By Attorney Lloyd J. Jassin

     You should be greatly concerned about who owns the work you specially commission. For example, unless there is a special kind of agreement in place before any work begins, someone who contributes material to your new book or web site can, in theory, sell that same material elsewhere without your permission. Worse still, if there is no written agreement, and you want to adapt that material, or publish it elsewhere, you will probably need that person's permission. Similarly, if you hire someone to illustrate one of your short stories, unless there is a written agreement that says otherwise, you may be surprised to learn that the illustrator has become your coauthor. These seemingly odd results follow from the fact that under copyright law, authors are presumed to own the copyright in the works they create. The best way to avoid these problems is by having a written agreement in place before any work begins.

Do I Own the Work I've Paid For?

     Not necessarily. If a specially commissioned work doesn't qualify as a "work for hire," you may not own the work -- or even have the exclusive right to use it. While you may have implied license to use it, the scope of your rights will be unclear at best. One way to avoid this situation is to use an appropriate work for hire agreement.

What is a Work for Hire?

     One way to acquire rights is by license. With a license, you do not obtain total ownership of the final work, but rather certain limited rights to use it. These limited rights can either be exclusive or nonexclusive. A license can further be defined -- or limited -- by territory, duration, or even media. As a rule, hiring parties prefer to obtain rights on "work for hire" basis (shorthand for "work made for hire"). With a work for hire, the hiring party steps into the shoes of the creator and becomes the author of the work for copyright purposes. With a work for hire, all of the attributes of copyright ownership -- including credit and control -- vest in the hiring party, not the creator.

Important! There are only two situations in which a work for hire can exist. They are: (1) a work created by an "independent contractor," and a (2) "work prepared by an employee" within the scope of her employment.

A.      Works Created by Independent Contractors

     For a work created by an independent contractor (or freelancer) to qualify as a work for hire, three specific conditions found in the Copyright Act must be meet:

1. the work must be "specially ordered" or "commissioned." What this means is the independent contractor is paid to create something new (as opposed to being paid for an already existing piece of work); and

2. prior to commencement of work, both parties must expressly agree in a signed document that the work shall be considered a work made for hire; and

3. the work must fall within at least one of the following nine narrow statutory categories of commissioned works list in the Copyright Act:

(1) a translation, (2) a contribution to a motion picture or other audiovisual work, (3) a contribution to a collective work (such as a magazine), (4) as an atlas, (5) as a compilation, (6) as an instructional text, (7) as a test, (8) as answer material for a test, (9) or a supplementary work (i.e., "a secondary adjunct to a work by another author" such as a foreword, afterword, chart, illustration, editorial note, bibliography, appendix and index).

TIP! As this is being written, the law is unsettled over the issue of whether a work for hire agreement signed after the work has begun is valid. However, you are strongly advised that all work for hire agreements be signed before any work commences. Without an agreement signed by both parties before work begins, the status of the parties' relationship (and copyright) may be in dispute.

     Since a work does not become "for hire" unless the work falls within one of these nine narrow categories, a written work for hire agreement does not always result in a work becoming "for hire." For example, a novel, can never be a work for hire, because it doesn't fall into one of the nine categories of works eligible for work for hire status by non-employees.

TIP! Obtain a "Back-Up" Copyright Assignments. Since merely stating that a work is a work for hire may not be enough (e.g., the work doesn't fall clearly into one of the nine categories), a well-drafted work for hire agreement should also contain an assignment of the entire copyright. Of course, many freelance writers and artists will resist signing away their rights because they profit from recycling their creativity.

     Keep in mind that characterizing a work as a "work for hire," could impose upon an "employer" certain obligations relating to state worker's compensation coverage, unemployment compensation, and other benefits for workers. So consult with your tax advisor before commissioning a work or hire -- both copyright and employee benefit issues may be involved.


