litigation and will continue to focus heavily on the creative and technology industries. The firm has litigated around the country on behalf of software, content owners, hand-held device and infrastructure companies.

The firm has also closed multimillion dollar complex information outsourcing service agreements and software license agreement with clients in managed hosting, systems on a chip, bio-tech analytical and gaming industries and plans to dedicate a large portion of their resources to expand this practice.

Commenting on their increased presence in southern California, founding attorney Gregory Rutchik said, “Our decision to open an office in Santa Monica was driven by our commitment to provide great customer service to our clients. Several clients in the video game and adult entertainment content industries expressed the need for a greater presence in the LA area. Right to publicity and right to privacy related litigation were taking up alot of our attention in southern California from the start. And our presence there will enable us to better serve our clients’ current and future needs.”

About the Firm

The arts and technology law group® is focused on infringement litigation and advising business owners craft and negotiate deals related to the flow of rights and money. Their clients are private and public companies with brands and/or business that are based on technology or creative content. The arts and technology law group® was originally formed in 1993 to address the needs of a film maker and has been committed to providing the best customer service to creators, technologists and businesses since then. More on the firm at www.thepiracylawyer.com.