Disclaimer: The following article is provided by way of general legal information only and should not be relied upon as legal advice specific to your situation. If you require legal advice, consult a licensed attorney in your state.
Paying someone to create something can be a clever way for you to get what you don’t have the skill or time to make yourself. But you should be concerned about copyright law if you’re making these types of arrangements.
Copyright law sets the rules for the ownership of original creations, such as art, music, photos, websites, & articles, among other things.
Generally, owning a copyright means that the creator of something has the exclusive right to use, sell, distribute, or otherwise exploit their creation. In other words, no one can use the creation without the copyright owner’s permission. When the copyright owner dies, 70 years must pass before the copyrighted item can be used without the permission of the owner’s heirs. After those 70 years, the copyrighted creation is said to have “entered the public domain.” (This is the typical scenario – there are other scenarios in which there’s a longer protected period).
Tell Me More About Copyright Law!
A fundamental principle about copyright law that may not seem so obvious is this: copyright protection attaches to something the moment it’s created. Lawyers like to say it this way: the creator of an original work receives copyright protection once the work is “fixed in a tangible form.”
So as soon as you finish snapping a photo or writing a line of code, for instance, you become the owner of a brand new copyright.
This type of copyright is known as a common law copyright, and you don’t have to file any paperwork with any government agency in order to claim it. (You must have a federal copyright registration in order to sue someone else for copyright infringement, but that’s a subject for a later post.)
There’s one situation in which this principle about common law copyrights doesn’t apply. And that’s when an employee creates something — such as a website — for her employer. In that case, the employer will own the copyright, despite the fact that it was made by someone else.
But if that same website was built by someone who wasn’t an employee of the organization, the person who created the website would retain ownership of the site’s copyright even if though they were paid to create it for someone else.
Let’s be clear: paying someone to make something for you doesn’t automatically make them your employee for copyright law purposes. The employment laws of your state will determine who is and who isn’t an employee.
Here's the Problem...And the Solution
You can see why this could be problematic. Copyrights are one of the most important forms of intellectual property that a business or a nonprofit can own, and sometimes it’s necessary to have someone create something for you, even if they aren’t your employee.
That’s why work-for-hire agreements exist. Such agreements typically say that Party A is making something on behalf of Party B, but that Party A’s creation is a “work for hire” under the federal Copyright Act. If a creation is a “work for hire” under the Act, it means that the copyright for the creation won’t belong to the person who made it — it will belong to the person or organization that paid for it to be created.
A solid work-for-hire agreement will go one step further and include an assignment provision. This kind of provision says that if the creation can’t be considered a “work for hire” for any reason, the creator assigns all of her rights, title, and interest in the creation to the person who paid for the creation to be made.
Rights, title, and interest = ownership. So through this type of provision, the creator hands over her copyright to the person who hired her.
But before you run off to download a work-for-hire agreement for your latest project, you should know that contracts aren’t neutral documents. Almost every contract is written from a certain perspective.
Since attorneys tend to be the ones who write contracts and do so only for their clients, a contract will have a certain slant depending on who it was written for. So a work-for-hire agreement written for the creator of the work might read differently from an agreement that’s been written for whoever’s paying for the work to be created.
Let’s examine this contract perspective issue a bit more closely, continuing with our example about the creation of a website. And let’s add some more color to our example while we’re at it, using the following facts:
Eric is a freelance website designer, and he has been hired to build a website for a consultant who helps nonprofits to source new volunteers and donors.
Considerations for the Creator
Here are some things Eric might want to consider for his work-for-hire agreement:
Scope of Work. Eric needs to make sure that the agreement identifies what the consultant expects him to do. Is he responsible only for creating a website certain functionality (the bare bones stuff) so that the consultant can write the necessary content? Or is he expected to fill the website with content too? This needs to be clearly spelled out so Eric knows what he’s getting himself into.
Intellectual Property Representations: The agreement might say that Eric “represents” that he hasn’t infringed on a 3rd party’s copyright or other intellectual property rights in his design of the nonprofit’s website. A representation is a legal term of art that refers to a strong promise that is the basis for the deal in a contract. If the representation isn’t true, the party who made the representation will be liable for breach of contract. So Eric needs to make sure that his design is wholly his and that he hasn’t borrowed anything from anyone (including his former clients) to design the website.
Considerations for Whoever's Paying for the Creation
Here are some things the consultant might want to consider for the work-for-hire agreement:
Release: After the agreement is signed, the consultant probably doesn’t want to have disputes with Eric later on about who owns what, how much compensation Eric is entitled to, and other similar issues. So the consultant should consider including a provision which says that Eric releases the consultant from any claims or demands about the website he designed and about the work-for-hire agreement itself.
Indemnification: If a 3rd party sues the consultant because the website that Eric designed infringes on the 3rd party’s copyright, the consultant may be able to pass the responsibility for any damages owed to the 3rd party on to Eric. Passing off responsibility in this way is called indemnification. If the consultant wants the protection that comes from indemnification, he or she has to negotiate for it to be included in the agreement. There is no independent legal right for indemnification.
Wrapping It Up
Work-for-hire agreements are a handy tool to get and provide needed services. Just make sure you understand what the agreement says before signing it and that the agreement has all the protections you need, depending on your role in the arrangement.
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About The Content Creator
Faith Mitton, Esq.
About The Content Creator
Faith Mitton, Esq.
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