Piliero Mazza &
Pargament, PLLC

Vol. VI, Issue 4
July/Aug 2001

An Update for Federal Contractors and Commercial Businesses


Supreme Court Rules on Internet Copyright Infringement

Federal Courts Recognize Claims for Disability-Based Harassment

Small Business Committee Update




Supreme Court Rules on Internet Copyright Infringement

In order to reach larger audiences, businesses are creating electronic versions of their company newsletters, brochures, and other publications, and publishing those materials on their web sites. While this can be an effective means of marketing, businesses should ensure that they do not run afoul of copyright laws in re-publishing these materials in electronic format. According to last month's Supreme Court ruling in New York Times Co., Inc. v. Tasini, 121 S.Ct. 2381 (June 25, 2001), the electronic re-publication of certain materials may expose companies to claims of copyright infringement by those who have not consented to the re-publication and distribution of their material in that fashion.

If material within a company's newsletter or other publication is written by the company's employees as part of their duties, the company will be considered the "author" of the material under the "works made for hire" doctrine, and therefore, free to re-publish electronic versions of the material. Consent from the employees is not required, and copyright infringement is not an issue.

However, material prepared for a company by consultants, independent writers or other third parties does not belong to the company. Each independent writer is considered to be the author, and therefore, the copyright holder, of the material. In order for the company to publish, reprint or display the material, the company must either acquire ownership from the author or secure a license to publish and display the material. If the scope of the license includes electronic distribution of the material over the Internet, then the company will not violate copyright principles by uploading the material onto its web site.

In most situations, however, the scope of the license is not readily ascertainable because there is no written license agreement. Rather, there is simply an understanding between the company and the independent writer that the company has permission to use the material for a particular purpose (e.g., inclusion of the article in a company newsletter). In this instance, courts have held that the company has an "implied license" to use the author=s material for the intended purpose.

The issue that arises with the onset of e-business is whether a company that holds an implied license to use an author's material in a hard copy publication can re-publish the material in an electronic database for distribution over the Internet. Until the Tasini ruling, the answer was not so clear.

The Copyright Act gives owners of "collective works" certain privileges. An example of a collective work is a company magazine. The company owns the copyright in the magazine as "collective work" even though it may not own the individual articles appearing in it. Indeed, the Copyright Act recognizes that the copyright in each separate contribution is distinct from copyright in the collective work as a whole.

The Copyright Act, however, allows owners of collective works a limited right to reprint individual articles in "revisions" of the collective work. Specifically, the Act provides such authors with a "privilege" of reproducing and distributing the material as part of a "revision" of that collective work.

In other words, even if a company lacks express permission from an independent writer to re-publish his or her material in a "revision" of a collective work, the company may nonetheless have the right to do so under the "collective works" privilege. For example, if a freelance writer prepares an article for a newspaper, the owner of the newspaper would likely have the right to re-publish the article in a later edition of the newspaper even though it did not have express permission from the author to do so. In that situation, the later edition would likely constitute a "revision" of the collective work.

Therefore, the issue that has confronted companies that have planned on creating electronic archives of their collective works has been B does electronic re-publication of hard copy material constitute a permissible "revision" of a collective work under the Copyright Act?

In Tasini, the Supreme Court confronted this issue. In that case, the New York Times had arranged to archive selected articles in an electronic database. A copyright infringement action was brought against the Times by authors of individual articles. The Times contended that the electronic publication of the articles constituted a "revision" of its initial hard copy publication, and therefore, fell within the "collective works" privilege. The Supreme Court, however, ruled that the "collective works" privilege does not permit companies to re-publish material electronically.

The message from the Tasini decision is clear. Companies should exercise caution in creating and publishing electronic versions of their hard copy materials. The first step in addressing this issue should be to examine whether the material the company intends to re-publish electronically contains articles or other works contributed by non-employees. If so, the company should go back to those third parties and secure the requisite consent to publish the material over the Internet. Also, now that electronic publication has become the norm, companies should implement a practice of securing express written consent from third party authors to re-publish the material in any medium. This can be very easily done with a one-page release form.

As a final point, it should be remembered that claims for copyright infringement may be brought not only by writers, but by other suppliers of third party content that have not consented to re-publication of their material. Most notable are advertisers and photographers. Re-publication of these materials over the Internet without the requisite consent can create the same copyright infringement problems discussed above.



Federal Courts Recognize Claims for Disability-Based Harassment

In previous issues of the Legal Advisor, we have discussed the need for employers to implement and disseminate policies addressing harassment based on sex, gender, race and other protected classifications.

In recent months, two federal Courts of Appeal have, for the first time, recognized claims for harassment based on disabilities under the Americans with Disabilities Act ("ADA"). These cases further illustrate the need for employers to ensure that their anti-harassment policies are up-to-date, and that appropriate remedial action is taken in response to complaints of harassment.

The following is a brief discussion of the Courts' decisions in these two cases. The courts -- the Fourth Circuit, which governs Virginia, Maryland, West Virginia and the Carolinas and the Fifth Circuit, which governs Texas, Louisiana and Mississippi - are generally regarded as two of the most conservative Courts of Appeal in the system.

