What does this mean?
When it comes to copyright, just because you paid someone to create something for you doesn’t mean that you own the work. The general rule is the author owns the copyright. It is only when the work is made under a work-made-for-hire contract or by an employee in the performance of his duties that the copyright will belong to someone else - usually to the person who had the work done.
This is why you need a written agreement with whoever makes the graphic design, copy, or other copyrightable work for you. This can be in the form of a work-made-for-hire contract, an IP assignment (if not covered by categories for WMFH), or an employment contract showing the job description (to show that the copyrightable work was done in the performance of his duty).
Does this apply to me?
If you are using copyrightable material, especially if your business relies on them then you should look into this matter.
Why is making this mistake going to harm my business?
Not having written agreements in place puts in question your ownership of the copyright. You might have to go to court to establish ownership over it. And worst-case scenario, if you don’t own it, a competitor could use that exact same work (if the contractor/employee sold it to them) and steal a lot of your goodwill.
You could avoid this by:
You can avoid this by making sure you have written agreements with people making copyrightable IP for you. Checkout our cheatsheet on what you can and should copyright for more info on what you need to see in these contracts, under Steps to Make Sure Your Own the Copyrights You’re Supposed to Own.
Will hired Spencer to design his website, which is where he mainly sells his products and interact with all his clients . Spencer had done several jobs for his friend Chet so Will trusted him enough to not to have written contracts with. One day, Will and Spencer got into an argument, which ended with Spencer quitting.
The following day when Will checked the website, there wasn’t anything on it anymore. Later that day, Will got an email from Spencer saying the latter wanted X amount of money for the continued use of his design.
Having written the code for the website himself and due to the lack of any written agreement transferring ownership to Will or the company, Spencer owned the code and the design. As such, he was in the right in asking for compensation for the use of his IP. If will wanted to continue using Spencer’s IP then he will have to get permission from him.
This could have been avoided if Will took the time to hammer out the details of Spencer’s engagement and getting an IP assignment beforehand.