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Tuesday, August 26, 2014

New Massachusetts law limits subcontractor retainage to 5%

Andrew Lynn, Esq.
Massachusetts Attorney

Massachusetts passed a law this month limiting retainage of payments to subcontractors to 5% of the subcontractor’s price.

Retainage is the withholding of a portion of a subcontractor’s payment until completion of the overall project - or even months later - and is common practice even when the subcontractor’s work is finished at an early stage of construction. Currently, a normal operating procedure in the industry is to withhold 10% of the subcontractor’s fee. (In fact, on some projects controlled by federal regulations, 10% is required.) Developers and contractors say that this withholding is necessary leverage in case a problem is found after the subcontractor’s task is complete, and the subcontractor must be called back to repair or finish the work.

So, for example, if the subcontractor is involved in the foundation or steel framing, and finishes the work one year before completion of the project, that subcontractor must wait that year - while plumbers, electricians, finish framers, drywallers, lighting installers, masons, landscapers, etc., etc., finish their tasks, before receiving the final payment. Subcontractors argue that this withholding is unfair, because the subcontractors incur labor and materials costs at the time they perform the work and need those payments if they are to make any income. They also argue that retainage is not necessary, because good relations with contractors and developers are fundamental to their business and the need to keep their clients happy is enough incentive to bring them back to a job site.

The new law takes effect in November. It applies to projects costing $3 million or more, and sets a timetable for subcontractor payments. While the ripple effects have yet to be seen, the halving of retainage will have some effect on the cost of financing, as owners, contractors and developers will have to be in possession of a larger percentage of their funding at an earlier stage. Whether the decrease in retainage will cause a corresponding increase in the number of subcontractors who refuse to return to an old job is yet to be seen.

As always, these are just introductions and overviews, not legal advice. If you have specific questions, or need a new contract, talk with a lawyer. I am a Massachusetts attorney and I default to Massachusetts law; some of the information in my blog posts will inevitably be incorrect in other places.

Monday, August 18, 2014

Copyright authorship and the curious case of "monkey selfies"

I almost titled this post: "Monkey selfies" prompt new editions of law school textbooks, profit projections soar.

The latest hot IP story is about the copyright status of “monkey selfies” - which are, as the name implies, self-portrait photographs shot by monkeys.

I’m a sucker for a good copyright law head-scratcher, so here’s an overview of the situation and my take on it, as a lawyer and a photographer who’s not involved.


I’m casting my vote for the photographer, though not for the reasons he states. To explain my reasoning will take a page or two of explanation, because this is really more complicated than either side would have it seem.

The back story:

UK-based professional photographer David Slater traveled to Indonesia to photograph wildlife. While he was setting up a shoot of some crested black macaque monkeys, one of the monkeys used his camera to take more than 100 photos, which included a couple of very marketable selfies.

Some details are unclear. In one version of the story, Slater was setting up for the shoot when the monkey, acting on its own (and surprising Slater), picked up the camera and started shooting. In another version, Slater was trying to get the monkeys to take selfies by first spending days befriending the simian locals, then setting up the camera and enticing them to play with the shutter release.

The photos were published, in print and online, with Slater’s permission, back in 2011 and 2012.

The controversy:

A Wikipedia user uploaded two of the monkey-taken shots to Wikimedia Commons, an open-source sharing site affiliated with Wikipedia. As I write this, the images can be seen there at the Macaque page. Wikimedia believes that there is no copyright violation. In the words of the image caption:

This file is in the public domain, because as the work of a non-human animal, it has no human author in whom copyright is vested.

Wikimedia has a simple argument: The monkey pressed the shutter button, therefore the monkey is the photographer. A nonhuman can’t be an author, therefore no copyright was created when the photo was shot, therefore it is public domain and they can use it freely.

Slater disagrees with this assessment. He says that he’s been trying to get Wikimedia to remove the image, but failed. Recently he’s gone public with his complaint, and has told the British media that he’s registered copyrights to the images in the US, has a US lawyer and may sue Wikimedia in the US. He has argued that Wikimedia’s theory is untested, and their actions have damaged his ability to generate income from his investment in camera gear and travel.

The law:

Note: The following is not “legal advice”. It’s just an overview for educational purposes only. Laws vary by state, province and country. If you have a specific concern or legal matter, please discuss it with a lawyer licensed in your jurisdiction. Although Slater is British, I am using US law here because indications are that he is planning a lawsuit in US federal court.

This controversy centers on the creation of a copyright. Two key points:
  1. A copyright is created when an author creates an original work.
  2. The initial owner of the copyright is the author.

The problem with Slater’s argument:

Simply put, a theory that copyright is vested in the person who can profit from a work doesn’t hold water. Although one of the aims of copyright law, and intellectual property law in general, is to reward investment in creating works (and inventions, and brand recognition, etc.) that is not the end of the discussion. To receive copyright rights, one must author a work. Slater must argue that he is an author of the photos.

The problem with Wikimedia’s argument:

Wikipedia incorrectly assumes that there is only one possible “author” of a photograph, and that’s the photographer, which is to say the person who presses the shutter button. No human shutter-presser, no author, therefore no copyright.

But that’s not what the law says. The law does not grant copyright only to the photographer, or to a person who accomplishes a physical act to create a work (such as pressing a shutter button). The copyright statute - the law as written by Congress - grants a copyright to anybody who has authorship of a work (including joint authors, and even people and companies who hire others to create works for them).

Deciding whether a person who participated in the making of a work is an author is actually not a simple matter, but the courts have provided guidance.

One way that a person who did not perform the instant act of creation may be an author is by providing the “original intellectual conception” of the work. For example, a director who gives a crew storyboards and instructions on camera angles and shots to take is an author of the resulting footage, even if he does not handle a camera. See section 2 of this case, where the director was not even present at the filming. (It was a documentary on the Titanic and the director is not a submarine operator.)

By another theory, when multiple people participate in the creation of a work but one is identifiable as the “master mind” or “superintendent” (e.g. a movie’s director) that person is the author.

But even in a case where there is not such a clear relationship between creators as that of a director and a minor contributor, so as to allow one person to claim to be the author, a person who makes a creative contribution to the work can claim to be one of the authors. This is what is meant by “joint authorship”, and each joint author independently owns a share of the copyright and has the rights of an author.

It’s in the details:

So here it is important to distinguish between the differing versions of the story of the photographs’ creation:
  1. If the monkey picked up the camera off the ground and started snapping, Slater can’t claim to have made the original conception of the photo, or to have been the mastermind of the work. In this case, Wikimedia is correct: the monkey is the author, but copyright can’t vest in a nonhuman animal, so there is no copyright and the photo is in the public domain.
  2. If Slater set the scene and prompted the monkey with the intent that it would take the photo, he could make a good argument that he did make the original conception of the work, or was the mastermind, and therefore is the author and owns the copyright.
  3. But even if Slater’s work is not sufficient to make him the author, by conceiving the monkey selfie concept and setting up the scene he is probably an author, along with the monkey. This will have the effect he desires, because the monkey can’t get a share Slater’s joint author share will be the only one and he will have full ownership.

My prediction:

If Slater goes to court and tells the same story he tells in this video, Wikimedia will be in the unenviable position of trying to prove him wrong without any evidence to the contrary. My prediction: they would fail, and the outcome would be either 2 or 3. Of course, this assumes he actually goes to court, but he’s already stated that he will if he doesn’t get the resolution he’s looking for and I have no reason not to believe him.

My prediction is that, one way or another - by settlement or court ruling - Slater comes out on top.