Claire Corlett

Fish Food, Fish Tanks, and More
William Fisher, CopyrightX: Lecture 5.3, Authorship: Works for Hire

William Fisher, CopyrightX: Lecture 5.3, Authorship: Works for Hire

In this last segment
of the lecture, we’ll examine the copyright implications
of employment relationships broadly defined. The United States is more
likely than most countries to confer copyrights
on the people who hire or commission artists
and authors instead of on the artists and
authors themselves. The main legal tool that enables
employers and hirers to obtain copyrights is known in the United
States as the work for hire doctrine. This is a very important doctrine. Roughly half of the registered
copyrights in the United States, which is a rough proxy for commercially
valuable works, are works for hire. The designation of a particular
copyrighted work as a work for hire has several implications, which
are summarized in the map. First and foremost, the employer or
other person for whom the work for hire was prepared, is consider the
author for copyright purposes. Not the assignee of the true
author’s copyright, but the author himself or itself. Next, the modest set of moral
rights that, in the United States, are provided by the
Visual Artists Rights Act do not apply to works for hire. We’ve discussed moral rights in rough
terms a couple of times already. In the eighth week of this course,
we’ll consider the Visual Artists Rights Act, which implements some of
those rights in the United States. For the time being, you need to
know only that works for hire are entirely exempt from that
portion of the copyright statute. So, to repeat, roughly half of the
registered copyrights in the United States do not give rise
to any moral rights. The rules that we’ll
discuss in detail next week concerning the termination
of assignments of copyrights are likewise inapplicable
to works for hire. In addition, works for hire are
governed by different rules pertaining to duration. Regular copyrights,
as you now know, last for the life of the
author plus 70 years. By contrast, works for
hire last for 95 years from the date they are first
published, or 120 years from the date they are
created, whichever is shorter. Sometimes this will result
in a longer term, sometimes a shorter term than a regular
copyright, but it’s certainly different. So that’s enough for now. The main point is that it makes a
big difference whether a copyrighted work falls into this special category. So how does a copyright end
up in this special zone? There are two routes which
are summarized in the map. First, work can become
a work for hire if it’s prepared by an employee within
the scope of his employment. In such cases, as we’ve seen,
the employer– not the employee– owns the copyright from its inception. Second, a work can
become a work for hire if it falls into one of
these nine categories and if the creators of
the work and the person commissioning it agree in writing that
it shall be considered a work for hire. Here’s a key point– these
two paths are exclusive. There’s no other way that a
work can become a work for hire. So if a work is not created by an
employee within the scope of his employment and does not fall into
one of these nine categories, it cannot become a work for hire even
if the parties expressly provide as much in a contract. That exclusivity probably
strikes you as odd. Why should the law deny access
to this particular legal form to some sets of parties? We’ll come back to that
question after we’ve examined these two paths in more detail. The first of the two
paths likely strikes you as the more intuitively plausible. Suppose you run a company, you hire
someone, part of that person’s job is to create copyrightable works. It’s not shocking, at least to most
US residents, that you the employer would own the copyright in those works. Millions of copyrighted works are
born as works for hire in this way. Their legal status rarely gives rise
to litigation both because it’s clear and to most observers it
seems both fair and efficient. When litigation concerning
this first path does arise, it’s usually because the person
who created the work can plausibly claim that he’s not really an employee. If he’s a traditional salaried employee,
he has no chance of prevailing. But if his relationship with the
putative employer is more attenuated, he might. Until 1989, the legal standards used to
determine whether a creator was truly an employee for these
purposes were murky. Different courts
adopted different rules. Finally the Supreme Court
attempted to settle the matter. The case the Supreme Court
chose to clarify the law involved interesting facts. A nonprofit company called CCNV
commissioned a sculptor, named James Earl Reid, to prepare a
sculpture commemorating homelessness. CCNV wanted to display the sculpture on
the mall in the center of Washington DC during the holiday season to sensitize
visitors to the plight of the homeless. CCNV gave Reid a fair amount of
instruction concerning what it wanted. For example, the sculpture should be a
modern nativity scene in which the Holy Family is replaced by
three homeless people, they should be African
American, they should be depicted lying down, not sitting
up or standing, and so forth. But CCNV left most of the artistic
decisions in Reid’s hands. CCNV paid Reid $15,000 for
his services, but provided him no other compensation,
