To avoid this issue altogether, companies looking to hire third parties should have written agreements that explicitly state that a company owners the third-party-made work. Two instruments that companies can use to obtain ownership of third-party made works are a “work for hire agreement” and an assignment.
A work for hire agreement is the preferred instrument for obtaining ownership of works that qualify as a “work made for hire” under Section 101 of the U.S. Copyright Act. Under the Copyright Act, a work made for hire includes “specially ordered or commissions for use (1) as a contribution to a collective work, (2) as 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 an answer material for a test, or (9) as an atlas.” If a work does not qualify as a work made for hire under the Copyright Act, companies may obtain ownership of the third-party-made work by way of an assignment. Written agreements between a company and independent contractors would, therefore, benefit from including a fallback assignment clause – in the event that a court (in later litigation) deems the work as a work for hire.
When a company has the choice of obtaining ownership via a work for hire agreement or an assignment, a work for hire agreement is encouraged. This is because a work for hire agreement cannot be terminated. An assignment – even if it includes language that the transfer is non-revocable – may be terminated by the author of the work, under Section 203 of the Copyright Act. This little-known provision allows the work’s author (or, if dead, his or her heirs) to reclaim ownership of a copyright, as early as 35 years after, and as late as 40 years after an assignment was made.
However, some methods of protecting intellectual property rights may undermine a worker’s classification as an independent contractor. In California, a “work-for-hire” provision indicates that the worker is an employee. The California “Work Made for Hire” Trap: Your Consultant May Be Your Employee
Read the full story at If It’s Worth It, You Should Work It (As a Work Made for Hire)