Startup Legal FAQ 10. – Why Use Independent Contractor Agreements?

I suppose I need an independent contractor agreement too?

Yes. Yes you do.

Ideally, you need one that uses the magic words “works made for hire.”

Ownership of intellectual property is counterintuitive. Mere payment for deliverables does not necessarily secure clean title from independent contractors. Under US copyright law, in order to be deemed to be “works made for hire” wherein the company obtains complete ownership from the developer, a written agreement literally reciting the phrase “works made for hire” must be executed by the developer prior to the developer’s creation of the deliverables.

If no such agreement is executed in time, the materials created by the developer for your company may not, and may never be, completely owned by your company. Without a written work-for-hire agreement, the strongest form of ownership your company might enjoy is an implied, nonexclusive license to use the materials in the manner theretofore discussed by you and the developer… whatever the record may reflect that to have been.

Failure to secure your outside developers’ signatures on a competent work-for-hire agreement gives rise to a major defect in your ability to secure clean title to the assets that they develop. The lack of a work-for-hire agreement means that your company is not the copyright holder in the deliverables and that the developer always will be.

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