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Work For Hire or Copyright Assignment?

Here’s a question that keeps popping up in my conversations with creators:

What’s the difference between a “work made for hire” and when I assign my copyright to someone else? In both cases I no longer own the copyright, so what’s the difference?

I’m so glad you asked! Because if you’re a creator who wants to encourage your clients to do the right thing (like pay you), the differences are pretty important.

By Giulia van Pelt via Flickr.com

A work made for hire is when you create something for someone else, the thing fits into one of these nine categories , and you have a written contract that explicitly says the work is a “work made for hire.”

If all of those things are true (or if you’re an employee making something in the “course and scope” of your job), then you never own the copyright to what you create. From the very moment the thing is created, it’s owned by the client or your employer. You can’t use the thing unless your client or employer gives you permission and they can do whatever they want with it even if they fire you in the middle of the project.

When you assign a copyright you are selling it to someone else . And in order to sell the copyright, you have to own it. You own the copyright to something you create so long as it’s not a work made for hire.

Setting aside situations where you make things as an employee, that means: no written contract? It’s not a work made for hire. If the thing doesn’t fit into one of the work for hire categories? It’s not a work made for hire. The contract is written but doesn’t say that what you’re making is a “work made for hire” or “work for hire”? It’s not a work made for hire.

The other rather important thing about a copyright assignment? After 35 years, you can cancel it.

You can go back to the client and say, “Hey, that thing I assigned to you? Yeah. I want it back.” You can do this even if you’ve signed something that says you super duper promise you won’t cancel the assignment; you can’t legally sign this right away.

To recap: when something is a work for hire, you never own the copyright. When you assign a copyright, you own it originally, but you’re giving it to someone else for at least 35 years.

By Alper Çuğun via Flickr.com

So why should you care?

Well, let’s say you do work for a client and then, for some reason, they don’t pay you.

If what you’ve made is a work made for hire, you can’t stop them from using what you’ve made. If, on the other hand, you’ve promised to assign the copyright once they’ve paid you in full, you can stop them from using what you made. They don’t own it yet, you do. If they want to own it and use it, they need to pay you.

Or, let’s say you want to use what you’ve created in your portfolio. If your creation is a work made for hire, you can’t unless the client gives you permission. If you assign the copyright, though, you can reserve the right to display the work in your portfolio when you give them the copyright. You hold on to that tiny portion (but valuable!) of the copyright and give them everything else.

You might see contracts where they say if the work is not a work made for hire, then you agree that you’re assigning the copyright to the client by signing the contract. If you don’t think what you’re creating fits into one of the work for hire categories and you want the advantage of assigning the copyright under your terms (upon full payment, reserving certain rights, etc.), negotiate to add those requirements to the contract, or work with a lawyer to help make sure that what you’re signing is what you want to sign.

By エン バルドマン via Flickr.com

Do you have questions about how copyrights work? Let me know in the comments and I may answer your question in a future post.

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Categories : Making Sense of Contracts

10 Comments »

Tags: client control , Contracts , copyright , Freelance

« How to Prepare for a Negotiation When You Don’t Have the Time

What Does “Creator Owned” Mean? »

10 responses to “Work For Hire or Copyright Assignment?”

Great job differentiating the two of these – I never really thought about the difference here, but it makes a lot of sense! One quick question – can I keep the copyright to a ghost written piece of content?

You mention that assigning a copyright allows you to keep the item in your portfolio – and I’m just wondering if that would still work if the article is intended to be ghost written for the client.

Good question! One quick point of clarification though: when you assign your copyright to someone else, they’ll own it entirely. You can include the work in your portfolio if you “reserve” that right when you make the assignment (or if they give you permission in the contract). Reserving rights means you are transferring all of the rights associated with copyright, except ________. So whether you can show the piece in your portfolio will depend on whether you’ve reserved that right, or, if the client wouldn’t agree to an assignment where you’ve reserved rights, if the agreement between you and your client explicitly allows you to include the work in your portfolio.

Hello – Sorry, I just found this article. As a freelance artist, I’m confused: If it is “Work for Hire”, how can a client own and use the work if they have not paid? Everything I have ever read states that ownership transfers upon payment. They are paying for the work – if they do not pay, they do not own. Can you explain?

Yours is a good question and a big reason why I wrote the post. If the work is a “work made for hire” payment is not required for the rights to transfer to the client because the client owns the rights from the very beginning. If the client doesn’t pay, they’re in breach (violation) of the contract, and you can try to recoup payment by asking a court to enforce the contract. You can even argue to the court that the client doesn’t own the rights because they haven’t paid for them. I don’t like that approach though, because it requires a lot of work on your end when you didn’t do anything wrong in the first place.

If you want to transfer the rights to the client when they pay, you want a copyright assignment, not a work for hire arrangement. Hope this helps.

If someone starts modeling and the models photos appear on very mainstream items in every store, would they be able to get paid for that if it does well or are they expected to just take the small payment that was initially given to them for the photoshoot. (This was under a work made for hire contract).

I can’t answer a specific question, but I can say that most issues related to who can use what are answered by applying whatever the contract says. In situations where someone’s image is involved, contracts usually have a section (or sometimes a separate document) called a release, that details how the photographer can use that person’s image and for how long.

[…] long as the work you’re creating isn’t a work made for hire, you own the copyright in the work you create as soon as you create it. You can give other people […]

Thanks for this useful article. I have a couple clarifying questions: — If you are hired as a staff photographer and have no written agreement whatsoever, is it safe to say that the photos you take for that employer are works-for-hire by default and the employer owns the copyright? — If there’s no written agreement, could you claim copyright ownership after the fact or attempt to grant a license to the employer? If they own the copyright, could they extend a license to you?

