What is Copyright?

Copyright is the set of legal rights given to the creator/owner of an original work. It prevents other people from doing certain restricted acts in relation to a copyright work without the permission of the copyright owner. These restricted acts include (among others) the right to:

Copy the work;
Issue copies of the work to the public by sale or otherwise;
Perform, play or show the work in public;
Communicate the work to the public;
Adapt the work; and
Do any of the above in relation to any adaptation of the work.

There is no requirement to assert or register copyright in New Zealand. Copyright recognition in New Zealand arises automatically in various kinds of works if:

The work is original; and
The author is domiciled in New Zealand or in a prescribed foreign country or is a citizen or resident of New Zealand or of a prescribed foreign country

Who Owns Copyright?

The Crown is the first owner of any copyright in work made by a person employed or engaged by the Crown under a contract of service, a contract of apprenticeship, or a contract for services.
Subject to Crown ownership, and unless otherwise agreed, in most cases the author is the first owner of the copyright in a literary work.

However, unless otherwise agreed:

if an employee makes a literary or artistic work in the course of employment, the employer owns the copyright; and
if a person commissions and pays or agrees to pay for the taking of a photograph or the making of a computer program, painting, drawing, diagram, map, chart, plan, engraving, model, sculpture, film, or sound recording, and the work is made in pursuance of that commission, the commissioning person owns the copyright.

Attribution

The author of a literary, dramatic, musical, or artistic work that is a copyright work has the right to be identified as the author of the work whenever the work is published or communicated to the public (section 94). The right to be identified as the author is not infringed unless the author has asserted the right be identified as author (section 96).

Use of Third Party Content

Where a third party owns copyright in content, you will not be entitled to copy or adapt that content or a substantial part of it without the permission of the copyright owner or unless the copying or adaptation can be justified under an exception.

What is a Substantial Part?

What constitutes a substantial part of a copyright work is a question of ‘fact and degree’. The quality or importance of what has been taken is much more significant than the quantity. Copying a part of a copyright work that by itself has no originality will not normally be copying a substantial part of the copyright work.
Copyright protection is not focused on originality of ideas but on originality of expression. The importance of the copied part to the original copyright work as a whole is assessed to determine whether it forms a substantial part of the original copyright work.
Originality tends to lie in the detail with which the basic idea is presented. The greater the originality, the greater the protection that copyright law will afford it.

Objective Similarity

Even if another copyright work has been copied, the copyright won’t necessarily have been infringed unless the copy is objectively similar to the original. It is possible to take underlying ideas and concepts that are expressed in a copyright work and express those ideas in a significantly different way which therefore does not infringe copyright.

There is limited clear case law, though, on what counts as objective similarity. In one case, the Judge said ‘a copy is a copy if it looks like a copy’.

Causal Connection

It is also necessary to show that the infringing work was actually copied directly or indirectly from the original copyright work.

Altered Copying

Taking the ideas expressed in a copyright work and expressing those ideas in a different words and in a different format may produce new content that is not causally connected with or objectively similar to the original work.
However, copyright will still be infringed if the altered copy has ‘incorporated a substantial part of the independent skill, labour etc. contributed by the original author in creating the copyright work’.

Fair Use Exceptions

There are a number of fair dealing and other exceptions under New Zealand’s Copyright Act 1994.

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you.

Kris Morrison – krismorrison@parryfield.com

“The Lean Startup” by Eric Ries: Review and discussion of key points

Being involved as the founder of an IT start-up (Active Associate – a chat bot for law firms) this book was recommended to me as essential reading. The subtitle is: “How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses”.

It definitely provides a lot of good ideas as the main point is that you should constantly be evolving – don’t try and build the perfect product. Particularly with software that is important to remember because demands shift and change so quickly among consumers.

