The term “work-for-hire” is found in many software development contracts, but it is one of most misused phrases. Typically, companies needing certain software developed will enter into a written contract with an independent contractor and insert the magical phrase “work-for-hire,” thinking it will automatically assign ownership of the intellectual property to the company. However, works created by independent contractors can constitute a “work-for-hire” only in very limited instances.
Works created by an independent contractor can constitute a “work-for-hire” only if: (1) the work is specifically ordered or commissioned; (2) the parties expressly agree in a signed written agreement that the work shall be considered a “work-for-hire”; and (3) the work is (i) a contribution to a collective work, (ii) a part of a motion picture or other audiovisual work, (iii) a translation, (iv) a supplementary work, (v) a compilation, (vi) an instructional text, (vii) a test, (viii) answer material for a test, or (viiii) an atlas. 17 U.S.C. §101. Obviously, software does not fit neatly under one of these nine limited categories because it was not contemplated by the Copyright Act.
Although there has not yet been a Circuit Court decision holding that software fits under these categories, a few District Courts have paved the way by holding that software programs satisfy the statutory definition because they are both “contribution to collective works” and “compilations.” Indeed, a recent court decision from the Southern District of New York held that work performed by an independent contractor in creating a software program had the potential to meet the statutory definition of a “work-for-hire.” Stanacard, LLC v. Rubard, LLC, 12cv05176 (S.D.N.Y. February 3, 2016). Specifically, the Stanacard court held that the independent contractor created and combined a number of different computer programs to create the new software program which, as a whole, is a “compilation,” and alternatively, the source code for each program could also be considered a contribution to the “collective work.”
Therefore, until there is a Circuit Court decision holding that computer software fits under one of the enumerated nine categories to qualify as a “work-for-hire,” the law remains uncertain. Companies should be aware that use of the phrase “work-for-hire” may not fully guarantee that ownership will be assigned in a software development contract. Used by itself, it could be argued that the “work-for-hire” doctrine does not apply to software. Thus, for avoidance of doubt and to ensure that all works prepared by the independent contractor are assigned, the best approach is to use the “work-for-hire” recitation in conjunction with an express assignment provision.