If you have a true employee/employer relationship, then yes, the employer will own the copyright to the work you do for them. The employer isn’t required to say in writing that your work is a work for hire.

Determining if someone is an employee or a contractor is something that there’ve been many lawsuits about. But, generally speaking: if the employer gives the worker access to benefits, and if the employer supplies the worker with all the tools necessary to do the work and controls when and where the work is performed, the worker is an employee.

If the person is *not* and employee, and there is no written agreement, then yes, they could assert copyright ownership and use that to compel the client to pay or to stop using the work in a particular way. Of course, as with many things copyright-related, that’s often easier to say than do, but it is doable.

Cheers! Katie

Hello, Would you know what is the difference between the two contracts: one as a work-for-hire in which the client retains copyright and one just as a full exclusive buyout. I was asked to create two estimates accordingly but not sure what the difference is, especially in price.

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Work-For-Hire Clause And Copyright Assignment Agreements

Secure your intellectual property.

Hiring independent contractors (ICs) can be an essential way to boost productivity and streamline your resources, especially during the startup phase, when you have limited access to capital and can’t afford to hire a full roster of employees.

And even after your operation grows beyond its fledgling period, contractors are often vital for completing one-off projects or rounding out your team during particularly busy periods. That said, working with ICs also creates a number of unique legal and financial risks for your company.

Outside of the risk of getting sued or hit with hefty fines for misclassifying an employee as a contractor , you must also be careful to properly secure ownership of anything an IC creates for you. This is particularly true when it comes to intellectual property (IP).

Make Sure You Actually Own The Work You Pay For

Unlike employees, with whom you generally own automatic copyrights to everything they produce while working for you, ICs typically retain full copyrights to their work—unless they’ve signed a written agreement stating otherwise.

Indeed, if you don’t have properly drafted agreements in place, you may not even own the work you pay ICs to produce for you.  A colleague of mine learned this the hard way during her early days as a lawyer when she hired a friend to create a website for her law firm that had some pretty fancy bells and whistles.

When that colleague went to move the website to a different developer, her friend claimed the source code was his, and he said she’d have to pay him $25,000 on top of the $25,000 she’d already paid him because they didn’t have an agreement containing a “work-for-hire” clause.

Because this colleague trusted her friend, she figured she didn’t need a formal written agreement to govern their relationship, and in doing so, she didn’t own the website she had paid her friend, the developer, to create as an independent contractor. And this is true of all creative works of authorship you might hire an IC to produce, including graphic design, written content, software, computer code, photos, videos, and other content.

Fortunately, it’s fairly easy to secure full ownership of such works by using the proper legal agreements. However, this is only possible if you actually put such agreements in place with every IC you work with—and yes, this means every single person, even those you may have worked with for years without a single problem.

Work-For-Hire Clause

When it comes to using legal agreements to secure ownership of the work you hire an IC to produce, you have a couple of options. One option is to include a work-for-hire clause in their independent contractor agreement.

A work-for-hire clause states that you, not the IC, own all copyrights to the deliverables he or she produces for you under the agreement. Such a clause effectively makes it as if you created the work yourself, and as such, it allows you to use the work in any way you wish.

Just be sure to have the IC sign the agreement before he or she starts working. If not, it may be too late to acquire full ownership. Additionally, work-for-hire clauses only cover certain types of materials. According to the U.S Copyright Office, in order for a work-for-hire clause to apply, the work being created must fall into one of the following nine categories:

• a contribution to a collective work, such as a magazine or anthology
• a part of an audiovisual work or movie
• a translation
• a supplementary work, such as a forward, editorial notes, appendix, bibliography, or chart
• a compilation created by selecting and/or arranging preexisting works
• an instructional text
• answer materials for a test

It is important to point out that if the work you hired an IC to create does not fall into one of these nine categories, a work-for-hire clause would not give you full ownership. This catches many business owners by surprise, who falsely assume having such a clause is all they need. If the work you are paying for doesn’t fit into these categories, you will need a different type of agreement.

Copyright Assignment

For works that fall outside of the work-for-hire domain, you will need to include an assignment clause in the contractor’s agreement, in which the IC transfers some or all of their copyrights to your business. Without this clause, the IC would retain all rights to the work, even if the agreement contained a work-for-hire clause.

Adding an assignment clause to the IC’s agreement is fairly simple, and for maximum protection, you can even include such a clause alongside a work-for-hire provision. Simply add a brief clause stipulating that if the work is not deemed a work for hire, the IC assigns all copyrights to your company. Contact us today to ensure you have proper agreements in place.

Don’t Do-It-Yourself

Although both work-for-hire and copyright-assignment clauses are not difficult to create, because each work is unique, there is not a specific template or generic form that would cover every job. What’s more, the wording of each agreement is important, and some states require specific language for work-for-hire agreements. 

Given this, you should steer clear of generic legal agreements you find online, and consider having Artisan Law TM review your IC agreements, even if they were drafted by another lawyer. Whether you need your existing agreements reviewed or need help creating new contracts, we can support you in developing sound employment agreements that will give you the most comprehensive ownership rights possible with every contractor you hire.

This article is a service of  Artisan Law, P.C. .  We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.

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Understanding the copyright “works made for hire” rule.

Intellectual Property rights (including trademarks, copyrights, patents, trade secrets, and other proprietary or confidential information) are some of the most valuable and hard-earned assets that a company or entrepreneur has.  Protecting those rights is of the utmost importance and can be more complicated than you might expect, as the varying categories of Intellectual Property also have varying rules concerning ownership.

