This post is part of a series of posts entitled A Legal Guide to the Internet. For a comprehensive list of articles contained in this series, click here.
It is important to recognize that in most cases, the original creator or author of the copyrighted work is the owner of the copyright. Copyright vests initially in the author or authors of the work (17 U.S.C. § 201(a)), so unless an exception applies, whoever creates the work owns it. The principal exception is a work made for hire, where the employer or commissioning party is treated as the author and owner (17 U.S.C. § 201(b)).
If an employee of your company creates the work, the copyright may belong to the company under the work-made-for-hire doctrine of the United States Copyright Act, provided the work is created within the scope of his or her employment. In that situation, the employer is considered the author and owns all of the rights comprised in the copyright unless the parties have expressly agreed otherwise in a written instrument signed by them (17 U.S.C. § 201(b); see 17 U.S.C. § 101 (defining “work made for hire” to include “a work prepared by an employee within the scope of his or her employment”)).
Whether a creator is a true employee, as opposed to an independent contractor, is not decided by your right to control the work alone. In Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989), the United States Supreme Court held that the term “employee” is understood “in light of the general common law of agency,” weighing a non-exclusive set of factors: your right to control the manner and means of the work, the skill required, the source of the tools, the location of the work, the duration of the relationship, your right to assign additional projects, the worker’s discretion over hours, the method of payment, the worker’s role in hiring assistants, whether the work is part of your regular business, the provision of employee benefits, and the tax treatment of the worker. As the Court put it, “[n]o one of these factors is determinative.”
If you hire an independent contractor (rather than an employee) to develop copyrightable subject matter, the contractor presumptively owns the copyright. The work can become a work made for hire owned by your company only if two conditions are both met under 17 U.S.C. § 101(2): first, the work falls within one of the nine enumerated categories of specially ordered or commissioned works (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, a test, answer material for a test, or an atlas); and second, the parties expressly agree in a written instrument signed by them that the work is a work made for hire. A signed work-made-for-hire clause by itself is not enough. If the commissioned work does not fall within one of the nine categories (for example, a standalone software program, a logo, a website, or a sculpture), it cannot be a work made for hire, and the contractor keeps ownership. That is what happened in Community for Creative Non-Violence v. Reid: applying the common-law agency factors, the Court held that the sculptor was an independent contractor rather than an employee, and because the commissioning party conceded the sculpture could not satisfy section 101(2), it could not be a work made for hire on that basis either. Because the sculpture was not a work made for hire, the commissioning party was not the author, and the Court remanded to determine whether the sculptor and the commissioning party were joint authors (and thus co-owners).
To secure rights to work that does not qualify as a work made for hire, obtain a written assignment of the copyright rather than rely solely on a work-made-for-hire clause. A transfer of copyright ownership 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” (17 U.S.C. § 204(a)). Copyright vests initially in the author (17 U.S.C. § 201(a)), and because a transfer of that ownership is invalid without a signed writing (17 U.S.C. § 204(a)), the contractor remains the owner absent such a writing. To be sure that ownership is transferred, your agreements with independent contractors should identify that the resulting work is deemed a work made for hire in accordance with the United States Copyright Act and, if it is not, that the independent contractor agrees to assign their rights to the company.
This issue is of particular importance when you hire an outside contractor to develop a website. If you do not get a written, signed assignment from the contractor, the contractor remains the copyright owner. As the owner, the contractor holds the exclusive rights to reproduce the work and to prepare derivative works (17 U.S.C. § 106), so your hiring of a new party to perform further website development or modifications may infringe the original developer’s copyright unless you have a license. An assignment of rights should be included in your website development agreement. If you hire an independent contractor to develop any Internet-related technology or other forms of intellectual property for your company, consider an assignment of rights as part of your written agreement.
For more information, see our post, Patents for Minnesota Employers | MN Employee Invention Rights.
This and the following posts have been copied or adopted from A Legal Guide To The INTERNET – Sixth Edition, published through a collaborative effort by the Minnesota Department of Employment & Economic Development and Merchant & Gould.