employment benefits, or so forth. Things went well for awhile. Reid created the sculpture
shown in your screen. It was indeed displayed
on the mall and seems to have been well received
by critics and the public. But the relationship
between CCNV and Reid frayed when CCNV planned to take the
sculpture on tour in other US cities in an effort to raise more
money for the homeless. Reid objected on the grounds
that to say CCNV money, he had fabricated the sculpture in
a material that could not hold up to such a travel schedule and thus
the sculpture would deteriorate which would be offensive to him. This sentiment should remind you of
the stances of Von Gerkan and Snow who sought to protect their
creations from desecration. At the time the dispute
arose, the sculpture was back in Reid’s workshop
for some minor repairs. Reid refused to turn it over to CCNV. In response, CCNV brought a
copyright infringement suit. Now at the threshold you should
notice that this is an odd lawsuit. There’s no question that CCNV owns the
sculpture itself, the physical object. CCNV commissioned it and paid for it. CCNV now owns it just as
the person who commissions a portrait owns the portrait
once it’s delivered. So why didn’t CCNV simply demand that
Reid to CCNV the sculpture itself? Why did it seek to establish
that in addition it owned the copyright in the sculpture? It’s not entirely clear
but probably because CCNV wanted to do things with the sculpture
other than show it to people, perhaps make additional copies of it. As you know by now,
only the copyright owner is permitted to make copies
of the copyrighted work. In any event, CCNV initiated
litigation and carried it all the way to the Supreme Court. Because Reid actually
made the sculpture, he was in a strong
position in this lawsuit. He would seem to be the author and thus,
as we’ve seen, the copyright owner. CCNV might have overcome
Reid’s presumptive claim to the copyright in any of three ways. First, CCNV could have argued
that one of its trustees, a man named Mitch Snyder, supervised
Reid’s work sufficiently closely that– like Mr. Lindsey
in the Titanic case– Snyder, acting on behalf of CCNV,
should be deemed the author. But as you now know,
to win on this theory, you need to exercise very tight control
over the activities of your assistants, and Snyder’s level of supervision
of Reid didn’t come close. So this wouldn’t work. Second, CCNV might have admitted that
Reid was an independent contractor but asserted that the
sculpture was a work for hire because it had been
commissioned by CCNV. But this strategy wouldn’t work
for two independent reasons. First, you’ll notice
that sculpture is not among the nine types of works
that can become works for hire through this path. Second, in any event,
the parties had not agreed in writing that the
sculpture would be a work for hire, thus CCNV was doubly blocked. The upshot was that CCNV’s
only plausible theory was that Reid had been an employee,
not an independent contractor. If CCNV could classify Reid as an
employee, it could win under path one because the sculpture was surely
within the scope of his employment. The hard part was to show
that he had been an employee. The trial court agreed with
CCNV on this crucial point, but the Court of Appeals and
eventually the Supreme Court did not. In the course of
rejecting CCNV’s position, Justice Marshall writing
for the Supreme Court announced a new, or
at least a clarified, test for determining when a person
should be considered an employee. It’s distilled on this slide. I’ll read the key passage
in the court’s opinion. “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. No one of these factors
is determinative.” Closed quote. The Supreme Court then
applied this multi-factor test to the facts of the case. All but one of these variables they
concluded tilted in favor of Reid. Here again is Justice
Marshall’s language. Quote, “True CCNV members
directed enough of Reid’s work to ensure that he produced a sculpture
that met their specifications, but the extent of control
the hiring party exercises over the details of the
product is not dispositive. Indeed, all the other
circumstances weigh heavily against finding an
employment relationship. Reid is a sculptor,
a skilled occupation. Reid supplied his own tools. He worked in his own
studio in Baltimore, making daily supervision
of his activities from Washington practically impossible. Reid was retained for
less than two months, a relatively short period of time. During and after this
time, CCNV had no right to assign additional projects to Reid. Apart from the deadline for
completing the sculpture, Reid had absolute freedom to
decide when and how long to work. CCNV paid Reid $15,000, a sum dependent
upon completion of a specific job, a method by which independent
contractors are often compensated. Reid had total discretion in
hiring and paying assistants. Creating sculpture was hardly
regular business for CCNV. Indeed, CCNV is not a business at all. Finally, CCNV did not pay
payroll or Social Security taxes, provide any employee
benefits, or contribute to unemployment insurance or
workers’ compensation funds.” Closed quote. Since 1989, courts confronted
with analogous disputes have relied on this list
of factors to determine whether an artist in
an ambiguous position should be considered an employee. A few lower courts have
tinkered with the test. For example, in one case the Court
