Determining Ownership of Software Copyright:
Presented at the 1997 AIPLA Spring Meeting
by Alan H.
Blankenheimer Brown & Bain, P.A.
(blanken@brownbain.com)
| Copyright initially vests in the author or authors of a copyrightable
work. Once the author has been identified, a series of other questions is
presented: Does the work made for hire doctrine apply? Are there issues presented
by joint authorship and joint ownership? Has one or more of the rights in
the work been transferred by assignment or license? If so, were statutory
formalities observed? Has ownership of copyright in the work shifted by operation
of law, such as through bankruptcy or community property laws? Have any transfers
been terminated? Has the copyright term expired?
Overlaying all consideration of the ownership issue is the fundamental nature of copyright as an intellectual property right - a right divorced from ownership of the copy or thing itself. I. The Nature of Copyright
A. Copyright Is Not a Thing 1. Copyright consists of a bundle of exclusive rights - in the case of software, the rights to reproduce, to distribute, to display, to perform and to create derivative works.
a. Those rights may be entirely divorced from ownership of a copy of the code as it is fixed in any tangible medium of expression, such as a hard drive, ROM, RAM or floppy disk. That is true for any literary work. Ownership of Mark Twain's manuscript or J.D. Salinger's letters, for example, necessarily conveys rights in the copy, but not rights in the copyrighted expression. See Salinger v. Random House, Inc., 811 F.2d 90, 95 (2d Cir.) ("Having ownership of the physical document, the recipient (or his representative) is entitled to deposit it with a library and contract for the terms of access to it"), cert. denied, 484 U.S. 890 (1987); Chamberlain v. Feldman, 89 N.E.2d 863 (N.Y. 1949). B. Copyrights In Search of an Author 1. Section 201(a) of the Copyright Act provides that statutory copyright in a work "vests initially in the author or authors of the work."
a. But "author" is a term of art. For works created by individuals not acting within the scope of employment of another or acting as a commissioned author, the individual is the "author" of the work. 2. That ownership of a work vests initially in the "author," as so defined, is generally true for works created on or after January 1, 1978.
a. However, with respect to works of qualifying foreign authors that have fallen into the public domain in the United States for failure to comply with certain formalities and are restored to protection under a 1994 amendment to the Act, ownership vests initially in the party entitled thereto under the law of the foreign nation. 17 U.S.C. [[section]] 104A(b); see 2 Melville B. Nimmer & David Nimmer, Nimmer on Copyright [[section]] 9A.04[B][2] (1996). 3. Correctly identifying the author of a work is important for several reasons.
a. Section 104(b) of the Copyright Act partially conditions copyrightability on the nationality or domicile of the author. C. What If There Is No Author? 1. The 1976 Act expressly makes "authorship" a requirement of copyrightability. 17 U.S.C. [[section]] 102(a). But is it really? Statements of the Supreme Court suggest the answer is yes.
a. "As a general rule, the author is the party who actually creates the work, that is, the person who translates an idea into a fixed, tangible expression entitled to copyright protection." Community for Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989). (emphasis supplied) 2. But what of computer generated works? Is there an essential link with human creativity, or is the creativity of a machine programmed by humans sufficient? 3. What of software written by computer? For that matter, what of other literary works written by computer. See Racter, The Policeman's Beard is Half Constructed (1984) ("Benton saw Lisa, then began to revile her. He yodeled that Lisa possessed an infatuation for Diane, that her spirit was nervous, that she could thoughtfully murder her and she would determinedly know nothing."), quoted in 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright [[section]] 5.01[A] at 5-5 n.16.6 (1996). It is difficult to differentiate such works from Dada poetry, for example. II. Joint Works A. Creation of a Joint Work 1. Section 201(a) of the Copyright Act provides that "[t]he authors of a joint work are co-owners of copyright in the work." A "joint work" is defined as "a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole." 17 U.S.C. [[section]] 101. 2. A co-owned work can be created without joint authors, however. One author may create the work but transfer an undivided interest in the work to another. The resulting joint tenancy has certain attributes of a joint work, but not others. For example, the life plus fifty year term of the copyright will be measured by the life of the sole author, not her surviving cotenant. The cases nevertheless sometimes refer to such a co-owned work as a joint work, but this is not correct, strictly speaking. See Oddo v. Ries, 743 F.2d 630, 632-33 (9th Cir. 1984) (joint work found where author contributed work to partnership). 3. For a work to qualify as a joint work, its collaborators must have intended to merge their contributions into a unitary whole at the time each made her contribution, regardless of whether they actually worked together or even knew each other, and notwithstanding that their contributions can be distinguished (e.g., words and music). See Shapiro, Bernstein & Co. v. Jerry Vogel Music Co., 161 F.2d 406, 409 (2d Cir. 1946) (after lyricist and composer wrote song together, new lyricist wrote new lyrics for the song; held that new lyricist and original composer were joint authors of the new work, "Melancholy Baby"), cert. denied, 331 U.S. 820 (1947). 4. Despite the so-called "12th Street Rag" case, Shapiro, Bernstein & Co. v. Jerry Vogel Music Co., 221 F.2d 569, 570 (2d Cir.) (four years after composer wrote music, his assignee arranged for lyrics to be written for the music; held that resulting song was joint work), modified on reh'g, 223 F.2d 252 (2d Cir. 1955), under the 1976 Copyright Act, the intent of the assignee of all rights in a work is not sufficient. It must be the intent of the authors. 5. The legal issue of copyright ownership among putative joint owners is a matter of federal jurisdiction. Merchant v. Levy, 92 F.3d 51, 55 (2d Cir. 1996), cert. denied, 117 S.Ct. 943 (1997). B. Protectability and Significance of Individual Contribution Required for Joint Authorship 1. Two authors cannot create a joint work if the contribution of one is confined to unprotectable matter, such as ideas, rather than copyrightable expression.
