Guest Post – Enrico Schaefer (Dronelaw.pro)

There are certain mission critical skills that every drone pilot must know in order to get off the ground. Some are obvious. Of course, you need your aircraft, remote controller, payload, Remote Pilot Certificate and you must comply with Part 107 during flight operations. You also need to successfully market your UAV services and secure customers willing to pay you for commercial UAV services.

However, many drone service companies fail to consider a mission critical issue at the very core of their business model, copyright law. UAS service companies sometimes wrongly assume they are “selling” the drone pictures, videos and data to customers. They are not. The photographs, video and data captured by drone operations are copyright protected under U.S. law and are almost always “licensed” – not sold – to customers.

Professional UAV service contracts between drone service companies and their customers should be drafted to include at least two sections. The first section of the UAV customer contract should address service terms (day or hourly rate for flight services, insurance requirements, FAA Part 107 compliance, deliverables, etc.). The second, and arguably more important section, should address the copyright licensing terms (the license fee for the use of the pictures, video and/or data, exclusivity, license duration, reserved rights, prohibited uses, term and termination).

Drone pilots and UAS service companies need to incorporate copyright principles in all aspects of their business operations, from employee and contractor agreements, to customer service contracts. We have communicated with over 5,000 aspiring drone pilots and represent over 200 drone companies nationally. Because many Part 107 operators come from market niches with little or no intellectual property background, copyright law is often overlooked. Based on the thousands of conversations we have had with drone operators, we believe that copyright may be the single most overlooked risk, and opportunity, in the UAS market.

Copyright Basics For Drone Pilots

The photographs, video and data output are protected by copyright law. Because drone pilots are primary dealing in digital photographs, videos and other data output, they are, by their very nature, intangible property. Unlike real world widgets, which can be touched, felt and physically handed from buyer to seller, intangible property cannot be transferred hand to hand. Copyrights can be either be assigned, or licensed, between contracting parties. But only by a party with ownership or rights in the copyright protected works.

The terminology surrounding copyright is as mission critical to drone operators as the Part 107 terminology which defines the regulations. It is important to ‘speak the language’ of copyright in order to protect the works and transfer some, or all, rights in that work to customers. Under U.S. copyright law with vests to wonder of the copyright with important exclusive rights, which include:

The right to reproduce the work
The right to prepare derivative works
The right to distribute copies
The right to perform the work
The right and to display the work publicly

These rights can be transferred from the copyright owner to third parties (including customers), in whole or in part, either by license or assignment. The first important issue is always “who owns the copyright.” To the surprise of many drone operators, the copyright is often not owned by the company who paid the pilot to obtain the photos or video. Sometimes, the copyright is owned, by default, by the contractor pilot, the camera operator or the person doing post-production work on the output. U.S. copyright law often provides default ownership to the person taking the picture, not the company hiring the person taking the picture. Unless copyright ownership is defined by contract, there is copyright risk for everyone involved.

Who Owns Your Copyrights?

Many drone service companies fail to appreciate that, absent a contractor which states otherwise, the person taking the photograph, video or capturing the data is, in fact, the copyright owner. If the person capturing the works with the drone is not the company itself, but instead a contractor or partner, then the drone services company may not be the copyright owner. A work-for-hire agreement may, or may not, vest copyright in the service company, rather than the photographer or production editor. The first order of business for every drone service company is understanding the relationship between the drone service company and the employees, partners and contractors. Drafting appropriate personnel contracts to make sure copyright is vested in the correct party, before attempting to license rights to a customer, is critical.

Copyright Laws – A Drone Company’s Best Friend

I always tell drone service companies that they are extremely lucky to be in the copyright business. Copyright law strongly protects and favors the copyright owner and provides nearly infinite ways to transfer some, or all rights, to a customer. Imagine selling a single widget, which could be morphed into a thousand different types, colors and sizes with a simple change of contract terms. Imagine being able to sell that widget profitably at infinite price points depending on customer budget. Copyright law provides copyright owners all these advantages, and more. If you started out being concerned about understanding copyright law, you should now be excited about the opportunity copyright affords all drone pilots and service companies.

Copyright Licenses Protects Customers

Drone pilots need to educate customers that copyright licenses are protect the customer just as much as the service company. Failing to identify the scope of the copyright license (or assignment) in writing as part of the sUAS Service Agreement, creates serious risk for everyone. No one in the drone series food chain should be relying on undefined and undocumented ’implied copyright licenses.’ Those risks include:

– If the copyright owner’s understanding of the customer expected use is exceeded, the copyright owner can sue the customer for infringement.
– The copyright owner has broad rights to terminate copyright licenses especially if they are implied.
– If someone uses your copyright protected work outside the scope of the license you have granted, or without permission, that person will likely owe the copyright owner a royalty even if the infringement is innocent.
– U.S. copyright law provides for statutory damages (similar to punitive damages) and attorney’s fees for willful infringement.

