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White paper: crowdsourcing and the law

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Organizing work also means defining and safeguarding the legal relationships between the players. It is no great secret that employment law is a lucrative field of activity for lawyers, and this shows …

Organizing work also means defining and safeguarding the legal relationships between the players. It is no great secret that employment law is a lucrative field of activity for lawyers, and this shows the many challenges that need to be managed. How can the challenges of crowdsourcing, where work needs to be organized among thousands of individuals, be dealt with?

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  • 1. 1 Creative crowdsourcing and the law Calculating legal risks Organizing work also means defining and safeguarding the legal relationships between the players. It is no great secret that employment law is a lucrative field of activity for lawyers, and this shows the many challenges that need to be managed. How can the challenges of crowdsourcing, where work needs to be organized among thousands of individuals, be dealt with? Despite increased complexity, established law must of course apply in crowdsourcing projects as well. It is important to set up transparent processes, rules and conventions for all players in the run-up to a project in order to nip any emerging conflicts in the bud. On the following pages we would like to provide you with an overview of the core legal questions that must be taken into account when organizing crowdsourcing projects and also to point out the basic rules that should be followed in order to avoid conflicts.
  • 2. 2 Hundreds, and frequently thousands, of parti- cipants work on the creative tasks of commissioning companies in creative crowd- sourcing projects. Participants are not bound to an employer, i.e. the commissioning company, by a conventional contract of employment. Instead, the project is organized as an open invitation to submit work, in most cases set up as a creative contest. In most cases it can be assumed that the commissi- oning company does not know who the parti- cipants are, which is different to the situation with the company's own employees. For this reason the focus is as a matter of principle less on the working relationship from the perspective of employment law than on the result of the work. These results are usu- ally classified under copyright-related matters. Creative crowdsourcing projects produce a huge amount of work results and content. As long as these work results are not protected by law, there are in principle no obstacles to their being used in whatever manner desired. Legal questions relating to copyright and rights of use that arise from this play no significant role. However, as soon as a work result crosses a sufficient threshold of originality, and there- fore becomes an independent work in its own right, the participant will enjoy the protection of copyright, and corresponding rights of use to his/her work result. Assessing the thres- hold of originality is not always straightfor- ward since the general circumstances of each case must be taken into account It is important for a crowdsourcing platform operator to safeguard the interests of all players as far as possible, i.e. participants, commissioning companies and clients.For this reason, we at jovoto always assume that each work result exhibits a sufficient thres- hold of originality and thus basically enjoys the protection afforded by copyright. This approach has so far proven its worth because the property rights are presupposed for each work result, which subsequently avoids unpleasant questions and means that there are clear rules for all players. When work results are subject to copyright, they may, as a general rule, only be assigned, used or published with the explicit consent of the author. This consent can be organized at different levels since there are many types of rights of use that govern this. The consent of the participants is also required at other points, for example in order to control the participant's access to the platform. Crowdsourcing platform operators usually require each user to accept the platform's conditions of use when registe- ring. This means that users are only permitted to access the platform when they accept the conditions beforehand. These conditions of use control first and foremost all aspects of platform utilization. This is where conditions are specified relating to access and to how the platform may be used. For example, offensive, racist or sexist forms of use and content are not tolerated. cc smlp.co.uk
  • 3. 3 Note: the conditions of use for a crowd- sourcing platform give a rapid indication of whether the relevant provider is the right partner. Example: A brewery can learn from the conditions of use whether a crowdsourcing platform takes into account the required minimum age of participants. If this cannot be assured under the conditions of use, any possible collaboration must be excluded. Various projects are frequently organized via the same crowdsourcing platform, sometimes, as in the case of jovoto, for a large number of different clients. For this reason, projects may well differ in their intention, terms of reference and conditions. It has therefore proven useful to require all participants in a project to accept specific project conditions. Project conditions define the relationship between the participant and the platform operator with specific reference to the project concerned. Project conditions may further differentiate the criteria for participation – however, they do not need to. In the overwhelming majority of cases, creative crowdsourcing projects are organized as contests in which participants compete to win offered prizes with their submissions. Contests can be more or less organized on unfavourable terms. Thus the organizers of most creative contests unfortunately require participants to cede all rights to the work results when they submit them or expect them to do so at the latest when prizes are disbursed. This requirement is quite clearly detrimental for many participants in the contest and results in decreasing participation and in many potential professional participants deciding against taking part in the contest. It should therefore be in the interests of the organizers to ensure fairness and to offer conditions that are as attractive as possible. Exercising fairness does not in the first instance pose any legal questions. However, the complexity of legal aspects can increase when, for example, the acquisition of extensi- ve rights of use are decoupled from the awarding of prizes or even basic participation. In most cases the organizer of a crowdsour- cing project is only looking for one or two solutions and thus only needs extensive rights of use to individual work results, but not generally to all submissions. For this reason it always makes sense to offer fair conditions, since this increases participation and also the general quality of the work results. At the end of the day the most protected project is not worth anything if creatives aren’t prepared to participate. This, however, results in increasing complexi- ty, and a separate, additional licence agreement needs to be concluded to cover the transfer of rights of use. On the other hand, the advantage of a separate licence agreement offers the possibility of adapting the transfer of a wide range of rights of use in a more individual manner to match the needs of the situation, thus making them more concrete. The important rule here is that the more individual the settlement, the more reliable it will be. Crowdsourcing platform operators generally leave the relevant contracting parties, i.e. the author of the work result and the commissi- oning company, to conclude individual
  • 4. 4 licensing agreements for themselves. This not only saves a great deal of time but also avoids a lot of risks when the operator does not know the players on its own platform and relies on accepted conditions of use. This practice may be suitable for small businesses, since the risks remain manageable, but the risks are usually in- calculable for large – in particular brand – companies and are therefore not acceptable. The solution that makes the risks calculable for the client is direct involvement of the plat- form operator in licensing process. The plat- form operator first licenses the relevant work result from the author direct and then trans- fers the acquired rights of use to the work to the client in a second step. Trustworthy plat- form operators are generally reinsured against any damage and offer the very level of compliance required by large companies. Note: crowdsourcing platform operators make risks calculable when the licensing process is organized via the platform operator. jovoto also assumes responsibility for its clients and offers reinsurance. We regularly see that safeguards do not accrue to the client simply from the process and contractual agreements or from reinsurance cover but primarily from direct communication with all the players, in particular with the authors of the work results that need to be licensed. This is not only where a process is executed but also where important clarification work is performed. For example, liability entitlements or the signifi- cance of rights of third parties can be explained and at the same time a detailed check can be made on whether the author sufficiently understands the licensing process, since it is after all only then that it makes sense. It is only by informing and explaining on the one hand and through transparency on the other that it is possible to establish central conventions for creative crowdsourcing projects in order to clearly prevent conflicts. As important as it is to observe established law, it is even more important to get all play- ers on the same side and to create a trusting basis for cooperation. This includes framing legal documents – from conditions of use to licensing agreements – in simple, under- standable language, communicating clearly, clarifying and above all managing the entire process. It is only then that a comprehensive, common understanding of what is "right" and what is "wrong" can be created. cc David Ortez
  • 5. 5 We wish you every success with your crowdsourcing project! Please do not hesitate to contact us if you have any questions. And if you liked this white paper, subscribe to our monthly newsletter here, to receive all our future ones. Jörn Hendrik Ast Sales & Marketing +49 (0) 30 80 20 878 14 jhast@jovoto.com jovoto GmbH Prinzessinnenstrasse 20 10969 Berlin

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