Businesses often rely on the talents of creative independent contractors when developing original works like software, marketing media, and product documentation, to name a few examples.

Many business owners believe – mistakenly – that the fact they paid for the contractors to develop the creative works in question means their companies own those works. Other business owners hit a little closer to the mark and believe – still, though, mistakenly – that their companies always will own the works as long as they identify them as being “made for hire” in their agreements with the contractors. However, both sets of owners run the risk of failing to perfect their rights in those works, leading to the possibility of disputes and costly, unexpected licensing arrangements down the road.

U.S. copyright law does not treat independent contractors like employees, whose works generally are held to be the property of the employing companies. In order to secure its copyrights, a business needs to take two important steps in written agreements with its developers:

1. Identify the works in question as “works made for hire,” and (more importantly)
2. Specify that the developers assign any rights they may have in those works to the company.

Step 2 is critical, because many kinds of creative works do not qualify for work-for-hire treatment under U.S. law. The copyright act specifies that works made for hire must be specially ordered or commissioned and must fall into one of the following categories:

  • a contribution to a collective work,
  • a part of a motion picture or other audiovisual work,
  • a translation,
  • a supplementary work (defined as being a published addendum that introduces, explains or assists in the use of an earlier work prepared by a different author),
  • a compilation,
  • an instructional text,
  • a test,
  • answer material for a test, or
  • an atlas

A wide variety of works – notably including many kinds of computer programs – do not fall within the scope of those categories, making an express assignment a vital element in the developer or project agreement. However, a full assignment also can be a source of friction in negotiations, and businesses dealing with savvy contractors should expect in many cases to pay a premium to own those works at the end of the relationship.

In difficult cases, businesses are well advised to seek the assistance of counsel.