of Appeals for the Second Circuit announced that a subset of the factors–
specifically those highlighted in red on this chart– are especially important
and should be given extra weight. But most courts just apply the CCNV
list as the Supreme Court formulated it. Disputes of this sort have not
arisen terribly often in the past, but they’re likely to become
more common in the future. The reason is that in many modern
economies, certainly including that of the US, companies
are decreasing their reliance on formal salaried employees and
increasing their reliance on people whose relationship to the
company is more attenuated. People hired for short periods of
time not given traditional employment benefits and so forth. In most respects, this trend
is bad for the workers. But in one respect it’s
potentially good for the workers and dangerous for the companies. Namely it increases the chances
that copyrighted works created by these workers will not be
classified as works for hire. Indeed, copyrights in these
works will belong to the workers. Unless and until tell the workers assign
those copyrights to the companies, their legal position will be stronger. Companies, for their part, should
look out for this legal hazard. The second path to work for hire
status seems more clearly marked. As I’ve already mentioned, if a work
falls into one of these nine categories and if the commissioning party secures
a signed written agreement acknowledging that it shall be deemed a work for
hire, that’s the end of the matter. One industry that relies
heavily and effectively on this mechanism in the United
States is the film industry. You’ll recall, I hope, this chart
showing the legal relationships among the principal
participants in the making and distribution of a typical film. As I discussed in lecture number
three, the creative contributions of many people– screenwriters,
actors, directors, and so forth– are pooled into a
single copyrighted work, namely the audio visual work
corresponding to the finished film. Ordinarily that copyright
is held by a producer which then enters into a distribution
agreement with a studio, which then issues licenses to the various players
listed at the bottom of this diagram. There’s a risk lurking in this structure
which is probably apparent to you now that we’ve seen how
the Rent case ended up. The risk is that some of the
contributors to the film listed at the top of the diagram
might argue, plausibly, that they own the copyrights
in the separate things they contributed to the
final product and thus that the theaters, TV
stations, and so forth shown at the bottom of the
diagram can’t publicly perform the film, in other words,
the film containing their copyrighted works, without getting
separate licenses from them. To avoid this outcome,
the producer almost always obtains a contract from
each of the contributors designating his or her
contribution as a work for hire. The result, the producer owns the
copyrights in those contributions from their inception. The legal provision that makes all
this possible and now indeed routine is shown on the chart. Notice that one of the nine categories
of works for which signed work for hire agreements
are effective consists of quote, “a part of a motion
picture or other audiovisual work.” Another industry that purports to
rely on work for hire agreements is the recording industry. You’ll also recall this slide, I hope. It outlines the legal relationships
among the principal participants in the making and marketing of a
musical composition and an associated sound recording. You’ll recall from lecture number
three that the composer acquires the copyright in the composition,
typically assigns that copyright to a music publisher, who then
issues licenses to many licensees collecting fees from all of
them, which the publisher then shares with the composer. The place in this complex industry
where work for hire agreements become relevant is the
relationship between the performer who makes a recording of the
composition and the record company. This relationship appears in
the bottom right of the diagram. You’ll recall that since 1972
the recording has given rise to a second, separate copyright
in the sound recording. Who does that second
copyright belong to? If the performer were an
employee of the record company, the copyright would, of course,
belong to the record company for the reasons we’ve just reviewed. But that’s rare. Nowadays record companies
rarely employ performers. Rather the performers are
independent contractors. That means that presumptively the
performer acquires the copyright. The record company though doesn’t
want to leave the copyright in the hands of the performer. Typically the record
company wants to control all aspects of the
marketing of the recording and wants to collect all the fees. The cleanest way for the
record company to achieve that is to hold the copyright. As a result, as the chart indicates,
virtually all recording contracts provide that the performer assigns his
or her copyright to the record company. From the standpoint of
the record companies, that’s pretty good, but not ideal. The reason it’s not ideal
is that in the United States an assignment of a
copyright is not permanent. As we’ll see in lecture
number six, the assignor holds a non-waivable right
to terminate the assignment after a prescribed interval of time. How exactly that termination right
works we’ll discuss next week. For the time being, the key fact is
