Copyright Assignment

Who owns the copyrights in your logo and other intellectual property?

Business owners often hire independent contractors (e.g., graphic designers, marketing firms, web designers, etc.) to assist with marketing and ad design, website design work, branding concepts, content writing, product photography, and many other projects and tasks that require creativity. Many businesses are not aware that they do not own the copyrights in the work provided by these independent contractors. The copyrights in such creative works only transfer to the business owner if there is a written contract that expressly includes a proper assignment clause. Without this, the business owner has only an implied license to use the work generated by the independent contractor ("IC"). The terms of this license are not defined and open to interpretation and dispute between the IC and the business. The business cannot transfer the copyrights (e.g., if the business or brand is sold) and may not be able to transfer the license. Business owners need to understand their intellectual property and manage it proactively. There are pitfalls for the unwary. The bottom line is that you as a business owner need to be the copyright owner of the work that you pay for.

A copyright assignment is an agreement that transfers ownership from the original creator to another party in exchange for some payment or other consideration (any bargained-for value provided by the receiving party), which grants the new owner rights to the work. This article will explain what a copyright assignment entails, its legal requirements, and how it differs from ‘work for hire’.

What is Copyright Assignment?

A copyright assignment is a legal agreement that transfers ownership rights from the original creator to another individual or entity. The assignment can transfer to the assignee all or some of the exclusive rights in the work to use, modify, and distribute the work. Copyrights are a bundle of rights granted to the creator of an original work. These rights include the ability to perform or display the work publicly, reproduce the work (e.g., by printing, copying digital files, scanning, etc.), distribute copies of the work (e.g., by posting the work on social media, selling printed copies, transferring digital files, etc.), create derivative works, and license or assign these rights to others. Each of these rights is distinct, meaning they can be transferred, licensed, or assigned individually or collectively. An assignment can be written to transfer one or more rights in this bundle to another party. The assignment can encompass all rights or just specific ones, depending on the agreement. The original creator relinquishes control of whatever rights are assigned and cannot exercise the assigned copyrights in the work without permission from the assignee. For example, an author of a novel might assign the right to publicly perform the work to a theater company while retaining the rights to reproduce and distribute copies of the book. The author has relinquished the public performance rights and can no longer pursue public performances of his work, but retains the right to sell the book.

Publishers and businesses must have control over the copyrights in works they commission because it enables them to transact business with respect to the work without limitations and it makes the work an asset in the business, rather than just something the company is allowed to use. Complete control over a work is ideal to allow the business to maximize its commercial potential. However, in certain situations like the example above, carve outs for the original author may make sense. Each situation is different and requires a skilled copyright attorney to avoid costly mistakes.

Legal Requirements for a Valid Copyright Assignment

For a copyright assignment to be valid, it must be executed in writing. Notarization is advisable, but not required. The written agreement should clearly outline the transfer of ownership and the specific rights being assigned. The agreement should also detail the amount of consideration. A copyright assignment is not valid without "consideration", which is anything for which the author is willing to exchange the copyrights. In other words, there must be a bargained-for exchange. Where a business is engaging an IC, the assignment is part of the bargain upfront and the consideration is in the price paid for the work. However, if the business fails to include the assignment the original agreement, there must be separate consideration for the assignment - i.e., the business has to pay the IC again to get a valid transfer of the copyrights. This is a mistake businesses make very often.

In order to avoid these mistakes, businesses should take a proactive approach similar to that outlined below.

Steps to Assign Copyright

Assigning copyright requires several critical steps: drafting a comprehensive agreement with the IC upfront, obtaining signatures, registering the copyrights in the work with the US Copyright Office (USCO), and recording the assignment with the USCO. The copyrights should be registered to create a public record of the work. The assignment should also be recorded with the USCO to establish a public record of the assignee's rights. Clarity in the scope and terms of the rights being transferred helps prevent misunderstandings and disputes. These steps can be adopted as a structured process for a business to execute any time they are soliciting creative services from an IC. Such a process can ensure that both the creators and assignees understand the terms of the engagement and that the copyrights are being transferred, and that there is a legally sound transfer of the copyrights.

Drafting the Agreement

A copyright assignment agreement should be comprehensive and include essential clauses to facilitate the transfer. Improper handling of copyright assignments, like omitting critical clauses, can impact your ability to enforce the copyrights. Careful drafting and review of the agreement are crucial to protect both parties’ interests. Having a copyright lawyer draft such an agreement is advised to ensure it is properly structured and legally sound. The original author (IC) must sign the agreement for it to be legally binding.

