As you begin operations for your startup, you’ll most likely need help with various types of tasks. Your company may need to develop an app for a Smartphone or write instructions for using your products. You also might hire an independent professional to write the content for your website. These scenarios are all examples of possible copyright issues.
Many new business owners may think that they automatically own the rights to content they’ve paid to produce for their startup. It makes sense that if you’re paying someone to do the project for you, you should own that product. But that’s not always the case.
Copyright laws state that a person who creates content—by putting an original work of authorship into a tangible medium of expression—owns the copyright in that content as soon as it’s created except when:
- the person is an employee who creates the work in the scope of his employment; or
- the person previously signed a written contract acknowledging that the work is a “work for hire.”
The key to this issue is whether the person you’re paying to create the work is your employee …or she’s an “independent contractor.”
Employees’ Work Product
Typically, the creative work that’s done by your startup’s employees automatically becomes the property of the company. So, if the head of technology who’s on your payroll as an employee writes software applications for your startup, the code that she writes as part of her normal duties of employment is owned by the company. This is known as the “work-for-hire” doctrine. Although the term “work for hire” can be confusing, it covers only your actual employees—those who receive a W-2 tax form. The “work-for-hire” doctrine automatically gives copyright ownership to the startup and is an exception to the normal copyright rules that give copyright ownership directly to the creator of a work that are set out above.
If you hire an independent contractor to write code or content for your website, you won’t automatically own the copyright to the work that he creates, unless he signs an agreement specifically stating that the startup owns the copyright.
Copyright law treats an independent contractor differently than an employee because the employer has limited control over how an independent contractor provides his services.
It’s rare that a non-employee would be classified in the “work for hire” category. However, the U.S. Copyright Act defines a “work made for hire” in nine situations aside from employees when it is a work specially ordered or commissioned for use:
- as a contribution to a collective work;
- as a part of a motion picture or other audiovisual work;
- as a translation;
- as a supplementary work;
- as a compilation;
- as an instructional text;
- as a test;
- as answer material for a test; or
- as an atlas.
If the work falls within one of the above statutory categories, you must have a Work for Hire Agreement in writing to own the content. If, for whatever reason, the work does not fall within one of the above statutory categories, then you must have a Work for Hire Agreement in writing that includes an assignment clause for those works that fall outside the statutory categories, or an outright separate assignment agreement as described below.
If your startup is planning on hiring a creative professional, it’s critical that you have that individual sign an assignment agreement. It’s called an assignment agreement because giving up a copyright to another is called an “assignment.” To be legally binding, assignment agreements must be in writing and signed by the individual who’s giving up their copyright.
Some in-demand independent contractors may be reluctant or have their own policies for signing away the rights to their work. You may need to negotiate the assignment for some duration, a limited use, or medium. An experienced intellectual property attorney can draft an agreement to meet your needs. Be diligent is obtaining these assignments, so that you don’t receive a threatening notice from the independent contractor in the future.
Your start-up needs to be aware of the importance of protecting your company’s innovative products, services, and technologies. This is accomplished by patent filings, along with a copyright, trademark, and branding strategy. Speak with an experienced intellectual property legal professional as you work to build your startup to discuss the types of intellectual property protection you may need.
Attorney Michael Ahmadshahi focuses on patents, intellectual property, copyright, and trade secrets in Irvine, California. The Michael Ahmadshahi, PhD, Law Offices are also located in Beverly Hills and Sherman Oaks. Call us toll free at (800) 747-6081 or direct at (949) 260-4997 or email firstname.lastname@example.org and let us help you with your intellectual property questions and the IP strategy for your startup.