From time to time, a company, business owner, or a sole-proprietor will need to bring in outside help to get the job done. Typical examples of hiring third parties for specific projects include:
- Hiring an ad agency or marketing firm to create promotional materials and/or packaging for the company's products or services
- Hiring a programmer to write software for the company’s products, or to create or improve some internal operating software for the company
- Hiring an artist to design a logo for use as a trademark or service mark by the company
- Hiring a website developer to design and/or update the company’s website
In each of these
Whenever a company arranges for non-employees to design, build and/or implement creative activities for the company, it is imperative that appropriate contractual safeguards be in place to make certain that the company owns the copyrights in the works it has purchased.
Without a written agreement with the person paid to create the work that is effective to transfer the creator’s copyright rights to the claimant (the company), the creator of the work retains the copyrights rights to that work. Where there is no written agreement, what the company paid for is only the physical copy of the work
Since the company is not the owner, it doesn’t have the right to do any of the following: make copies of the packaging, make copies of the software (so it can put it on several computers), make copies of the design (logo) so it can freely advertise and put the logo on any product or service that it sells, and make copies of the new content on its website. Only the owner of the copyrights has, among other things, the right to make and distribute copies of the work. The company is not the owner. The company only owns the “deliverable”.
Why must there be a written agreement? Because Section 204 of the Copyright Act, 17 USC § 204, provides that copyright rights can only be transferred in writing:
"A transfer of copyright ownership, other than by operation of law, is not valid unless an instrument of conveyance, or a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent."
But wait! What about a “work made for hire”? Can’t a work be deemed a “work made for hire” to deal with copyright ownership issues? “Work made for hire” also is defined in the Copyright Act, 17 USC § 101, and there are only two situations in which a “work made for hire” can exist. The first is when the work is prepared by an employee within the scope of employment. Under US Copyright law, the employer is then deemed to be the “author” and thus, no written transfer of copyrights is needed from the employee.
The second situation relates to a specially ordered or commissioned work for nine very specifically defined types of works. These works are
- 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
- a compilation;
- an instructional text;
- a test;
- an answer material for a test; or
- an atlas.
If someone attempts to create a work made for hire by contract, but the work is not one of these nine enumerated works, that work will not be deemed a “work made for hire” and the contracting party will not own copyrights in the work notwithstanding an agreement stating that it is a “work made for hire.” You cannot contractually create a “work made for hire” simply by inserting this phrase in an agreement if the work is not one of the nine enumerated works defined in Section 101.
For example, in Community for Creative Non-Violence et al. v. Reid 1, the Supreme Court addressed ownership of copyrights in a situation where the facts required interpretation of the terms "employee" and the "scope of employment" as well as the type of work commissioned. As an initial matter, CCNV hired Reid to create a sculpture for CCNV. CCNV suggested aspects of the design of the sculpture and supervised Reid's work.
The Court looked directly to the wording of Section 101 of the 1976 Copyright Act which defines a work made “for hire” and its two circumstances:
- a work prepared by an employee within the scope of his or her employment; or
- 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 written instrument signed by them that the work shall be considered a work made for hire.
Since the work did not fit any of the specifically defined types of ordered or commissioned works, the Court looked to whether Reid was an employee. After reviewing the legislative history of the work made “for hire” language, the Court held that the term "employee" was to be defined according to general agency principles.2 Under that definition, the facts in CCNV indicated that Reid was not an employee of CCNV, but was an independent contractor. There was no written agreement between CCNV and Reid. The Court concluded that CCNV was not an author under the work made “for hire” provision of the statute. However, the court also ruled that CCNV may be a co-author based on its involvement in creating the sculpture and thus this issue was left for determination upon remand.
We have seen many agreements stating that the work being created is a “work made for hire.” The enforceability of such a written provision is
A situation where a written instrument (while encouraged) may not be required arises where a copyrighted work was created by one party at the request of another, but only an oral grant of permission to use the work was given by the creator (copyright owner). As discussed, Section 204 provides that all transfers of copyright ownership must be in writing. Section 101, which is the definitions section of the Copyright Act, defines “transfer of copyright ownership” as “an assignment, mortgage, exclusive license, or any other conveyance, alienation, or hypothecation of a copyright or of any of the exclusive rights comprised in a copyright, whether or not it is limited in time or place of effect, but not including a
That is, a non-exclusive license can be granted orally, or may be implied from conduct.3 An oral license to use the commissioned work may only be enforceable in a
In Effects Associates, Inc. v. Cohen,4 Cohen wrote, directed, and produced a horror movie (titled "The Stuff"). Effects
To find that a
So what is the
2. Id. at 740
3. Nimmer & D. Nimmer, Nimmer on Copyright § 10.03[A], at 10-36 (1989)
4. 908 F. 2d 555 (9th Cir. 1990)
5. Id. at 559