WHO OWNS WHAT? YOU MAY BE SURPRISED!
Do you own the work you paid for? You might be surprised to learn that the answer depends upon whether the person creating the work is deemed an employee or independent contractor. Other complications arise when joint parties create a work or make changes to an existing work. The respective rights and liabilities, and what permissions may be needed to exploit the work, should be of concern to all. These questions are particularly important in the entertainment and publishing industries and frequently become the subject of litigation.
Do You Own the Work You Purchased?
Maybe and maybe not. Under U.S. Copyright Law, the author or creator of a work automatically owns the copyright. This applies whether you are a writer, musician, visual artist, photographer, web designer or other creator. The creator owns the copyright and has the exclusive rights to copy, publically perform or otherwise use the material elsewhere. This rule applies even if you paid for the entire work. However, the person paying for the work is deemed to have a non-exclusive license to use the work for the purpose for which it was originally created.
For example, if someone is hired to create website content, the hiring party can use the content on its website. However, the website designer, as the creator, is the copyright owner and has the right to use the same content elsewhere (unless there is a written agreement to the contrary). You might also be surprised to learn that someone contributing material to your music or movie script may become the co-owner of the entire work, even if their contribution is significantly less than yours.
There are two exceptions under U.S. Copyright Law to the creator owns rule, namely, (i) works created by an employee within the scope of employment and (ii) for works created by an independent contractor where there is a written “work-made-for hire” agreement. Independent contractors (freelancers) should be careful about signing a “work for hire” agreement because valuable ownership rights are often unknowingly waived without obtaining full compensation for the rights transfer.
Work Created for an Employer
If an employee creates a work within the scope of employment, Copyright Law provides that the employer automatically owns the copyright. However, disputes often arise over whether works prepared “after hours” and for “special assignments” constitute works within the customary scope of employment. Written agreements covering intellectual property rights are recommended to avoid such disputes.
Works Created By Independent Contractors
Works created by independent contractors are owned by the respective creators unless there is a written agreement to the contrary signed by both parties. If you are the engaging or purchasing party, it is recommended that a “work for hire” agreement be obtained before work is commenced. The law is unsettled as to whether a “work for hire” agreement signed after the work has commenced is valid.
Disputes also arise as to whether a person is an employee or an independent contractor. The IRS has comprehensive guidelines for tax purposes to determine whether an individual is an employee or an independent contractor. This analysis is also applicable for copyright purposes. Generally, a person will be deemed an independent contractor if the engaging party does not have the right to control creatively how the work will be done. However, whether someone is deemed an independent contractor for copyright purposes will depend upon the facts of each particular situation.
Special care should also be taken in drafting work for hire agreements. A well-drafted agreement will, among things, provide for the assignment of the copyright and any third party rights that need to be acquired. Written agreements are also recommended when collaborating with other parties or companies so that the respective ownership rights and duties are clearly defined.
This article is provided for general guidance and is not intended as legal advice. For more information about what rights you may own, contact me via email: nabesq1@gmail.com
Other intellectual property issues are discussed on my blog at www.neilburstein.com/blog
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