If It’s Worth It, You Should Work It (As a Work Made for Hire)

With the growth of mobile apps, non-tech companies face the challenge of creating apps to promote and sell their services or goods. Because the creation of an app can be a one-time project, hiring an independent software company or a freelance software engineer might make more economic sense than hiring salaried employees to complete this singular task. However, this economic solution may raise legal questions regarding the nature of ownership in the mobile app created. These same questions arise outside the mobile app space – in fact, they are present any time a company hires an independent contractor to create copyrightable works for the company.

To avoid this issue altogether, companies looking to hire third parties should have written agreements that explicitly state that a company owners the third-party-made work. Two instruments that companies can use to obtain ownership of third-party made works are a “work for hire agreement” and an assignment.

A work for hire agreement is the preferred instrument for obtaining ownership of works that qualify as a “work made for hire” under Section 101 of the U.S. Copyright Act. Under the Copyright Act, a work made for hire includes “specially ordered or commissions for use (1) as a contribution to a collective work, (2) as part of a motion picture or other audiovisual work, (3) as a translation, (4) as a supplementary work, (5) as a compilation, (6) as an instructional text, (7) as a test, (8) as an answer material for a test, or (9) as an atlas.” If a work does not qualify as a work made for hire under the Copyright Act, companies may obtain ownership of the third-party-made work by way of an assignment. Written agreements between a company and independent contractors would, therefore, benefit from including a fallback assignment clause – in the event that a court (in later litigation) deems the work as a work for hire.

When a company has the choice of obtaining ownership via a work for hire agreement or an assignment, a work for hire agreement is encouraged. This is because a work for hire agreement cannot be terminated. An assignment – even if it includes language that the transfer is non-revocable – may be terminated by the author of the work, under Section 203 of the Copyright Act. This little-known provision allows the work’s author (or, if dead, his or her heirs) to reclaim ownership of a copyright, as early as 35 years after, and as late as 40 years after an assignment was made.

Accordingly, a bit of thought and planning at inception can go a long way in ensuring that works created to your specifications are actually owned by the proper entity.

This article appeared in the October 2015 issue of MarkIt to Market. To view our past issues, as well as other firm newsletters, please click here.