Why “Work Made for Hire” is a Term Made for Confusion
As Alexander Pope wrote in An Essay on Criticism (1711), “A little Learning is a dang’rous Thing“. That certainly pertains to the legal concept of a “work made for hire” (WMFH).
People who have some knowledge of WMFH typically believe that it means the transfer of all rights in a work from the creator to a purchaser. So, for example, if an independent contractor writes software for a company, then according to this belief, the company will own all rights to the software if the parties’ contract says the software is a WMFH. This belief is wrong! The following is an explanation of what WMFH really means under copyright law and how parties actually can arrange for transfer of all rights in a work.
Statutory Provisions
Title 17, Section 102(a) of the United States Code states that “Copyright protection subsists…in original works of authorship fixed in any tangible medium of expression….” Copyrightable works include, among others, literary, musical, dramatic and audiovisual works. Subject to certain limitations, the owner of a copyright has a set of exclusive rights, such as the rights to make and distribute copies and to prepare derivative works (17 U.S.C. Section 106). If someone infringes any of the exclusive rights, the copyright owner may seek remedies that include injunctions (17 U.S.C. Section 502), recovery of actual damages and additional profits of the infringer or, alternatively, statutory damages (17 U.S.C. Section 504), and recovery of litigation costs and attorney’s fees (17 U.S.C. Section 505). These rights and remedies are quite powerful. Accordingly, anyone who pays for a work has a strong incentive to own the copyright.
According to 17 U.S.C. Section 201(a), “[c]opyright of a work…vests initially in the author….” Section 201(b) provides, however, that “[i]n the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author….” “Work made of hire” means, most commonly, “a work prepared by an employee within the scope of his or her employment” (17 U.S.C. Section 101). There is, however, a second class of specifically enumerated types of works (such as translations, instructional texts, and works specially commissioned as contributions to collective works) that also qualify as WMFH if a signed contract so states.
Business Implications
Taking these provisions together, we see the following with respect to WMFH:
- An employer automatically owns the copyright to a work prepared by an employee within the scope of his or her employment.
- A company that hires an independent contractor to prepare a work will own the copyright to that work only if (a) there is a signed agreement that says the work is a WMFH and (b) the work falls into one of the enumerated types.
For any business that wants to own all rights in a work, there are two significant limitations in relying on WMFH status:
- For most works prepared by independent contractors, WMFH treatment is not available because the work is not of one of the enumerated types.
- Even if the work is a WMFH, that status has no bearing on rights other than copyright, such as those pertaining to patents.
Consequently, prudent businesses often include in agreements with employees and independent contractors both WMFH language and a provision that explicitly assigns all rights to the work. An example:
Company will have all right, title and interest in and to the Work Product. Company will be the sole and exclusive owner of the Work Product as a “work made for hire” under applicable copyright laws. If any Work Product is not deemed a “work made for hire”, Supplier hereby assigns to Company all of Supplier’s right, title and interest in the Work Product. Supplier hereby waives any moral rights that it may have in the Work Product.
The bottom line: One can pay for a work yet not own it. It is far better to ensure ownership with a properly drafted agreement.
Related post: If You Don’t Set the Terms of a Copyright License, a Court Will
This blog does not provide legal advice and does not create an attorney-client relationship. If you need legal advice, please contact an attorney directly.
Dana Shultz is a business-savvy lawyer located in Northern California's San Francisco Bay Area (in the East Bay, near Oakland) who has in-depth knowledge of law, business, technology, and the needs of startup and early-stage companies.