WHO OWNS THE COPYRIGHT TO THE WORK I’VE CREATED?
Copyright 2007 Ira C. Selkowitz
Here’s a hypothetical fact situation that many of my students find applies to them or to artists they know in some form:
The Dead Canaries are a musical group based in Denver, Colorado. They hired Artistic Angela to take photographs of the Pacific Ocean for the group’s first CD cover. Angela is a college student and she owns her own camera equipment and is starting to recruit clients in the music industry so that she can start her own photography business after she graduates.
The Dead Canaries gave Angela the following instructions: “Take a photo of the Pacific Ocean at sunrise or sunset and make it really cool.” All of the communications between Angela and The Dead Canaries were verbal; nothing was put in writing. Angela gave the group a read-only disc with 50 different photos she took of the Pacific Ocean so that they could select which photo they wanted to use. Angela did not ask or expect that the disc would be returned to her. The Dead Canaries used one of the 50 photos for their CD cover and did not alter or tweak Angela’s photo in any way.
When she agreed to take the photo for the CD cover, it seemed to Angela that the members of the group spent more time dreaming about how they were going to be big stars one day, and less time actually performing and finding ways to further their career. They planned to press 1,000 units of their first CD and Angela accepted a flat fee of $100.00 to take the photographs for the CD cover. Angela accepted this low fee because she needed to build up her portfolio and because it didn’t seem to her that the band was going to make it very far in the music business. In fact, she thought they would be lucky to sell even 1,000 units of their CD.
Well, as it turned out, the members of The Dead Canaries decided to quit their day jobs and devote themselves wholeheartedly to “making it” in the music business. They went on several tours in clubs around the country and found an independent distributor for their CD. To date, the CD has sold 50,000 units (after numerous re-pressings) and The Dead Canaries’ fans like the cover of the CD so much that Angela’s photo now appears on Dead Canaries’ t-shirts that sell for $25.00 each and posters for $10.00 each.
Angela does not receive a portion of the income from CD sales or the group’s merchandise; in fact, all she ever received was the initial $100.00 fee to take the photo for the CD cover. When she demanded that The Dead Canaries stop selling merchandise with her photo of the Pacific Ocean and that they pay her additional money for the sales of CD’s over 1,000 units, the group responded that “we already paid you and we give you credit on the CD, t-shirts and posters and you gave us the CD, so we own all the rights” to the photo. Angela would like 1) to receive additional compensation from the group, 2) control over how the photo is used and 3) to sell the photo on posters herself (without using the group’s name or the members’ photos), keeping all of the income from poster sales.
Who has a better right to use the photo of the Pacific Ocean and to proceeds from such use? In other words, who owns the copyright to Angela’s photo?
Determining who owns the copyright to a photo or other copyrighted work (such as a song, book, play, or sound recording) is crucial because a copyright owner has the ability to control the use of the work and to receive the economic benefits from use of the work. For instance, the owner of the copyright to a photograph has the exclusive right (over anyone else) to reproduce, distribute, change (make a “derivative work”) or publicly display the photograph.
Under the Copyright Act of 1976, the owner of the copyright is the author of the work. Who is the “author” of Angela’s photograph? If Angela is the author of the photograph, she would have the exclusive right to reproduce and distribute that photograph on CD’s, t-shirts, posters, and in other ways and to receive compensation for such uses.
If, however, the photograph is considered a work made for hire, then the hiring party (the musical group) is considered the “author” and would own the copyright. The term “work made for hire” has a very specific meaning; it does not apply to all works created for a fee. Determining whether a work is a “work made for hire” requires an analysis of the working relationship between the artist and the hiring party.
Many work made for hire relationships are created because the parties are in an employer/employee relationship. A work created within the scope of an employee’s duties is considered a work made for hire, and the employer owns the copyright to the work, unless there is a written agreement to the contrary.