While there are some defenses to copyright infringement, such as fair use or abandonment, copyright law generally favors the copyright owner and requires a reasonable royalty to be paid for commercial use.

Because copyright law so heavily favors the copyright owner, the customer will be in an automatic and serious disadvantage if there is a dispute. As a result, any knowledgeable customer of drone services should demand a written licensing contract which details the scope, allowed uses, limitations, duration and territory of the copyright license for which they are paying a fee.

You Can “Slice and Dice” Copyright Licenses a Thousand Different Ways

The most fundamental advantage of copyright for both the drone service company is that a copyright license can be defined in virtually infinite ways. Copyright licenses may provide exclusive or non-exclusive rights to use the works. The license can be assignable or non-assignable. A copyright licensee may, or may not, have the rights to reproduce the works, prepare derivatives of the works, distribute the works, display the works, make modifications to the works, sell the works and several other possible limitations. The territory for use can be defined geographically. Prohibited uses can be defined in the license agreement. The license can be indefinite or for a period of time.

The Very Best Thing about Copyright!

When I talk to drone pilots and operators about drafting customer contracts which divide the ‘drone services’ from the ‘copyright license,’ I always stress the best part about being in the copyright licensing business. Copyrights allow drone operators to ‘up-sell’ and ‘down-sell’ customers based on budget. A single drone shoot can be licensed dozens of different ways, and at many different price points.

A customer that has a very limited budget will often get a very limited license to use the works. A real estate broker paying $150 for drone 15 drone photographs and 15 minutes of video is typically going to receive limited rights in the works. It is typical in real estate to provide a non-exclusive license in the works only to market the sale of a specific property, and only for the duration of the listing agreements with the homeowner. All other rights are reserved to the drone operator. If the homeowner changes agents or terminates the listing, the drone service company may be able to license those same works to the next agent. Alternatively, the drone service company could license the photographs to the home purchaser who may want to frame it home. A real estate agent with a much larger budget, can obtain rights in the works which meet the requirements of their business purpose, such as uses which include marketing materials (brochures, website, etc.). If a customer wants more rights, the drone operator can add more license rights, creating a sense that the customer is getting more value for the money. Some customer with larger budgets may want to obtain an outright assignment of the copyright, essentially becoming the copyright owner.

If a customer indicates that their budget is currently limited, the drone operator can provided a limited license which accomplishes the specific purpose of the customers, but allows that customer to come back and license more rights later. Typically, the drone operator is going to reserve rights in the work which allow the drone operator to re-use, re-sell or retain the right to use the photos and videos for their own marketing purposes. As the market matures, customers will have less leverage in these transactions providing a solid foundation for drone operators to license fewer rights, and retain more rights, in the works.

A Final Word about Professional Drone Service Companies

The industry is quickly waking up to the harsh reality of uninsured, unprofessional “fly by night” pilots offering foolishly low prices. The market should eventually mature into “professional” drone services and “fly by night” services. It is up to professional drone service companies to educate their customers on Part 107 requirements as well as industry standards in order to maintain a market advantage and deter customers from hiring cheap unprofessional labor. In other words, customers must be taught that there are other important considerations besides price.

We can all help the market mature by employing a few basic principles. The first is that drone operators must present and market themselves as “professional.” Your interactions with customers must show that you are going to do great work, and protect the customer from liability and other risks. Here are some tips:

– Telling customers that you fly fully compliant with Part 107 is great, but also providing them reporting on your flight operations is much better.
– Telling customers that you have drone insurance is great, but providing customers with your certificate of insurance is significantly better.
– Part 107 doesn’t require you to provide a notice or obtain permission from neighboring property owners, but doing so reduces the risk to customers of a lawsuit for invasion of privacy, trespassing or other complaints from neighboring property owners. Mark sure customers understand their risk, and that your company protects them from those risks.
– Quoting your customers a price is not enough if you want to perceive as professional. Your contracts need to be designed specifically for UAV operations and make customers feel safe, while also protecting your rights.
– Tell customers early, and often, why working with you team of professionals is the only way to fly. When the fly by night operator comes through the door with a lower price, red flags will arise immediately in your customer’s mind.

What Do Your Drone Contracts Say about Your Company?

We design low-price, high-value drone contracts for drone operators which are specifically designed for UAV operations. From sUAS service Agreements (customer contracts), Copyright Licensing & Assignments, Pilot Work for Hire Agreements, Trademark Registrations, Copyright Registration, Website Policies, LLC filings and Notice of UAV Operations Forms (notice to neighboring property owners), we have you covered. We also offer free video training to help pilots obtain Airspace Authorizations in Class B, C, D and E airspace, as well as Part 107 Waivers so you don’t have to hire an attorney. Feel free to contact us to see how we can help you grow your UAS service business.

http://dronelife.com/2016/10/18/copyright-law-mission-critical-drone-service-companies/