Of the various types of intellectual property rights, copyrights are the most easily obtained, but arguably the most misunderstood. In the United States, copyrights exist from the moment that original works of authorship (such as poetry, software code, and musical works) are fixed in any tangible medium of expression (such as paper and ink or flash memory cards). Registration provides additional benefits, but is not required.
In general, the author of a work is the initial owner of the copyright in such work. Copyright owners have several exclusive rights, including the rights to reproduce, distribute, publicly perform, publicly display, or create derivative works based on the work. Copyright protection lasts from creation until 70 years after the author’s death, or, in the case of works made for hire (and pseudonymous or anonymous works), the later of 120 years after creation or 95 years after first publication.
The concept of a “work made for hire” is frequently misunderstood, even by lawyers. A work is not “made for hire” simply because one person pays another to create the work or because an agreement between the parties labels it a “work made for hire.” Under the Copyright Act (17 U.S.C. §§ 101 et seq.), a work is a “work made for hire” only if: (1) it is prepared by an employee within the scope of his employment; or (2) it is specially ordered or commissioned from an independent contractor pursuant to a written agreement and the work falls within one of nine statutorily defined categories.
For works created by employees, courts apply general principles of agency and employment law to determine whether an individual is an “employee” and whether the work was created within the “scope of employment.” (See Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989); U.S. Auto Parts v. Parts Geek, LLC, 692 F.3d 1009 (9th Cir. 2012)). Courts generally apply a three-prong test to determine whether a work is an employee-created work made for hire:
- whether the work is of the kind the employee is employed to perform;
- whether the work occurs substantially within authorized work hours; and
- whether the work is performed, at least in part, to serve the employer.
If a company is uncertain whether an individual is an employee or whether the creation of the work falls within the scope of such individual’s employment, it should obtain a written agreement from the individual expressly assigning the copyright in the applicable works to the company.
For works created by independent contractors, only the following types of works are eligible to be “works made for hire”:
- a contribution to a “collective work” (a work, such 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);
- a part of a motion picture or other audiovisual work;
- a translation;
- a “supplementary work” (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);
- a “compilation” (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);
- an “instructional text” (a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities);
- a test;
- answer material for a test; or
- an atlas.
The list above does not include many types of works that businesses frequently hire outside personnel to create, such as websites, logos, advertisements, photography, and custom software. For works that do fall within the defined categories, the business must have a written agreement from the author expressly stating that the work is made for hire for it to qualify as such.
Although the agreement and course of dealings between a business and an independent contractor may give rise to an implied license for the business to use the works created by the contractor, it is highly preferable to avoid relying on an implied license. Any business that engages a non-employee to create a work and intends to own the copyright to such work should have a written agreement with the author expressly stating that the work is made for hire (if it falls within one of the eligible categories). If the work is not eligible to be a work made for hire, and for good measure even if it is, the written agreement should include a provision assigning the copyrights to the business. An example of such a provision is: “To the extent that the Work Product is not recognized as a ‘work made for hire’ as a matter of law, the Contractor hereby assigns to the Company any and all copyrights in and to the Work Product.” By including such a copyright assignment clause, a business will be able to obtain the copyrights it expects, even if the work does not qualify as a “work made for hire.”