Fundraiser Seeks Dismissal of Intellectual Property Suit

October 15, 2013       Mark Hrywna      

Arguing that the existing contract’s language is clear and unambiguous regarding which party owns intellectual property in question, a fundraising agency has asked a judge to dismiss a lawsuit brought by one of its former clients.

The 12-page motion was filed in U.S. District Court for the Eastern District of Virginia by American Target Advertising (ATA). Helping Hospitalized Veterans (HHV) filed suit Sept. 20 against the Manassas, Va.-based agency, seeking more than $5 million in compensatory damages for breach of contract, expenses, lost profits, permanent destruction of a contract, and damage to business relations. HHV also seeks control of intellectual property and copyrights, with complete rights of ownership, control and use of the property.

“By the plain language of the contract between the parties,” ATA owns the copyright to the printed materials and the content, Aaron Book of Alexandria, Va.-based law firm Webster Book argued in the Oct. 11 filing for ATA. The inventory of printed materials produced and delivered to the nonprofit prior to termination of the contract is owned by HHV, he argued. “At its essence, this case boils down to a fundamental question: Who owns the copyright to the printed materials? In other words, who owns the rights to the content of printed materials?”

HHV in Winchester, Calif., which settled litigation with the California Attorney General’s Office this past summer, alleged in its complaint that ATA forwarded correspondence or communicated with other agencies, advising them that the charity was attempting to violate terms of a contract and warning them to avoid copyright violations by refusing to work with them. HHV had given ATA notice that it would no longer be using them as of Sept. 30 after many years.

ATA created direct mail marketing materials for HHV to use in solicitations, helping to generate a house file of donors. The house file can belong solely to the nonprofit or owned jointly with the direct mail agency; in this case the house file is owned solely by HHV. As list manager, ATA subsidiary American Mailing List Corporation (AMLC) marketed the house file and rented data to other nonprofits.

HHV contracted with ATA as an independent contractor to create and produce direct mail solicitation materials, distributing arts and crafts packages as therapy to veteran and military hospitals.

The contract clearly states that the house file and printed materials developed and/or prepared by ATA exclusively on behalf of HHV shall be the sole exclusive property of ATA, Book argued. The work commissioned by the contract was not “work for hire,” which would have provided an exception to the general rule that the author gains protection of copyright once the work is in a “concrete” medium. As an independent contractor and not an employee of HHV, ATA is the protected author of work commissioned by the charity, unless there is a written agreement expressly stating that the work was “for hire.”

ATA contends in court documents that it communicated with the charity to reiterate terms of the contract, specifying that it owns all intellectual property rights in the direct mail materials created for HHV.

NonProfit  Times
The Leading Business Publication For Nonprofit Management