Software contractors and IP

"Work made for hire" may not apply to commissioned software

Did you know using an independent contractor agreement that stipulates software contractor work as work made for hire, presumably so your company owns copyright to software developed by the independent contractor, may not result in your company owning copyright? The contractor may still retain ownership because most software does not fit into one of the nine categories of works required for commissioned works to qualify as work made for hire.

Assignments are used instead

Obtaining copyright to software developed by an independent contractor may instead require an assignment. With an assignment, the contractor expressly assigns copyright to your company. Since it's hard to know what intellectual property may actually exist in software, and typically software deliverables also include technical documentation and other peripheral works, assignments of software I’ve seen have typically assigned all independent contractor rights, title, and interest to all deliverables prepared by the independent contractor.

But there’s more in deliverables than meets the eye

No matter how convenient it would be to separate a work from the mind that created it, software development and consulting works contain the unique experiences, skills, perspectives, and expert opinions of the contractor that produced them. Each of these are valuable components of the contractor's intellectual 'toolbox', needed by the contractor to continue making a living. Of course these can't really be "removed" from the contractor anyway: an intellectual work, and the ideas it contains, can't be separated either from the work or the mind that invented it. At least I don't know how to do it.

Insisting on everything could get you less

Would a contractor freely provide you with everything their intellect has to offer if they know they're
potentially giving up all rights to everything that arises, results, or can be derived from any part of their work with you forever? Does motivating a contractor in this way encourage them to provide you with everything of value they have to offer?

A better alternative?

There is another way that may be better for everyone. Having the independent contractor provide you with a license that authorizes all the uses you require of a deliverable may be able to meet your needs without excluding the contractor of rights of authorship. The intellectual property clauses I've seen in agreements typically gives clients nonexclusive, perpetual, worldwide license to use and sub-license the use of all work products for the purpose of developing and marketing their products or internal business operations. Can you imagine really needing more than that?

When you still need an assignment

Well, maybe there are circumstances where you DO need more. Maybe you have an existing work made for hire relationship with your customer, or maybe you just feel you need to own the copyright. For these situations, including a provision that supports adding an assignment on a project-by-project basis may enable the best of both worlds. You're still provided a license to all works by default, enabling your contractor to share the full value of their experiences, skills, opinions, and software creativity uninhibited. But for specific situations when it's needed, a full assignment can be made.

My take

Work made for hire agreements with your independent software contractors may not result in you having the rights you expect. An assignment can transfer "all rights, title, and interest", but going that far may not be necessary -- or ideal. Licenses authorizing uses can probably give you all you need (and more) and won't exclude the contractor from continuing to use expressions of their intellect and knowledge to make a living. Best of all, they won’t be restricted from giving you everything they've got.


Note that this information is for informational purposes only. Compass Point, Inc. is not a law firm and does not provide legal services or legal advice, and this information is not a substitute for an attorney’s advice. Please consult a licensed attorney in your area with specific legal questions or concerns.