Copyright Ownership Problems: Are You Sure You Own Your Copyrights?
Avoiding Copyright Ownership Issues
Are You Sure You Own Your Copyrights?
Identifying a businesses’ core intellectual property is not always as easy as it should be. Each type of intellectual property has its own quirks that can sometimes have surprising consequences for determining ownership. Issues that should have been spotted earlier often only arise after an infringement has been identified, or in preparation for licensing agreement, asset purchase, sale, or merger. This is especially true with copyrights and this article addresses common copyright ownership problems and provides potential solutions.
This paper identifies some of the fundamental concepts necessary to understand where to look for copyright ownership problems and what to do to secure the rights to make sure your company actually owns its copyrights.
Copyrights are a right often neglected by businesses until it’s too late to secure them for some very practical reasons that result from how they are created in the first place. A copyright (that is, the right to copy) is secured the instant the expression of something is made tangible. In other words, the copyright to a photograph exists the moment the photographer snaps the picture; a story or song is copyrighted as soon as it is written down; a sound recording as soon as the engineer hits the record button and records sounds, and an illustration is copyrighted as soon as it is illustrated.
How Are Copyrights Created?
The first important concept to understand is that the initial owner of the copyright is the person (a human) who created the content, or in some cases the company who employed that person to create the content. The key word here is employed—and this is different than hired or contracted. It is the traditional relationship between an employee and employer that can potentially convey the copyright to the employer rather than the individual who created the work. But this automatic vesting of the copyright in the employer has several requirements. First, as mentioned above, there has to be the traditional agency relationship between employee and employer and creating that content has to be “within the scope of his or her employment.” 17 USC § 101. Second, if there is not an employee/employer relationship, then there needs to be an agreement signed by both parties stating that the work will be considered a “work made for hire.” However, in this second category, there are only nine types of works that are eligible for consideration as a work for hire even if the parties agree.
Copyrights Created Through Employment
As to the traditional agency relationship required to show “employment” as that word is used in the Copyright Act, the Supreme Court has held that the determination of status as an “employee”—in contrast to an “independent contractor”—is governed by “the general common law of agency.” Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 740 (1989). The Court then elaborated on the considerations for how this is determined:
In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party’s right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party. Id. at, 751-52.
Copyrights Created Through “Work For Hire” Doctrine
Regarding a contractual work for hire, as mentioned above, this can be formed “if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.” 17 USC § 101. But this agreement is only valid for the following types of works specified in the statute:
1. a work specially ordered or commissioned for use as a contribution to a collective work,
2. as a part of a motion picture or other audiovisual work,
3. as a translation,
4. as a supplementary work,
5. as a compilation,
6. as an instructional text,
7. as a test,
8. as answer material for a test,
9. or as an atlas.
While some of these categories like “collective work,” “supplementary work,” or “compilation” may sound open ended, they are also defined terms in Section 101.
When do Copyright Ownership Problems Arise?
A typical way we see this causing problems is when a business hires an independent contractor or other company to create content for them or when valuable content that was originally created by the owner or founder of a company and the company was later sold.
Consider the case where a business hires an advertising agency to develop an advertising campaign to launch a new product. The add agency may hire an outside artists to create a new logo for the product and another independent illustrator to create illustrations for the add campaign, but use its own employees to write the text to go with that illustration for your company’s add that will be displayed online, in magazines or on billboards. Imagin that the new product is a success and goes on to become a popular household item. Now imaging ten years later a different company starts selling a different product in a different market but with a copycat logo and you want to stop that. If the products are in different markets (i.e. Ford Motorcars and Ford’s Gin) the fact that your business owns a registered trademark for the logo might not matter.
But what about the copyright you ask? Maybe the contract you had with the advertising agency can help. Indeed you find that this agency agreed that they would assign the copyrights to you, but the agency is no longer in business. What can you do? Probably nothing. You might try to track down key personal, or if there was a merger, look to the new company, but in reality, they will probably not be able to help you. First, even if that company’s former owners can be found, they will probably not own the copyrights. When companies close down they rarely assign abstract intellectual property rights to their former owners of executives. True mergers are rare and are more often achieved with an asset purchase that may, or may not, include a blanket assignment of copyrights. Second, this would only help if the company itself actually owned the copyrights. Did the add agency obtain work for hire agreements from the contractors it used ten years ago? Does its predecessor have those? Probably not. Here, the copyright to the logo initially vested in the artist who created it. The artist could only have transferred that right to the agency who hired him by a written work for hire agreement that was signed by the artist. And even if the contract stated that they would assign the copyrights, that is not the same thing as an assignment itself. Even if the advertising agency is still around, it might not have obtained a written work for hire contract from the contract artist and, if it’s been a decade, might not even have sufficient records to show who that was.
In another example, imagine that you purchase a company with a strong and recognizable logo or other valuable content that was created by the now deceased original owner of that company. You have an assignment of the trademark registrations, but do you own the copyright to that logo? There is a good chance that the original owner was not an employee of that company when he created the logo. The founder may have been a member of the LLC or shareholder or the corporation without ever being an employee. The work he created may have originated as a doodle on the back of a napkin before the company was even created. Unless the person who actually drew that picture (or code) on the napkin assigned his copyright to the company, you will probably have to turn to estate law to track down the rights.
Owning the copyright to your company’s trademarked logo might seem obvious, but this legal detail is often overlooked. Copyright law can be a more valuable tool for protection against knockoffs, grey market goods, or counterfeits because it permits statutory damages and attorneys’ fees. But the rights to the copyright must be considered when the logo is created, rather than when it’s time for enforcement.
While the ownership of a company’s logo is a big deal, all content used by a business can be important. More commonly, problems arise when a company hires a content creator to create something for use on a webpage or print add, and never bothers to get an assignment from the creator—or worse—does not pay the extra fee the creator charges for the copyright assignment and then forget about it. This gets businesses in trouble when they want to reuse that content in a different context or at a later time. If this new use exceeds the scope of use granted by the artist, it is a copyright infringement.
How to Make Sure this Does Not Happen to Your Business
Tracking down ownership rights for copyright gets even more complicated if there are multiple co-creators. It is important that this task be handled by experienced attorneys who are familiar with these aspects of Copyright law. Any break in the chain of title could make enforcement of the copyright impossible. Even worse, if your company cannot obtain the rights to its content, then someone else probably owns that content and this can be a ticking time bomb.
But tracking down ownership is merely one of the issues that needs to be clarified in order to register a company’s copyrights. If you have content you need to secure with a copyright, we have provided a helpful intake form available as a free download on our website to get you started. If you have any questions, please contact one of our experienced attorneys to assist you.
Klemchuk PLLC is a leading IP law firm based in Dallas, Texas, focusing on litigation, anti-counterfeiting, trademarks, patents, and business law. Our experienced attorneys assist clients in safeguarding innovation and expanding market share through strategic investments in intellectual property.
This article is provided for informational purposes only and does not constitute legal advice. For guidance on specific legal matters under federal, state, or local laws, please consult with our IP Lawyers.
© 2025 Klemchuk PLLC | Explore our services