What Are You Buying When You Use an Independent Contractor?

Photographer Dan by Kevin Dooley from Flickr (Creative Commons License)

Photographer Dan by Kevin Dooley from Flickr (Creative Commons License)

I get questions all the time from people involved in situations where a business outsources the creation of their website, marketing materials, or other photography work about who owns the copyright in the final work product and what can the other side do with it. And I get these questions from people on both sides of the relationship – the hiring company and the artist.

In these situations, my first question is always, “What does the contract say?” Under the U.S. Copyright Laws, if you hire a third party to do your graphic design, photography, or similar work, the artist owns the copyright in whatever you’ve hired them to create unless you have a written and signed contract that says you will own the copyright in the final product. A lot of business owners don’t understand this. They think they automatically get the rights in whatever they’ve hired someone to create just because they’ve paid for it. And that’s not true. Without an explicit contract that says they own the copyright, the artist owns it and the business has an implied license to use it.

Look at it this way – if you buy a poster for your office, you’re only buying the print. You don’t get the copyright with it. You can decide where you’re going to hang it or if you’re going to get rid of it, but you can’t make copies of it and sell them. Likewise, if you hire someone to do photography work for your website, you’re only buying the digital images, not the copyright in them. If you wanted to do something else with the images, you would need the photographer’s permission. If wanted to buy the rights, you could do that, but expect to pay extra.

There are many artists who write their contracts to say that the business hiring them owns the copyright in whatever they’ve hired the artist to create once they’ve paid their bill in full. That means if the client hasn’t paid their bill, they don’t own the rights to the work product, and the artist has rights to remove it from the client’s website if the client is using it without complying with the terms of the contract. I recently had a discussion with a website designer about modifying her contract template to explicitly state that she can and will shut down the client’s website if they are using her work and they haven’t paid the balance owed to her.

Here’s a video I did on additional issues you want to consider if you are or working with a third party contractor.

If you are a third party contractor or working with one, please read your contract carefully. This is the document for managing your relationship, including who owns the final work product and what happens if a problem arises. If you have contract templates in your work, make sure a skilled business and intellectual property attorney reviews them before you use it, because otherwise you may be stuck with terms that you don’t like.

If you want to chat more about working with contractors, copyright, and/or contracts, feel free to connect with me on TwitterFacebookYouTubeLinkedIn, or you can email me. You can also subscribe to the Carter Law Firm monthly newsletter.
Please visit my homepage for more information about Carter Law Firm.

Simple Contracts with Foamy the Squirrel

Merry Christmas from our Ninja family to yours! by thotfulspot from Flickr

Merry Christmas from our Ninja family to yours! by thotfulspot from Flickr

If you want to create a contract, the minimum you need are three things.

  1. An Offer
  2. Acceptance of the Offer
  3. Consideration

Consideration is a legal term for a “bargained-for exchange,” which is a give-and-take between the parties. And it has to be an exchange that is reasonable. You probably have consideration if you want to sell your car for the Kelley Blue Book value vs selling it for 2 cents.

Check out this Foamy cartoon that appears to create a contract (I heart Foamy):

Here’s the contract offer I heard: Germaine will get Foamy a ninja for Christmas in exchange for shutting up about his disappointment over the ninja gig. And Foamy accepted with the caveats that the Ninja not be American unless it’s Chuck Norris and the penalty for not delivering a ninja would be that thugs get to rape Germaine with her own severed limbs.

Was there consideration? That’s up for debate. Foamy can be pretty awesomely obnoxious. I can see someone offering a higher ticket item to make him shut up. The big problem I see if you can’t make a contract for something that is illegal. Owning a person is illegal which could be one interpretation of the contract’s terms. Foamy’s caveat about the severed limbs obviously doesn’t hold water.

Check how the contract was executed:

It sounds like Germaine was blackmailed into giving Foamy a ninja, which arguably makes this whole exchange invalid since she was afraid for her life and not acting to get the bargained for exchange. Setting that aside, I can see consideration in exchanging a toy for getting someone to shut up. Foamy could argue that both parties knew that he was bargaining for a real, breathing, human ninja, but that would make the contract invalid since owning a person is illegal. In the end, I think Foamy should take his plush ninja and be happy he got a present.

Happy Ninja Christmas Everyone!

You can connect with me via TwitterGoogle+Facebook, and LinkedIn, or you can email me.
Please visit my homepage for more information about Carter Law Firm.

Form Contracts are the Beginning

Signing a Contract by Victor1558Last weekend, I went indoor rock climbing with my friends. It’s not uncommon for me to participate in activities that require signing a liability waiver. I think most people just sign them without reading it. My friends get a kick out watching me read every word and change the terms I disagree with. I respect that these companies want to protect themselves against liability. I accept that I participate in risky activities and as such I might get hurt, but if I get hurt because of their horrific negligence, I want to be able to get them to pay for my injuries that they caused.

The same ideas apply to businesses. A lot of businesses have form contracts that they use for providing services, creating intellectual property, and/or licensing you software or equipment.   I look as these as a jumping off point to begin negotiations.

Whoever writes a contract write the terms that best protect their interests. If a company hires the lawyer, the lawyer writes the best provisions for their client. They may not care about your interests at all. It’s your job to read these contracts carefully and propose the terms and conditions that work best for you. Lots of things may be open for negotiation such as

  • Payment rates,
  • Whether you’re licensing, renting, or purchasing software or equipment,
  • The length of the contract,
  • Whether you can end the contract early,
  • How disputes will be settled, and
  • If their creating intellectual property for your use, who owns it.

There are so many things that could be open to negotiation. It’s best to think of the worst-case scenarios and to protect your interests and assets if one occurs. There may be more than one way to address a potential problem; you and the other side can decide which way works best for the both of you.

If you’re given a form contract and you don’t like a provision, change it and see what the other side says. They may accept it. (Be sure to check with your lawyer so you know how to properly change the contract, or better yet, hire a lawyer to review your contracts before you sign them.) If the other side says they can’t accept an altered contract, ask to speak with someone who can or seriously consider doing business with someone else.  You don’t want to set yourself up to be screwed down the line.

The law generally holds you to the contracts you create, so think hard before signing your name.

In my personal life, I’ve changed contracts and the other side has accepted the changes without question. Sometimes they’ve come back and said they can’t accept it with the changes, and that opened the discussion about what they could accept. Sometimes I have to walk away from an offer if we couldn’t make a deal and sometimes I bind myself to the original contract provisions, but I always know what risks I’m taking and I try to set myself up to be protected.