50

As long as copyright ownership as between employer and employee can be provided for by contract, it may make little practical difference in most situations whether one or the other is considered to be the initial copyright owner in the absence of a contract. It could be argued, however, that the burden of contracting, i.e., deviating by contract from the statutory rule, should be placed on the shoulders of the party who is ordinarily in a better position to carry this burden. This party would seem to be the employer, by reason of his stronger bargaining position and more convenient recourse to expert legal advice. On the other hand, it could be argued that the burden of contracting should be so placed that the need for a contract would arise infrequently. It seems likely that if the statute did not vest copyright in the employer, he would commonly insist upon an assignment of copyright to him.

It is enlightening to note how the U.S. patent law 51 has worked out in this connection. The patent statute makes no special provision regarding the ownership of patents or inventions made by employees for hire, but the following rules have been developed by the courts in construing employment contracts and applying trade custom. If an employee makes an invention in the course of his general employment or through the use of his employer's facilities, he is entitled to secure the patent, but his employer will have a "shop right" in such patent. This "shop right" is in the nature of an implied nonexclusive license to utilize the patent throughout the term of protection. However, if an employee is hired specifically for the purpose of making a particular invention, or if during his employment he is specifically assigned to work on an invention, the employer is considered to be entitled to ownership of the patent and may compel the employee to assign to him the patent secured by the employee.

52

A subsidiary question is raised if copyright is to be vested initially in the employer. Should he be designated somewhat artificiallay as the "author" or merely as the first owner of copyright? Prior revision bills have differed on this point, as do foreign laws. The choice of designation should be made with appreciation of the consequences, noted earlier, 53 which may be incident to the status of authorship, regardless of questions of copyright ownership. For example, whether the employer or employee is deemed to be the author may determine the eligibility of a work for protection where its eligibility depends upon the nationality of the author, or may determine the duration of copyright under a system where the term is based on the life of the author.54

50 Also to be considered is the need of third persons, who are prospective users of the work, to know who owns the copyright. This need may be accommodated by provisions as to notice, registration or other devices creating presumptive ownership.

51 Title 35, U.S. Code. Under section 111, "application for patent shall be made by the inventor Under section 261, "application for patent, patents or any interest therein, shall be assignable in law by an instrument in writing."

52 This latter situation is probably common in the creation of copyright material. It is believed that the creation of copyright material by employees (such as staff writers for newspapers, magazines, motion picture producers, advertising agencies, etc.) is usually pursuant to the specific purpose of their employment or to a specific work assignment.

A study made in the Patent Office (see Study No. 3, "Distribution of Patents Issued to Corporations (1939-55)," issued by the Senate Committee on the Judiciary in 1957) shows that almost 60% of all patents issued during that seventeen year period were owned by corporations.

53 Supra, pp. 127, 128.

If the employer is a natural person and is deemed to be the author, the term might be based on his life. But the employer is more commonly a corporation. In most foreign countries, where the term is based on the life of the author, the author is the first copyright owner and there is no special provision for works made for hire. Any title of an employer is apparently acquired by assignment from the employee-author. However, at least in some countries the courts have considered that employment implies an assignment of the copyright to the employer. Moreover, where the employee is not identified as the author on the work, the rules regarding anonymous works would seem to apply: generally, for such works, copyright is exercised by the publisher, and the term is a period of years after publication.

Regardless of the substantive provisions finally adopted, it might be helpful to clarify the scope of the concept "works made for hire." A new definition might take the form of "works created by an employee within the scope of his employment.' This would serve to make it clear that works created by an employee on his own initiative outside of his employment, are not included. If the employment-for-hire rule is not to extend to works created on commission at a fixed fee, the definition might further specify "employment on a salary basis." Differentiation as to kinds of works

A determination of the first copyright owner need not be made by means of an "across the board" statutory approach. The employer might be considered the first owner in certain cases, and the employee as first owner in others. Ownership in the employer seems most appropriate where the work is created by a more or less numerous team of employees, such as in the case of motion pictures, newspapers and other periodicals, and cyclopedic works (encyclopedias, dictionaries, directories, catalogs, etc.).55

If copyright were vested in the numerous team members, third persons wishing to use the entire work would find it cumbersome to deal with all of the employee-authors. Moreover, it is with respect to such works that the contribution of the employer in assembling the group, furnishing the facilities and directing the project is especially significant. Hence, even if it is not provided generally that the initial ownership of copyright in works made for hire vests in the employer, consideration might be given to such a provision for specified kinds of works such as motion pictures, newspapers and other periodicals, and cyclopedic works.

Differentiation as to uses of works

If the work produced by the employee is a separable part of the composite work and is capable of independent uses, an even more refined approach is possible. An example of this approach is found in the "split copyright" provisions of the first Dallinger bill of 1924 56 and the recent United Kingdom Act. 57 Under these provisions, the publisher of a newspaper, magazine or similar periodical is entitled to copyright in the contribution of his employee only insofar as it relates to reproduction of the contribution in a like publication; in all other respects the employee-author is entitled to the copyright.

