Legalities #4: What is Work Made for Hire?
by Linda Joy Kattwinkel
Q: As a freelance illustrator, I sometimes
get contracts from my clients which state that the work is “work
made for hire.” What does “work made for hire”
mean? If I sign, do I lose all rights to my work?
A. “Work made for hire”
is a doctrine created by U.S. Copyright Law. Generally, the person
who creates a work is considered its “author” and
the automatic owner of copyright in that work. However, under
the work made for hire doctrine, your employer or the company
that has commissioned your work, not you, is considered the author
and automatic copyright owner of your work. Under the old Copyright
Act (before 1976), it was relatively easy to convert a freelancer’s
work into work made for hire. Many contracts still use work made
for hire language left over from that time. Now, however, the
standards for establishing work made for hire are much more stringent.
Under the current statute, there are only two ways that the work
made for hire doctrine can apply to graphic artists.
First, if you are a regular employee,
your employer will own any work you do within the scope of your
employment automatically as work made for hire.
Second, if you are not an employee,
your client can own your work as work made for hire only if:
(1) your client specifically ordered or commissioned your work;
and
(2) your work was commissioned for use as one of the following:
* a contribution to a collective work
* a part of a motion picture or other audiovisual work
* a translation
* a supplementary work (to another author's work, such as
a foreword, chart, or table)
* a compilation
* an instructional text
* a test
* answer material for a test, or
* an atlas;
and
(3) your contract with your client explicitly states that your
work is a “work made for hire.”
When is a “work made for hire”
provision valid?
A. If you have signed a “work made for hire” contract,
that does not necessarily mean that your work is automatically
deemed work made for hire. First, the courts will determine whether
your situation meets these statutory requirements. If not, courts
will disregard the “work made for hire” language and
instead interpret the other language in your contract, and the
circumstances of the project, to determine whether you have otherwise
transferred your copyright to the client.
1. Are you an employee?
Because employees’ work automatically belong to their employee,
many companies will argue that an independent contractor, like
a freelancer, should be treated as its employee for the purposes
of the work for hire doctrine. Fortunately, the Supreme Court
has ruled that whether an independent contractor qualifies as
an employee depends upon a stringent test. (Community for Creative
Non-Violence v. Reid, 490 U.S. 730 (1989)). Under that test, the
courts must consider several factors to evaluate the level of
control a client has over the independent contractor’s work.
Under those factors, generally an artist will not be deemed an
employee if most the following are true (no one factor is determinative):
* the commissioned work required significant artistic skill
* the artist supplied her/his own tools
* the artist performed the work at her/his own studio, rather
than at the client’s workplace
* the artist was retained for a relatively short time
* the client did not have the right to assign additional
projects to the artist
* apart from completion deadlines, the client did not control
when or how long the artist worked
* the artist was paid a flat fee or royalty rather than
an hourly wage
* the client had no role in hiring and paying artist’s
assistants
* the work is not part of the client’s regular business
(e.g., your client is a magazine publisher rather than a producer
of illustrations)
* the client is not a business (e.g., a private party commissioned
a portrait)
* the client did not provide employee benefits to the artist
(e.g., health insurance), or contribute to unemployment insurance
or worker’s compensation funds
* the client did not treat the artist as an employee for
tax purposes (e.g., the client did not pay payroll or social security
taxes)
As you can see, most clients will have a hard time establishing
that freelance artists are really their employees under this test.
It is helpful that most contracts include explicit language identifying
the graphic artist as an independent contractor with no rights
to benefits.
2. Does your work qualify as a specially commissioned
work made for hire?
If you are not deemed an employee, the first requirement for a
valid work made for hire contract is that your work must be “specially
commissioned.” Some courts have interpreted the “specially
commissioned” requirement to mean that the actual work made
for hire contract must have been signed before you created the
work. Others have accepted a retroactive agreement designating
a work that has already been delivered to the client as a work
made for hire. However, in any event the work must have been created
specifically for the client’s project. If your work existed
before receiving the assignment from your client, it cannot qualify.
Thus, if your client is buying an illustration from your portfolio,
it cannot be deemed a work made for hire.
Next, the work must fit one of the 9 statutory categories listed
above. For graphic artists, the relevant categories are usually
“a contribution to a collective work,” a “compilation,”
and sometimes, a “supplementary work” or an “atlas.”
Unfortunately, these categories are somewhat vague. Under the
Copyright Act, a “collective work” is “a work,
such as a periodical issue, anthology, or encyclopedia, in which
a number of contributions, constituting separate and independent
works in themselves, are assembled into a collective whole.”
A “compilation” is “a work formed by the collection
and assembling of preexisting materials or of data that are selected,
coordinated, or arranged in such a way that the resulting work
as a whole constitutes an original work of authorship.”
There are arguments on both sides as to whether newspapers, magazines,
company catalogs, advertisements or annual reports are collective
works, and thus whether illustrations commissioned for such works
could be considered works made for hire. Graphic design is a form
of compilation authorship (see last month’s Legalities)
and thus graphic design for an annual report or a web site could
arguably qualify as a compilation. Illustrations for medical textbooks
might qualify as supplementary works.
The effects of work made for hire ownership
When a client holds ownership of your work as work made for hire,
you as the artist have no copyright to begin with. The most significant
consequence of this doctrine is that you cannot control what the
client does with your work. The client can publish the work wherever
and whenever it wants to, including reselling rights to others.
Unless you receive permission from your client, you cannot do
anything yourself with your work. You do not necessarily even
have noncommercial rights to show your work, e.g., in your portfolio
(although it is common practice to allow such usage, and there
would probably be a good “fair use” defense for such
use).
Another important consequence concerns the statutory termination
right. Under U.S. Copyright law, an author who has transferred
copyright still has the right to unilaterally terminate that transfer
35 years later, and thus recover her/his copyright (technically,
the window for terminating is between the 35th and 40th year after
the transfer agreement was signed). This is a safeguard for artists
whose works become more profitable or marketable over time. The
statutory termination right gives artists the opportunity to recoup
the increased value when they had originally sold or licensed
rights in their works for too little. They can regain their copyright
and then relicense or resell the rights in the work. Under the
work made for hire doctrine, however, your client is considered
the “author” of your work from the beginning, and
so you do not have the statutory termination right to recover
the copyright.
