Independent Contractor Redux - Make sure you own the IP!

This topic has been discussed often, but remains too often misunderstood, and the consequences of misunderstanding it are dire. So here we go.

Independent contractors are often used to obtain cost savings over hiring full-time employees. However, beware that the IP ownership of work produced by independent contractors has a counter-intuitive outcome. Under the U.S. copyright law, unless there is a written agreement stating otherwise, the copyright in work product produced by an independent contractor is owned by the independent contractor. Period. What does the employer get for all the money spent developing the next killer app? An implied license, which is a very ambiguous and undefined creature, and one which you don’t want inhabiting your IP portfolio.

The solution is a properly drafted independent contractor agreement. The agreement should contain both “work made for hire” language and assignment language. Under the “work made for hire” laws, work product produced by an employee automatically vests in the employer. If the employee is an independent contractor, then the agreement must expressly state that the work product is a “work made for hire.” However, an additional wrinkle is that under the U.S. Copyright Act software cannot be a “work made for hire” so if the work product is software, then the agreement must contain a current assignment.

There, it’s been said, again. Don’t forget!

Bottom Line: Independent contractors own the copyright in work product they create, unless a written agreement either states that the work product is a “work made for hire” or that the work product is assigned to the employer.

By William S. Galkin, Esq. | December 12, 2014
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William Galkin manages GalkinLaw. Mr. Galkin has dedicated his legal practice to representing Internet, e-commerce, computer technology and new media businesses across the U.S. and around the world. He serves as a trusted adviser to both startup and multinational corporations on their core commercial transactions.

  
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