Second Circuit Decisions Show Need for Clear and Timely Work for Hire Agreements

Two Second Circuit decisions, issued in the same month, considered “work for hire” agreements, and their efficacy in transferring copyright interests.

Estate of Kauffmann v. Rochester Institute of Technology (2d Cir. 2019) held that a work for hire agreement signed five years after the copyrighted works were submitted to the publisher was too late to reflect a pre-existing agreement that the works would be treated as works for hire.

Ennio Morricone Music Inc. v. Bixio Music Grp Ltd. (2d Cir. 2019) held that an assignment effected in Italy under Italian law did not suffice to create a “work for hire.” Although the agreement did affect an assignment, the question of whether the work was “for hire” was critical to whether the author’s assignee could terminate the assignment 35 years after the fact, as the Copyright Act provides for.

Taken together these decisions emphasize the importance of having clear and timely agreements that expressly recite that the work is “for hire,” if that is what is being agreed to and is legally applicable. And, this applies to transfers in foreign countries, which can often implicate U.S. rights.

The Copyright Act vests ownership of a copyrighted work in the author, generally the individual or individuals who created the work.

An exception is a “work for hire.” By statute, this is limited to two situations: (1) where the work is created by an employee in the scope of his or her employment or (2) a “work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.” 17 U.S.C. § 101.

The latter situation usually involves works that are an adjunct to another work – such as graphic illustrations added to a book, a music score for a film (the situation in Ennio Morricone) or submitted movie reviews to be published in a monthly magazine (the situation in Kauffmann). Although the author need not be an employee, there must be a writing that specifically states that the work is a “work for hire.”

The two Second Circuit cases dealt with this second scenario. In Kauffman, over a period of 55 years, a famous movie critic, Stanley Kauffman, had submitted movie reviews to a magazine, The New Republic, and these were published along with the magazine. But the treatment of these works was not formalized until 2004, years after the reviews had been submitted. The Second Circuit held this was far too late.

Some Circuits require a writing prior to the creation of the work. While the Second Circuit in one prior case had taken a more relaxed view, in that case there had been multiple writings (in the form of payment checks) that were made shortly after each work was sent in for publication. In Kauffman, in contrast, the agreement, such as it was, was far too late.

In Ennio Morricone Music, the Second Circuit considered ownership of six music scores composed by an Italian composer in the 1970s and 1980s for incorporation into six films. The parties effected an assignment under Italian law, whereby the scores were assigned to another company who licensed them for incorporation into the films . The composer’s assignee sought to terminate these assignments 35 years after the fact, as provided for by Section 203 of the Copyright Act.

The company to whom the works had been assigned sought to defend on the grounds that the assignment was in effect a work for hire – since works for hire are excepted from the termination provisions of Section 203.

But the Second Circuit rejected that – the parallel Italian copyright law provision did not require either a writing or a specific statement that the work is “for hire.”

In fact, it appears that Italian law, like that of most countries, does not have a “work for hire” concept in its copyright law. In most countries, initial ownership of a copyrighted work vests in one or more individual “authors,” who then can assign their interests to another person or entity.

As noted above, U.S. law does generally operate that way as well. But there is exceptional situation: a “work for hire.” Under American law, “work for hire” means more than an assignment; in a work for hire situation, the employer/commissioning party is treated as the author itself. This is not the same as an individual author assigning his rights to an assignee.

To illustrate, if a freelance photographer sells his photographs to a newspaper, the individual is the author and owner and the transfer is a mere assignment. But if he is an employee of the newspaper, for example, then the photos are a “work for hire” and the newspaper itself is the author.

While in both cases the receiving party will own the copyright, an assignment is subject to termination after 35 years, while a work for hire is not.

The lesson of these two cases is clear: a party involved in a work for hire situation should use a clear writing that the work will be treated as a work for hire, and have it signed as soon as possible, preferably before the work is created.