This article will focus on ownership of copyrighted works and the often misunderstood “Works Made for Hire” rule of the U.S. Copyright Act .

A “copyrighted work” is an original work of authorship that is fixed in a tangible medium of expression. Protected works include (among other things) literary, dramatic, musical, artistic, computer software, and architectural works.  In general, this protection allows the owner to stop others from using the work without permission the moment the work is fixed in a tangible form.

Under Section 201 of the Copyright Act, the original author(s) of the work own the above-mentioned copyright protection.  However, Section 201 also contains exceptions to this general rule of ownership when you are dealing with employee-created works or those created by independent contractors or consultants.  This exception is known as the “Works Made for Hire” rule.

Under Section 101 of the Copyright Act, “Works Made for Hire” are defined as either (1) a work prepared by an employee within the scope of his or her employment , or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas if the parties expressly agree in a signed written agreement that the work shall be considered a Work Made for Hire.

Therefore, if you are dealing with a work created by an employee (as opposed to an independent contractor) and the work was produced in the course of employment, the copyright belongs to you , not your employee.

However, if the work is created by an independent contractor, you will not own the copyright unless the work falls into at least one of the categories listed above – and you have a signed written agreement with the independent contractor stating it is a Work Made for Hire.

To learn more about copyright ownership and for assistance in drafting agreements to protect your Intellectual Property rights, please contact McCarty Law’s Trademark & Intellectual Property Lawyers .

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Work for Hire: Everything You Need to Know

Work for hire is any created work that can be copyrighted like songs, stories, essays, sculptures, paintings, graphic designs, or computer programs. 6 min read updated on February 01, 2023

Updated July 13, 2020:

Work for hire: what is it.

Work for hire is any created work that can be copyrighted like songs, stories, essays, sculptures, paintings, graphic designs, or computer programs. In the U.S., work for hire — shorthand for the term "a work made for hire" — applies if the created piece is part of a person's job or made by an independent contractor .

Instead of the creator keeping the copyrights, the copyright and publishing rights belong to their employer. For example, when a staff writer drafts a blog for his employer, the company becomes the author and assumes the copyrights for the blog. All areas of copyright ownership now belong to the company, including credit for the blog and control of the blog. Work for hire is part of the U.S. Copyright Act of 1976 and changed the go-to rules of copyright ownership. Work for hire applies in two situations:

• An employee creates work during her normal functions as an employee
• An independent contractor completes a commissioned piece of work

Copyright protection allows the employer sole rights to use the work for financial gain under work for hire. When a company hires a person and pays for the created piece, they retain copyright ownership under work for hire. The work's creator has no rights to the work under work for hire.

Copyrights: Employees vs. Independent Contractors

Any work created by a company employee during the course of employment is automatically owned by the company he works for. To decide whether a work falls under employee creation, the courts will ask three questions:

• Was the work the kind the employee was hired to do?
• Did the work mostly occur during approved work hours?
• Was the work done, at least partly, to serve the company?

Companies that aren't sure if a person would qualify as an employee or whether the work falls within the employee's responsibilities should get a written copyright agreement. In California, labor laws create somewhat of a loophole concerning contractor work. The law basically states that any person under contract creating any work that both contractor and employer agree to is automatically considered work for hire. Work for hire in California may cause a typical contractor-employer relationship to become employee-employer at the loss of the client. Freelance workers beware: Keep from making freelance agreements based in this state to save yourself a potential legal headache. If you work as an independent contractor, anything you create can only be considered a work for hire if it falls into one of these nine categories:

• Contributions to collective works like encyclopedias, magazines, or anthologies. Collective works are many separate and independent works combined into a whole.
• Part of a movie or other audiovisual piece
• Translations
• Supplementary work published alongside work by another author to clarify, illustrate, or comment on. Supplementary works include forewords, afterwords, pictorial illustrations, charts, tables, indexes, bibliographies, and appendices.
• Compilations of preexisting material that's chosen, organized, and arranged in a way that the end piece forms an original work.
• Instructional works such as literary, graphic, or pictorial creations prepared for publishing for use in instructional activity.
• Answer material for tests

Even if a contractor's work clearly falls into one of these categories, a written agreement stating a work for hire is needed to protect the company.

Songwriters, Beware

In the songwriting realm, a work-for-hire situation normally comes about when an artist creates music for other media. For example, when composers create jingles for commercials, it makes sense that the company would keep copyrights. Without copyrights, the company couldn't use the jingle in future commercials. When musicians hire songwriters to help record a song under work for hire, the songwriter can lose out in a major way. While she gets paid a one-time fee, which might be substantial, she has no rights whatsoever to future earnings from royalties of that song. If a songwriter's contribution to the final recording is significant, like hooks or lyrics, she should try to obtain written credit early in the recording process. If the musician isn't willing to give credit, don't work with that artist again. Songwriters should always have a lawyer look over any agreements.

Work for Hire vs. Copyright Assignment

As an employee or contractor selling work as a work for hire, the copyrights belong to the company from the moment creation begins. When a copyright gets assigned, the rights are sold to another party. You can sell the copyrights to your works as long as they aren't works made for hire. The difference between work for hire and copyright assignment: After 35 years, you can cancel the assignment.

