Employee Relations LAW JOURNAL

VOL. 47, NO. 2 AUTUMN 2021 Employee Relations LAW JOURNAL A Guide to Drafting Effective Assignments of Copyrights and Patents in Employment Agreements and Beyond – Part I Steven H. Sholk In this two-part article, the author addresses the assignments that are necessary for employers to ensure their ownership of copyrights and patents with reasonable certainty. In this first part, the author discusses the scope of copyright and patent protection and then authorship and copyright ownership of works made for hire; an author’s moral rights for works of visual art not made for hire; the rights of termination and recapture of copyright trans- fers for works not made for hire; specially ordered or commis- sioned works of independent contractors as works made for hire; works created by an employee within the scope of employment as works made for hire; the scope of employment under an employment agreement; assignment of copyright for works not made for hire; and more. The second part, which will appear in an upcom- ing issue of Employee Relations Law Journal, will continue the analysis. “[T]he rule [for patent assignments] nonetheless remains a technical drafting trap for the unwary.” Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Systems, Inc., 563 U.S. 776, 800 (2011) (Breyer, J., dissenting). Steven H. Sholk is a director in the Corporate Group of Gibbons P.C. and chair of the firm’s Employee Benefits and Executive Compensation Group. The author gratefully acknowledges the review of this article by Robert E. Rudnick, a director in the firm’s Intellectual Property Department. The views expressed in this article are solely those of the author, and not those of his law firm or its clients. Mr. Sholk may be contacted at [email protected]. Employee Relations Law Journal 1 Vol. 47, No. 2, Autumn 2021 A Guide to Drafting Effective Assignments “When you’re young, you just want to get out there and aren’t really paying attention to what’s on paper. I never even read one contract they put in front of me, and that’s a big mistake.”1 Victor Willis, writer of the lyrics for YMCA and In the Navy and former lead singer for the Village People. or many businesses intellectual property is one of their most valuable Fassets. A dual regime of federal and state law determines whether the employer or an employee owns a copyright or patent. For copyrights, a federal statutory regime provides that when an employee creates a work within the scope of his or her employment, the work is made for hire and the employer is treated as the author and owns the copyright. When a work is not made for hire, the federal statutory regime provides that the employee-author owns the copyright, and permits the employee-author to assign the copyright to the employer. A state regime, usually the common law of contracts, governs the construction and interpretation of assignments. For patents, a federal statutory regime provides that unless an employee is hired to invent, the employee-inventor owns the invention. This regime permits the employee-inventor to assign the invention to the employer. As a result of judicial interpretation of standing requirements, in the context of employment agreements federal common law determines whether an agreement to assign rights to future inventions is a present transfer of expectant interests in future inventions, or an agreement to assign future inventions in the future. Other than this determination, a state regime, again usually the common law of contracts, governs the construction and interpretation of assignments. The dual regime of federal and state law often results in a mishmash of legal rules.2 For an employer to use this mishmash to ensure its ownership of copyrights and patents with reasonable certainty, effective assignments are necessary.3 SCOPE OF COPYRIGHT PROTECTION Copyright protection applies to original works of authorship fixed in any tangible medium of expression.4 Works of authorship are architec- tural works, computer programs, dramatic works (including any accompanying music), literary works, motion pictures and other audiovisual works, musical works (including any accompanying lyrics), paintings, pantomimes and choreographic works, photographs, pictorial, graphic and sculptural works, and sound recordings.5 The author is the person who reduces an idea to original expression and commits that expression to a tangible medium.6 A work must be original to the author. Original means that the work was independently Vol. 47, No. 2, Autumn 2021 2 Employee Relations Law Journal A Guide to Drafting Effective Assignments created by the author, rather than copied from other works, and pos- sesses a minimal degree of creativity.7 A copyright gives the owner the rights to: (1) reproduce or copy the work; (2) create derivative works based on the copyrighted work, such as modifications or adaptations of the copyrighted work; (3) distribute copies in any medium to the public by sale or other transfer of ownership, or by rental, lease, license, or loan; (4) publicly perform choreographic, dramatic, literary, and