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Works for Hire
  • 1 Community For Creative Non-Violence v. Reid (1989)

    1
    490 U.S. 730
    3
    109 S.Ct. 2166
    5
    104 L.Ed.2d 811
    7
    COMMUNITY FOR CREATIVE NON-VIOLENCE, et al., Petitioners,

    v.

    James Earl REID.

    9
    No. 88-293.
    11
    Argued March 29, 1989.
    13
    Decided June 5, 1989.
    15
    Syllabus
    17

              In the fall of 1985, petitioners—the Community for Creative Non-Violence (CCNV), a Washington, D.C., organization dedicated to eliminating homelessness, and one of its trustees—entered into an oral agreement with respondent Reid, a sculptor, to produce a statue dramatizing the plight of the homeless for display at a 1985 Christmas pageant in Washington. While Reid worked on the statue in his Baltimore, Md., studio, CCNV members visited him on a number of occasions to check on his progress and to coordinate CCNV's construction of the sculpture's base in accordance with the parties' agreement. Reid accepted most of CCNV's suggestions and directions as to the sculpture's configuration and appearance. After the completed work was delivere to Washington, CCNV paid Reid the final installment of the agreed-upon price, joined the sculpture to its base, and displayed it. The parties, who had never discussed copyright in the sculpture, then filed competing copyright registration certificates. The District Court ruled for CCNV in its subsequent suit seeking, inter alia, a determination of copyright ownership, holding that the statue was a "work made for hire" as defined in the Copyright Act of 1976, 17 U.S.C. § 101, and was therefore owned exclusively by CCNV under § 201(b), which vests copyright ownership of works for hire in the employer or other person for whom the work is prepared, unless there is a written agreement to the contrary. The Court of Appeals reversed, holding that the sculpture was not a "work made for hire" under the first subsection of the § 101 definition (hereinafter § 101(1)), since it was not "prepared by an employee within the scope of his or her employment" in light of Reid's status as an independent contractor under agency law. The court also ruled that the statue did not satisfy the second subsection of the § 101 definition (hereinafter § 101(2)), since sculpture is not one of the nine categories of "specially ordered or commissioned" works enumerated therein, and the parties had not agreed in writing that the sculpture would be a work for hire. However, the court remanded for a determination whether the statue was jointly authored by CCNV and Reid, such that they were co-owners of the copyright under § 201(a).

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    Page 731

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                Held:

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              1. To determine whether a work is a "work made for hire" within the § 101 definition, a court should first apply general common law of agency principles to ascertain whether the work was prepared by an employee or an independent contractor, and, depending upon the outcome, should then apply either § 101(1) or § 101(2). Although the Act nowhere defines "employee," "employment," or related terms, it must be inferred that Congress meant them in their settled, common-law sense, since nothing in the text of the work for hire provisions indicates that those terms are used to describe anything other than the conventional relation of employer and employee. On the contrary, Congress' intent to incorporate agency law definitions is suggested by § 101(1)'s use of the term "scope of employment," a widely used agency law term of art. Moreover, the general common law of agency must be relied on, rather than the law of any particular State, since the Act is expressly intended to create a federal law of uniform, nationwide application by broadly preempting state statutory and common-law copyright regulation. Petitioners' argument that a work is "prepared by an employee within the scope of his or her employment" whenever the hiring party retains the right to control, or actually controls, the work is inconsistent with the language and legislative history of the work for hire provisions, and would distort the provisions' structure, which views works by employees and commissioned works by independent contractors as mutually exclusive entities. Pp. 737-751.

    25

              2. The sculpture in question is not a "work made for hire" within the meaning of § 101. Reid was an independent contractor rather than a § 101(1) "employee" since, although CCNV members directed enough of the work to ensure that the statue met their specifications, all other relevant circumstances weigh heavily against finding an employment relationship. Reid engages in a skilled occupation; supplied his own tools; worked in Baltimore without daily supervision from Washington; was retained for a relatively short period of time; had absolute freedom to decide when and how long to work in order to meet his deadline; and had total discretion in hiring and paying assistants. Moreover, CCNV had no right to assign additional projects to Reid; paid him in a manner in which independent contractors are often compensated; did not engage regularly in the business of creating sculpture or, in fact, n any business; and did not pay payroll or Social Security taxes, provide any employee benefits, or contribute to unemployment insurance or workers' compensation funds. Furthermore, as petitioners concede, the work in question does not satisfy the terms of § 101(2). Pp. 751-753.

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              3. However, CCNV nevertheless may be a joint author of the sculpture and, thus, a co-owner of the copyright under § 201(a), if, on remand,

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    the District Court determines that the parties prepared the work with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole. P. 753.

    33

              270 U.S.App.D.C. 26, 846 F.2d 1485 (1988), affirmed.

    35

              MARSHALL, J., delivered the opinion for a unanimous Court.

    37

              Robert Alan Garrett, Washington, D.C., for petitioners.

    39

              Joshua Kaufman, Washington, D.C., for respondent.