Essential elements of a copyright assignment agreement include the grant of rights, term and termination conditions, payment and consideration terms, the scope of the assignment, and warranties. The scope of the assignment may vary depending on the agreement of the parties. Copyrights are not monolithic. There are a bundle of copyrights in a work. There are several aspects of copyrights and the agreement should be explicit about which rights are being transferred and which rights are being retained by the IC, if any. For example, a graphic designer may demand that they are granted a license to use a copy of their work for inclusion in their public portfolio and/or other advertising.

The terms of the assignment should be tailored to the specific transaction and failure to properly capture the parties' intent and the necessary language can result in a failed transfer or unintended limitations on the transfer of rights.

Registering the Copyrights and Recording the Assignment with the Copyright Office

In order to publicly record copyrights in a particular work, the work must be registered with the USCO. To register a copyright, the applicant must complete an application, providing the title of the work, identifying the author(s), its creation date, and whether and when it was previously published, such as by sale, public performance or display of the work. A deposit of the work must also be submitted. Additionally, groups of related works, such as a group of photographs, can sometimes be registered together under specific rules. Copyright registration ensures legal protection if the work is displayed, copied, or performed by any person or group without authorization. Once registered, there is a public record of the copyrights in the work and the copyrights can be enforced against infringements by filing a complaint in federal court. Registration also establishes constructive notice of the work to the public, meaning that even if a copyright infringement occurs without actual knowledge of the copyrighted work, the infringer is still liable. Copyright notice can be used to provide actual notice of copyrights to potential infringers, but registration provides more complete copyright notice benefits.

Recording the copyright assignment with the Copyright Office establishes public notice and legal recognition of the transfer of the copyrights from the author(s) to the assignee. The Copyright Office does not provide specific forms for copyright transfers but accepts various documents related to copyright ownership and maintains records of submitted assignments. This step solidifies the legal validity of the assignment and a pubic record of the transfer to the assignee. The publicly recorded assignment is crucial for future reference and resolving potential disputes over ownership.

Common Pitfalls in Copyright Assignment

One common pitfall in engaging an IC for creative services is to assume that because you are paying the IC for the work, you own the copyrights. As explained above, this is incorrect. There must be a written assignment signed by the IC that expressly transfers the copyrights to you.

Another common mistake is the use of a copyright assignment form found online. Copyright assignments are unique to each situation. It is important that the assignment is appropriately tailored to the situation by an attorney. A inadequate copyright assignment can lead to legal disputes over ownership, costly litigation, and complicate future licensing deals.

Failing to keep adequate records of copyright transfers can be equally damaging. The copyright office database does not provide copies of the copyrighted work associated with registration or assignment records. Thus, a failure to keep copyright registration and assignment records associated with copyrighted work can lead to confusion about what copyrights you own and associated enforcement and licensing problems.

These potential consequences underscore the importance of following proper procedures and maintaining accurate records to protect one’s interests.

Differences Between Copyright Assignment and Work for Hire

While both copyright assignment and work for hire involve the transfer of copyright ownership, they operate very differently. A copyright assignment can be made between any two parties, whereas a work for hire is only created either by an employee or by an IC under specific circumstances. For a work to qualify as work for hire, it must either be created by an employee as part of their normal responsibilities and job duties or fit into one of nine specific categories defined by law. These categories include commissioned works such as translations, instructional texts, and tests, among others. Additionally, the work must be specially ordered or commissioned, and there must be a written agreement stating that the work is a work for hire.

Many businesses operate under the assumption that creative work specifically commissioned for the business is a "work for hire". However, as a general rule, the creative work is not a work for hire, since the categories of works for hire are fairly narrow and there must be a written agreement specifically identifying the work as a work for hire. It is much more effective to include specific assignment language for each contract made for creative services.

Always Consider the Need for an Assignment When Seeking Creative Services

In summary, a copyright assignment is essential in any situation where you are engaging an IC to create artistic, design, decorative, or other kinds of creative work. You must include assignment language in the initial contract, clearly define the scope of the assignment, maintain accurate copyright records, and ideally register the copyrights with the USCO. Proper management of copyright assignments allows creators to retain control over their work and businesses to fully exploit their commercial potential.

Seek the Assistance of an Experienced Copyright Attorney

Your copyrights are important assets and should be protected. Our attorneys have decades of experience in the copyright field. Contact our office for a free consultation.

© 2024 Sierra IP Law, PC. The information provided herein does not constitute legal advice, but merely conveys general information that may be beneficial to the public, and should not be viewed as a substitute for legal consultation in a particular case.