a. Thus, a corporate officer who contributed ideas to the development of a computer program and helped design the language and format for the program's visual display was not an author, because his information and advice were "little more than one would expect from the operator of any business who seeks to have a computer system designed for him." Whelan Assocs., Inc. v. Jaslow Dental Lab., Inc., 609 F. Supp. 1307, 1318-19 (E.D. Pa. 1985), aff'd on other grounds, 797 F.2d 1222 (3d Cir. 1986), cert. denied, 479 U.S. 1031 (1987); see Ashton-Tate Corp. v. Ross, 916 F.2d 516, 521 (9th Cir. 1990); S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1087 (9th Cir. 1989) (plaintiff who contributed to design of computer program by specifying tasks program was to perform and how it was to sort data held not to be joint author: "A person who merely describes to an author what the commissioned work should do or look like is not a joint author for purposes of the Copyright Act . . . . To be an author, one must supply more than mere direction or ideas; one must `translate[] an idea into a fixed, tangible expression entitled to copyright protection'"). 2. That a putative co-author contributed only a small portion of the work creates a presumption against joint authorship. See Eckert v. Hurley Chicago Co., 638 F. Supp. 699, 704 (N.D. Ill.1986) (co-author's contribution must be "`significant' both in quality and quantity" to permit an inference that the parties intended a joint work). C. Alternatives to Joint Authorship: Derivative and Collective Works 1. It will often be important to delineate, in the case of a computer program that may have been flowcharted by one person or group and had various modules successively coded and modified by others, whether the work is a single joint work, a collective work, or one work and a series of derivative works. 2. There are important differences among the three. In a joint work, each author owns an undivided interest in the whole and has the right to use or license it (subject to accounting to his co-authors for royalties), including the portions written by others. In a collective work or a derivative work, each author owns only her own contribution. 3. There are important similarities among the three. A joint work consisting of inseparable parts is like a derivative work in that one author's contribution transforms or recasts the other's. A joint work of interdependent parts is like a collective work in that the works of different authors are assembled into a collective whole. 4. The distinguishing difference among the three resides in each author's intent at the time of his contribution. If the work is written "with the intention that [his] contribution[] be merged into inseparable or interdependent parts of a unitary whole," the combination of his work with others' results in a joint work. 17 U.S.C. [[section]] 101. If that intention is formed only afterwards, a derivative or collective work results from the merger of his contribution with others. D. Some Likely Future Implications of Joint Ownership Analysis for Determining Ownership of Software 1. When there is a dispute whether programmers have created a joint work, the court should inquire not only whether they intended a joint work, but also whether the contribution of each programmer was separately a work of authorship.
