If you run a small business and hire remote workers or freelancers, you cannot safely assume you own the copyright in what you pay for. Under U.S. copyright law, the default owner is usually the individual creator, not the company writing the check, unless the work qualifies as a "work made for hire" or is assigned in writing.

This article explains the core legal concepts and then uses real federal cases involving software developers, media producers, and tech contractors to show what can go wrong—and how to prevent it.

Default Rule: The Creator Owns the Copyright

The 1976 Copyright Act says copyright vests initially in the "author," meaning the person who translates an idea into a fixed, tangible expression (like code, a video, or a graphic).¹ Courts consistently treat the actual coder, designer, or filmmaker as the initial author—even when they're working for a business—unless a specific exception applies.

The "Work Made for Hire" Exception²

There are two routes for a business to be treated as the author from day one:

Employee route: A work "prepared by an employee within the scope of his or her employment" is a work made for hire; the employer is deemed the author and owner, absent a contrary written agreement.³
Specially ordered / commissioned route:⁴ A work created by a non-employee can be a "work made for hire" only if:
- It falls within one of the narrow statutory categories (e.g., an audiovisual work), and
- The parties expressly agree in a written, signed instrument that it is a work made for hire.

If neither route is satisfied, the hiring party must obtain a written assignment or license—otherwise, copyright ownership stays with the creator.

Independent Contractors: Why Paying for Work Is Not Enough

Contractors usually keep ownership by default.

Federal courts have repeatedly confirmed that when a software developer or web designer builds something as an independent contractor (not an employee), ownership initially stays with them unless there is a valid written transfer or applicable work-for-hire agreement.

In Alcatel USA, Inc. v. Cisco Systems, Inc.,⁵ a programmer created internal software tools while working through a staffing company on a series of short-term contracts. The manufacturer claimed it owned the copyrights based on "work made for hire." The court emphasized that, absent a signed work-for-hire/assignment for a specially commissioned work, ownership depended on whether the programmer was legally an employee or an independent contractor. Because he had been treated like a contractor for tax and benefits purposes and engaged through a third-party agency, there was a real factual dispute, and the court refused to grant summary judgment on ownership.

In Power v. Connectweb Technologies, Inc.,⁶ a developer who had done both employee and contractor-type work claimed ownership of "derivative" versions of a commercial web software product. The court held he could not own derivative works absent proof that the company actually authorized him (or its customers) to create derivative versions of its core software; the business retained exclusive rights because it never granted such permission. The court ultimately declared the company to be the sole copyright owner of the software and its versions.

Therefore, if you hire a freelancer to design your website, write your software, or create your brand assets, you do not automatically own the copyright—at best, you may have an implied or limited license for the specific use you agreed on. That can be disastrous when you try to sell your company or enforce your IP rights.

Remote Employees: When "Work for Hire" Gets Messy

On paper, employees' work within the scope of employment belongs to the employer. But remote work blurs the lines: people use their own devices, cloud tools, and flexible hours, which complicates "scope of employment" and even "employee" status.

Courts use a detailed, multi-factor test (from the Supreme Court's Reid decision) to decide whether someone is really an employee or an independent contractor for copyright purposes. Key factors include⁷:

Who controls the manner and means of the work (supervision, review, assignment of tasks).
Who supplies tools and equipment (devices, software, studio, office).
Where the work is done (home vs. employer's premises).
How long the relationship lasts and whether the company can assign additional projects.
Whether the worker gets benefits and is treated as a W-2 employee for tax purposes.
Whether the work is part of the company's regular business.

Example: In-house Engineer vs. Remote Media Team

In Alcatel, even though the programmer worked through a contractor company and was treated as a non-employee for benefits and taxes, he worked for years at the company's facility, used its infrastructure, and was supervised like other in-house engineers. The court held that a jury could reasonably find he was, in substance, an employee—so the employer might own the software he created as work made for hire.

In Fokiss, Inc. v. TLM Global, LLC, a media company (Fokiss)⁸ claimed it owned the copyright in a viral documentary ("Died Suddenly") created by video professionals who worked out of their own production company's studio. The court found the filmmakers (Skow and Stumphauzer) were employees of the production company, TLM Global—not of Fokiss—because:

Fokiss paid TLM as a vendor and issued it a 1099, while TLM put the individuals on W-2 payroll and provided benefits.
The film was made using TLM's studio, equipment, and travel funds.
TLM regularly produced documentaries as its core business; Fokiss did not.
Fokiss itself had repeatedly described TLM as an independent contractor, which undercut its later attempt to relabel them as employees.

Because there was no written work-for-hire or assignment in favor of Fokiss, copyright ownership stayed with TLM Global as the employer of the authors.

Takeaway: Even if you work closely with a remote team, if they are on someone else's payroll, using their equipment, and you've been treating that entity as a contractor, courts are unlikely to treat their creative employees as your employees for copyright purposes.

International and Cross-Border Remote Workers

If you hire foreign creators (for example, a Canadian or Indian developer) and the work is created abroad, which country's law governs initial ownership can change the outcome.

In Automotive Data Solutions, Inc. v. Directed Electronics Canada, Inc.,⁹ the court confronted Canadian software created by a Canadian company and allegedly infringed in the U.S. The judge noted that when a foreign work is allegedly infringed in the United States, courts generally:

Apply the law of the country with the closest relationship to the work (often the place of creation or the author's nationality) to decide who owns the copyright, and
Apply U.S. law to decide whether infringement occurred and what remedies are available.

