What's a Reasonable Assignment Provision?

Dear Rich: The other day you criticized a contract clause that a developer sent you because the clause claimed rights to the developer's own software tools. Can you give an example of a clause that wouldn't do that? We usually don't like it when someone responds to a question by saying "Good question." It seems gratuitous and a bit of a stalling tactic, doesn't it? It reminds us of our grandfather (left) who could hear okay but whenever you asked him a hard question, he made you repeat it so that he would have more time to answer.
Right, you had a question.  Flakasoft, one of our favorite app developers, responded to our recent work-for-hire entry and sent us a contract they had just received. It included the following provision.

Ownership of Inventions. To the extent that, in the course of providing the Services, Consultant jointly or solely conceives, develops, or reduces to practice any inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets, whether or not patentable or registrable under copyright or similar laws (collectively, “Company Inventions”), Consultant hereby assigns all rights, titles and interest to such Company Inventions to the Company. “Company Inventions” shall not include any software, owned or developed by, or licensed to Consultant, or methodologies, techniques, software libraries, tools, algorithms, materials, products, ideas, designs, and know-how (including all copies, enhancements, modifications, revisions, and derivative works of any of the foregoing) that existed prior to the date hereof or are acquired by Consultant from a third party thereafter or developed independently and outside the scope of this Agreement.

It's possible to draft a more specific or more favorable clause for protecting developer tools but this will give you a basic idea of what could work in terms of turf protection and fairness. And thanks for the good question!

Should I Sign Work for Hire Clause?

Dear Rich: I'm a developer and I work as an independent contractor. Can I get your thoughts on a "work for hire" clause that a client wants me to add to my IC agreement.

Work for Hire. The deliverables (including any underlying technology) created pursuant to this Agreement shall be deemed a “work made for hire” as that term is defined under Section 101 of the U.S. Copyright Act, and the Company shall be considered the person for whom the work was prepared for the purpose of determining authorship of any copyright in the deliverables. If for any reason the deliverables are determined not to be a “work made for hire” under U.S. law or the law of any other jurisdiction, Developer hereby assigns and agrees to execute such written instruments and do such other acts as may be necessary in the opinion of the Company to assign, to the Company, without additional compensation, all of Developer’s right title and interest in and to the deliverables.

Ah, yes, the old "either/or" clause, popularized after a 1989 case in which a sculptor disavowed a work made for hire agreement. Companies didn't like the uncertainty of independent contractor (IC) status and this clause became de rigueur: the IC agrees that it is a work made for hire, and if for some reason, it isn't, the IC assigns ownership. Either way, the person who signs this is giving up all rights in the thing created.
What about the technology? One thing we're wondering about is giving up on the underlying technology incorporated within your deliverables. You may develop software tools or other programs that may have many uses in your work. Is there a way that you can carve out ownership of such technology? Or perhaps, can you and the company share nonexclusive rights?
Marwencol. We gave up searching in Google Images for "work for hire"  and decided to display the poster for our most recent favorite documentary. That got us thinking about a comment somebody made that they didn't know if the fantasy world of Marwencol was a form of therapy or an escape mechanism. Was Colonel Hogencamp treating his problems or evading them? If we weren't so concerned about our precious and ever-precarious blog metrics, we'd have an opinion on that.
[Note: There's a follow-up to this post here.]

Do You Have to Get Paid to Create a Work For Hire?

Dear Rich: Thanks for your answer to my question about ownership rights for a documentary film. I wanted to add a couple of things after reading your response: First, we are listed as "company" and the subject of the documentary as "owner" and the language specifically says 50% copyright of the documentary with no mention of source materials or materials created as a result of the production of the documentary. There is a clause that says we will return to "owner" whatever materials they gave us (photographs, video tapes, etc.) but nothing about our mini-DV tapes, edit files, etc. This was NOT a work made for hire as the "owner" has not spent any money nor offered to give us money over the three years we've been in production. We spent over $7,000 out of our pocket during production and were not paid an hourly rate of any kind (this is actually stipulated in the contract, that neither party would be paid except to split revenue generated by the sale of the movie on DVD or other means). Second we've resolved ourselves to the fact that in light of the "owner's" unwillingness to offer us a reasonable buy out of our source tapes we will simply do nothing, as has been suggested to us. Our concern however, is that since they have an attorney that they will look for a way to return to the issue of our breach of contract and attempt to sue us for some alleged damages - damages we are unclear on since aside from their attorney they have not paid for anything. Could they sue us for damages of lost potential revenue of the sale of the DVD? Did anybody miss us? We missed you and thanks for bearing with us as our hosting service retrofitted itself with some highly technical IT stuff all of which forced us into an extended hiatus. Anyway, we're back and we may have more exciting technical information to report soon ... then again, maybe not. It could be that kind of year.
Right, you had a question. Because you never got paid, you assume your arrangement can't be a work made for hire. That’s not necessarily true. There are two ways to create a work made for hire. The first way is irrelevant since you're not an employee. The second way -- for independent contractors -- occurs if the following three criteria are met:
(1) the film is specially ordered or commissioned (check)
(2) the work falls into one of the enumerated categories (check, it's an audio-visual contribution), and
(3) “if the parties expressly agree in a written document signed by them that the work will be considered a work made for hire” (Hmmm …. Notice there’s no mention of getting paid). As a general rule, courts presume that the above-referenced “written document” is a contract of some sort. In order to be a legally valid contract, there must be consideration.

What's consideration? It can be anything that one party does (or doesn’t do) for the other, and vice versa. Typically it's a payment but it can also be a promise to be paid in the future, even if it is speculative. (We recently signed a speculative arrangement like this when we wrote a book and got no advance). We’re not concluding that your document is a work made for hire arrangement (after all, we haven't seen it), but it could be even if you never received a dime from the other party.

Should you fork over the raw footage. None of this really helps your decision about whether you should fork over the raw footage and files. A lot depends on what is (and what's not in) the agreement. An argument might be made that the parties only intended to share copyright in the completed project. Even if it is implied that the shared-copyright extends to all footage, it's still not clear whether you are required to furnish that footage to the other copyright owner. We start to get into a slippery area as an intangible right is used to claim rights over tangible elements. If it's not spelled out in the agreement, this type of battle sometimes ends up in the courts.

What about damages? As for damages, keep in mind that although your payment for a contract can be speculative, damages in a lawsuit usually cannot. Courts are often hesitant to award financial damages if the person claiming damages cannot say with some certainty how much the film would have earned. There are ways to demonstrate damages in film cases but they are often confusing and when litigated can go on for years-- for example the Kim Basinger/Boxing Helena lawsuit (the judgment for which was later voided) (BTW, Kim, you did the right thing). In other words, the aggrieved party needs to show the court why they’re entitled to the dough, not just ask for it. We wish there was a volunteer lawyers for the arts group in your area to help you get some low cost arts advice. To learn more, here’s a recent podcast we did with the folks who run California Lawyers for the Arts.