musical works, motion pictures and other audiovisual works, and pantomimes; (5) publicly display the work; and (6) in the case of sound recordings, perform the work publicly by means of a digital audio transmission.8 An author receives copyright protection as soon as an original work is fixed in a tangible medium of expression. Protection does not require a notice of copyright on the work or registration with the United States Copyright Office.9 The author’s use of a copyright notice does not require registration.10 The author should place a copyright notice on the author’s works to avoid a defense of innocent infringement, and to assist third- parties in locating the copyright owner and obtaining permission for reuse.11 The notice must contain: (1) the symbol © for visually perceptible copies or ℗ for phonorecords of protected sound recordings, the abbreviation “Copr.,” or the word “Copyright;” (2) the year of first publication for a work that will or has been published, or the year of first creation for a work that is not and will not be published, such as source code or a writing describing a trade secret, followed by all creation or publication dates of any derivative works; and (3) the name of the copyright owner, which may include an abbreviation or an alternate designation that is generally known.12 The size and position of the notice must be sufficient to give reasonable notice of the copyright.13 Although registration with the Copyright Office is not required for copyright protection,14 it confers significant benefits. Since the Copyright Office maintains a searchable public database of copyright claims, add- ing a work to the database provides notice to the public of the copyright claim and allows those interested in obtaining permission for reuse to determine the copyright owner’s identity. In licensing transactions and mergers and acquisitions, the licensee and acquiror often require registration. When the copyright owner registers a copyright before or within five years of the work’s first publication, the registration is prima facie evi- dence of the copyright’s validity in any judicial proceeding.15 In addition, registration is required to bring an action for copyright infringement.16 Prompt registration is especially important for producers of video games and mobile app developers and publishers. In these situations since a company’s product can go viral and copycats are rampant, the copyright owner will often need to move quickly to seek a preliminary injunction against infringement. Employee Relations Law Journal 3 Vol. 47, No. 2, Autumn 2021 A Guide to Drafting Effective Assignments Registration with the Copyright Office is not required for an artist to bring claims for violation of the artist’s moral rights under the Visual Artists Rights Act of 1990.17 A copyright owner can recover statutory damages and attorneys’ fees only if the owner registered the work before the infringement began, or in the case of infringement that began after publication, within three months after the work’s first publication.18 Since actual damages or an infringer’s profits can be difficult to prove or may be relatively small, the ability to recover statutory damages is important. Statutory damages can range from $750 to $30,000 per work infringed, and up to $150,000 per work for willful infringement.19 Moreover, if the copyright owner wants to negotiate with an infringer before filing suit, providing a copy of the registration certificate shows that the owner can immediately file suit, which strengthens the owner’s bargaining position. In addition, recording of an assignment of a registered copyright with the Copyright Office generally provides priority over a later assignment.20 Finally, recording a registered copyright with the United States Customs Service provides protection against the importation of infringing copies.21 SCOPE OF PATENT PROTECTION A patent gives the owner the rights to exclude others from making, using, offering for sale, or selling an invention, or importing the invention into the United States.22 The patent application must fully and par- ticularly describe how to make and use the invention without undue experimentation. It must also describe the best mode for using the invention, which is the best way of using the invention known to the inventor at the time the application is filed.23 Utility patent protection applies to an invention that comes within four statutory categories: articles of manufacture; compositions of matter; machines; and processes or methods. Protection also applies to any new and useful improvement of the invention.24 The invention must satisfy the requirements of eligible subject matter, novelty, and nonobvious- ness.25 The term of a utility patent is twenty years from the filing date of the earliest United States patent application to which the patent claims domestic benefit.26 Design patent protection applies to new and original ornamental designs for articles of manufacture, such as chairs, dishes, and glassware.

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