Even if you plan the work in great detail before passing it off to another person to implement, that other person is likely to have copyrights in the resulting work.  For example, if you went to a computer programmer to code some software for you and gave him complete flowcharts of how you wanted the program to operate, the programmer would still have copyrights in the resulting code that he wrote.

The Employee Exception and Independent Contractors

An exception to this rule is that a work made by an employee within the scope of employment is considered a work made for hire and the copyrights to such a work accrue to the employer and not the employee. So, if you run a software company and have programmers that work for you in your offices on a full-time basis, the copyrights to their code will generally accrue to your company and not the individual employees.

The problem for a lot of smaller businesses is that the law distinguishes between an employee and an independent contractor.  The copyrights for works made for you by independent contractors generally belong to the independent contractor and not to you.  That means you could contract with a freelance programmer to produce software for you according to your specifications, only to find that you are not allowed to make any copies of the program or sell the copies to your customers without the contractor’s explicit permission!

The difference between an employee and an independent contractor is not always crystal clear and there are a number of factors that a court would consider when determining the nature of the creator of a work.  These factors include the degree of control exercised by the employer over the work that was done and over the worker, whether the working space and tools are provided by the employer or by the worker, how the worker is paid (salary vs. one-time fee), etc.  In many cases, it is clear which category the worker falls under.

The Work-for-Hire Agreement

If the creator is an independent contractor, copyright will accrue to the contractor unless 1) the parties explicitly agree in writing that the work is a work made for hire and 2) the work falls within one of 9 statutory categories of works under the Copyright Act.  The statutory categories include works 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.

Therefore, if you may be working with an independent contractor it is always a good idea to have them sign a work-for-hire agreement before beginning work.  This agreement should contain the explicit work made for hire agreement required and should also contain provisions guarding against the possibility that the work will be deemed not to be a work made for hire at some point in the future.

So the agreement should state that both parties agree that the work is a work made for hire falling under one of the statutory categories, but also that in the event it is determined not to be a work for hire, the agreement will function as a transfer of the copyright from the contractor to the employer.  The contractor should also agree to complete any paperwork necessary to fully transfer all rights in the work throughout the world.  Other provisions should also be included, such as an agreement by the contractor to waive any moral rights in the work.

If you plan to contract out with another party to produce a creative work, such as software, a website, some text, or a prototype or sample, you should use a work-for-hire agreement.  Contact your IP attorney to discussyour particular needs and to have such an agreement drafted for your use.