     

Case & Comment: The United States Supreme Court interpreted the Copyright Act's "work for hire" provisions in 1989 in Community for Creative Non-Violence ("CCNV") v. Reid, a dispute over ownership of a sculpture commissioned by a nonprofit organization. The court held that the artist was an independent contractor, not an employee, since sculptural works were not one of the nine specific categories of "commissioned" works listed in the Copyright Act, and no written agreement between the parties existed. However, the court sent the case back to the district court to determine whether a jointly copyrighted work was created. Comment: CCNV was a major legal victory for independent contractors. It stands for the proposition that creators who produce work at the instance and expense of a third party do not necessarily give up their copyrights in the process. For hiring parties, it stands for the proposition that just because you paid for it, doesn't mean you own the copyright.

 

TIP! Make Certain Your Freelancer Obtains Permission for Third Party Material. Special care must be taken when working with freelancers -- especially if they use outside copyrighted material in their own work. It is imperative that they secure the necessary rights you need to exploit their contribution, and that those rights are transferable. For example, if you hire a firm to design a web site, make certain the responsibility for clearing rights is spelled out. Make final payment contingent upon timely delivery of satisfactory permission letters, and decide in advance, who will be responsible for permission costs. You can make collaborators and contributors mindful of what you need by asking them to "represent" in writing that their work is original and not in the public domain. Have them "warrant" that their work does not infringe any copyright or other proprietary rights, including the right of privacy or publicity, and that it does not contain material that is either scandalous, obscene, libelous or otherwise contrary to the law. To further limit your risk, ask them to indemnify and reimburse you for any damages and costs you incur as a result of any breach of their "representations and warranties."

B.      Works Created by Traditional Employees

     A work created by an "employee" within the scope of his or her employment is automatically considered a work for hire. These works do not have to fall into one of the nine narrow statutory categories of works for hire and no written agreement is required. Typically, "work for hire" situations involve independent contracts, not employee-employer situations

C.      Independent Contractor of Employee?

     The term "employee" is a legal term of art without precise definition. However, a worker is most likely to be classified as an employee if the person who employs her has the legal right to control the "method and result" of her work; provides her with tools; pays her on a daily, weekly or monthly basis; and can fire her. The IRS use a 20-part test, applicable for copyright purposes, to distinguish between employees and independent contractors.

     Unlike specially commissioned works, for works where a traditional employee-employer relationship exists, no work for hire agreement is needed. However to avoid any ambiguity, it's a good idea to include a well-drafted statement in the employment agreement acknowledging that any work created in the scope of employment will be considered a work for hire. The employment agreement can also include non-competition and non-disclosure provisions to protect your business's trade secrets.

     An important issue that arises in the context of employer-employee relationships is the ownership of works prepared after-hours, or outside the scope of employment. Under the Copyright Act, work product prepared outside the scope of one's job is not generally considered a work for hire. Therefore, employers may have to negotiate for such materials separately.

NOTICE: This article represents copyrighted material and may only be reproduced in whole for personal or classroom use. It may not be edited, altered, or otherwise modified, except with the express permission of the author. This article discusses general legal issues of interest and is not designed to give any specific legal advice pertaining to any specific circumstances. It is important that professional legal advice be obtained before acting upon any of the information contained in this article.

LLOYD J. JASSIN is a New York-based publishing and entertainment attorney in private practice. He is co-author of the bestselling Copyright Permission and Libel Handbook: A Step- by-Step Guide for Writers, Editors and Publishers (John Wiley & Sons, Inc.), available at bookstores or at www.copylaw.com. Mr. Jassin has written extensively on negotiating contracts in the publishing and entertainment industries, and lectures frequently on contract and copyright issues affecting creators. He is counsel to the Publishers Marketing Association and Vice Chair of the Small Press Center. He may reached at Jassin@copylaw.com or at (212) 354-4442. His offices are located at 1560 Broadway, Suite 400, New York, NY 10036.

Adapted from the Copyright Permission & Libel Handbook (John Wiley & Sons), by Lloyd J. Jassin and Steven C. Schechter.