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April 2002
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Beware of Copyright Infringement in Political Advertisements Imagine for a moment that the 2002 elections are upon us. Your organization, the Anti-Deregulation Action Fund, has decided to run attack ads against incumbent Governor Grayout, whose reaction to the state's energy crisis has been sluggish and ineffective. Your savvy media consultants have put together a marvelous but expensive set of newspaper ads that feature a well-known photo of Governor Grayout taken at a recent public event. It's the weekend before the election, and your preferred candidate is running neck to neck with Governor Grayout in the polls. Unfortunately, you've just received a "cease and desist" letter from the photographer's attorney. It turns out that the photographer took the photo for Governor Grayout's campaign literature, owns the copyright, and is threatening to sue you for using it. Crushed, you have no choice but to pull your beautiful ads three days before the election, which Governor Grayout goes on to win by a slim margin. As this year's midterm races heat up, the threat of copyright infringement looms as an effective way for opponents to stop advocates from running damaging political ads—even though most cases of copyright infringement result from accidental or unintentional misuse of copyrighted material. In our only slightly exaggerated example, Anti-Deregulation Action Fund's media consultant mistakenly assumed that Governor Grayout's photo was in the public domain. However, almost all photographs, television footage, and other images are protected by copyright laws, and can be reproduced or used only with permission from the holder of the copyright. Books provide a good analogy: they are available in libraries and stores, but it is against the law to photocopy them and distribute the copies to the public. The same holds true for images, but many organizations and their media and advertising consultants are not aware of this. An organization that is successfully sued for copyright infringement could be liable for thousands of dollars worth of damages. Even if the copyright holder only uses the threat of legal action as leverage to stop a series of attack ads, that will be small comfort for an organization that must pull a series of expensive ads right before an election. A nonprofit organization may be able to argue that its use of a contested image constitutes "fair use" under the copyright laws, but such a determination is likely to be fact-specific and time-intensive, and there is no guarantee of a favorable outcome. Its best course of action would be to obtain permission from the copyright holder before using any photo, videotape, or other image in a media campaign. As nonprofits begin to negotiate contracts with advertising and media consultants and to plan their advocacy strategies for this fall's elections, they should stay on their toes regarding this issue. Advocates should examine their contracts with media consultants for indemnification clauses in case an expensive copyright dispute arises; but depending on the specific facts of a case, these may not always be enforceable. And of course, no amount of monetary remuneration will be able to compensate for an organization's disappointment if its preferred candidate loses a close race. By Mark Sawchuk   Off the Record: FEC Objects to Limits on Disclosure of Investigation Related Documents The Federal Election Commission is appealing a recent decision by a U.S. District Court judge that limits the FEC's ability to publicly disclose documents related to investigations into alleged campaign finance violations. The FEC maintains that disclosures are appropriate under the Federal Election Campaign Act (FECA) and that once an investigation has ended the FEC may disclose a broad range of information acquired during such an investigation. By contrast, the plaintiffs in AFL-CIO v. FEC argue that such disclosures, which would reveal confidential political strategies to the public and political opponents, violate the FECA. This case involves an investigation into claims by the National Republican Congressional and Senatorial Committees and a PAC chaired by Oliver North that the AFL-CIO and its affiliated unions had coordinated their federal campaign activities with the Democratic Party and the White House during the 1996 election. The FEC conducted an investigation and determined that there was no probable cause to believe that the FECA had been violated. After the case was dismissed, the FEC notified the AFL-CIO and the Democrats that the determination, along with 6,000 pages of its investigatory file, would be made part of the public record. The AFL-CIO and the Democrats objected to the disclosure of the investigatory file, claiming that the FEC had interpreted too broadly the disclosure requirements in the FECA and the related regulations. The FECA states that notifications and investigations shall not be made public without the consent of those involved; it is undisputed that this limits disclosure during on-going investigations. At the conclusion of investigations, the FECA requires publicity of conciliation agreements and determinations that the law has not been violated as well as supporting documentation. The FEC argued that in such cases where conciliation agreements and determinations are made public, the confidentiality provisions regarding the case file expire. Judge Gladys Kessler of the U.S. District Court in the District of Columbia rejected the FEC's interpretation, stating that the FECA does not place a time limit on the confidentiality