Ownership of Work Created by Independent Contractors
Recall from Chapter 10 that an employer can own work created by independent contractors if the work falls in one of the ten categories of statutorily designated works (a contribution to a collective work, a part of a motion picture or other audiovisual work, a sound recording, a translation, a supplementary work, a compilation, an instructional text, a test, answer material for a test, or an atlas) and there is a written agreement between the parties specifying that the work is made for hire.
If the work is not within one of the ten enumerated categories, the commissioning party can still own the work if the independent contractor assigns in writing all rights in the work to the commissioning party. In fact, in every case, even those involving one of the designated ten types of works, the parties should agree in writing that the work is original, it is made for hire, that their intent is that the commissioning party will own the work, and that if for some reason the work is deemed not to be made for hire, that the independent contractor thereby immediately and irrevocably transfers and assigns all rights in and to the work to the commissioning party. See Figure 19-2 for a sample clause for assigning ownership of the work of independent contractors.
| The Company shall own and Employee hereby irrevocably assigns to the Company all right, title, and interest in any invention, technique, process, device, discovery, works, products, improvement, or know-how, whether patentable or not, including all trade secrets and copyrights, in and to any works created by or contributed to by Employee during the course of his or her employment that relate in any manner to the actual or anticipated business of the Company. ---Employee intends that the Company shall have full ownership of the aforementioned items with no rights of ownership in Employee, and Employee shall perform all acts and execute all documents necessary or desirable to protect Company's rights in and title to any such items and shall not contest or dispute the Company's ownership of or rights to the same. |
| Employee signature: ____________________ Date: _______________ |
In determining whether a party performing work is an employee (whose work product is automatically owned by the employer) or an independent contractor (whose work product might be owned by the commissioning party if the work is one of the ten designated types and the parties have agreed such in writing), courts consider a variety of factors. Typically, the following factors, none of which is determinative but all of which characterize a regular and salaried relationship, tend to suggest an employment relationship:
| Any software, inventions, discoveries, materials, work, work product, or other intellectual property (''Intellectual Property'') developed by Consultant for Company while on assignment for Company or on assignment to any Company client shall become and remain the property of Company, which shall have the right to use such Intellectual Property in any media for any purpose and to create derivative works based thereon. Such Intellectual Property shall be ''works made for hire'' as that term is defined in the United States Copyright Act, and, consequently, Company shall be the author for copyright purposes of such Intellectual Property and shall own the copyright to all such Intellectual Property. To the extent that any such Intellectual Property may not be works made for hire, Consultant agrees to and hereby does by this Agreement immediately and irrevocably assign and transfer to Company the right, title, interest, and all ownership of all copyright throughout the world in such Intellectual Property, which shall be treated as though works made for hire with regard to all rights, including moral rights, if any. No claims of ownership of such Intellectual Property by Consultant shall be made or honored, and Consultant shall not hereafter dispute or contest the Company's rights in and to such Intellectual Property. As to such Intellectual Property, Consultant agrees to disclose them promptly to Company, to assign them to Company, and to do all things necessary, including executing documents, to assist Company in obtaining patent, copyright, trade secret, or other legal protection for such Intellectual Property, Company to pay the expenses therefor. Consultant agrees that the entire right, title, and interest in and to such Intellectual Property are hereby irrevocably assigned to and shall become the property of Company without further consideration. Consultant agrees that all work developed or provided by Consultant under this Agreement is original to Consultant and does not violate the proprietary, copyright, or other rights of any third party. Consultant will maintain any confidential information relating to the Company or its business or operations strictly in confidence and will not use such information for any purpose other than the Company's business purposes. |
| Consultant signature: _______________Date: _________ |
The employer has the right to determine how the work is done.
The work is done at the employer's location.
The employer provides equipment or other means to create the work.
The employer controls the worker's schedule in creating the work.
The employer has the right to have the worker perform other tasks.
The employer determines the method of payment.
The employer has the right to hire the employee's assistants.
The employer is in business to produce products of the nature created by the worker.
The employer provides the worker with benefits or withholds tax from the worker's payment.
In sum, although there is a presumption that work created by employees belongs to employers, no such presumption exists for work created by independent contractors. In fact, the presumption is the opposite. Even if a work is one of the ten designated types, if the parties do not agree in writing as to its ownership, the independent contractor retains ownership rights. Therefore, the only safe course for a commissioning party is to provide by written agreement that if for some reason the work is not deemed a work for hire, by that agreement the contractor assigns and transfers all right, title, and interest in and to the work to the party who engaged the contractor's services.
An additional complication of using independent contractors is that independent contractors who stay in the same job for a prolonged period of time may later claim that they were employees and then sue for certain benefits. In the late 1990s, long-term temporary workers successfully sued Microsoft after alleging that they were employees rather than independent contractors and were therefore entitled to the lucrative stock option packages and savings plan Microsoft had offered to its employees. As a result of the suit, in early 2000 Microsoft announced it would limit its temporary workers to one year of employment at a time, with 100-day intervals in between.