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Determining the Owner of the Copyright Work Created by a Contractor
The ownership of the copyright with the work accomplished that a business pays for can often be vital for successful commercialization of that product. Unfortunately, the U.S. copyright contains obscure provisions that will often produce a counterintuitive result, which leaves the full copyright ownership with the contractor. You might be wondering how? Well, businesses and advisors need to be aware of the obscure laws that apply to copyright.
When employees create copyrightable work, the employer can take ownership of that work in one of two ways: either by qualifying as a work made for hire as defined in Section 101 of the U.S. Copyright Act or the employee has to assign the work to the employer. A work made for hire can produced by either an employee or by an independent contractor. If the employee created, during the period of his or her employment, then all the work produced will be owned by the employer as work made for hire. No written agreement needed.
Nevertheless, when work is produced by an independent contractor the law is quite peculiar. The work created by an independent contractor will only qualify as work made for hire and therefore owned by the employer, if there is a written agreement that the work is work made for hire and the work falls in one of the following categories: contribution to a collective work, part of a motion picture or audiovisual work, translation, supplementary work, compilation, instructional text, a test, answer material for a test, or an atlas. If the work does not fall into one of the categories, then even a written agreement stating that the work is made for hire would not be effective, which the employer will not own the work. In such a case, only a written assignment of copyright will be effective. Computer software, websites, graphic work, and music will often not be considered to be included in the work made for hire categories.
Lets make this clear, the default under law is the that copyright will be owned by the contractor unless there is a written agreement that the work is made for hire (if it qualifies in the listed categories) or the work is assigned in writing to the employer.
Be careful of different scenarios that can happen. If a business hires an independent contractor with all the correct documents needed, but the independent contractor hires a different independent contractor, and didn’t use the correct documents. Well, you get what would happen.
What is an independent contractor?
There are many factors that can be applied to determine if they are an employee or independent contractor.
- Who controls the manner and means by which the work is created?
- Who provides the tools and equipment?
- Do they work at a work site or at their own place?
- Who controls when and how long to work?
- Do they get paid hourly or by the project?
- Do they get benefits?
- Are they withholding taxes?
Implied License
If you don’t acquire copyright ownership in work you commissioned based on what we discussed above, then there is still a chance to acquire ownership. Normally, when work is commissioned and paid for, then the employer and independent contractor had an understanding that the goal of the project was for the employer to use the work that the independent contractor created. This understanding would create an implied license. Not like a work made for hire agreement or a copyright assignment that requires it to be in writing, which a license (other than an exclusive assignment) does not have to be in writing. Just be careful with this.
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