Episode 235 — Seth Polansky — IP Lawyer

 

EPISODE 235 — SETH POLANSKY — IP LAWYER

Seth C. Polansky, a contracts, intellectual property and start-up specialist founded his professional firm in 2005. Seth Polansky LLC is a small law firm specializing in art, contracts, corporate, and general personal affairs. Based in Silver Spring, Maryland, Seth Polansky LLC accepts clients from around the world regarding contract, art and IP issues.

As an adviser and counselor to business, Seth has repeatedly negotiated successful outcomes with domestic and international entities – including the US government, UK government and multiple state agencies. He has counseled small businesses and artists in securing copyright, trademark and other intellectual property protection, and aided them in navigating contracts. He has helped countless families by securing their peace of mind through wills, trusts and prenuptial agreements, and has offered assistance with disputes.

His professional highlights include being a General Counsel for Cellcrypt, a multinational conglomerate and leading provider of voice encryption technology; working as a Director of Contracts for one of the world’s largest tech companies CSC; and serving as a Deputy General Counsel for The GAVI Fund, a nonprofit funded by the Bill and Melinda Gates Foundation.

Seth is a LinkedIn Learning author. He teaches a Contracting for Creatives Course on Lynda.com. He is also an Executive Producer of documentary Eye of the Beholder: The Art of Dungeons and Dragons.

In this Podcast, Seth talks about the most common mistakes artists make in negotiating contracts, explains what makes a valid contract — and gives resources for one; breaks down the rules of fair use, covers some of the IP laws and many other topics.

The Law Offices of Seth Polansky: http://www.sethpolanskylaw.com/
Seth Polansky at the Norton Law Firm: https://www.linkedin.com/in/sethpolanskylaw/
The Norton Law Firm Website: www.thenortonlawfirm.com
Seth Polansky’s Contracting for Creatives Course: https://www.lynda.com/Business-Skills-tutorials/Contracting-Creatives/508540-2.html
Eye of the Beholder: the Art of Dungeons and Dragons: http://www.eyeofthebeholdermovie.com/
Eye of the Beholder on Amazon: https://tinyurl.com/ux42p5k
Women MTG Stream: https://www.facebook.com/CovenMTG/?rc=p

HIGHLIGHTS

[04:58] Introduction
[05:25] Seth Talks About His Inspiration for Going into Entertainment Law
[09:02] Why Artists are Allergic to Business and Contracts
[11:52] The Most Common Mistakes and Misconceptions that Artists Make
[15:21] Corporate Contracts and Brand Management
[18:32] How Binding are Non-Compete Agreements?
[20:49] Explaining the Leniency of the Intellectual Property Clause
[23:48] International IP Laws
[24:39] Understanding the Infringement of Fan Art
[33:12] Infringement on Instagram
[36:16] Breaking Down the Rules of Fair Use
[38:59] Rules of Crediting the Copyright in Your Portfolio
[41:37] Is Email Considered a Binding Contract?
[42:00] Definition of a Valid Contract — and Resources on Where to Find One
[45:55] Explaining “Risk Shifting” and How to Protect Yourself
[48:20] Seth’s Online Course: Contracting for Creatives
[49:22] Additional Resources

INTERVIEW WITH SETH POLANSKY, IP LAWYER

Hi, Everyone! This is Allan McKay. Welcome to Episode 235! I’m sitting down with Seth Polansky who has a law firm that focuses on IP laws, contracts for artists, copyright laws. He is the guy who is on our side. This is the Podcast that any and every creative has to listen to!

I had so much fun chatting with Seth. I didn’t want this interview to end. I had a film crew shooting a day-in-the-life type of profile. But I had to kick them out and do this interview with Seth who has a lot of artists as clients. We talk about is journey from being a musician to being an IP lawyer, international IP laws, rules of fair use (which everyone seems to be throwing around quite a lot), corporate contracts and so much more! I definitely learned a lot from this interview.

Please share this Episode with others. That would mean the world to me!

Next week, I will be talking about your side hustle, how to leverage your skills to make money on the side.

Let’s dive in!

