There is a common assumption in the business world: If you paid for it, you own it. As laid out in one of Erin’s earlier posts, that is not always a case with IP. To quickly summarize, the default under copyright law is that whoever creates the thing owns the copyright, even if someone else paid to have it created. The exception to this is a “work made for hire,” where the person paying is the one who owns the intellectual property rights. The exception takes two forms: (i) the work is created by an employee in the scope of their employment or (ii) the work is created by an independent contractor AND the work is based on a written agreement between the creator specially ordering or commissioning the work AND that work fits into one of 9 buckets.
Given the particularity of the rules around work made for hire (as well as the increased role IP plays in the value of modern companies), it is important if you’re the one paying that your contracts reflect the expectation that you will own the IP rights. If you’re relying on the employee path, then making sure your company’s relationship with the worker is one of an employee is important. Many companies also make explicit in their employment contracts and company policies that employee work product is “work made for hire” and assigned to the employer, just to make abundantly clear what the status of the IP rights are.
The independent contractor route can be a little trickier. Adding an IP section on the independent contractor agreement with an explicit callout that all work products is a “work made for hire” is a helpful first step. Even with that clause, there is still the possibility that some of the IP rights would still remain with the independent contractor (remember, even if there is a written independent contractor agreement, the work still has to fit into 1 of 9 buckets to qualify as a “work made for hire”). A smart contract uses a “belt and suspenders” approach in the form of an IP assignment clause. That clause essentially says, “Even if some of the work product doesn’t qualify as a ‘work made for hire,’ the creator hereby hands over the rights they might have in the work product to the company.” This makes sure that no matter how the law categorizes the work, the IP ends up in your hands.
If you’re reading this and wondering what you and your company should do with this information, I have some thoughts:
- Take a look at your contracts.
- Do your contracts support that your employees are your employees? And do they affirm that all work products belong to the company?
- Do your contracts with contractors address IP?
- If so, do they make explicit that work product made under the contract is a “work made for hire”?
- If so, do they also make clear that all IP in the work product is assigned (handed over) to your company?
- Update your contract templates that don’t address (or are at least unclear about) IP rights. Having contracts where are confident about the IP sections can help fortify your company’s hold over its IP.
- Have some doubts about some of the IP you thought you own? Get your attorney involved! The best time to address the IP question is before the agreement is signed and work begins. Even if the IP language in your contract isn’t what you thought it was, there is still the possibility of fixing the IP issue afterwards (like getting the contractor to agree to separately assign their rights after the fact). These options can be more complication, and your attorney can help you navigate them.
Thanks for reading!