Liability Waivers in Your Adventure Business

Adventures are everywhere and more accessible than ever! But, with more adventure comes more risk for the participant and more risk for the business (and its owners).  As you can imagine, the question\request I get most often from adventure business owners is related to liability waivers and protecting the business from legal risk in the case of an accident (because accidents do happen!) This article discusses the reality of liability waivers in Wisconsin and some critical points every adventure business owner should think about while developing the critical culture of safety that is required to protect their business and investment!

The Liability Waiver and the Law in Wisconsin

First, a little background:

Reality Check 1: A business with a great waiver, but bad (or no) business & safety practices to back that waiver up, is absolutely still open to legal risk – the waiver won’t save them. Don’t believe me, Just ask Tough Mudder.

Reality Check 2: The Wisconsin Supreme Court has never upheld a liability waiver when it has been challenged by an injured person.  That doesn’t mean that no waiver will work – just that Wisconsin is strict when it comes to what the waiver must contain to be enforceable against a regular customer.

A Release of Liability and Agreement Not to Sue (The Waiver) 

A good, well drafted, well organized, and easy to understand waiver is a key component of minimizing risk. The waiver should be:  1) tailored to your business; 2) part of your regular business process; and 3) in plain English.

Additionally, the waiver should not attempt to avoid all types of liability (willful or reckless conduct) because that will be grounds for invalidating the waiver all together in Wisconsin.

Finally, the waiver should: 1) offer the participant the chance to bargain its terms; 2) be in its own document; and 3) detail the risks of participation explicitly.

(and this is just a short list…)

 Reinforcing the Waiver With A Culture of Safety 

More important than the waiver, though, are all the things the business does to back the waiver up and reinforce that safety is a key component of the business model. Here are a few things to think about:

1) How does the waiver look? Can anyone besides an an attorney understand it? If you don’t understand your own waiver – it’s time to update it. Legalese is a dying language, and the waiver (and any agreement for that matter) will be better if it’s written in plain language – so anyone can understand it with relative ease.

2) How is the waiver presented to customers? Are they allowed to ask questions? (Especially if the waiver is filled out online or at home). You should not provide legal advice on particular parts of the waiver – but you shouldn’t have a policy of NOT answering any questions at all either (which is the case at a lot of places).

3) Do customers have a comfortable space to sit down and read, understand, and sign the waiver? This might seem trite, but it’s not. Can you reasonably expect anyone to understand the waiver if it’s crumpled up on their knee and they are squeezed into a couch in the corner? I wouldn’t want to sign a document under those circumstances.

4) Is the participant’s identity checked when they arrive? How does the business ensure everyone has signed a waiver? Again, seems stupid – but it’s an easy step to take.

5) What other safety training is in place? After the customer signs the waiver,  are they given further instruction on how to be safe? In skydiving and zip lining, there are brief classes or additional videos that the customers watch. Further, training for the customer and opportunities to ask questions are key.

6) If the activity is inherently dangerous (like Tough Mudder) – what safety protocols are in place? Accidents will happen, but what if something really bad happens?  How will it be handled? How are staff trained to respond?

7) What about angry customers – how does the business deal with them? Again, seems unrelated – but it’s not. An angry customer with a lot of money can file a lawsuit pretty easily – what steps are in place to deal with problem customers?

A waiver is an absolute “must have” for any adventure business, but a waiver by itself is useless without the culture of safety to back it up.  Now is the time to review your waiver for compliance with Wisconsin law and to think critically about where the waiver fits into the larger safety and risk reduction strategy in your business.  If you need assistance, OGS can help!

Don’t Cross the Streams

When talking with people starting businesses, one question that we get is a lot is “How do I limit my liability?”.  First, we talk about creating a business entity.  And don’t forget about insurance.  But, one thing we always talk about is “Don’t cross the streams. It would be bad.

By that, we mean keep your business money and your personal money separate.  That means separate bank accounts and separate books.  It definitely means pay your business debts using your business account and your personal debts from your personal account.

