Freelancers and Copyright Ownership: Know the Facts

 

20 March 2017
Posted by Tony Grujovski

Are you a creative business that hires independent contractors (known as ‘freelancers’) to work on certain projects?  Did you know that that by hiring a freelancer to work on a project, you will not necessary own the intellectual property rights created by that freelancer for the project?

Here at Studio Legal, we often see creative businesses fail to secure ownership of copyright materials, when using freelancers.  Failing to do so can have dire commercial and reputational consequences.

An example of what can go wrong

A creative business develops a product (i.e. a mobile app) for a client and provide warranties by written contract that the client will own all associated IP.  The client commercially releases the product and it becomes a commercial success.  Suddenly a freelancer who helped create the product sues the client for copyright infringement as the creative business did not ensure the freelancer transferred the IP to the creative business during the development stage.  The client then suffers financial and reputational loss and then sues the creative business for breach of contract.  The damages claim against the creative business could be hundreds of thousands of dollars.

Understanding the law

Under the Copyright Act 1968, the owner of copyright is typically the person who created the “work”. The most relevant types of copyright created by freelancers of creative businesses are “artistic works” (drawing, logo, photograph) or “literary works” (body of text, computer program). There are a number of exceptions to the ownership rule, the most relevant to creative businesses being that the copyright in any works created by employees of the business pursuant to their duties of employment is automatically owned by the employer. However, this exception does not apply to freelancers as they are not employees under law, rather independent contractors.

For any works created by freelancers, they will own the copyright in the work as they are the author. In order to obtain ownership of copyright from the freelancer, the Copyright Act requires the assignment to be in writing, identifying the new order of the copyright, and be signed by the copyright owner (being the freelancer in this instance).

Implied licences

If a creative business engages a freelancer without any formal contract in place, copyright law can recognise an “implied licence” in favour of the creative business to use the works for the purpose they were commissioned from the freelancer. However, creative businesses often need to either assign or licence any intellectual property they have created for a client to them, and doing this without a written licence or assignment of copyright in place with the freelancer is a very risky move.

Also, a creative business might want to use the freelancer’s work for another purpose other than it was commissioned for, and the “implied licence” usually does not provide those rights.

If a freelancer alleges that the use of its works by a client of a creative business infringes their copyright, the business will have the responsibility of proving that a copyright licence (that is not in writing) exists under law. To determine this question, a court would look at the circumstances in which the works were commissioned between the parties, and the answer of whether the licence exists is never clear-cut.

How do I obtain copyright from a freelancer?

To protect any creative businesses from legal exposure when engaging freelancers, we always recommend that a copyright assignment or licence for the works from a freelancer is made in writing, ideally at the time of engaging the freelancer.

If you need assistance with preparing freelancer/contractor agreements, copyright assignments or you are seeking advice on copyright infringement generally, please contact Tony Grujovski on 03 9521 2128 or tony@studiolegal.com.au

DISCLAIMER

The information in this article is of a general nature. It does not constitute formal legal advice, and should not be relied on as such. Please see the full disclaimer in our website terms. Please contact Studio Legal if you are seeking advice about a specific legal matter.