Once upon a time, working with independent contractors was considered risky and even a bit frivolous. Today, however, hiring out work to freelancers is not only the norm, but it has also become a great way for businesses to reduce overhead costs, increase output, and turn more profit. However, there are still some issues that employers run into with independent contractors, the biggest of which is, who owns the rights to the intellectual property when all is said and done?

While you may have paid for the time and resources dedicated to creating the finished product, without a contract explicitly stating that the final product is yours, the independent contractor is legally entitled to the rights of any works that they create. At Garcia & Gurney, ALC, our intellectual property lawyers can help you draft a contract that ensures you gain the rights of any works you pay an IC to create.

Works Made for Hire 

In the independent contractors’ world, there is a little-known clause known as “works made for hire” that essentially dictates whether or not they will retain the rights to a piece of property upon the completion of a project and after being paid. If the person or entity who hired them to complete the project included a clause about the work being created for hire, the company who did the hiring is legally considered to be the work’s author or creator, and therefore the legal owner.

In order for a work to be eligible for a work for hire agreement, it must fall into one of the following nine categories:

• A contribution to a collective work, such as a magazine or other literary publication;
• A translation;
• A compilation;
• A supplementary work;
• A piece of an audiovisual work;
• An instructional text;
• A test;
• Answer material for a test; and
• An atlas.

Works Not Made for Hire 

If the work you contract out does not fall into one of the above nine categories, you cannot legally contract it out as a work for hire job, and therefore, you are not legally entitled to ownership of the finished product, even if you pay for it. In order to protect yourself and your intellectual property in such an instance, you must include a provision in your contract that specifically requests that all or some of the copyrights be transferred to you upon completion of the project. In order for the contract and all of its provisions to be valid, you must choose your wording carefully and ensure that the independent contractor signs the agreement before taking on the project.

Consult a Pleasanton Intellectual Property Attorney

At Garcia & Gurney, ALC, our business attorneys help protect the intellectual property of businesses across the Pleasanton, Alameda, and Contra Costa areas. Intellectual property issues can be complex, especially when they involve independent contractors. ICs are not dictated by the same rules and conditions as traditional employees, and as such, businesses must take extra precautions when working with them. If you routinely work with independent contractors, make sure that you have the proper safeguards in place to protect your intellectual property, and to ensure that you do not pay for a product or design that you may never see the rights to. To speak with a Pleasanton business attorney for advice on drafting your IC contracts, call 925-468-4000 today.