Who owns a copyright in the final product?

Winter 1999

With changes in technology occurring at high speed and the growth of "virtual companies," as well as traditional business ventures, copyright law has come to both help and hurt many business owners, employees and "consultants" alike without their fully understanding the consequences of their actions. Generally speaking, a copyright is an author's rights in ownership of his or her original works of authorship. In the most basic terms, a copyright is established by the act of an author fixing his or her work in a tangible medium of expression. 17 U.S.C. §102(a). In general, this has been interpreted as reducing the work to a relatively stable form of expression and placing it in a relatively stable and permanent embodiment. Accordingly, the work must be recorded or written in some manner in order to obtain federal statutory copyright protection.

Under U.S. copyright laws, all works which may receive the benefit of protection are by default owned by the author. However, as with most legal principals there are several exceptions to this general rule of ownership. One broad exception to this rule is a situation where an employee creates a copyrightable work and the task or duty of creating the copyrightable work falls within the "scope of their employment duties." By default, all works which are created in such a situation are owned by the employer. Of course, it is important to review and outline the duties of an employee so that a dispute does not arise after the work is created as to what falls within the "scope of their employment duties."

In addition, another broad, yet common, exception to the ownership default is copyrightable works which are created under a "work for hire" agreement prior to the initiation of any effort to create the new and original work. Under a written "work for hire" agreement, all works created by the author within the terms of an agreement are understood to be owned by the entity which has contracted for the product as this is literally set forth in the agreement. However, an agreement may be used to further apportion ownership rights as the parties to the agreement see fit. Accordingly, there are situations in which a copyrightable work created by an author may be owned by another party.

In view of the confusion which commonly arises in cases of ownership of copyrightable works as a result of the general rule and its exceptions, it is important to outline the relationship of the parties in writing before work on a product is initiated as this will hopefully clarify ownership in the work. Also, this usually mitigates disputes and resolution of any misunderstandings between the parties as a well drafted agreement should at a minimum represent the understanding of the parties.

Additionally, the mere lack of a written agreement does not preclude the party paying for the project from acquiring ownership rights in the product. The "scope of employment" exception may apply. Furthermore, if there is no agreement between the parties before a project is initiated, an assignment or licensing contract to a work product may be executed after initiation of any effort, or even upon completion of the product. Of course, having the relationship between the parties memorialized prior to initiating any work is advisable as this may reduce the chance that any unforseen conflict may arise, and may also reduce or eliminate the need for licensing royalties that may result from unknowingly proceeding without a written agreement. As many other factors may impact the terms and conditions of any written agreement addressing copyright ownership, it is advisable to consult an attorney prior to drafting or executing such an agreement as this may avoid future problems and/or expenses.