Copyright infringement is a startup killer

Creative minds depend on inspiration. Some of the best business ideas are triggered by what entrepreneurs have seen other companies accomplishing. Of course, in such instances it can be incredibly easy to violate intellectual property laws, which inevitably leads to legal trouble and possible business failure. Here are a few companies that learned that lesson the hard way:

Napster: Napster was a pioneering peer-to-peer online file exchange service which focused on sharing .mp3 format music files over the internet. Napster was user-friendly and quickly garnered a following of about 80 million users. The website had a large collection of mainstream music, along with older songs that were difficult to find, bootlegs and even unreleased recordings. Napster ran into trouble when heavy metal band Metallica discovered a demo of their song on the site. Eventually the constant copyright infringement led to a legal battle which resulted in bankruptcy.

Boundless Learning: This startup was a godsend for college students. Boundless Learning provided free, web-based versions of common college textbooks to students. When top publishers like Pearson Education Inc. and Macmillan Higher Education learned that their material was being hosted illegally online they took their complaints to court. Boundless Learning was able to come to a settlement with the publishers, involving changing their business model, but the incident was a huge financial loss.

Aereo: Aereo's business model focused on providing over-the-air television services to internet connected devices using a specially developed antennae. Broadcast networks were quick to claim that, despite the technology, Aereo was basically a cable television provider. Since the company had not obtained licenses from copyright holders and was involved in redistribution without paying any fees, they were infringing copyright law. Aereo eventually went bankrupt.

Copyright law and intellectual property law are serious issues and should never be taken lightly. If you are working with protected material make sure to contact an experienced business attorney, who can ensure you are adhering to federal rules and regulations.

Categorised in: Starting a Business in Arizona

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