03/05/2014 12:04 pm ET Updated May 05, 2014

An Overview of 'Work for Hire'

Typically the creator of an item owns it. An exception to this rule is a "work for hire." The federal Copyright Act at 17 U.S.C. Section 101 states:

A "work made for hire" is--
(1) a work prepared by an employee within the scope of his or her employment; or
(2) 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....

Note that employees may create works for hire or certain contractors who in writing agree to work for hire status. In contrast, these creators might retain ownership, while allowing another the right to use the creation, with written phrases such as "grants a limited, nonexclusive license" etc. This brief comment does not address the frequently complex issue of employee status and scope of employment. Intellectual property law is also beyond this comment as are the special aspects of copyright law. Standing alone, "work for hire" may cause fortunes to be made or lost.

In the first two months of 2014, the phrase "work for hire" appeared in 12 LexisNexis reported court decisions. Three involved computer programs and one each addressed the following situations: an actress's role in a movie, a song, a cartoon character, and Web design services. Three cases addressed legal procedural matters and one was concerned with the duration of work for hire status. An unusual situation involved injuries caused by a security guard working under an "Independent Contractor and Work for Hire Agreement."

Having an individual sign an agreement in which she or he is designated an "employee" or creating a "work for hire" is very persuasive, but not necessarily conclusive, evidence. In the 2014 cases two situations had no contract containing work for hire language, two contracts stated "work for hire," in two cases the existence of a contract was disputed, and in two cases the court determined that the individual was not an employee.

Several important considerations concerning collaborative works are discussed in a 2014 case. When two or more persons collaborate they become co-owners of the work unless one person made his contribution as an employee or in exchange for a commission. A co-owner cannot transfer ownership of her co-owner's rights. Each co-owner alone may transfer non-exclusive rights to the work but must account to his co-owner for a share of the profits. Copyright registration by one individual alone is not determinative of ownership status because a co-owner is not expected to continually check the copyright records. An attempt to cancel a copyright registration requires an administrative action undertaken at the Copyright Office. The statute of limitations for civil actions (time period to sue) under the Copyright Act is three years but this time only starts to run when one should have discovered with the exercise of due diligence that her rights were violated. If one co-owner expressly tells the other that he is the sole owner, then certainly the statute of limitations starts to run. The common law doctrine of "latches" may prevent a lawsuit when an individual has unreasonably delayed in asserting his rights to the detriment of another.

A 2014 case commented on screenplays. Screenplays are copyrightable and films made with the consent of the screenplay owner are derivative works. An actor simply following the directions of the screenplay may have only a license to perform the work. If the actor provides more than a minimal creative contribution, then that contribution may be copyrightable; however, the Copyright Act does not expressly include acting. To avoid these complications, most films are legally based upon carefully written contracts containing work for hire and licensing language.

My 2014 case review indicates some general themes. "Work for hire" is complex beyond these brief observations and extremely important. Do not overlook ownership issues in the desire to rapidly begin a creative project. Recognize the legal significance of "work for hire" and "license" language. If there is a written contract, very carefully obtain a signed copy from the other party in order to have enforceable legal rights. The unsigned contract situation occurs with sufficient frequency that one should be wary. Save yourself subsequent grief and expense by consulting an experienced attorney before commencing a creative endeavor.