Part III: A Business Owners Guide To Assignments, Assignment Clauses, And Licenses

A Business Owners Guide to Assignments, Assignment Clauses, and Licenses

In part I and part II, we discussed the Work for Hire Doctrine, and the difficulties of relying upon this doctrine to secure your company’s core copyrights. Both parts concluded with the rule of thumb to always get a written assignment of the copyright regardless of the employment status of the person who created the work. This is because there can be a substantial amount of legal ambiguity regarding who is—and is not—an employee for the purpose of creating a work for hire if there is no written work for hire agreement. And even if there is a written agreement, such an agreement is only valid for the nine statutory types of works. Relying on these ambiguities and technicalities can cause your rights to fall apart quickly, especially if you have to litigate over ownership. However, because there are advantages to owning a copyright as a work for hire—having all the rights of an original author and not subject to a later termination—the addition of an assignment is a belt and suspenders way to secure the most out of copyright.

The Key Advantage of Assignments and Licenses: Clarity of Rights

One of the greatest advantages of assignments and licenses is the certainty and clarity of the rights involved. Normally, with a written assignment or license agreement you know exactly what your rights are and your legal standing as either the owner or licensee. While disputes do arise, they are less binary than disputes over work for hire agreements. A dispute over an assignment or a license agreement is more likely to involve the scope or duration of the rights but not the bedrock issue of ownership. In contrast, a dispute over a work for hire will likely end up with one of the parties either owning, or never having owned, the copyright.

Understanding the Difference Between a Copyright Assignment and a License

Generally, an assignment is a transfer of 100% of the rights and is almost equal to the original ownership. “Almost,” because assignments can be terminated by the original author or the author’s heirs during the 5-year period between 35-40 years after the assignment. This is in contrast to a “license” which generally involves less than 100% of the rights, and is often limited in both duration and scope. For example, a photographer may grant a license for the use of a photo on the cover of a magazine and further grant the right to republish such photo in special issues for a period of years. Additionally, licenses may be either exclusive or non-exclusive. The exclusivity of a license may also be time limited. Thus, the owner may grant an exclusive license that converts into a non-exclusive license after a period of time.

How Copyright Licenses Offer Flexibility for Rights Holders

Licenses allow for a great amount of flexibility. To revisit the example of our photographer, that person could grant a 5-year license of a photo for use in advertising and make that license exclusive for the first 90 days, then reserve the right to display the photo on the photographer’s own website (to promote the photographer’s business) but not allow anyone else to use the photo except the original licensee for the next three years, and then allow the license to be non-exclusive for the final two years outside of the original licensee’s industry. Such an arrangement would allow the photographer to exploit the image to a higher degree while not getting in the way of the original licensee’s purpose for using the image.

What Business Owners Should Know About Nonexclusive and Implied Licenses

An important characteristic of nonexclusive licenses is that they do not need to be in writing and can even be implied by the conduct of the parties. An implied license will often be found where a company pays an independent artist to create a work for the obvious purpose of promoting the company and the company then uses that logo with the knowledge and consent of the artist. While the artist technically owns 100% of the copyright to that work, it would be difficult for the artist to successfully sue the company for copyright infringement, because the company would have a strong defense that there was an implied license. However, if you are reading this article, you are probably savvy enough to know that you should always get such an agreement in writing.

How Copyright Assignments Are Recorded and Why It Matters

In contrast to a nonexclusive license, by statute, an assignment must be in writing and signed by the owner of the rights being conveyed. Additionally, the Copyright Act allows assignments to be recorded—similar to a deed to real estate—and this provides constructive notice of the assignment. The effect of this recordation is that the assignment executed first prevails over an unrecorded assignment if it is recorded. In certain circumstances, a later assignment will prevail if it is recorded first, and made in good faith without notice of an earlier transfer. Therefore, it is always a good idea to check for prior recorded assignments before paying for a copyright, and once you have the assignment in place, record it right away.

How to Structure a Copyright Assignment in a Contract

An assignment can be created either as a standalone document or as a clause in another document—such as a work for hire agreement. As a clause, it can be as simple as: “To the extent that the [Author’s services] may be determined not to be a ‘work-made-for-hire’ vesting exclusive ownership of the copyright in [Hiring party], [Author] hereby exclusively assigns to [Hiring party] all right, title, and interest in the copyright of the work throughout the world for the full term of the copyright.”

Why the Language in a Copyright Assignment Agreement Is Critical

One important word to note is the word “hereby.” This means the assignment is done. If instead, the contract specifies that the creator “agrees to assign” the copyright (in the future), then there has been no transfer of the copyright. And if the creator does not, in fact, execute an assignment, the creator will be in breach of the contract, but the remedy may only be damages for that breach, and not a judicially enforced assignment. This is one area of the law where courts strictly interpret the writing requirement. Any ambiguities will be interpreted against the assignment so the written agreement must be clear that it is the copyright that is being assigned and not just a physical copy of the work. And if the language does not use the word “copyright” it will be difficult to argue that it is an assignment. An ambiguous agreement that could be interpreted as either a license or an assignment will be interpreted as a license.

Best Practices for Copyright Assignment: Work With Experienced Legal Counsel

The best practice is to be crystal clear that the written document is assigning the full copyright. Always use experienced legal counsel when dealing with copyrights of any significant value or importance to your business. The creation, transfer, and recordation of copyrights, can all involve written documentation with specific requirements set by Congress and the Copyright office. If you have any concerns about your business’s current or past practices with works covered by copyrights, an experienced copyright attorney can help audit those assets and correct any issues that may present themselves.