This is a guest post from Charles Vethan of Vethan Law Firm.
As business evolves and technology disrupts the geographic limitations of how we work, companies are increasingly making use of independent contractors (ICs). While this has undisputed benefits in terms of cost savings and convenience, how does it play out with regard to intellectual property ownership rights?
General Copyright Laws
The rules regarding intellectual property rights are less straightforward than generally believed. Materials created by employees automatically belong to the employer, but ICs can retain ownership to works protected by copyright. Since copyright covers any type of authorship, it applies to:
- written content,
- graphic designs,
- software development
- computer code,
- film and video footage,
- photographic images, and
- artworks,
among others. Even if you commissioned the work to be done and paid for it, the independent contractor could retain copyright to the work. This would result in limited usage, and factors such as reproduction and distribution could be subject to the IC’s control.
Work for Hire Agreements
The best practice for protecting your intellectual property rights is for both parties to sign a written, Work-for-Hire Agreement before the materials are officially ordered. Don’t wait until a formal order has been placed using any channel, because once the order is placed it can be too late. Three specific conditions must be covered for a signed work-for-hire agreement to be valid:
- The work must be a newly-commissioned item specially ordered, not existing work.
- Both parties must agree in advance that the item is a work made for hire.
- The material must fall into one of nine categories listed in Section 101 of the Copyright Act.
The list excludes certain types of creative works. For example, a written novel is not listed, because it can never be a work for hire. If you commission an IC to develop a novel manuscript, it’s essential to use a Transfer of Copyright agreement instead.
Assignment of Copyright
For all works falling outside the scope of Work for Hire, before placing your order you should conclude a written assignment agreement. This could just be a clause within a larger contract, but it should provide clear details of the rights being assigned. In the absence of an assignment of copyright, the work the IC created belongs to the IC, regardless of whether s/he was commissioned and paid to develop it.
Exceptions to the Rule
All rules have exceptions, including intellectual property laws. In some instances, industry standards exist that permit ICs to retain the right to use the work they develop for clients. For example, freelance designers may display the work they created for you in their portfolios, which is acceptable industry usage, unless the signed agreement clearly states it cannot be used in this manner. They may not use it as a design for another client, however, because that is not considered acceptable.
ICs can also request to retain certain rights for future use, and it is up to the client to determine whether to agree to the request. If they agree, these rights should also be stipulated in the agreement to avoid confusion in the future.
Licensing Option
A licensing agreement is an option whereby the owner of the copyright allows his or her client to use the materials in exchange for an agreement payment. These should also be concluded in writing and signed by both parties before starting the work, and should outline the terms and conditions the work is subject to as well as the extent of the agreed usage. This is common in industries such as stock photo libraries, which allow usage of an image according to strict guidelines including purpose, duration and the publishing frequency.
For over twenty years, Vethan Law Firm P.C. (VLF) has delivered top-tier legal counsel to private businesses and professional practices of all sizes. VLF’s team of experienced business attorneys have helped clients in Texas and beyond navigate their most serious legal challenges. VLF delivers results by focusing on the unique needs of each business client, bringing to bear its commercial litigation experience and corporate planning expertise.