What is work made for hire?
The phrase "work made for hire" has a specific place in labor law and a more general use within the intellectual property laws. The basic idea is that certain conditions allow an employer to claim ownership of creative works that an employee, such as a graphic designer, produces as part of their job. It is not a free, open-and-shut version of when an employee’s employer receives ownership of works that the employee may have created during their employment. The employer must prove that the conditions of a work made for hire agreement are met.
The work-for-hire idea can apply to freelance work as well, but not always. For example, a freelance writer who writes an article for a magazine for a flat fee, does not transfer their rights to the magazine and the magazine cannot stop the freelance writer from placing the article on their personal website after the publication. Work does not have to be a physical thing or even something tangible to count as a work , and intellectual property lawyers often suggest taking the idea of "work" in "work made for hire" and make it synonymous with creation of any kind.
There are actually two types of works made for hire. The first, as you may expect, encompasses employment. If an employee creates a work during the scope of their employment, the employer may own the work and the copyright in the work. The other type of works for hire covers works that are "ordered or commissioned." Under the Copyright Act of 1976, 17 U.S.C. § 101(2), these are works of "contribution to a collective work, part of a motion picture or other audiovisual work, translation, supplement, compilation, instructional text, test, answer material for a test, or atlas, or as an atlas." An example of a work commissioned specifically to fit under the second type would be a graphic designer designing images for a billboard.
An "employee" is someone hired by an employer with specific expectations for their work as part of their hiring. This includes hourly employees and salaried employees, and possibly, depending on the situation, interns and volunteers.
Independent contractors, not employees
It is important to understand the distinction in law between an independent contractor and an employee, since that distinction will have a large bearing on your ability to prove a ‘work made for hire’ right. An employee is typically under the much more stringent control and supervision of the company, subject to the rules and policies of the company and expected to perform the tasks assigned as requested by the company. Also, employees are typically covered by employer-provided benefit plans and are generally eligible for termination without cause. Employees routinely receive a tax form, a W-2, from the employer which essentially disclaims the self-employment status of the worker.
An independent contractor works under a contract that describes the duties of that employee. The independent contractor is usually not treated as an employee for certain benefits such as severance, pension and retirement plans, and since manufacturers and distributors are not liable for any injuries suffered by independent contractors, the independent contractor must usually obtain liability and workers compensation insurance. An independent contractor is generally not eligible for termination without cause and is often responsible for his or her own utilities, equipment and supplies.
The Internal Revenue Service has established requirements for properly classifying an employee as an employee or an independent contractor. In particular, the amount of direction and control that the company has over the worker is a central inquiry. The degree of supervision and control of the work performed is a sign of an employer and employee relationship. 22 C.J.S. Contracts § 382 (2011). That level of control and right to control, including evaluation of the means and methods of accomplishing the task, would be one factor in establishing whether the work was made for hire.
Laws and contracts that apply
The primary federal law applicable to independent contractors in this context is the Copyright Act itself, Section 101 of Title 17 of the United States Code. Section 101 defines "work made for hire" as "a work prepared by an employee within the scope of his or her employment," or "a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them, that the work shall be considered a work made for hire in accordance with clause (2)."
There is no federal law that specifically addresses the scope of works made for hire within the context of independent contractors. The argument that a work made for hire was created by an independent contractor, as opposed to an employee, must be made through a state law tort claim. That claim, in this circumstance, would likely be based on Section 333 of the Restatement (Second) of the Law of Torts, a claim for conversion, misappropriation, or an infringement of one or more of the author’s rights under the Copyright Act.
As noted above, the primary legal tool for establishing a work made for hire, regardless of whether it is created by an employee or an independent contractor is a written agreement between the parties regarding the creation of the work. In addition to the language specifically addressing exclusive licensing agreements, it is important to draft and execute a written agreement governing the creation of the work, which specifically establishes that the parties intend it to be a work made for hire. Please see the section below, regarding Symbol Technologies Inc. v Adaptix, Inc., for a discussion of the threshold requirements for a claimed work made for hire agreement between an independent contractor and its client.
Work made for hire benefits and drawbacks to businesses
Work made for hire agreements with independent contractors who draft or build a variety of works, including written works, software code, designs, musical works or any other works, can serve as a powerful tool in protecting the interests of the hiring business. If identified and used in the proper context, work made for hire agreements can help a business maintain control over its internal development projects, enforce its intellectual property rights against third parties, and prevent potential litigation and liability to third parties who may seek to enforce their own intellectual property rights against the hiring business, among other things . Failure to use work made for hire agreements, on the other hand, in appropriate circumstances can render a business exposed to significant risks, including having to deal with unintended third party intellectual property interests or litigation to stop third party infringement to the detriment of the business.
