THE WORK MADE FOR HIRE AGREEMENT: Further Issues  

(Revised 2018)

Ivan Hoffman, B.A., J.D.

   

   Here is the situation:  you’ve been requested to: 

·         write a book or a chapter in a book or

·         design a web site or

·         design a book cover or

·         write a song for a television show or motion picture or

·         record a master recording or

·         create any other sort of work of art 

          and you’ve been asked to do any of the foregoing as a “work made for hire.”  Further, you are an independent contractor and not an employee of the person commissioning the work.  The rules are different for an employer-employee situation and this article does not deal with those situations.  You’re all excited about the prospects so you begin your work based upon the conversations with the person engaging your services even before a contract is presented to you and certainly before it is actually negotiated and signed.  When you’ve either completed your work or are in the midst of it,  the contract arrives and you sign it. 

          Here are the questions: what have you signed?  What have you given away?  Is the “work made for hire” agreement that you signed valid?  (For more information about the technical legal requirements for work made for hire agreements, read the article on my site with that title.  Click on “Articles for Writers and Publishers.”)

 The Case Authority

         Despite the fact that this situation arises quite frequently in all of the above circumstances and more, there is a scant body of law in response to these questions.  And what law there is is in conflict and the United States Supreme Court has yet to hear a case to resolve that conflict.  

         On the one hand, there is the case of Playboy Enterprises, Inc. v. Dumas, 831 F. Supp. 295, 308 (S.D.N.Y.), opinion modified on reargument, 840 F. Supp. 256 (S.D.N.Y. 1993), and aff'd in part, rev'd in part, 53 F.3d 549 (2d Cir. 1995) in which the litigants were fighting over the rights to the work of the artist Nagel.  In that matter, the artist had done many drawings and paintings that were published in the magazine.  This was all done without a formal agreement, the only indication as to the rights transferred being the legends on various checks, all of which were endorsed after the works had been delivered.

       The relevant language of the statute for purposes of this case states: 

if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. 

       That would seem to indicate, grammatically, that the agreement had to have been signed before the creation of the work. 

        In that case the Court held that: 

“We therefore find that the 1976 Act requires that the parties agree before the creation of the work that it will be a work made for hire. We are not convinced, however, that the actual   writing memorializing the agreement must be executed before the creation of the work.”

         So the Court agreed that the parties had to have an understanding and agreement before the work was done that it would be done as a work made for hire.  However, that Court indicated that the actual execution of the written agreement embodying that understanding did not have to take place until a point after the work was commenced as long as that writing embodied the original understanding. 

         In another New York case, The Estate Of Stanley Kauffmann vs. Rochester Institute Of Technology et. al., No. 17-CV-6061-CJS-MWP United States District Court, W.D. New York, the trial court was faced with a similar situation to that in Playboy. The writer, Stanley Kauffmann, had written many movie review articles for “The New Republic” magazine going back many years.  There was a republication of these articles and the Estate brought a copyright infringement suit against the party that republished them.  The party claimed that by virtue of a letter agreement entered into in 2004, long after the reviews were written, Mr. Kauffmann had agreed that all the reviews had been written as a work made for hire for the magazine and thus the Estate was not the copyright proprietor and thus had no standing to bring suit for the claimed infringement. 

        The Estate tried to legally challenge the validity of the 2004 agreement but the Court ruled that because the writing was legally clear, no evidence varying the terms of the agreement could be introduced.   The Court analyzed the agreement and compared it to the “agreements” in the Playboy case (see below).   In the end, the Court ruled that the Playboy case was determinative of the issue and found the transfer as a work made for hire was valid. 

        But in Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410 (7th Cir.1992), that Court held that in order to be a valid work made for hire agreement the parties not only must have agreed before the work was commenced that the transfer of rights would be as a work made for hire but, more importantly, the actual agreement must have been signed by the parties prior to work having been even commenced. 

       Thus, in my examples above, were the situation to be determined under the law as set forth in the Schiller case, the results might be entirely different than had the Playboy rule been applied.  Which law applies depends primarily on under which law the contract is to be interpreted.

        Therefore, the issue is presented as to exactly when the agreement defining the work made for hire must be entered into.  If the work has already been commenced before the agreement is signed, in certain parts of the United States the parties run the risk of having the agreement be deemed not a work made for hire. 

        While in the ideal situation the parties do no work until the document is fully negotiated and executed, making sure of course that the transaction itself fits within the statutory requirements for a work made for hire, what seems the more commonly encountered situation is where the creator begins to work on the project while the contract is being prepared.  Thus, if the horse has already left the barn and the work has already been commenced, the parties must address this potential problem in the contract itself.  The issues raised in these cases have to be addressed by specific language in the agreement or else the parties run the risk of not having created a valid work made for hire contract.  And even with such specific language, courts are likely to look to the facts of the transaction instead of that language and thus there is no guarantee that any such language will be legally effective. 

The Sufficiency Of The Writing 

        In Playboy, the court also discussed what is or is not a sufficient “writing” in order to qualify as a work made for hire agreement.     

        Often it appears that the law requires that certain “magic words” be used in order to achieve a given result.  The rules regarding work made for hire agreements are just such a situation.   

        The copyright statute (17 USC § 101) specifically requires that “the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.” 

        The Court reviewed the legislative history to explain the reasons behind this requirement.  Since the legal concept of a work made for hire results in the loss of virtually all rights in the creator of the work, the drafters of the legislation wanted to be certain that the parties understood and in this instance, “expressly agree” in a writing that the work was being created as a work made for hire. 

         In the Playboy case, there was no formal contract and the only writings that existed relative to the claims of rights ownership were a series of checks that bore various legends at various times. 

