Pat Parker & Associates – Harvard Business School Case Study

Critical Issues
The Pat Parker & Associates case, written in 1995 by Mursten in the Harvard Business Review raises several points that should be considered when dealing with intellectual property matters. We need to clearly understand who owns the copyright to a

report prepared by a firm for a client. The fair use defense to a copyright infringement can be complex and difficult to prove. The work for hire doctrine needs to be applied to the case in order to assign copyright ownership. Using sound business judgment in negotiations and following a code of ethics should have more weight on decisions than the legal implications. If something is legal to conduct, then this doesn’t mean it is an ethical action. Ignorance is not always a viable defense for permitting a civil wrong to take place. Questions need to be asked in order for individuals to make the most informed decisions. These critical issues will all come into play as we take a closer look at the Parker case and are able to draw some conclusions.

Campaign Research Consultant
Parker’s business operations are basically a fact-finding service. His firm researches political candidates and reports back on their voting history, prime and co-sponsored bills, and attendance records. It also looks at financial disclosures, gift reports, lawsuits, general public records, and non-legislative activities (Mursten, 1995). Information is gathered, organized, and presented to the client. The actions that the client decides to take based on the information gathered is independent of the work that the consultant was paid to do. Opinions are not generated, but inconsistencies and weaknesses are drawn out. Parker’s firm can also be utilized to consult on political advertising campaigns while they are in the development stages (Mursten, 1995).

Use of the Research Report Created for Dale Jackson
Parker had no way of knowing if the research he compiled for Dale Jackson was ever used. Jackson decided not to publicly address any of the voting disparities of Paine (Mursten, 1995). This did not mean that his campaign discarded the research report. He could have used the information to prepare for a debate or could have used it in general discussions he had with other legislators throughout the election process. Sometimes you just want to know what your opponent’s weaknesses are so you are equipped in case you are caught off guard with the media. It would also help to be prepared if your opponent decided to attack your own voting record. You are armed with ammunition but don’t always have to use it. In my opinion, reading the information that was provided in the report meant that Jackson’s campaign used the research.
Use of a Copy of the Research Report by the SATL

Parker never asked what the State Academy of Trial Lawyers (SATL) intended to use the research report for. What did they want the purchase to accomplish? Since ethics came into play regarding his final decision, he had the right to ask questions that would help him make that decision. The SATL would have the right to decline to give a reason. Parker was forced to speculate that the SATL would use the report to be aware of any potential criticisms of Paine. Their intentions were likely noble as they prepared to work on his next campaign. Parker had no way of knowing or controlling how they would ultimately use the information provided.

Legal Implications of Political Campaign Actions

It would be illegal for the SATL to give the research report to the Paine campaign. Cash gifts up to $250,000 could be bundled from 500 individuals and be considered a legal campaign contribution. According to the state campaign financing statutes, giving in-kind gifts in excess of $500 was a criminal action (Mursten, 1995). In-kind gifts did not qualify for the bundling exception. If Parker sold the research to the SATL knowing that they would give it to Paine, he could be implicated as aiding in the crime and held accountable for a misdemeanor (Mursten, 1995). It would be possible for the SATL to in turn sell the research to the Paine campaign. It this occurred, the transaction would be indicated in the official spending reports. The SATL could also donate the research to the Republican Party. The Republican Party could then donate the research to the campaign of the Republican nominee. According to Mursten, “Under state campaign financing law, registered political parties were exempt from the $500 contribution limit.” This would likely provide a loophole to the campaign gift policies.

Parker could not be held liable if Paine used the research information to violate the new Florida Voluntary Code of Fair Campaign Practices. If Paine publicly announced his support for the code and then violated it with research conducted by Parker’s firm, then Paine should be held accountable. Parker also could not legally distribute a copy of the postcard from the Jackson campaign since his firm did not create the marketing piece. He merely reviewed the postcard for accuracy and had no rights to the product. Every functional area in the business world has legal exposure (Baumer, 2001). Each business needs to identify what their largest exposures are and determine how they can best be contained.

Copyright Law
The Agreement for Campaign Research and Consulting Services limited the use of the research report by the client for a specific period of time coinciding with a specific election campaign (Exhibit 8). The Agreement did not limit the future use of the research report by Parker’s firm. Since it did not specifically limit the use of the research, then Parker interpreted the contract to read that his firm could use it again for hire. Parker also felt that the campaign could not claim the copyright since a copyright disclosure was omitted on the document. The Copyright Act of 1976 does not require a copyright symbol to appear on a work in order for it to be covered by copyright protection. The Act only requires the work to be original and fixed (Wikepedia, 2006). The question regarding who owns the copyright still must be answered. The Agreement and disclosure statements on the report address when the report can be used and who has the right to use it (Mursten, 1995). These documents never mention that Parker’s firm retains the original copyright to the work and can republish it in the future. Because these statements don’t exist, there can be considerable debate regarding who should own the copyright.

Work For Hire
As a general rule the author of the work owns the copyright. The Copyright Act of 1976 contains an exception called the “work for hire” doctrine. If the “work for hire” doctrine can be proven in a specific case, then the person or company that the work was created for would own the copyright (Developer, 2006). The “work for hire” doctrine applies when an employee creates a product within the scope of his/her employment or in a situation where a certain type of work is specially ordered or commissioned by which an express agreement is considered for hire (Developer, 2006). Since Parker is an outside consultant or a contractor, and not an employee, the “work for hire” doctrine would not apply under the first part of the test. The work was specifically ordered, it is new, and it could be classified under the compilation category in the Copyright Act of 1976 if there were an agreement that expressly stated that the work was made for hire (Developer, 2006). Since this statement did not exist, the second part of the test also favors Parker’s interpretation. This scenario would not be considered work for hire(,) and Parker would retain the copyrights. The copyright ownership issue should always be addressed with the assistance of legal counsel in preparing the agreement.

