Copyright gives authors a bundle of personal property or economic rights in an original work of authorship. These rights include the rights to reproduce, create derivative works, distribute work to the public, publicly perform a work, publicly display visual works, and digitally transmit sound records. They belong exclusively to a copyright holder.
Usually, the copyright holder is the person who created the work. However, any of these economic rights, or any part of these economic rights, can be transferred. Under the Visual Artists Rights Act (VARA), an artist’s moral rights in a work of fine art can be waived but not assigned.
The transfer of economic rights may be on an exclusive basis, which requires a written agreement, or a nonexclusive basis, which does not require a written agreement. Mostly commonly, this transfer is accomplished by assignment or license. Unlike a license in which the copyright owner maintains his or her ownership, an assignment is similar to a sale. The original copyright owner sells the rights to a third party and cannot control how the rights are used, just as he or she would not be able to control how personal property that he or she sold was used once it was transferred.
Generally, a license is preferable if a copyright holder expects to continue exercising interests and control over the work. For example, if you assign your copyright in a song to a music producer, the decision about whether to allow a film studio to use your song in a film will belong to the producer, not to you. If you license your copyright in a song in a limited capacity to a music producer, however, you will continue to be able to license your copyright in the song to a film producer.
Assignments can be used for many different purposes, such as security for debt, as an asset passed to heirs, or as part of the distribution of assets after a bankruptcy proceeding. Once you assign your rights to somebody else, however, you are permanently giving away your right to control the work. That means if you try to exercise any of the rights you have assigned, you are committing copyright infringement even though you created the work. If you assign your copyright to somebody else and regret the loss, you may be able to buy your copyright back from that person, but whether or not to sell it back to you is up to the assignee.
How Is Copyright Assigned?
Under section 204, a transfer of ownership is only valid if the instrument, note, or memorandum of transfer is in writing, signed by the copyright owner or his duly authorized agent. Generally, a certificate of acknowledgement is not required for the transfer to be valid, but it can be used as prima facie evidence that a transfer was executed if it is issued by someone authorized to administer oaths in the United States or, if the transfer is executed abroad, if the certificate is issued by a United States diplomatic or consular official, or a person authorized to administer oaths who also provides a certificate.
You do not have to record an assignment in in order to assign the interest. However, there are advantages to recording the assignment, such as creating a public record of the transfer details, giving constructive notice to members of the public, establishing priority of rights when there are conflicting transfers of ownership, validating the transfer of the copyright against a third party, or in some cases perfecting a security interest.
Capital Concepts, Inc. v. Mountain Corp., 2012 WL 6761880 (W.D. Va. December 30, 2012)
The parties in a recent case engaged in expensive litigation they could have avoided if language governing transfer of copyright had been more precise. The decision serves to remind how good drafting in development agreements — whether for software, content, or, as in this case, t-shirt designs — can enhance business efficiencies.
Plaintiff sued defendants for infringement, alleging they continued to sell t-shirts bearing the copyrighted designs after the expiration of a license agreement among them. Defendants moved for summary judgment arguing, among other things, that plaintiff never owned the copyright in the designs in the first place, because plaintiff’s independent contractor designer did not successfully assign his copyright interests to plaintiff. Defendants asserted that the designs did not constitute “work made for hire” and that the language of the agreement between plaintiff and its designer did not meet the requirements of Section 204 of the Copyright Act to otherwise effect an assignment.
The court rejected defendants’ arguments and found that the independent contractor had assigned his rights.
The agreement between plaintiff and its independent contractor provided as follows:
. . . any and all drawings, illustrations, characters, text, layout, designs, ideas, digital files, or any other works (collectively, the “Creative Works”) that I have created or worked on for [the Hiring Party] in the past, or unless mutually agreed to in writing by me and the appropriate Hiring Party, will create or work on in the future, are “Works Made For Hire” within the meaning of the United States Copyright Act.
The agreement further provided that:
I agree that I have no ownership, rights, title, or interest in the Creative Works, nor will I challenge the Hiring Party’s ownership, rights, title or interest in the Creative Works and their right to register intellectual property rights, and use or license the Creative Works at their sole discretion. I agree to execute any documents attesting to this that may be necessary for registering copyright or trademark rights with the U.S. or other governments. I do not hold any copyright or trademark interest in the Creative Works, including any changes, derivations, or substantially similar artwork or designs related to the Creative Works.
Plaintiff conceded that the works did not meet the definition of “work made for hire” under Section 101 of the Copyright Act. The designer was not one of plaintiff’s employees, and the works did not fall within any of the designated categories of work made for hire set forth in Section 101. So the inquiry turned to whether the designer had otherwise transferred ownership of his copyright interests as required by Section 204.
The court found that the language of the agreement, though it did not specifically reference any “assignment” of copyright, satisfied all of Section 204’s requirements. Significantly, the agreement did not simply state that all works that the designer created or may create in the future would be work made for hire. Instead, it clearly evidenced the parties’ intent to transfer ownership because the designer:
- relinquished all rights in all creative works that he created for plaintiff in a specified period of time;
- agreed he would not challenge plaintiff’s ownership of such works, and that plaintiff had the right to register the copyrights in such works in its own name,
- promised to execute any documents necessary in connection plaintiff’s registration of the works
So the court found that no plausible interpretation of the agreement left ownership of the works with the designer. Moreover, the designer executed subsequent documents, and testified in his deposition that he intended to assign his interest.
Though plaintiff ultimately succeeded in arguing that it acquired rights in the works its independent contractor created, that success came at the price of expensive litigation over the issue. Businesses can learn a couple important lessons from this case: (1) the notion of “work made for hire” is more subtle than people believe, and is often misunderstood or misapplied, and (2) independent contractor agreements whereby the contractor is delivering copyrightable materials should precisely spell out that an assignment of copyright is occurring.