When Covering Your Back, Remember That Legal Analysis Shapes Risk Analysis

In 2005, Jonathan Coulton recorded an original arrangement of “Baby Got Back” by Sir Mixalot. In 2013, the popular TV show Glee featured an arrangement of “Baby Got Back” that is, to my untrained ears, indistinguishable from that of Mr. Coulton. I have no evidence to offer that plagiarism or copying occurred. I simply cannot imagine any good-faith argument that the arrangement of the two productions is dissimilar in any way.

Copying Can Be Legal

Even if Glee did steal the arrangement (and I’m not saying they did, and I have no knowledge that Fox ever said they did), the show’s producers and network (Fox Broadcasing) didn’t break any laws. The general consensus by attorneys interviewed by news sources is that blatantly taking the arrangement of a musician’s cover of a third party’s song (especially if the cover is covered by Creative Commons) is mostly ok.

So, let us assume that Fox stole Coulton’s arrangement (for the sake of the academic dissection of a hypothetical case). Let us further assume that Fox is completely innocent of all crimes and liabilities. Now, granting Fox’s total innocence, I conclude: Fox made the wrong decision and failed to truly, meaningfully protect their Intellectual Property portfolio. Wielding copyright offensively offended people and undermined Fox’s goodwill (which is the value of a trademark). Losses in trademark  are rarely worth gains in copyright.

Two Legal Analyses To Get to The Bottom Line

There are two approaches to the question of whether Fox ought to use Mr. Coulton’s arrangement.

Analysis 1

An attorney examines the facts surrounding Mr. Coulton’s arrangement. The attorney researches the law that applies to music covers and the extent of copyright over arrangements. The attorney applies the relevant law to the facts and offers a professional opinion as to the likely legal consequences that would result from copying Mr. Coulton’s arrangement. Fox executives and producers consider the opinion and weigh the risks and rewards, and make a decision.

Analysis 2

An attorney performs the same procedure for analysis as above, but with one addition: The attorney also evaluates the effect on the full IP portfolio of Fox, including their trademark value (which is a concept that is almost interchangeable with “goodwill” in law and business).

Why would such similar analyses lead to a different conclusion? Because the executives and producers are chiefly concerned with the objective mathematics of “the bottom line.” The first legal analysis looks only at one narrow question (“Can we avoid losing litigation if we do this?”), while the second analysis addresses as more broad question (“What effect will this choice have on our IP portfolio?”). By including the harm to the trademark (as “loss of goodwill”) in the analysis, the executives now have different numbers to work with when calculating their bottom line.

Business Law 301: Just Because It’s Good Under the Law Doesn’t Mean It’s Good Under the Bottom Line

The moral of this story is the same lesson that I offered to Nintendo earlier this year: Just because it’s legal doesn’t mean it’s good business. You can legally get away with a lot of things – particularly if you have a lot of attorneys helping you. It is easy for business executives to get caught up in the details of what they can “get away with.” We repeatedly see examples of companies loosing their long-term, broad vision of building a brand. Companies are generally better off when they do not sacrifice short-term copyright wins for long-term trademark growth.

The Tiny Legal Differences That Make A Big Difference

“Building a brand” has a lot to do with intellectual property, but few people distinguish between trademarks and copyrights. However, the differences matter. Executives often think in very concrete terms, and the concept of a trademark is much more abstract than the idea of copyright.

If copyright law seems a little up-in-the-clouds abstract, trademark law is in low Earth orbit. When there’s a copyright dispute, the questions of ownership and rights might be murky, but the thing at issue is very clear: a photograph, a book, a script, a painting, a song, etc. Trademark law is much more robust than copyright law, but the subject matter has always been very, very abstract and vague: how consumers think and feel about a good or service—or the ability of a consumer to identify the source of a good or service. The most tangible that subject matter ever gets is anecdotes and consumer surveys—which always come with a margin of error, by its nature as a set of statistics. The “thing” that trademark law ties to can be very concrete in a counterfeiting case, but outside of that, it’s just “goodwill”—the special feeling that consumers have in their hearts for a good or service.

