Law Offices of Ronald D. Jackson

Intellectual Property Law

Who Owns the Copyright?

Demystifying © Ownership in Employment Situations

Disclaimer: This is not legal advice.

Many people make assumptions about who owns the copyright in works created in an employment setting:

• Employees assume that anything they create while employed belongs to their employer.
• Consultants assume that they own their work and are free to reuse it.
• Businesses assume that if they pay for it, they own it -- regardless if an employee or contractor created it.
  

Unfortunately, these assumptions are often wrong. Reliance on such generalities and misconceptions can lead to disastrous effects when the issue of copyright ownership is not clearly spelled out at the outset. Often individuals and businesses discover too late that they have no rights in work they thought they owned. When that happens, problems arise, because only the copyright owner has the legal right to exercise the bundle of rights comprised in a copyright. Everyone else is a potential infringer, which makes them liable unless they have a valid license or other authority to use the work. This article demystifies the legally complex subject of a "work made for hire," and provides tips on how to avoid costly copyright ownership disputes.

What is a "Work Made for Hire?"

A copyright comes into existence when eligible work is put in some tangible form, i.e., source code, manuscript, film, etc. At that instant, copyright becomes the property of the author who created it. However, determining who the author is for purposes of copyright ownership is not always easy. This is particularly true for work created in an employment situation. Is the owner of the copyright the one who actually created the work or the one that employed the creator?

The answer often depends on whether the work is considered "work made for hire," which operates to give automatic copyright ownership to the employer. Under the Copyright Act of 1976, a "work made for hire" is either:

This definition, particularly the first part, sounds simple, but it leaves a lot of undefined terms, which can and do, create confusion. For one thing, the copyright act does not define who an "employee" is, and it does not tell us when something is created "within the scope" of an employment relationship. Frequently, the creative work at issue will not be one of nine categories of "specially ordered or commissioned" works enumerated in part (2) of the definition. Usually, the focus is on whether the disputed work falls under the first part of the definition. That is whether a work was created by an "employee," and if it was created "within the scope" of an employment relationship. If the answer to either of those questions is "no," the "work-for-hire" doctrine does not apply. In such a case, the "employee" or independent contractor owns the copyright in the work.

Of course, the hard part is determining when an employer-employee relationship exists and if it does, whether something was created within the scope of that relationship. The US Supreme Court has ruled that state laws related to agency control whether someone is an employee or independent contractor in a given situation.

Was the Creator an Employee or Independent Contractor?

In the real world, it is often difficult to determine whether someone is an "employee," and if they are, whether they acted "within the scope of an employment relationship." To confuse matters more, "independent contractors" often work in conditions that have characteristics of employer-employee relationships. According to the US Supreme Court, the single overriding factor is whether the "employer" has the right to control the manner and method by which the person does the task.

For copyright ownership purposes, it is important to know who is an employee or an independent contractor. The "work made for hire" doctrine operates to give ownership to the employer for work an employee creates within the scope of his or her employment. But absent a written agreement to the contrary, an independent contractor can retain copyright ownership even after the sponsor has paid for the work.

Was the Work Created Within the Scope of Employment?

Even if the creator is an employee, ownership does not go to the employer unless the work was created within the scope of the employee’s employment. Again, courts rely on principles of state agency law to determine if something was created within the scope of an employment relationship. The answer depends on answers to the following questions.

1. Was creation of the work the kind of thing the employee was hired to do?Alternatively, was creation of the work "incidental" or closely related to the employee’s primary job duties? Generally, the more distant the work is to the employees’ regular job duties or to the employer’s expectations, the less likely the work will be considered within the scope of employment.

2. Did the employee create the work substantially within the authorized time and space limits of his or her job? Generally, the more the employee works at home using his or her own equipment, tools and resources the less likely the work will be deemed to be within the scope of employment.

3. Was the employee motivated, at least in part, by a desire to serve his or her employer? Generally, the more the employee is motivated by self-interest and the broader the market for the work, the less likely the work will be considered within the scope of employment.

Tips to Avoid Copyright Ownership Disputes

Raise questions early! If something might be outside regular job responsibilities, the wise employee considers getting a written statement from his or her employer that makes it clear who will own copyright in the completed work. The wise employer will take a similar approach. If it is important to business, the prudent employer wants assurances that it owns, licenses, or is otherwise legally entitled to use the work subject to copyright protection. So, raise any questions, doubts or concerns about copyright ownership early.

Get it in writing! Copyright ownership disputes most often occur because parties fail to specify who is to own work. So, the best way to avoid disputes is to agree in writing about who will own the work before the work is ever created. Depending on the circumstances, the written document could be a short memorandum, a consulting service contract, or a detailed development agreement. Whatever the form, the important thing is to make sure that the issue of copyright ownership is appropriately addressed.

Don't depend on good intentions! Talking about copyright ownership is like talking about money. Some people simply do not like talking about such matters, and sometimes employees fear raising such issues with their employer. However, reliance on someone's good intentions can be a big mistake. Under copyright law, someone's "word" about ownership is not worth much. Steadfast dependence on cordial working relationships and verbal understandings about ownership paves the road to many copyright lawsuits and much heartache.

Be alert to consequences! A written agreement is needed to transfer ownership of copyrights, but actions and oral statements can result in the granting of implied licenses. Hence, if you are not careful, giving someone a copy of your work to use or "try out" can have unintended consequences. Although such actions cannot transfer legal ownership, in some situations, they may give someone the right to legally use your work. Also, someone who contributes to the creation of your work can often claim rights as a "joint author." The possibility of joint authorship is very real in most employment settings, because of teamwork and collaboration between co-workers and colleagues. Generally, a dispute about copyright ownership is a "winner take all" proposition: either the employee or consultant or employer owns the exclusive rights. However, under some circumstances, an employer or someone else can successfully claim "joint authorship" and get co-ownership of a copyright. The concepts of joint authorship and implied licenses are complex subjects. Suffice it to say that under copyright law, what you do matters.

Get legal help early! Copyright law rewards prompt action and seriously penalizes procrastination. For example, if you do not timely register a copyright, it does not mean that you lose protection, but you can lose valuable legal remedies and negotiating leverage. Also, bear in mind that calling something a work made for hire — even in a written document — does not make it so. A work made for hire must satisfy one of the two statutory definitions of what such work is. Avoid costly blunders, and seek legal advice before creating valuable work in an employment situation. And, if you ever do find yourself ensnared in a copyright ownership dispute, don't let misconceptions and assumptions influence your decisions. Seek legal advice about the situation, and find out who really owns that copyright. It could be you.