When you create a work for hire, you can never stop the company from using it. Even if you get fired in the middle of the project, the company can use what you created. If a company owes you money for a work for hire and you've finished the project, the company can publish it before paying you. If you have a contracted agreement to assign copyright upon payment, you will get paid before the company can use your work because you control the rights until you assign them. If you wanted to use that work-for-hire piece in your portfolio, you'll have to ask the company first. If you agree in writing to transfer the copyright, but with the provision, you can use the piece in your portfolio. Sometimes in contracts, a work isn't called a work made for hire, but copyrights transfer once you sign. If what you create doesn't fall into the contractor work-for-hire categories, you can assign the copyright with your terms. If you're unsure about a contract or copyrights, contact a lawyer.

Work for Hire Do's and Don'ts

For companies protecting their interests:

• Do get a signed, written agreement specifying that something is a work for hire for every time the company wants copyrights to the piece.
• Do make sure any work-for-hire agreements between the company and nonemployees fall into the nine specific categories.
• Do consider a copyright transfer agreement when work from an independent contractor doesn't fall into one of the nine categories.
• Do know state laws regarding work-for-hire agreements to ensure compliance with taxes and workers' compensation laws.
• Do have agreements notarized if you think it's necessary.
• Don't forget to include specifics in contracts, including the expected work, payment terms and amounts, and deadlines.
• Don't rush your contractor to sign an agreement, which will help reduce the likelihood of rebuttal later on.
• Don't assume both parties agree to specific expectations if they're not written in the contract.
• Don't hesitate to contact a lawyer to overlook complicated agreements.

For contractors:

• Do review an agreement completely and thoroughly, making sure all key points are present.
• Do make sure the agreement clearly lays out the work you're expected to do, the amount you're being paid, when you'll get paid, and deadlines.
• Do ask for a copy of the written agreement.
• Do contact a lawyer if you're unsure about an agreement's terms.
• Don't enter into an agreement if you're not sure what it says.
• Don't sign a contract without reading all the details.
• Don't enter into a work-for-hire contract if you're not sure what that means.

Frequently Asked Questions

• Am I an employee or not?

If the person paying you dictates the work you do and when you do it, you're probably an employee.

• What do I do if I want any control over my work?

Instead of a work-for-hire agreement or copyright assignment, issue a license on your work.

• What's a license?

When an artist grants a license to her work, she stays the owner and decides when, where, and how the work is used.

If you need help with work for hire, you can post your legal need  on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.

Hire the top business lawyers and save up to 60% on legal fees

Content Approved by UpCounsel

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• How Long Does a Copyright Last
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IP Tech Knowledgy

Work Made for Hire — A Misunderstood Copyright Concept

This article also appears in the Winter 2020 issue of   Topics.

Too many people wrongly believe that just because they pay for someone else to create copyrightable work for them, the party who pays automatically owns the resulting work. The concept of work made for hire is one of the most common, yet misunderstood, aspects of copyright law.

When hired to create any type of copyrightable work, such as software, artwork and advertising material, an independent contractor who is not an employee retains ownership of the copyright in what is created, no matter how much that contractor is paid for that work. The party paying for the work who will receive the final product does not automatically own the work of that independent contractor. Without a written assignment of the copyright from the author to the entity who requested the work, the requesting party may have a license to use the work for the purposes the parties intended, but the requesting party does not own the work outright. In contrast, when an employee, within the scope of his or her employment, creates a work, the employer is deemed to own the work as a work made for hire. No written assignment is needed for the pure employment relationship. Since ownership of a copyright can only be transferred by a written assignment — unless a situation is clearly an employment relationship, — whoever is paying for the work should be sure the author is assigning over all copyrights. If an employee is creating the work, but the assignment is not clearly within the scope of why the person has been employed, be safe and obtain an assignment of the copyright from that person.

Ned T. Himmelrich 410-576-4171 • [email protected]

September 03, 2020

Publications

Himmelrich, Ned T.

Technology & Intellectual Property

Copyright In India Intellectual Property Rights Doctrine of “Work For Hire” under the Copyright Law

  INTRODUCTION

Copyright law vests a bundle of rights in the creator of particular works, or those deriving rights from such creators, from the moment of production and fixation of such works. The growing work-for-hire concept, however, holds that the ’employer or another person for whom the work is generated’ is deemed to be the author of the work and owns all rights derived from it, unless the parties have expressly agreed otherwise.

The Copyright Act, 1957 (hereinafter referred to as the “Copyright Act” ), governs the laws pertaining to copyrights in India. The phrase “work for hire” as  recognised by the Copyright Act is classified in two broad categories :

• Works produced under an apprenticeship or job contract;
• Works that are particularly commissioned.

Like other laws, the regulations governing work for hire vary from country to country. This article will focus on the specific laws that apply to them in order to explain how work for hire agreements operate in each of their respective jurisdictions.

In the 19 th century, the employee’s ownership rights garnered significant respect from Courts. From the U.S. Supreme Court’s decision in Wheaton v. Peters [ 33 U.S. (8 Pet.) 591] till 1860, there was a consensus in determining that by default, the owner of the copyright was who produced the work, even if such person is employed by someone. Hence, the recognition of employer ownership started around 1860.

The default rule in the first decade of the 20 th century allowed the employer’s entitlement to their employees’ creative works. This was subject to an agreement mutually made between the employer and the employee. The cases Boucicault v. Fox [5 Blatchf. 87.] and Wheaton v. Peters [Supra] , made it logically possible to disregard the old master-servant doctrine. The rule of “work-for-hire”, thus, first developed in the Courts and was later codified.

