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State Supreme Court Decision Paves Way for Intellectual Property Law Development
Friday, May 29, 2009
Evansville, IN -- The Indiana Supreme Court ruled in favor of Gray Loon Marketing Group, a client of a Bamberger, Foreman, Oswald and Hahn, LLP in a case filed by the firm with regards to intellectual property, specifically the ownership of website design and hosting, which paves the way for advances in technology and website development across the state.
The Indiana Supreme Court concluded in the suit, between a business enterprise and a marketing firm that created and hosted its website, that the Uniform Commercial Code does not apply and that the web design firm may collect for its work under the principles of common law contract. In addition, the court also ruled that regarding the conversion of intellectual property, copyright law supports the ownership by the designer.
The issue at hand began in the fall of 2003 when Piece of America (POA) hired Gray Loon, a marketing and communication agency to design and host a website for their business. Gray Loon finished the site and continued hosting it on behalf of POA. The work was done and paid in full by POA.
In April 2004, POA requested substantial changes to the site, which Gray Loon performed. After the changes were made, POA changed their mind and decided they did not want to use the changes. POA did not pay for the changes and also stopped paying for Gray Loon’s hosting service. After several unsuccessful attempts to receive payment, Gray Loon took the site off the internet and did not deliver the modified files to POA. POA claimed that this action constituted conversion.
Two issues were at stake in this proceeding – first, which type of law to apply to the facts and second, what are a business’s rights when they have a marketing agency design a website for them under that law?
In the end, the Indiana Supreme Court handed down two major decisions with regards to intellectual property. First, custom programming in relation to a website or other software is primarily a service, and thus the Uniform Commercial Code does not apply to these contracts. Rather, general principals of contract law as augmented by Federal Copyright Law control. The Court held that under this law, Gray Loon was the owner of the copyright of the website it created for POA, and no conversion occurred. Second, the Court followed other jurisdictions in finding that because there was no signed assignment of copyright to POA, POA received only a non-exclusive license to use the website materials instead of ownership of the same.
The ruling clarifies the importance of clear agreements between the creators of intellectual property and their customers. Such agreements should include provisions specifically addressing copyright and other ownership issues. This ruling is important for software developers, website designers and anyone who works with copyrighted material in Indiana, as it outlines the protections they have in the intellectual property they create and purchase.
Bamberger, Foreman, Oswald and Hahn, LLP was organized in 1959, and is the largest law firm in Southern Indiana. For the past 50 years, the firm has incorporated cutting edge technology and education to provide legal services in the areas of business law, banking and financial institution law, healthcare law, intellectual property law, litigation, private client services, family law, employment law and real estate and land use law. The firm assists both clients who create and clients who are consumers of intellectual property with licensing, copyright and trademark issues. Headquartered in Evansville, Indiana, the firm also has offices in Indianapolis, Mt. Vernon, Poseyville, Vincennes and Princeton, Indiana.
For more information on this case, the entire ruling may be found at: http://www.state.in.us/judiciary/opinions/pdf/05190901rts.doc.pdf
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