    41

              Lawrence S. Robbins, Washington, D.C., for Register of Copyrights as amicus curiae supporting respondent, by special leave of Court.

    43

               Justice MARSHALL delivered the opinion of the Court.

    45

              In this case, an artist and the organization that hired him to produce a sculpture contest the ownership of the copyright in that work. To resolve this dispute, we must construe the "work made for hire" provisions of the Copyright Act of 1976 (Act or 1976 Act), 17 U.S.C. §§ 101 and 201(b), and in particular, the provision in § 101, which defines as a "work made for hire" a "work prepared by an employee within the scope of his or her employment" (hereinafter § 101(1)).

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    I
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              Petitioners are the Community for Creative Non-Violence (CCNV), a nonprofit unincorporated association dedicated to eliminating homelessness in America, and Mitch Snyder, a member and trustee of CCNV. In the fall of 1985, CCNV decided to participate in the annual Christmastime Pageant of Peace in Washington, D.C., by sponsoring a display to dramatize the plight of the homeless. As the District Court recounted:

    53

              "Snyder and fellow CCNV members conceived the idea for the nature of the display: a sculpture of a modern Nativity scene in which, in lieu of the traditional Holy Family, the two adult figures and the infant would appear as contemporary homeless people huddled on a streetside steam grate. The family was to be black (most of the homeless in Washington being black); the figures were to be life-sized, and the steam grate would be positioned atop a platform 'pedestal,' or base, within which special-effects equipment would be enclosed to emit simulated 'steam' through the grid to swirl about the figures. They also settled upon a title for the work—'Third World America'—and a legend for the pedestal: 'and still there is no room at the inn.' " 652 F.Supp. 1453, 1454 (DC 1987).

    55

              Snyder made inquiries to locate an artist to produce the sculpture. He was referred to respondent James Earl Reid, a Baltimore, Maryland, sculptor. In the course of two telephone calls, Reid agreed to sculpt the three human figures. CCNV agreed to make the steam grate and pedestal for the statue. Reid proposed that the work be cast in bronze, at a total cost of approximately $100,000 and taking six to eight months to complete. Snyder rejected that proposal because CCNV did not have sufficient funds, and because the statue had to be completed by December 12 to be included in the pageant. Reid then suggested, and Snyder agreed, that the

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    sculpture would be made of a material known as "Design Cast 62," a synthetic substance that could meet CCNV's monetary and time constraints, could be tinted to resemble bronze, and could withstand the elements. The parties agreed that the project would cost no more than $15,000, not including Reid's services, which he offered to donate. The parties did not sign a written agreement. Neither party mentioned copyright.

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              After Reid received an advance of $3,000, he made several sketches of figures in various poses. At Snyder's request, Reid sent CCNV a sketch of a proposed sculpture showing the family in a creche like etting: the mother seated, cradling a baby in her lap; the father standing behind her, bending over her shoulder to touch the baby's foot. Reid testified that Snyder asked for the sketch to use in raising funds for the sculpture. Snyder testified that it was also for his approval. Reid sought a black family to serve as a model for the sculpture. Upon Snyder's suggestion, Reid visited a family living at CCNV's Washington shelter but decided that only their newly born child was a suitable model. While Reid was in Washington, Snyder took him to see homeless people living on the streets. Snyder pointed out that they tended to recline on steam grates, rather than sit or stand, in order to warm their bodies. From that time on, Reid's sketches contained only reclining figures.

    63

              Throughout November and the first two weeks of December 1985, Reid worked exclusively on the statue, assisted at various times by a dozen different people who were paid with funds provided in installments by CCNV. On a number of occasions, CCNV members visited Reid to check on his progress and to coordinate CCNV's construction of the base. CCNV rejected Reid's proposal to use suitcases or shopping bags to hold the family's personal belongings, insisting instead on a shopping cart. Reid and CCNV members did not discuss copyright ownership on any of these visits.

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              On December 24, 1985, 12 days after the agreed-upon date, Reid delivered the completed statue to Washington. There it was joined to the steam grate and pedestal prepared by CCNV and placed on display near the site of the pageant. Snyder paid Reid the final installment of the $15,000. The statue remained on display for a month. In late January 1986, CCNV members returned it to Reid's studio in Baltimore for minor repairs. Several weeks later, Snyder began making plans to take the statue on a tour of several cities to raise money for the homeless. Reid objected, contending that the Design Cast 62 material was not strong enough to withstand the ambitious itinerary. He urged CCNV to cast the statue in bronze at a cost of $35,000, or to create a master mold at a cost of $5,000. Snyder declined to spend more of CCNV's money on the project.

    69

              In March 1986, Snyder asked Reid to return the sculpture. Reid refused. He then filed a certificate of copyright registration for "Third World America" in his name and announced plans to take the sculpture on a more modest tour than the one CCNV had proposed. Snyder, acting in his capacity as CCNV's trustee, immediately filed a competing certificate of copyright registration.

