Work for hire is a concept of intellectual property protection outlined in Section 101 of the 1976 Copyright Act. In most cases, the person who creates a copyrightable work—such as a story, poem, song, sculpture, graphic design, or computer program—holds the copyright for that work. A copyright is a form of legal protection which gives the holder sole rights to exploit the work for financial gain for a certain period of time, usually 35 years. In contrast, the copyright for a work for hire is owned by the company that hires the person to create the work or pays for the development of the work. The creator holds no rights to a work for hire under the law. Instead, the employer is solely entitled to exploit the work and profit from it. The concept of work for hire is different from the creator transferring ownership of a copyrightable work, because the latter arrangement allows the creator to reacquire rights to the work after the copyright period expires.
There are two main categories of copyrightable materials that can be considered works for hire. One category encompasses works that are prepared by employees within the scope of their employment. For example, if a software engineer employed by Microsoft writes a computer program, it is considered a work for hire and the company owns the program. The second category includes works created by independent contractors that are specially commissioned by a company. In order to be considered works for hire, such works must fall into a category specifically covered by the law, and the two parties must expressly agree in a contract that it is a work made for hire.
"If you show up to a job where somebody tells you what to do and when to do it, and for that you're rewarded with a paycheck, then your work product is classified as a work for hire and you don't own the copyright on it. Instead, it automatically becomes copyrighted in the name of the company," Michael Bertin explained in the Austin Chronicle. In the situation of independent contractors, he added, "There are two criteria for works for hire. It has to fit into one of nine specific categories, and there has to be a contract stipulating that it's a 'work for hire.' If one of those two elements is missing, then the work in question is not, repeat not, a work for hire."
The nine categories of materials eligible to be considered works for hire, as outlined in the Copyright Act, include works commissioned for use as: a contribution to a collective work; a part of a motion picture or other audiovisual work or sound recording; a translation; a supplementary work; a compilation; an instructional text; a test; answer material for a test; or an atlas.
Work for hire arrangements affect small businesses in a variety of ways. For example, a small business that hires a Web page design firm to create a company site must make certain that the contract stipulates that the design is a work made for hire. Otherwise, the company may find that it does not hold copyright to various elements of its own Web page, and the design firm may decide to use those elements in pages created for other clients. On the other hand, entrepreneurs who do occasional work for large companies as independent contractors will want to be careful signing work for hire contracts. A consultant who develops a framework for problem solving under contract with one client may be unable to use that framework with any other clients if it was developed under a work for hire arrangement.