Oft misunderstood, this legal doctrine can leave you high and dry.
So you hired a freelancer to create content for you. Maybe a software developer, photographer, graphic designer, or a writer. Maybe you needed to bring in some outside expertise. Or maybe you frankly never had time to be writing your own blog posts anyway and you finally have the budget to outsource that.
In any event, you’ve probably heard the phrase “work for hire” (WFH). Maybe you’ve even written the phrase into one of your own contracts. I mean it sounds intuitive, right? What could go wrong?
Famous last words.
Incorrectly using WFH can mean losing control over copyrights that you thought you owned and that may even be critical for your career or business. How? Read on.
Background
WFH is one of those phrases that gets tossed around a lot, but most people don’t know that it has a very specific legal definition. It’s all spelled out in 17 USC § 101. This means that you can’t just slap “work for hire” onto something. It only counts if it matches certain criteria.
Under 17 USC § 101 there are only two cases where WFH applies. The first case is a work prepared by an employee within the scope of his or her employment. This gets tricky because what counts as “within the scope” of employment? There’s been a lot of litigation over that question. Today we’re going to focus on freelancers, but I may address the employment question in a future post.
The second case is work prepared by a freelancer (aka independent contractor) if and only if (a) the work is specially ordered or commissioned, (b) the work fits into one of nine categories, and (c) the parties sign a document in advance saying that this will be a work for hire. Those nine special categories are (1) a contribution to a collective work, (2) as a part of a motion picture or other audiovisual work, (3) a translation, (4) a supplementary work, (5) a compilation, (6) an instructional text, (7) a test, (8) answer material for a test, or (9) an atlas.
So what does this mean?
First of all, oral agreements don’t count. Second, a lot of freelancer work likely doesn’t count because it doesn’t fit into one of those nine special categories.
Now some of these categories seem pretty straightforward (we know what motion pictures are and we know what an atlas is). But what counts as a “collective work” or a “compilation”? It’s unclear. The law offers some guidance, but not much. Court opinions offer some guidance, but not much.
In summary: relying solely on WFH for copyright ownership can be a pretty risky strategy. While YOLO can be appropriate in many situations, intellectual property is not one of them.
Why Do People Keep Relying On Work For Hire?
The law is nothing if not nuanced. If WFH is so dubious, why do people keep relying on it? There are at least a couple of different reasons.
First, the current Copyright Act was passed in 1976. This amended the Act passed in 1909. Under the 1909 version, case law eventually came to the conclusion that if you paid for it (i.e. if it was made at your “instance and expense”), then you got to own it. Even though the law changed in 1976, this old perception remains.
Second, there are really only two ways to own the copyright to something that you didn’t create. The first is through a copyright assignment. The second is through the WFH doctrine. Unlike WFH, copyright assignment is pretty straightforward and has no special categories required. Copyright owners are free to transfer their copyright to someone else. Sounds perfect, right? It depends.
This is going to get a little technical, but stick with me. Under copyright law, ownership automatically vests in the creator. That creator can do whatever he or she wants with that right, including assign it away. But even if a creator assigns their copyright to someone else, the law allows them to take it back after 35 years, if certain conditions are met (17 USC § 203).
This is why WFH is significant: if a client hires a freelancer to create something and the work counts as a work for hire, the client is deemed to be the original copyright owner. This means the freelancer cannot claw back the rights after 35 years.
So if it’s something that’s going to be obsolete in 5 years? Maybe it doesn’t matter. But if it’s something that people will still want to own 35 years from now, it matters a whole lot.
Takeaways:
WFH is a narrow, specific legal doctrine. Simply writing it into a contract does not make it so. Depending on the situation, a copyright assignment may be more appropriate. However, copyright assignment is subject to the 35-year clawback rule.
For people in California, WFH has yet another wrinkle. Under California Law, sticking WFH into a freelancer agreement converts the freelancer into an employee. This can make the person who hires them liable for both employee benefits and back taxes. Yikes.
Finally, this is an instructive case on “don’t believe everything you read on the internet”. I have seen well-meaning business resources tout WFH agreements and proceed to tell everyone why they need one. Remember that the internet is a wealth of information, but that information may be incorrect or even outdated. (Yes, I realize this is ironic coming from a blog posted on the internet).
Remember: laws change every day. You may not want to keep up with the Joneses, but it’s a good idea to keep up with the law.
Need Help?
Questions about how copyright law affects you? Wondering how to protect your creative career or business? Book a call today with Bevel Law PLLC.
This information is not legal advice and should not be relied on to make legal decisions. Readers should seek legal advice from an attorney before taking action regarding the topics discussed in this blog.
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