The Wondrous World of Works Made for Hire (Part 2)

In our last post, we discussed “work made for hire” status for works created since January 1, 1978. That is the effective date of a major overhaul of the Copyright Act, which included a more detailed (and arguably a more contractor-friendly) approach to defining works made for hire. The prior 1909 Copyright Act included only vague reference to works made for hire and employer/employee relations, but its application is still relevant today. In the comics industry, for example, an enormous number of world-famous characters were created prior to January 1, 1978 and ownership of those characters continues to be the subject of legal disputes between creators (or their heirs) and publishers.

For nearly six decades, courts limited the application of the work made for hire doctrine to traditional employer/employee relationships and not to circumstances involving independent contractors. However, in 1965, a federal appeals court ruled that an independent contractor was the equivalent of an “employee” and the work was made for hire because it was made at the hiring party’s “instance and expense.”

A work is made at the hiring party’s “instance” when the hiring party inducing the creation is the motivating factor in the production of the work. Courts look at the the extent to which the hiring party provided impetus for, participated in, or had the right to direct or supervise the creation of the work. The right of the hiring party to “direct and supervise the manner” in which the work is performed is essential. It is sufficient that the right exists; the right does not need to be exercised. However, the hiring party’s actual creative contribution or direction strongly suggests that the work is made at the hiring party’s “instance.” A work is made at the “expense” of  the hiring party when the hiring party pays the contractor a definite amount for creating the work as opposed, for example, to payment of royalties based on future revenue.

If a work is made for hire, there is a presumption that the hiring party is the author of the work and owns the copyright. That presumption can be rebutted with proof that there was a written or oral agreement to the contrary (i.e. that the employee or contractor retained the copyright) entered contemporaneously with the creation of the work.

The work made for hire issue – both under the 1909 Act and the 1976 Act – has an obvious impact on determining who owns valuable intellectual property. The works of well-known creators such a Jack Kirby, Marv Wolfman, and Jerome Siegel, for example, have all been the subjects of litigation involving the work made for hire doctrine. But whether a work is made for hire (and, therefore, authored by a corporate entity ) or is authored by an individual creator also affects issues such as the term of the copyright or the potential existence of “moral rights” in the work.

Perhaps the greatest impact of determining whether a work is made for hire is the ability of the individual creator to claw back an assignment of rights in the work after a period of time, known as a statutory right of reversion. Works made for hire are not subject to rights of reversion, and the consequences of that determination can be enormous to both the creator and the hiring party. We’ll discuss rights of reversion in a future post . . . Until then, keep creating!