FIRST THINGS FIRST:

[01:08] Have you ever sent in your reel and wondered why you didn’t get the callback or what the reason was you didn’t get the job? Over the past 20 years of working for studios like ILM, Blur Studio, Ubisoft, I’ve built hundreds of teams and hired hundreds of artists — and reviewed thousands of reels! That’s why I decided to write The Ultimate Demo Reel Guide from the perspective of someone who actually does the hiring. You can get this book for free right now at www.allanmckay.com/myreel!

[51:01] One of the biggest problems we face as artists is figuring out how much we’re worth. I’ve put together a website. Check it out: www.VFXRates.com! This is a chance for you to put in your level of experience, your discipline, your location — and it will give you an accurate idea what you and everyone else in your discipline should be charging. Check it out: www.VFXRates.com!

INTERVIEW WITH SETH POLANSKY

[04:58] Allan: Thanks for taking the time to chat! Do you want to quickly introduce yourself?

Seth: Sure! My name is Seth Polansky. I run The Law Offices of Seth Polansky at http://www.sethpolanskylaw.com/. I’m also a Partner at the Norton Law Firm. We do a lot more corporate work on that side of the house. In my private practice, I represent a lot of artists, musicians, illustrators. I do some of the corporate work on the Northon side.

[05:25] Allan: That’s so cool! What’s your background? You do law but you’re also a creative person. I think it’s great what you’re doing. How did you get started?

Seth: I went into law school because I wanted to play in a band for another 2-3 years while everyone else was heading to grad school. I figured I’d move to DC with my band and we’d all go do our grad programs. I’ve been a performing musician for most of my life. My wife and I make indie films. We do lots of kind of things. I’m starting to get involved in the streaming world. I host the Women Magic the Gathering Stream on Thursdays: https://www.facebook.com/CovenMTG/?rc=p. The whole story is that I’m geek, I’m a nerd, I’m a musician. If I can make a living doing law that’s involved in all those things — the better!

[06:41] Allan: That’s great! Do you think it’s out of necessity that you know some of the struggles that artists are going through — or the mistakes and misunderstandings — that drove you to represent them?

Seth: Yeah! I thought I wanted to be an international lawyer. Ooh, very sexy! But there is no such thing as international law because each country has its own law. Out of law school, I went to State Department. I was working in the passports legal office. I was taking away passports from a grandma who was a Mexican citizen and she probably shouldn’t have one. And it wasn’t very fun at all! I managed to parlay that into a position at an IT company. I did that for a while and I came to realize that entertainment law is all contracts! The entire industry runs on contracts, be it contracts or NDA agreements, etc. Everything in the entertainment business runs on contract! I figured I could make money on the corporate side and help my friends because quite frankly, artists don’t have money. And by the time they do have money, they’ll go to a huge law firm in LA or New York. I thought I’d get in on the ground floor as the artists are growing and hopefully, they take you along for a ride.

[08:22] Allan: It’s kind of like Spiderman: Protecting the little guy!

Seth: Somebody’s got to do it! No one is going to help people who need trademark work for free. At the end of the day, it’s not that difficult. You can teach someone to do it pretty quickly. I’ve taught a couple of my clients and they can do it themselves now. If I teach you to fish, you can do it for the rest of your life. I’ve helped you and it’s not that much money out of my pocket.

[09:02] Allan: In general, creative people tend to be allergic to the business side. A lot of artists when they do land work, they’re afraid to rustle the bushes and protect themselves in a formal way. Do you feel that’s a common practice?

Seth: [09:26] I mean, reputable companies will give you a contract. If you aren’t being given a contract and there is just a handshake, it’s not a reputable company. That’s all there is to it! Or there is some plan in place to screw you, or not pay you on time — and they don’t want to have to document that. There is a lot of anecdotes to the old days of Marvel and about their artists getting paid when they filed a lawsuit. It was “payment upon lawsuit”.

[10:12] Allan: I’ve definitely experienced that where there were projects where all the milestones were set, but the final payment wasn’t mentioned. Suddenly, you’re hearing terms you haven’t head before. When you anticipate that, it affects other people’s lives.

