Is there a doctrine in the house? Part 3

Be careful. While a design firm can retain its copyrights by contract, the firm can just as easily give those rights away – by written contract.

Design professionals are, traditionally, reluctant to give up ownership of their designs or drawings, including the copyrights. Several reasons exist for this.

First, retaining ownership is a way to secure payment from a client, by preventing use or copying of the drawings until payment is made; second, there is expanded liability with each use of a design, so that restricting use of the drawings to a single project is a way to limit liability; and, third, a design that has market value (especially in the residential sector) can be sold again to new clients, such that the designer of a hot-selling plan might reap rewards for a clever plan layout or aesthetic design beyond the initial client for whom it was prepared. Knowing just a bit about copyright law will help you protect yourself.

What is a “work-for-hire” anyway? The phrase “work for hire” refers to the doctrine in copyright law dealing with ownership and authorship of work created by an employee or an independent contractor. The doctrine dates to a 1903 U.S. Supreme Court case holding that an employer owned the copyright to advertisements created by an employee in the course of his employment. The concept is now codified in the U.S. Copyright Act.

Section 201(a) of the Act provides that copyright ownership “vests initially in the author or authors of the work.” The “author” is generally deemed to be the person or party who actually created the work. But the Act carves out an important exception for “works made for hire.” If the work is created by an employee of a company (thus “for hire”), the Act states that “the employer or other person for whom the work was prepared is considered the author,” and owns the copyright, unless there is a written agreement to the contrary.

This gives the architectural or engineering firm the rights to own designs prepared by their employees in the regular course of their employment. When we are dealing with commissioned architectural drawings, however, most often the architectural firm is an independent contractor (not an employee) of the client. As such, are the drawings subject to the work for hire doctrine? There has been considerable confusion and much litigation on this topic. We can look to the Act, however, for clarity.

Section 101 of the Act provides that a work is “for hire” under only two sets of circumstances: 1) when prepared by an “employee” or 2) when prepared by an independent contractor, “specially ordered or commissioned,” but limited to nine specific types of works – and if there is a written contract specifically stating that the work is “made for hire.” Noticeably absent from the list are “engineering” or “architectural” drawings.

The standard AIA contract forms. The standard AIA Owner-Architect Agreement, B101 (2017 ed.) devotes an entire section (Article 7) to the topic of copyrights and licenses. Section 7.2 states: “The Architect and the Architect’s consultants shall be deemed the authors and owners of their respective Instruments of Service, including the Drawings and Specifications, and shall retain all common law, statutory and other reserved rights, including copyrights.”

Clearly, the AIA (and all design professionals for that matter) want to protect the designer’s work product, including the copyrights therein, for the reasons stated above. The AIA’s B101 form intentionally omits the phrase “work for hire” because for a work to be considered “made for hire,” the Act requires that the parties state, in writing, their intent that the work is “made for hire.” If an architect agreed that its drawings were “made for hire,” the client might attempt to assert ownership rights over the copyright, just as if the architect were an employee. While not using the phrase “made for hire,” the AIA forms are very specific, however, on who is the “author” and “owner” of the work, including copyrights – it is the architect.

Why does it matter? In a 2016 copyright case, the court stated simply: “Architectural drawings are not ‘works for hire’ under the Copyright Act,” noting that it had been held that, “drafting of architectural blueprints does not fit into any of the … nine categories of ‘specially ordered’ work.” In a 2008 copyright case, the project owner claimed to own the copyrights to the design prepared by an architect, under the work for hire doctrine. The court rejected that argument, however, noting that the AIA standard agreement does not make “even a veiled reference to works for hire, nor does [the] contract contain any language remotely suggesting an intention to establish a work for hire relationship.”

Take aways? While a design firm can retain its copyrights by contract, the firm can just as easily give those rights away – by written contract. Clients that pay large fees to design firms often want to own the work product, with the ability to reuse the design for additions, expansions or even for a totally separate facility. It is a negotiation, and the lawyers drafting these clauses need to understand the difference between ownership of the drawings versus ownership of the copyrights (which are separate legal rights under the Act). So, in the tug and pull of contract negotiations, design professionals should make it clear that regardless of which party owns the physical drawings, 1) the designer retains the copyrights, but merely licenses their use to the client for a single project; 2) the design firm is an independent contractor (not an employee). These two factors should negate any claim by the client that the design contract was a “work for hire,” and protect your copyrights.

G. William Quatman, FAIA, Esq., is general counsel and senior vice president at Burns & McDonnell Engineering Co. He can be reached at bquatman@burnsmcd.com.

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Posted in Articles | June 4th, 2018 by