Many industries involve the creation of creative output – whether it is websites, software, architectural plans, art, or the pattern on a particular brand of bedding. And of course, companies in these industries make use of employees and contractors to help them create this output.
It is, perhaps, a natural assumption that the company who pays for the creation of a creative product is the sole owner of the rights to that product unless and until they sell or license it to others. Sophisticated business owners will even include language in their contracts that anything created by an employee or a contractor in the course of their work is a “work made for hire” under the copyright laws of the United States, and therefore belongs to the company. First, some reassurance; a “work prepared by an employee within the scope of his or her employment” is indeed a work made for hire, insofar as copyright law goes, and copyrightable works belong to the employer. Enter pitfall number 1. This “work made for hire” doctrine applies only to copyrightable works, not those that would be subject to patent or other intellectual property law.
Pitfall number two comes into play with the use of independent contractors. Imagine, for example, that you are launching an app. You hire a software developer, as an independent contractor, to help you write the code. As a savvy business owner, you make sure to have a written contract and include a provision that the work is made for hire. You might naturally think that this makes you the owner of that code. However, when it comes to non-employees, the Copyright Act contains an exclusive list of 9 types of works that are works made for hire, and then only if that is agreed to in a signed writing. If a particular work does not fall into those categories, it is not a work made for hire, even if your contract stipulates that it is.
Software code is not one of the 9 enumerated types of work and thus, even with a written agreement in place, the code for your app would likely not be a work made for hire. This work would belong to the developer, and not to you. We say “likely” because there have been some interesting arguments made – with varying results – that software can qualify as a “compilation” or “collective work”, which would be one of the nine enumerated types of work for hire.
So, what happens if the work in question is not a work made for hire covered by copyright law and you are not otherwise protected? Nothing good for your company. While the company would have an implied license to use the work, your rights would be limited at best, and likely not exclusive. If you were involved in the creation of the work, you could attempt to assert rights as a joint “author” of the work. However, the safest course by far is to have a tightly drafted contract that explicitly assigns the ownership rights to you, rather than relying on the work made for hire or other intellectual property doctrines.
If you are unsure whether your contracts fully protect your company’s intellectual property, it may be time for a closer look. An experienced attorney can help ensure your agreements give you the maximum protection, and the team at Way Law is always here to help!