Copyright In IndiaIntellectual Property Rights Doctrine of “Work For Hire” under the Copyright Law

Copyright law vests a bundle of rights in the creator of particular works, or those deriving rights from such creators, from the moment of production and fixation of such works. The growing work-for-hire concept, however, holds that the ’employer or another person for whom the work is generated’ is deemed to be the author of the work and owns all rights derived from it, unless the parties have expressly agreed otherwise.

The Copyright Act, 1957 (hereinafter referred to as the “Copyright Act”), governs the laws pertaining to copyrights in India. The phrase “work for hire” as recognised by the Copyright Act is classified in two broad categories :

1. Works produced under an apprenticeship or job contract;
2. Works that are particularly commissioned.

Like other laws, the regulations governing work for hire vary from country to country. This article will focus on the specific laws that apply to them in order to explain how work for hire agreements operate in each of their respective jurisdictions.

BACKGROUND

In the 19 th century, the employee’s ownership rights garnered significant respect from Courts. From the U.S. Supreme Court’s decision in Wheaton v. Peters [33 U.S. (8 Pet.) 591] till 1860, there was a consensus in determining that by default, the owner of the copyright was who produced the work, even if such person is employed by someone. Hence, the recognition of employer ownership started around 1860.

The default rule in the first decade of the 20 th century allowed the employer’s entitlement to their employees’ creative works. This was subject to an agreement mutually made between the employer and the employee. The cases Boucicault v. Fox [5 Blatchf. 87.] and Wheaton v. Peters [Supra] , made it logically possible to disregard the old master-servant doctrine. The rule of “work-for-hire”, thus, first developed in the Courts and was later codified.

INTERPRETATION OF “EMPLOYEE”

The employer will have the copyright if the creator is determined to be an employee under the employee’s purview of employment. If the work does not fall into one of the statutory categories and is not acknowledged as “work done for hire” in a contract, the employer will not have the copyright for such work. The criteria/test used for the interpretation of the term “employee” are briefly discussed below:

1. Right to Direct and Control Test: Whether the creator is an official employee or an independent contractor has little effect on their job. Instead, it emphasises whether the hiring party had the authority to supervise and control a project irrespective of actual exercise of right.
2. Agency Test: The test uses principles of agency to evaluate whether the relationship between the hired and hiring party is one of those of the employments. Courts must consider a number of variables in order to determine whether the hired party is an agent and consequently, a statutory employee of the hiring party.
3. Actual Direct and Control test: Applying the actual direct and control test, a work is deemed to be a work for hire if the commissioning party actively supervises and controls the creation of the work, as opposed to merely reserving the right to do so.
4. Formal, Salaried Employee Test: It uses the strictest definition of the word “employee”. To interpret the term “employee”, the customary interpretation, which includes regular payment of salary, withholding of taxes, etc., should be used.

THE “WORK FOR HIRE” AGREEMENT

The “work for hire” agreement should include a clause that briefly addresses the following topics:

• The parties to the contract should be identified in clear and unambiguous words. It should also go into detail on the nature of their relationship.
• A clear statement from both the parties that they are freely entering into the agreement is required, taking into account the various objectives that each party may have in mind for the transaction.
• The payments that are expected to be made should be explained.
• The nature and extent of each party’s usage of the contract’s subject matter after the employer-employee relationship has ended should also be made clear.
• Additionally, it should outline what would happen if one or both parties fail to fulfil their obligations.
• When the employer owns the Intellectual Property (hereinafter referred to as “IP”) but it needs to be customised or altered from its original form, it is advisable to look for a customisation or amendment agreement before getting started. This type of contract specifies the extent of the work to be done and makes it clear that the authorship of the modified work remains unchanged in the event of such adjustments. Instead, it functions as a licensing right whereby the company allows the employee to alter an already existing IP asset, such as a book, software, invention, etc.

Furthermore, to better protect and secure the IP asset resulting from such a sale, the contract may further shed light on the following matters in addition to the points already mentioned:

• The employment contract that governs independent contractors and employees should include a clause referring to “work for hire”.
• A clause allowing the transfer of the work produced during such a course of employment as well as the ancillary ownership rights to such works may be expressly mentioned in the contract.

HOW IS “WORK FOR HIRE” PROVISIONS PERCEIVED ACROSS THE GLOBE?

In India

1. Section 17(b) of the Copyright Act states that, in the absence of a written agreement between the parties, the person who requested that a work be created by an author if the first owner of the copyright.
2. Section 17(c) states that, in the absence of an agreement between the parties, the employer is the original owner of the copyright in cases where an author creates a work while employed under a service or apprenticeship contract.