a. To decide the latter issue, the court should engage in an abstraction/filtration analysis to determine whether the degree of expression and authorship due each programmer suffices for that programmer to have created a copyrightable work. See Aymes v. Bonelli, 30 U.S.P.Q.2d 1718 (S.D.N.Y. 1994) (discussing but not applying a/f/c analysis to resolve joint ownership issue), aff'd on other grounds, 47 F.3d 23 (2d Cir. 1995). 2. More generally, if a consultant works with employees of a company to create a computer program, absent a disclaimer of joint authorship and/or an assignment of rights to the company, the consultant may well end up as a joint author of the work, and hence a joint owner of the copyright, without the company's authorization or even knowledge. In that event, the consultant would be free to exploit the copyright without permission of the company, subject only to a duty to account for profits, and would, in turn, be entitled to an accounting of profits from the company for its exploitation of the work. Consequently, before IPOs, financings or sale, it will be highly desirable to undertake a technology audit of the company and attempt to remedy such problems before the putative joint author can create serious problems. 3. A related issue arises in the case of derivative works. Is the joint author of a prior work necessarily the joint author, and hence a joint owner, of the derivative work based thereon? In Ashton-Tate v. Ross, the court held that "[j]oint authorship in a prior work is insufficient to make one a joint author of a derivative work." 916 F.2d at 522. In that case, involving a spreadsheet program for the Apple Macintosh, the prior work's co-author's permission to Ashton-Tate to create a derivative work left the other co-author without a copyright claim against Ashton-Tate, but arguably with a claim for an accounting of profits against the first co-author. 4. "Linking" on the World Wide Web creates a distinct set of ownership issues.
a. A hypertext link on the Web is an embedded electronic address that when activated in one Web location transports the user to the content of another Web location. Some links, sometimes called "outlinks," simply take the user out of the first Web location to the second Web location. Other links, sometimes called "in-line links," pull content from the second Web page into the first. 5. In any event, the entire skein of linkages from the first website can be conceptualized as a kind of virtual collective work. The owner of copyrights in the second website -- or indeed all the linked sites -- might contend that the first site is now, if not a joint work (because of the lack of shared intentions to create one), at least a collective or derivative work (in which, since the first website is now in part based on the second), the second website owner can assert some ownership rights. E. Rights of a Joint Owner 1. As noted above, a joint owner may, without obtaining the permission of the other joint owners, either exploit the work himself or grant a nonexclusive license to third parties to use the work. Thus, a joint owner may prepare and publish a derivative work. 2. Each joint owner is accountable to the others for their pro rata share of the profits from licensing or exploiting the work. III. Community Property A. Definition 1. Under a typical community property law, a husband and wife become the co-owners of property that is owned or acquired by either spouse during the marriage other than by gift, devise, bequeath or descent. 2. Accordingly, in a community property jurisdiction, a copyrighted work authored by a spouse during the marriage, as well as any royalties and profits derived therefrom, are community property. In re Marriage of Worth, 195 Cal. App. 3d 768, 241 Cal. Rptr. 135 (1987). B. Implications 1. For the most part, the rules governing joint owners will therefore apply to both husband and wife with respect to such copyrighted works. 2. Divorce may be, and often is, the impetus to determine questions of joint ownership or other entitlement to royalties that, for one reason or another, have not previously been resolved. IV. Works Made for Hire A. Statutory Basis 1. "Works made for hire" are an exception to the rule that the individual creating the work is the "author" of the work and the owner of the copyright (which comes into existence automatically upon the creation of the work and its fixation in a tangible form). 2. Section 201(b) of the Copyright Act provides that "[i]n the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright." 3. Section 101 defines a "work made for hire" as either
a. "(1) a work prepared by an employee within the scope of his or her employment," or B. Author 1. Accordingly, the employer is always the author of the code written by its employees within the scope of employment. The employer and employee may by express written agreement give copyright ownership to the employee, but the employer remains the author. 2. If the work is one made for hire, then the life of the author (employer) cannot measure the life of the copyright, so its term is the earlier of 75 years from the year of its first publication or 100 years from the year of its creation rather than the life of its author plus 50 years. 3. For purposes of [[section]] 104's nationality and domicile requirements, the nationality of the employer, not the employee, governs. C. Works Prepared by "Employees" Are Not Limited to Those Created in the Traditional, Salaried Employer/Employee Relationship 1. The first clause of the definition of "works made for hire" in [[section]] 101 refers to works prepared by "employees" in the scope of their "employment." But "employee" has been given a functional rather than literal meaning. 2. In Community for Creative Non-Violence v. Reid, 490 U.S. 730, 739-41 (1989) ("CCNV"), the Court read the first clause as encompassing works prepared within the common law master-servant relationship. In that regard, the Court adopted a federal law definition of agency guided by the Restatement. 3. The Court in CCNV held that Reid, a sculptor, was an independent contractor rather than an agent at common law. Accordingly, notwithstanding CCNV's detailed specification of his work-
-a modern Nativity scene in which the figures appear as "contemporary homeless people huddled on a streetside steam grate"- 4. The hiring party's control of or right to control the worker (not necessarily the product) is the ultimate factor in this definition, but there are many potentially relevant factors, including:
a. the skill required 5. If created by an agent, the work must still be "within the scope of his or her employment" to be "made for hire" under the Act. A work is created within the scope of employment if it is created during the time, or for the specific objects, for which the employer hired the employee, under conditions subject to the employer's supervision and control, and it is actuated at least in part by a desire to serve the employer.
