Bitlaw

Copyright Ownership

Executive summary:

One of the most important concerns in copyright law is the determination of copyright ownership. The general rule is that the creator of the work is the owner of all copyright interests in the work. However, where two or more parties create a work together, copyright ownership becomes a more difficult issue. In addition, copyright ownership is more difficult to determine when the creator of a work is being paid by a third-party to create the work.

This section of BitLaw explains these issues in more detail in the sections below:

Joint Authorship:

When several people work together to create a single work, a joint work may be created under the Copyright Act. A joint work is defined by the Copyright Act as:

a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole.

Under this definition, both authors must intend that their contributions be combined, and this intention must exist at the time the contribution is created. It is not necessary, however, that the contributions be equal in effort or value. Nor is it necessary that the joint authors work in the same physical area or at the same time. As defined in the statute, the only requirement is that both authors have the intention that the works are to be "merged into inseparable or interdependent parts of a unitary whole."

A typical example of a joint work is a song developed by a composer and a lyricist. If both parties intend for their contributions to be combined into a single song, the song is considered a joint work. However, if the lyricist actually wrote the lyrics intending that they serve merely as a poem, and the composer later wrote a tune for the poem, there would be no joint work. This would be true even though the composer intended to form a single work, since the lyricist did not have any such intention.

The determination of whether a joint work is created can be crucial in determining each party's rights to the created work. If a joint work exists, then both authors are co-owners of an undivided interest in the entire work. One of the authors can use the entire work as they please without seeking permission from the other joint author(s). However, if a single author makes a profit through the exploitation of the joint work, then the profits will have to be shared with the other joint authors.

If there is no "joint work," then the combined efforts of multiple authors are considered separate works temporarily joined together. In the example of the lyricist and the composer who created their works without intending them to be combined, the authors can still agree to combine their works into a single song. However, neither party can use the work of the other party without their permission. Neither author would have any rights to the complete song other than what they agree to with the other author.

Works Made for Hire--The Standard:

In a work made for hire situation, the "author" of the work is no longer the individual who created the work. Instead, the "author" is considered to be the entity which hired the actual creators of the work (such as a corporation for whom the author works as an employee).

The Copyright Act limits the work made for hire doctrine to two specific situations:

  1. a work prepared by an employee within the scope of his or her employment; or
  2. a work specially ordered or commissioned for use
    • as 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,
    but even then only if the parties agree in writing that the work is a work made for hire.

The first situation applies only when the work's creator is an employee and not an independent contractor. The determination of whether an individual is an employee for the purposes of the work made for hire doctrine is determined under "the common law of agency." What this means is that courts will look at various factors to determine whether the individual is an employee, such as:

Although these factors are not exhaustive and can be difficult to analyze in close situations, it is clear that a work created within the scope of a regular, salaried employee's job is a work made for hire. Typical examples of works made for hire would include a software program created by an employee programmer, or the ad copy created by a marketing department employee.

If a work is created by an independent contractor (that is, someone who is not an employee), the work may still be a work for hire, but the definition is much harder to meet. In order for the work of an independent contractor to be a work made for hire, the following facts must exist:

Works Made For Hire--why is it Important?:

The determination of whether a particular work is a work made for hire can be crucial to the hiring party's ability to utilize the created work. If a work is considered a work made for hire, the author and owner of the work is the hiring party. If the work is not a work made for hire, the hiring party has no copyright ownership in the work. The hiring party's ability to use the work would therefore depend either on the specific terms of its agreement with the author, or upon the concept of an implied license to use the work (see the BitLaw discussion on implied licenses for more information on this topic). If forced to rely on an implied license, the hiring party may find that it has only limited rights to alter, update, or transform the work for which it paid.

In addition, the determination of whether a work is a work made for hire affects the ability of a creator of a work to invoke her right to terminate the transfer of rights, which would otherwise affect a license or assignment (for more information, see the BitLaw discussion on the termination of transfers).

Example: Ownership of Software Programs:

Software developers should pay close attention to copyright ownership issues when hiring computer programmers. Programs written by salaried employees will, in almost all cases, be considered works made for hire under the first section of the work made for hire definition. As a result, the software developer itself will be considered the author of the software written by those employees, and ownership will properly reside with the developer. However, the prudent developer will nonetheless have employees sign agreements whereby they agree to assign all copyrights in software they develop to the software developer. The reason for this prudence is that the determination of who is an employee under the law of agency requires an analysis of many factors and might cause unexpected results in rare cases. In addition, the work made for hire doctrine requires that the work be done "within the scope of" the employee's employment. Generally, programs written by a software programmer employee will be within the scope of his or her employment, but this again is an ambiguous phrase that is best not to rely upon.

In addition, software developers must be especially careful when hiring contract programmers. In order for the work of contract programmers to be considered a work made for hire, three facts must exist:

  1. the program must be specially ordered or commissioned;
  2. the contract retaining the programmer must be in writing and must explicitly say that the programs created under the agreement are to be considered a work made for hire; and
  3. the program created must fall into one of the nine enumerated categories of work.

The first element will generally be true when the programmer is hired to work on a specific project. The second element can be met through careful drafting of contract programmer's retainer agreement. The third element, however, can be more difficult. Computer software programs are not one of the nine enumerated categories. The best bet is to fit the software program under the definition of an "audiovisual work." While some software programs are clearly audiovisual works, it is unclear whether courts will allow this phrase to include all computer software programs. Thus, a software developer cannot be sure whether the contract programmer is creating a work made for hire.

It is best to draft an agreement which reflects this uncertainty. The agreement should state that the work is a work made for hire. However, the agreement should also state that if the software is not considered a work made for hire, the contract programmer agrees to assign the copyright in the software to the software developer.

Finally, when hiring a company to provide contract programming services, it is important to make sure that the copyright ownership passes all the way from the individual programmer to the software developer. Therefore, the software developer should review not only its agreement with the company providing the services, but also the agreements by which that company hires individual programmers.