If Angela was legally considered an employee of The Dead Canaries, and if she took the photograph in the “scope of her employment,” then The Dead Canaries would own the copyright to the photo. If Angela was legally an independent contractor, then she would own the copyright to the work. Thus, it is very important to determine if the person creating the work is an employee or independent contractor of the hiring party.
As I explain in this article, it appears that Angela was an independent contractor and that she owns the copyright to the photograph. Unfortunately, however, because Angela and The Dead Canaries did not put their agreement in writing, the extent of the rights of the band to use the photograph is unclear.
The United States Supreme Court, in a seminal 1989 case, set forth a non-exhaustive list of factors to consider when determining whether someone is an employee or an independent contractor in a copyright dispute. Although no one factor can answer the employee v. independent contractor question, perhaps the most important factor is the “right to control the manner and means by which the product is accomplished.” Other factors include 1) the degree of skill required to accomplish the job, 2) whose tools and equipment are used, 3) the location of the work, 4) the duration of the relationship between the parties, 5) whether the hiring party has the right to assign additional projects to the hired party, 6) who sets the hours of work, 7) whether the hired party is paid a salary or a flat fee, 8) the hired party's role in hiring and paying assistants, 9) whether the work is part of the regular business of the hiring party, 10) whether the hiring party is in business and has other clients, 11) the provision of employee benefits; and 12) whether wages are withheld from the hired party’s pay for the purposes of income tax, social security and Medicare.
Applying these factors to Angela’s situation, Angela seems to be an independent contractor. The Dead Canaries gave her very little guidance or direction and merely instructed her to “take a photo of the Pacific Ocean at sunrise or sunset and make it really cool.” Thus, it cannot be said that the group gave itself a right to control the “manner and means” of taking the photograph. Also, Angela used her own camera equipment, presumably set her own hours, and did not work at the group’s business location. She was paid a flat fee for a one-time job that requires a skill that she, and not the group, has. Angela is also recruiting other clients for her business and is not dependent on The Dead Canaries for her livelihood.
In situations such as this one, however, even an independent contractor may be engaged in a “work made for hire” arrangement in which the hiring party owns the copyright. But, this can only be the case if the work is one of nine types of works commissioned by the hiring party and if the parties agree in writing that the work shall be classified as a “work made for hire.” This method of creating work for hire does not apply in the Angela/Dead Canaries scenario for two reasons. First, no written agreement was made between Angela and The Dead Canaries and secondly, the photograph is not one of the nine types of works that the Copyright Act provides can be a work made for hire even if created by an independent contractor. Those nine types of works are:
- a contribution to a collective work
- a part of a motion picture or other audiovisual work
- a translation
- a supplementary work
- a compilation
- an instructional text
- a test
- answer material for a test
- an atlas
In all collaborative situations, the parties should also be aware that a court may construe the parties as “joint authors.” If The Dead Canaries’ instructions were more detailed, they might have been able to assert that they owned a share of the copyright with Angela, because they were involved in the creative process and were joint “authors” of the photograph. Thus, in all collaborative endeavors, it is very advisable for the parties to put the nature of their working relationship in writing. This written agreement could indicate that the parties are not joint authors and that only one party owns the copyright. If an agreement for joint authorship is made, the agreement should specify the relative percentage ownership shares of the joint authors, and the ground rules for granting others permission to use the copyrighted work. In other words, if the photograph would be used on a poster, do all of the joint authors have to agree to the terms of such use?
If The Dead Canaries wanted to be the sole owners of the copyright to the photograph, they should have taken an “assignment” of the copyright. An assignment is a transfer of ownership of the copyright and, under the Copyright Act, an assignment must be in writing to be enforceable. Creators should always be cognizant of the meaning of the word “assignment” in a contract because it divests the creator of ownership and the right to control how the work is used. Many times, if the terms of the assignment are favorable, a creator of a work of authorship may assign his or her copyright in return for a continuing share of income from use of the work. (Creators may regret assigning a copyright in return for a flat fee if the work has the potential to generate income for years to come.)