    71

              Snyder and CCNV then commenced this action against Reid and his photographer, Ronald Purtee,1 seeking return of the sculpture and a determination of copyright ownership. The District Court granted a preliminary injunction, ordering the sculpture's return. After a 2-day bench trial, the District Court declared that "Third World America" was a "work made for hire" under § 101 of the Copyright Act and that Snyder, as trustee for CCNV, was the exclusive owner of the copyright in the sculpture. 652 F.Supp., at 1457. The court reasoned that Reid had been an "employee" of CCNV within the meaning of § 101(1) because CCNV was the motivating force in the statue's production. Snyder and

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    other CCNV members, the court explained, "conceived the idea of a contemporary Nativity scene to contrast with the national celebration of the season," and "directed enough of [Reid's] effort to assure that, in the end, he had produced what they, not he, wanted." Id., at 1456.

    77

              The Court of Appeals for the District of Columbia Circuit reversed and remanded, holding that Reid owned the copyright because "Third World America" was not a work for hire. 270 U.S.App.D.C. 26, 35, 846 F.2d 1485, 1494 (1988). Adopting what it termed the "literal interpretation" of the Act as articulated by the Fifth Circuit in Easter eal Society for Crippled Children & Adults of Louisiana, Inc. v. Playboy Enterprises, 815 F.2d 323, 329 (1987), cert. denied, 485 U.S. 981, 108 S.Ct. 1280, 99 L.Ed.2d 491 (1988), the court read § 101 as creating "a simple dichotomy in fact between employees and independent contractors." 270 U.S.App.D.C., at 33, 846 F.2d, at 1492. Because, under agency law, Reid was an independent contractor, the court concluded that the work was not "prepared by an employee" under § 101(1). Id., at 35, 846 F.2d, at 1494. Nor was the sculpture a "work made for hire" under the second subsection of § 101 (hereinafter § 101(2)): sculpture is not one of the nine categories of works enumerated in that subsection, and the parties had not agreed in writing that the sculpture would be a work for hire. Ibid. The court suggested that the sculpture nevertheless may have been jointly authored by CCNV and Reid, id., at 36, 846 F.2d, at 1495, and remanded for a determination whether the sculpture is indeed a joint work under the Act, id., at 39-40, 846 F.2d, at 1498-1499.

    79

              We granted certiorari to resolve a conflict among the Courts of Appeals over the proper construction of the "work made for hire" provisions of the Act.2 488 U.S. 940, 109 S.Ct. 362, 102 L.Ed.2d 352 (1988). We now affirm.

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    Page 737

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    II
    85
    A.
    87

                The Copyright Act of 1976 provides that copyright ownership "vests initially in the author or authors of the work." 17 U.S.C. § 201(a). As a general rule, the author is the party who actually creates the work, that is, the person who translates an idea into a fixed, tangible expression entitled to copyright protection. § 102. The Act carves out an important exception, however, for "works made for hire." 3 If the work is for hire, "the employer or other person for whom the work was prepared is considered the author" and owns the copyright, unless there is a written agreement to the contrary. § 201(b). Classifying a work as "made for hire" determines not only the initial ownership of its copyright, but also the copyright's duration, § 302(c), and the owners' renewal rights, § 304(a), termination rights, § 203(a), and right to import certain goods bearing the copyright, § 601(b)(1). See 1 M. Nimmer & D. Nimmer, Nimmer on Copyright § 5.03[A], pp. 5-10 (1988). The contours of the work for hire doctrine therefore carry profound significance for freelance creators—including artists, writers, photographers, designers, composers, and computer programmers—and for the publishing, advertising, music, and other industries which commission their works.4

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              Section 101 of the 1976 Act provides that a work is "for hire" under two sets of circumstances:

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              "(1) a work prepared by an employee within the scope of his or her employment; or

    95

              (2) 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, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire." 5

    97

              Petitioners do not claim that the statue satisfies the terms of § 101(2). Quite clearly, it does not. Sculpture does not fit within any of the nine categories of "specially ordered or commissioned" works enumerated in that subsection, and no written agreement between the parties establishes "Third World America" as a work for hire.

    99

              The dispositive inquiry in this case therefore is whether "Third World America" is "a work prepared by an employee within the scope of his or her employment" under § 101(1). The Act does not define these terms. In the absence of such guidance, four interpretations have emerged. The first holds that a work is prepared by an employee whenever the hiring party 6 retains the right to control the product. See Peregrine v. Lauren Corp., 601 F.Supp. 828, 829 (Colo.1985); Clarkstown v. Reeder, 566 F.Supp. 137, 142 (SDNY

