Entrepreneur's Toolkit - Copyright Ownership

Who Owns a Copyrightable Work?

Initially, by default under U.S. law, the author or authors of a copyrightable work is/are the owner(s) of the work. Generally, the author(s) is the person(s) who created the work, but a business can be deemed the author in the case of works made for hire. Given the variety of copyrightable materials used by the typical business (website design, website content, pictures, instruction materials, advertising, product packaging design, podcasts, videos, blog posts, internal materials, product specification documents, artwork, etc.), businesses should carefully ensure they own all copyrights in the materials they create and have created for them.

Make Sure You Can Use Your Works

The last thing your business wants is to learn it can't control use of its own copyrightable works. Imagine having a dispute with your website creator years down the line, only to learn that the creator owns the copyright and you can't use your own website. Businesses should plan to ensure the ability to control their copyrightable works:

Best: the Business Is the Author

The typical best-case scenario is for the business to be deemed the author from the get-go (if possible). This is achieved when works are created by employees within the scope of their employment or in the limited circumstances when works can be deemed works made for hire. For such works, the business is the owner from creation of the works, and no transfer of ownership is necessary. That said, careful businesses will ensure that their contracts with employees and outside contractors include fallback provisions assigning ownership of any copyrightable works to the business.

Better to Best: Assignments before Creation

Simply put, it's likely that not all copyrightable works your business will use can be authored by the business itself. A smart business will ensure that all its contracts involving creative endeavors will include terms assigning (or agreeing to assign) ownership in the copyrights of all works created for the business to the business. Such contracts include contracts with outside contractors, but should also include employment contracts with employees and agreements with non-employee people such as founders and owners. Having such language in your contract up front avoids issues later on if a dispute with an ex-employee, partner, or contractor ever occurs. Your business might also include a fallback provision in which the employee or contractor further agrees to license any works created for the business to the business free of additional charge or for a nominal fee if any assignment is deemed invalid.

OK, but Risky: Assignment after the Fact

It happens: businesses sometimes don't think about copyright ownership up front and have to obtain ownership at a later point. If you are obtaining ownership of a copyright for your business after the fact, however, you will likely have to pay (at least a little) extra, even if it is from an employee still with the business. Many outside contractors who didn't assign the copyright up front will bill extra for the copyright. If your employee created something for your business outside of the scope of his/her employment, you'll want to compensate them to ensure that there is adequate consideration for the transfer of ownership (so the transfer won't later be deemed invalid). It can be particularly painful to pay for copyright ownership in the event you are in a dispute with a creator (the alternative being to stop using content and create new content to use).

OK, and Sometimes Necessary: License

Many businesses use content from others, such as stock photography on a website, or popular music in a video or presentation. Properly using existing works made by others (at least when you can't acquire ownership) involves obtaining a license to use the work. Be careful to obtain the right to do what you want to do with each copyrighted work and also be careful NOT to use the work in a way not expressly permitted in your license.

Possibly OK, More Risky: Consider Fair Use

The doctrine of fair use acts as a defense against claims of copyright infringement when someone uses a copyrighted work of another without permission. Note that asserting fair use basically assumes use of a copyrighted work without permission (essentially admitting infringement were fair use not to apply). Fair use is a complicated topic and consulting an attorney is recommended. One of the key factors in evaluating fair use is the nature and purpose of the use - if the use is commercial (e.g., supporting your business), it is less likely to be found a fair use, so tread with care before relying on fair use.

Bad Choice: Ignoring Copyright Issues

The worst thing you can do as a business is ignore copyright issues until an issue arises. A little care from the start to ensure that your business has the copyright rights it needs can avoid big problems down the line.

Copyright Ownership Is Flexible

The bundle of copyright rights (right of reproduction, right to control the making of derivative works, right to control distribution, right to control public performance or display, etc.) can be held, transferred, and/or licensed together or individually. When you obtain rights to your works, be sure that what you obtain is (at least) what you need for your business.