Within the solopreneur community, independent contractor relationships are a way of life. Solepreneurs hire other solopreneurs to develop their Web sites, write their advertising copy, develop their customer contracts, maintain their books, and carry out their SEO and PPC advertising campaigns.
However, solopreneurs often overlook the importance of memorializing these relationships in writing. Beyond being able to enforce a contractor’s basic promises to perform, putting independent contractor agreements in writing can also be essential to establishing ownership rights in intellectual property.
For example, while works prepared by employees within the scope of their employment are automatically classified as “works made for hire” under the U.S. Copyright Act, the same does not hold true for works prepared by independent contractors. Critically, in order for a work prepared by an independent contractor to be considered made “for hire,” there must be a written agreement to this effect in place at the time the work is created. While the failure to designate a work as being made “for hire” can be cured through transfer of ownership rights, this “assignment” must also be in writing to be enforceable.
Solopreneurs Must Establish Ownership
Establishing ownership is critical for many solopreneurs. However, if there is no written agreement in place to assign ownership of, say, a Web site design, to the person who pays for it does not actually “own” anything. Instead, the commissioning party merely acquires a non-exclusive license to use the design. This means that the developer is free to sell the same design to competitors, or to continue to use it indefinitely as a template for hundreds or thousands of other Web sites that will bear a striking resemblance to the one you paid to have developed in the first place.
Importantly, “literary works,” including computer programs, do not fall within the statutory categories of works that can be subject to a “work-made-for-hire” agreement. With these works, a written assignment is necessary to transfer ownership of rights.
What About Software Development, Branding, Advertising?
Of course, additional issues exist with respect to the use of independent contractors beyond ensuring ownership of copyrights.
For example, with respect to software development, the commissioning party needs to be sure to clearly and adequately define the developer’s obligations with respect to interoperability, acceptance testing, updates and other matters. Similarly, regarding brand developers and advertising agencies, the commissioning party will, among other things, want adequate assurances that the commissioned works will not infringe upon any third parties’ intellectual property rights or violate false advertising laws. Generally speaking, agreements between businesses and independent contractors should be set forth in writing, and should carefully define and anticipate the parties’ respective rights, expectations and obligations.
Other issues that can be addressed through independent contractor agreements include confidentiality and non-disclosure obligations for proprietary information, as well as non-solicitation provisions to prevent contractors from taking advantage of having access to your customer list. Absent a written agreement, it can be difficult – if not impossible – to protect these interests in the event someone strays from the playbook. Well-written independent contractor agreements will often contain jurisdictional and injunctive relief provisions that make it easier for the solopreneur to enforce its rights in the event it is forced to do so.
Fabian, LLC is a boutique business and intellectual property law firm in Baltimore, Maryland serving small businesses, creative professionals, writers and musicians.