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    1983). Petitioners take this view. Brief for Petitioners 15; Tr. of Oral Arg. 12. A second, and closely related, view is that a work is prepared by an employee under § 101(1) when the hiring party has actually wielded control with respect to the creation of a particular work. This approach was formulated by the Court of Appeals for the Second Circuit, Aldon Accessories Ltd. v. Spiegel, Inc., 738 F.2d 548, cert. denied, 469 U.S. 982, 105 S.Ct. 387, 83 L.Ed.2d 321 (1984), and adopted by the Fourth Circuit, Brunswick Beacon, Inc. v. Schock-Hopchas Publishing Co., 810 F.2d 410 (1987), the Seventh Circuit, Evans Newton, Inc. v. Chicago Systems Software, 793 F.2d 889, cert. denied, 479 U.S. 949, 107 S.Ct. 434, 93 L.Ed.2d 383 (1986), and, at times, by petitioners, Brief for Petitioners 17. A third view is that the term "employee" within § 101(1) carries its common-law agency law meaning. This view was endorsed by the Fifth Circuit in Easter Seal Society for Crippled Children & Adults of Louisiana, Inc. v. Playboy Enterprises, 815 F.2d 323 (1987), and by the Court of Appeals below. Finally, respondent and numerous amici curiae contend that the term "employee" only refers to "formal, salaried" employees. See, e.g., Brief for Respondent 23-24; Brief for Register of Copyrights as Amicus Curiae 7. The Court of Appeals for the Ninth Circuit recently adopted this view. See Dumas v. Gommerman, 865 F.2d 1093 (1989).

    105

              The starting point for our interpretation of a statute is always its language. Consumer Product Safety Comm'n v. GTE Sylvania, Inc., 447 U.S. 102, 108, 100 S.Ct. 2051, 2056, 64 L.Ed.2d 766 (1980). The Act nowhere defines the terms "employee" or "scope of employment." It is, however, well established that "[w]here Congress uses terms that have accumulated settled meaning under . . . the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms." NLRB v. Amax Coal Co., 453 U.S. 322, 329, 101 S.Ct. 2789, 2794, 69 L.Ed.2d 672 (1981); see also Perrin v. United States, 444 U.S. 37, 42, 100 S.Ct. 311, 314, 62 L.Ed.2d 99 (1979). In the past, when Congress has used the term "employee" without defining it,

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    we have concluded that Congress intended to describe the conventional master-servant relationship as understood by common-law agency doctrine. See, e.g., Kelley v. Southern Pacific Co., 419 U.S. 318, 322-323, 95 S.Ct. 472, 475-476, 42 L.Ed.2d 498 (1974); Baker v. Texas & Pacific R. Co., 359 U.S. 227, 228, 79 S.Ct. 664, 665, 3 L.Ed.2d 756 (1959) (per curiam ); Robinson v. Baltimore & Ohio R. Co., 237 U.S. 84, 94, 35 S.Ct. 491, 494, 59 L.Ed. 849 (1915). Nothing in the text of the work for hire provisions indicates that Congress used the words "employee" and "employment" to describe anything other than " 'the conventional relation of employer and employe.' " Kelley, supra, 419 U.S., at 323, 95 S.Ct., at 476, quoting Robinson, supra, 237 U.S., at 94, 35 S.Ct., at 494; cf. NLRB v. Hearst Publications, Inc., 322 U.S. 111, 124-132, 64 S.Ct. 851, 857-861, 88 L.Ed. 1170 (1944) (rejecting agency law conception of employee for purposes of the National Labor Relations Act where structure and context of statute indicated broader definition). On the contrary, Congress' intent to incorporate the agency law definition is suggested by § 101(1)'s use of the term, "scope of employment," a widely used term of art in agency law. See Restatement (Second) of Agency § 228 (1958) (hereinafter Restatement).

    111

              In past cases of statutory interpretation, when we have concluded that Congress intended terms such as "employee," "employer," and "scope of employment" to be understood in light of agency law, we have relied on the general common law of agency, rather than on the law of any particular State, to give meaning to these terms. See, e.g., Kelley, 419 U.S., at 323-324, and n. 5, 95 S.Ct., at 475-476, and n. 5; id., at 332, 95 S.Ct., at 480 (Stewart, J., concurring in judgment); Ward v. Atlantic Coast Line R. Co., 362 U.S. 396, 400, 80 S.Ct. 789, 792, 4 L.Ed.2d 820 (1960); Baker, supra, 359 U.S., at 228, 79 S.Ct., at 665. This practice reflects the fact that "federal statutes are generally intended to have uniform nationwide application." Mississippi Band of Choctaw Indians v. Holyfield, 490 U.S. 30, 43, 109 S.Ct. 1597, 1605, 104 L.Ed.2d 29 (1989). Establishment of a federal rule of agency, rather than reliance on state agency law, is particularly appropriate here given the Act's express objective of creating national, uniform copyright law by broadly pre-empting state statutory and common-law copyright regulation. See 17 U.S.C. § 301(a). We thus

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    agree with the Court of Appeals that the term "employee" should be understood in light of the general common law of agency.

