IP Tech Knowledgy

A company likely owns the copyright in what directors and officers create for the business, even if they are not also employees of the business. This is an exception to the usual Work Made for Hire principle that a company automatically owns the copyright only in work created by employees acting within the scope of their employment, but creators who are not employees – such as independent contractors – own the copyright in what they create.

This exception, which is rarely discussed in cases or treatises, is based on the notion that officers and directors have a fiduciary duty to the company not to take for themselves a corporate opportunity of the company. Consider: if an officer or director on the company’s real estate committee were scouting properties, s/he could not buy for her/himself that parcel of real property and deprive the company; the same should be true for intellectual property. The one case that addressed the issue head on found that the director creating copyrightable material was acting for the company’s benefit determined that the director did not own the work, but instead held it in trust for the company as an owner.  

In cases where federal copyright law conflicts with state law intending to address copyrights, the federal copyright law preempts, and thus negates, the applicability of the state law. However, because there is an additional element to a corporate opportunity issue – the fiduciary duty to act in the best interest of the company —  federal copyright law does not preempt a state’s corporate opportunity obligation of an officer or director. 
 
As with any relationship that touches on ownership of copyrights, it is advisable for the parties to have a written agreement as to who owns the copyright. A corporation could include in its bylaws its position on copyright ownership of materials created by officers and directors. The company is even better protected if it has its officers and directors assign — in writing — ownership of copyrightable work they create during their service to the company.
 

Ned T. Himmelrich
410-576-4171 • nhimmelrich@gfrlaw.com