As a business owner, you should be aware of the copyright law exception allowing automatic transfer of copyright ownership from your employees and independent contractors to your business. Knowing what qualifies as a work-for-hire and how to protect your business’s interest in such work is significantly valuable to your company to commercialize the company's products and services, license IP rights to others, use the rights in the company’s internal business, and more.
What is a work for hire agreement?
Generally, copyright ownership vests on the original creator of a work. The exception to that rule are works made for hire. For a work to be a work made for hire and, therefore, automatically become a hiring company’s property instead of that of an employee or independent contractor, two mutually exclusive requirements must be met by the hiring company. On one hand, if the creator is a company employee, no separate work for hire agreement is needed so long as creating the work was part of the employee’s job. On the other hand, if the creator is an independent contractor, the hiring company must execute a work for hire agreement with said independent contractor. The Copyright Act lists nine categoriesof what is considered a work for hire by an independent contractor. As such, it is important to accurately qualify an independent contractor’s duty, and the work for which the contractor is being hired, under this type of contract to ensure that your company owns any work for hire created by the contractor.
Why does it matter for your business?
Knowing what is and is not a work made for hire is crucial to any business’s success. You do not want your business to inadvertently violate copyright laws and be accused of copyright infringement where such legal issues can be easily prevented. Additionally, whether a work product is classified as a work for hire or not can affect other rights, besides ownership, associated with the different types of intellectual property. For example, without a work made for hire classification and agreement, a hiring company may not be able to revise, alter, or distort the author’s (i.e., the employee or independent contractor) work, regardless of who owns the work. In other words, you may not legally have the ability to change a product created by an employee or independent if your business does not have a work made for hire agreement in place.
Similarly, without properly specifying that a work is one made for hire, the work may be subject to termination and reversion to the employee or independent contractor that created the work. Having a work for hire agreement before such work is created can protect against the potential risk of losing your ownership rights. Although there are equitable common law principles, which vary from state to state, which could be claimed in the event of a legal dispute, taking advantage of a work for hire agreement is an effective and proactive solution against expensive litigation costs.
As a well-informed business owner, you should reach out to a licensed attorney for more in-depth information about your specific business’s IP needs and protections as there are various types of intellectual property, each having different requirements for a valid transfer.
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 Intellectual Property: Employees and Independent Contractors, Practical Law Practice Note w-002-9206.  Id.  Id.  Id.  Id.  Id.  See 17 U.S.C § 101.  See supra, note 6.  See supra, note 8.  Id.  Id.  Id.