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Legalities 4: What is Work Made For Hire?

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?

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.

What should you do if you are asked to sign a work made for hire contract?

When you are asked to sign a work made for hire contract, you might first consider whether the situation meets the statutory requirements to qualify as work made for hire. Frequently for graphic designers, the answer is arguably no. As noted above, many contracts have old “boilerplate” work for hire language that is no longer viable. You can explain to your client that the work made for hire language may not be valid, and it would be better to use language that is legally sound and relevant to the client’s specific intentions for use of the artwork. Then have a discussion about the client’s intentions and negotiate license provisions to grant rights in your work which match those intentions.

There are a few situations when it would be appropriate for your client to own copyright in your work, for example, if you are doing a logo or corporate identity package (see discussion in Legalities 1 under the subhead: When should a client own your copyright?). However, even when it is appropriate for your client to own the copyright, it is better to transfer the copyright by assignment language rather than through work made for hire language.

Short of a full assignment of rights, you will be negotiating a copyright license. License agreements are very fact specific and must be carefully drafted for the particular project. Its best to have a lawyer help you with the drafting. As a general guideline, here are some examples of potential arrangements that you can suggest as alternatives to a work made for hire contract (beginning with the most favorable to artists and ending with the most favorable to clients).

License exclusive rights for first use. For example, if the assignment is to create an illustration for the cover or editorial content of a national magazine, tailor the license to grant exclusive but limited publication rights for that purpose, within the magazine’s geographic territory and for a limited time. The rights might be for first print publication only, or you can include simultaneous online publication.

Set additional fees for additional uses. If your client thinks it might want to publish the work again in other venues or at a later date, negotiate a separate payment schedule for such potential additional uses. This is beneficial to your client because it locks in the client’s rights to use your work again, but it need not pay for those rights unless it actually republishes the work.

License all rights for a limited time. If your client insists that it need full rights to your work rather than a usage fee arrangement, negotiate to provide such rights for a limited time period. The time period should rationally reflect the client’s potential market for your work. At the end of that time, all rights would revert to you.

Assign all rights for higher compensation. If none of the above suggestions work, and your client insists on transfer of all copyright for an unlimited time, negotiate for an assignment (not work for hire) and a higher fee in consideration for such a drastic loss of your copyright. If you meet resistance, remind your client that it is asking for essentially the equivalent of rights it would have in an employee’s work product, without bearing the expense of ongoing employee salaries, benefits, office space and equipment, all costs which you as a freelancer must cover for yourself. By giving the client copyright ownership, you are giving up any rights to future income from that work. The assignment fee should compensate not only for your current effort, but also that loss of future income and the risks and overhead you bear as part of your freelance status.

In any event, always explicitly condition any assignment or license of copyrights upon full payment of the compensation due to you under the contract. It is very important to ensure that legally, your copyright does not transfer until you are paid. When a copyright assignment or license is not conditioned on payment, the courts have held that the rights under copyright were already effectively transferred when the contract was signed. That eliminates your ability to claim that continued use of your artwork without payment constitutes copyright infringement. Instead, your only recourse is a claim for breach of contract to get the fees paid. Unlike copyright infringement, breach of contract does not entitle you to an injunction preventing further use of your work, statutory damages or attorneys’ fees (see Legalities 1, subhead: Register your copyrights!) Thus, conditioning the copyright assignment or license upon full payment ensures that you’ll be in the best bargaining position in the unfortunate event that your client fails to pay you.

Finally, its always a good idea to include an explicit provision preserving your right to show your artwork for self-promotional purposes, especially in a work made for hire contract, or if you are assigning copyright or granting an exclusive license to your client.

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You are invited to submit questions for upcoming Legalities columns. Please send your questions to .

Legalities is a service mark of Linda Joy Kattwinkel. © 2003 Linda Joy Kattwinkel. All Rights Reserved. The information in this article is provided to help you become familiar with legal issues that may affect graphic artists. Legal advice must be tailored to the specific circumstances of each case, and nothing provided here should be used as a substitute for advice of legal counsel. Linda Joy Kattwinkel is an attorney, painter and former graphic artist/illustrator. She practices intellectual property law, arts law and mediation for artists with the firm Owen, Wickersham and Erickson in San Francisco. She can be reached at 415-882-3200 or .

An archive of previous Legalities articles is available at Linda Joy’s website.

1 Comment

On 27 Mar 2012 @ 2:17am, 2:17am Reid Walley wrote:

As a freelance Website designer in California, am I considered part of “a contribution to a collective work” if I design a Website (sketches, wireframes, prototype, graphics, icons, CSS stylesheet), but then also coordinate with the company’s programming development team to complete the finished Website?

IE: is my contribution automatically a Work For Hire under the “contribution to a collective work” even if I’m not an employee? To clarify: I have not signed a Work For Hire agreement.

Thanks.

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