A lot of people assume that when you pay an artist to create a work of art, that you, the person laying out the cash, is the owner of the copyright. This concept is known as “work made for hire” and has been around for a very long time. This concept was totally revamped and codified under the current Copyright Act. But within this revamping of the law is a pitfall, one that reared its head in Court and cost the hiring party copyright it thought that it owned. Because simply calling something a “work for hire” (WFH) does not necessarily make it so. Even if everyone agrees that it is.
Why is WFH so desirable that people will litigate about it? Because if something is a WFH, the person paying the money owns the entire copyright as if they had created it themselves, whether they really had any hand in the creation of the work or not. They become the equivalent of the “author” for all purposes under the Copyright Act. 1 And the actual author has no recourse. 2
Work for hire comes in two forms:
- Made by an employee within the scope of employment
- Created by an independent contractor, if certain conditions are met 3
The first part has resulted in numerous litigated cases, mainly revolving around whether the artist in question was an “employee” or not. 4
The second part has also spawned a number of disputes, usually dealing with whether the required formalities have been met.
Under the Copyright Act, an independent contractor retains the copyright to a work the artist is paid to create, unless two things happen:
- The work is one of the “magic nine” kind of works specifically listed by the Copyright Act
- The parties all agree that the work is a work for hire in a written agreement signed by them 5
It is the second part of this requirement that came before the Second Circuit Court of Appeals.
The case is Estate of Kaufmann v. Rochester Institute of Technology. 6 The facts of the case are highly unusual, in that both parties to the case agree on all the facts; except what it should mean legally.
- Stanley Kaufmann wrote movie reviews for The New Republic magazine
- Everyone agrees that Kaufman was not an employee of The New Republic
- Everyone agrees that his reviews were a “contribution to a collective work” and thus one of the “magic nine” kind of works that can be considered a WFH created independently
- Both Kaufman and The New Republic granted licenses as if they were the copyright owner
- Everyone agrees that five years after he stopped writing reviews Kaufman executed an agreement with the literary editor of The New Republic that the reviews that he wrote were “works for hire”
- Kaufmann died in 2013
- Subsequent to his death, the Rochester Institute of Technology published 44 of the articles, based upon a license from a 3rd party that later turned out to be fraudulent 7
The Estate of Stanley Kaufmann now sues RIT for copyright infringement. But if the Estate does not own the copyrights, they have no basis for filing a claim. If the Estate does own the copyrights, RIT’s license would be useless no matter who issued it. The question before the Court centers around the written agreement.
Does the agreement make the articles “works for hire,” even though it was executed after the fact?
Three previous Courts of Appeals have examined this question, and come to different results, creating a split of opinion between three Circuit Courts of Appeals.
The Seventh and Ninth Circuits have held that in order to make the agreement of an independent contractor work a WFH, the agreement must be executed before the work is created. 8
However, the Second Circuit ruled differently in the case of Playboy Enterprises v. Dumas, 9 a case arising out of artwork created by Patrick Nagel that appeared in Playboy magazine. While not a household name, you would instantly recognize Nagel’s work due to his distinctive style. The cover of Duran Duran’s Rio album is a good example of his work.
In the Playboy case, Playboy did not have any written agreement with Nagel except for transfer language placed on the back of the payment checks and Playboy did not pay Nagel until after it had received the artwork. Under the rulings of the 7th and 9th circuits, this would end the case. However, the 2nd Circuit ruled that there was evidence of an ongoing agreement between Nagel and Playboy by endorsing checks that had legends of transfer of ownership on them.
“[w]hile Nagel’s endorsement of Playboy’s first check bearing [one version of the legend] may not evidence [Nagel’s] pre-creation consent to a work-for-hire relationship, Nagel’s subsequent pre-creation consent to such a relationship may be inferred from his continued endorsements.” 10
But here the Court finds that while Nagel’s conduct indicated an ongoing agreement with Playboy, the evidence fails to support a finding that there was a similar ongoing agreement between Kaufman and The New Republic. The agreement, executed five years after the fact, is simply too remote in time and ineffective to vest copyright in TNR.
“In the pending case, the agreement alleged to satisfy the writing requirement was not executed until five years after the year in which the articles were written, and there are no circumstances even approaching the Playboy scenario of a series of writings executed by check endorsements right after payment for each work. It is not ‘paperwork [that] remained not fully executed until after creation of the subject work.’ Id. at 559 (quoting 1 Nimmer § 5.03[B][b] (1994)). The 2004 Agreement does not satisfy the writing requirement of section 101(2).” 11
What is left to question is why TNR avoided one of the primary rules of drafting agreements: the “belt and suspenders” approach. If TNR was at all uncertain about whether the articles of Kaufman were in fact “works for hire,” it should have provided that if the agreement failed to establish a work for hire arrangement, the copyright in the articles would be deemed transferred by the same instrument.
So for now, in the 7th and 9th circuits, the agreement must be executed before the work is created. In the 2nd Circuit (and the four district courts that have relied on Playboy 12) the agreement must be somewhat contemporaneous with the creation of the work, and five years is simply too long.
Even if everyone agrees.
- 17 USC 201(b) ↩
- 17 USC 203(a) ↩
- 17 USC 101 “work made for hire” ↩
- Community for Creative Non-Violence v. Reid 490 U.S. 730 (1989) ↩
- 17 USC 101 “work for hire” ↩
- 2019 WL 3482596 Second Circuit Court of Appeals 2019 ↩
- Id. at 2 ↩
- Schiller & Schmidt, Inc. v. Nordisco Corp., 969 F.2d 410, 412-13 (7th Cir. 1992); Gladwell Government Services, Inc. v. County of Marin, 265 F. App’x 624, 626 (9th Cir. 2008) ↩
- 53 F.3d 549, 558-59 (2d Cir. 1995) ↩
- Id. at 560 ↩
- 2019 WL 3482596 at 4 ↩
- They are: Kid Stuff Marketing, Inc. v. Creative Consumer Concepts, Inc., 223 F. Supp. 3d 1168, 1180-81 (D. Kan. 2016); Campinha-Bacote v. Rearden, No. 3:10-CV-00139-JDR, 2011 WL 1343343, at *3 (D. Alaska Apr. 8, 2011); Looney Ricks Kiss Architects, Inc. v. Bryan, No. CIV.A. 07-572, 2010 WL 4068885, at *6 (W.D. La. Oct. 14, 2010); TMTV, Corp. v. Mass Productions, Inc., 345 F. Supp. 2d 196, 206 (D.P.R. 2004), aff’d on other grounds, 645 F.3d at 464, 469-70 (1st Cir. 2011). ↩