Product development is critical to any company’s success. One of the issues in my forthcoming novel about a business in trouble is whether the company's new product was an employee’s own creation or whether it was owned by the company as a “work made for hire.” If the business in my story does not own the product, it is likely doomed to fail. If the company does own the product, and the product is a success, the business might be saved.
What is a “work made for hire”?
Although the general rule is that the person who creates the work is its author, there is an exception to that principle. The exception is a work made for hire, which is a work prepared by an employee within the scope of his or her employment or a work specially ordered or commissioned in certain specified circumstances. When a work qualifies as a work made for hire, the employer, or commissioning party, is considered to be the author. See Circular 9, Work-Made-For-Hire Under the 1976 Copyright Act.It is important for companies that have employees engaged in creative endeavors – even those who create presentations and advertisements for the business – to be clear with their employees that the business owns the work, not the employee.
How can an employer protect its intellectual property as “works made for hire”?
It makes a difference whether the person creating the work is an employee or an independent contractor. For employees, you can use an individual employment agreement, but a provision in your company policy manual might suffice. For independent contractors, you need a specific contractor agreement with that individual or firm. Otherwise, the contractor may retain rights in work you hired them to create for you!
1. Individual Employment Agreement
For employees who frequently create works for your company, it would be a good idea to have an employment agreement specifically stating that the company owns the work. The employer should have the employee sign the agreement, and give the employee an opportunity to specifically list all works the employee has previously created that are not “works made for hire.”
In addition, the agreement should state that the employee will let the employer know of any future works created by the employee that are not “works made for hire.” Anything the employee does that is outside the business belongs to the employee. A provision that the employee will tell the employer about such works will help, but will not necessarily guarantee clarity on which works fall into work and non-work categories.
It would be best to have your agreement drafted by an attorney with experience in intellectual property. But for an overview of these agreements, see this article.
2. Company Policy Manual
Since most employers have employees sign an acknowledgement of the company policy manual, this is another way you can put employees on notice of their “work made for hire” obligations. However, because employees often claim they didn’t read everything in the manual, this method is usually better when “works made for hire” are not a frequent issue in your workplace.
The manual should at least inform employees that documents and other works prepared by an employee within the scope of his/her employment are owned by the employer as “works made for hire,” and should instruct employees to contact their supervisor or HR if they want to use any work materials outside the workplace.
Supervisors and HR should be told to contact the company’s lawyers if any issues arise. For more, see this article.
3. Specific Agreement with Contractors
If your business hires a contractor to create a written work or a product that could be copyrighted, you should enter into a written contract with the contractor before the work is done.
The contract should state that the commissioned work is a “work made for hire,” and define what the work is. If the work is later changed or expanded, then amend the agreement to describe the broader work. Be up front with the contractor that you want your business to own the work and to be able to use it and variations and derivatives of the work in the future. You don’t want to have someone draft a technical training manual, for example, then not be able to use segments of it later on, or not be able to update it for future product versions without the consent of the contractor.
For more on independent contractors and works made for hire, see this article or this one.
Have any readers had experiences with issues around “works made for hire” going badly?
NOTE: None of the foregoing is intended as legal advice. Consult an attorney regarding your particular circumstances before relying on any agreement or policy or if you have any questions.