Law Offices of Vance R. Koven | Latest Blog

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Law Offices of Vance R. Koven | Latest Blog

Online advice, good and bad

Saturday, June 20, 2015

I happened on an infomercial for Intuit's QuickBooks® accounting program (which I neither endorse nor diss) that has some decent advice for small businesses about when to consult a lawyer, but which also points to some dangerously bad advice. Here's the link:

While this article's checklist of things to look out for is reasonable, the advice with respect to "work for hire" agreements can lead a business seriously astray, especially if it uses the model agreement that's linked to in the article.

Why? Because although it's true that an independent contractor creating copyrightable content for a business (whether it's advertising copy, software, logos, jingles, or anything else) will own the copyright in the content (regardless of who paid for it) unless a contract says otherwise, no contract--at least not in the US--can make something a "work made for hire" under the Copyright Act unless it falls within one of nine exquisitely narrow categories (specifically, "a contribution to a collective work [e.g. an encyclopedia], as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work [e.g. a teacher's guide for a textbook], as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas"). In all other cases, it's not going to be a work made for hire no matter what you say in the contract.

That means that the contract you draft has got to transfer the copyright differently from just calling it "work made for hire," there has to be an express assignment of the copyright. It's also a bit tricky how you say that, because there have been court cases ruling that you can't assign now what hasn't been created yet. Not every court, but enough that some nimble draftsmanship is required. 

There are also different legal consequences to an assignment of copyright from work made for hire. In WMFH the employer or principal in the nine listed cases is considered the author of the work, so that the copyright stays with that person for the duration (95 years in the case of a corporate "author"). With an assignment, there is a non-waivable right in the author to "reclaim" the copyright after 35 years, which means in effect that the price becomes renegotiable at that time. Now, 35 years is a long time, and most copyrightable work loses its value over that period, but by no means all copyrightable work. So, if you think the assigned work will need to be renegotiated after 35 years, a little drafting around that prospect wouldn't hurt.

For the sake of completeness, I should mention that patents, trademarks and trade secrets, the other most commonly created forms of intellectual property, have different rules with respect to assignment, and in appropriate cases the contract between the company and the contractor should deal with them.

So yes, small businesses have many reasons to contact lawyers to avoid messes down the road. Not the least of these reasons is to sift through the wheat and chaff advice you're likely to find online.