With a wealth of creative companies in the Portland area, one of the common legal issues we see as attorneys for small businesses, and especially for advertising agencies, is who owns the copyrights to the work that these agencies produce. This post builds upon my earlier post, Transferring Copyrights, and is written specifically for this legal issue. Agencies are often wise enough to enter into detailed written contracts with the companies for which they agree to act as agency of record. And, more often than not, their contracts contain some language about who owns the copyrights to the work product, such as plans, drawings, samples and final versions of the advertising materials. But, sometimes agreements are made where the terms are not finalized, or there is a disagreement about the terms. In these cases, who owns the copyrights to the materials will sometimes be a surprise.
Under federal copyright law, the initial owner of a copyright is the “author,” who, in turn, is the person (or company) who created the work, except in cases of “work made for hire.” Under this exception, the author becomes the person for whom the work was prepared. There are only two general situations that fit under the work made for hire exception: 1) works created by employees, and 2) certain categories of commissioned works. The first exception is relatively straightforward. Employees that create copyrightable work within the scope of their employment do not own the rights to the work. Rather, their employers do. Agencies typically do not fit under this exception; they enter into arms-length negotiations with the companies they act as agency of record for, making them independent contractors. Even though companies may have the right to control, or actually do control, the work of the agencies, that doesn’t mean the agencies qualify as their employees. Consequently, the agencies will be considered the authors of their work and own the copyrights to the work, even though they were specifically paid to create that work for another company.
The second exception rarely will apply, but agencies should nevertheless be aware of it. The categories under the second exception include works specially ordered or commissioned for use as (1) a contribution to a collective work, (2) a part of a motion picture or other audiovisual work, (3) a translation, (4) a supplementary work, (5) a compilation, (6) an instructional text, (7) a test, (8) answer material for a test, or, in some cases, (9) an atlas.
Companies often mistakenly assume that by paying for the creation of work, they automatically will receive the copyrights to the work. Under current law, however, absent a valid written transfer agreement or work made for hire agreement, the copyrights to the work should belong to the agency of record.
Tags: advertising, advertising agency, Copyrights
