Nasir and Matt talk about one woman's revenge against Huffington Post after she realized it used her photo without giving her credit. They also answer the question, "We are trying to negotiate a deal on entering into either a joint venture or some profit sharing partnership for our service and wanted to know if we can just use a term sheet before putting everything formally in writing."
NASIR: All right. Welcome to our podcast where we cover business in the news and answer some of your business legal questions that you, the listener, can send in to firstname.lastname@example.org.
My name is Nasir Pasha.
MATT: And this is Matt Staub.
NASIR: Very excited. This is our 99th episode. That’s about… if you take 101 and minus 2, that’s 99, to kind of help you out with that math. Very exciting.
MATT: And it only took 99 episodes for you… I think that’s the first correct math problem you’ve done on the podcast so that’s always good.
MATT: We should stop here. Well, not because of the math thing which is… I don’t know if I want to get to a hundred.
NASIR: No, we can’t stop. We have to do our 100th episode which I’m excited for because at least what plan is – who knows if we’ll actually do it – we’re planning on recording live together in the same room which we never have done in about 99 episodes, if I did my math correctly.
MATT: Yeah, I guess, by the time it comes out, we won’t know whether we’ve done it yet so it will still be accurate, I guess.
NASIR: Yeah, exactly, but look out for the next episode. Either way, Episode 100 will be a big one.
NASIR: Yeah, I hope so. All right. So, what do we have today? I’m actually excited about the 100th episode but I’m also excited about this topic as well – this story.
MATT: Yeah, you’re overly excited about it. You don’t get excited about these articles too often, but this one… I don’t know what it is.
NASIR: This is actually the first time I actually read the article or story that we’re covering.
MATT: Usually, you just read the title and look at the pictures which actually is applicable to the story. So, it’s dealing with Huffington Post and I’ve been to Huffington Post before, I believe. I had to have.
NASIR: Oh, yeah, it’s a pretty popular news source. I mean, even when people link to different news sources online, it comes up pretty often. Are you being sarcastic? Or I don’t even know.
MATT: Well, I’m pretty sure I’ve been there. I don’t know.
NASIR: Okay. So, you weren’t?
MATT: It was an Arianna Huffington? Is that there?
NASIR: Yeah, Arianna I think.
MATT: I don’t know. I just know her from the impressions that are done on SNL but they lost that cast member so I don’t know if they’re going to do that anymore. Basically, there’s a bunch of pictures that are up on these articles. One Reddit user, FrancescaO_O specifically – I assume she’s listening to this podcast – basically, she found out that one of her photos was being used on Huffington post and she wanted to do something about it. She tried to reach out and I think she was ignored initially, right? But, at one point, someone got a hold of her or she was able to get in contact with someone and they said, “We’re not going to give you any credit because you posted it on this other site so the only way to get rid of it is for you to delete the image yourself.” But she got a little bit of creative and I guess the way they had it set up the links which you understand better than me…
NASIR: Yeah, let me take care of this tech part.
MATT: Yeah, go for it.
NASIR: I love how you glossed over the other site. The image was posted on a site called “Imgur” which, by the way, even though you may not know, this is one of the biggest sites in the world, by the way.
MATT: I didn’t want to pronounce it incorrectly, that’s why.
NASIR: Well, I’m not necessarily sure how it’s pronounced but it’s something like “Imgur” but everyone know about it. So, Huffington Post, what they did is they actually, instead of downloading the image and then uploading it onto their site, they basically hot-linked it or embedded – whatever tech term you want to use – to put it on their site. And so, because of the kind of response that she did get from Huffington Post, what she did was instead of deleting the image, she changed the image so that’s the image that was actually on Huffington Post blog was updated accordingly with the whole text kind of a rant about how Huffington Post stole the image and they didn’t give us credit and et cetera, et cetera, and here is the credit, “My name is Francesca Timbers and my blog is…” I’m going to plug her too because “… travelry.tumblr.com.”
MATT: I mean, this happens all the time, obviously. I think we might have even talked about it on the podcast a few times, but this is a very creative way to kind of get back at… I guess, first of all, this is just a bad response by Huffington Post. I don’t know why they would even respond like that. They deserve this sort of retribution that they got from this poster and she’s pretty creative and I guess, for people out there that find their photos being used, I guess the thing to do is – I’m pretty sure we have talked about this before – but, you know, you contact the site. You would think that they would take it down at that point. I mean, there are certain legal ways you can pursue it but, usually, it’s not even worth the battle.
NASIR: Yeah, and you’re talking about the DMCA request which they do have to comply with. What’s interesting about the response, they said, “Okay. Well, since you uploaded it to Imgur, we can use it unless you delete it,” right? And, if you look at the terms of service of Imgur, first of all, there’s no transfer or assignment of copyright per se. It does, by uploading it, you do agree that they’re allowing to display it publicly and sublicense it to others. But, also, it says there that, by downloading a file from that site, you also promise not to use it in any commercial purposes as well. That excuse of it of being on Imgur, I don’t see how that flies.
But here’s what’s interesting, I think – and this is why I was kind of getting excited is – because what people aren’t talking about is this kind of aftermath. I’m trying to figure out what’s going here. If you look at the original Reddit post, for whatever reason, the link and the user that posted has been deleted and then the image that’s on that website on the Huffington post is also gone and then they have a correction in there and the correction makes no mention of why the image was taken out. They have some kind of weird… it almost seems like an excuse. Basically, they’re saying that the image showed something else when in fact it was basically the image was an image of a cup of noodles from a certain restaurant or a certain location and they’re saying, “Oh, this is a cup of noodles from a different location or whatever,” right? But the point is that there is no mention of it. I really feel that Huffington Post got the pressure and they paid off this person that originally posted it and, in exchange, she removed the link to the Reddit and – I don’t know – I’m just assuming that but I feel like there’s something there.
