It’s October 1st, and do we have a scary story to tell. Well, scary for those who don’t heed the importance of putting effective work-made-for-hire agreements in place (read more about that here).
Yesterday, the Second Circuit Court of Appeals issued a long-awaited decision in Horror Inc. v. Victor Miller, resolving Mr. Miller’s attempts to terminate his copyright grant in the screenplay for the film Friday the 13th. The dispute on appeal was whether Mr. Miller was an employee or an independent contractor when he wrote the screenplay. This is important because Mr. Miller never signed a work-made-for-hire agreement (he signed a contract with the producers but it didn’t mention that the screenplay was a work for hire). Under section 101 of the Copyright Act, without written agreement to that effect, the screenplay does not qualify as a “specially commissioned work.” And the studio can only be the “author” of the screenplay if Mr. Miller was its employee or the work was “specially commissioned.” Otherwise, Mr. Miller is entitled to recapture his copyright in the screenplay under section 203 of the Copyright Act.
The producers argued on appeal that Mr. Miller’s membership in the Writer’s Guild of America and participation in collective bargaining establish that he was an employee of the studio for copyright purposes. The Second Circuit panel disagreed concluding that the definition of “employee” under copyright law is grounded in agency law and the framework set out by the Supreme Court in Community for Creative Non-Violence v. Reid, 490 U.S. 730, 737 (1989) and “serves different purposes” than labor law.
In Reid, the Supreme Court identified 13 spooky (sorry) and non-exhaustive factors to determine whether there was an employee relationship for purposes of the work-made-for-hire doctrine:
- the hiring party’s right to control the manner and means by which the work is accomplished;
- the skill required to create the work;
- the source of the instrumentalities and tools;
- the location of the work;
- the duration of the relationship between the parties;
- whether the hiring party has the right to assign additional projects to the hired party;
- the extent of the hired party’s discretion over when and how long to work;
- the method of payment;
- the hired party’s role in hiring and paying assistants;
- whether the work is part of the regular business of the hiring party;
- whether the hiring party is in business;
- the provision of employee benefits; and
- the tax treatment of the hired party.
Courts may consider other factors “so long as they are drawn from the common law of agency that Reid seeks to synthesize.”
In Mr. Miller’s case, the producers asked the court to give weight to a determination by the National Labor Relations Board that screenplay writers are “employees” of production companies under the National Labor Relations Act. The court opined that such a result would contradict Reid because it would approach Mr. Miller’s employment status from a labor law perspective, not a common-law agency perspective. The producers could seek further review. If not, Mr. Miller will be successful recovering the rights to his screenplay and possibly licensing further works. Though the producers can continue to use and exploit the sequels as termination rights do not extend to derivative works that were created prior to termination. See 17 U.S.C. § 203(b)(1).
What’s the lesson to be learned? If you hire someone to perform creative work, you should always consider the copyright implications. Experienced copyright counsel like Slater Legal PLLC can help you navigate these complex issues.