When people ask me “What’s the Number 1 mistake you see entrepreneurs make when it comes to intellectual property?”, this is the topic that comes to mind.
Every entrepreneur and creative professional, whether you’re just starting out or are in charge of a growing company, needs to know some basic information about Work-For-Hire Agreements.
Any time you have anybody do any kind of creative work for you, and you want your company to own that content, the work for hire rules come into play.
What Kind of Creative Works are we Talking About?
Some examples are:
- Creating a logo
- Writing sales copy, advertising copy, blogs, or white papers
- Creating an online video
- Recording music or audio
- Creating software for your company
If you’re having someone do any of those things for your company, this blog post applies to you.
Here’s What You Need to Know
Let’s say you hire someone to create a logo for your product. In the US, and in many other countries, the default is that whoever actually sits down and creates that content is the owner of the copyright.
I’m going to assume that since it’s your product, you want to own the logo. That can only be accomplished in two ways:
- The designer is a salaried employee who’s creating the logo in the context of her job. Independent contractors and freelancers don’t count here. Only regular, 9-5 type employees. Or…
- The designer has signed a Work-for-Hire Agreement. This is a written document (or part of a larger contract) that states that this copyrightable content is actually owned by you, the one who’s paying for it to be created. This must be a written, signed contract, not a handshake deal or a vague understanding. And it should include specific language stating that this work (and you have to be specific about what it is) is created as work for hire.
Here’s What Most Entrepreneurs Get Wrong
This happens all the time. I’m in a consultation with the owner of a startup. She mentions the logo she’s going to have created for her brilliant new app and asks me whether we should file a trademark application to protect it.
Before I answer the trademark question, I ask her, “Who’s going to design the logo?” She replies, “Oh, I hired Larry the Logo Designer, he said he’d do it for $100.”
“Did you have a written agreement with Larry?’
“Sort of, we exchanged a few emails and he cashed my check.”
Unfortunately, that’s not good enough. If her app becomes the next Instagram, you’d better believe that Larry’s going to come back around and start asking about what his rights might be. Suddenly that $100 logo might be worth millions.
And, again, the default under the law is that our buddy Larry is the owner of the copyright image, not the company who paid him.
That doesn’t mean my client can’t use the logo, but that use may be restricted, and Larry suddenly may have all sorts of legal rights, such as the right to use the logo on his own, to sell products featuring that logo, and to create derivative works (new images featuring versions of the logo). All of which could be very damaging and costly for my client.
It’s very difficult, and very expensive, for a company to deal with this kind of problem later on. The best practice is always to have a solid Work-for-Hire Agreement with the creator if he or she is not a regular, salaried employee of the company. This document should be prepared by your company’s intellectual property attorney.
(Guess what? Regular business attorneys who don’t typically deal with trademarks and copyrights often don’t usually know this stuff, either.)
Again, this best practice applies when you’re hiring a designer, illustrator, content marketing writer, filmmaker, software developer, or any other outsourced vendor who’s creating something of value for your business.
Get it in writing, and, whenever possible, make sure that’s done before the work is created.
For more info about Work-for-Hire Agreements, including the 9 Enumerated Categories, check out my 2011 blog post Copyright Challenges: Software as a Work For Hire.