FAA Grants Limited Exemptions Allowing Hollywood to Film With Drones

Legal Drones2By Diana Marina Cooper

In a surprising move last week, the Federal Aviation Administration (FAA) granted permission to six Hollywood companies to film using unmanned aerial vehicles (UAVs).

The FAA is currently developing rules to integrate UAVs into the domestic airspace, and to date the agency has blocked virtually all commercial operations from taking place.

Under the current system, those looking to operate UAVs for commercial purposes can only proceed if they receive an exemption from the FAA. Although numerous companies have attempted to obtain exemptions, the FAA has been reluctant to approve such applications. In fact, prior to the Hollywood exemptions, the agency has only approved a limited number of commercial flights for oil companies operating in remote areas of Alaska. The FAA defends its cautionary approach to regulation of UAVs by pointing to a need to develop a comprehensive framework to protect the safety of people and property on the ground.

Although the Hollywood exemptions represent a move in a positive direction, the restrictions placed on the companies are quite onerous, for instance the operations must take place in a controlled closed-set environment and may only be completed below 400 feet and within the visual line of sight.

The FAA has been working to develop UAV regulations since the enactment of the FAA Modernization Act of 2012. Although the notice of proposed rules is set to be released sometime this fall, companies still face a long wait until commercial operations become mainstream. The release of the draft rules will be followed by a public notice and comment period, and subsequently the agency will have to craft the final rules.

While the US determines how best to regulate UAVs, it is quickly falling behind other countries that already have frameworks in place to support commercial operations. For instance, Canada has adopted a system that allows companies to apply for Special Flight Operations Certificates (SFOCs) in order to complete commercial flights. The Canadian regulations generally do not establish bright line rules – for instance they do not specify whether you need a pilot’s license to operate a UAV or whether it is permitted to fly beyond the line of sight. Rather, Transport Canada (the regulatory agency that issues SFOCs) assesses applications using a case-by-case approach. Although the Canadian system is somewhat inefficient because of the lack of specificity, over the last few years an increasing number of SFOCs have been issued to companies representing a variety of industries including the film industry, agriculture and oil and gas.

Diana Marina Cooper is the Head of the Unmanned Aerial Systems and Robotics Practice Group at LaBarge Weinstein LLP, and is also an Associate in the firm’s Intellectual Property and Licensing Group.  She advises drone companies on airspace regulations, intellectual property, privacy and commercial contracts.  Diana also provides intellectual property, privacy by design and technology transaction services to emerging technology companies.  She has authored a number of publications and has given talks on intellectual property and privacy issues raised by drones and robotics.

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Intellectual Property and Crowdfunding: Practice Safe Crowdfunding®

Intellectual Property and CrowdfundingBy Mary Juetten, Founder and CEO of Traklight

Crowdfunding, despite its popularity, is still misunderstood. Many people are familiar with rewards crowdfunding sites like Kickstarter and Indiegogo based on widely publicized campaigns such as the Pebble Watch and the Veronica Mars movie. However, the intricacies of the Jumpstart our Business Startups (JOBS) Act, the federal equity crowdfunding legislation, continue to be a mystery to entrepreneurs and potential investors alike. Further, any link between all types of crowdfunding and intellectual property (IP) is less well known.

The JOBS Act was passed into law in April 2012 but the Securities and Exchange Commission (SEC) has not released the long overdue final rules. Comment letters were requested late in fall 2013 and, like many involved in advocating for non-accredited investors to be able to invest in startups, we filed Traklight’s comments in January 2014. In general, our position is that we recognize the difficulties associated with balancing investor protection and deal flow with startup access to capital. Thus we provided suggestions with a view to reduce costs to companies seeking funding while still balancing investors’ needs for protection.

In short, the JOBS Act will allow federally what some states are already doing within their borders. The average American will no longer have to be accredited (i.e., required to meet minimum net worth of a million dollars or income of several hundred thousand dollars per annum) in order to invest in private companies. Unlike Indiegogo, where money is contributed for a perk or reward, equity crowdfunding will allow you to actually buy shares or equity in a company using an online platform or portal.

For reference, equity crowdfunding is practiced in countries such as Australia and the United Kingdom. Other platforms, such as AngelList, offer equity-based investments but for accredited investors only.

IP and the JOBS Act

When we wrote our comment letter to the SEC, we quoted our company mission as educating and empowering entrepreneurs and businesses on intellectual property and innovation for their success. Therefore we expressed grave concerns about any public disclosure when entrepreneurs may not have first properly identified and adequately protected all intellectual property: trademarks, copyrights, trade secrets, and patents. We recommended that warnings be provided to issuers and, in addition to the education provided in the JOBS Act for investors, we advocated for entrepreneur education. We would like to see information on IP identification, protection, innovation capture, and disclosure of the same plus a non-exhaustive list of potential public disclosures that both educate the entrepreneur and improve the quality of deal flow for investors.