The author outlines more about that basic point as follows:

After more than ten years as an entrepreneur … I have learned from both my own successes and failures and those of many others that it’s the boring stuff that matters the most. Startup success is not a consequence of good genes or being in the right place at the right time. Startup success can be engineered by following the right process, which means it can be learned, which means it can be taught.

He summarises the five key principles regarding the Lean Startup idea as follows:

Entrepreneurs are everywhere. So the Lean Startup approach can work with any size of company or sector.
Entrepreneurship is management. Startups require new types of management given their context of uncertainty.
Validated learning. Startups exist to learn how to build a sustainable business. This learning can be tested and validated.
Build-Measure-Learn. Startups turn ideas into products, measure how customers respond, and then learn whether to pivot or persevere.
Innovation accounting. Need to measure progress, set up milestones, and how to prioritize work.

There is quite a lot on this also at the website The Lean Startup

The main takeaway from the book is the need to continually innovate and evolve and not settle or try to have a “perfect” solution before you actually start rolling it out to your customers. In order to give a taste of the concepts that the author then goes on to outline here are some key quotes that I found were the most interesting and potentially the most applicable to many others:

The Lean Startup asks people to start measuring their productivity differently. Because startups often accidentally build something nobody wants, it doesn’t matter much if they do it on time and on budget. The goal of a startup is to figure out the right thing to build – the thing customers want and will pay for – as quickly as possible.
In the Lean Startup model, every product, every feature, every marketing campaign – everything a startup does – is understood to be an experiment designed to achieve validated learning.
This is one of the most important lessons of the scientific method: if you cannot fail, you cannot learn.
What differentiates the success stories from the failures is that the successful entrepreneurs had the foresight, the ability, and the tools to discover which parts of their plans were working brilliantly and which were misguided, and adapt their strategies accordingly.
A minimum viable product (MVP) helps entrepreneurs start the process of learning as quickly as possible. It is not necessarily the smallest product imaginable, though; it is simply the fastest ways to get through the Build-Measure-Learn feedback loop with the minimum amount of effort.
Contrary to traditional product development, which usually involves a long, thorough incubation period and strives for product perfection, the goal of the MPV is to begin the process of learning, not end it.
It’s often about gaining a competitive advantage by taking a risk with something new that competitors don’t have yet.
Only 5 percent of entrepreneurship is the big idea, the business model, the whiteboard strategizing and the splitting up of the spoils. The other 95 percent is the gritty work that is measured by innovation accounting: product prioritisation decisions, deciding which customers to target or listen to, and having the courage to subject a grand vision to constant testing and feedback.

As a lawyer I found the following quote quite interesting because it is definitely something we see among our clients with early stage ideas. They often are worried about someone stealing the idea and so ask about patents, copyright, trademarks etc. But often it is the best advice just to start doing something and learn as you go and be the front runner in the industry rather than trying to have everything sorted and perfect in advance.

Legal risks may be daunting, but you may be surprised to learn that the most common objection I have heard over the years to building an MVP is fear of competitors – especially large established companies- stealing a startups ideas. If only it were so easy to have a good idea stolen! Part of the special challenge of being a startup is the near impossibility of having your idea, company, or product be noticed by anyone, let alone a competitor.

I found the sections where he described the businesses that he had been involved with were the best parts (rather than describing what other people had done). For example, these were the four questions that he asked his team:

“Do consumers recognise that they have the problem you are trying to solve?
If there was a solution, would they buy it?
Would they buy it from us?
Can we build a solution for that problem?

The common tendency of product development is to skip straight to the fourth question and build a solution before confirming that customers have the problem.”

Overall this book was helpful for me to read through although the key concepts are outlined above and so it felt like it was a longer book than it needed to be. But that is just my own impression and others might enjoy the variety of stories that are told. On other parts of this site we are putting up reviews of books which entrepreneurs will want to have to hand when they go through the journey of starting up something new.

If there is a book you think we should review, or you would like to do a guest review, then just let me know at stevenmoe@parryfield.com!