The court ordered supplemental briefing on whether Canadian or U.S. law governed ownership and whether the plaintiff could validly claim ownership under that law. That step alone shows how complex—and fact-specific—cross-border copyright ownership can be.

For small businesses: if you use overseas remote workers, do not assume U.S. "work made for hire" rules will apply cleanly. You need contracts drafted (or at least reviewed) by counsel familiar with both U.S. law and the foreign jurisdiction's copyright regime.

Why "Calling It Work-for-Hire" Is Not Enough

Many businesses simply write "this is a work-for-hire" in their contractor agreements and think they are covered. Courts have been very clear that this label alone is not sufficient:

In Fokiss, the absence of any written work-for-hire or assignment in favor of the hiring network was fatal; oral understandings and high-level control over distribution were not enough to transfer ownership away from the production company that actually employed the creators.
In Alcatel, the court stressed that, for a specially ordered or commissioned work, the statute requires a written, signed instrument stating it is a work made for hire; otherwise, the general rule (author owns, unless assigned) applies.
In Power v. Connectweb, the court likewise underscored that a derivative work creator cannot claim ownership of derivative versions of software without proof of actual authorization from the original software owner; an "understanding" or self-serving label is not enough.

In short: merely calling a contractor document "work-for-hire" does not make it legally effective unless you also meet the statutory categories and have the agreement properly documented.

Best-Practice Checklist for Business Owners

The cases above point to very practical steps you can take to protect your IP:

Use clear written agreements before work starts. For contractors (designers, developers, video editors, writers), include:
- A copyright assignment clause: "Contractor hereby assigns all right, title, and interest in and to all copyrights and related rights in the deliverables to Company…"
- A work-for-hire clause where legally available: "To the extent permitted by law, the parties agree the deliverables are works made for hire under 17 U.S.C. § 101. If not, Contractor assigns all rights to Company."
Note: Courts in Fokiss and Power heavily scrutinized whether such writings existed; where they didn't, creators kept ownership.
Define "scope of work" and "ownership" in detail. Specify exactly what is company-owned: source code, documentation, design files, raw footage, edit files, derivative versions, and any tools created specifically for your project.
Note: In Alcatel, disputes over whether internal tools were "within the scope of employment" became a central, expensive factual fight.
Align tax, HR, and contract treatment. In both Alcatel and Fokiss, courts paid close attention to whether the hiring party:
- Issued W-2s vs. 1099s.
- Provided benefits.
- Treated individuals as employees or as vendor personnel.
If you want "employee-style" IP ownership, your HR/tax treatment should match that story.
Control infrastructure and access where feasible. When your company provides the core tools and environment (servers, repositories, studio, dev platforms), and controls access to code and assets, courts are more comfortable treating output as belonging to the business (especially for employees). In Power, the company's SaaS architecture and lack of any license to make derivative software helped the court rule that all versions remained with the company.
For international hires, get jurisdiction-aware contracts. As Automotive Data Solutions illustrates, foreign copyright ownership questions will turn on foreign law; the Berne Convention does not harmonize everything.¹⁰ Your agreement should:
- State governing law and jurisdiction.
- Include explicit assignment of all copyright and related rights worldwide, to the extent allowed by applicable law.
Include confidentiality and trade secret clauses. Even when you lock down copyright, you still need NDAs and confidentiality obligations to protect your proprietary data, trade secrets, and internal tools. In Automotive Data Solutions, the plaintiff's ability to argue "trade secret" status depended heavily on documented security, access limits, and technical measures around its software.

Bottom Line for Small Businesses

The consistent message across these cases is simple but critical:

Courts start from the presumption that the person who created the work owns the copyright, even if they were paid by someone else.
Shifting ownership to your business generally requires:
- A true employment relationship and work within the scope of that job, or
- A signed, written work-for-hire and/or assignment agreement that satisfies the statute.
Labels and assumptions ("they're part of our team," "we paid for it," "we called it work-for-hire") do not save you in court; paperwork and structure do.
If you rely on remote workers, agencies, or overseas talent for your core software, brand, or content, it is worth getting your contracts reviewed once, up front, rather than discovering in litigation—or during due diligence for a sale—that you don't actually own the IP your business depends on.

17 U.S.C. § 201(a) (2024). ↩
17 U.S.C. § 101 (definition of "work made for hire"). ↩
17 U.S.C. § 201(b) (works made for hire—employer as author). ↩
17 U.S.C. § 204(a) (requirement of signed writing for transfer of copyright ownership). ↩
Alcatel U.S.A., Inc. v. Cisco Sys., Inc., No. 4:00-CV-199, 2001 U.S. Dist. LEXIS 25113 (E.D. Tex. Oct. 30, 2001). ↩
Power v. Connectweb Techs., Inc., 740 F. Supp. 3d 39 (D. Mass. 2024). ↩
Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730 (1989). ↩
Fokiss, Inc. v. TLM Glob., LLC, No. 2:24-cv-14096-KMM/McCabe, 2024 U.S. Dist. LEXIS 222228 (S.D. Fla. Dec. 9, 2024) (report & recommendation), adopted by 2025 U.S. Dist. LEXIS 17610 (S.D. Fla. Jan. 31, 2025). ↩
Auto. Data Sols., Inc. v. Directed Elecs. Can., Inc., 2018 U.S. Dist. LEXIS 222625 (C.D. Cal. July 16, 2018). ↩
Berne Convention for the Protection of Literary and Artistic Works art. 5(1), Sept. 9, 1886, as revised at Paris July 24, 1971, S. Treaty Doc. No. 99-27. ↩

Copyright Ownership Issues with Remote Workers and Contractors