In my practice, I often come across situations where a business derives value from copyrightable materials, but that business may not necessarily have all the rights they think they do. If your business has created valuable intellectual property that may be subject to copyright protection, there are a few issues you should consider.
What is Protected by Copyright
The Copyright Act of 1976 provides protection for "original works of authorship fixed in any tangible medium of expression," including literary works, musical works, dramatic works, pantomimes and choreography, pictorial, graphic, and sculptural works, motion pictures and other audiovisual works, sound recordings, and architectural works. See 17 USC § 102. Included in these definitions are websites, computer software, and other "technical" documents.
Work Made for Hire Doctrine
One of the reasons that many well-intentioned people misunderstand copyright law is because of the “work made for hire” doctrine. Put simply, many people think, “I paid for it… I own it!’ And, even people who are aware of the “work made for hire” doctrine think that paying for something means that the work was for hire and that they own it. However, that’s not necessarily the case, as a work is “made for hire” in only two circumstances:
First, if two parties expressly agree in writing that a work is “made for hire” and that work is specially commissioned and that work is in one of nine predetermined categories then the work is “made for hire.” Unfortunately for many, those nine categories are very limiting, and most books, photography, software, and many other copyrightable works which are common in commerce are not included. Therefore, even if the work was specially commissioned per the terms of a written contract, unless the work is in one of those nine very limited categories, the creator – not the business paying for the creation of the work – remains the author, and the owner, of the work.
Second, a work can be a “work made for hire” if it is created by an employee within the scope of his/her employment. In this case, the law places particular importance on whether the creator is a true “employee” or is instead an “independent contractor.” Courts will look at a number of different factors, including whether taxes were withheld from the creator’s paycheck, whether they receive benefits, and whether creating the work is part of their duties as an employee. As a result, if the creator of a work is a true employee, then the employer is the author, and the owner, of the work. On the other hand, if the creator is an independent contractor, then the creator – and not the employer – is the author/owner.
This can become more complicated where, for example, both employees and independent contractors jointly contribute to a work (for example, where both employees and an independent contractor collaborate on a project, such as a website). Ownership problems can arise if even just one contributor to a work is an independent contractor.
Another reason why some businesses may not have all the rights they think they do is because of copyright registration. Although most of the rights afforded a copyright owner come about naturally, registration gives an owner enhanced remedies in the event of infringement. Specifically, if a copyright owner registers a work before infringement commences, registration provides for so called “statutory damages” (an amount a court can award without the owner needing to prove damages) and the possibility of recovering attorney’s fees. These two remedies can be very powerful tools in prosecuting copyright infringement claims. Therefore, copyright owners are well advised to apply for copyright registration sooner rather than later.
What’s the Solution?
In cases where copyright in a work is not owned by the person paying for the work, this unexpected and unwelcome situation can sometimes be fixed by a copyright assignment – a written contract transferring ownership from one party to another.
So, in summary, in order to avoid these potential problems, it may be a good idea to take four steps:
- Assess what copyrightable works might be valuable to your business;
- Understand who created those works and the employment status of the creators;
- If it appears that ownership could be a problem, obtain copyright assignments; and
- Apply for copyright registration for the works.
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