The rationale of this rule would seem to be the appropriateness of limiting the copyright ownership of the employer to the extent to which exploitation of the work comes within his normal business. activities for which the work was created. Conceivably, this principle might be extended to other classes of works, so that the employer would have the exclusive right to utilize the work for the purposes of his regular business activities, with the employee-author having all rights as to other uses of the work which are not competitive with the employer's business. However, unless specific kinds of works and uses were enumerated, many doubtful questions would probably arise in applying such a general principle to a variety of situations-questions regarding the purposes of the employment, the scope of the employer's regular business, the competitive nature of various uses, etc.

The Copyright Office survey referred to in footnote 49 shows that corporations or other group organizations were the "authors" of 92% of the motion pictures and 93.7% of the periodicals registered. No figure is available for cyclopedic works since they are not registered as a separate class.

H.R. 8177, 68th Cong., 1st Sess., section 45(b). See p. 131, supra.

Section 4(2), supra pp. 136, 137.

56580-6011

B. WORKS MADE ON COMMISSION

The statute makes no specific mention of works made on commission. There have been a few litigated cases holding that in the absence of an agreement to the contrary, the copyright in a portrait photograph made on commission belongs to the person commissioning the work; and in one case this rule was applied to a work of art (not a portrait). No reported decisions have been found involving commissioned works other than photographs and works of art, and it appears uncertain whether the same rule would apply to such other works.58

None of the various revision bills attempted to provide generally for copyright ownership in commissioned works. Some, however, expressly indicated that presumptions in favor of employers proposed with respect to works made in the course of employment did not extend to commissioned works. E.g., section 3, Vestal bill, H.R. 12549, 71st Congress, 2d Session; section 8, Thomas bill, S. 3043, 76th Congress, 3d Session. These provisions might arguably have been intended to reverse the employer-for-hire rule in the case of commissioned works, perhaps without disturbing the court decisions as to portrait photographs. In some of the revision bills (for example, sec. 45(a) of the first Dallinger bill) it was specified that copyright vests in the person who orders an engraving, photograph or portrait representing a designated person.

It might be argued that the policy considerations regarding the ownership of copyright in commissioned works are in many ways similar to those with respect to works made in the course of employment. Both classes of works are produced for, pursuant to the initiative and order of, and against payment by, a person other than the creator. The differences in type of payment or regularity of working hours between the employment and commission situations would not seem to be crucial reasons for different treatment.

However, the common law generally has differentiated between the employer-employee relationship and that of the parties to a contract for a commissioned product: in broad terms, the acts of an employee as such are imputed to his employer, but those of an independent contractor are not imputed to the person for whom he performs a special commission. Underlying this distinction is the premise that an employer generally gives more direction and exercises more control over the work of his employee than does a commissioner with respect to the work of an independent contractor. Perhaps in recognition of this principle, the statutory provisions in the United States regarding the employer's ownership of copyright in works made for hire, and the corresponding provisions in the copyright laws of several foreign countries, have not been extended to commissioned works generally. Moreover, except in the case of photographs, a commission to produce a particular work is commonly the subject of a specific agreement.

The paucity of reported litigation over the ownership of commissioned works, and the absence of any proposals in prior revision efforts for legislating generally on this matter, are some indications that the present law has operated satisfactorily.

58 The decisions dealing with individual or group portraits might have been influenced by considerations of privacy in the use of one's own likeness. A special rule for portraits is found in a number of foreign laws and was proposed in several of the previous revision bills.

A well-rounded statute might undertake to codify the rule established by the courts as to commissioned photographs, or to provide similarly for the commissioner's ownership of portraits (whether photographs, paintings, or other works of art). This is done in a number of foreign laws and was proposed in some of the previous revision bills. Codification, however, entails some risk of undue rigidity or of unintended changes by implication.

VII. SUMMARY OF BASIC ISSUES

A. WORKS MADE FOR HIRE

Should the statute provide that copyright in a work made by an employee as such will vest initially (in the absence of an agreement to the contrary):

1. In the employer generally?

2. In the employee generally?

3. In the employer with respect to specified categories of works; otherwise in the employee? If so, should the specified categories include works produced for (a) motion pictures, (b) newspapers and other periodicals, (c) cyclopedic works such as encyclopedias, dictionaries, directories and catalogs, (d) any other categories?

4. In the employer with respect to those uses of the work which are comprised in his regular business activities; otherwise in the employee? If so, should this rule be confined to one or more specified categories of works?

B. COMMISSIONED WORKS

1. Should the statute treat commissioned works in the same manner as works made by employees?

2. Should the statute provide specially that (in the absence of an agreement to the contrary) the person giving the commission is the initial copyright owner in the case of (a) photographs generally, (b) portraits in any form, (c) any other categories of works?