Who Owns the Work That Was Specially Commissioned?
If you are a multimedia developer, a software developer, a publisher, or a business owner who hires employees or utilizes third parties to create intellectual property, you should be familiar with the Copyright Act’s ownership rules. Artistic and multimedia works and many of their components, such as music, graphics, text, software, and video, film, and television show clips, are protected by copyright. If you fail to deal with ownership issues before the work is created, you may not have clear title to the work and all its components. The best way to avoid problems relating to the ownership of copyrightable works is by having a written agreement in place before any work begins. The Copyright Act of 1976 provides that copyright ownership vests initially in the author or authors of the work. As a general rule, the author is the person who actually creates the work; that is, the person who translates an idea into a fixed, tangible expression is entitled to copyright protection. A work that is made for hire is an exception to this general rule. When a work is classified as one “made for hire,” it determines not only the initial ownership of the copyright, but all rights under the copyright. “Works made for hire” can arise from work by either employees or independent contractors. To determine whether the work is for hire under the Copyright Act, courts have used various factors to distinguish between employees and independent contractors, such as the: • Manner of payment (employees usually receive a salary from which payroll taxes are deducted, while freelancers frequently receive a flat fee), • Degree of supervision and control exercised by the employer, • Skill required to execute the work, or • A written agreement stating that the art will be considered a work for hire. If the work was prepared by an employee, then the employer is automatically considered the author, unless there is an express written agreement otherwise. If the work was prepared by an independent contractor, the work is owned by the independent contractor, unless it is a specially ordered or commissioned work. The Copyright Act delineates nine (9) specific categories of “specially ordered or commissioned” work and requires an express written agreement between the parties for a work prepared by an independent contractor to be considered a work for hire. The specially ordered and commissioned works are works for use as: 1. a contribution to a collective work, 2. a part of a motion picture or other audiovisual work, 3. a translation, 4. a supplementary work, 5. a compilation, 6. an instructional text, 7. a test, 8. answer material for a test, or 9. an atlas. To further complicate matters, there is a split in the circuit courts on the issue of the requirement for the express written agreement. The Second Circuit in Playboy v. Dumas held that the writing requirement can be met with a writing executed after the work is created if it confirms a prior agreement. The Seventh Circuit, however, in Schiller & Schmidt v. Nordisco, held that the signed writing must precede the creation of the work. To get around these limitations and uncertainties, the usual arrangement is that the commissioning party may insist that the artist, instead, by express written agreement, to assign all of his or her rights, or grant copyright licenses, to them if for any reason it is held not to be a work made for hire. The controlling Supreme Court case on the issue is Community for Creative Non-Violence, et al. v. Reid, 490 U.S. 730 (1989) (“CCNV”). In CCNV, CCNV hired Reid, a sculptor, to make a statue called “Third World America.” CCNV conceived the idea of the statute and “CCNV members directed enough of Reid’s work to ensure that he produced a sculpture that met their specifications. But the extent of control the hiring party exercises over the details of the produce is not dispositive. Indeed, all the other circumstances weigh heavily against finding an employment relationship.” CCNV, 490 U.S. at 752. In particular, Reid was a sculptor, a skilled occupation; Reid was free to decide when and how long to work; and CCNV did not pay payroll or Social Security taxes, provide any employee benefits, or contribute to unemployment insurance or workers’ compensation funds. The Supreme Court held that Reid was not an employee of CCNV, but an independent contractor. CCNV, however, could not show that it owned the copyright as a work made for hire because “[s]culpture does not fit within any of the nine categories of ‘specially ordered or commissioned’ works enumerated in that subsection, and no written agreement between the parties established ‘Third World America’ as a work for hire.” CCNV, 490 U.S. at 738. As such, the Supreme Court held that Reid was the author and owner of the copyright to the “Third World America” sculpture. In July of this year, a federal judge in New York ruled in favor of Marvel Entertainment and against the heirs to the comic book artist Jack Kirby. Mr. Kirby helped create such notable comics and characters as the Fantastic Four, the Incredible Hulk, and the X-Men. In this case, the judge ruled that the comic books and characters created by Mr. Kirby were works for hire under the Copyright Act, and could not be reclaimed by the Kirby family. In August of this year, Victor Willis, a founding member of band the Village People and who performed as a policeman and a sailor, filed a copyright claim to regain his rights to the disco classic song “Y.M.C.A.” The two (2) companies that hold the publishing rights to the song, Can’t Stop Productions and Scorpio Music, say the Village People was a concept group that they created, and that Mr. Willis worked for them as a writer for hire. As such, both employers and employees should be especially aware of their respective rights when it comes to copyrightable works created during the course of employment. Businesses that hire employees to create intellectual property, including advertising material and computer source code, for example, should be careful to ensure that the ownership of the copyrights in any resulting works is clearly defined and subject to a written agreement in advance of the undertaking.