DMCA Agent Registration
The United States Copyright Office has adopted a new process for registering Agents under the Digital Millennium Copyright Act (“DMCA”). The new system has simplified the process but has also created a renewal requirement as well as discarding all prior registrations.
The Importance of DMCA Agent Registration
Registering a DMCA Agent with the US Copyright Office has become a vital part of almost every website operator’s operations--arguably as important as paying for domain name registration and hosting costs. This is owed to the DMCA’s Section 512 “safe harbor” provision which protects website operators from claims of copyright infringement brought by content owners.
The inclusion of the safe harbor provision was an attempt to balance the interests of website operators, copyright owners, and internet users and has arguably served that purpose for nearly two decades.
Websites that allow users to post content could reduce their liability for copyright infringement claims arising from content uploaded by their users by:
- Registering a DMCA Agent responsible for receiving takedown notices with the Copyright Office;
- Listing that Agent’s contact information on their website;
- Informing users that repeated posting of infringing content will result in termination of their right to access the website; and
- Removing the infringing material identified by the content owner.
DMCA Agent Registration Prior to December 1, 2016
Prior to December 1, 2016, DMCA Agents were designated by completing a paper form and mailing it to the US Copyright Office. Registration cost $105 and the paper form could take weeks or months to process. Once complete, DMCA Agent registration remained valid indefinitely and website operators were only required to update their registration when their Agent’s information changed. As long as the website operator complied with the additional requirements listed above it would enjoy reduced exposure to copyright infringement liability.
The new system has introduced two major improvements and one glaring drawback to this process.
New Areas of Concern for Website Operators
The new online-only system, launched on December 1, 2016, boasts a drastically reduced $6 filing fee and a simple online registration form which takes approximately 10 minutes to complete and, once submitted, provides instant registration. While the significant reduction in cost and waiting period are obvious improvements over the old format, the new system creates a new vulnerability for website operators: All DMCA Agent registrations expire and become invalid after three years--requiring website operators to regularly renew their registration in order to maintain liability protection.
This new requirement can have drastic legal and financial consequences for website operators. The actual task of renewing a registration is simple, quick, and cheap. Remembering to do so, however, may prove difficult, especially for startup providers with limited staff and no dedicated legal, IT, or other form of compliance personnel. The periodic renewal requirement thus increases the odds of an inadvertent lapse in registration and subsequent exposure to potentially costly liability.
In addition to requiring website operators to renew their registration every three years, the U.S. Copyright Office will also be discarding all registrations previously filed under the paper system. Website operators who have yet to re-register through the online system must do so by December 31, 2017 in order to maintain protection.
Highlights of Certain New Tax Considerations for Investment Funds and US Businesses (Part 2)
Update: Changes in the US Federal Tax Law 2018 (Part 2 – Impact on Entity Choice)
In Part 1 we discussed the impact of recently passed tax bill, formerly known as the Tax Cuts and Jobs Act (the “Act”), on certain types of investment funds including hedge funds and venture capital funds. Here we discuss how modifications to tax rates applicable to corporations and certain businesses operating as “passthroughs” should cause certain businesses to restructure.
As mentioned in Part 1, the highest corporate tax rate has been reduced from 35% to 21% starting with the 2018 tax year. In addition, the corporate alternative minimum tax has been repealed. This in tandem with certain other provisions of the Internal Revenue Code could make corporate form much more appealing, particularly for startup companies.
The Act also provides for a maximum 20% deduction for noncorporate owners of pass-through entities on the qualified business income they earn from the entity. The deduction does not apply to entities in specified service businesses including health, law, consulting, financial services, brokerage services, or any trade or business where the principal asset of such trade or business is the reputation or skill of its employees or owners, or which involves the performance of services that consist of investing and investment management, trading, or dealing in securities, partnership interests, or commodities.
The pass-through deduction available for an individual owner with respect to each eligible pass-through business is capped at the greater of (i) 50% of the individual’s share of the W-2 wages paid by the business to employees and (ii) 25% of such W-2 wages plus 2.5% of the unadjusted cost basis of the business’s “qualified property” (generally depreciable assets used in the business). This cap does not apply to taxpayers below certain income thresholds ($315,000 for married couples), nor are such taxpayers subject to the qualified business limitation.
Additionally, there are special rules for REIT dividends but not for income from other real estate investments. Finally, an individual’s total pass-through deduction is capped at 20% of the excess of the taxpayer’s taxable income for the year over the taxpayer’s net capital gain for the year.
Highlights of Certain New Tax Considerations for Investment Funds and US Businesses (Part 1)
Update: Changes in the US Federal Tax Law 2018 (Part 1 – Impact on Investment Funds)
On December 22, 2017, the President signed the bill formerly known as the Tax Cuts and Jobs Act (the “Act”). The Act significantly changes some crucial domestic and international tax rules.
The Act includes a large reduction in the corporate tax rate from 35% to 21% and a major change in international tax to a hybrid participation exemption system that reduces and sometimes eliminates tax on profits of foreign operations. The Act also modifies the effective rate for individual owners of businesses in LLCs and other pass-through entities with a reduction as much as 20% in some instances.
Impact on Certain Alternatives Funds including Hedge Funds and PE Funds that hold medium term assets
A number of The Act provisions could impact hedge funds, PE funds and other alternative funds. These include a new three-year holding period to be eligible for long-term capital gains treatment with respect to carried interests as well as a new limitation on the deductibility of interest and the repeal of the ability to carryback net operating losses.
The Act increases the holding period before a taxpayer would qualify for long-term capital gain rates with respect to certain carried interests from one year to three years. Such partnership interests would include partnership interests received in connection with the performance of substantial services in a trade or business relating to (i) raising or returning capital, and (ii) either investing in (or selling) certain securities, commodities, real estate, cash or cash equivalents, or derivatives or developing such assets.
For investors in companies, the 20% deduction applicable to non-excluded passthrough businesses (described more fully in Part 2 of our Update) is available with respect to the income earned by non-corporate taxpayers through a fund’s portfolio companies that are owned in pass-through form. Such companies must have adequate W-2 wage income or qualified property.