Work Made for Hire Doctrine- Module 1 of 5

Work Made for Hire Doctrine- Module 1 of 5


Module 1- Work Made for Hire Doctrine

 

Copyright law establishes that the person who originally creates a work possesses all rights associated with the copyright. The original creator, or “author” of a work has many exclusive rights, including the right to reproduce the copyrighted work; to prepare derivative works; to distribute copies to the public; to perform the copyrighted work publicly and to display the works publicly.

In this module, we examine the work for hire doctrine, which elucidates copyright ownership when an employee creates something for an employer. We analyze the two circumstances it applies to, and the specific requirements that must be met for a copyrighted work to qualify under the doctrine.


Work Made for Hire

Federal copyright laws have existed in various forms since 1790, but a work for hire provision didn’t appear in any statutory form until the 1909 Copyright Act.[1] The Copyright Act of 1976, states that a “Work Made For Hire” situation will arise under two sets of circumstances.[2]

17 U.S.C. section 101(1) defines an employee's work made for hire as:

a work prepared by an employee within the scope of his or her employment.” For example, ABC Corp. hires Sarah to create videos for online distribution through streaming.  Under these facts, there is no doubt that ABC Corp. would own the copyright for all the videos Sarah creates as part of the job she was hired to perform under the works made for hire doctrine.

Section 101(2) provides that:

a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or 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…

A large body of case law supplements and interprets these two sections.

A work made for hire created today has copyright protection for a substantial length of time. A work made for hire is under copyright protection for the shorter of 95 years from the date of first publication, or 120 years from the date of first creation.

For example, John is an information analyst for a professional sports franchise, creating player statistical models. He creates several statistical studies for the team within the scope of his employment in 2017, and these studies are first published in 2018.  Thus, the copyright protection for the studies would be until 2113 because 95 years from the date of first publication would be 2113, while 120 years from first creation would be 2137. 

When a hiring party holds ownership of a creator’s work as work made for hire, the creator will have none of the rights associated with copyrights. The most significant consequence of this doctrine is that the artist cannot control what the client does with his work. The client can publish the work wherever and whenever it wants, including reselling rights to others. Unless he receives permission from his client, the creator cannot do anything with the work.


Works Made by Employees

One method for having a work qualify under the doctrine is for an employee to create the work when he’s acting within the scope of his job duties.  When an employee creates a copyrightable work as part of his job duties, then a court will find that the resulting creative work is a work made for hire and copyrights associated with that work are owned by the employer, not by the individual employee.[3] 

The individual who creates the work made for hire must be a true employee, not an independent contractor or consultant.  Also, works created by an employee must be created within the scope of his employment to qualify as work made for hire. Allen operates a ceramics shop and hires George as his employee. All ceramics made during employment are owned by Allen but if George creates a ceramic bowl on his own time, in his own home and then sells it later to Allen, the ceramic bowl won’t qualify as a work made for hire, so George will own all rights associated with it.

The rules for determining whether an artist or work’s creator is an employee or an independent contractor was clarified in the United States Supreme Court case Community for Creative Non-Violence v. Reid.[4]  In that case, the Community for Creative Non-Violence, a non-profit organization dedicated to eliminating homelessness in America, created a float for the Washington D.C. Christmas Pageant. One director conceived of the idea of a statue as an analogy to the nativity scene with a homeless family huddled over a steam grate. CCNV hired James Earl Reid, a sculptor, who prepared a sketch. CCNV requested some changes and Reid agreed to create the statue and received a $3,000 advance. CCNV constructed the steam grate portion of the exhibit and on December 24, 1985, 12 days after the due date, Reid delivered the statue and CCNV paid him the final $15,000. 

After the pageant and a month on display, CCNV wanted to take the statue on a tour to other cities. Reid, who possessed the sculpture, objected claiming that the statue was too fragile and that it should go on a less demanding exhibit tour. Both parties claimed copyright in the work.

