Followup: My Lawyer on Employee Ownership of Works

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Followup: My Lawyer on Employee Ownership of Works

photo: flickr member Jordanhill School D&T Dept.

As promised (on Twitter) after this post on your ownership rights as an employed designer, I asked my lawyer about the legal specifics. Here’s a summary of what he says. Mike Pickles, who owns MRP Business Law in Manhattan, is a good friend of about fifteen years—and a piranha (in the good way that keeps me out of trouble). If you’re looking for a lawyer, he’s great.

Since Mike is offering this advice based upon hypothetical scenarios and isn’t being paid for this (thanks, Mike), I must say: this is not legal advice you can use to uphold your own actions. Every situation is legally individual.

In short, ownership of employee works is complex.

First of all, the law of copyright is federal and applies in all US jurisdictions, but the law governing employee invention assignment agreements is state law, which varies state to state.

Under the U.S. Copyright Act, a work prepared by an employee within the scope of his or her employment is a “work made for hire” and the copyright in the work would be owned by the employer.

I should note here that “scope of his or her employment” is a widely examined provision and I can’t encapsulate a brief, comprehensive description of what circumstances constitute “scope of employment” here.

But suffice it to say, for the purposes of answering your specific question, if a person is employed as a developer tasked with developing a platform, operating system or application and in his or her spare time such person develops an application or tool that works with that OS or platform or application, then that work is likely a “work for hire” owned by the employer.

I should also mention here that under copyright law, what constitutes an “employee” isn’t limited to someone who is paid on a W-2. These days, there are all kinds of people classified as “independent contractors” paid on 1099’s who, under the “law of agency” are really employees for the purposes of copyright law (and also for the purposes of state labor codes and federal tax law, but that is a different issue).

This online circular from the U.S. Copyright Office discusses works for hire and employee “law of agency” in more depth. The upshot is that even if you are nominally an independent contractor, you might actually be an employee for the purposes of copyright law.

In addition to the tenets of copyright law, most everyone who is hired these days as an employee or independent contractor has to sign some sort of agreement that contains confidentiality, work for hire and invention provisions that assign ownership of all of an employee’s or independent contractor’s deliverables (regardless of whether they constitute “works for hire”) and inventions to the company.

In the case of the Apple employee you described, Apple definitely already had ownership of applications he was independently developing because companies like Apple and Microsoft require employees to sign comprehensive employment agreements that assign ownership of all works created by an employee during the term of employment to the company.

Here’s one more interesting “real world” example of this ownership issue: Microsoft currently wants to encourage people to create apps for its Windows Phone 7 platform, so it has instituted a corporate policy that waives Microsoft’s rights to own any apps that are independently created by its employees for WP7 – that is a big step for a software company like Microsoft.

For the most part, Jens gets it right in his blog post. If you want to retain ownership of works that you independently produce or produce prior to starting your employment, you should get them expressly exempted in writing under your employment agreement or contractor agreement before you sign it.

Also, you really, really should have a lawyer look at it to make sure it is done right. Too often people don’t want to spend the money to consult an attorney and the company’s HR person drops in some language that may superficially look to be okay, but in fact does not effectively protect the employee’s/contractor’s rights to those exempted works or effectively give the employee the ability to create something independent of the company.

Believe me when I say that most companies are not at all interested in protecting your intellectual property rights unless you have a lawyer on your side looking at the agreement.

I would also caution independent contractors to look at all Non-Disclosure Agreements very carefully. Some companies require contractors to sign an NDA before they even begin negotiating an actual engagement agreement for a project.

Contractors should either refuse to sign such NDAs, or if signing it is absolutely necessary, have a lawyer review it carefully because many NDA’s also sneakily include provisions that assign ownership of all work product to the company.

Now, I should also comment on something Jens discussed in his post regarding California law and inventions. There is a difference between “work for hire” and inventions. Generally, inventions constitute something that is patentable and patent law as it relates to employee inventions is somewhat different than copyright law relating to “work for hire.”

I’ll refrain from going down the patent rabbit hole here, but again, suffice it to say that assignment of inventions to an employer is usually very comprehensively covered in employment and contractor agreements and subject to all the same caveats I gave about having a lawyer look at such agreements before you sign them.

The limitations that Jens mentions under California law apply to the patent-ability of inventions, not to ownership of the copyright. The written code of software applications is copyright-able in almost all instances (and therefore the employer can almost always own it as a “work for hire”) but it is much rarer and much harder to obtain a patent in the invented process performed by a software application so those California employee protections that Jens describes provide little or no protection of employees’ rights so long as the application isn’t patent-able or so long as no patent is sought.