Transfer of Ownership
It would be possible for the Jackson campaign to transfer the ownership of the copyright if the contract were negotiated as a work for hire. They could even authorize the sale of the copyright and reap the financial rewards of the transaction. It would be difficult to determine if the Jackson campaign would easily give up the copyright or refuse the request. Since they are no longer in the political circuit, they may be willing to share the information. On the other hand, they may feel that the information would create a disadvantage for the Democratic Party and decline the transfer request.

Fair Use
Under the Copyright Act of 1976, the fair use of copyrighted work does not infringe a copyright. Fair use is generally permitted for criticism, news reporting, teaching, scholarship or research purposes (Wikipedia, 2006). Fair use is further determined based on the character of the use, nature of the copyrighted work, amount of the original work used and the effect it will have on the demand for the original work (Wikipedia, 2006). If it were determined that the Jackson campaign owned the copyright, Parker could argue that the reproduction of the research reports fall under fair use of a copyrighted work. The main use would be for research purposes and would not be disclosed publicly. An individual should have a right to obtain a copy of materials written about their own character provided discretion is used and public criticism of the work is not made. It is legal for Parker to resell the report, but not sell the postcards.

Ethical Issues
Parker felt uncertain about the request for information soon after receiving the phone call from the SATL. He questioned if he should even be taking on the contract. Parker’s gut feeling told him that something didn’t feel right about the request (Mursten, 1995). As a rule of ethics, if you immediately question an action, then you should spend a considerable amount of time conducting research in order to justify the action you decide to take. If you feel uneasy about performing a service or action, then you have the right to turn down the business without providing a detailed explanation. Parker also felt like he had nobody to turn to for advice with his firm (Mursten, 1995). He felt pressured as the sole decision maker of the firm to make the right decision.

I don’t see anything wrong with the SATL’s request to purchase old research. I do have a concern about the price that they are willing to pay for the data. They are willing to pay full price for research that has already been conducted and paid for by another client. Are they coming in with a high offer in order to deter Parker from considering the ethical and legal implications of their request?

Appropriate Ethical Action
When the request for information was made Parker, he should have replied that he would retrieve the old contract and get back in touch with the SATL regarding his ability to meet their request. Parker should have taken a few days to consider all of his options and seek advice. Since he had nobody to turn to within the company for guidance, he should have leveraged his extensive political network. He should have been able to identify a few individuals that worked in legislature that would be able to provide an unbiased opinion on the subject. Parker should also revise his standard client agreement in order to clearly state who retains the copyright for the product produced. He needs to eliminate any confusion and can work with an attorney to draft the agreement. I do not feel that he should resell the report to the SATL since they are likely to use it to aid the Republican candidate.

Conclusion
Parker needed to ask more questions regarding how the research would be used and whom it would be disseminated to within the political arena. In order to make a well-informed decision, he needed to have all of his concerns addressed. If he were not able to obtain answers to all of his questions, then he should have declined the offer. If he were comfortable that selling the research would not violate any copyright laws, state legislature, or prior contracts, then he had an ethical duty to sell it for a fair price. He has an ethical duty not to sell the research. In my opinion, $25,000 is not a fair asking price for a report that already exists and would take minimal time and effort to reproduce. An asking price of $10,000 would be more appropriate for all parties involved. Copies of the postcards created for the Jackson campaign should not be included since a different marketing consultant created them. It would be copyright infringement to sell the postcards. Parker has worked hard to establish his firm as the “Party’s choice” for Democrats. (Mursten, 1995). He has a loyal customer base that values the work that he has conducted over the years. He would get negative press if word leaked out that he sold a report originally contracted by a Democrat to the Republicans. He would be disloyal to his former client, whether anyone knew about it or not. It would look like he was abandoning that party in favor of financial rewards.

According to Baumer, managers should be mindful of the legal pitfalls that can confront their company. Parker should be able to get through this scenario on all of the legal technicalities. He does retain the copyright ownership since the work for hire doctrine does not apply. He could still be challenged to defend his position. I don’t think it is worth the time or effort to put up a fight to defend these actions. He could get sued and have to spend money on attorneys and time in court. His free time is worth more to him than the price of the contract. He should weigh ethics above all else and decline the request. He would not lose any clients by turning down the business and his reputation in the industry would still be intact. Parker has always worked for Democrats and the client who paid for the report was a Democratic organization. The SATL likely supports the Republican candidate. This puts Parker in a conflict of interest position. He has fostered loyalty to the Democrats, and resale of the report to the SATL would appear disloyal.

References:

Baumer/Poindexter: Cyberlaw & E-Commerce (2001). Ch. 1

Developer. developerdotstar.com. Who Owns Your Software? Software Copyright and the Work for Hire Doctrine. 2006. http://www.developerdotstar.com/mag/articles/daniels_softwarecopyright.html

Exhibit 8. Mursten, D.B. (1995). Agreement. Pat Parker & Associates. Harvard Business School Publishing.

Mursten, D. B. (1995). Pat Parker & Associates. 9-393-059. Harvard Business School Publishing.

Wikipedia.com (2006). Copyright Act of 1976. http://en.wikipedia.org/wiki/United_States_Copyright_Act_of_1976

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