The staid walls of academia, whether or not covered with ivy, are shaking.  The cause?  The Internet and web-based publishing and its related progeny.  I’ve spoken at a number of prominent colleges and universities about the complexities of intellectual property and Internet law in this arena and it seems clear that both faculty and administration alike are actively questioning centuries old models of their relationship.

        Everyone, it appears, has awakened from the monastic slumber that was academia.  All parties are seeking their share of the projected multibillion dollar marketplace for online education and distance learning that is expected in the next several years.

        Thus then, what are the legal and business issues both the faculty and the institution need to face so that their respective rights may be effectively exploited to both parties’ best interests?  This article deals with some of those issues in the event there is no written agreement between the parties as is too often the case.  Many of the institutions are relying on “tradition” and “custom” instead of rules of law.  As long as no one questioned those traditions and customs, it did not matter.  Today, everyone is a questioner.  The answers, however, are none too clear.

        In answering the various aspects of the puzzle, keep in mind that I do not take the position of either faculty or institution in this article.  Advocacy is reserved for my respective clients.  My role here is to explain the issues both parties must face.  And in the end, my primary responsibility is to bring clarity to the most important issue of all:  that there is an absolute and essential need to embody the myriad of provisions of their complex relationship into a valid, written and mutually executed agreement so that not only the requirements of the law are satisfied but, even if no writing is mandated by law, that the parties understand that a writing is far, far more beneficial to both parties than none at all.  In nearly 27 years of practicing law and making deals of all sorts, my experience is that it is not contracts that destroy relationships.  The things that destroy relationships are the “I thought you said that…” stuff that comes from no contracts.  A contract benefits both parties since the parameters of the deal and the respective rights and obligations of both parties are then set out for all to read.  And with any luck, the agreement will be itself readable!

        And a contract should solve more problems than it creates.  It should be thoroughly drafted so that there are no vagaries that can become the subject of litigation down the road.  By covering all the points with precision, even by making it somewhat longer than desired, it seems likely that those areas of uncertainty would be eliminated and thus resort to expensive and destructive litigation avoided.

        And beneficial relationships preserved.

The Context

        The foundational issue that the parties must face is determining who, under the law, is the owner of the rights to the faculty’s class notes and curricula (“notes” in this article for simplicity sake).   Once that determination is made, the parties can then discuss how they might alter their legal relationship so as to accomplish reaching an agreement that is mutually satisfactory.

        The basic federal copyright law dealing with course material is the United States copyright act.  Section 101 states:

A “work made for hire” is--

              (1) a work prepared by an employee within the scope of his or her employment; or

              (2) a work specially ordered or commissioned for use as a contribution to a collective work,  as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a “supplementary work” is a work prepared for 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 forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an “instructional text” is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic  instructional activities.

        Thus, the question becomes: what is the legal relationship between faculty and institution?  Keep in mind that these issues become relevant in the absence of a valid, written and signed agreement between the parties.

Faculty as Employee

        Let’s first examine the section (1) situation in which the faculty is or better still, may be an employee of the institution.

        Initially, often a person who appears to be an employee may not be.  It depends on a series of factors, many of which were articulated by the United States Supreme Court in Community for Creative Non-Violence et. al. Vs. Reid in 1989.  The situation in that case arose because the Center engaged the services of an artist, a sculptor, to create a work of art for the Center.  There was no written agreement between the parties.  The issue was the ownership of the rights to the finished artwork and the question was whether the artist was a bona fide employee of the Center and thus the work would be owned by the Center as a work made for hire or whether the artist was an independent contractor and thus outside the (1) section and perhaps covered under the (2) section, which requires a whole host of other issues to be addressed. (It was conceded, however, that section (2) was inapplicable because none of the requirements were met so the case for the Center and artist rose or fell on the basis of the employee issues).

        The court analyzed general agency law principles and concluded that Reid was in fact not an employee within the meaning of the work made for hire doctrine.  The Center lost.  The sculptor won.  The Court cited several factors that went into that determination.  Let me rephrase some of those factors in light of the within discussion.

        If then it is determined that the instructor is an employee, then the next threshold question is: is the work that is being done (and sought to be licensed) done by the instructor within the course and scope of the instructor’s job?

        Without a thorough definition within the 4 corners of an agreement of what is and perhaps more importantly what is not part of the duties of the instructor, the parties are left to dispute job mandates.  Dispute leads to litigation and under any circumstances, uncertainty and animosity, all qualities to be avoided.  Often job descriptions are never written down or are so covered in the dust of ages as to unavailable.  Custom and tradition are uncertain at best, unenforceable at worst.  Without a written agreement, other issues complicate the matter such as what happens if the instructor works from home?  What happens if the instructor works from campus but on these notes, say over lunch or when not conducting regular hours?

