The Importance Of A Work Made For Hire Agreement

• Published date: 16 August 2022
• Subject Matter: Employment and HR, Intellectual Property, Employee Benefits & Compensation, Employee Rights/ Labour Relations, Copyright
• Law Firm: Brownstein Hyatt Farber Schreck, LLP
• Author: Mr Arthur Zorio

It is ideal for a business to employ policies and strategies to own intellectual property, not merely to receive an assignment or license thereto. One tool for doing so is to ensure that copyrightable works are created under effective "work made for hire" circumstances. In the United States, the initial owner of a copyrightable work is generally the person who reduces a copyrightable expression to a tangible medium. However, the individual who reduces a copyrightable expression to a tangible medium is not the owner if it is a work made for hire. A work made for hire exists generally when: (1) the work is prepared by an employee within the course and scope of employment for the employer; or (2) the work is prepared by an independent contractor who has signed a work made for hire agreement pursuant to 17 U.S.C. Section 101.

When the employment status of an individual who created a copyrightable work is unclear, courts consider numerous factors to determine whether the individual was an employee of another or an independent contractor. In Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989), the Supreme Court set out a nonexclusive seven-part analysis to determine whether a work is created by an employee as contemplated by the Copyright Act, rather than an independent contractor using traditional agency principles: essentially to ascertain "the hiring party's right to control the manner and means by which the product is accomplished." Id. at 751.

Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party. See Restatement [(Second) of Agency] Section 220(2) (setting forth a nonexhaustive list of factors relevant to determining whether a hired party is an employee). No one of these factors is determinative. Reid, 490 U.S. at 751?52 (footnotes omitted).

Although no one factor is determinative, the tax treatment of the hired party and whether the hired party receives employee benefits...