If you have two businesses, pay each one separately.  If you are going to give money to one from another, it has to be a loan – yes, with interest.  These are separate legal entities.  You wouldn’t loan your neighbor’s business money without interest, which means you shouldn’t do so between your own.

The more you treat the entities as distinct from you and each other, the more likely courts will follow your lead and do the same.  So, unless you are faced with a giant, flaming marshmallow man and a gateway to Gozer, don’t cross the streams.

Rent Never Abates to Zero – and Other Tips for Tenants!

Last time I wrote about tips for Landlords embarking on their first adventure into residential renting – but today, I’m going to concentrate on a few tips for tenants.  In Wisconsin, there are plenty of “gotchas” or “trap doors” in the law for both parties – but when\if mistakes happen, the outcomes often disproportionately impact tenants.  Therefore, if you’re about to rent a new place for summer, keep these tips in mind!

Get a Check-In Sheet (and Take Pictures!)

I mentioned this in my last post, but a Check-In sheet is even more important for Tenants.  A Check-In sheet allows you to mark pre-existing damage to the property so you won’t be held accountable for it when you move out!  Although a Landlord is required to provide a Check-In sheet to you when you move in, many do not.  Therefore, you should take it upon yourself to note the damage and take pictures too.  Within 10 days of moving in (the usual deadline), you should provide your Check-In sheet and pictures to the Landlord.  Also, make sure to keep copies of everything – so if you have to prove what was damaged before, it will be a piece of cake!

New Money Goes to Old Debt First

This is important to remember:  If you owe money to a landlord for back rent, “new money” you pay the landlord will be applied to the oldest debt first – not the amount currently due for this month.  

For example, if you owe $500 in back rent, and rent for June 1st is $500 – you will technically have to pay $1000 by June 1 to avoid eviction.  If you pay only $500 (the monthly rent) it will be applied to the back rent due, and you will still owe for June 1.  Many tenants incorrectly think that they can pay for the “current” month and take extra time to catch up on the “back rent” – but that is not the case because “new money” is always applied to the oldest debt first.

Rent Never Abates to Zero!

Imagine this scenario: you have a hole in your roof and have asked the Landlord to fix it 10 times to no avail; you’re at your wits end.  In a last ditch attempt to get the Landlord’s attention, you withhold rent and say “I’m not going to pay you one more dollar until you fix my roof!”  Not a good idea – you just got evicted!

If you are deprived of the normal use of your rented home, you are not liable for full payment of the rent.  The thought being, you should only pay “full” rent when you have the “full” use of your home.  But, if you stay in the home (even with a hole in the roof) rent will never be $0; the thought there being, even with the hole in the roof – you’re still using some of the home and therefore should pay some of the rent  Wis. Stat. Sec. 704.07(4).  This is a mistake a ton of tenants make and if you simply pay no rent then there is basically no defense that you can make against the eviction.  So, what should you do if a Landlord repeatedly fails to make requested repairs?

1) Always make sure your requests for repair are in writing and delivered to the landlord in accordance with your lease.  Phone calls and visits to the leasing office to request repairs won’t cut it – you need to make sure your requests are in writing so you can prove you made the requests later.

2) Keep a list noting the dates\times you made each repair request.

3) If the Landlord fails to make the repairs after repeated written requests to do so, then you should write a letter with your next rent payment stating that rent will be abated by some amount (less than $0!) the following month and until the repairs are made.

*Please Note* This is NOT the procedure to follow for minor repairs (rent only abates if the problem is serious!) and should be used with caution no matter what.   You will have to defend the amount of rent you withheld, so make sure it is reasonable (and if you live in a city like Madison that has adopted an – ordinance regarding rent abatement – make sure to check it out before you do anything!)

If you have questions, OGS is glad to help!