Guest article by Tim Jones, founder of Grow Good

To B or not to B? Why wouldn’t you B a B Corp?

It is so hard to know where to start writing a post about why you should be a B Corp as there are SO many great reasons.

Before we get into that it might be best to let you know what B Corps are.

What is a B Corp?

B Corps or Benefit Corporations are globally leading businesses that are operating as a force for good in the world. Rather than fighting to be the best in the world, they collaborate to be the best FOR the world.

To become one your business must pass a rigorous certification process where you need to score more than 80 out of 200 points on the B Impact Assessment. Businesses are assessed and benchmarked on how transparent and accountable they are across the five key areas of Governance, Workers, Customers, Community and Environment.

Fundamentally it is all about measuring the positive impact your business has and ensuring all stakeholders get to benefit from the activity of the business.

Why would you want to consider being a B Corp?

In my opinion I struggle to see why you wouldn’t be a B Corp. I envision a world where being a B Corp is just how you run a business. To make it slightly easier to navigate here are the top three reasons why you should seek to certify.

1. It’s the right thing to do

Right now, in New Zealand alone we are facing numerous challenges. Climate change, inequality, high rates of youth suicide, people sleeping in cars, increasingly unaffordable housing.

These are traditionally areas that we have looked to Government to fix, but it’s more likely that real solutions will come from enterprise.

Every business can easily evaluate its impact on its workers, community, society and the environment and choose to have a positive impact. Choose to pay a living wage. Choose to use environmentally friendly products. Employ staff from disadvantaged backgrounds. Offer staff ownership in the business.

Ideally go even further and consider how your business could work to solve one or more of the 17 UN Sustainable Development Goals. Have a watch of this compelling video and a read of this presentation by Prof David Griggs on how that could look for you.

Doing good to others is great for you also. Living a life of purpose and contribution is way more fulfilling than just being in business for the money. You only get one shot and a limited number of spins around the sun on this green and blue dot in the middle of the universe. You might as well aim to leave a decent dent in it, right?

2. Lead a movement, don’t get left behind.

As a Brand Manager for a large multinational based in NZ I recently spoke to said:

“The purpose driven economy is not a trend. This is now table stakes”.

In New Zealand, there is an opportunity for you and your business to help lead the movement.

Unilever has identified a global market opportunity of $1 Trillion dollars for businesses that choose to care.

This is reflected in NZ where in the Colmar Brunton Better Futures report it is clearly identified that Kiwi’s want to support brands that care. They just can’t name any!

We need business leaders to step up and B the Change. Those that take that leadership will win out in the long run, whist other business will fall into irrelevance.

If you are a Kiwi business looking to export in the US, UK or Australia then there is a significant opportunity for you.

Just look at how Ethique has taken off in the US. Similarly, Eagle Protect (the first B Corp in NZ) has recently set up shop in the US also.

3. Build a Better Business

Just by taking the B Impact Assessment you will most likely identify areas for growth and development in your business. Businesses that pass the Impact Assessment can proudly state that their businesses are held to world leading standards of transparency and accountability.

Customers are caring more about the transparency and accountability of business. They want to know what good you are doing and that it has been verified and accredited by a third party.

The B Corp certification is not pay for play and it totally avoids any risk of greenwash.

Internally, 50% of your leadership team will likely be completely lacking meaning in their working life. 70% of your staff probably don’t want to be there. Having a sense of purpose and real mission is more likely to ignite your staff to greatness.

Millennials are driving this and they are making up an ever larger proportion of your workforce and consumer base.

Lastly there is a ton of evidence that shows that businesses that care and are truly purpose driven outperform their peers (see further reading below the article). This has been identified by such socialist, tree hugging groups as EY, Deloitte and PwC. This is also being reflected by the growing demand for more ethical investments.

There are plenty of reasons why you should look at certifying as B Corp, however the reason will be very individual for each business or business owner.