Seth: And there are so many games that corporations play. “Oh, that’s not a proper invoice!” There are other things that I put into contracts like: Title doesn’t pass until full and final payment is received. Which means, you’re still owning it. That way if it ever gets used, it’s an infringement!

[11:25] Allan: That’s so brilliant!

Seth: There a situation a couple of years ago, with a car dealership in DC that used a commercial that hadn’t passed that clause. So anytime it aired in the DC area, Maryland or Virginia, it was an infringement. It was triple damages too.

[11:52] Allan: What are the common mistakes or misconceptions that artists make?

Seth: Not having a contract! That’s a big one! It happens everyday. “Oh, well, I have an email!” Well, that’s probably your contract but it says nothing about payment terms, approvals or rounds of revisions. That’s the other thing that corporations do. Blizzard refuses to put rounds of revisions in their contracts. If you do art for Blizzard, you work until they say you’re done. And you can’t even submit your invoice until they state that it’s accepted work.

[12:57] Allan: So they technically could come back 6 months later and say, “Hey, there is a slight change” and they push it back.

Seth: Or they just make you do it 40 different times. It’s awful! To answer your question, people forget to put down rounds of revision. It’s due on this date. What happens if a company doesn’t like [your work]? Is it over? Do you get rounds of revisions? How long do they accept it until you have to submit it again? How long until you close the door and say, “It’s done and you have to pay for it”?

The other thing is payment provisions without “teeth”. It’s all well and good to say you’ll get paid in net 30 days. Okay, that’s great! What if they don’t pay you in 30 days? What are the “teeth”? What happens if they don’t pay you on time?

  • You need to put down the interest that accrues daily.
  • You need to put a late payment penalty.
  • You need to put down recovery costs: If you have to go hire an attorney to get paid, you have to pay for it.

Those are the three things that really stop people from getting paid. [14:21] There is a lot of common mistakes but the big ones are:

  • Rounds of revisions;
  • Acceptance rejection criteria;
  • Payment terms.

There are other things I like to talk about: limitational liability and indemnification. These are for small artists, one person shops creating an asset for something and getting asked to provide million dollar insurance policy that’s going to cost them, $1,500, naming a big company as the insured — that’s just overkill! If you’re hiring someone to do art, you can ask them to indemnify you; but realistically, what are you going to recover from them? Are you going to get a million dollars from that artist?

[15:21] Allan: In my experience, Blizzard and Disney are the two most corporate places.

Seth: That’s a polite way to say it! I would use the word “rapacious” but that’s okay.

[15:35] Allan: I once put Blizzard’s logo on my website as one of my clients. Their lawyers told me no one could have their logo on their site but their own.

Seth: Those are general terms and conditions that I see in many contracts. Think about it: Disney, Marvel (well, that’s the same company now), they pay people millions of dollars to manage their brand. Putting their logo on your website is not giving them any exposure. They manage their brand with an iron fist. That’s always under terms and conditions that you cannot use their logo without their permission. I guarantee it’s in your contract with them!

[17:10] Allan: When I worked at Lucas, I noticed that they had a term “we own your likeness”. Forever. It’s a scary thought!

Seth: Oh, it’s awful! It’s in the IT industry too. If you’re a developer and you go work for a place like Lockheed Martin, there is a non-compete in that contract you’ve signed that states that they own everything you do while you’re there. Corporate America is a huge problem! Without getting political, the person I’m following in this election understands corporate America and tax law in this country. I identify with that! Try to explain stock buyback to someone in Middle America and their eye glaze over 3 seconds into the conversation. Corporation have way too much power in the world right now!

[18:32] Allan: In terms of non-compete, how binding is that? I remember when I was 19, there were only 3 studios in my city but you had to sign these non-compete agreements. They used it more as a scare tactic.

Seth: It depends on which state you’re in. California is employee friendly. All the red states are “fuck you, human beings — corporations rule everything” places. If you’re in a Southern state, good luck with that! It’s enforced more vigorously there. I can tell you in Maryland, Virginia and DC — where I have clients — you have to worry about 3 things:

  • It has to be limited in time.
  • It has to be limited in geography.
  • It has to be limited in the industry.