Faculty as Independent Contractor

        On the other hand, what about adjunct teachers as well as those that teach in extension courses?  If they are independent contractors because they do not fall within the scope of an employee under CCNV vs. Reid, how are their rights and the corresponding rights of  the institution to be handled?

        Initially, one should note a rather peculiar set of circumstances under California law.  Under Labor Code section 3351.5 as well as Unemployment Code sections 621 and 686, to the extent that any independent contractor transfers any of his or her rights to another under circumstances that fall within the scope of the work made for hire federal statute cited above, for the purposes of both unemployment insurance and workman’s compensation insurance, that person is deemed to be an employee.  And while this may not affect the issue of copyright rights that are the subject of this article, it may affect the need of the institution to provide coverage for that person under their workman’s compensation insurance and if that person is fired, may be required to contribute to that person’s unemployment compensation.

        But let’s get back to the rights questions.  Firstly, in order to qualify as a work made for hire relationship, the transaction must fall within the ambit of the statutory scheme.  This means that the “employer” must have “specially ordered and commissioned” the instructor’s work.  How often does this happen?  Is simply the act of hiring this independent contractor to teach one or more classes also the act of “specially ordering and commissioning” the notes that are the subject of the dispute?

        Second, the work must fall within the scope of the specifically denominated categories.  Under certain circumstances, it appears that many of the works in question may qualify as “instructional texts” if they were prepared “for publication.”  If they were prepared solely for classroom instruction, the question is whether or not this qualifies.  Merely because something is later published does not, in and of itself, mean that it was prepared “for publication.”

        This is the definition of “publication” in the law:

“Publication” is the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public  performance, or public display, constitutes publication. A public performance or display of a work does not of itself constitute publication.
        An open question it seems to me.

        But even if it falls within that section of the statute, the last requirement is that the parties must have entered into a written agreement that is expressly denominated as a “work made for hire agreement.”  Issues arise as to what is a sufficient “agreement” and when this agreement must be signed.  Is it valid if it is signed after the work has been created or must it be signed before?  For that you should read “Playboy and the Work Made For Hire Agreement.

        In sum, if the faculty’s work is a work made for hire under law, then the faculty owns no rights of any sort in and to that work and indeed, the institution is deemed to be the “author” of the work for all purposes and thus owns all rights to that work.  No sums need be paid to the instructor for any exploitation of the work.

        Is this what the parties intend?

        All this of course in the absence of a valid, written and mutually executed agreement.

Exclusive vs. Non-Exclusive Rights and Royalties

        Another issue that arises in the absence of a written contract is whether or not what rights the parties have, retain, grant by law etc. are exclusive or non-exclusive rights.  For instance, under United States copyright law, the creator of any copyrightable work (who is not a bona fide employee or otherwise in a work made for hire relationship) owns all rights to that work except if there is a written agreement transferring some or all of the creator’s exclusive rights.  However, in the absence of that written agreement, a non-exclusive transfer of rights can occur.  The problem with non-exclusive grants is that they are terrible from a legal and a marketing standpoint.  It means that 2 or more parties can have concurrent rights to exploit the work and this leads to overlapping of markets, overlapping of grants to third parties, inability of either party to make any exclusive grants and the need for accountings, among many other issues.

        Complicating this non-contractual, non-exclusive situation is that it is often very unclear exactly what non-exclusive rights have been granted and on what terms.  Which party has what rights and what does that party have to pay to the other party for the exploitation of those rights?  Or is that party obligated to pay anything at all?  Is the rights owner to be able to exploit the materials without payment to the other party?

        Other issues just to name some are representations and warranties from the creators, term of rights, sublicensing rights and so on.


        These are some, but certainly not all, of the open questions faced in these situations.  In other articles, I intend to explain the contractual provisions that are ways to deal with these uncertainties and make title to the class notes and other materials “clean” and marketable.

        In sum, given the vagaries of the relationship and consequent impact on rights ownership, the multiplicity of uses on the Net and otherwise, the need for accounting and revenue sharing, it is simply unclear to me, as an experienced attorney and negotiator, the reasons the parties do not embody their relationship in a written agreement.  In today’s legal and business climate, the “private laws” that are agreements are essential, often times essential in a legal context as well but certainly essential in real terms.  Read “Private Laws.

        Leave it unsaid and you can be reasonably certain there will be claims made on both sides.  Claims are costly, not only in absolute “pay the lawyers” terms but in the loss of revenue that happens during the pendency of the claim.

        Write it down.  Make it clear.  Then go out and market the hell out of it.

© 2000 Ivan Hoffman


This article is not intended as a substitute for legal advice.  The specific facts that apply to your matter may make the outcome different than would be anticipated by you.  You should consult with an attorney familiar with the issues and the laws.
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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