August 12, 2015
Who Owns the IP You Hire a Freelancer to Create?
The first step in determining who owns what Intellectual Property (“IP”) a freelancer may create for your business is understanding the different types of IP.
“Copyright protects original works of authorship, while a patent protects inventions or discoveries. Ideas and discoveries are not protected by the copyright law, although the way in which they are expressed may be. A trademark protects words, phrases, symbols, or designs identifying the source of the goods or services of one party and distinguishing them from those of others.” (Copyright.gov)
Typically, patents and trade marks (and service marks) belong to the person or entity who registers them or otherwise obtains the legal right to own them. Copyrights, however, spring into existence at the moment of creation of the “work of authorship.” Works of authorship include things like articles, books, papers, photographs, films, music, and even computer code. By default, copyrights are owned by the creator of a work of authorship. “As a general matter, copyright infringement occurs when a copyrighted work is reproduced, distributed, performed, publicly displayed, or made into a derivative work without the permission of the copyright owner.” Id. Copyright infringement (or lawsuits alleging copyright infringement, rather) are what this article aims to help you avoid.
Work Made for Hire: An Exception to the Default Rule
“Although the general rule is that the person who creates the work is its author, there is an exception to that principle. The exception is a work made for hire, which is a work prepared by an employee within the scope of his or her employment or a work specially ordered or commissioned in certain specified circumstances. When a work qualifies as a work made for hire, the employer, or commissioning party, is considered to be the author. See Circular 9, Work-Made-For-Hire Under the 1976 Copyright Act.” Id.
How does one establish that a work is a work made for hire, though? That’s easy: use a written contract to hire a creative professional to create the work for hire.
Assigning Copyrights and other Rights to Intellectual Property
Written contracts between a seller of services (e.g., a creative professional) and a buyer of such services (e.g., a business hiring a creative professional to create works of authorship for the business’s commercial use) enable the parties to assign ownership of, and other rights to, copyrighted material. When crafting such a contract, it is important to clearly and unambiguously establish both the existence of an employer-employee relationship and to expressly, clearly, and unambiguously establish who will be the owner of any work created for hire by the employee.
In general, there are three broad categories of factors the Supreme Court identified in a case called Community for Creative Non-Violence v. Reed which make up an employer-employee relationship:
- Control by the employer over the work;
- Control by the employer over the employee; and the
- Status and conduct of employer.
Despite identifying these non-exhaustive factors, the Court still has not clarified the specific issue of which factor or factors must be present in order to establish an employment relationship with respect to the definition of a work-for-hire. The Court did hold, however, that the mere presence of a supervisory relationship to the creator or control over the creation of the work is not the controlling factor (pardon the pun) in determining whether an employer-employment relationship exists with respect to the definition of a work-for-hire.
This is why it is absolutely essential to use a written contract for employment, and to state in clear, unambiguous language the terms of the employment. (Also, gaining control over the works-for-hire your employees create is another benefit of using written employment contracts, in general, even if you’re in an at-will employment state. (For more on this topic, see: Employment Contracts in an At-Will Employment State”.)
You Need a Business Attorney
You should have a competent, experienced business attorney draft your Employment Contracts for your business. A business attorney will know the terms of art to use, as well as the right phrasing of the appropriate clauses to put into the contracts to ensure your legal rights are protected. Trying to copy & paste something together or use some template you found online is going to result in a document of substandard quality, which is not likely to protect you the way a custom-drafted contract would.
This is not an area in which you should cut corners, trying to save a buck. This is your intellectual property, and making the wrong move could mean someone else owns it or can exclude you from using it. So, get it done right the first time. You’ll be glad you did. If you need an attorney to draft an employment agreement for you to use between yourself, your business, and / or a creative professional or employee, please contact Executive Legal Professionals on the web, or by phone at (615) 669-6566. We can protect your intellectual property rights without breaking the bank.
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