The Supreme Court, in Indian Performing Right Society Ltd v. Eastern Indian Motion Pictures Association and Ors.,[1977 AIR 1443] , held that the clauses (b) and (c) Section 17 of the Copyrights Act, which raise the issue, hold the key to resolving the question of whether a film maker can nullify the rights of a music composer or lyricist by hiring them.

As per Section 17(b), when a music composer or lyricist accepts a cinematographic film’s offer of payment, the cinematographic film becomes the first party. Therefore, the outcome would be the same under Clause (c) regardless of whether the composer of the music or lyrics is hired to compose the work under a service or apprenticeship contract.

The Delhi High Court, in Khemraj Shrikrishnadass v. M/s Garg & Co. [AIR 1975 Delhi 130] held that, unless there is a specific contract to the contrary, when the work is completed by an author for another writer in lieu of consideration, the copyright is normally transferred to the publisher.

The parties involved in a contract are responsible for finding a way to avoid those commitments. Due to the lack of contractual liability, freelancers are therefore considered the original owners of copyright under Indian law, whereas periodicals, magazines and newspapers are considered the as original works created by employees under a service contract.

In USA

“Work made for hire” could be divided into two categories, as stipulated in Section 101(1) of the Copyright Act (Title 17 of the United States Code): either a work created by a person while at work or a product specifically purchased or commissioned for use.

In Community for Creative Non-Violence v. Reed, [490 U.S. 730 (1989)] the Court decided that it was important to establish whether a project was created by an employee or an independent contractor first. The job would typically be referred to as “work made for hire” if it was created by an employee.

In UK

The concept of work made for hire functions in the U.K. in a way that the law varies based on the type of work and not the issue. As per the Copyright, Designs, and Patents Act, 1988 in the UK, when the work is made in the course of employment, copyright will vest in the employer, otherwise it will vest in the author. The copyright in commissioned works by independent contractors may vest fully in the commissioning party where an agreement pre-exists that assigns the ownership in the future work.

Like the US Courts, the Courts in the U.K. consider a variety of factors to determine employment versus contract labor, including the presence of employee tax and benefits treatment, although the primary test is “whether the work undertaken forms an integral part of the business.”

Works made for hire are subject to the freedom of contract in the UK. As noted, independent contractors may freely assign their authorship to the commissioning party. Likewise, employers may agree to permit employees to retain the copyrights in certain works even when they are created in the course of employment. British Courts have also been inclined to imply the existence of such agreements in both types of case where the facts warrant.

In practice, UK resembles the US in their treatment of works made for hire as both of these common law countries vest copyright ownership in the employer for works made within the scope of employment, and both require an agreement, either expressed or implied, to similarly divest the rights of an independent contractor, except for specific categories of works.

The most significant difference appears to lie in the UK’s presumptive treatment of certain independently contracted works as works made for hire where the US would require an express agreement.

In Stevenson Jordan Harrison Ltd v. MacDonald & Evans [(1952) 1 TLR 10] , the Court distinguished between a “contract of service” and “contract for services” provided to a company or business entity. The Court applied the traditional ‘control test’ concerning whether the employer has the right to control the way in which a person does the work. The Court further stipulated that a person is considered an employee under a “contract of service” when the work is integrated in that of the business and considered an integral part of the business, whereas an independent contractor for services is merely an accessory to the business and, thus, not an employee.

A MLEGALS REMARKS

In order to give owners more protection and assurance , copyright law has been evolving and changing. Many rules are codified, but some of the uncodified rules are still significant and actively discussed by the judiciary across several jurisdictions.

One of these is the doctrine of work for hire. The aforementioned comparison was crucial for noting a few facts, one of which was that the doctrine operates largely uniformly over the world despite the lack of codification, with a few minor exceptions. When an employee develops a piece of work while performing duties related to his employment, all three countries at least partially recognise the employer’s copyright.

The fundamental idea is that, unless otherwise expressly provided for in the contract, the employer or contractor is the first owner of any IP acquired through the course of the activity during the term of employment.

This doctrine’s requirements apply to both employees and independent contractors as well as business owners and entrepreneurs. Furthermore, an employee should be familiar with his or her rights and the parameters of their work description. Negotiating the conditions of a contract that explicitly specifies that the work is for hire may be advantageous from the viewpoint of the employee.

It is a typical boilerplate; hence one should think about negotiating a deal where IP belongs to the employee but can be licensed to the party for whom it was created in a certain way and for a set amount of time. Therefore, while dealing with priceless intangible property, it is crucial to comprehend the contract’s provisions and whether it pertains to “work of hire” or “work for hire.”

– Team AMLEGALS assisted by Ms. Shreya Chauhan (Intern)

For any queries or feedback, please feel free to get in touch with chaitali.sadayet@amlegals.com or mridusha.guha@amlegals.com.