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Work-for-hire from a legal perspective

When work-for-hire is abused, it is legalized theft and hurts the entire design industry. To prevent abuse, it's necessary to understand the true definition of work-for-hire.

For a project to be considered work-for-hire, two (2) conditions must be met:

  • The contractor and client must sign an agreement stating that the work is work-for-hire (work made for hire).
  • and, the work described MUST fall under one of the following nine categories as specified by the U.S. Copyright Act.
    1. A work specially ordered or commissioned for use as a contribution to a collective work (such as a newspaper, magazine, anthology, or encyclopedia)
    2. As a part of a motion picture or other audiovisual work
    3. As a translation
    4. As a supplementary work (defined as work prepared for publication as a secondary adjunct to a work by another author, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements.
    5. As a compilation (defined as a new arrangement of preexisting works or data)
    6. As an instructional text (defined as a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities.)
    7. As a test
    8. As answer material for a test
    9. As an atlas

Please note what is NOT included in the criteria above: Print advertising (such as brochures, logos, point-of-sale, package design, etc.); Web media (such as web sites, HTML emails, banner ads, etc.); Interactive media (such as Flash animations, demos, motion graphics, etc.); Electronic media (such as power point presentations, kiosks, etc.) This is, by no means, an exhaustive list and represents only a few examples of the type of work not included in the work-for-hire criteria.

A "standard" work-for-hire clause

(b) Company Ownership. 
All right, title and interest in and to all Subject Ideas and Inventions, including but not limited to all registrable and patent rights which may subsist therein, shall be held and owned solely by the Company, and where applicable, all Subject Ideas and Inventions shall be considered works made for hire. I shall mark all Subject Ideas and Inventions with the Company's copyright or other proprietary notice as directed by the Company and shall take all actions deemed necessary by the Company to protect the Company's rights therein. In the event that the Subject Ideas and Inventions shall be deemed not to constitute works made for hire, or in the event that I should otherwise, by operation of law, be deemed to retain any rights (whether moral rights or otherwise) to any Subject Ideas and Inventions, I agree to assign to the Company, without further consideration, my entire right, title and interest in and to each and every such Subject Idea and Invention.

Expanding work-for-hire to include any media

Despite the limitations imposed by the work-for-hire clause in the U.S. Copyright Act, far too many companies and agencies, interactive and design firms subvert the Copyright Law by including revised contractual language that specifies any work they deem appropriate as work made for hire.

Can they do this legally? Short answer: NO. According to lawyers we have spoken with, the vast majority of work-for-hire can't be held up to the scrutiny of the law if the criteria has been expanded to include media not listed in the Copyright Act.

So, why can agencies get away with including a web site, for example? Simple. The loophole is your signature. The moment you sign a document with work-for-hire language (or a restrictive covenant), you no longer have any rights to the work you create.

THE CATCH = COURT COSTS WILL RUIN YOU
You, the contractor, DO NOT have the financial resources to win a court case against a high-powered attorney who is defending an employer's work-for-hire agreement. Employers are well aware of this.

Are you Aware:**
• The average rate for an experienced attorney is $300/hour
• The average PRE trial costs you will pay simply to prepare and bring a case to civil court is 60k to 90k
• The average total cost of pursuing a law suit will cost between 100k and 200k
• The average cost to defend yourself, if the case went to trial ... 100k to 200k

k = thousand

What this means is simple. The average contractor can't afford to go to court at any cost. Again, Employers are well aware of this.

You may also come to the conclusion that, based on potential legal fees, the majority of threats you receive from clients regarding rights infringements probably amount to nothing more than hot air ... And, you may be right. Don't assume, however, that your lives couldn't be made miserable.

** How did we arrive at these numbers? We spoke with a local Atlanta attorney who has extensive litigation experience.

The bottom line: Legal docments are deliberately written in obtuse (confusing) language in order to provide an attorney with multiple avenues for legal action should a case ever be brought to trial. This also provides a defense lawyer with the tools he needs to defend you against an overzealous employer.

However, you need to be aware that there are many many legal avenues an employer can use to prosecute you for an alleged contractual infringement, including (but not limited to) work-for-hire, copyright, trademark, trade name, trade dress, public display, and patent. Each of these are separate and distinct areas of the law that will be ruled on and judged separately by a judge or jury. Feeling confident yet?

Work-for-hire abuses

What should you as the contractor look for? Unfortunately, Copyright law doesn't prohibit any of the following unethical practices. Which means, you need to be vigilant and READ ALL DOCUMENTS CAREFULLY.

We have identified three primary documents where work-for-hire language may appear: contracts, non-disclosure agreements, and purchase orders.

  • Many businesses will pressure contractors by denying work to those who do not accept work-for-hire.
  • Look out for clients who designate work as work-for-hire after the fact by requiring the contractor to sign a purchase order or payment check imprinted with work-for-hire terms.
  • Some work-for-hire contracts understood by the contractor to apply only to the current project but may actually have language that covers all future work. Blanket work-for-hire agreements are not uncommon, and inexperienced contractors are especially vulnerable to their traps.

A slow economy and a saturated market has emboldened employers to add increasingly broad rights ownership to contracts. Look out for:

  • Clauses buying "all electronic rights"
  • (Our favorite) "All rights in all media now in existence or invented in the future in perpetuity throughout the universe"
  • Fallback language in a work-for-hire contract that provides for an "all rights" transfer if work is not deemed to be work made for hire.

Not all contracts are created equal. If “work-for-hire” does not appear in a section header, read the text under the “rights”, “authorship”, and "ownership" sections carefully. You may just find the clause buried in a lengthy paragraph of legalese.

Other abuses

A few other nasty practices to watch out for:

  • Contractual work-for-hire language found in random documents, such as on the back-side of paychecks.
  • 1-5 year non-compete clauses buried in lengthy paragraphs.
  • The words "silent partner"
  • Unscrupulous clients who claim there was an "implicit" work-for-hire agreement, prior to the start of work, when in fact none existed.

Protect yourself

Protect yourself from misunderstandings, unfair business practices, and potential legal action.

GET IT IN WRITING 
Confirm all assignments in writing prior to starting any job, spelling out the exact terms of the agreement and the specific rights transferred (licensed).

Don't Sign agreements that strip your rights or limit your ability to make a living or run your business.

Request a new Purchase Order or cross out the incorrect work-for-hire clause if one appears on a document after the fact.

Request a new Paycheck or cross out the incorrect work-for-hire clause on the back of the check and write "deposited without reconditions" to mitigate the attempted rights grab.

This material just scratches the surface of the legal side of work-for-hire. Your best defense is to learn and know your rights. Please take the time to educate yourself with regard to Copyright information and best practices for your business.

Please visit our Reference Section for more information.

Disclaimer

THE INFORMATION ON THIS WEB SITE IS FOR EDUCATIONAL PURPOSES ONLY

The content of this web site is not legal advice. It only constitutes commentary on legal issues concerning the creative industry, and is for educational and informational purposes only. Reading this web site, replying to its posts, or any other interaction on this site does not create an attorney-client privilege between you and the author. No information you provide through this website shall be deemed confidential. The Author/Editor is not a licensed attorney, and this web site is not an attempt to engage in the practice of law.

 

Work-for-hire is not good business. Chapter 4 >>