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Published: 2008-03-26

Ownership of Copyrights



These materials cover the Copyright Act's ownership rules, and, in less detail, the ownership rules for patents, trademarks, and trade secrets. Ownership rules discussed here apply only in the United States (other countries have their own rules of intellectual property ownership).

Understanding the Copyright Act

If you are a multimedia developer or publisher, you should become familiar with the Copyright Act's ownership rules. Multimedia works and many of their components - music, graphics, text, software, and video, film, and television show clips - are protected by copyright. If you fail to deal with ownership issues while creating a multimedia work, you may not have clear title to the work and all its components. If there is uncertainty concerning your title to the work, it may complicate distribution of the work.
Example: April hired Don, a freelance software designer, to develop the software for April's multimedia work. April and Don did not discuss who would own the copyright in the software. According to the Copyright Act's "default" rule for works created on commission by independent contractors, Don owns the copyright in the software.

The Copyright Act's default rules on ownership apply if the parties - employer and employee, employer and independent contractor, developer and client, or developer and publisher - do not reach their own agreement on ownership. Those rules are discussed in "Initial Ownership" and "The Work Made for Hire Rule" in this chapter.

Initial Ownership

Ownership of copyright initially belongs to the author or authors of the work.
Example: Sarah, a photographer, took a photograph of the Lincoln Memorial. Sarah is the author of the photograph and the initial owner of the copyright in the photograph.

The "author" is generally the individual who created the work, but there is an exception for "works made for hire." This exception is discussed in the next section.

The Work Made for Hire Rule

The "author" of a work made for hire is the employer or hiring party for whom the work was prepared. This default ownership rule is known as the work made for hire rule. Unless the parties have agreed otherwise in a signed written document, the employer or hiring party owns the copyright of a work made for hire.

There are actually two branches to the work made for hire rule: one covering works made by employees, and one covering specially commissioned works. We discuss these in this section.

Works Made by Employees
A work created by an employee within the scope of his or her employment is a work made for hire. The employer for whom the work is made is the "author" of the work for copyright purposes and is the owner of the work's copyright (unless the employee and employer have agreed otherwise).

Example: As part of his job, John, an employee of Big Co.'s training division, created a training film using Big Co.'s facilities. Even though John created the film, Big Co. is the author for copyright purposes. Big Co. owns the copyright in the film (unless John and Big Co. have agreed in a signed contract that John owns the copyright).

The work made for hire rule does not give employers ownership of works made by employees outside the scope of their employment.

Example: Darryl, an engineer at Productions, Inc., wrote the script for Productions' newest multimedia work on his own initiative on weekends. Because Darryl did not write the script within the scope of his employment, the work made for hire rule does not apply. If Productions wants ownership of the copyright in the script, it must get an "assignment" (discussed in "Assignments," later in this chapter) from Darryl.
Specially Commissioned Works
The second category of works made for hire is limited to eight types of specially ordered or commissioned works. These are works commissioned for use as:
  • A contribution to a collective work.
  • Part of a motion picture or other audiovisual work.
  • A translation.
  • A supplementary work.
  • A compilation.
  • An instructional text.
  • A test or answer material for a test.
  • An atlas.

For these types of works, if the hiring party and independent contractor creating the work agree in writing to designate the work as a work made for hire, the work is a work made for hire. If the parties do not have an agreement to treat the independent contractor's work as a work made for hire, it's not a work made for hire.

Example: April hired Don, a software developer, to design the software for April's multimedia work. April and Don did not agree in writing to consider the software a work made for hire, so the software is not a work made for hire. Don owns the copyright in the software.

Even if the hiring party and independent contractor agree in writing to consider the independent contractor's work a work made for hire, the work is not a work made for hire unless it falls into one of the eight special categories listed in the first paragraph of this subsection.

Example: Sarah commissioned John, a freelance painter, to do an oil painting of Sarah's home. Although Sarah and John agreed in writing that the painting would be considered a work made for hire, the written agreement does not make the painting a work made for hire because the painting is not in one of the eight categories of works that can be specially commissioned works made for hire.

The rules governing ownership of copyrights in works created before January 1, 1978 (the effective date of the Copyright Act of 1976), were different from the rules described in this chapter. The 1909 Copyright Act did not distinguish between employees and independent contractors (works created by both independent contractors and employees were automatically owned by the employer or hiring party unless the parties agreed otherwise). In a 1989 case, Community for Creative Non-Violence v. Reid, the U.S. Supreme Court made it clear that the current Copyright Act does distinguish between employees and independent contractors.