    117

              In contrast, neither test proposed by petitioners is consistent with the text of the Act. The exclusive focus of the right to control the product test on the relationship between the hiring party and the product clashes with the language of § 101(1), which focuses on the relationship between the hired and hiring parties. The right to control the product test also would distort the meaning of the ensuing subsection, § 101(2). Section 101 plainly creates two distinct ways in which a work can be deemed for hire: one for works prepared by employees, the other for those specially ordered or commissioned works which fall within one of the nine enumerated categories and are the subject of a written agreement. The right to control the product test ignores this dichotomy by transforming into a work for hire under § 101(1) any "specially ordered or commissioned" work that is subject to the supervision and control of the hiring party. Because a party who hires a "specially ordered or commissioned" work by definition has a right to specify the characteristics of the product desired, at the time the commission is accepted, and frequently until it is completed, the right to control the product test would mean that many works that could satisfy § 101(2) woul already have been deemed works for hire under § 101(1). Petitioners' interpretation is particularly hard to square with § 101(2)'s enumeration of the nine specific categories of specially ordered or commissioned works eligible to be works for hire, e.g., "a contribution to a collective work," "a part of a motion picture," and "answer material for a test." The unifying feature of these works is that they are usually prepared at the instance, direction, and risk of a publisher or producer.7 By their very nature, therefore, these types of

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    works would be works by an employee under petitioners' right to control the product test.

    123

              The actual control test, articulated by the Second Circuit in Aldon Accessories, fares only marginally better when measured against the language and structure of § 101. Under this test, independent contractors who are so controlled and supervised in the creation of a particular work are deemed "employees" under § 101(1). Thus work for hire status under § 101(1) depends on a hiring party's actual control of, rather than right to control, the product. Aldon Accessories, 738 F.2d, at 552. Under the actual control test, a work for hire could arise under § 101(2), but not under § 101(1), where a party commissions, but does not actually control, a product which falls into one of the nine enumerated categories. Nonetheless, we agree with the Court of Appeals for the Fifth Circuit that "[t]here is simply no way to milk the 'actual control' test of Aldon Accessories from the language of the statute." Easter Seal Society, 815 F.2d, at 334. Section 101 clearly delineates between works prepared by an employee and commissioned works. Sound though other distinctions might be as a matter of copyright policy, there is no statutory support for an additional dichotomy between commissioned works that are actually controlled and supervised by the hiring party and those that are not.

    125

              We therefore conclude that the language and structure of § 101 of the Act do not support either the right to control the product or the actual control approaches.8 The structure of

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    § 101 indicates that a work for hire can arise through one of two mutually exclusive means, one for employees and one for independent contractors, and ordinary canons of statutory interpretation indicate that the classification of a particular hired party should be made with reference to agency law.

    131

              This reading of the undefined statutory terms finds considerable support in the Act's legislative history. Cf. Diamond v. Chakrabarty, 447 U.S. 303, 315, 100 S.Ct. 2204, 2210-11, 65 L.Ed.2d 144 (1980). The Act, which almost completely revised existing copyright law, was the product of two decades of negotiation by representatives of creators and copyright-using industries, supervised by the Copyright Office and, to a lesser extent, by Congress. See Mills Music, Inc. v. Snyder, 469 U.S. 153, 159, 105 S.Ct. 638, 642-43, 83 L.Ed.2d 556 (1985); Litman, Copyright, Compromise, and Legislative History, 72 Cornell L.Rev. 857, 862 (1987). Despite the lengthy history of negotiation and compromise which ultimately produced the Act, two things remained constant. First, interested parties and Congress at all times viewed works by employees and commissioned works by independent contractors as separate entities. Second, in using the term "employee," the parties and Congress meant to refer to a hired party in a conventional employment relationship. These factors militate in favor of the reading we have found appropriate.

    133

              In 1955, when Congress decided to overhaul copyright law, the existing work for hire provision was § 62 of the 1909 Copyright Act, 17 U.S.C. § 26 (1976 ed.) (1909 Act). It provided that "the word 'author' shall include an employer in

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    the case of works made for hire." 9 Because the 1909 Act did not define "employer" or "works made for hire," the task of shaping these terms fell to the courts. They concluded that the work for hire doctrine codified in § 62 referred only to works made by employees in the regular course of their employment. As for commissioned works, the courts generally presumed that the commissioned party had impliedly agreed to convey the copyright, along with the work itself, to the hiring party. See, e.g., Shapiro, Bernstein & Co. v. Jerry Vogel Music Co., 221 F.2d 569, 570, rev'd, 223 F.2d 252 (CA2 1955); Yardley v. Houghton Mifflin Co., 108 F.2d 28, 31 (CA2 1939), cert. denied, 309 U.S. 686, 60 S.Ct. 891, 84 L.Ed. 1029 (1940).10

    139

              In 1961, the Copyright Office's first legislative proposal retained the distinction between works by employees and works by independent contractors. See Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law, 87th Cong., 1st Sess., Copyright Law Revision 86-87 (H.R. Judiciary Comm. Print 1961). After numerous meetings with representatives of the affected parties, the Copyright Office issued a preliminary draft bill in 1963. Adopting the Register's recommendation, it defined "work

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    made for hire" as "a work prepared by an employee within the scope of the duties of his mployment, but not including a work made on special order or commission." Preliminary Draft for Revised U.S. Copyright Law and Discussions and Comments on the Draft, 88th Cong., 2d Sess., Copyright Law Revision, Part 3, p. 15, n. 11 (H. Judiciary Comm. Print 1964) (hereinafter Preliminary Draft).

