From time to time, other attorneys with our firm will contribute blog posts on items that may be of interest to members of the labor and employment law community. Today, we are fortunate to have a post contributed by Marc Fineman, a partner in Levenfeld Pearlstein’s Intellectual Property Group. Marc’s post discusses an issue that frequently comes up when companies retain independent contractors. As Marc explains, if you don’t document the relationship correctly you may not own what you think you own when the project is complete . . .
It is a widely held belief that if you retain an independent contractor to create something (a logo, software, a website, marketing collateral, etc.), and you pay the outside contractor, then you “own” what the independent contractor creates. However, this is a common misconception that can lead to disastrous results. For most works created by an independent contractor, the independent contractor owns the copyrights to the works, even if the independent contractor is paid, unless the independent contractor signs a written copyright assignment.
The phrase “work made for hire” is a term of art under the U.S. Copyright Act and refers to two categories of works. The first category is relatively straightforward—the copyright to any work prepared by an employee within the scope of his or her employment is owned by the employer. However, the second category of works made for hire, which covers works created by independent contractors, applies only to nine somewhat unusual types of works (and requires a signed agreement with the independent contractor in which the parties agree that the work is a “work for hire”). For works created by independent contractors that fall outside of those nine specific types of works (as many works commonly created for businesses do), the independent contractor owns the copyright to the work unless the independent contractor signs a written copyright assignment.
Think about the situations in which you have retained, or in the future may retain, an independent contractor to create something for you or your business. Then, think about what would happen if you found out that your independent contractor owns the copyright to what he or she created for you. Could you still stop somebody else from infringing the work? Could the independent contractor sue you for infringement? Would a potential buyer of your business be concerned?
The bottom line—if you use an independent contractor, be sure to obtain a written copyright assignment.