a. Accordingly, an employee hired as a labor economist who developed a computer system at home that he implemented at work did not create a work for hire because he was not hired as a computer programmer. Roeslin v. District of Columbia, 921 F. Supp. 793, 798 (D.D.C. 1995). D. Specially Ordered or Commissioned Works 1. Specially ordered or commissioned works, under the second clause of [[section]] 101's definition of "work for hire," may qualify only if they were ordered for one of the nine specifically enumerated uses.
a. Supervision or artistic control by the commissioning party is not required. The agreement that a work will be a work made for hire must be reached before the work is created. Playboy Enters., Inc. v. Dumas, 53 F.2d 549 (2d Cir. 1995), cert. denied, 116 S. Ct. 567 (1996). E. Implications for Software Development 1. CCNV significantly narrows the circumstances under which a work will be deemed made for hire.
a. It uses a relatively restrictive definition of employee, relying on the old common law agency test. 490 U.S. at 753. 2. Most independent programmers and computer consultants will not fall within the definition of "employee" in the first clause. Nor does software fit generally into any of the nine specifically enumerated categories of the second clause of the definition of "work made for hire."
a. To be sure, software might be a "translation" from one language to another, or part of an audiovisual work if the consultant creates screen displays. V. Copyright Transfers A. Copyright Transfers Require a Writing 1. Section 204(a) provides that a transfer of copyright ownership (including an exclusive license; [see [[section]] 101] but not a nonexclusive license) other than by operation of law is not valid unless memorialized by a writing. 2. Where the terms or fact of the transfer are disputed, the alleged transferor may not be able to enforce the agreement unless the writing is contemporaneous with the transfer.
a. Illustratively, in Konigsberg Int'l, Inc. v. Rice, 16 F.3d 355, 357 (9th Cir. 1994), the Court held that a writing executed three and a half years after the alleged oral agreement was not substantially contemporaneous with the agreement and accordingly was insufficient, in suit by alleged transferee, to effect a transfer of copyright under [[section]] 204 in an Anne Rice work, "The Mummy." B. Recordation of Transfers 1. Section 205 provides that recordation of a copyright transfer is constructive notice of the facts stated therein if the recorded document specifically identifies the work and satisfies other formalities, and the underlying copyright has been registered. 2. As between two conflicting transfers, the one first executed prevails if it is timely recorded, i.e., within one month after its execution in the U.S., or before the timely recordation of a second transfer. VI. Termination Rights A. Statutory Basis 1. Under [[section]] 203 of the Copyright Act, in the case of any work other than a work for hire, the grant of a transfer or license of copyright or any right thereunder may be terminated by an author or his statutory successors within a five year window beginning
a. 35 years after the grant B. Implications for Ownership of Software 1. While it is hard to imagine any software with a life of ten years, let alone 35 years, the termination provisions may nonetheless be relevant in the case of a grant of derivative rights in a program, which conceivably could stretch out to 35 years. Section 203(b) of the Copyright Act provides that a derivative work prepared under authority of the grant before its termination may continue to be used after termination, but this privilege does not extend to the preparation of new derivative works after termination. 2. In that case, it may be very important whether the work is made for hire, in which case there are no termination rights, or created by an independent contractor and subsequently assigned, in which case the author has such termination rights and the company may be foreclosed from creating new versions of the software if termination is exercised. 3. The same problems could arise if one company incorporates into its software the contribution of another, which unknown to the first company, contains work of an independent contractor who could exercise termination rights down the line. 4. Accordingly, consider requiring a warranty from the second company that no termination rights will arise, along with an indemnity against damages in the event of breach. 5. Similarly, in the case of joint works: Where an independent consultant has been used to create a joint work with employees of a company, the consultant will have a termination right after 35 years, but the company will not, as the company interest in the work is as a work for hire. 1 See O'Rourke, "Recent Interpretations of the Copyright Law's Requirement That Written Transfers of Copyright Ownership Be Contemporaneous with the Transfer," ABA Section of Intellectual Property Law Newsletter, vol. 14, no. 2 (Winter 1997) at 14.
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See also the following articles on the Brown & Bain website:
New Developments in Copyright Litigation: Infringement, Fair Use, Internet Law and Preemption
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