Prof. Justin Hughes, Cardozo School of Law, Yeshiva University
March 25, 2010

A constitutional, but really badly named legal doctrine

In her contributions to this series, Professor Jane Ginsburg has explored the termination-of-transfer provisions in American copyright law.  The author’s power to reclaim her copyright 35 years after she agreed to its transfer is an extraordinary aspect of copyright – in what other kinds of property law can the original owner take back whatever property she contractually agreed to give up decades earlier?  To many of us, termination of transfer is one of the ways that copyright law is “pro” the “little guy” – the individual writer, artist, photographer, or filmmaker.

Yet one cannot say with a straight face that copyright favors the “little guy” without discussing one of American copyright’s most debated and misunderstood doctrines: the work-for-hire doctrine.

Under work-for-hire (or, originally, “work made for hire”), when a work is prepared by an employee in the usual course of his or her employment, the Copyright Act vests the copyright in the employer as the author of the work.  Section 201(b) of the Act is quite clear:

“In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title.”

Not only does the doctrine apply to standard employment situations, but it also applies in nine specific business situations when a work is “specially ordered or commissioned” and the “parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire.”  But for ease of discussion, let’s call all the entities that hold copyright through Section 201(b) “employers.”

To people who care about authors and their rights – Roberta Rosenthal Kwall and Mark Helprin being two eloquent examples – the work-for-hire doctrine is a problem, a regrettable anomaly, an affront to creative people.  It certainly looks like a fairly naked grab by employers and other capitalists – writing the statute to declare themselves to be the “authors” of creative works for purposes of the law.

Can Congress do that?  Can it declare an employer – often a corporation – to be the “author”?  At first blush, the answer seems to be “no.”  The Supreme Court has made it clear that there is substantive content to the word “authors” in the Patent and Copyright Clause – indeed, the rich meaning of this one word is, after all, the source of the originality standard in American copyright law.  As the Nimmer treatise notes, in common parlance the “author” is surely “the person closest to the actual creative process.”1

By declaring that the employer is the statutory “author,” the work-for-hire doctrine may seem to violate the constitutional requirement that copyrights be given to authors.  When the employer is a corporation – itself only a “person” by way of legal fiction – the employer is definitely not the person(s) closest to the actual creative process.  To give you an extreme example, imagine that Congress amended the Copyright Act to say that statutory “authors” henceforth always be the mother-in-law or the nearest neighbor of the actual creator of a work – that would almost certainly be unconstitutional.

Not surprisingly, thoughtful scholars like Marci Hamilton and Rochelle Dreyfuss have concluded that the work-for-hire doctrine is constitutionally suspect.2   One of the great American judges of the 20th century, Henry Friendly, seems to have thought along the same lines.  In a 1969 opinion – that is, under the old 1909 Copyright Act – Judge Friendly observed that the Constitution “authorizes only the enactment of legislation securing ‘authors’ the exclusive right of their writings” and concluded that “[i]t would thus be quite doubtful that Congress could grant employers the exclusive right to the writings of employees regardless of the circumstances.”3

Ah, but there is the rub – and the breathing space for the work-for-hire doctrine’s constitutionality: Congress did not grant employers the status of authors “regardless of the circumstances.”  In the nine enumerated “commission” scenarios described in the statute, there must be a “a written instrument signed by [the parties] that the work shall be considered a work made for hire.”  And in the employer/employee situations, there is nothing preventing the two sides from agreeing that the work-for-hire doctrine will not apply. So, the Nimmer treatise reasons that the work-for-hire doctrine survives constitutional scrutiny by dint of it permitting the employer and employee to agree that copyright will rest with the employee:

“It would seem, however, that Section 201(B) passes constitutional muster by reason of its further provision that the parties may agree ‘otherwise’ as to who ‘owns all rights comprised in the copyright.’  Congress has in effect created an implied assignment of rights from the employee-author to his employer – in the absence of an express agreement to the contrary.  Thus the employer may be regarded as at least a ‘quasi-assignee’ and as such entitled to the privileges of the author, even if he may not be regarded as the author himself.”4

Similarly, in the 1980 Cliff May v. Morganelli-Heumann decision,5 the court concluded that the work-for-hire doctrine “is based on the presumed mutual intent of the parties, and does not operate as a matter of law,”6 and that it was proper for the trial court to consider extrinsic evidence as to whether the parties had intended to contract out of the presumption.

If all this is correct, the real import of Section 201(b) is that it establishes a presumption of transfer from the employee (or commissioned artist) to the employer, the transfer happening instantly on the work’s fixation.  On this interpretation, Section 201(b) simply manifests a common thread in American labor law, i.e., that where an employee creates something as part of his duties under his employment, the thing created becomes the property of his employer unless, by appropriate agreement, the employee retains some right in or with respect to the product.

So, if the statute’s true effect is to create a presumptive transfer from the true author to the employer, why not say that?  Why not say that the actual creator is the “author” and rewrite the Copyright Act to state that, upon creation of a copyrighted work, the employee is presumed to have transferred (immediately and irrevocably) all rights to the employer?  Wouldn’t that be more honest and avoid the constitutional question?

It would, but there is a problem: that majestic termination-of-transfer provision in American copyright law.  If the employee is deemed to be the “author,” then the employee will have the right to claim the copyright back after 35 years – even in circumstances where the employer took all the financial risk.  The simplest way to avoid the Section 203 termination of transfer is to declare that the employer is the original “author.”

Although that is a simple solution, the United States could do it other ways.  For example, Canada also has a termination-of-transfer provision.  In Canada, the heirs of an author can reclaim the copyright 25 years after the author’s death, regardless of whatever contractual transfer or assignment the author made.  (The same system was UK law until 1952.)  Like American law, Canadian copyright law shields what we would call “works-for-hire” from this termination provision.  How?  By creating a special category of owners called “first owners” and establishing that, in certain circumstances and conditions, the first owner of a work is the employer, even though the “author” is the natural person who was the true creator.

The American approach – declaring employers as “authors” when all it is trying to achieve is that the employer should be the “first owner” – is not just quirky, but it also seems disrespectful toward the natural persons who create literary and artistic works, particularly to legal minds from civil law jurisdictions.  Not surprisingly, this has created problems for Europeans trying to understand American copyright law, even though their national laws have their own mechanisms to consolidate copyright rights with employers.  That’s unfortunate because work-for-hire is only a device for transfer and consolidation of the rights of exploitation that come with copyright.  If you don’t believe that, look carefully at Section 201(b), which states that the employer “is considered the author for purposes of this title” – language much more circumspect than a straightforward declaratory statement that the employer “is the author for purposes of this title” (emphasis added).

Whether our work-for-hire doctrine affects this transfer of copyright in all the appropriate circumstances, whether it properly recognizes the economic contribution and personal interests of the true authors is a separate question – and one I’ll consider in my next contribution to this series.  All I am doing here is explaining what the work-for-hire doctrine does, not whether it does it particularly well.

1. Nimmer on Copyright, § 106[C] at 1-104.3.