Intellectual Property, Labor & Employment Articles

Work Made for Hire Trap in Independent Contractor Agreements
by Alan C. Freeland, Cyrus Wadia

February 20, 2009

Independent contractor agreements commonly have intellectual property provisions that assign any work performed by the contractor pursuant to the intellectual property ownership to the company that commissioned the work, as a "work made for hire" under the U.S. Copyright Act.  Such boilerplate "work made for hire" provisions are often used as a shorthand grant of rights instead of (or in addition to) present or conditional assignments of intellectual property rights.  Using such shorthand "work made for hire" language has serious consequences for unwary drafters of independent contractor agreements in California.
 
California Labor Code Section 3351.5 includes in the definition of employee "any person while engaged by contract for the creation of a specially ordered or commissioned work of authorship in which the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire, as defined in Section 101 of Title 17 of the United States Code, and the ordering or commissioning party obtains ownership of all the rights comprised in the copyright in the work."  California Unemployment Insurance Code Section 686 similarly provides that "'Employer' also means any person contracting for the creation of a specially ordered or commissioned work of authorship when the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire, as defined in Section 101 of Title 17 of the United States Code, and the ordering or commissioning party obtains ownership of all the rights comprised in the copyright in the work.  The ordering or commissioning party shall be the employer of the author of the work for the purposes of this part."
 
In other words, the mere inclusion of the term "work made for hire" in an independent contractor agreement may actually create an employer-employee relationship, which counters the very purpose of establishing an independent contractor relationship.  Employers and companies creating independent contractor agreements should avoid "work made for hire" references entirely and replace this shorthand grant of rights with a properly drafted assignment provision.

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