Whether a creator is in a work made for hire relationship or has assigned his or her copyright, the result is similar – the creator does not own the copyright. Many companies retaining the services of an artist prefer to classify the artist’s work as a “work made for hire,” rather than taking an assignment of the work. Under the Copyright Act, an assignment of copyright can be terminated by the assignor (the person making the assignment) during a five-year window beginning with the 35th anniversary of the assignment. This termination right must be signed and sent by the copyright owner(s) at least two years, and not more than ten years, before the effective date of the termination. [If the assignment covers the right to “publish” the work, the 35-year period is measured from the date of publication by the assignee. “Publication” under the Copyright Act is the sale or offer to sell the copyrighted work.]
There is no right of “termination” in a work made for hire relationship. In a work made for hire situation, the creator of the work never owned the copyright and therefore has nothing to seek back, because the hiring party is considered the “author” of the work from the moment the work is created. Thus, hiring parties prefer to designate a work as a “work made for hire,” rather than an assignment, since there is no prospect of losing the copyright in the future.
Often, works are designated as “works made for hire” even in situations in which the creator is not an employee and has not created one of the nine types of commissioned works. In the event of a dispute, a court will not look at “form over substance.” Instead, the court will examine the parties’ relationship and determine the copyright ownership based not solely on what their contract states (the “form”), but on the totality of circumstances (the “substance”) in the situation. Thus, it would behoove hiring parties who want to classify a work as a “work made for hire” to only do so if the facts would justify that classification and, in any event, to include language providing that the creator of the work “assigns” all right, title and interest in and to the work (including the copyright) in the event the work is deemed to not be a work made for hire. In this way, the hiring party would at least be entitled to ownership of the copyright for 35 years.
The right to terminate the assignment at the appropriate 35th anniversary of the assignment cannot be waived or given up by the assignor and such a waiver clause in a contract will be void and unenforceable. Can an assignor terminate the assignment before the 35-year period has elapsed? Yes, if the contract of assignment gives an earlier right of termination or, perhaps, if the assignee has materially breached the terms of the assignment (such as by failing to pay royalties when due). To eliminate doubt as to whether the breach is “material,” the contract of assignment should clearly define grounds that would give a right to terminate the assignment before the applicable 35 year period. Such grounds could include the assignee’s failure to pay royalties, cessation of business by the assignee, or resignation of a particular “key” employee of the assignee.
In conclusion, it seems that Artistic Angela is the sole owner of the copyright to the photograph she took. She was not in a work made for hire relationship with The Dead Canaries and their degree of creative input does not justify a claim of joint authorship. Furthermore, The Dead Canaries did not take an assignment of the copyright, which can only be accomplished in a written document, signed by the assignor. There is, however, an open question as to how far Angela’s rights and The Dead Canaries’ rights extend. Did their oral agreement only cover the CD and not other merchandise? How long do their rights last?
What if Angela would like to produce posters and t-shirts using her photo? Without a written agreement, the band could not claim “exclusive” rights to use the photo. (Exclusive “licenses,” or permissions to use, must also be in writing).
The real lesson in this situation is to get a written contract at the outset of the business relationship. Artists have a harder time securing written contracts than many other professionals because artists are expected to be laid-back, easy-going and generally unconcerned with business matters. Thus, when an artist seeks a written contract, they may be perceived as pushy and overly aggressive. Sometimes, the artist will be told "if you don't trust me, maybe we shouldn't do business together. And I’ve got people lined up at the door that would kill for this opportunity." What's the best answer to this remark? I propose "I think you're right. Let’s not do business. See you later."
In today's complicated, high-tech business world, no professional should be embarrassed to ask for a written agreement. Written contracts, if carefully drafted, may eliminate future misunderstandings concerning the provisions of the parties’ agreement. A written agreement also has a psychological effect - you are much less prone to ignore or deny an agreement if it's on paper.
In my next column, I will describe a case that illustrates the risks inherent in not getting your agreement in writing.
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