If you would like to discuss your specific business and how being a B Corp could help then please do contact with me at Grow Good. To learn more about B Corporations have a look at the B Lab site.

Tim Jones

Tim is the founder of Grow Good a Certified B Corp and is also a B Corp Ambassador for NZ

Further Reading

For more information on the many benefits of being purpose driven please see this list of links:

A model of the impact of mission statements on firm performance

5 Key Business Trends to Master in 2016 – Be like a “B Corp”

Prosocial Incentives Increase Employee Satisfaction and Team Performance

How Do Leaders Bring Purpose to Life in Organisations?

The pursuit of purpose: from aspiration to value creation Executive roundtables in Davos

THE BUSINESS CASE FOR PURPOSE EY and Harvard Business Review

Investor Tip: Look For Purpose-Driven Companies

Purpose-Driven Companies Are Driving The New Economy

Why Businesses That Are Purpose-Driven Come Out on Top

The Science Behind What Really Drives Performance (It’s Going to Surprise You)

Boycotts and the bottom line

Corporate Philanthropy and Productivity: Evidence from an Online Real Effort Experiment

How Great Companies Think Differently

Companies that Practice “Conscious Capitalism” Perform 10x Better

Why Companies Are Becoming B Corporations

Sustainability Pays Studies That Prove the Business Case for Sustainability

Vulnerability & Loyalty In The Purpose Driven Company: An Interview With Dov Baron

Why Purpose-Driven Companies Are Often More Successful

Every Purchase You Make Is A Chance To Vote With Your Wallet

Companies with a purpose beyond profit tend to make more money

Putting Purpose to Work: A study of purpose in the workplace

The Deloitte Millennial Survey 2016 – Millennials want business to shift its purpose

The Science Is In: Greater Equality Makes Societies Healthier

Business School’s Worst Idea: Why the “Maximize Shareholder Value” Theory Is Bogus

Do you have a current Will? Do you need one?

In this past year you may have bought a house, established a business, moved in with your partner, welcomed a baby, booked your big OE or perhaps there are wedding bells on your horizon. Whatever this year has brought you, now is an opportune time to ensure that your Will reflects your current situation. If you don’t have a Will, now is the time to get one.

Death isn’t a pleasant topic, yet it’s an important one that’s often avoided by New Zealanders, particularly those in their 20s, 30s and 40s.

When a young New Zealander passes away they often do so without a Will. Although discussing one’s mortality can feel uncomfortable, knowing that you have a valid Will can provide you and your family with the peace of mind that your final wishes are known and will be adhered to.

When thinking about a Will there are some important questions you need to ask yourself.

Who should be the executor and trustee?

All Will-makers must appoint an executor and a trustee. An executor obtains probate for your Will from the High Court and your trustee carries out your wishes. Although the executor and trustee are separate roles you may appoint the same person to fulfil both.

Quite commonly a Will-maker will appoint a family member to these positions. However, it’s important that you think about whether a person is suitable for such a role in regard to the dynamics of your family.

Keep in mind that in times of grief many people will operate on the periphery of their personalities. Ask yourself whether appointing certain people could cause strain on your family’s relationships. For example, if your parents are separated, will choosing one over the other cause unnecessary friction?

If you choose not to have a family member or if the distribution of your estate is likely to be complicated, you may prefer to appoint your lawyer or a trustee company.

What are my final wishes?

In your Will you instruct your trustee to distribute your estate to whomever you wish, for example you may like to:

Leave your property to your partner, children, grandchildren, other family members or friends you wish to provide for
Leave some of your property, money or other assets to a family trust
Specifically leave items such as cash, jewellery, artwork or furniture to particular friends or family members
Leave money to a specific charity or organisation
Give instructions to your executors if you own a business, and
Instruct your executor as to how you would like your body to be handled, whether you’d like to be cremated or buried (and if so, where?) and how you would like your funeral to be conducted.