You can’t tell someone they can’t work in their industry for 2 years — anywhere! But you can’t work within 25 miles, [for example], of their corporate office for a year in this industry. It’s basically telling people they have to move if they want to keep their careers.

[20:15] Allan: You literally have to change your entire life just because there may be another job down the street.

Seth: But again these are contracts and they’re always negotiable. But you have no leverage at that point. But then again, people really don’t want disgruntled slave labor employees. There is a lot of ways that you can legally sink someone’s business by being inept.

[20:49] Allan: The other thing that I brought up is the other clause: The company owns the IP even if you were to make a course or build an app, in your spare time, on your own equipment.

Seth: It’s terrible. California has the law that you cannot do that. There is actually a Silicon Valley episode about that. But there are some companies that have that draconian language: “It’s ours, no matter what you do!” It’s terrible! It goes against the basic foundation of the US! Again, corporate problems! We’ve seen some fast food corporate restaurants requiring their employees to not compete. A lot of other countries think we’re insane for doing that.

[22:34] Allan: It’s scary how lawsuit friendly we are. It doesn’t mean you’re a bad guy!

Seth: One of my clients posted on her blog some pictures she was inspired by. It was a clear use exception. I got a letter from a troll attorney in Germany threatening to sue me. I wrote him an email, “If you sue, we will move this suit to the US and a court that understands fair use and the word ‘IP troll’.” I actually got to write that. I haven’t heard back from them!

[23:48] Allan: How does this work internationally? Say, you do have someone in Bulgaria using your material. How liable are they?

Seth: Good luck trying to sue in a foreign country! Unless you have an unbelievable amount of money and resources, you’re just not going to win! Your best bet is to go after the host and the hosting company. If you have 30-40 people complaining to your ISP, there’s going to be a problem.

[24:39] Allan: One of the things we’ve talked about is fan art. When I was 15, one guy was explaining it as, “As long as you modify something by at least 25 percent — it’s yours!” Even then I thought it wasn’t right.

Seth: How do you modify something by 25 percent?

[25:15] Allan: Oh, you cut off the arms and give them cyborg arms.

Seth: I can’t fathom someone making art and saying they only changed it by 25 percent. It’s like that old sampling argument: “I can use 7 seconds of a song for free”. Anytime I teach an IP class, I hear that. Can you reach into the cash register and just take 7% of the cash? No! It’s not yours, you can’t use it!

[25:08] Allan: There are misconceptions about this. The biggest place to see that is at any Comic Con. People think it’s fine.

Seth: Well, it’s not. Fan art is a violation of copyright. No one wants to be told their business model is based on theft. There is a fun story about Bob Kane (Co-Creator of Batman) who was sitting across from someone selling a piece of Batman art. Bob Kane himself wasn’t allowed to sell his art of Batman. Anyway, he had that person ejected! It happens everyday. I’ve drafted an agreement for artists alleys many times but most people don’t read what they’ve signed. If they’re selling anything that’s infringing and the convention gets sued, they’re going to have to pay for that lawsuit. Can you imagine? It would be ruinously expensive.

[27:40] Allan: So why do people do it? They think they’re small enough and no one would go after them. But what happens to those small people? Are they’re just too small?

Seth: That’s part of it, the size of the infringer. They may not want to get a black eye. I have some clients who get cease and desist letters. Disney, Sony, they all have lawyers and council. One of my clients runs a Harry Potter convention. It was called Potter Verse. The [studio] claimed they owned anything with the word “potter”. It was ridiculous! But here is the kicker: After changing the font (that looked too similar to the film’s), I congratulated her on the Harry Potter pop-up bar that was going to be open in DC that weekend. You could hear the sigh when the studio attorney said, “Could you send me the link please?” It’s not just the little people who have to deal with this. Big studios do too! Their attorneys have to send out a cease and desist, to make sure infringement stops.