    145

              In response to objections by book publishers that the preliminary draft bill limited the work for hire doctrine to "employees," 11 the 1964 revision bill expanded the scope of the work for hire classification to reach, for the first time, commissioned works. The bill's language, proposed initially by representatives of the publishing industry, retained the definition of work for hire insofar as it referred to "employees," but added a separate clause covering commissioned works, without regard to the subject matter, "if the parties so agree in writing." S. 3008, H.R. 11947, H.R. 12354, 88th Cong., 2d Sess., § 54 (1964), reproduced in 1964 Revision Bill with Discussions and Comments, 89th Cong., 1st Sess., Copyright Law Revision, pt. 5, p. 31 (H.R. Judiciary Comm. Print 1965). Those representing authors objected that the added provision would allow publishers to use their superior bargaining position to force authors to sign work for hire agree-

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    ments, thereby relinquishing all copyright rights as a condition of getting their books published. See Supplementary Report, at 67.

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              In 1965, the competing interests reached a historic compromise, which was embodied in a joint memorandum submitted to Congress and the Copyright Office,12 incorporated into the 1965 revision bill, and ultimately enacted in the same form and nearly the same terms 11 years later, as § 101 of the 1976 Act. The compromise retained as subsection (1) the language referring to "a work prepared by an employee within the scope of his employment." However, in exchange for concessions from publishers on provisions relating to the termination of transfer rights, the authors consented to a second subsection which classified four categories of commissioned works as works for hire if the parties expressly so agreed in writing: works for use "as a contribution to a collective work, as a part of a motion picture, as a translation, or as supplementary work." S. 1006, H.R. 4347, H.R. 5680, H.R. 6835, 89th Cong., 1st Sess., § 101 (1965). The interested parties selected these categories because they concluded that these commissioned works, although not prepared by employees and thus not covered by the first subsection, nevertheless should be treated as works for hire because they were ordinarily prepared "at the instance, direction, and risk of a publisher or producer." Supplementary Report, at 67. The Supplementary Report emphasized that only the "four special cases specifically mentioned" could qualify as works made for hire; "[o]ther works made on special order or commission would not come within the definition." Id., t 67-68.

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              In 1966, the House Committee on the Judiciary endorsed this compromise in the first legislative Report on the revision bills. See H.R.Rep. No. 2237, 89th Cong., 2d Sess., 114, 116 (1966). Retaining the distinction between works by employees and commissioned works, the House Committee focused instead on "how to draw a statutory line between those works written on special order or commission that should be considered as works made for hire, and those that should not." Id., at 115. The House Committee added four other enumerated categories of commissioned works that could be treated as works for hire: compilations, instructional texts, tests, and atlases. Id., at 116. With the single addition of "answer material for a test," the 1976 Act, as enacted, contained the same definition of works made for hire as did the 1966 revision bill, and had the same structure and nearly the same terms as the 1966 bill.13 Indeed, much of the language of the 1976 House and Senate Reports was borrowed from the Reports accompanying the earlier drafts. See, e.g., H.R.Rep. No. 94-1476, p. 121 (1976); S.Rep. No. 94-473, p. 105 (1975), U.S.Code Cong. & Admin.News 1976, p. 5659.

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              Thus, the legislative history of the Act is significant for several reasons. First, the enactment of the 1965 compromise with only minor modifications demonstrates that Congress intended to provide two mutually exclusive ways for works to acquire work for hire status: one for employees and

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    the other for independent contractors. Second, the legislative history underscores the clear import of the statutory language: only enumerated categories of commissioned works may be accorded work for hire status. The hiring party's right to control the product simply is not determinative. See Note, The Creative Commissioner: Commissioned Works Under the Copyright Act of 1976, 62 N.Y.U.L.Rev. 373, 388 (1987). Indeed, importing a test based on a hiring party's right to control, or actual control of, a product would unravel the " 'carefully worked out compromise aimed at balancing legitimate interests on both sides.' " H.R.Rep. No. 2237, supra, at 114, quoting Supplemental Report, at 66.14

    163

              We do not find convincing petitioners' contrary interpretation of the history of the Act. They contend that Congress, in enacting the Act, meant to incorporate a line of cases decided under the 1909 Act holding that an employment relationship exists sufficient to give the hiring party copyright ownership whenever that party has the right to control or supervise the artist's work. See, e.g., Siegel v. National Periodical Publications, Inc., 508 F.2d 909, 914 (CA2 1974); Picture Music, Inc. v. Bourne, Inc., 457 F.2d 1213, 1216 (CA2), cert. denied, 409 U.S. 997, 93 S.Ct. 320, 34 L.Ed.2d 262 (1972); Scherr v. Universal Match Corp., 417 F.2d 497, 500 (CA2 1969), cert. denied, 397 U.S. 936, 90 S.Ct. 945, 25 L.Ed.2d 116 (1970); Brattleboro Publishing Co. v. Winmill Publishing Corp., 369 F.2d 565, 567-568 (CA2 1966). In support of this position, petitioners note: "Nowhere in the 1976 Act or in the Act's legislative history does Congress state that it intended to jettison the control standard or otherwise to reject the pre-Act judicial approach to identifying a

    165

    Page 749

    167

    work for hire employment relationship." Brief for Petitioners 20, citing Aldon Accessories, 738 F.2d, at 552.