Case examples and relevant law
Several notable cases have further defined the intricacies of the work for hire doctrine in the context of independent contractors.
Snap-On Tools Corp. v. Honeywell, Inc. is a frequently cited case at the intersection of software ownership and the work made for hire doctrine. The parties had precedent dealings where Snap-On paid for software to be developed. Later, when Snap-On contracted for similarly developed software, it later asserted that the agreements were not works made for hire. The U.S. Court of Appeals for the Federal Circuit held: "When a party provides others with ample notice that the party expects to retain copyright in materials, even if the other party would be required . . . to pay a relatively small sum if that party expects to obtain some copyright rights in the materials, the court should not so easily assume that the other party has not effectively paid for copyright rights." Snap-On Tools Corp. v. Honeywell, Inc., 93 F.3d 482, 493 (Fed. Cir. 1996).
In a situation similar to many modern freelance jobs in the digital world, a Third Circuit case draws attention to client/contractor relationships with less than clear contract terms. In Edcyc., Inc. v. Employment law center, etal., a consultant for an independent contractor was brought to court by his employer for copying or creating computer programs without the employer’s written permission. The consultant, a self-described "independent contractor" for the defendant-authors of the website in question, disputed the fairly standard agreement used by the company, saying that it did not make clear which potential work products might be works made for hire. Traditionally, any creations of an employee would qualify as works made for hire, however, the website in question left little doubt as to its independent contractor status. The website in question was entirely created by the defendant-authors and did not fit the traditional criteria of an employer/employee relationship. The court noted that the consulting agreement between the two parties only stated that the defendant-authors could "request" copies of their work. The court found that the consultant’s work could not be considered works made for hire because while the employment law center website had various third party contributors, their identities were not kept secret. The fact that the defendant-authors did not have the public’s permission to use the website with the authoritative name attached was not sufficient to find that Edcycs’ material should be considered works made for hire.
Navigating the work made for hire doctrine in the contracting context can be complex, but the stakes are high for both the creator and the person engaging the creator’s services, especially in a rapidly changing market for work product such as in digital and creative industries.
Drafting and writing best practices
Though many companies use other avenues to acquire talent in lieu of direct hire, there are many instances in which the work of an independent contractor would be drafted into a "work made for hire" agreement. As described earlier, there are certain requirements a work must meet in order to be made for hire. The Copyright Act includes these requirements in section 101, and permits consideration of a work for hire, so long as it falls into one of ten categories listed as follows:
- A contribution to a collective work
- A part of a motion picture or other audiovisual work
- A translation
- A supplementary work
- A compilation
- An instructional text
- A test
- Answer material for a test
- An atlas
- An architectural work
Section 101 further defines "employee," as a "person who is employed by another." If the independent contractor does not qualify as an employee, the only way to make the contract actionable is if 1) it falls as discussed above into one of the ten listed categories, where the independent contractor creates the work in whole at the request of the company; or 2) is clearly specified in a written agreement as a "work made for hire." Drafting a contract with the appropriate clauses listed below will ensure the work is made for hire.
The contract should adopt the language from the statute, specifically that it is a "work-made-for hire." In addition, it should state that the contracted work "shall be prepared for use as contribution to a collective work, as part of a motion picture, as a translation, as a supplementary work, or as an instructional text. The Company shall be considered the author and owner of the copyright in the Work . "
Further, the contract should include language that states both parties understand that the objective of the contract is that the work created will be a "work made for hire" subject to U.S. copyright law. And finally, the contract should be signed by both parties.
Like the idea of a "work made for hire" contract, but also want to share the copyright ownership later? The terms "work made for hire" should be stricken from the contract and a work-for-hire clause should be added into the copyright assignment clause as follows:
"Assignment. Creator hereby agrees that all rights in the work shall forthwith vest in Company, which Company shall be the sole owner of all right, title and interest therein, including without limitation all copyright, and that creator shall have no right, title or interest therein, except as provided herein, and that the Company shall have the right at all times hereafter to transfer whatever rights creator may have or claim to the work to any person or entity in perpetuity. Creator agrees and acknowledges that the Company will not need to request permission from creator to exercise any of the above rights. In consideration of all the rights granted herein, creator hereby waives any and all rights creator may have with respect to attribution or integrity of the work, and creator understands and agrees that the Company shall have the right to exploit, manipulate, change and revise the work, including without limitation, the right to create derivative works based upon the work and/or the original artwork created by creator. Furthermore, creator understands that this assignment of rights shall inure to the benefit of the Company’s successors, assigns, licensees, distributors, sponsors and other third parties authorized by the Company."