MATT: You’re probably right. I would think that would be… Well, I don’t know. They responded so poorly the first couple of times that, you know, would they be smart enough to do that? I think, I guess, after this article got posted and, you know, more people got wind of it then, yeah, it’s probably something they did, especially it’s weird how the Reddit post is taken down. I don’t really understand why that would that be the case other than what you said, but…
NASIR: And, when I say taken down, all the comments are still there and the title is still there but, literally, it’s been edited so that the link that had all the commentary about what happened, the story that she gave was removed in the user has been deleted, so I feel like something’s there. I don’t have proof at all because – think about it – I don’t think that, the besides us talking about it, I don’t think this story’s been really picked up in the pop media so to speak. No one’s too keen about bashing another news agency but, obviously, we don’t mind.
MATT: Yeah, that’s true. You just got so excited about this because you wanted to be a detective and try to crack this case.
NASIR: I know. I kind of hope this kind of comes out and then we’ll find out more about it but will see.
MATT: The lowest stakes detective work ever done but that’s all right.
NASIR: Oh, no, it took me five minutes, but I was like Sherlock Holmes or Monk from the hit TV show on USA Today – not USA Today, just USA.
MATT: All right. Well, get into the question of the day.
“We’re trying to negotiate a deal on entering into either a joint venture or some profit-sharing partnership for our service and wanted to know if we can just use a term sheet before putting everything formally in writing.”
NASIR: Yeah, term sheets. I think they’re worried about whether the term sheet’s going to be binding or is it enough. I think that’s a common question. I think a lot of people are so keen to, like, get everything in writing and they kind of forget they are still in negotiation process, you know. We even had clients too that want something written up so that they want to show the other party which, you know, can be useful sometimes but, often times, it’s almost a waste because often the terms get negotiated face to face. You know, at the end of the day, it doesn’t matter what’s on paper. Terms sheets are great to kind of having starting point. It’s also what we use as attorneys to actually draft the agreement.
MATT: Yeah, it’s always good to at least get something on paper because, obviously, if you’re just speaking, anything could change, I suppose, or at least there’s some sort of… whether it’s binding or not, at least there’s some sort of understanding of where you and the other side are at.
MATT: To me, that’s much better than just talking or I guess I would put talking at the lower level than the email and then some sort of actual document above that, if I’m doing my weekly rankings.
NASIR: Yeah, you bring a good point too about binding or non-binding. If you want it to be binding like a binding term sheet, first of all, I wouldn’t. I wouldn’t do that. I would find some non-binding language in there. The best thing you can do is have your attorney draft a letter of intent – a non-binding letter of intent – and that basically a formalized term sheet – an LOI – and there is binding kinds and there’s non-binding kinds or a memorandum of understanding and so those are very useful. I have to mention too that they mentioned something about a joint venture or some profit-sharing partnership. I would also be careful about any kind of joint venture. I just have to mention it. Most likely, this person knows. It seems like they’re sophisticated in that arena but keep in mind that a joint venture, even if you use the word “partnership,” in a joint venture, all the parties are jointly and severally liable for everything that goes on in the venture partnership, just like a regular general partnership. And so, that means, even if you’re operating under two entities, if one party is taking up most of the work, 90 percent, that other party could still be held 100 percent liable for the liabilities of the actual joint venture. So, that kind of agreement is a very big deal so getting a letter of intent that’s non-binding is probably the first step before putting anything in a formal agreement.
MATT: I guess another thing too, even if it is a non-binding term sheet, there have been cases, and I came across one that’s was in Delaware which is one of the most popular places to incorporate, probably the most popular outside of your own home state, where the Delaware supreme court held that a non-binding term sheet can be sometimes be considered binding under certain circumstances.
MATT: We don’t have time to go through all the facts of what this was but for more detailed sheets where the intent was kind of there to make it binding and something got screwed up but, I don’t know, it’s just a consideration to keep in mind so try to make it clear what intent is from the onset.
NASIR: Yeah, and that’s why, if you have your attorney do it, I mean, any basic attorney will understand how to make a letter of intent non-binding and have that appropriate language in there and avoid those kind of pitfalls that occur because – Matt’s right – I mean, there are circumstances in which, if consideration is paid or expectations aren’t t clear, that all of a sudden the non-binding nature can become binding. Even a non-binding letter of intent has a binding nature to it even to negotiate in good faith, for example. And so, those kind of things do come into play.
MATT: Well, I think this should be the last podcast. We’ll end on you saying that I’m right and we move on, right?
NASIR: Yeah, first and last time I believe, if I recall.
MATT: You said I was right. You got a math problem right. It’s a pretty great show for us.
NASIR: Well, I think our next hundred episodes, we’re going to turn our new leaf, a chapter of our podcast, and looking forward to doing that with you, Matt. Maybe you’ll still be around, I’m not sure.
MATT: Illegally unsound, dumb art.
MATT: Is art the opposite of business? They were all easy until I had to get to do the opposite of business.
NASIR: I think the opposite of business is not business.
MATT: That’s too easy.
NASIR: Well, that’s what it is.
MATT: All right. Well, stay tuned for Episode 100. We hit triple digits.
NASIR: Nice. All right. Thanks for joining us everyone.
MATT: Yeah, keep it sound and keep it smart.