When a person or a company is being hired to create any kind of intellectual property protected by copyright – whether it’s content for a website, a graphic design for an ad, or a computer program – it’s common to see a clause in the contract describing the output as a “work-for-hire.”
This means the customer owns ALL the rights in the output from the moment the work is created.
Any copyrightable work created by employees of a company is considered “work-for-hire.” Not surprisingly, there have been a number of court cases debating the definition of “employee.” It’s not always as simple as the presence or absence of a designation of someone as an “employee.”
In contracts, the language “work-for-hire” is often used in situations where it might not technically apply. Software is one of those areas.
Work output from a contractor doesn’t automatically have “work-for-hire” status simply because the contracting parties say it does. There are very specific requirements for work to count as work-for-hire.
There are three requirements that must all be met for a work output to be considered work for hire: 1) it must be specially ordered or commissioned; 2) the parties must agree contractually that it is a work-for-hire; 3) it must be one of the following nine types of work:
- a contribution to a collective work
- part of a motion picture or other audiovisual work
- a translation
- a supplementary work
- a compilation
- an instructional text
- a test
- answer material for a test
- an atlas
Note that software is NOT listed as one of the nine categories.
A recent court case, Stanacard, LLC v. Rubard, LLC, adds to a growing body of non-precedential court rulings that find software eligible for work-for-hire status.
In the Stanacardcase, the judge reviewed the work the contractor did, and concluded
The system as a whole is properly deemed a compilation of computer programs. Alternatively, the source code for each program can be deemed a contribution to the “collective work” that is Stanacard’s system.
Therefore, the judge concluded that the work qualified as a work-for-hire as it fell into one or more of the nine categories.
Other courts that have looked at software have ruled in a similar fashion. However, the issue has not yet come to an appeals court that would issue a more authoritative and precedential ruling, and the finding of whether a particular piece of software is a work-for-hire could depend on the specific circumstances.
If you’re contracting for software development and want to have the additional protection offered by designating the output as a work-for-hire, we recommend also including an express assignment of rights as a backup