Due Diligence for Copyright
LegalMatch Law Library Managing Editor, Ken LaMance, Attorney at Law 
Why Should I Use Due Diligence when Purchasing a Copyright?
Using due diligence, a specific standard of care, when buying a copyright can inform the purchaser of a copyright as to the value of that copyright, and whether the copyright is valid, infringed, or infringing on another copyright. Particularly in the software context a great deal of care must be taken when purchasing these types of assets.
What Types of Things do I need to do when Purchasing a Copyright?
- Verify ownership - Although not an issue when the copyright holder is a self-employed individual, one of the most important issues that can come up is whether the copyrighted work is a work done for hire. Whether it is or isn't a work-for-hire may affect ownership. One should be careful to verify what the status of employee/employer relationship was before purchasing material generated under a work-for-hire agreement.
- Verify registration - Copyright registration is not required for copyright ownership. However, if a company later wants to sue for copyright infringement, the copyright must be registered with the United States Copyright Office. Also, registration will be important in the eyes of a court for calculating damages.
- Verify scope of copyright - Important only for software copyrights, certain elements of software code are not protectable, such as parts of a program which are used to achieve compatibility with other software and/or hardware, and aspects of a program that conform to industry standards. One must be careful to check what was claimed in the original copyright registration when filed.
- Copyright licenses - When the company or person bought its copyright from someone else, the scope of the company's rights is defined by the copyright license agreements. Therefore, it will be vital, if you are interested in a particular copyright, for you to check the limits on a company's licensed ownership rights in a copyright before you buy it so that you don't end up with less than you bargained for.
- Copyright misuse - Copyright misuse results when a copyright owner attempts to impose restrictions on parties beyond the scope of their copyright. If a party that owns a copyright has tried to do this with other parties in the past, courts have routinely held these copyrights invalid. You will want to check a company's history of doing this.
Should I Contact a Lawyer Regarding my Copyright Due Diligence Issues?
A good copyright lawyer will understand that using due diligence will help facilitate the process of transferring copyright rights. Since purchasing a company, its assets, and its goodwill can be tricky business, it's recommended to always contact a lawyer in these complicated situations.
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Last Modified: 12-16-2011 04:25 PM PST