The Court sided with Reid and held that the sculpture wasn’t a “work for hire” under Section 101 of the Copyright Act of 1976. It based its decision on the theory that Reid was an independent contractor and not an employee.


Determining the Creator of the Work

To determine whether the creator of a work is one or the other, several factors should be examined. When a court weighs all these different factors, no one factor is determinative, meaning it won’t reach a decision simply because one factor is so dispositive in explaining the relationship that exists between the hiring party and work’s creator.[5] 

First is the extent to which the hiring party can direct or control the work’s creation. The greater the control exercised by the hiring party, the more likely the arrangement will be viewed as an employment relationship. 

Second, is the skill necessary to complete the work. The greater the skill necessary to complete the work successfully, the less likely that the individual is an employee.

Third, if the party who hired the creator supplies materials to create the work, it is more likely that the relationship is that of an employee. However, if the individual creator provides the needed materials, a court will more likely find that the artist is an independent contractor.

Fourth, a court will consider the location where the work is created. If the artist creates it at a location provided by the hiring party, it’s more likely that the arrangement will be considered an employment relationship. If artist is creating the work at his own place or someplace with his own control, then it’s more likely that he’s operating as an independent contractor.

Fifth is the duration of the relationship between the parties. The longer the relationship between the two, the greater the likelihood that the creator is an employee of the hiring party. In Reid, the sculptor was employed for the length of time that it took to complete the artwork, which was less than two months, which is relatively short.

Sixth is figuring out who exerts the most control over the creator’s work schedule, meaning when and how long he will work. For example, if the creator has a great deal of latitude and can set her own working hours for the project, the relationship is less likely to be viewed as an employer-employee arrangement. 

Seventh is a consideration of the method of payment for the work completed.  If the hiring party will pay the creator only after the entire project is complete instead of on an hourly or daily basis, then it is more likely that a court would find the relationship to be that of an independent contractor. Returning to the facts of Reid, the sculptor was paid a set amount for the job in a set of installments, which is typical of an independent contractor relationship.

Eighth, if the creator can hire her own staff and then pay staff members herself rather than have the hiring party pay them, then it is more likely that she is an independent contractor.  This was the case in Reid, because CCNV provided the sculptor with absolute discretion in the hiring and paying of any assistants that may have been necessary to complete the work.

Finally, a court will evaluate the hiring party’s tax treatment of the work’s creator and whether the hiring party provides a work creator with any employment benefits. If the hiring party pays the artist’s payroll and employment taxes, and provides other benefits like insurance and a travel stipend, then the relationship is more likely to be considered an employment arrangement.

This final factor, tax treatment, has been at the forefront of several cases where the question does an employer-employee relationship exist, emerged. In Carter v. Helmsley-Spear, Inc. several artists created artwork in a building lobby then claimed they owned it because they were independent contractors.  The reviewing court determined that the artists were employees, relying substantially on the factual determination that the artists were paid a regular salary, received benefits, and were subject to income tax withholding.[6]

In another case, High-Tech Video Productions, Inc. v. Capital Cities, the parties disputed ownership of a copyright over a tourism video to promote Mackinac Island in Michigan. The court held that the creators of the copyright weren’t employees, so the work was not made for hire. The video’s creators received no benefits from the company that commissioned the video and the party who asked for the video didn’t withhold taxes from the payments made to the individuals involved. Thus, the video’s creators owned the copyright.[7]


Works Commissioned by a Written Instrument

The second method for a work to qualify under the doctrine is for a hiring party to commission the creator to create a work for a certain specific purpose with a signed and written document.[8]  A work created by an independent contractor can be a work made for hire only if there’s a written agreement between the parties specifying that the work is a work made for hire and if the work falls into one of nine enumerated categories of commissioned works. These categories are:

·       as a contribution to a collective work;

·       as a part of a motion picture or other audiovisual work;

·       as a translation;

