If I Pay Someone to Create Something for Me, Don't I Own the Copyright?
Businesses routinely hire creative professionals to generate new content, whether for internal use or for distribution to the public at large. A photographer may be brought in to shoot the company’s product line for a print catalog or online store. An artist may be hired to create the company’s new logo or create artwork for a new label. A writer may be engaged to draft a handbook for the company. If you pay these individuals either an hourly or flat fee to generate this content for you, don’t you own any resulting copyright? Generally speaking, the answer is no.
Many people have heard of the “work made for hire” doctrine, and assume that it applies whenever a creative professional is commissioned to prepare a copyrightable work. However, the Copyright Act primarily defines a work made for hire as a work prepared by an employee within the scope of employment. The courts apply a strict test to determine whether the person in question was actually an employee as opposed to an independent contractor. If you failed to withhold taxes from the payment to the person in question, the courts are extremely unlikely to determine that person is an employee. Courts will also look to whether the company is in the business of creating such works, whether the work was created at the company, whether the company provided the equipment and materials needed to create the work, and whether the company controlled the person’s schedule and had the right to have the person perform other assignments. While not all of these factors must be present in every case, the overarching theme is the courts will probe to determine whether the company treated the creative professional as an employee before an issue arose as to the copyright—and belated attempts to invoke the work made for hire doctrine with regard to independent contractors are unlikely to be successful.
The time to be thinking about who will own the copyright to any works created by an independent contractor is before the works are actually created. When the independent contractor is engaged, a written contract should spell out whether the copyright for any resulting works will be assigned to the business. Not only is a written agreement required if the business wants to register ownership of the copyright in its name, but the written agreement will also eliminate any later ownership disputes. Of course, there may be some instances where the creator of the work wants to retain ownership of the copyright and the business is willing to accept a license to use the copyrighted work—in which case the written agreement will spell out terms such as any royalties to be paid and how long the license will last. In certain rare instances, the business may not need either an assignment or a license. For instance, if you commission a painting for your lobby you may be content to just accept ownership of the painting—but be careful not to put the painting on the cover of your employee newsletter, incorporate into your holiday cards, or otherwise violate the copyright holder’s exclusive rights to reproduce the work.
Failure to address the ownership of copyrightable works resulting from an independent contractor relationship can have serious consequences. First and foremost, the company may be held liable for copyright infringement if it takes actions inconsistent with the exclusive rights of the copyrightable owner—even if it incorrectly assumed that it owned the copyright because it commissioned the work. Further, if the company obtains a copyright registration based upon an incorrect assertion that the work constitutes a work made for hire, the copyright would be subject to cancellation. Finally, even if the author is agreeable to assigning or licensing the work to the company that commissioned its creation after the fact, the costs of obtaining such an assignment or license is likely to exceed the price of obtaining them on the front end, as part of the independent contractor agreement.