It All Comes Around

We started on this fair use train to answer a question someone asked me:  When can you use music in videos and podcasts?  I think you can make some guesses as to the answer.  First, you can certainly use music if you get permission from the owner of the music.  Second, there are companies that provide a license for a catalog of songs for videos.  Third, there are songs that are open source or under the Creative Commons license.  Fourth, if the songs are old, they are in the public domain and no longer protected by copyright.  Therefore, go ahead and use that Mozart Piano Sonata.

But, can you just turn on the radio and hope for a good song?  Unless you are doing WPR’s morning classics, that is probably a bad bet.  As we have learned, it is not likely fair use – especially if you are purposefully putting the music in your video and podcast.

Now, what if you are shooting a scene and someone – out of your control – is playing music in the background?  If that use is truly incidental, you have a fighting chance to say it is fair use if you do not focus on the music.  Extra bonus points if it plays for a short period and it’s in the background.  But again, that gets you a defense, not a free pass.  Therefore, think carefully before choosing your mood music and how it is supplied.

Tips for New Residential Landlords in Wisconsin

Becoming a landlord sounds like a great plan – you have a nice house you can rent out, the monthly rent payments will cover your mortgage, and you will be free to buy a new house, retire early, or all of the above!

But, as with many things, it probably won’t work out quite as you planned – Tenants sometimes destroy property, pay late, crank up the heat, and leave without paying their utility bills. Before you take the plunge into the residential landlord business, here are a few very important things to keep in mind! Landlording can be great – but only if you enter the fray with your eyes wide open!

Tip #1: You Need a Lease that Complies with Wisconsin Law – This is the most important step you can take to protect your interests as a landlord.  Not having a lease will cause issues for a number of reasons, specifically: 1) your agreement will be in your minds only – and hard to remember as the tenancy goes on and; 2) if there is an issue, it will be a “he said\she said” type of scenario, and the onus will be on youthe landlord, to prove non-compliance with the (nonexistent) lease (a hard proposition when there is no document to show the Court).

Having a lease is important – but having one that is legal under Wisconsin Law is even more important. Specifically, 1) your lease cannot deduct from the security deposit for disallowed damage like carpet cleaning; 2) your lease should advise the tenant what will be done with their property if they are evicted (will you store it or throw it away?); and 3) your lease should specifically state when the Landlord can enter the property, and who will be responsible for paying for each individual utility. This is just a short list of what your Lease should cover, so you should use a trusted Wisconsin Lease or speak to an attorney to have one drafted for your specific circumstances.

Tip #2: You Need to Provide Additional Documentation To Tenants When They Move In  – In addition to a written lease, you must always provide residential tenants with: 1) A Check-In Sheet where they can mark any pre-existing damage to your property; 2) A smoke detector notice certifying that smoke detectors are installed and working; 3) a carbon-monoxide notice certifying that CO detectors are installed and working; 4) A Lead Based Paint Notice if your home is older; and 5) Information on how to access the Sex Offender Registry. Failure to do so prior to the start of the tenancy will result in mandatory fines and penalties to the Landlord.

Tip #3 – Take A Security Deposit and Don’t Use it as Rent – Make sure you get a Security Deposit – this is your best way of protecting your property against damages. A Security Deposit cannot be wildly large, but is usually equal to 1 to 2 months rent. It should be collected from the Tenant prior to move in, and it should NEVER be used as rent. If you allow a Tenant to use the security deposit as rent, your insurance against damage will be gone (often before the you get a chance to inspect the property) and, more importantly, you could open yourself up to fines and possible lawsuits for mis-using a Tenant’s security deposit and\or not providing an accurate itemization of the amounts withheld 21 days after termination of the tenancy.

These are just a few things to keep in mind when becoming a residential landlord. If you have any additional questions, or want more information, please feel free to reach out OG +S!

Sorry For Partying

Last week was a bit of a let down, wasn’t it?  Here’s all of these interesting facts, and then thbbt! No resolution.  This week is better.  This one also involves the manipulation of a photograph but with a lot more humor.