The issue in Reid was who owned the copyright in a sculpture created by the artist Reid for the Community for Creative Nonviolence (CCNV). The Court concluded that the work made for hire rule did not apply for two reasons: Reid was not an employee of CCNV, and the sculpture was not one of the eight types of works that could be designated a work made for hire by written agreement of the parties.

Foreign Copyright Law
The work made for hire rule discussed in this chapter and in other chapters of this book applies to copyrights in the United States. Other countries have different rules on copyright ownership. Although many countries have rules similar to the first branch of the Copyright Act's rule (works made by employees), the second branch (specially commissioned works) is not covered by most countries' work made for hire rules.

To obtain international copyright ownership for works that fall within the second branch of the Copyright Act's work made for hire rule, parties that commission works should obtain "assignments" of copyrights (see "Assignments," later in these materials) from independent contractors.

Joint Authorship and Ownership

According to the Copyright Act, the authors of a joint work jointly own the copyright in the work they create. A joint work is defined in Section 101 of the Copyright Act as "a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole."
Example: Ann and Bruce worked together to create a multimedia work, with Ann developing the software and user interface and Bruce developing the content. The work is a joint work, and Ann and Bruce jointly own the copyright.

You do not become the author of a joint work merely by contributing ideas or supervision to a work. You do so by contributing material that meets the standards for copyright protection (see "Standards" in the Copyright Materials).

Example: Susan suggested that John write a book on how to beat the stock market, and John did so. Susan is not a joint author of John's book.

When the copyright in a work is jointly owned, each joint owner can use or license the work in the United States without the consent of the other owner, provided that the use does not destroy the value of the work and the parties do not have an agreement requiring the consent of each owner for use or licensing. A joint owner who licenses a work must share any royalties he or she receives with the other owners.

Many foreign countries (Germany and France, for example) require that all joint owners consent to the grant of a license. Generally, joint ownership is not recommended because of the complications it adds to licensing worldwide rights. In addition, it is unclear what effect the filing of bankruptcy by one joint owner would have on co-owners.

COMMUNITY PROPERTY

In nine states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin), any property acquired during a marriage is jointly owned by the husband and wife. Several years ago, a court in California held that the copyrights in several books created by a man during his marriage were jointly owned by the man and his wife. The court's reasoning - that the copyrights were community property because they were the result of one spouse's expenditure of time, effort, and skill during the marriage - could apply to patents, trademarks, and trade secrets as well.

ASSIGNMENTS

A transfer of copyright ownership is known as an assignment. When a copyright is assigned, the assignee (individual or company to whom it is assigned) becomes the owner of the exclusive rights of copyright in the protected work. (These rights are discussed in "The Exclusive Rights" in the Copyright Materials)
Example: Tom, an individual working on his own, created multimedia software and then assigned the copyright in the software to Developer. After the assignment, Developer has the exclusive right to reproduce and publicly distribute the software. If Tom starts selling the software, he will be infringing the Developer's rights as copyright owner.

The ownership of copyright may be transferred in whole or in part. Examples of partial transfers are an assignment of the copyright for a term of 10 years (time limitation) and an assignment limited to California (geographic limitation). In addition, the individual exclusive rights (reproduction, modification, and so forth) can be transferred.

Assignments are common in many industries - for example, music composers often assign copyrights in their compositions to music publishers.

An assignment is not valid unless it is in writing and is signed by the owner of the rights conveyed or the owner's authorized agent.

An assignment can be recorded in the Copyright Office to give others "constructive notice" of the assignment. Constructive notice is a legal term that means you are presumed to know a fact (because it is a matter of public record) even if you have no actual knowledge of the fact.

Recording an assignment in the Copyright Office to give constructive notice protects the assignee from future conflicting transfers. An assignment that is recorded properly within one month after its signing prevails over a later assignment. If the assignment is signed outside the U.S., the assignee has two months to record it.

Example: Songwriter assigned the copyright in her song to Music Publishing Co. in Boston on August 1, 1993. On August 15th of the same year, Songwriter assigned the copyright in the same song to Media Enterprises. So long as Music Publishing Co. recorded its assignment properly in the Copyright Office by September 1, Music Publishing Co. owns the copyright because its assignment prevails over Songwriter's later assignment to Media Enterprises.

