Business Law: Why 'Guns for Hire' Should Scrutinize 'Work for Hire' Provisions

By Nina L. Kaufman, Esq

You're a gun for hire. No, not in the "John-Wayne-with-spurs-clinking-down-a-tumbleweed-path" kind of gun for hire...more in the "you're-brought-in-to-handle-the-tough-stuff" vein. For example, Epiphany, an up-and-coming clothing company based in Taos, New Mexico, needed consistent branding and attention, in order to attract the kinds of customers they wanted. They could design clothing, but designing a solid marketing campaign was way over their head. So Epiphany hired Maybeth and her Miami-based Maximum Impact Marketing firm to help. Epiphany provided Maybeth with a detailed agreement that covered the work to be performed, the cost, "work for hire" provisions, and intellectual property rights. Maybeth created several proposed logo designs, wrote the copy for the Epiphany website (which MIM also developed), and worked out a strategy for attracting customers that included local PR.

Things started to go awry when Maybeth used one of Epiphany's discarded logo designs, and received an angry letter from Epiphany...something about "infringing intellectual property rights." Then Epiphany threatened a lawsuit when it saw the exact website layout (and nearly exact design) on a competitor's website. The situation became even thornier when Maybeth received a telephone call from a company in Chicago, claiming that Maybeth had ripped off much of the text from their website...when Epiphany had provided Maybeth with the copy. All of this made Maybeth wish she did have a gun for hire - literally!

What a mess! Where did Maybeth go awry? There are several provisions that Maybeth did not look at carefully:

1. "Work for Hire"/Logo Designs. Under U.S. copyright laws, the ownership of a work (be it a literary, artistic, audio, video, choreographed, or sculpted work) belongs to its creator. Here, MIM was the "creator". However, you can transfer your rights in a "specially commissioned work". Because Epiphany's written agreement (1) stated that all work that Maybeth created belonged to Epiphany. (2) was signed by Maybeth before the work started, and (3) Maybeth was paid for the work, Maybeth very likely (although unknowlngly) transferred all of her rights in whatever she created. Not surprisingly, Epiphany took a very broad view of what Maybeth created for it (everything!). . .and was prepared to enforce its rights accordingly.

TIP: What could Maybeth have done to protect the logo ideas and designs? Limit the transfer of ownership to only the specific design that Epiphany chooses. That way, all other ideas, drafts, and concepts that Maybeth creates remains her property, to use with other clients as she chooses.

2. "Work for Hire"/Website Design. Believing that it owned all of the intellectual property rights, Epiphany was understandably miffed to find a similar design that Maybeth created for a competitor. And perhaps, in hindsight, maybe Maybeth did infringe the copyright rights of Epiphany or the competitor (depending on whose site was created first) by using a nearly identical layout. However, if Maybeth was working with a template-type site, there may have been only just so much customization that could have been done.

TIP: Maybeth should disclose upfront whether she's using a template format. If so, she will want to keep her rights in the template, but let Epiphany use (license) it on a non-exclusive basis. That way, she gets to use the template with other clients. If she is designing a site from scratch, she will want to protect her rights in the underlying code and methods (so that they can be used again with other clients).

3. Other People's Stuff. As a toddler, I had a tendency to pick things up off the street (and want to put it in my mouth). My mother would say, "Don't do that! You don't know where that thing has been!" So it is with accepting materials from other people that you want to incorporate into a project you are working on. You don't know where those materials have come from. Epiphany may provide things like sales copy and earlier marketing materials, but Maybeth has no way of knowing for sure whether Epiphany created them legitimately, or ripped off someone else's content.


TIP: Maybeth should make sure there are representations in the agreement that the materials provided will not infringe other parties' intellectual property rights. Maybeth certainly wants that from Epiphany. If a third party does come out of the woodwork (like the Chicago company), Maybeth will want Epiphany to help defend her (part of what's referred to as an "indemnification clause") in any claim or lawsuit that arises.

'Work for hire," "copyright assignment," intellectual property license," "representations," "indemnification". . .these are all thorny issues and the terminology has a specific legal meaning. A little twist in the wording can make the difference between being protected. . .and being caught naked! Make sure to have your agreements reviewed by an attorney before signing them. . .so that when you're a "gun for hire," you have the right ammunition!

© 2004-2009 The Legal Edge LLC. Nina L. Kaufman, Esq. is an award-winning business attorney, author, and speaker. Under her Ask The Business Lawyer umbrella, Nina offers easy-to-understand business law resources that protect small businesses and save them money. To learn more, and receive our FREE "LexAppeal" ezine, visit http://www.GreatBusinessLawTips.com  or contact Contact Us. This article is for your general information only. Be sure to consult with an attorney regarding your particular situation to make sure you get the specific advice you need.

Nina Kaufman, Esq. Award Winning Business Lawyer, Author & Speaker