INTERPRETATION OF “EMPLOYEE”

The employer will have the copyright if the creator is determined to be an employee under the employee’s purview of employment. If the work does not fall into one of the statutory categories and is not acknowledged as “work done for hire” in a contract, the employer will not have the copyright for such work. The criteria/test used for the interpretation of the term “employee” are briefly discussed below:

• Right to Direct and Control Test : Whether the creator is an official employee or an independent contractor has little effect on their job. Instead, it emphasises whether the hiring party had the authority to supervise and control a project irrespective of actual exercise of right.
• Agency Test : The test uses principles of agency to evaluate whether the relationship between the hired and hiring party is one of those of the employments. Courts must consider a number of variables in order to determine whether the hired party is an agent and consequently, a statutory employee of the hiring party.
• Actual Direct and Control test : Applying the actual direct and control test, a work is deemed to be a work for hire if the commissioning party actively supervises and controls the creation of the work, as opposed to merely reserving the right to do so.
• Formal, Salaried Employee Test : It uses the strictest definition of the word “employee”. To interpret the term “employee”, the customary interpretation, which includes regular payment of salary, withholding of taxes, etc., should be used.

THE “WORK FOR HIRE” AGREEMENT

The “work for hire” agreement should include a clause that briefly addresses the following topics:

• The parties to the contract should be identified in clear and unambiguous words. It should also go into detail on the nature of their relationship.
• A clear statement from both the parties that they are freely entering into the agreement is required, taking into account the various objectives that each party may have in mind for the transaction.
• The payments that are expected to be made should be explained.
• The nature and extent of each party’s usage of the contract’s subject matter after the employer-employee relationship has ended should also be made clear.
• Additionally, it should outline what would happen if one or both parties fail to fulfil their obligations.
• When the employer owns the Intellectual Property (hereinafter referred to as “IP” ) but it needs to be customised or altered from its original form, it is advisable to look for a customisation or amendment agreement before getting started. This type of contract specifies the extent of the work to be done and makes it clear that the authorship of the modified work remains unchanged in the event of such adjustments. Instead, it functions as a licensing right whereby the company allows the employee to alter an already existing IP asset, such as a book, software, invention, etc.

Furthermore, to better protect and secure the IP asset resulting from such a sale, the contract may further shed light on the following matters in addition to the points already mentioned:

• The employment contract that governs independent contractors and employees should include a clause referring to “work for hire”.
• A clause allowing the transfer of the work produced during such a course of employment as well as the ancillary ownership rights to such works may be expressly mentioned in the contract.

HOW IS “WORK FOR HIRE” PROVISIONS PERCEIVED ACROSS THE GLOBE?

• Section 17(b) of the Copyright Act states that, in the absence of a written agreement between the parties, the person who requested that a work be created by an author if the first owner of the copyright.
• Section 17(c) states that, in the absence of an agreement between the parties, the employer is the original owner of the copyright in cases where an author creates a work while employed under a service or apprenticeship contract.

The Supreme Court, in Indian Performing Right Society Ltd v. Eastern Indian Motion Pictures Association and Ors.,[1977 AIR 1443] , held that the clauses (b) and (c) Section 17 of the Copyrights  Act, which raise the issue, hold the key to resolving the question of whether a film maker can nullify the rights of a music composer or lyricist by hiring them.

As per Section 17(b), when a music composer or lyricist accepts a cinematographic film’s offer of payment, the cinematographic film becomes the first party. Therefore, the outcome would be the same under Clause (c) regardless of whether the composer of the music or lyrics is hired to compose the work under a service or apprenticeship contract.

The Delhi High Court, in Khemraj Shrikrishnadass v. M/s Garg & Co. [AIR 1975 Delhi 130] held that, unless there is a specific contract to the contrary, when the work is completed by an author for another writer in lieu of consideration, the copyright is normally transferred to the publisher.

The parties involved in a contract are responsible for finding a way to avoid those commitments. Due to the lack of contractual liability, freelancers are therefore considered the original owners of copyright under Indian law, whereas periodicals, magazines and newspapers are considered the as original works created by employees under a service contract.

“Work made for hire” could be divided into two categories, as stipulated in Section 101(1) of the Copyright Act (Title 17 of the United States Code): either a work created by a person while at work or a product specifically purchased or commissioned for use.

In Community for Creative Non-Violence v. Reed , [490 U.S. 730 (1989)] the Court decided that it was important to establish whether a project was created by an employee or an independent contractor first. The job would typically be referred to as “work made for hire” if it was created by an employee.

The concept of work made for hire functions in the U.K. in a way that the law varies based on the type of work and not the issue. As per the Copyright, Designs, and Patents Act, 1988 in the UK, when the work is made in the course of employment, copyright will vest in the employer, otherwise it will vest in the author. The copyright in commissioned works by independent contractors may vest fully in the commissioning party where an agreement pre-exists that assigns the ownership in the future work.

Like the US Courts, the Courts in the U.K. consider a variety of factors to determine employment versus contract labor, including the presence of employee tax and benefits treatment, although the primary test is “whether the work undertaken forms an integral part of the business.”

Works made for hire are subject to the freedom of contract in the UK. As noted, independent contractors may freely assign their authorship to the commissioning party. Likewise, employers may agree to permit employees to retain the copyrights in certain works even when they are created in the course of employment. British Courts have also been inclined to imply the existence of such agreements in both types of case where the facts warrant.

In practice, UK resembles the US in their treatment of works made for hire as both of these common law countries vest copyright ownership in the employer for works made within the scope of employment, and both require an agreement, either expressed or implied, to similarly divest the rights of an independent contractor, except for specific categories of works.

The most significant difference appears to lie in the UK’s presumptive treatment of certain independently contracted works as works made for hire where the US would require an express agreement.

