In these modern days of downsizing and right-sizing, companies are subcontracting many business services. The task of creating Web sites, advertising materials and slogans, photography and brochures are often assigned to nonemployees or subcontractors.
From a business standpoint, hiring subcontractors may be good business. From a copyright law standpoint, it can be disastrous. According to United States copyright law, the thing created (i.e., the Web site, the advertising material, the photograph, etc.) is called “the work” and the person who created the work is “the author.” Under the law, the author owns the work. If the person who creates it is an employee who does so in the scope of his or her employment, then the employer is the author”
What about when a company hires a subcontractor to create a Web site? Believe it or not, the company owns that copy of the Web site, but the subcontractor is the author of what it created and the subcontractor owns the copyright in that work.
To own the copyright in a work is actually to own five distinct rights: the right to make copies, the right to distribute the work, the right to perform the work, the right to make derivative works and the right to publicly display the work.
For many business situations, the most important of these is the right to make copies and the right to make derivative works. In the example of Company A hiring a subcontractor to develop a Web site, the company would own one copy of the Web site and the subcontractor would own the copyright in the Web site.
The subcontractor hired by Company A would therefore have the right to make copies. This means the subcontractor could sell the same Web site, or a very similar one, to Company B, Company C, etc. In addition, because the copyright owner has the right to make derivative works (new works related to earlier works), Company A may not be able to update its Web site without the permission of the subcontractor.
In my experience, most companies and most subcontractors aren’t aware of this aspect of copyright law. Occasionally, a knowledgeable and opportunistic subcontractor blindsides a less knowledgeable company by enforcing its copyrights against the company.
How can this problem be solved? Proactively, it is easy and inexpensive. Retroactively, it is usually difficult and expensive. Before hiring a subcontractor, prepare a simple written agreement, stating that the copyrights will transfer from the subcontractor to the company. The specific language for the transfer can be provided by an intellectual property attorney familiar with U.S. copyright law.
This simple, proactive measure will pay big dividends. Roger Emerson is a shareholder in the intellectual property law firm of Emerson & Associates. He can be reached at [email protected].
