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Contract Negotiation11Columbus, Ohio attorney Joe Dreitler, who has been practicing Copyright and Trademark law for 36 years, says he is often asked the same question by various clients, no matter the size of their business. The inquiry? Who owns the copyright of work product, the boss or the employee?

According to Dreitler, namesake of Dreitler and True, “Anything created by an employee within the scope of their employment is a work for hire and the copyright automatically vests in the employer.” Furthermore, there needn’t be a specific written agreement to that effect for the employer to exercise their ownership rights over the creation, says Dreitler. This automatically belongs to the employer under the Shop Right doctrine.

The key is whether the work was created in the course of employment. For example, if a janitor for a software company goes home and independently writes a software program on her own computer, the creation is not a work for hire by an employee. In that scenario, the janitor’s job is not to write software programs, so the copyright in that intellectual property, is the janitor’s property. But, if the same software program is created by a company’s Director of IT at home or in the office, it is considered the business entity’s property, and the boss owns it. The facts usually make it easy to determine if something was created by an employee within the scope of their employment or not.

So, in the scenario where the janitor goes home and creates an IT program, that creation belongs to the janitor.  “The company can't use it without a license or without buying it,” says Dreitler.

Employers should be aware of complications that frequently arise in the scenario when a company hires independent contractors to work in IT and other departments when it comes to who owns the intellectual property. Independent contractors “are not employees and their work is not owned by company,” warns Dreitler.  The key is to define in writing who will own what before the contractors start to work. The company automatically obtains a non-exclusive license to utilize the program or software the contractor created, but since it was created by an independent contractor, the copyright in their work product belongs to them. Moreover, when software is created by an independent contractor, they are also able to license the software to a competitor.

In order to own the exclusive rights to the software created by an independent contractor, a company seeking to own it needs a written agreement at the time of hiring, whereby the contractor actually assigns title of everything that they create to that company. Of course the employer should expect to pay for that exclusive use or ownership of the copyright. Moreover, Dreitler says a written assignment detailing the company’s rights of ownership of the software from the contractor to the Company should formalize the acquisition. Such a written agreement is imperative so the company owner’s rights of exclusive use are crystal clear.

However, says Dreitler, an agreement shouldn’t be created seeking to change the status of the work product of an independent contractor into “work for hire”. They aren't employees and the rules of work for hire do not apply,” he says. When work is created by an independent contractor, they own it unless and until it is formally assigned to someone else, he says.

Tami Kamin Meyer is an Ohio attorney and writer.

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