    169

              We are unpersuaded. Ordinarily, "Congress' silence is just that—silence." Alaska Airlines, Inc. v. Brock, 480 U.S. 678, 686, 107 S.Ct. 1476, 1481, 94 L.Ed.2d 661 (1987). Petitioners' reliance on legislative silence is particularly misplaced here because the text and structure of § 101 counsel otherwise. See Bourjaily v. United States, 483 U.S. 171, 178, 107 S.Ct. 2775, 2780, 97 L.Ed.2d 144 (1987); Harrison v. PPG Industries, Inc., 446 U.S. 578, 592, 100 S.Ct. 1889, 1897, 64 L.Ed.2d 525 (1980).15 Furthermore, the structure of the work for hire provisions was fully developed in 1965, and the text was agreed upon in essentially final form by 1966. At that time, however, the courts had applied the work for hire doctrine under the 1909 Act exclusively to traditional employees. Indeed, it was not until after the 1965 compromise was forged and adopted by Congress 16 that a federal court for the first time applied the work for hire doctrine to commissioned works. See, e.g., Brattleboro Publishing Co., supra, at 567-568. Congress certainly could not have "jettisoned" a line of cases that had not yet been decided.

    171

              Finally, petitioners' construction of the work for hire provisions would impede Congress' paramount goal in revising the 1976 Act of enhancing predictability and certainty of copyright ownership. See H. R. Rep. No. 94-1476, supra, at 129. In a "copyright marketplace," the parties negotiate with an expectation that one of them will own the copyright in the completed work. Dumas, 865 F.2d, at 1104-1105,

    173

    Page 750

    175

    n. 18. With that expectation, the parties at the outset can settle on relevant contractual terms, such as the price for the work and the ownership of reproduction rights.

    177

              To the extent that petitioners endorse an actual control test,17 CCNV's construction of the work for hire provisions prevents such planning. Because that test turns on whether the hiring party has closely monitored the production process, the parties would not know until late in the process, if not until the work is completed, whether a work will ultimately fall within § 101(1). Under petitioners' approach, therefore, parties would have to predict in advance whether the hiring party will sufficiently control a given work to make it the author. "If they guess incorrectly, their reliance on 'work for hire' or an assignment may give them a copyright interest that they did not bargain for." Easter Seal Society, 815 F.2d, at 333; accord, Dumas, supra, at 1103. This understanding of the work for hire provisions clearly thwarts Congress' goal of ensuring predictability through advance planning. Moreover, petitioners' interpretation "leaves the door open for hiring parties, who have failed to get a full assignment of copyright rights from independent contractors falling outside the subdivision (2) guidelines, to unilaterally obtain work-made-for-hire rights years after the work has been completed as long as they directed or supervised the work, a standard that is hard not to meet when one is a hiring party." Hamilton, Commissioned Works as Works Made for Hire Under the 1976 Copyright Act: Misinterpretation and Injustice, 135 U.Pa.L.Rev. 1281, 1304 (1987).

    179

              In sum, we must reject petitioners' argument. Transforming a commissioned work into a work by an employee on the basis of the hiring party's right to control, or actual control of, the work is inconsistent with the language, structure, and legislative history of the work for hire provisions. To

    181

    Page 751

    183

    determine whether a work is for hire under the Act, a court first should ascertain, using principles of general common law of agency, whether the work was prepared by an employee or an independent contractor. After making this determination, the court can apply the appropriate subsection of § 101.

    185
    B
    187

              We turn, finally, to an application of § 101 to Reid's production of "Third World America." In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party's right to control the manner and means by which the product is accomplished.18 Among the other factors relevant to this inquiry are the skill required; 19 the source of the instrumentalities and tools; 20 the location of the work; 21 the duration of the relationship between the parties; 22 whether the hiring party has the right to assign additional projects to the hired party; 23 the extent of the hired party's discretion over when and how long to work; 24 the method of payment; 25 the hired party's role in hiring and

    189

    Page 752

    191

    paying assistants; 26 whether the work is part of the regular business of the hiring party; 27 whether the hiring party is in business; 28 the provision of employee benefits; 29 and the tax treatment of the hired party.30 See Restatement § 220(2) (setting forth a nonexhaustive list of factors relevant to determining whether a hired party is an employee).31 No one of these factors is determinative. See Ward, 362 U.S., at 400, 80 S.Ct., at 792; Hilton Int'l Co. v. NLRB, 690 F.2d 318, 321 (CA2 1982).

