Many dentists hire independent consultants to develop their website or to perform marketing services to brand their dental office. However, most dentists are unaware that without a written contract that includes certain specific provisions, the independent consultant retains the ownership of the intellectual property created. Because the consultant’s ownership of the intellectual property is not common knowledge, this can create problems for dental offices that do not adequately protect their rights.
Copyright law protects work from the time it is created. The general rule under the Copyright Act states that a person who creates the work is the author of that work, unless the work is designated as “work made for hire.”
For example, if a dental office hires a graphic design company to create its’ company logo and a “work made for hire agreement” was not signed before the logo was created, the graphic design company would own all of the right, title and interest to the dental office’s logo. The graphic design company would be free to license or sell the logo and dilute the market place with similar images. The dental office would have no control over its own logo.
There is, however, an exception to this principle: “works made for hire”. This doctrine allows for an employer to be considered the author of the work even if an employee created the work. If an employee creates intellectual property for an employer, the employer will own the exclusive rights to work created, if the work was created within the scope of the employee’s employment. However, although work created by an employee is considered to be “work for hire” and is owned by the employer, the more cautious dental practice owner will still have their employees sign an employment agreement that transfers ownership of work, ideas and inventions to the employer. Because many employees often work from home or at odd hours, it can be unclear if a concept or idea was created during the course of employment.
If an independent contractor is performing the services for a dental practice, the contractor is the lawful owner of the work unless the “works made for hire” requirements are met. The “work made for hire” doctrine requires that three  conditions must be satisfied in order for the hiring business to own the original work. First, prior to the commencement of the work, the parties must agree in writing that the work shall be considered “work for hire”. Second, the work must have been “specially ordered” or “commissioned” by the hiring party. Finally, the work must fall within at least one of the nine  statutorily mandated categories of commissioned works listed in the Copyright Act. A “work made for hire” is defined in the Copyright Act (15 U.S.C. § 101) as “a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas.”
These requirements necessitate that the parties have a written agreement in place with specific work-for-hire provisions. And since it is not always clear whether the work product falls into one of the nine  specified categories authorized by statute, a well-drafted independent contractor agreement should always include language assigning all of the intellectual property rights associated with the work created to the dental practice contracting for the work.
Since more and more dental offices hire independent contractors and consultants rather than hiring full-time or part-time employees, the question of ownership regarding intellectual property rights has created a substantial amount of litigation. The consequences of failing to take the necessary steps in order to protect your dental office’s intellectual property rights can be very problematic, particularly if there is a dispute over payment or the quality of work with the independent contractor or consultant. If this were to happen, an Ip Theft Investigation may have to be conducted to prove that you own the rights to the intellectual property.
In today’s digital and knowledge based business world, dental offices are not always careful in protecting their “work made for hire”. Intellectual property rights associated with work created by employees and independent contractors can be the source of expensive litigation if a dental office becomes successful. Intellectual property is also an important subject of review during any due diligence period that may be conducted for the purposes of financing and selling a business. As a matter of general practice, and especially when the intellectual property being created is crucial to the long-term growth of the practice, well-drafted employment and/or independent contractor agreements must be in place. If companies need a business broker to help sell their business, they can look on helpful websites such as cgkbusinesssales.com to see how to go about that.
Stuart J. Oberman, Esq.
Stuart J. Oberman is the founder and President of Oberman Law Firm. Mr. Oberman graduated from Urbana University and received his law degree from John Marshall Law School. Mr. Oberman has been practicing law for over 30 years, and before going into private practice, Mr. Oberman was in-house counsel for a Fortune 500 Company.
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