In Stevenson Jordan Harrison Ltd v. MacDonald & Evans [(1952) 1 TLR 10] , the Court distinguished between a “contract of service” and “contract for services” provided to a company or business entity. The Court applied the traditional ‘control test’ concerning whether the employer has the right to control the way in which a person does the work. The Court further stipulated that a person is considered an employee under a “contract of service” when the work is integrated in that of the business and considered an integral part of the business, whereas an independent contractor for services is merely an accessory to the business and, thus, not an employee.

A MLEGALS REMARKS

In order to give owners more protection and assurance , copyright law has been evolving and changing. Many rules are codified, but some of the uncodified rules are still significant and actively discussed by the judiciary across several jurisdictions.

One of these is the doctrine of work for hire. The aforementioned comparison was crucial for noting a few facts, one of which was that the doctrine operates largely uniformly over the world despite the lack of codification, with a few minor exceptions. When an employee develops a piece of work while performing duties related to his employment, all three countries at least partially recognise the employer’s copyright.

The fundamental idea is  that, unless otherwise expressly provided for in the contract, the employer or contractor is the first owner of any IP acquired through the course of the activity during the term of employment.

This doctrine’s requirements apply to both employees and independent contractors as well as business owners and entrepreneurs. Furthermore, an employee should be familiar with his or her rights and the parameters of their work description. Negotiating the conditions of a contract that explicitly specifies that the work is for hire may be advantageous from the viewpoint of the employee.

It is a typical boilerplate; hence one should think about negotiating a deal where IP belongs to the employee but can be licensed to the party for whom it was created in a certain way and for a set amount of time. Therefore, while dealing with priceless intangible property, it is crucial to comprehend the contract’s provisions and whether it pertains to “work of hire” or “work for hire.”

– Team AMLEGALS assisted by Ms. Shreya Chauhan (Intern)

For any queries or feedback, please feel free to get in touch with [email protected] or [email protected].

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What You Should Know About Work for Hire

Associate Attorney

Many people mistakenly believe that if they hire or employ someone to create something for them, the work is automatically considered a “work made for hire.”  Whether you own a small business and are engaging a graphic designer to develop website content, or a production company seeking a director for a new feature film, understanding work for hire arrangements may be valuable to your future business and creative endeavors.

WHAT DOES “WORK MADE FOR HIRE” MEAN?

Under  U.S. Copyright law , the person who actually creates a work is generally the author of the work.  Usually, the author is automatically the owner of the exclusive rights and privileges of copyright protection.  However, if a work qualifies as a work made for hire, then the creator’s employer or the person that commissioned the work will be considered the author.

Under Section 101 of the Copyright Act, a work made for hire is either: (i) a work prepared by an employee within the scope of employment, or (ii) a work specially ordered or commissioned for use as one of the following:

• a contribution to a collective work;
• a part of a motion picture or other audiovisual work;
• a translation;
• a supplementary work;
• a compilation;
• an instructional text;
• answer material for a test;

For the second category of independently commissioned works, both parties must expressly agree in a signed written instrument that the work is considered a work made for hire.

Sound recordings are notably absent from the list of works that can be works commissioned by independent contractors as works made for hire.  Historically, labels have treated sound recordings as works made for hire under the theory that the sound recordings are contributions to a “compilation” in the list above.  This is largely perceived as permissible under the Copyright Act because virtually all recording contracts require delivery of several sound recordings in any delivery period.

WHY DO WORK FOR HIRE ARRANGEMENTS MATTER?

There  are several privileges and benefits  to an employer or third party obtaining authorship rights in a work.  As legal author, a company can freely and exclusively reproduce and distribute the work, among other things, without seeking permission from the content creator.

Moreover, work for hire arrangements are not subject to the same termination rights as assignments. Under Section 304 of the Copyright Act, a copyright owner can terminate all assignments, grants, licenses or transfers of rights (made prior to 1978) 56 years after the grant or assignment was made.  Thus, a company obtaining a license or assignment of the copyright in a work made by an employee may be forced to forfeit the rights to the work after 56 years.  Because this rule does not apply to works made for hire, a work made for hire is generally a more favorable arrangement for those commissioning a work.

Moreover, under Section 203 of the Copyright Act, an author or his or her heirs can terminate an exclusive or nonexclusive transfer or license of a work.  The author has five years, beginning 35 years after the license or transfer was granted, to exercise this right of termination.  As with the Section 304 right, the Section 203 termination right does not apply to works made for hire.

HOW DO I ENSURE THAT A WORK IS A WORK MADE FOR HIRE?

Because the Copyright Act defines works made for hire in two different ways, it is important to determine whether the work is being created by an employee or by an independent contractor.  Sometimes it can be tricky to determine if the person engaged to create the work is an employee or independent contractor.  Although there is no clear-cut rule to resolve the issue, courts often take into consideration the (i) control of the employer over the work, (ii) control by employer over the employee and (iii) status and conduct of the employer.

Most companies, no matter the size or industry, prefer to have work for hire arrangements with those hired to create various original works or material.  While a work will be considered a work made for hire if it is created within the scope of an employee’s employment, it is important that a company create clear expectations for the employee via a  written agreement  to avoid future authorship or ownership disputes.

On the other hand, if a non-employee ( independent contractor ) is creating the copyrightable work, the agreement must always be in writing and the nature of the work must fall under one of the nine categories listed above.

WHAT IF I’M NOT SURE?

Work for hire agreements can contain carefully drafted, protective clauses for ambiguous or confusing situations.  The contracts may include assignment language, indicating that if, for any reason, the work is not considered a work made for hire under the Copyright Act, then the author agrees to assign and transfer all right, title and interest in the work to the person commissioning it.   Accordingly, if the situation was not a work for hire, the commissioner would still be the legal owner of the work.

