Work For Hire: Good or Evil?

20 09 2011

When negotiating an entertainment related contract, anything can happen (I’d love to spend this blog post telling you all the crazy stories that came to mind when I wrote that line, but that wouldn’t be very informative and might get me sued for defamation).  One thing that almost always happens, however, is an argument regarding copyright ownership, and that argument usually centers around the inclusion of a Work for Hire clause.

The words Work for Hire seem to be almost universally hated. Artists see it as a disadvantage no matter what the situation, and they can hardly be blamed. A Work for Hire clause or agreement requires one party to give up rights to intellectual property, and no one likes to give things up. And the numerous articles and blog posts imploring artists not the sign Work for Hire agreements would give anyone the impression that there is never a good reason to do so. Clients on the business end of the entertainment industry also express discomfort with the Work for Hire. Knowing it is likely to cause a problem, they often ask me to “say it some other way” or “make it friendlier.”

Unfortunately, a Work for Hire clause can’t be stated another way, or made much friendlier, because it only works if it jumps off the page, yelling “I’m a Work for Hire and you’re giving up your rights.” That’s a good thing, because it prevents people from being tricked into signing away their rights. The main problem with the Work for Hire clause, in my opinion, is misunderstanding.

The reason the Work for Hire clause is often necessary is that, without a Work for Hire clause, collaborators on a project become equal owners, with equal rights to sell and otherwise encumber the whole project, and equal rights to collect money from the project. This happens whenever two or more authors prepare something with the intention that their contributions be merged into inseparable or interdependent parts of a whole.

This arrangement is fine if you are truly collaborating with a partner or several partners, and you intend to share equally in the final project. Many collaborations, however, are not set up that way. Often, one or more parties gets paid up front for their work on a project, while the person or entity that hired them takes a risk on its eventual success. An unequal division of rights, in that situation, may be more fair than a 50/50 split. The same goes for situations where one party will be solely responsible for selling a project. Without the Work for Hire, there is no guarantee of exclusivity.

The lesson to take away from this (very abbreviated) explanation of the Work for Hire clause, is that whether to include it (or whether to sign it) turns on your intentions with regard to the final product. If you intend to be an equal owner, no Work for Hire is necessary. But, if you intend to have anything other than a 50/50 division of rights, the Work for Hire is the only way to make your arrangement enforceable. That can be to the benefit of both parties. The point, as in all contract negotiations, is to understand and accept the contract terms before you sign the contract.

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The Great Contract Fairy in the Sky

13 09 2011

We write a lot of contracts.  We review a lot of contracts.  There is a common misperception about contracts that should be cleared up.

Often, the misperception appears when a client asks us for “X” type of contract.  Maybe it’s a “Service Agreement,” or a “Writer’s Agreement,” or something else.  We then ask for details.  Invariably, we are asked to produce “just a simple, standard form.” 

The impression most people seem to have is that lawyers have a connection to the Great Contract Fairy in the Sky and just pick up the phone and say “can you send down a Writer’s Agreement?  Thanks.”  Sometimes a person will just do a search for the type of contract, and send us what they found to review.

But there is almost never a standard agreement.  While there is a lot of “boilerplate” that can be copied from past agreements, even that is not standard!  For instance, do you want faxed signatures to be treated as originals?  Do you want the contract to be binding as of the last signature date or some specified date? What do you want your remedies to be in case of breach?

It is not a matter of knowing which form to use or having access to the right one.  It’s a matter of putting on paper the expectations and obligations of each side.  You can certainly use something that you find online, or draft yourself.  But you will then be bound to that.





Securities Law–a primer

7 09 2011

Every entrepreneur needs to know a little securities law.  Why?  Because when you form your business and want to sell shares to investors, these laws apply to you.  Also, when you form your business and want to invest money in your own company for your own shares, these laws apply to you.

What do you need to know?

1)  Don’t do anything without knowing what you are doing.  To learn what to do, either read a lot about the subject or speak to a lawyer.

2)  The general rule, stated simply, is that the issuance of any securities (most commonly stock) requires registration unless there is an exemption.  Registration is a big and expensive process.  Luckily, there are quite a few exemptions.

3)  If you want to avoid registration (which you want to do if you’re a new company), you need to fit one or more exemptions, both on a Federal level and on a State level.  Some of these require filing forms (such as Form D if you fit one of the Regulation D exemptions on a Federal level), others don’t.  It is very likely that you will need to file a form either on a Federal or a State level, possibly both.

4)  There are deadlines on when you need to file the forms, and they are not long (e.g. 15 days after becoming required to issue the shares).  It is best not to miss these deadlines.

5)  Your company should follow the correct company procedures (e.g. meetings, voting, resolutions) to issue the shares.

6)  None of the exemptions protect you from fraud and disclosure requirements.  You cannot withhold information that an investor might want to know when deciding whether or not to invest in your company.