So, when an executive is faced with “protecting the intellectual property of the brand,” it’s easier for them to think about something concrete and tangible. It’s easier to think that “protecting IP” means “stop someone else from benefiting from an image or sound.” And that is one important part of IP protection. But IP protection is means, not an end. The goal of IP protection is to build your brand and your business. Failing to understand this principle leads executives to make asinine decisions that make them look hypocritical and foolish while undermining their own businesses. Failing to know the difference between the categories of Intellectual Property can mislead smart businesspeople into acting on a misleading risk analysis.

It Would Be Unfair To Make Executives the Butt of The Joke

It is only fitting that I challenge myself on my analysis. Who am I to make such cavalier judgments? The executives at Fox (and other large corporations) have (combined) many decades more experience than I have. How could it be possible that I am right where they are wrong? Is it probable that I understand their product and their brand better than they do? I’m sure a lot of them have law degrees (and I have no doubt they talk to attorneys almost daily) – so why do they not share the same legal analysis or conclusions that I do?

I think that their positions force a particular focus. Business executives stand to lose a tremendous amount from failing to protect their IP. I lose nothing if my analysis of Fox’s or Nintendo’s business decision is wrong. I don’t have the same pressure to start from (or remain in) a deeply defensive trench. My risk-free position liberates me to be dangerously wrong—and therefore allows me to stumble into better ideas than the risk-laden executive can.

This is why I think it is the newer and smaller entertainment companies that will continue to blaze trails in new perspectives in managing their IP portfolios: They have more to gain and less to lose in taking counter-intuitive risks and re-imagining what it means to “protect IP.” It’s scarier for the larger companies to take anything less than a Draconian approach toward their intellectual property. Nintendo can’t imagine letting YouTube see someone play their games for even a few seconds. DevolverDigital can’t imagine NOT letting YouTube see every minute of every game.

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Getting an MBA from the University of Auir?

Real Time Strategy games have a lot in common with business practices. The core of both is managing limited resources and making strategic decisions to achieve select objectives. Although the execution of the strategy is the obvious part of the game, Starcraft II rests on theory-crafting, timings, build paths, and strategic decisions.

Businesses – from industrial machinery manufacturing to food and entertainment services – have to consider the strategic advantages of short-term or long-term plans, organizational structures, short- and mid-range objectives, budgetary allocations and constraints, and adequate staffing. Real time strategy* games require consideration about long-term strategies, allocation of resource-gatherers, timing an expansion or an upgrade, investing in buildings or unit production, and monitoring army size and strength. The micro-decisions that appear, on the surface, to comprise the core of the game- tactics, when and where to move armies,  grouping and splitting, and so forth- are actually secondary to the  broader, macro-decisions.

Business is also concerned with the potential decisions of competitors, as well as customers and markets.  Business tries to anticipate the decisions of other forces and position accordingly. This involves some risk taking, but that riskiness is mitigated by a strong understanding of the competitor and the market. Competitive games like Star Craft II also center on anticipation and strategic positioning, and the risk involved is mitigated by experience and game knowledge.

I came to this realization when while reading a series of business emails as executives debated making an  upgrade to their facilities and equipment, and it sounded strikingly similar to the internal dialogue I hear when deciding to upgrade or expand in an RTS. There were all of the considerations about the risk and cost of an immediate investment, but the undeniable fact that the action would be indispensible in the long-term. It isn’t surprising that this similarity exists: The basic concepts of opportunity cost, risk, return on investment, and long-term planning are part of everyday life. But the similarities between executives discussing a facility upgrade and a player deciding to build another base were just too uncanny to ignore. It made me wonder to what extent strategy games can prepare a person for the business world. My assessment is that if the player engages with strategy games with a methodical, process-driven paradigm, the gap is closed substantially. The fundamental essence of business is having an organized structure and process for managing resources towards a goal. Professional gamers strive to achieve exactly the same thing.

Oh, and also:  jargon – I can’t discount the role of jargon. Both business and gaming have a lot of jargon that sounds stupid, nonsensical, and pretentious to anyone outside of the practice. Often, jargon captures meaningful, actionable concepts, but it is nevertheless a roadblock to being taken seriously by those who don’t already understand and appreciate the language.

 

*Most of this also applies to turn-based strategy, but Heroes of Might and Magic 5 is a lot less thrilling to watch than Starcraft II.