• It’s Not Really a “Work Made for Hire”

    by  • January 10, 2013 • copyright • 1 Comment

    One of the most misunderstood aspects of copyright law is work-made-for-hire.  The lay understanding is that a work created at the request of another in exchange for payment is a “work for hire.” That’s not true, as explained by the Supreme Court in 1989 in Community for Creative Non-Violence v. Reid, but nevertheless it must be one of the longest running misunderstandings about copyright law there is – well that, or the “poor man’s copyright.”

    Any lawyer will tell you that the agreements are commonly referred to as “work for hire agreements.” But when drafted properly, they say something to the effect of “To the extent a copyrightable work qualifies as a work made for hire, authorship vests in the hiring party. If the work does not qualify as a work made for hire, then independent contractor hereby assigns all right, title and interest to the hiring party …” It’s belt and suspenders; either the work is a work made for hire because it falls into one of the enumerated categories in Section 101 of the Copyright Act (a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas) or the copyright in the work is instead assigned to the hiring party by operation of the agreement. But you’re covered either way.

    I’ve always thought there was no harm to this approach. It’s easy; you don’t have to figure out ahead of time how exactly the hiring party has ownership but there is no doubt that it does. You also don’t have to explain to the creating party that, even though the magic “work for hire” words aren’t in there, it is the right document and they won’t have any ownership interest in the work. It’s easier just to use the words they know while making sure that the document is legally defensible.

    I still stand by the advice, but ran across a case where this type of agreement provoked a challenge. The hiring party won in the end, as it should have, but it still had to go through the exercise in court at no small cost.

    In Capital Concepts, Inc. d/b/a bCreative, Inc. v. The Mountain Corp., Mountain continued to use bCreative designs after its license agreement expired, so bCreative sued for infringement. Mountain claimed that bCreative didn’t own the copyright in the licensed works.

    bCreative had hired a independent contractor, Rob McAbee, to create the designs. After the designs were created (and well before the lawsuit was filed), McAbee signed a “Work for Hire Agreement” with this operative language:

    Any and all drawings, illustrations, characters, text, layout, designs, ideas, digital files, or any other works (collectively, the “Creative Works”) that I have created or worked on for either Capital Concepts, Inc., bCreative, Inc. or Offside, LLC (each individually, the “Hiring Party”) in the past, or unless mutually agreed to in writing by me and the appropriate Hiring Party, will create or work on in the future, are “Works Made For Hire” within the meaning of the United States Copyright Act….

    I agree that I have no ownership, rights, title, or interest in the Creative Works, nor will I challenge the Hiring Party’s ownership, rights, title or interest in the Creative Works and their right to register intellectual property rights, and use or license the Creative Works at their sole discretion. I agree to execute any documents attesting to this that may be necessary for registering copyright or trademark rights with the U.S. or other governments. I do not hold any copyright or trademark interest in the Creative Works, including any changes, derivations, or substantially similar artwork or designs related to the Creative Works.

    Note that the agreement is missing the “suspenders” assignment language. Mountain therefore claimed that because the works weren’t truly works made for hire, there was no transfer of ownership.

    But the court properly recognized that

    The question of whether a work is a “work made for hire” is a legal question that is determined by analyzing whether the requirements set forth in the definition of a “work made for hire” in the Copyright Act have been met…. [A] work is either a “work made for hire” or it is not, and the parties’ characterization of a work (or failure to characterize a work) as a “work made for hire” is not relevant to such determination.

    ….

    Accordingly, my analysis turns to whether Plaintiff acquired ownership of the Copyrighted Designs from McAbee under some other manner authorized by the Copyright Act. This is readily apparent. As discussed below, a transfer of copyright ownership requires only a writing signed by the owner of the rights conveyed. The McAbee Agreement is a written instrument transferring ownership of the Copyrighted Designs from McAbee to Plaintiff and, therefore, is sufficient to transfer ownership of the copyrights in the Copyrighted Designs to Plaintiff despite the misnomer in referring to and claiming ownership of McAbee’s works as “works made for hire.”

    Another problem in the case was that the misnomer carried through to the copyright registrations, which also stated that the works were works made for hire. This therefore also became fodder for litigation. A copyright registration will be invalidated (thus depriving the court of subject matter jurisdiction) if it was procured fraudulently, but the bCreative court had no problem finding that there was no fraudulent conduct: “there is no plausible argument that the mistake was knowingly made to mislead the Copyright Office and to confer a benefit or advantage on Plaintiff, because Plaintiff could obtain no benefit or advantage from the error.” The registrations were therefore valid.

    And one more problem for Mountain – it had clicked through an agreement that prohibited it from challenging the validity of any intellectual property rights bCreative owned, which the court found enforceable.

    The decision is most assuredly the right outcome, but my policy is to try to avoid collateral attacks to the substantive claim as much as possible. So there is a reminder here to make sure your “work for hire” agreements also have an express assignment provision, as well as a reminder that when you’re filing applications for copyright, don’t rely on what the agreement says but instead investigate the actual legal basis for ownership to make sure that it’s claimed properly.

    Capital Concepts, Inc. d/b/a bCreative, Inc. v. The Mountain Corp., No. 3:11-cv-00036 (W.D. Va. Dec. 30, 2012).

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    One Response to It’s Not Really a “Work Made for Hire”

    1. Joshua Jarvis
      January 10, 2013 at 5:56 pm

      Completely agree, and add only that it pays to add an agreement to assign as a “safety pin” to those suspenders on the off-chance the present assignment is ineffective for works created in the future (as some courts have so held). Can’t hurt to add a Power of Attorney to execute such assignments, if you can get away with it!

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