National Online Contests and Retainment of Rights to use for commercial purposes
We're a small internet startup who are looking to run a contest online, where the winners are judged by the user community. We were wondering how can we keep this from slipping into any definition for a sweepstake as opposed to a contest and how to keep it consistent with various state laws.
Also is it possible for entrants to give us the rights to publish their content for commercial use whether it be by license or transfer of their intellectual property through the submission of their entries.
Answer
Re: National Online Contests and Retainment of Rights to use for commercial purposes
Lots of good question! Contests are merit-driven, sweepstakes are luck-driven. The laws in each state are not totally in harmony one with the other so you have to be careful and may have to exclude citizens/residents of particular states to suit your needs. As to the granting of IP rights in the entered content this is of course possible but you need to remember that contestants can only give what they have -- if their work is a derivative or otherwise their rights in it are limited they can only give you the rights they have. So strong liability limitations and indemnifications are called for. Of course, this raises the question of how strong the indemnification can be as a practical matter -- and this has to be a risk profile that your company is comfortable with.
If you'd like to discuss this you can give me a call at 212.366.1324 or hit me with an e-mail.
Answer
Re: National Online Contests and Retainment of Rights to use for commercial purposes
Mr. Friedman is correct, and so you will have to decide how you want to balance the legal risks with the commercial possibilities. My firm focuses on Internet, media and entertainment law.
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