This time, Sconnie Nation, a t-shirt company, used a photo taken by Michael Kienitz of Paul Soglin, the mayor of Madison, Wisconsin.

While a student at the University of Wisconsin in the 1960’s, Paul Soglin wasn’t into “the establishment.”  He even attended the first Mifflin Street Block Party, whose theme (according to Soglin) was “taking a sharp stick and poking it in the eye of authority.”  However, over the years, his views have changed, especially on the Mifflin Street Block Party. He wants to shut down the annual event. For the 2012 Block Party, Sconnie Nation made some t-shirts and tank tops displaying an image of Soglin’s face that was based on Kienetz’ photo and the phrase “Sorry for Partying.” Sconnie Nation made a whopping 54 sales of those shirts.  Kienitz sued claiming Sconnie Nation infringed his copyright by using his photograph without his permission.

When reviewing if Sconnie Nation did infringe, the court looked at the factors to determine if a  work in any particular case is a fair use.  While it could have argued about the “transformative” nature as we saw in the Fairey case, the court decided it didn’t need to do so.  It stuck to the tried and true statutory factors.

It noted that “A t-shirt or tank top is no substitute for the original photograph. Nor does Kienitz say that defendants disrupted a plan to license this work for apparel. Kienitz does not argue that defendants’ products have reduced the demand for the original work or any use of it that he is contemplating.”

Judge Easterbrook, who has a penchant for writing interesting opinions, went on to say:

Defendants removed so much of the original that, as with the Cheshire Cat, only the smile remains. Defendants started with a low-resolution version posted on the City’s website, so much of the original’s detail never had a chance to reach the copy; the original’s background is gone; its colors and shading are gone; the expression in Soglin’s eyes can no longer be read; after the posterization (and reproduction by silk-screening), the effect of the lighting in the original is almost extinguished. What is left, besides a hint of Soglin’s smile, is the outline of his face, which can’t be copyrighted. Defendants could have achieved the same effect by starting with a snapshot taken on the street.

In Kienitz’ favor, the court pointed out that Sconnie Nation didn’t need to use the copyrighted work. They wanted to mock the Mayor, not to comment on Kienitz’s skills. “There’s no good reason why defendants should be allowed to appropriate someone else’s copyrighted efforts as the starting point in their lampoon, when so many non-copyrighted alternatives (including snapshots they could have taken themselves) were available.” Also, this use may injure Kienitz’s long-range commercial opportunities, even though it does not reduce the value he derives from this particular picture.

The fair-use privilege under § 107 is not designed to protect appropriators who take the easiest option for their starting point. Rather, its goal instead “is to facilitate a class of uses that would not be possible if users always had to negotiate with copyright proprietors. (Many copyright owners would block all parodies, for example, and the administrative costs of finding and obtaining consent from copyright holders would frustrate many academic uses.)”  However, that doesn’t truly apply here as a Sconnie Nation and Mayor Soglin are both from the same, relatively small city, and Mayor Soglin is no hermit.

But, alas, given that “almost none of the copyrighted work remained,” the court found Sconnie Nation did not infringe.  And the Mifflin Street Block party continues as well.

So the take away for you is that the safest bet is to be the originator of all of your media or get permission from the owner.  As these two cases show, a lot of modification may or may not get you a “win” in litigation, but it will get you litigation. Fair use is a defense that isn’t a “gimme.”   Therefore, to avoid litigation, consider avoiding the use of other people’s stuff without their OK.

When it goes Fairey, Fairey wrong

Fair use is a defense, but it isn’t always a slam dunk winning defense.  Shepard Fairey is a graphic artist and known for street art.  You may not recognize his name, but you likely recognize at least one piece of his work:  The Obama HOPE poster.

The photo is instantly recognizable and arguably iconic.  It also was based on a photograph owned by the Associated Press (the “AP”).  The AP is “an independent, not-for-profit news cooperative” and provides “content and services to help engage audiences worldwide, working with companies of all types, from broadcasters to brands.”  That includes providing photos to newspapers around the world (and likely in your city).  In April 2006, Mannie Garcia, a professional photojournalist, was working for the AP and took a photo of then senator, Barack Obama.