Defining the parameters of the work made for hire relationship, ownership and payment in writing before commencing development of a creative project is usually a good idea to protect your interests.

CONTACT OUR TEAM

Does your business hire others to develop creative content?  The experienced attorneys at Romano Law are ready to help.   Contact us  for next steps.

[This blog post has been updated from a previous version, published May 30, 2014]

Carlianna Dengel is admitted to practice law in New York and California.

Photo by Cytonn Photography on  Unsplash

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Why Work “Made For Hire” Matters

The “work made for hire” doctrine addresses the question: Who owns copyright when a person is hired to create certain types of works? The doctrine deems certain entities or individuals the owners of works prepared by their employees. The owner of the copyright is vested with automatic rights – such as the right to copy the work, make derivative works or adaptions of the work, to distribute the work and/or make money from the work. Thus, if you as an individual creator create a work “made for hire,” you are not the copyright owner; the entity commissioning the work is.

As an individual creator, you may enter into a work “made for hire” arrangement because your daily work duties at a place of employment require it, because you seek stable compensation, and/or because you wish to focus on creating, not exploiting your work. There are also instances when you may wish to commission a work made for hire. For example, as an independent filmmaker, you may wish to commission a composer to create a theme song for your film as a work made for hire. You may wish a title company to create artwork for the opening of your film as a work made for hire. There are many instances as an individual creator or small business that you may want work created for you in a manner that ensures you will be able to use the work and license it as you see fit.

Significantly, it is worth noting that there is a difference between assigning all rights to a work and entering into a for hire relationship. In the former, there is an opportunity to terminate that rights grant between the 35th and 40th year after it is made. But if the creation is a work made for hire, since the entity or person commissioning the work is actually deemed the owner of the work, such termination rights would not exist for you or your heirs. For more information, see Works Made for Hire .

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Legalities 4: What is Work Made For Hire?

Q. As a freelance illustrator, I sometimes get contracts from my clients which state that the work is “work made for hire.” What does “work made for hire” mean? If I sign, do I lose all rights to my work?

A . “Work made for hire” is a doctrine created by U.S. Copyright Law. Generally, the person who creates a work is considered its “author” and the automatic owner of copyright in that work. However, under the work made for hire doctrine, your employer or the company that has commissioned your work, not you, is considered the author and automatic copyright owner of your work. Under the old Copyright Act (before 1976), it was relatively easy to convert a freelancer’s work into work made for hire. Many contracts still use work made for hire language left over from that time. Now, however, the standards for establishing work made for hire are much more stringent. Under the current statute, there are only two ways that the work made for hire doctrine can apply to graphic artists.

First , if you are a regular employee, your employer will own any work you do within the scope of your employment automatically as work made for hire.

Second , if you are not an employee, your client can own your work as work made for hire only if:

(1) your client specifically ordered or commissioned your work;

(2) your work was commissioned for use as one of the following:

* a contribution to a collective work * a part of a motion picture or other audiovisual work * a translation * a supplementary work (to another author’s work, such as a foreword, chart, or table) * a compilation * an instructional text * a test * answer material for a test, or * an atlas;

(3) your contract with your client explicitly states that your work is a “work made for hire.”

When is a “work made for hire” provision valid?

If you have signed a “work made for hire” contract, that does not necessarily mean that your work is automatically deemed work made for hire. First, the courts will determine whether your situation meets these statutory requirements. If not, courts will disregard the “work made for hire” language and instead interpret the other language in your contract, and the circumstances of the project, to determine whether you have otherwise transferred your copyright to the client.

1. Are you an employee?

Because employees’ work automatically belong to their employee, many companies will argue that an independent contractor, like a freelancer, should be treated as its employee for the purposes of the work for hire doctrine. Fortunately, the Supreme Court has ruled that whether an independent contractor qualifies as an employee depends upon a stringent test. (Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989)). Under that test, the courts must consider several factors to evaluate the level of control a client has over the independent contractor’s work. Under those factors, generally an artist will not be deemed an employee if most the following are true (no one factor is determinative):

* the commissioned work required significant artistic skill * the artist supplied her/his own tools * the artist performed the work at her/his own studio, rather than at the client’s workplace * the artist was retained for a relatively short time * the client did not have the right to assign additional projects to the artist * apart from completion deadlines, the client did not control when or how long the artist worked * the artist was paid a flat fee or royalty rather than an hourly wage * the client had no role in hiring and paying artist’s assistants * the work is not part of the client’s regular business (e.g., your client is a magazine publisher rather than a producer of illustrations) * the client is not a business (e.g., a private party commissioned a portrait) * the client did not provide employee benefits to the artist (e.g., health insurance), or contribute to unemployment insurance or worker’s compensation funds * the client did not treat the artist as an employee for tax purposes (e.g., the client did not pay payroll or social security taxes)

As you can see, most clients will have a hard time establishing that freelance artists are really their employees under this test. It is helpful that most contracts include explicit language identifying the graphic artist as an independent contractor with no rights to benefits.

2. Does your work qualify as a specially commissioned work made for hire?

If you are not deemed an employee, the first requirement for a valid work made for hire contract is that your work must be “specially commissioned.” Some courts have interpreted the “specially commissioned” requirement to mean that the actual work made for hire contract must have been signed before you created the work. Others have accepted a retroactive agreement designating a work that has already been delivered to the client as a work made for hire. However, in any event the work must have been created specifically for the client’s project. If your work existed before receiving the assignment from your client, it cannot qualify. Thus, if your client is buying an illustration from your portfolio, it cannot be deemed a work made for hire.