Steps to Successful Crowdfunding:

We advise that you Practice Safe Crowdfunding® as follows:

Identify and protect IP.

It is extremely critical to protect IP before launching your rewards-based crowdfunding campaign since launching requires that you completely disclose how your invention or product works. For example, Kickstarter will not allow a drawing or prototype but instead asks for details on how your product works, enough in most cases to be an enabling public disclosure. Under equity-based crowdfunding, the rules propose similar disclosure in the business plan.

Also, setting out how your product works in a public forum is going to affect your patent rights inside and outside the US. Patent lawyer George Rondeau had this to say:

In the U.S. a public disclosure will start a one year period running within which you must file a patent application to avoid loss of patent rights, which may force you into filing before your invention is ready. It also presents the possibility that another person may copy your idea and even fraudulently file a patent application on it before you do, which is a real problem now that the U.S. uses a first-to-file patent system. At least filing a well written provisional patent application is suggested before making a public disclosure if you cannot file a full nonprovisional application using a patent attorney. The public disclosure will result in immediate loss of patent rights in most foreign countries if you have not previously filed a patent application. It will also destroy any trade secrets, leaving patents your only option to protect your invention.

Your brand should be protected with necessary trademarks or copyright before you launch your campaign. There are horror stories of names and designs being copied because the entrepreneur did not protect before launching. However, keep in mind that before you can protect your IP, you must first identify all your potential IP.

Choose the right platform.

You can either opt for an all-or-nothing or earn-what-you-raise system. It is important to determine how much of the funds raised will be used for fulfillment of your rewards so you do not fail to provide the rewards offered.

You should choose a platform where you will reach your crowd. When we are using the equity rules, I recommend choosing a platform that will educate you on the rules and process.

Build social capital (not just social media followers).

It is important to create value and market presence before launching your campaign. Simply put, you must prime the pump or presell. Have friends, family, and networks ready before the product launches so that you reach 20–30% of the goal on the first day of launch. Crowdfunding has its origins in charitable donations and those campaigns are always pre-loaded before announcement. Look at the training materials on the larger sites for advice.

Create your pitch and put up the campaign.

This is where we caution people to be careful about infringement; no one wants a large fine or even a cease and desist letter. We encourage people to read terms and conditions of all third party content (i.e., music, videos, photos) used when making their pitch. Remember, just because there is no copyright © on the item, whether on the Internet or not, you do not have the automatic right to use it for your campaign.

In the meantime (since federal equity crowdfunding is still unfortunately illegal), you can look to intrastate equity crowdfunding, which is allowed in at least 10 states that have passed requisite acts. For example, if you are a Georgia company and want to raise funds solely from Georgia investors, then you can do so by selling portions of your company under Georgia intrastate equity crowdfunding laws on an intrastate funding platform.

Please join me on Twitter @maryjuetten and @traklight to help spread the word that the SEC should #releasetherules.

Mary Juetten is the Founder and CEO of Traklight, the only self-guided software platform that creates your custom intellectual property (IP) strategy. Mary has dedicated her more-than-25-year career to helping businesses achieve and protect their success, specializing in leading companies in transition or startup phases and helping them create sustainable, operational, and financial growth. Mary wants entrepreneurs and businesses to have Fortune 500 style software solutions! She has a Bachelor of Commerce degree from McGill and a Juris Doctorate from Arizona State as well as her US and Canadian accounting and public accountant certifications. She is an international writer, speaker, and mentor, as well as co-chair of the Arizona Technology Council’s Law and Technology committee. Mary also represents entrepreneurs on the Board of the Crowdfunding Intermediary Regulatory Advocates and the Emerging Enterprise Committee of the Licensing Executives Society.

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Revenue Based Financing

Lighter CapitalWhy It Works For Growing Technology Companies

There are multiple options to funding to fuel your growing technology business, but what if you need to:

A) get funded fast,
B) keep you in control of your company and,
C) not risk your personal assets

Webinar: BJ Lackland, CEO of Lighter Capital, explains what revenue-based financing is, and why it is a more entrepreneur-friendly path to growth capital. Most startups need capital at some point to revitalize or fuel growth and it is always best to know your options. This webinar will explain:

  1. Who it’s designed for, and how to decide if it’s a good fit for your business.
  2. How it compares to other funding options such as banks, angels & VC’s.

Register

This webinar is free.

When: Tuesday, September 16th @ 10am PT

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