·       as a supplementary work;

·       as a compilation;

·       as an instructional text;

·       as a test;

·       as answer material for a test; or

·       as an atlas

Courts hesitate to expand application of the work for hire doctrine to any work that does not fit into one of these nine categories. For example, there is a great deal of confusion regarding whether a commissioned sound recording can be considered a work made for hire because it doesn’t fit into one of these categories.[9] In the case of Lulirama v. Axcess Broadcast Services, Lulirama and Axcess reached an agreement for Lulirama to write and provide Axcess with 50 advertising jingles at a rate of $750 per jungle. Two years later, the parties ended the contract and Lulirama filed a copyright infringement claim against Axcess for using several radio jingles without having paid for them.

The United States Court of Appeals for the Fifth Circuit held that sound recordings specially commissioned for use in audiovisual works could be considered works made for hire, but that purely audio works were not “audiovisual” works, and that a disputed issue of material fact existed as to whether the sound recordings at issue were commissioned for use in purely audio works, audiovisual works, or both.[10]  It reasoned that a purely audio work won’t qualify under the term “audiovisual” because the plain definition of the term indicates that audiovisual work must have a visual component. Here, the radio jingles didn’t include any audiovisual components, so Lulirama wasn’t the owner of the copyrights under the commissioned work section of the work for hire doctrine.

In addition to the requirement that the work be specially ordered or commissioned under one of the nine enumerated categories specified in that subsection, it must also be accompanied by a signed writing providing that the procured work be designated a work made for hire under the copyright ownership of the hiring party. The agreement must be signed by both parties indicating that the work is being performed as a work made for hire. The written and fully executed agreement commissioning the work’s creation should address a few critical points.

The agreement should specifically describe the work as “work made for hire.”  Some courts believe that the phrase, “work made for hire” must specifically appear in the agreement commissioning the work.[11]  Although there is no uniformity to this requirement because other courts have indicated that the intention of the parties is clear and that an agreement doesn’t need to specifically use the phrase, “work made for hire,”[12]  the best practice is to always include it in a written agreement commissioning such work.

The agreement should also describe specifically which of the work made for hire categories the work being commissioned fits within. By specifically identifying the appropriate work made for hire category, the case for work made for hire status is made stronger.  An agreement establishing a work made for hire relationship can be recorded with the U.S. Copyright Office to provide formal documentation of the arrangement.[13]

Finally, the written instrument must be signed by both parties for it to be valid. In the 1992 case, Schiller & Schmidt, Inc. v. Nordisco Corp., the question presented was whether photographs taken for an office supply catalogue were a work made for hire.[14] The court found that the photographs weren’t a work made for hire. It reached this conclusion because the written document accompanying the agreement was one for a specially ordered or commissioned work was not signed by both parties. The court carefully followed the statutory language of Section 101(2) that explicitly provides that a written instrument must be “signed by them”, meaning the parties to an agreement, and that the federal statute “means what it says.”

          In the next module, we will look at the ramifications of building on copyrighted works and when copyright protection shifts from the person who originally created a work to the person who modifies it.

 

 



[3] 17 U.S.C. §101

[4] Community for Creative Non-Violence v. Reid, 490 U.S. 730 (1989)

[6] Carter v. Helmsley-Spear, Inc., 71 F.3d 77 (2d Cir. 1995)

[7] High-Tech Video Productions, Inc. v. Capital Cities, 53 f.3d 1093 (6th Cir. 1995)

[8] 17 U.S.C. §101

[10] Lulirama Ltd, Inc. v. Access Broadcast Services, Inc, 128 F.3d 872 (5th Cir. 1997)

[11] Playboy Enterprises, Inc. v. Dumas, 53 F.3d 549 (2nd. Cir. 1995)

[12] Armento v. LaserImage, Inc., 40 U.S.P.Q. 2d 1874 (C.D.N.C. 1996)

[14] Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410, (1992).