Property, intangible

a blog about ownership of intellectual property rights and its licensing

Get Those Agreements Signed

Where a work is a “work made for hire” by virtue of it being specially commissioned, there must be a writing saying so signed by both parties. And it really has to be signed.

On July 10, 2010 Zenova signed an agreement to create a website framework for defendant Mobile Methodology, LLC (“MML”). The agreement defined the scope of work as “only that which is described in the Web Development Specifications and the [instant] Web Development Agreement.” (Brackets in original.) The agreement also provided that Zenova’s work would be “works for hire” for MML and that “upon full payment of all invoices due, copyright and all rights to page designs, web development source code, and graphic source files” would belong to MML. The agreement also said “to be valid, this agreement must be signed within 30 days of the date signed by [Zenova], and be accompanied by an initial deposit.” (Brackets in original.)

MML never signed the agreement but the parties nevertheless worked together within the scope of the work as defined in the contract. In January, 2011 MML signed a change order that modified the scope of the work and increased the contract price. MML wrote at the top of the change order “Change Order from 7/10/10 contract between Zenova and Mobile Methodology, LLC.”

The relationship ended badly about seven months later, but after Zenova had delivered some of the project. Zenova demanded that MML cease and desist from using the project materials, MML did not, and we have a lawsuit. Zenova claimed that MML infringed the copyright in its work on the project and MML claimed that it owned the copyright in the work because it was a work made for hire.

Zenova’s argued that there was a condition precedent to the agreement’s validity, that is, that MML sign the agreement within 30 days of Zenova’s execution, which it had not done. Therefore, the statutory requirement for a work made for hire was not satisfied. MML rebutted that the January, 2011 Change Order was signed and it expressly referenced the July, 2010; thus, this execution met the signature requirement.

The court agreed with Zenova:

In my view, Zenova’s argument presents a threshold question of common law contract formation rather than copyright law. Clearly, putting aside its legal enforceability, there was some contractual or quasi-contractual relationship between the parties; both had an expectation that Zenova would do some amount of work for which it would be, and at least in part was, paid. At some point in this case, it may be necessary to rely on extrinsic evidence as to what the agreement was, and that would include a review of both the July Agreement and the January Change Order. But the terms in toto of any potential quasi-contract are not before me.

Viewed from the perspective of contract formation, the July Agreement became a dead letter 30 days after Zenova signed it and defendants did not. The provision was clear: “To be valid, this agreement must be signed within 30 days of the date signed by [Zenova].” Defendants did not meet that timetable. The conclusion is unavoidable that defendants did not countersign the agreement within 30 days because they wanted a firm agreement on the specifications, or modifications to them, before they would sign, and that second agreement was not reached until the January Change Order. Although they signed the January Change Order, they did nothing that would have been legally sufficient to revive the expired July Agreement….

Etshtien could write on the change order that it was pursuant to “7/1/10 contract between Zenova and Mobile Methodology, LLC” – he could write whatever he wanted – but he had no right to unilaterally change the condition precedent to the validity of that contract. In other words, he could not by his own dint relate a change order to a contract that had never come into being. At most, the January Change Order constituted either a proposal by Etshtien for Zenova to do work based on the specifications in that change order, or a new agreement between the parties to do so. Which, if either, of those scenarios eventuated between them is not before me on this motion; it suffices for present purposes that neither of them contained an express, written, mutually signed work for hire clause.

Wow. What if the new Change Order was signed 11 days later and the parties had worked together for two years afterwards? Wasn’t Zenova’s work, before and after the change order, waiver of the deadline for execution?

The reasoning also misses a step, which is whether the work by Zenova could be considered a work made for hire in the first place. Under the definition relied on by Zenova, the work must be “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.” The court never examined that aspect of the statute. And if the work isn’t a work made for hire because it doesn’t fit the statutory category, was the intent of the parties instead that the work be assigned?* If so, an assignment requires only one signature, by “the owner of the rights conveyed.” Zenova, the company creating the copyrighted work, signed the agreement. It might have been enough.

*This was the situation in Vergara-Hermosilla v. Coca-Cola Company: the parties referred to the work being a “work for hire” but the court found there was an assignment.

Zenova Corp. v. Mobile Methodology, LLC, No. 13 Civ. 745 (BMC) (E.D.N.Y. Feb. 4 2014).

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