If you are a young person and have assets, which could include insurance policies, but do not have a Will then on your death your parents would need to apply to the court to administer your estate. This is very difficult for a grieving parent as generally under the law they are the ones to inherit. They are left feeling that they are trying to benefit from your death. If, however, you have left a Will under which your parents benefit then they know that was your wish and are left feeling more comfortable.

When drafting a Will keep in mind that you may be obligated to provide for particular people (such as your spouse or partner, children and so on) under the Family Protection Act 1955, the Property (Relationships) Act 1976 and the Testamentary Promises Act 1949.

How will I pay for a funeral?

Money is the last thing people want to think about when grieving. Therefore it’s practical to give this question some serious thought. Many young New Zealanders are only beginning to build their capital and many have substantial debt. Accordingly you may want to contact your insurance provider about both life and funeral coverage insurance.

Funerals can cost thousands of dollars. If it’s unlikely that your estate could cover your funeral costs, preparing for the future will save your loved ones unnecessary financial strain.

The same can be said if you are servicing a mortgage. You may want to ensure that you have insurance cover for your mortgage and also have income protection insurance for your partner and/ or children.

Who can draft a Will?

In order for your Will to be legally valid:

You must be 18 years old or over,
It must be in writing,
It must be signed by you, and
It must be witnessed and signed by two people who are not benefiting under the Will.

It’s very important that anyone who has assets also has a current Will. Make yourself a time in the next few weeks to think about the questions we’ve posed above. If your Will needs updating or you need to make your first-ever Will, do get in touch with us as soon as possible to discuss your wishes. It will give you and your family great peace of mind to have this End of Year Resolution ticked off.

This article is not a substitute for legal advice and you should talk to a lawyer about your specific situation. Please contact Ken Lord at Parry Field Lawyers (348-8480) kenlord@parryfield.com

So, what makes a mission driven company?

Came across an interesting report from November 2016 published in the UK called: “In pursuit of impact: Mission-led businesses”. A copy can be accessed here.

One of the most interesting parts was how they actually decided what a mission led business was and their criteria for determining that. In the introduction they note: “This report sets out an approach for defining and identifying businesses that have no legal restrictions on their profit distribution but which have a genuine commitment to wider social and environmental impact. As an emerging business trend, it is too early to describe this as a clear ‘sector’ or ‘market’. It is better described as a movement or an approach to business where social impact is seen as a critical driver of value creation.”

Essentially they had a weighting system for different components of a business and it had the following parts. I think this is helpful to analyse in order to see how businesses we may be starting, or involved in, might weigh up.

Intent: 40%
Strength of strategic commitment to a social or environmental mission

Business Model: 25%
Centrality of mission in core business activity and profit distribution

Governance and operations: 20%
Integration of mission across governance, business operations and ways of working

External perception: 15%
Public recognition for business commitment to mission

A company can get a unique rating based on an assessment of objective criteria relating to each of these component parts. They actually provide an even more detailed background on each one of those four elements as well which shows the weighting for each:

Intent: Central Ambition is given 80% and long term commitment is given 20%.
Business Model: Core commercial activity is given 60% while Profit distribution is given 40%.
Governance and operations: Governance structure (20%), Mission integrated in operations and ways of working (40%), Impact related activities integrated with mission (30%) and Impact reporting (10%).
External perception: Press reports and awards is given 100%.

I found it interesting that in undertaking their research they specifically excluded charities and community interest companies and focussed solely on profit making company structures.

One of the interesting quotes I came across in the conclusion which I agree with was: “Businesses that did not have access to quality advice often chose their legal structure randomly.” In all the report concludes that 4.3% of turnover in the UK private sector related to mission driven businesses (that’s 165 billion pounds).

Not unlike B Corp status, this way of thinking is new and challenging when it comes to how we actually define what a company is. It is one thing to claim to be about a purpose or to be advancing social good but what are the metrics that are satisfied to objectively show that? What might the impact be of thinking in this way for social enterprises and people who want to do good with their new companies (or, for that matter, with existing ones). It is certainly worth thinking through when it comes to setting up a business and working out how it will operate.

