Written by Candice Shantell Patrick, Esq.
As technology advances, more business owners are hiring app developers to build new social media and marketing application platforms. Of course, developers charge hefty fees for their services—often tens of thousands of dollars. As a result, business owners heavily rely on business attorneys to draft contracts outlining their agreement. Non-disclosure, trade secrets, merger clause, and “work-made-for-hire” provisions are some of attorneys most go-to clauses for these contracts. However, “work-made-for-hire” clauses may not accurately protect your client’s intellectual property in app development deals.
“Work-made-for-hire” also known as work-for-hire, stems from Section 101 of the United States Copyright Act (the Act). [1] Generally, the creator or author of a work owns the copyright in it. [2] However, the work-for-hire statute allows non-authors to own copyrights in two situations—when created by an employee within the scope of their employment and in independent contractor agreements where the work is directly ordered or commissioned, in writing, and at the same time, within one of the nine categories outlined under the Act. [3]
In establishing copyright ownership under the first scenario, an employer simply has to show that the work was created within the scope of employment. Courts use three determinative factors to assess whether or not work was created within the scope of employment: a) is it the type of work the employee was hired to perform; b) was it created substantially within authorized work hours; and c) was the work performed, at least in part to serve the employer. [4] As long as the aforementioned elements are met, work-for-hire clauses successfully transfer copyright ownership to the employer in app development deals. However, the same cannot be said for all independent contracting agreements.
While some independent contracting situations can be deemed a work-for-hire, app development deals cannot. Independent contracting agreements are only recognized as works-for-hire when the agreement is reduced to writing, specifically ordered or commissioned, and falls within one of the nine categories listed under the Act. [5] Those categories are limited to the following: a collective work, a motion picture or other audiovisual work, a translation, a supplementary work, a compilation, an instructional text, a test, answer material for a test, or as an atlas. [6] App development is a type of computer software and therefore classifies as a literary work—which is not included under the nine statutorily protected works. [7] As such, merely including a work-for-hire clause in your client’s contract will not effectively transfer the app developer’s copyright ownership.
Failing to accurately transfer the developer’s rights could result in joint authorship of the work. Yikes! That would be disastrous. To avoid making this mistake, include the work-for-hire clause in the contract, but also draft a strong assignment clause. Section 203 of the Act allows original authors to terminate any assignment or license of their copyrights after thirty-five years. [8] So, be sure to waive the developer’s right to revoke the assignment.
Furthermore, the Act only pertains to copyrights, not patents or trademarks. Thus, a work-for-hire provision alone would not sufficiently protect all of your client’s intellectual property. By incorporating an assignment clause however, you not only protect your client’s copyright in the app, but also their intellectual property as a whole—copyrights, patents, and trademarks.
[1] Title 17 U.S.C. §§ 101 et seq.
[2] Title 17 U.S.C. §§ 201(a); See also, U.S. Auto Parts v. Parts Geek, LLC, 692 F.3d 1009, 1015 (9th Cir. 2012) stating “...copyright ownership "vests initially in the author or authors of the work," which is generally the creator of the copyrighted work.”
[3] Id; Community for Creative Non-Violence v. Reid, 490 U.S. 730, 738 (1989).
[4] See U.S. Auto Parts v. Parts Geek, LLC, 692 F.3d 1009, 1015 (9th Cir. 2012).
[5] Title 17 U.S.C. §§ 101 et seq.
[6] Id. “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.”
[7] See Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1247-48, 1249 (3d Cir. 1983) holding that a computer, whether in object or source code, is a literary work and therefore copyrightable; see also H.R.Rep No. 1476, 94th Cong., 2d Sess. 54, reprinted in 1976 U.S. Code Cong. & Ad. News 5659, 5667.
[8] Title 17 U.S.C. § 203 et seq.