The Default Rule: Contractors Own What They Create
If you hire an independent contractor—a web designer, software developer, graphic designer, or photographer—the default rule in the United States is that they own the copyright to whatever they create for you. Even if you paid $100,000 for custom software, the contractor retains the intellectual property rights unless your contract says otherwise.
This catches many business owners off guard. A photographer who shoots your office space or staff portraits? Under the law, the photographer owns every one of those photos.
Employees Are Different
When an employee creates work as part of their job duties, the company generally owns that work product. This is one reason businesses choose to bring certain creative and technical functions in-house rather than outsourcing them.
The Fix: A Work Made for Hire Provision
The single most important step you can take is to include a “work made for hire” provision in every independent contractor agreement. This clause states that the work was created for your company and that all copyrights belong to you—not the contractor.
A well-drafted version also includes a backup assignment clause: if the work doesn’t legally qualify as “work made for hire,” the contractor assigns all rights to you anyway. That two-step approach closes the loopholes.
What to Do Now
Review your existing contracts with designers, developers, and other creative vendors. If there’s no work made for hire provision, you may not own what you’ve been paying for. Add this clause to every future agreement before the project begins.
Video Transcript
Paying for Work Does Not Always Mean You Own It
You paid for the work, but do you actually own it? Whether it’s software branding or a website. If you’re hiring designers or developers, there’s a legal trap that could cost you your rights to what you thought you bought. In this video, we’ll uncover the surprising truth about who really owns the intellectual property and the simple contract clause that puts you back in control.
Hiring a Designer or Developer
Let’s talk about another type of service contract you might have. You may hire a designer. Maybe it’s a web designer, maybe it’s a graphic designer. Maybe it’s a software company. Let’s use that as an example. There’s a company who spent a hundred thousand dollars asking a company to develop software for them.
They paid them a hundred thousand dollars. They got the software. You might think it’s all good, right? But who owns that software? What you might not realize is that the general rule in the United States is if you hire a contractor to do something for you, they own the copyright, the intellectual property rights in whatever they design for you.
Contractors Retain Ownership
Now, they might allow you to use it, but if you are paying a hundred thousand dollars for some software code, you are probably assuming you own that. Now, if your employee wrote the code for you, then generally speaking, your company would own that code as long as the employee did that as part of his or her job.
But if you hire a contractor to write software code or music, or do graphic design or prepare a website or whatever that might be, the general rule in the United States is the contractor owns the intellectual property rights in what they created. This even includes a photographer. If the photographer takes photos of your office space or your staff under the law, the photographer owns the copyright to all of those photos.
Adding a Work Made for Hire Provision
Now there is something you can do about that. So here’s the tip. Include a work made for hire provision in your contract with the independent contractor. A work made for hire provision basically says, look, this work that you’re preparing was made by you for us, so we own the rights to it. That’s what a work made for hire or a work for hire provision means. You can find it on the internet, but it basically says:
All copyrights acquired for this design, or this software, or photo, or whatever it is, are owned by us, not by you. So you can reverse the default rule simply by having in your contract with anybody who provides services to you a work made for hire provision.
Additional Resources for Business Owners
Now, if you’d like to know more about how to avoid trouble like this, I have a free resource at AaronHall.com/free.
I provide information for business owners of small to midsize companies on how to avoid common legal problems. That includes a PDF. It includes videos talking about important issues. I’m Aaron Hall. I’m an attorney for business owners and entrepreneurial companies. If you’d like, subscribe to this channel so you can get more educational content like this.