that, as I say, it’s non-waivable. The result is that even if
in the recording contract the performer purports to surrender
his or her right to terminate the assignment at a future date,
that surrender is ineffective. The record companies,
for obvious reasons, don’t want the performers to
hold this power of termination. The record companies want to hold
the copyrights in the recordings permanently. How could they do so? By ensuring that the recordings
are classified as works for hire. The large majority of record
contracts purport to do just that. In addition to the provisions
assigning the performance copyrights to the record companies,
those contracts contain provisions indicating that
the recordings generated pursuant to the contract
constitute works for hire and thus that the copyrights in
them belong to the record company from their inception. If effective, these provisions would
trump the performer’s termination rights. The problem from the standpoint
of the record companies is that it’s far from clear
that these provisions, these contractual provisions,
are indeed effective. Recall that signed work
for hire agreements entered into by independent
contractors are valid only if the works to which they
pertain fall into this list. Sound recordings, as you’ll
notice, don’t appear in this list. Now the lawyers for the record companies
contend that the game is not up. Specifically they argue
that the individual songs recorded as parts of the albums or
CDs generated under these contracts constitute quote, “contributions
to collective works,” and thus qualify under the
first item in the list. But even the record company lawyers
realize that that argument is shaky. Some copyright scholars have
testified on their behalf when the issue has been presented
to Congress while others equally strongly disagree. Aware of the precariousness
of their position on this issue, the record
companies sought to strengthen it. Through shrewd lobbying, they were able
to slip into a seemingly unrelated 1999 statute what was called a
quote, “technical amendment,” closed quote, that added sound
recordings to the list on your screen prospectively. Representatives of
the musicians were not consulted when this change was made. When they learned of the change, there
was, as you might expect, an explosion. The furor resulted in
congressional hearings, a report from the Copyright Office,
angry letters from musicians, and so forth. In response, Congress removed the quote,
“technical amendment,” closed quote, thus restoring the original list. The record company lobbyists were
able to secure only one concession, an agreement that the repeal
should not be construed as a rejection of their original shaky
characterization of sound recordings as works for hire because they
might be considered contributions to a collective work. The net result of this
elaborate maneuvering is the very odd language
shown on your screen. As you can see, the
current state of affairs is as if the technical ammendment–
the 1999 technical amendment– never happened. So are sound recordings
works for hire or not? We don’t know yet and won’t until
the first of the termination rights start to take hold. For the reasons I’ll discuss
next week, that, as it turns out, will begin this year– 2013. If in the inevitable
litigation sound recordings are not deemed works for
hire, then older musicians, like Bruce Springsteen and
Eric Clapton, will soon begin to reclaim their
copyrights in their early albums and will probably be able
to make more money off them. Conversely, if sound recordings
are deemed works for hire, then Springsteen and Clapton will
remain bound by their original recording contracts. So a great deal hinges on this highly
technical and still unresolved issue. Two general lessons can be
distilled from this story. The first is that
adjustments in copyright law are often achieved through
lobbying by the representatives of the affected interest groups. When two or more powerful groups are
opposed, the usual result is stalemate. Only when the relevant groups
are aligned does the law move. The technical amendment,
so-called, secured by the recording industry in 1999 is a
rare exception to that generalization. But note that it was very short lived. Once the representatives of
the musicians were alerted, the amendment was rolled back
restoring the statutory stalemate. As Jessica Litman has
shown, this dynamic in which copyright law
changes if and only if the relevant interest groups want
it to is common in the United States and not quite so common but still
frequently seen in other countries. The second of the general lessons
is that in some industries artists are vulnerable. Their bargaining power
is, in most instances, inferior to that of the intermediaries
with whom they have to deal. As a result if they’re allowed to
sign away their rights, they will. Occasionally the law seeks to mitigate
their vulnerability ironically by restricting their
contractual freedom. In other words, by preventing them
from signing away their rights. The limitations on the set of works
that can constitute works for hire when prepared by independent contractors
is an example of that approach. We’ll see some other examples next week. Whether these efforts to protect artists
or their families from exploitation are effective is far from clear. We’ll see.

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