         The Court held as follows: 

“1. Legend A 

Legend A was stamped on the back of the checks issued from 1974 through July 1979.  The legend reads: 

Any alteration of this legend agreement voids this check. By endorsement of this check, payee acknowledges payment in full for the assignment to Playboy Enterprises, Inc. of all right, title and interest in and to the following items: [a description of a painting followed].  

This agreement does not mention a work-for-hire relationship. It only mentions an “assignment.”  It does not, therefore, satisfy the writing requirement of § 101(2) that “the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”  Therefore, the works created between January 1, 1978 (when the 1976 Act became effective) and July 1979 are not works for hire.”

        The Court went on to examine the other legends as follows: 

“2. Legends B & C 

In contrast to Legend A, Legends B and C each contain language sufficient to meet the writing requirement of § 101(2). Legend B, which was stamped on checks issued between September 1979 and March 1981, reads: 

Any alteration of this legend agreement voids this check. BY ENDORSEMENT, PAYEE: acknowledges payment in full for services rendered on a work-made-for-hire basis in connection with the Work named on the face of this check, and confirms ownership by Playboy Enterprises, Inc. of all right, title and interest (except physical possession), including all rights of copyright, in and to the Work. (Emphasis added.)  

Legend C, which was stamped on the checks issued between March 1981 and May 1984, reads: 

Any alteration of this legend agreement voids this check. IT CONTAINS THE ENTIRE UNDERSTANDING OF THE PARTIES AND MAY NOT BE CHANGED EXCEPT BY A WRITING SIGNED BY BOTH PARTIES. BY ENDORSEMENT, PAYEE: acknowledges payment in full for the services rendered on a work-made-for-hire basis in connection with the Work named on the face of the this check and confirms ownership by Playboy Enterprises, Inc. of all right, title, and interest (except physical possession), including all right of copyright, in and to the Work. (Emphasis added.)  

Since Legends B and C contain essentially identical language confirming that services were rendered by Nagel on a work-for-hire basis, they meet the statutory writing requirement if they were signed by both Playboy and Nagel and if Playboy can show that the parties had an understanding, before the creation of each work, that the works were to be made for hire.” (emphasis added) 

         Therefore, we can probably conclude from the decision that any writing must specifically mention the words “work made for hire” and reflect the express agreement that the parties intend the writing to be a transfer of rights under the work made for hire doctrine.  This latter point about the writing being a reflection of the original understanding, requires a determination about what was the intention of the parties at the time the work was commenced and is there a sufficient writing to satisfy the language of the statute. 

        What was or was not the understanding of the parties is a question of fact to be determined in each case.   

“Specially Ordered and Commissioned” 

        There were other issues covered by the Playboy Court that also are required to determine the validity of the work made for hire agreement.  One of those issues was the meaning of the term “specially ordered and commissioned.”    

        The Court found that that term requires that the party requesting the work, in this instance Playboy, had to have expressly asked for the work to be done.  The work had to be done under the direction and supervision of the party requesting the work and the request by that party had to be the “motivating factor” in having the work done.  In other words, would the work have been created except for the request by the commissioning party?   

        Thus, you probably cannot have a valid work made for hire agreement that seeks to acquire a work that had already been created before the relationship between the commissioning party and the creator was established.  This, because the work was not created at the specific instance and request of the commissioning party.   

        These are all questions of fact that can only be resolved on a case by case basis.  

Who Cares? 

        The difference between a work made for hire and a grant of all rights not in the form of a work made for hire can be quite significant.  In a work made for hire, the commissioning party is deemed the author of the work and owns all the rights, including all rights in copyright, throughout the world, for the duration of the copyright.  The creator of the work under this doctrine has no rights to her or his creation except what rights the contract itself may have carved out. 

        Perhaps of equal or even greater importance lies in difference in the right of termination of the original transfer.  This right, which as to agreements entered into after January 1, 1978 commences 35 years after the publication or 40 years after the date of the agreement and is subject to a significant number of rules including different rules for agreements entered into prior to January 1, 1978--read “Terminations of Transfers” -- does not exist if the original agreement was as a work made for hire.  I realize that many readers will be unable to fathom what may happen in 35-40 years but since many copyrights can retain their value for far longer than that, the value of this right of termination can be quite significant. 

        It is the party with vision that understands that how a deal is structured today can have long term implications. 

Conclusion 

        NOTE: there are issues related to work made for hire agreements under California law related to both worker’s compensation insurance and unemployment insurance and whether a party executing such an agreement is an “employee” for those purposes.   Read “The Stupidest Law Ever Enacted.”

        You should never use a “standard form,” “boilerplate” work made for hire agreement since, as you can see, there are some significant technical and in turn legal issues that turn on whether your choice is the correct one.  And in the situations described in this article, a few missing words here or there can have totally different consequences than you might intend.  If you are wrong, the results can be costly. 

        Additionally, the situation must be one of those in which a work made for hire agreement is even permissible and this must be analyzed carefully.  In the Kauffmann case, the court concluded that the articles were “contributions to a collective work.”  This article is not intended to be exhaustive of all the issues involved in this topic.  Read “Work Made For Hire Agreements.”    

        You should seek the advice of an attorney familiar with the issues. 

Copyright © 1997, 2018 Ivan Hoffman.  All Rights Reserved. 

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This article is not legal advice and is not intended as legal advice.  This article is intended to provide only general, non-specific legal information.  This article is not intended to cover all the issues related to the topic discussed.  You should not rely on this article in any manner whatsoever and you should not draw any conclusions of any sort from this article.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  This article is based on United States laws but the laws of other countries may be different.  You should consult with an attorney familiar with the issues and the laws of your country.  This article does not create any attorney client relationship and is not a solicitation.  

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No portion of this article may be copied, retransmitted, reposted, duplicated or otherwise used without the express written approval of the author.


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