[29:42] Allan: In that case, if you think you’re small enough, could you risk it?

Seth: I wouldn’t. You don’t want to be the canary in the coal mine. That’s your big risk. You’re going to offend the wrong person. How cost effective is it to pursue that case? You never know what’s going to trigger a big studio to go after you!

[30:25] Allan: Is that the case that big studios take ownership of everything. I had a tv show I was going to do and we wanted to make the hologram of a live action figure that the winner designed. My friend, who designed the hologram of Tupac at Coachella, advised me to not do it. There are two people in California that think they own anything to do with holograms.

Seth: They’re called “slap suits”. They’re meant to stop you from doing what you’re doing. They’ll go get an injunction and the suit will drag on for a year. By the time that year goes by, the timeliness of what you wanted to do has passed. It’s back to the shitty nature of corporations.

[31:41] Allan: Man, it’s a scary place! It’s about whoever has the biggest wallet or the most ferocious lawyers.

Seth: It’s not just on the corporate side. It’s interesting to see startups be willing to take risks with IP. There is a fun dude who was a douche bro. He was teaching people how to set up Shopify shops. He was so angry that he got sued by Porsche, he stole the photo. It was the artist’s fault according to him. Everyone is crappy when it comes to IP.

[33:12] Allan: What about non-commercial stuff? There are people who post fan art on Instagram. Is that perfectly okay?

Seth: [33:24] No! What people don’t realize is that the creation of the infringing art — is the infringement. It’s not whether you sell it or give it away. If I draw a Spiderman and hang that art in my bathroom, the drawing of Spiderman is the infringing act. The chances that Marvel comes after me are zero. But it’s little for Instagram to host your artwork. You can do it BUT: It is functionally a violation of the copyright of another party.

[34:16] Allan: And you might get a C & D but that’s the worst that can happen. It’s rolling the dice.

Seth: Blizzard just came out with a new student art contest. I just read the Terms and Conditions. Blizzard owns everything you submit, whether you win or not. They own that artwork! Think about that! What a great way to get free artwork!

[34:56] Allan: And it’s happening more and more. I was in Vegas and UFC saw my Instagram and invited me for a tour. I remember it got flack a while back for submitting artwork. A lot of people just wanted to submit their stuff, but it’s thousands of dollars worth of free material.

Seth: Absolutely. It’s terrible because it preys on younger creatives and they don’t know any better. That’s why I exist, or people like me exist.

[36:16] Allan: What about Fair Use? Does that play into this at all?

Seth: Sometimes, it does. There is the concept of amount of substantiality: How much of the original material did you use? There are so many different exceptions that apply. The biggest one people use is the news exception. That’s why documentary films exist. I don’t need someone’s permission to do a doc because I’m breaking news. The gentleman who made Supersize Me, his lawyers made him get a writer on one thing: A lawsuit by McDonald’s. They declined to participate in the documentary but they did sue. Had he not had that writer, he would’ve gotten destroyed. He would’ve had no money left to make the film. Fair Use is a dangerous, dangerous thing. Even if you have a Fair Use exception to someone else’s copyright, you can always be dragged to court to prove it. At the end of the day, you can blow $50K of your production budget to have a judge say, “Go ahead and use it!”

[38:07] Allan: Is there a chance for you to sue them back for those losses?

Seth: No. Functionally, Fair Use is a violation of their copyright. Whenever someone writes an article online, they’re full of crap when they say, “I have the right to Fair Use”. You have an exception to someone else’s copyright. You’d be surprised how many people want to argue about what Fair Use is!

[38:59] Allan: If an artist uses art by other people but they use the disclaimer, it that okay?

Seth: You have to have permission by the original person. Let’s say you want to make an art book. Ninety percent of that art is not personal — it’s been created for a client. When you do your copyright filing, you need to go get permission from all of those places. You have to actually prove you have that permission. When you publish that book and it has a painting for Marvel, you will be sued. They will stop you from distributing it. We’ve discussed this: A lot of this depends on what your relationship is with the company for which you created that art — and what your relationship is with the people there. How good is that relationship? I take it Neil Gaiman has a great relationship and no one is going to shoot the goose that lays the golden egg. But it’s the little guy. Certain people should not do that. There are artists who have problems with some conglomerates and they should not do that.

