Copyright and software code: employees and independent contractors

When I say software and intellectual property, chances are you first think -patent protection- but if you're sourcing out your software development to employees or independent contractors, dealing with copyright ownership on the front end is crucial. And just because something is patentable, doesn’t mean it can’t find protection under copyright law.[1] The literal elements of computer programs - source and object codes - are deemed “literary works” and subject to copyright protection, limited to exclude any functional or utilitarian aspect of the work (note some non-literal aspects of a program, like screen display, may be protectable as an audiovisual work, but that’s outside the scope of this article).

Take Google’s litigation with Oracle America as an example: Oracle developed a programming interface that allows software developers to write programs that run on several different types of computer hardware without rewriting the code every time it’s applied to a new device. As you can imagine, Google found this pretty useful since they run Android on just about any handset that will take it; and they copied it, verbatim. Oracle sued basing its argument on patent and copyright law. The patent claim was shot down (for reasons outside the scope of this article), but those devious copyright rights came in handy. Oracle claimed copyright protection for anything that was a creative expression separate from the underlying function of the code, and the court ultimately concluded that the declaring code and structure, sequence and organization of the API packages were entitled to copyright protection.[2]

Bad news for Google.

But why are we talking about Oracle AM v. Google, you ask? Well, unlike patent law, copyright rights vest in the creator the moment the copyrightable content is fixed in a tangible medium. Read between the lines. If you’re looking to hire a software developer, and you don’t contractually hammer out the conditions on the front end, you're setting yourself up for a costly headache.

Is the developer you’re hiring an employee or independent contractor?

If your coders are employees and you want to own all copyrightable content created within the scope of their employment, you can probably get away with a simple “Work made for hire” clause in the employee’s contract. Simple enough. Things get thorny when your scenario involves a coder / independent contractor, though. The U.S. Copyright Act requires that: (1) deliverables be specially ordered or commissioned; (2) the independent contractor must have executed a written contract stating that the deliverables are a work made for hire; and (3) the deliverables must come within one of nine categories: a contribution to a collective work; a part of a motion picture or other audiovisual work; a translation; a supplementary work; a compilation; an instructional text; or an atlas.

You’re thinking, wait, software and other tech deliverables don’t fit under any of the nine categories listed; you’re exactly correct. And as we discussed earlier, if your independent contractor is writing and customizing your software, they own the copyright. If you want to flip this scenario around, you must also include words of assignment in your contract.

 Here’s an example of some of the type of language you could include:

Assignor hereby assigns to Assignee, its legal representatives, successors, and assigns, the publishing rights in the above manuscript, including the right to procure the copyright thereon and the right to secure all renewals, reissues, and extensions of any such copyright in the United States and in any foreign country.

Note that in some states like California, the inclusion of a work made for hire clause in an independent contractor contract is penalized. This means that you as the hirer will be forced to cover the independent contractor under your worker’s compensation insurance – not exactly the plan when hiring independent contractors. Also note that if your independent contractor sues you claiming that they are actually an employee, the inclusion of a work made for hire clause, under some circumstances, can be used as evidence that a contractor is, in fact, an employee.

This article is by no means suggesting a do-it-yourself approach to protecting software IP. As with everything in the fascinating world of law, the analysis depends on the specific facts and jurisdiction. Talking with a lawyer about your situation is generally the best bet.

[1] See Mazer v. Stein, 347 U.S. 201, 217 (1954)

[2] Oracle Am., Inc. v. Google Inc., 750 F.3d 1339, 1347, 110 U.S.P.Q.2d 1985, 1988, 2014 BL 129893, 2 (Fed. Cir. 2014)

Michael is the senior corporate and intellectual property counsel in RVL®’s Chattanooga office. His practice areas include copyright and trademark protection, licensing and litigation, complex business transactions, corporate compliance, e-commerce, government contracts, fundraising, securities, and alternative corporate structures including gig economy and benefit companies.

The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.