of investigatory material. She maintained that the FEC could comply with regulatory requirements to release their determination in an investigation and the basis for this decision without disclosing documents from the investigatory file. Judge Kessler also declared that disclosure of significant portions of the investigatory file would violate an exemption in the Freedom of Information Act (FOIA). Exemption 7(c) of the FOIA protects from public disclosure the names and identifying information compiled for law enforcement purposes. Such information, if released, could reasonably be expected to constitute an unwarranted invasion of personal privacy; therefore, Congress exempted it from the FOIA. The FEC commission, which is made up of three Democrats and three Republicans, voted in February to appeal Judge Kessler's decision. Former FEC officials have also voiced their disapproval of the decision, stating that the FEC longstanding disclosure policy was a practice that served the public interest. In contrast, Judge Kessler notes in her decision that disclosing sensitive information could potentially limit the exercise of political speech for all political players. By Anne Cornelison Get What you Pay For: Copyright Tips for Web Development Contracts Web site development contracts contain many traps for the unwary. The intellectual property issues are critically important and particularly complicated. Read your web development contract closely to ensure that your organization gets what it pays for. The creator of any original material owns the copyright to it, unless there is a contract providing otherwise or the creator is an employee. Therefore, it is critical that your organization has an appropriately drafted contract when you hire a company or individual independent contractor to create your web site. Ownership issues in the development of a web site can be particularly complicated because several companies or individual independent contractors may contribute their time and efforts to the creation of the site. Further complicating the matter, a website may integrate both custom programming created specifically for that site, and pre-existing elements created either by one of the contractors working on the site or by some third party. Without a carefully drafted contract, your organization could find that it does not own all the rights it needs to maintain its expensive new website. Here are a few points to keep in mind when negotiating a web development agreement:
By Paul J. Tanis IRS Releases Information on Electronic Receipts The Internal Revenue Service is now allowing electronic receipts to be used as acknowledgments of charitable donations. This information, along with other useful guidelines for organizations, can now be found in an updated version of Publication 1771, "Charitable Contributions: Substantiation and Disclosure Requirements." The Publication explains the types of charitable donations that require documentation and includes examples of receipts that will satisfy requirements. Federal law requires that organizations must provide written acknowledgment to donors who receive goods or services in exchange for a gift of $75 or more. In addition, donors cannot claim a charitable deduction on federal tax returns for gifts of $250 or more unless they have written acknowledgment from the charity. Up until now, the IRS did not accept electronic acknowledgments, such as e-mails or personalized web pages summarizing annual donations. The use of electronic receipts will allow organizations to streamline the process of acknowledging charitable donations. Organizations may now provide either an electronic acknowledgment, such as via an e-mail addressed to the donor, or a paper copy receipt in order to substantiate the contribution. Both types of documentation should include the organization's name, the amount of contribution, and any other relevant information that is described in Publication 1771. A copy of Publication 1771 is available on the IRS web site at www.irs.gov. Organizations may also order printed copies by calling the IRS Exempt Organizations Customer Account Services at 877-829-5500. By Anne Cornelison IRS Extending Deadline for Documentation of 9/11 Contributions The IRS recently announced that it would allow more time for taxpayers to secure acknowledgments of charitable donations made in the wake of 9/11. In order to take an itemized deduction on their tax returns, donors are required to obtain a receipt from an charity for any contributions of $250 or more. Taxpayers will now have until October 15, 2002, to obtain a written acknowledgment from charities of any donation made after September 10, 2001, and before January 1, 2002, or to demonstrate evidence of a good faith effort to obtain the acknowledgment. E-mail is now acceptable as a form of acknowledgment for charitable donations (see article above). The IRS is easing the requirements because of the unique circumstances of September 11th. Many organizations were not prepared for the outpouring of donations that came as a result of the 9/11 tragedy and have been unable to provide donors with documentation in a timely manner. According to the Chronicle of Philanthropy, more than 2 billion dollars in charitable donations have been collected related to 9/11. By Anne Cornelison This publication is designed to provide accurate and authoritative information about the subject matter covered. It is not distributed with the intent to render legal, accounting, or other professional advice. The services of a competent professional should be sought if legal advice or other expert assistance is required. Newsletter Home | HarmonCurran Home |