In the first decision, Flowers v. Southern Regional Physician Services, (5th Cir., 2001), the plaintiff disclosed to her employer that she had the human immunodeficiency virus. Soon after the employee made this disclosure, her supervisor became hostile. The supervisor, who had been friendly with the plaintiff, stopped socializing with her, began intercepting her telephone calls and eavesdropped on her conversations. In addition, the president of the company, who had also been friendly, refused to shake her hand and began avoiding her. The plaintiff was subjected to increased random drug tests and her job performance was criticized. Ultimately, her employment was terminated for poor performance. The plaintiff sued, alleging that she was harassed because of her disability, and a jury awarded her a six-figure judgment.

In the second case, Fox v General Motors Corporation, (4th Cir. 2001), the plaintiff experienced a back injury which limited his ability to perform his job. He and other disabled workers were berated and harassed by supervisors on a regular basis. For example, a supervisor told him, "I don't need any of you handicapped m--f--s. As far as I am concerned, you can go the hell home." Other employees with disabilities also testified that supervisors referred to them as "911 hospital people." Supervisors also refused to permit disabled employees to work overtime and encouraged co-workers to ostracize the disabled workers and to hinder their job performance by withholding materials. The plaintiff claimed that his disability worsened because he was forced to perform demanding tasks in spite of his limitations. Like Ms. Flowers, Mr. Fox sued under the ADA and was awarded a six-figure judgment.

Both Courts of Appeal decided that Congress intended disability-based harassment to be actionable under the ADA. The ADA, like Title VII of the Civil Rights Act of 1964, which governs sexual harassment, provides that employers may not discriminate with regard to the Aterms, conditions, and privileges of employment." The Courts held, with minor differences, that a claim of harassment based on disability may be brought if the following elements are established: (1) the employee is a qualified individual with a disability under the ADA; (2) the employee was subjected to unwelcome harassment; (3) the harassment was based on the employee's disability or disabilities; (4) the harassment was sufficiently severe or pervasive to alter a term, condition, or privilege of employment; and (5) some factual basis exists to impute liability for the harassment to the employer.

In light of the decisions in the Flowers and Fox cases, employers should review and update their harassment policies to ensure that they cover all forms of unlawful harassment, including harassment based on disability. To be deemed effective, a harassment policy must contain an effective complaint procedure. Employers should also consider conducting training for all personnel, including supervisors and upper management, on unlawful harassment and complaint procedures.



Small Business Committee Update

At the midpoint of the first session of the 107th Congress, we wanted to provide our readers with a brief summary of the issues that are pending in the Senate and House Small Business Committees.

With the Democrats now controlling the Senate, Senator John Kerry (D-MA) has replaced Senator Christopher "Kit" Bond (R-MO) as the chairman of the Small Business Committee. Because the committee has taken a bipartisan approach on many small business issues, the transition has been a smooth one.

Before the change in power in the Senate, the committee approved two pieces of legislation introduced by Senator Bond that would grant greater autonomy to the Small Business Administration's ("SBA") Office of Advocacy and establish the White House Quadrennial Commission on Small Business. The first of these proposals has subsequently been passed by the Senate and is now awaiting action in the House of Representatives. The Senate has also passed legislation introduced by Senator Kerry that provides emergency relief to small businesses affected by significant increases in energy prices. This legislation has since been referred to the House Committee on Small Business.

Senator Bond has also introduced other legislation that may be considered by the Senate Small Business Committee this year. The "Governmentwide Mentor-Protégé Program Act of 2001" would establish a mentor-protégé program under which major federal contractors would act as mentor firms to eligible small business protégés. Eligible protégé businesses include any small business owned and controlled by women, socially and economically disadvantaged individuals, or service-disabled veterans. The mentor-protégé program in the legislation is based on the structure of the Department of Defense ("DoD") mentor-protégé program that was established in 1991.

Additionally, Senator Bond has introduced the "Agency Accountability Act of 2001." This legislation would require certain federal agencies to notify the SBA and other individuals of the impact of a proposed rule on small businesses before it is published in the Federal Register. The Senate Small Business Committee has not yet scheduled a hearing or markup on either of these pieces of legislation.

With Senator Kerry as chairman, the committee can be expected to focus on technological issues relating to small business. For example, Senator Kerry recently introduced legislation to reauthorize the Small Business Technology Transfer Program. The Senate Small Business Committee held a hearing on this legislation on June 21, 2001. Additionally, Senator Kerry has stated that he wants to focus on developing a small business world consisting of high-growth businesses with high-wage jobs. In that spirit, the Senate has recently passed a resolution sponsored by Senator Kerry changing the name of the committee to the "Senate Committee on Small Business and Entrepreneurship."

In the House Small Business Committee, Chairman Donald Manzullo (R-IL) has focused primarily on regulatory issues. The committee has held numerous hearings on whether certain federal regulatory requirements disproportionally burden small businesses.

Additionally, the House Small Business Committee is focusing on procurement issues. On June 20, 2001, the committee held a hearing in which they examined the procurement reforms being considered at the DoD. Many members of the committee, including Representative Nydia Velazquez (D-NY), the committee's ranking minority member, criticized the DoD for failing to meet its procurement and small business prime contracting goals. According to Representative Velazquez, the DoD fell 2 percent short of awarding at least 23 percent of its prime contracts to small businesses, and achieved only half of its goal to award 5 percent of those contracts to women-owned small businesses. As a result, Representative Velazquez has introduced the "Small Business Contract Equity Act," which requires agencies to meet their small business contracting goals before consolidating requirements. Under this legislation, if the goals are not met, any proposed consolidation would require SBA approval. Many members of the House Committee on Small Business have cosponsored this legislation, including Representative Manzullo.

The Legal Advisor will continue to monitor important issues and legislation taken up by these committees.


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