A properly recorded assignment even prevails over an earlier assignment that was not recorded if the later assignment meets two criteria:

  1. The later assignment was taken in good faith and without notice of the earlier assignment.
  2. The assignee paid money or something of value for the assignment or made a promise to pay royalties.
Example: Author assigned the copyright in his novel to Publishing, Inc. on November 1, 1993. Publishing, Inc. did not record the assignment. On January 15, 1994, Author assigned the copyright in the same novel to Media, Inc. for $10,000. Media, Inc. recorded its assignment in the Copyright Office. So long as Media, Inc. acted in good faith and did not know or have reason to know about Author's 1993 assignment to Publishing, Inc., Media, Inc. owns the copyright. The assignment to Media, Inc. prevails over Author's earlier assignment to Publishing, Inc.

Licenses

A license is a copyright owner's grant of permission to use a copyrighted work in a way that would otherwise be copyright infringement. A copyright owner who grants a license is known as a licensor. A party receiving a license is known as a licensee.

Implied in every license is a promise by the licensor to refrain from suing the licensee for infringement based on activities within the scope of the license.

A copyright license can be exclusive or nonexclusive. An exclusive license is a license that does not overlap another grant of rights.

Example: Author granted Publisher the exclusive right to sell Author's novel in the United States. She granted Movie Developer the exclusive right to create and distribute a movie version of the novel. Both Publisher and Developer have exclusive licenses. There is no overlap between the two licenses.

Under copyright law, an exclusive license is considered a transfer of copyright ownership. An exclusive license, like an assignment, is not valid unless it is in writing and signed by the owner of the rights conveyed. A nonexclusive license is valid even if it is not in writing.

An exclusive license, like an assignment, can be recorded in the Copyright Office to give constructive notice. Recording the exclusive license protects the license against unrecorded earlier transfers of copyright ownership and against later transfers. (See "Assignments," earlier in these materials.)

Termination Right

The author of a work other than a work made for hire has the right to terminate any license or assignment granted on or after January 1, 1978 during a five-year period that starts 35 years after the grant was made. If the grant involves the right to distribute the work to the public, the termination period begins 35 years after distribution begins or 40 years after the grant was made, whichever is earlier. For works published before January 1, 1978, the five-year termination period begins fifty-six years after the work was first published.

The termination right cannot be waived in advance. If the author dies before the termination period begins, the termination right can be exercised by the author's widow or widower, children, and grandchildren.

Owning a Copy of a Work

Copyright law distinguishes the ownership of a copy of a protected work (a print of a photograph, a compact disc, a book, a diskette) from ownership of the intangible copyright rights. The transfer of a copy of a work does not transfer any rights in the copyright. Thus, purchasing a book (a copy of a literary work, in copyright terminology) does not give you permission to make copies of the book and sell those copies.

There are two exceptions to the preceding paragraph's first sentence. If you buy a copy of a work, you have a right to resell (distribute) that copy. This exception is known as the "first sale doctrine." You also have the right to display your copy publicly, "either directly or by the projection of no more than one image at a time, to viewers present at the place where the copy is located." These two exceptions do not give you any right to exercise the copyright owner's reproduction, modification, or public performance rights. (The five exclusive rights are discussed in "The Exclusive Rights" in the copyright materials).

Example: Don bought a copy of Publisher's multimedia work. Don can resell his copy of the work. The "first sale doctrine" gives him that right. If he makes copies of the work, though, he will be infringing Publisher's copyright.

Patents, Trademarks, and Trade Secrets

Patent law does not have a work made for hire rule. Patentable inventions created by employees within the scope of their employment are owned by the employee. However, the employee may have a legal obligation to transfer ownership to the employer under patent law's "hired to invent" doctrine. This doctrine provides that when an employee is hired to perform research or solve a specific problem, the employer is entitled to get an assignment of a patent received by the employee on the results of the research.

Generally, as a condition of employment, employers require employees to agree to assign their interests in patentable inventions to the employer. The Patent Act implicitly recognizes the validity of such agreements, providing that a patent may be granted to the assignee of the inventor.

A trademark is owned by the first party to use it in connection with goods or services or the first to apply to register it. A trademark can be owned by an individual, company, or any other legal entity.

An employer or hiring party generally owns trade secrets developed by employees and by independent contractors who are hired to invent.

Ownership of patents, trade secrets, and trademarks, like the ownership of copyrights, can be assigned. As with copyrights, owners of these types of intellectual property frequently grant licenses authorizing others to do things that would otherwise violate the owner's exclusive rights.