Who Owns Employee Work? The Employee or the Business?

Who Owns Employee Work?
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Who Owns the Work of My Employees? My Business? Or the Employee?

Is the work of employees owned by your company? Or by the employees? What about the work of independent contractors? Who owns it? Before you hire a creative employee or contractor, you'd better be sure you know the answer to these questions, and be ready to put your understanding in writing, to be signed by both parties. Intellectual property court cases can be difficult unless you have created a work-for-hire agreement with your creative staff.

What is Work-for-Hire?

Work-for-hire is a concept relating to the ownership of work products. Generally, any work done by an employee is the property of the employer. For example, if an engineering firm hires an engineer to create patentable software or hardware, the work-for-hire concept is in force, and the creations of the engineer are the property of the company. The same would typically be true of an engineer hired as an independent contractor - the work is the product of the entity who hired it to be done. Thus, the work-for-hire concept is an exception to copyright law, in which the work is owned by the creator.

Exceptions to the Work-for-Hire Concept

A business doesn't necessarily own everything created by its workers. The question of ownership comes down to many factors, chief among them being the presence of an employment contract. Employees typically produce work that is owned by the business - if they write a memo at work, the business owns the copyright in that memo. However, an employment contract might modify how the employee's work is treated, possibly by broadening or narrowing the definition of what the business owns. And it also depends on what sort of work is created, at what time, and with what resources.
Independent contractors, on the other hand, might own the work they produce themselves. This depends on a number of factors, such as whether there is an agreement between the business and the contractor, the nature of the work at issue, when the relationship began, and when an agreement was signed.
Sometimes, it isn't even clear whether the worker is an employee or an independent contractor. Whether the business owns the property created by the worker then depends on the business's control over the worker, the skills necessary for the job, the extent of benefits given to the worker, tax treatment of the worker, and a number of other factors.
Each situation is different and the rules or factors can't be generalized and applied all the time.

Why a Written Contract is Necessary

The work-for-hire question is another reason for putting every agreement into writing. Unwritten assumptions can come back to bite you. Employees in particular don't always understand the concept that their work is your property, so having them sign a contract helps make it clear who owns what.

Disclaimer: This information and the quote by Tom Galvani, are not intended to be used as legal advice. If you need assistance with a specific situation, contact your own attorney.