Your Business: Rufus Brown

Avoid legal complications when marketing

Portland Press Herald, Friday, November 15, 2002

Today, marketing requires a presence on the Internet, a logo and perhaps a brochure, catalogs and other branding and advertising copy.

To produce that material, you may hire someone outside the firm: a Web master, graphic-design firm, marketing specialist or free-lancer. You pay good money. You are pleased with the product. And you assume that your business owns the copyright to your marketing copy.

But it's vital that you make sure your assumption is correct. If you don't own the copyright, you have no legal right to use the copy without the permission of - and only under the terms and conditions set by - the owner. You have no right to reproduce the copy, publish it, change it, sell it, license it or do anything else with it.

The owner can demand "royalties" for uses beyond the original price for creating the materials and can insist on being hired to make any changes in the copy.

Most people in the business of creating marketing materials will not interfere with your use of something you paid them to create. Still, you are at risk if you don't own the copy - not only from the person who created it, but from infringement by third parties that you will be powerless to prevent without ownership and registration.

The legal principle usually referred to as the "work-for-hire doctrine" can block your ability to register ownership of your marketing copy. The doctrine is both complex and at the same time counterintuitive.

That combination can lead to surprises and legal complications, which are the last thing you had in mind when you set out to promote your market presence.

The work-for-hire doctrine is an exception to the general rule under the Copyright Act of 1976 that the person who creates an original work, expressed in a fixed medium, owns it. The doctrine also is an exception to the assumption that if you hire someone to promote your presence in the marketplace, you will own the copy you paid for.

The relationship between parties is key to determining the ownership of a work's copyright.

An employer owns work created by an employee if that work is done in the scope of his or her job. Conversely, the work is owned by the person who creates it if the person who does the job is an independent contractor or an employee working outside of his or her normal job functions. This is true even though the party ordering the work paid for it.

The task is to find the dividing line between two ends of the spectrum.

One end is a traditional employee who has produced marketing materials as a salaried worker, using the employer's equipment. This arrangement clearly puts ownership of the copyright with the employer.

The other end of the spectrum is when people produce copy on their own time, in the manner they chose, with their own equipment, and at their own location. This setup clearly places the copyright in their hands, unless special arrangements have been made.

The situations falling between these two ends of the spectrum are the grist of litigation.

If your business hires and pays an independent contractor to create, say a Web page, your business will be considered the author and owner of the copyright only if two conditions are met.

First, the work must be a sound recording or fall within one of nine categories set out in Section 101 of the Copyright Act: a collective work, part of a motion picture or other audiovisual work, translation, supplementary work such as a work illustrating, commenting on or assisting in the use of the work, instructional test, answer for a test, or atlas.

In our example, a Web page may well qualify as a "contribution to a collective work" if the Web page consists of content derived from different sources.

Second - and this is key - there must be a written agreement by the parties. Some courts require that an agreement be reached before the work is performed, explaining that the work is to be considered a made-for-hire product.

Still, many firms producing marketing materials do not have a standard contract. Few that do contain work-for-hire provisions place the copyright ownership in the hands of the business that paid for the project.

So how do you avoid these legal complications? When you have marketing work performed for your business by someone other than a person who clearly is an employee, insist on an agreement that the work is to be considered a "work made for hire," either by an employee or by an independent contractor performing a commissioned task.

Then add that, if for any reason the work is not considered a "work made for hire" under the Copyright Act, the people creating the work assign all copyright ownership rights to your business.

There are no special technicalities required for such an agreement to work. It just has to be written, signed by all parties, and express the described intent. By this simple agreement, properly prepared or reviewed by an attorney, your copyright can be protected.