Wanting to create a poster to support Obama’s presidential candidacy, Fairey used the Google Images search engine to hunt for publicly available photographic portraits of Obama. A search for images of “Obama” or “Barack Obama” generated lots and lots of “thumbnail” images showing the results of his search.   Fairey chose Garcia’s photo and began to play with it in Photoshop.*  The final result is the poster we all recognize.  He then sold some of the posters and gave many away at campaign events or donated them to campaign workers.  In addition, he granted a free license to the organization, Sticker Robot, to produce and distribute, at cost, large numbers of stickers and granted free, nonexclusive licenses to other organizations to make and distribute the poster as they were supporting Obama.  Don’t feel too bad for Fairey.  He made money by selling merchandise, like t-shirts, with the image and creating murals and paintings of it, as well.

So where there is money being made, there is a chance for a lawsuit.  Yup, after quite a bit of demands and negotiations came to nothing, the AP sued Fairey.  His main defense was fair use.  Fairey argued that he “transformed” the AP photo.  One way a work can be deemed “transformative” is where the purpose of the second “transformed” work is different from the purpose of the original work. Fairey argued that this was they case for his poster.  After all, Garcia’s aim had been to take a realistic portrait of Obama for news purposes, and Garcia even testified that he had no intention to promote Obama’s candidacy. By contrast, Fairey’s primary purpose in creating the poster was to promote Obama’s candidacy for president.  In addition, Fairey argued that he made many changes to the photo such that all that was left of the original photograph wasn’t really protected by copyright anymore.  In fact, what he made was fundamentally different from the original and because of his changes, people saw it in a completely different light.

Another factor weighed is the extent to which the defendant’s activity, if deemed fair, would adversely affect the market for the copyrighted work at issue in the case.  Fairey argued that no one wanting the original photo would have purchased his poster instead.  They clearly did not act as substitutes for each other.  Also, he argued that because he transformed the work, he wasn’t impairing the “potential market” for the copyrighted work either.

Unsurprisingly, the AP disagreed with those contentions.  Rather, they argued that he had acted in bad faith, the poster project was highly commercial, and his use was not transformative.  He removed the copyright notice, did not give any credit to the source of the original photo and did not identify any pre-existing material not owned by the applicant when Fairey applied for his own copyright registration on the poster.  He made plenty money (he could have made even more but chose not to do so with the posters themselves).  Finally, his intent for the poster was not truly “transformative.”  It wasn’t a parody or commentary on the photo.  Rather, both the poster and the photo tried to capture the essence of Obama; Fairey just used more Photoshop than Garcia used to get there.

After a long, arduous, and expensive pre-trial period, the parties settled right before a three-week trial was to begin.  Unsurprisingly, the financial terms were confidential.  So we don’t actually know what the court would have found.  Was it transformative?  We don’t know for sure, but we do know that Fairey and the AP spent a lot of time and money arguing over a cut and pasted photo that was used without permission.

If you want a lot more detail and analysis, I highly recommend this piece by the Harvard Journal of Law and Technology.  It has exhibits and everything!

 

*There’s actually more drama there about how and when he picked the photo. And, more importantly, how and when he told others, including the court, which photo he picked.  He found out that if you lie to the court, you can be found criminally liable for that.

Welcome Attorney Collin Schaefer!

Collin Schaefer of the Law Firm of Collin Schaefer in Cedarburg, Wisconsin has joined Erin Ogden and Jeffrey Glazer at OgdenGlazer, LLC as a partner.  The new firm is now Ogden Glazer + Schaefer, or OG+S. Schaefer brings a strong practice in business, real estate, and technology.  He will keep his practice centered in Cedarburg, Wisconsin.

