Part II: A Business Owners Guide to Works Made For Hire
Risks of Relying on Employee Status for Copyright Ownership
In the last installment, we discussed the potential pitfalls of relying on the employer/employee relationship to secure the copyright to your company’s creative works. Our primary concern was the fact that, while the copyright to an employee’s work will sometimes automatically vest in the employer, the concept of “employee” is strict and does not include the classes of persons who often create the core intellectual property of the company—namely, owners and contractors. The test for determining if a worker is an employee or contractor is complicated and not always clear when the work is created.
Limits of Work-for-Hire Agreements in Practice
One of the options I discussed in the last installment was obtaining a work-for-hire agreement to establish that the employer was paying not only for the work to be created, but also for the right to copy the work in the future—i.e., to own the copyright. But, as I briefly discussed, not every work is eligible to be considered a work for hire even if that was the intent of the parties and they signed a “work for hire agreement.”
Part II: What types of creative work can be subject to a work for hire agreement?
For a business hiring outside contractors to create content, it might seem like a simple matter of having the contractor sign a “work for hire agreement” at the outset specifying that everything the contractor is paid to create will become property of the company hiring the contractor. But having a signed “work-for-hire agreement” does not guarantee that the work will be considered a work for hire by the law. Yes, outside of the direct employment context, a signed agreement is necessary, but only specific types of works can qualify for work for hire status. If the work does not fall into one of the nine statutory categories, a work for hire agreement is not worth the paper it is printed on. This is why it is so important to have an assignment clause in any content creation agreement.
Statutory Limits on Work-for-Hire Eligibility
There are nine eligible categories for works that can qualify as works for hire. If the work in question does not fit into any of these categories, then even if there is a signed “work for hire agreement,” the person who actually created the work will still be considered the author and owner of that work.
Under the second part of the statutory definition, a “work made for hire” is “a work specially ordered or commissioned” for use as one of these following types of works:
1. A contribution to a collective work
2. A part of a motion picture or other audiovisual work
3. A translation
4. A supplementary work
5. A compilation
6. An instructional text
7. A test
8. Answer material for a test
9. An atlas
Formal Requirements for Enforceable Work-for-Hire Agreements
Keep in mind that these categories only apply if there is a written agreement signed by both parties stating that the work shall be considered a work made for hire. These requirements are interpreted strictly, so there is no room for implicit agreements. In other words, there needs to be: 1) a written agreement; 2) that agreement must state that the work to be created is “a work made for hire;” 3) the agreement must be signed by the person creating the work; and 4) the agreement must be signed by the person commissioning the work. Note also, that this can never have retroactive effect—it only applies to work created after the agreement is signed.
Understanding Collective Works Under Copyright Law
While some of the categories like translations, instructional texts, tests and answers, and atlases are self-explanatory, the others have their own specific statutory definitions. A “collective work” is defined 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.” While this sounds very specific, it is possible for a website to meet this definition. According to guidance published by the U.S. Copyright Office, a website may be registered “as a compilation or a collective work if there is a sufficient amount of creative expression in the selection, coordination, or arrangement of the content appearing on the individual web pages or the website as a whole.
Copyright Treatment of Compilations
A “compilation” is defined in the statute as “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.” Note also that the term “compilation” includes “collective works,” so a collective work is always a compilation, but a compilation is not necessarily a collective work. One very important fact about compilations: a factual compilation is only eligible for copyright if it features an original selection or arrangement of facts, but the copyright is limited to that particular selection or arrangement. The copyright never extends to the facts themselves.
Definition and Scope of Supplementary Works
A “supplementary work” is also defined by statute as “a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes.”
Advantages of Work-for-Hire Over Copyright Assignment
These are the key definition for the categories of works that are eligible for work for hire agreements. If the work falls outside of these nine categories, a work for hire agreement will not be enforceable. However, there is one clear advantage of a work for hire agreement over an assignment— under certain conditions, an assignment can be terminated by the original creator, but not if it was a work for hire. This is because a work for hire agreement vests the copyright on the commissioning party as if they were the author. As such, it cannot be terminated because the original creator never had the copyright in the first place.
Best Practices for Businesses Using Contractors
These complications and pitfall are why, if your business uses contractors to create content, you should not rely on work for hire agreements unless you are confident the work fits into one of those statutory definitions and you maintain all of the other formal requirements. And you should never rely on a work for hire agreement alone. A good rule of thumb is to always get a written assignment of the copyright regardless of what type of work is created and even if there is a work for hire agreement. The assignment clause can be contained in the work for hire agreement as a contingency clause.
When to Consult an Intellectual Property Attorney
If you are not sure if the work falls into one of these categories, or you need a work for hire agreement or assignment, it is always best to reach out to an experienced intellectual property attorney. Never leave the ownership of key intellectual property to chance.
The next installment, Part III, will discuss the law relating to assignments, assignment clauses, and licenses, as well as the practicalities of navigating these options for business owners. These topics are a little more straightforward, but there are still some legal pitfalls to look out for.
Klemchuk PLLC is a leading IP law firm based in Dallas, Texas, focusing on litigation, anti-counterfeiting, trademarks, patents, and business law. Our experienced attorneys assist clients in safeguarding innovation and expanding market share through strategic investments in intellectual property.
This article is provided for informational purposes only and does not constitute legal advice. For guidance on specific legal matters under federal, state, or local laws, please consult with our IP Lawyers.
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