Why is due diligence important?

Due diligence is an important aspect of buying or selling a property, both for the purchaser and the vendor. Decisions are made based on disclosures made in due diligence, therefore it’s important for both parties that the documents or information relied on are accurate and correct. Failing to undertake due diligence can have a potentially disastrous consequences, as a 2012 case shows.

In this particular case water rights were the issue. Altimarloch Joint Venture Limited contracted to buy 145.5 hectares of rural land, part of which they intended to plant in grapevines. Under the contract the water rights held by the vendors would be transferred to the purchaser. Those water rights were represented to allow 1,500m3 of water per day to be taken from a stream for irrigation purposes. The reality was that the property held resource consents to take only 750m3 a day from the stream.

The error came from a LIM Report issued by Marlborough District Council that was relied on by the vendor’s real estate agents when they were marketing the property for sale and also by vendor’s lawyers when preparing the agreement for sale and purchase. The vendors themselves were aware of the correct water-take figure but didn’t spot the error when signing the contract, relying as they were on their professional advisors.

If the vendor’s agent or lawyer had checked with the vendor themselves as to what consents they had or had obtained a copy of the resource consent from the District Council, which is easy enough to do, the error would have almost certainly been picked up.

Always check primary sources

The lesson learnt is not to rely on secondary sources, particularly when making specific contractual warranties about matters. Instead, do check the actual source documents that give the rights or govern the obligations.

In this instance the purchaser successfully claimed damages of $1,055,907.16 as a result of this misrepresentation, even though the difference in value of the land with the represented amount of water rights as opposed to the water rights it actually had was only $125,000.

The reason for this is that the court assessed the damages as the amount it would take the purchaser to put themselves in the position as if they did get what they contracted to purchase. The reason the damages were so high was because no further water rights were available from the stream; in order for the purchaser to obtain the increased water-take they had to construct a dam to store the sufficient water to take up the shortfall.

By using primary source documents mistakes like this can be avoided. Where agreements, easements or resource consents are referred to in other documents such as valuations, LIM Reports (as in this case) or property information packs compiled by real estate agents, it’s encumbent on both the purchaser and the vendor to check the source documents of the information.

In this case, because there was a specific contractual provision about the volume of water rights being transferred, the vendor (or in reality their professional advisors) were found liable to pay very significant damages when the correct information was readily available and could have been checked very easily.

Always thoroughly check documentation

The same applies to easements, leases, crops supply agreements or other sorts of resource consents. None of these documents should be viewed as ‘standard’ and the original documents should be read by a vendor to ensure that what they are representing is what is actually in the document. A purchaser must also check documentation to ensure that what they are contracting to buy is what can actually be acquired.

Every situation is unique so please discuss your situation with a professional advisor who can provide tailored solutions to you. Please contact Paul Owens at Parry Field Lawyers paulowens@parryfield.com 03 348 8480

Recent trends relating to mission driven companies

Came across an interesting report about mission driven companies from November 2016 published in the UK called: “In pursuit of impact: Mission-led businesses”. A copy can be accessed here.

Some of the trends regarding mission driven companies that they identify include the following (from page 1):

“Increasing expectations for business to adopt a responsible role in wider society. For example, nine out of ten millennials believe that he success of a business should be measured by more than just its financial performance.
Employees becoming more optimistic about businesses that make a commitment external to themselves. One survey indicates that workers are twice as likely to be optimistic about businesses with a strong sense of purpose. These businesses are considered more likely to be resilient to future shocks and “able to stay ahead of industry disruptions; and
The digital economy creating greater transparency, ensuring trust in business becomes ever more important at a time when public trust in business is at an all-time low.”

There are some good points to keep in mind here when thinking about our current environment and what the future might hold for the social enterprise sector as it seems likely that these trends will grow.