Works of authorship created by ICs that do not fall within the list of nine specially commissioned works discussed above can never be works made for hire. This means that the IC, not the hiring firm, initially owns the copyright in such a work. As the copyright owner, the IC has the exclusive right to copy, distribute and create new works based on the work. Even though you paid the IC to create the work, you won’t own any of these exclusive rights. You may end up only with a limited right to use the work.
EXAMPLE: Tom hires Jane, a freelance programmer, to create a computer program. Tom and Jane have an oral work agreement and Jane qualifies as an IC. She works at home under her own direction, sets her own hours and uses her own computer. Jane completes her work, delivers her code and Tom pays her.
The program is not a work for hire because Jane is an IC, not Tom’s employee, and a computer program does not fall within one of the categories of works created by ICs that can be works made for hire. And, in any event, Jane never signed a work-for-hire agreement. This means that Jane owns all the copyright right in the program. As the copyright owner, Jane has the exclusive right to sell the program to others or permit them to use it. Even though Tom paid Jane to create the program, he doesn’t own it and can’t sell or license it to others.
Fortunately, it’s easy to avoid this unhappy result. Simply require all ICs who create copyrightable works for you to sign written agreements assigning, or transferring, to you the copyright rights you need before they begin work on a project.
An assignment is simply a transfer of copyright ownership. You can obtain all the copyright rights in the work, or part of them. It’s up to the IC and you to decide which rights to transfer. As discussed above, a copyright is really a number of rights including the exclusive rights to copy, distribute, perform, display and create derivative works from a work. Each of these rights can be sold or licensed together or separately. They can also be divided and subdivided by geography, time, market segment or any other way you can think up. For example, you could obtain the right to copy and distribute a work in North America for ten years.
An assignment can be made either before or after a work is created, but must be in writing to be valid. (See Independent Contractor Agreements for information on creating an assignment.)
EXAMPLE: Tom hires Jane, a freelance programmer, to create a computer program. Before Jane starts work, Tom has her sign an independent contractor agreement providing, among other things, that she transfers all her copyright rights in the program to Tom. Jane completes her work, delivers the program and Tom pays her. Tom owns all the copyright rights in the program.
When you obtain copyright ownership through an assignment, it is legally not the same as owning a work made for hire. When you own a work for hire you are considered to be the work’s author, even though you didn’t create it. You automatically own all the copyright rights in the work. You are not considered the author when you obtain a copyright through an assignment, and you only acquire those rights covered by the assignment.
However, you’ll usually want the assignment to transfer all the IC’s copyright rights. When you do this, the only practical difference between an assignment and a work for hire is that the IC or his or her heirs can terminate the assignment 35 to 40 years after it was made. However, in most cases this is meaningless because very few works have a useful economic life of more than 35 years.
Failing to Obtain Copyright Transfers From ICs
If you fail to obtain a copyright transfer from an IC, the best thing that can happen is that you will be considered a co-author of the work the IC helps create. For this to occur, you or somebody who works for you must actually help the IC to create the work. Giving suggestions or supervision is not enough to be a co-author. If you qualify as a co-author, you and the IC will jointly share copyright ownership in the work. As a co-author, you’re entitled to use or let other people use the work without obtaining approval of the other co-author. But any profits you make must be shared with the other co-author or co-authors.
If you don’t qualify as a co-author, at most you will have a nonexclusive right to use the work. For example, if you hired an IC to create a computer program, you will be able to use the program without asking the IC for permission. But you won’t be allowed to sell or license any copyright rights in the work because you won’t own any. The IC will own all the rights and will be able to sell or license them without your permission and without sharing the profits with you.