[41:37] Allan: In terms of artists protecting themselves, is email considered binding (over a phone call, let’s say)?

Seth: [42:00] To have a valid contract, you need to have an offer, an acceptance and a mutual inducement and consideration. If you have those those things — Someone offers, someone accepts and we both understand each other, and there is a value exchanged — that is a contract! If you write it on the back on a napkin, it’s a contract. That’s why lawyers always tell you to never sign anything at the scene of an accident. That’s a release! You’re releasing the other person or admitting guilt. Yes, your email can be a contract but the problem is you need to [also address]: What are you payment terms? What are your indemnification obligations? Are there NDA requirements? Most reputable companies don’t do that. Fifty percent of the cases I deal with are with creatives that made a handshake deal. FIFTY PERCENT! My first question is, “What does the contract say?” And they hang their head: “I don’t have one!” And I have my moment of Bad Artist, but what can you do at that point? Show me all the communication and I have to go do forensic work.

Eventually, at the Norton Law Firm, we will have some standard contracts for people to use. I am not your attorney if you use these contracts, I disclaim all liability — but they will be standard. Most contracts you find online are worth nothing. We will put up some standard contracts. I will set up a quote. Here is your quote and there is fine print at the bottom. Choice of law is another one! If you live in Ohio and your suit is California, you’re flying to California just to get paid! You have to hire a California attorney.

[45:32] Allan: What do you think is the value of someone reiterating everything you’ve agreed on — but in writing, over email? “This is what we talked about; this is what we agreed on. Fire me back an email and let me know it’s all cool.”

Seth: Yeah.

[45:55] Allan: Let’s say a person hires you to do a commission piece of a celebrity that’s copyrighted. Who’s liable in that situation?

Seth: This is what we call “risk shifting”. In the contract, I would say, “You’ve hired my client to do this. You certify that if the license turns out to to be false, we shift the risk.” If the artist gets sued, but you can hold up the contract and say, “You can sue me but that guy has to pay for the lawsuit.” You should be suing that guy too.

[46:46] Allan: We have a mutual friend in this situation. Is it the artist or the client who’s responsible?

Seth: You created it! Here is what’s going to happen: The company is going to sue whoever is going to have the deeper pocket. It’s probably going to be the person who paid $25K for a piece of art. I would be very weary though! It is way better (maybe it’s my white male privilege talking) to pay someone $350 for my time, to look at your contract. Because it’s going to cost you a lot more down the line. Hiring me beforehand is preventative maintenance.

[48:20] Allan: I hope people know now that they can turn to someone, to prevent a lot of headaches. They can go about it the right way.

Seth: I should plug my Lynda: It’s a LinkedIn class on Contracts for Creatives. It’s a 90-minute class and I walk through a creative contract from start to finish (https://www.lynda.com/Business-Skills-tutorials/Contracting-Creatives/508540-2.html).

[49:22] Allan: Let’s go put out a wealth of material so people understand why they should hire you. Where else can people find you?

Seth: I’m on Facebook, Instagram. Also, http://www.sethpolanskylaw.com/
and at the Norton Law Firm: https://www.linkedin.com/in/sethpolanskylaw/. Right now, let me mention some other projects:

– Eye of the Beholder: the Art of Dungeons and Dragons: http://www.eyeofthebeholdermovie.com/. We make indie documentaries and this is the first documentary we made. It’s on Amazon right now.
– We also just inked a deal to make a documentary on Magic the Gathering. That one will be out in 2 years.
– Every Thursday night, we do a live stream: https://www.facebook.com/CovenMTG/?rc=p.

[50:52] Allan: Thanks for doing this, man! You’re going to save a lot of people’s lives.

Seth: Thanks!

I want to thank Seth for taking the time to chat. If you have a burning question, please email me at [email protected]. Please make sure to share this Episode around.

And make sure to hire Seth!

In the meantime —

Rock on!

 

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