MJ Bogatin (“Bo”) of Bogatin, Corman & Gold, is an Arts and Entertainment Attorney in San Francisco. He is also Co-President of California Lawyers for the Arts. www.calawyersforthearts.org Bo is available to answer some of your questions surrounding the business of Art Licensing. - THANKS BO!
“Work Made for Hire” is a term of art – in law. It is hugely important to artists providing any kind of artistic services for a client. In some instances it is fully appropriate. In most that I have seen submitted to artists as “vendors” providing services, it is not.
The nature of "work for hire" is that pursuant to the Copyright Act, 17 USC 201b, the independent contractor Artist who is providing services is not the copyright holder in her deliverable artwork. With use of those magic words in the contract, the commissioning party is deemed to own the copyright in whatever the artistic deliverable might be. The Artist’s work product, even though she is engaged as “an independent contractor,” is essentially being treated as if her work product has been created by one of the company’s own employees. It is reasonably expected that the copyright to anything an employee creates on the job for her employer is going to belong to that employer. 17 USC 201b supports that expectation as a matter of law. Work for hire applies the same proprietary interest of the employers to the work of non-employees. The Copyright Act is linked here for convenience: http://copyright.gov/title17/circ92.pdf
Employees and independent contractors are very different jobs. As an independent contractor, whether or not the Artist is working for her own business, the Artist is not receiving a salary. She must negotiate for a fee and is competing with every other independent contractor for the assignment. However, she is not entitled to the benefits that an employee receives as a matter of law in exchange for her labor. Must a non-employee Artist’s work product belong entirely to the client, including the underlying copyright and all the use rights and derivative use rights that are contained in that copyright interest? No, it need not.
As artists well know, there are 1001 uses for any one of their images. A single image can be used as print, limited edition or otherwise; as a giclee; as a card or on any paper product. It can be used in any kind of decorated merchandise, from plastic ware to bumper stickers. If the client has a single uses in mind, or a dozen, it does not necessarily mean that the Artist need give up her copyright. To the contrary, more often than not, once the issue is discussed, it may well turn out that the kind of artistic deliverable requested may not qualify as a work made for hire, and/or that an exclusive license for the client’s uses is all that they really require.
In fact, the Copyright Act provides that there are only limited kinds of works that are eligible for work for hire treatment. (See 17 USC 101 Work Made for Hire.) These include only a work specially ordered or commissioned for use in the following ways:
1 as a contribution to a collective work,
2 as a part of a motion picture or other audiovisual work,
3 as a translation,
4 as a supplementary work,
5 as a compilation,
6 as an instructional text,
7 as a test,
8 as answer material for a test, or
9 as an atlas.
The law defines a “supplementary work” as a work prepared for a publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as may appear in forewords or afterwords, or as pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes.
So, in essence, the Copyright Act looks to protect artists from being duped into giving away her copyright interest. However, if it is agreed that the artistic work involved is legitimately work made for hire, the Copyright Act further requires that the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. In the absence of such a written, signed Agreement using the magic phrase, there is a presumption that the deliverable is not work for hire and the Artist retains her copyright interest!
Assuming for the moment that the Artist’s deliverable is for one of these legitimate work for hire purposes, the Artist still need not offer it on that basis. The services need not be provided on a work for hire basis if a license of part of the Artist’s retained copyright interests will as fully meet the client’s actual needs. One way to convince a client to prefer the license is to offer a significant cost savings for the license as opposed to conveying the underlying copyright by way of a work for hire provision. I recommend a 10 to 1 ratio! The copyright “coat of many colors” can be had for a price, but is worth as much as 10 times the fee the Artist might otherwise charge for the licensed use right. That often results in a quick agreement to license the artwork in lieu of a work made for hire transaction.
If the client still insists on work for hire, here in California individual artists have another argument that typically will clinch the deal as a licensed work product instead of work for hire. The legislature in California has reasoned that if a company is going to treat a deliverable as work for hire as they would were it made by one of its own employees, the company should rightly provide to the independent contractor some of the same benefits to which its employees are entitled as a matter of law, namely Workers Compensation and Unemployment Insurance! That’s right! In California statutes provide that if work for hire is involved as part of the deliverable by a non-employee independent contractor, the company is responsible to pay into Work Comp and Unemployment Insurance policies for the service provider! (See CA Labor Code Section 3351.5c and Unemployment Insurance Section 686 linked here: http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&group=03001-04000&file=3350-3371 and http://www.leginfo.ca.gov/cgi-bin/displaycode?section=uic&group=00001-01000&file=675-687.2 )
All this said, there are caveats. (Lawyers always have “caveats”.) It may well be that a client wants an Artist to design a new logo or provide artwork the right to which they need to totally control. A logo for instance is a form of Trademark, which the client logically does not want used in any other way that might be confused with their brand with which the logo is associated. In a circumstance like this, the Artist should recognize the legitimate need, but the client should be prepared to pay accordingly for the larger rights required. If the logo does not fit naturally into one of the work made for hire categories, the copyright can still be “assigned” (sold) by the Artist in writing.
This brings me to my final comments on the subject. Companies have become so sophisticated that many will often include a provision in their Service Agreement that anticipates that if the work to be performed is not necessarily eligible for work for hire treatment under 17 USC 101, but they still want “all rights,” they will add an alternative assignment provision to the work for hire provision. It will read something like this:
All work products developed in whole or in part by Contractor for Client (the “Work Product”) including but not limited to any text and/or artwork or graphics, and any copyrights contained therein, shall belong exclusively to Client and shall, to the extent possible, be considered a work made for hire for Client within the meaning of Title 17 of the United States Code. However, to the extent that any of the materials created by Contractor in support of the project may not, by operation of law, be a work made for hire in accordance with this agreement, Contractor hereby assigns to Client all right, title and interest in and to any copyright.
In which case, the Artist is right back to looking for the much higher fee since in the application of either of these legal precepts, copyright is conveyed, and the Artist will have no further use rights whatsoever, without the Client’s permission!
If you have further questions about this that you want to direct to me personally, I can be contacted through my website linked below.
Disclaimer: The information contained in this website is not intended as legal advice. Because the law is not static, and one situation may differ from the next, we cannot assume responsibility for any actions taken based on information contained herein. Also, be aware that the law may vary from state. Therefore, this website cannot replace the advice of an experienced attorney. Receipt of this information does not create an attorney-client relationship. MJ Bogatin, Bogatin, Corman & Gold, www.bcgattorneys.com
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