PLAYBOY AND THE WORK MADE FOR HIRE AGREEMENT 

IVAN HOFFMAN, B.A., J.D. 

 


Here is the situation: you've been requested to: 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 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 "Helpful 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 vs. Dumas, 53 F.3rd 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.

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."
This would seem to indicate that the creator and the commissioning party both had to understand, before the work was commenced, that the work was going to be done as a work made for hire for the commissioning party. 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.

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 the question of 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 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 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 does not exist if the original agreement was as a work made for hire. ( Read “Terminations of Transfers”) 

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.  Additionally there may be these or other issues presented by the laws of other states and other federal laws.  However, since this article is really about the intellectual property issues presented by work made for hire agreements, I will not discuss these said insurance and other issues. You should consult with an attorney who handles employment and insurance or other type of law dealing with those other issues.

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.  This article is not intended to be exhaustive of all the issues involved in this topic.

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

© 1997 Ivan Hoffman.  All rights reserved.

****************

This article is not intended as legal advice and is not 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.  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 law.  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.

****************

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

FOR MORE INFORMATION:

EMAIL

Where Next? 

 

Ivan Hoffman Attorney At Law || More Helpful Articles For Writers and Publishers|| More Internet and Electronic Rights Articles|| More Articles for Recording Artists and Song Writers || More Articles for Web Site Designers and Site Owners || Home