Friday, January 27, 2017

Copyright - Independent contractor and work-for-hire

     Independent contractor. Work-for-hire. These terms appear inextricably linked. However, work-for-hire isn’t quite the panacea people believe it to be.

     Under copyright law, the author of a work is the copyright holder. See 17 U.S.C. 201. But, under the work-for-hire doctrine, copyright ownership doesn’t flow to the person who made the work instead it flows to the employer or the person for whom the work is prepared. See 17 U.S.C. 101 (definition of "work made for hire"). This sounds great for an independent contractor situation. Unfortunately, the work-for-hire doctrine only applies to:
(1) works prepared by an employee within the scope of the employee's job, or
(2) works specially ordered or commissioned for use
(i) as a contribution to a collective work [which is a work, such as a periodical issue, anthology, or encyclopedia, in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole],
(ii) as a part of a motion picture or other audiovisual work,
(iii) as a translation,
(iv) as a supplementary work [which is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes],
(v) as a compilation [which is a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship],
(vi) as an instructional text [which is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities],
(vii) as a test,
(viii) as answer material for a test, or
(ix) as an atlas,
if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.

Thus, if your independent contractor agreement contains a work-for-hire provision but, the work created by the independent contractor doesn't fall into one of these nine categories, then the copyright remains with the independent contrator. Simply calling a work a work-for-hire doesn't make it so.

     Fortunately, there are a few solutions and here are two of them:  (1) determine if the work falls into one of the nine categories and then use either a work-for-hire provision or a copyright assignment whichever is appropriate, or (2) if you are not going to determine if the work falls into one of the nine categories, then include a work-for-hire provision and also a copyright assignment provision, as a backup.

     [Update]  If your independent contractor agreement contains a work-for-hire provision and is governed by California law, then there are additional considerations. Under California laws, if a business hires an independent contractor with a work-for-hire provision, then the business is considered an employer and the contractor an employee.  Cal. Labor Code Section 3351.5(c), Cal. Unemployment Ins. Code Section 686 and Section 621(d).  This treatment imposes numerous regulatory burdens on the business, such as obtaining unemployment insurance and state disability insurance, paying payroll taxes, and filing tax forms.  Los Angeles Lawyer, March 2016 at p25.  Failure to comply with regulations can lead to penalties, interest charges and fines.

     [Update 2] If you working under California law, you may want to make sure that the independent contractor is signing as a business entity (LLC, Corp.).  Los Angeles Lawyer, March 2016 at p25

- Henry Park

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