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?

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.”

Listen to my interview here on the David Lawrence radio show (August 08, 2007) on:
- the basics of trademark piracy claims
- whether there is any justification for the notion that copying a brand is anything other than stealing
- why businesses based on not coming up with their own designs have any place in our market place
- do American consumers really not get that buying pirated goods (whether its a digital song or a clothing item) is no different than having your own ’stuff’ pilfered.
- do you agree that copying is stealing or a form of flattery? Isn’t the flattery argument a ruse?

Let me know your thoughts.

On July 18, 207, the California Court of Appeals in Douglas v. Talk America, Inc. called into question online agreements that add new terms when both parties do not consent. “A party can’t unilaterally change the terms of a contract; it must obtain the other party’s consent before doing so.”

For example, if you need capital to grow or would like to plan an exit strategy that may take years to work out, asking specific questions to your network can pay off in unexpected ways. I have a client - who has given me permission to tell this story - that has just recently sold her telecom software business. Having successfully litigated to protect their brand over the years, a deal come into the works from a competitor that was on our shortlist as a potential target - note that she was looking to grow - for years. A customer of my client introduced us to the head of business development at the competitor and next thing you know they turned the tables. For my client, it was a happy turn. Had she not told her customer that she wanted to acquire the competitor, the discussion would never have happened. For many months she said she stalled at telling her own customer about her plans. She was glad she did.

Afterall, going outside your normal resources for help often triggers new solutions. Customers and clients are often the best people to help their service provider grow or fill a hole. Some attribute success to simply casting a wider net.

Humans do not read minds - at least that’s true for most of you ;-). If you are specific and direct, others can know specifically what it looks like if they find it.

- Are you looking to develop a new service but not sure it if will sell in a particular industry and would love to speak to someone there?
- Are you looking to sell your company or combine in with anothers but don’t want your competitors or key customers to know?
- Must you change your business/product name and are you concerned with how this will be perceived in the market?
- Fill in the blank?

So - bring me your tired, your traveled and your problems. I may not be able to fix it or have the answer myself but maybe I can pass it along to someone I trust who does. It’s really what I enjoy doing the most.

Speaking of help….

By Eoin Callan in Washington

Published: April 9 2007 18:50 | Last updated: April 10 2007 06:56

The Bush administration on Monday made an ambitious bid to prise open the Chinese market for American movies, music and books through the World Trade Organisation.

The administration detailed two legal cases it is filing at the WTO aimed at persuading Beijing to tear down barriers to US goods and to criminalise piracy.

The twin cases are the most legally contentious ever filed by the US against China and seek to force politically sensitive changes to cultural laws and the judicial system.

Beijing responded strongly on Tuesday, saying in an official statement reported by the state news agency Xinhua that the US move ”goes against the consensus reached between leaders of the two countries to resolve contradictions through dialogue.”

”China strongly requires the US side to reconsider the decision and make prompt changes,” the statement said.

The US effort to liberalise the audio-visual market will meet serious resistance, as Beijing sees the importation of foreign and particularly western culture as a political rather than economic policy decision.

US demands that China throw pirates in jail rather than issue fines would also require changes to the criminal code.

Gregory Rutchik, a lawyer that specialises in copyright breaches, said the US action was driven in significant part by industry pressure but added that legal victory was far from certain.

Susan Schwab, US trade representative, said the litigation centred on two “problems that bilateral dialogue has not been able to resolve: current Chinese laws impede effective attacks on piracy and counterfeiting, and legitimate audiovisual products and publications continue to face serious problems with market access”.

“We hope the initiation of these two WTO actions will, first, encourage changes to laws and other measures that have stood in the way of effective protection of [intellectual property rights] in China for a wide range of products, and, second, tear down the legal barriers that keep legitimate copyrighted products from competing effectively in the Chinese marketplace,” Ms Schwab said.

The US trade representative welcomed moves by China last week to lower thresholds and close loopholes that impede prosecutions of copyright violations, and indicated the administration was looking for more concessions before the cases reached a verdict.

Ms Schwab said the intellectual property case covered rights that were “critical to products, brands and technologies in businesses large and small, ranging from machine tools to consumer goods”.

The case for greater market access for audio-visual goods has strong support in Hollywood but did not appear to cover software – a sector that along with the pharmaceutical industry has lobbied against aggressive litigation.

The decision to bring the cases follows demands from the Democratic majority in Congress for tougher action over the record $233bn annual trade deficit with China.

Democratic Senator Chuck Schumer, chairman of the Joint Economic Committee, said: “Late is better than never. China has no excuse to allow American intellectual property to be ripped off without consequences. I hope this is just the beginning of a much stronger administration stance on China’s non-stop violations of free trade rules.”

Max Baucus, chairman of the Senate Finance Committee, said the litigation could help ease political tensions over US-China relations.

“Vigorous enforcement of intellectual property rights is good for the US, good for China’s economy, and good for our bilateral economic relationship,” he said.

Officials in Washington and Beijing said the legal clashes were a natural step in the maturing trade relationship between the two countries after a five-year grace period following China’s accession to the WTO.

Copyright The Financial Times Limited 2007

Unless you’ve been living under a rock (not that there is anything bad about that) for the past month, you know that Viacom has sued Google for copyright infringement arising from its YouTube business model. The complaint is here for your reading enjoyment.

The 9th Circuit has just decided an important case - Perfect 10 v. CCBill et al. which goes to some of the heart of the Viacom matter.

1) DMCA provisions in Perfect 10 are relevant to Viacom suit. In Perfect 10, the Court focused on the DMCA safe harbors “from liability” for:

“(1) transitory digital network communications;

(2) system caching;

(3) information residing on systems or networks at the direction of users; and

(4) information location tools.” Ellison, 357 F.3d at 1076-77 (citing 17
U.S.C. §§ 512(a)-(d))

2) Not exclusive or complete protection. The safe harbor “do[es] not affect the question of ultimate liability under the various doctrines of direct, vicarious, and contributory liability,” and nothing in the language of § 512 indicates that the limitation on liability described therein is exclusive.” CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 552 (4th Cir. 2004).

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