Ogden, Glazer + Schaefer is a four-person firm, consisting of three (3) attorneys and a Paralegal/Client Support Coordinator, located in Madison and Cedarburg, Wisconsin.  The firm’s transactional practice is focused on business and intellectual property.  The firm was started in 2016.  Erin Ogden, the firm’s managing attorney, has been a lawyer in Madison for over 14 years and has built her practice on intellectual property, commercializing technology, and mergers and acquisitions.  Jeffrey Glazer, a partner in the firm, is a leading expert in food and beverage law in the State of Wisconsin, in addition to a practice focused on implementation of advanced technologies.

Please join us in welcoming Collin!

 

The Set Up

As we discussed earlier, courts look at the purpose and character of the use for both the original owner and the derivative use.  Courts look at how the party claiming fair use is using the copyrighted work.  Is the derivative use meant to make money?  If so, it is more likely to be found infringing, but if it is not intended to bring profits to the copier, then it has a better chance to be found as fair use.

While courts are more likely to find that nonprofit, educational and noncommercial uses are fair.  This does not mean, however, that all nonprofit, educational and noncommercial uses are fair.  Nor does it mean just because you make money on it that all commercial uses are not fair.  Rather, courts balance the purpose and character of the use against the other factors.

Additionally, “transformative” uses are more likely to be considered fair.  Transformative uses are those that add something new, with a further purpose or different character, and do not substitute for the original use of the work.

This can be closely related to another aspect:  The effect of the use upon the potential market for or value of the copyrighted work.  In this factor, courts review whether, and to what extent, the unlicensed use harms the existing or future market for the copyright owner’s original work. Questions asked include:  Is the use hurting the current market for the original work, and whether the use could cause substantial harm if it were to become widespread?

Next time, we’ll look at some specific cases looking at how these factors are reviewed in real life.

By the way, if you want to learn more about trademark and copyright, we have some upcoming webinars.  Register here!

No Quippy Acronyms Here – TTB CBMTR Guidance

 

The United States Tobacco and Trade Bureau (“TTB”) has finally issued guidance around the pieces of Craft Beverage Modernization and Tax Reform (the TTB is not as good at acronyms or naming as our legislators) contained in the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act made a number of changes to the way alcoholic beverages are regulated, primarily by (no surprise here) cutting taxes. However, there are some non-tax-cut-related improvements made, too; in general, these are small but helpful changes.

Beer

  • For small brewers, federal excise taxes were reduced from $7/bbl on the first 60,000 bbl to $3.50/bbl – a cut of 50%
  • Big brewers and importers got some benefits, too
  • Brewers are now permitted to transfer beer in bond between each other –
    • Notes: this is a big deal; now, when Brewers contract brew or bottle, the beer does not need to be tax-paid when it transfers between brewers; this is a really nice efficiency gain and the production brewer need not pay taxes on beer that isn’t really theirs.
    • Notes: In Wisconsin, this doesn’t really impact “Recipe Brewers” – Wisconsin Recipe Brewers hold a federal “Wholesalers Permit” (aka “Basic Permit”) and are not considered “Brewers” for the purpose of the TTB; therefore, the transfer-in-bond would not be between two “Brewers”.

Wine

  • Mead is now better defined and classified for tax purposes as a “Low Alcohol Still Wine” subject to tax at $1.07/wine gallon
  • Low Alcohol Still Wines are now “Still Wines” (basically, non-carbonated wine, not including hard cider) up to 16% ABV
  • Some tax credits for 2017 ($1/wine gallon on first 30,000; $.90/wine gallon on next 100,000; and $.535 on next 620,000)
    • Notes: hard cider gets a different set of much smaller credits; see the Guidance for more in-depth explanation

Spirits

  • New tax rates – $2.70 per proof gallon on first 100,000 proof gallons; $13.34 per proof gallon on next 22.13 million proof gallons
    • Spirits importers get some benefits, too.
  • A similar transfer-in-bond authorization to Beer whether transferred in bulk or non-bulk containers