Next, the work must fit one of the 9 statutory categories listed above. For graphic artists, the relevant categories are usually “a contribution to a collective work,” a “compilation,” and sometimes, a “supplementary work” or an “atlas.” Unfortunately, these categories are somewhat vague. Under the Copyright Act, a “collective work” is “a work, such as a periodical issue, anthology, or encyclopedia, in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole.” A “compilation” is “a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.” There are arguments on both sides as to whether newspapers, magazines, company catalogs, advertisements or annual reports are collective works, and thus whether illustrations commissioned for such works could be considered works made for hire. Graphic design is a form of compilation authorship (see last month’s Legalities) and thus graphic design for an annual report or a web site could arguably qualify as a compilation. Illustrations for medical textbooks might qualify as supplementary works.

The effects of work made for hire ownership

When a client holds ownership of your work as work made for hire, you as the artist have no copyright to begin with. The most significant consequence of this doctrine is that you cannot control what the client does with your work. The client can publish the work wherever and whenever it wants to, including reselling rights to others. Unless you receive permission from your client, you cannot do anything yourself with your work. You do not necessarily even have noncommercial rights to show your work, e.g., in your portfolio (although it is common practice to allow such usage, and there would probably be a good “fair use” defense for such use).

Another important consequence concerns the statutory termination right. Under U.S. Copyright law, an author who has transferred copyright still has the right to unilaterally terminate that transfer 35 years later, and thus recover her/his copyright (technically, the window for terminating is between the 35th and 40th year after the transfer agreement was signed). This is a safeguard for artists whose works become more profitable or marketable over time. The statutory termination right gives artists the opportunity to recoup the increased value when they had originally sold or licensed rights in their works for too little. They can regain their copyright and then relicense or resell the rights in the work. Under the work made for hire doctrine, however, your client is considered the “author” of your work from the beginning, and so you do not have the statutory termination right to recover the copyright.

What should you do if you are asked to sign a work made for hire contract?

When you are asked to sign a work made for hire contract, you might first consider whether the situation meets the statutory requirements to qualify as work made for hire. Frequently for graphic designers, the answer is arguably no. As noted above, many contracts have old “boilerplate” work for hire language that is no longer viable. You can explain to your client that the work made for hire language may not be valid, and it would be better to use language that is legally sound and relevant to the client’s specific intentions for use of the artwork. Then have a discussion about the client’s intentions and negotiate license provisions to grant rights in your work which match those intentions.

There are a few situations when it would be appropriate for your client to own copyright in your work, for example, if you are doing a logo or corporate identity package (see discussion in Legalities 1 under the subhead: When should a client own your copyright?). However, even when it is appropriate for your client to own the copyright, it is better to transfer the copyright by assignment language rather than through work made for hire language.

Short of a full assignment of rights, you will be negotiating a copyright license. License agreements are very fact specific and must be carefully drafted for the particular project. Its best to have a lawyer help you with the drafting. As a general guideline, here are some examples of potential arrangements that you can suggest as alternatives to a work made for hire contract (beginning with the most favorable to artists and ending with the most favorable to clients).

License exclusive rights for first use. For example, if the assignment is to create an illustration for the cover or editorial content of a national magazine, tailor the license to grant exclusive but limited publication rights for that purpose, within the magazine’s geographic territory and for a limited time. The rights might be for first print publication only, or you can include simultaneous online publication.

Set additional fees for additional uses. If your client thinks it might want to publish the work again in other venues or at a later date, negotiate a separate payment schedule for such potential additional uses. This is beneficial to your client because it locks in the client’s rights to use your work again, but it need not pay for those rights unless it actually republishes the work.

License all rights for a limited time. If your client insists that it need full rights to your work rather than a usage fee arrangement, negotiate to provide such rights for a limited time period. The time period should rationally reflect the client’s potential market for your work. At the end of that time, all rights would revert to you.

Assign all rights for higher compensation. If none of the above suggestions work, and your client insists on transfer of all copyright for an unlimited time, negotiate for an assignment (not work for hire) and a higher fee in consideration for such a drastic loss of your copyright. If you meet resistance, remind your client that it is asking for essentially the equivalent of rights it would have in an employee’s work product, without bearing the expense of ongoing employee salaries, benefits, office space and equipment, all costs which you as a freelancer must cover for yourself. By giving the client copyright ownership, you are giving up any rights to future income from that work. The assignment fee should compensate not only for your current effort, but also that loss of future income and the risks and overhead you bear as part of your freelance status.

In any event, always explicitly condition any assignment or license of copyrights upon full payment of the compensation due to you under the contract. It is very important to ensure that legally, your copyright does not transfer until you are paid. When a copyright assignment or license is not conditioned on payment, the courts have held that the rights under copyright were already effectively transferred when the contract was signed. That eliminates your ability to claim that continued use of your artwork without payment constitutes copyright infringement. Instead, your only recourse is a claim for breach of contract to get the fees paid. Unlike copyright infringement, breach of contract does not entitle you to an injunction preventing further use of your work, statutory damages or attorneys’ fees (see Legalities #1, subhead: Register your copyrights!) Thus, conditioning the copyright assignment or license upon full payment ensures that you’ll be in the best bargaining position in the unfortunate event that your client fails to pay you.

Finally, its always a good idea to include an explicit provision preserving your right to show your artwork for self-promotional purposes, especially in a work made for hire contract, or if you are assigning copyright or granting an exclusive license to your client.

See the index of previous columns for more answers to your questions.

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