    193

              Examining the circumstances of this case in light of these factors, we agree with the Court of Appeals that Reid was not an employee of CCNV but an independent contractor. 270 U.S.App.D.C., at 35, n. 11, 846 F.2d, at 1494, n. 11. True, CCNV members directed enough of Reid's work to ensure that he produced a sculpture that met their specifications. 652 F.Supp., at 1456. But the extent of control the hiring party exercises over the details of the product is not dispositive. Indeed, all the other circumstances weigh heavily against finding an employment relationship. Reid is a sculptor, a skilled occupation. Reid supplied his own tools. He worked in his own studio in Baltimore, making daily supervision of his activities from Washington practicably impossible. Reid was retained for less than two months, a rel-

    195

    Page 753

    197

    atively short period of time. During and after this time, CCNV had no right to assign additional projects to Reid. Apart from the deadline for completing the sculpture, Reid had absolute freedom to decide when and how long to work. CCNV paid Reid $15,000, a sum dependent on "completion of a specific job, a method by which independent contractors are often compensated." Holt v. Winpisinger, 258 U.S.App.D.C. 343, 351, 811 F.2d 1532, 1540 (1987). Reid had total discretion in hiring and paying assistants. "Creating sculptures was hardly 'regular business' for CCNV." 270 U.S.App.D.C., at 35, n. 11, 846 F.2d, at 1494, n. 11. Indeed, CCNV is not a business at all. Finally, CCNV did not pay payroll or Social Security taxes, provide any employee benefits, or contribute to unemployment insurance or workers' compensation funds.

    199

              Because Reid was an independent contractor, whether "Third World America" is a work for hire depends on whether it satisfies the terms of § 101(2). This petitioners concede it cannot do. Thus, CCNV is not the author of "Third World America" by virtue of the work for hire provisions of the Act. However, as the Court of Appeals made clear, CCNV nevertheless may be a joint author of the sculpture if, on remand, the District Court determines that CCNV and Reid prepared the work "with the intention that their con ributions be merged into inseparable or interdependent parts of a unitary whole." 17 U.S.C. § 101.32 In that case, CCNV and Reid would be co-owners of the copyright in the work. See § 201(a).

    201

              For the aforestated reasons, we affirm the judgment of the Court of Appeals for the District of Columbia Circuit.

    203

              It is so ordered.

    205

    1. Purtee was named as a defendant but never appeared or claimed any interest in the statue.

    207

    2. Compare Easter Seal Society for Crippled Children & Adults of Louisiana, Inc. v. Playboy Enterprises, 815 F.2d 323 (CA5 1987) (agency law determines who is an employee under § 101), cert. denied, 485 U.S. 981, 108 S.Ct. 1280, 99 L.Ed.2d 491 (1988), with Brunswick Beacon, Inc. v. Schock-Hopchas Publishing Co., 810 F.2d 410 (CA4 1987) (supervision and control standard determines who is an employee under § 101); Evans Newton, Inc. v. Chicago Systems Software, 793 F.2d 889 (CA7) (same), cert. denied, 479 U.S. 949, 107 S.Ct. 434, 93 L.Ed.2d 383 (1986); and Aldon Accessories Ltd. v. Spiegel, Inc., 738 F.2d 548 (CA2) (same), cert. denied, 469 U.S. 982, 105 S.Ct. 387, 83 L.Ed.2d 321 (1984). See also Dumas v. Gommerman, 865 F.2d 1093 (CA9 1989) (a multifactor formal, salaried employee test determines who is an employee under § 101).

    209

    3. We use the phrase "work for hire" interchangeably with the more cumbersome statutory phrase "work made for hire."

    211

    4. As of 1955, approximately 40 percent of all copyright registrations were for works for hire, according to a Copyright Office study. See Varmer, Works Made for Hire and On Commission, in Studies Prepared for the Subcommittee on Patents, Trademarks, and Copyrights of the Senate Committee on the Judiciary, Study No. 13, 86th Cong., 2d Sess., 139, n. 49 (Comm. Print 1960) (hereinafter Varmer, Works Made for Hire). The Copyright Office does not keep more recent statistics on the number of work for hire registrations.

    213

    5. Section 101 of the Act defines each of the nine categories of "specially ordered or commissioned" works.

    215

    6. By "hiring party," we mean to refer to the party who claims ownership of the copyright by virtue of the work for hire doctrine.

    217

    7. See Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill, 89th Cong., 1st Sess., Copyright Law Revision, pt. 6, pp. 66-67 (H.R. Judiciary Comm. Print 1965) (hereinafter Supplementary Report); Hardy, Copyright Law's Concept of Employment—What Congress Really Intended, 35 J.Copr.Soc. USA 210, 244-245 (1988).

    219

    8. We also reject the suggestion of respondent and amici that the § 101(1) term "employee" refers only to formal, salaried employees. While there is some support for such a definition in the legislative history, see Varmer, Works Made for Hire 130; n. 11, infra, the language of § 101(1) cannot support it. The Act does not say "formal" or "salaried" employee, but simply "employee." Moreover, respondent and those amici who endorse a formal, salaried employee test do not agree upon the content of this test. Compare, e.g., Brief for Respondent 37 (hired party who is on payroll is an employee within § 101(1)) with Tr. of Oral Arg. 31 (hired party who receives a salary or commissions regularly is an employee within § 101(1)); and Brief for Volunteer Lawyers for the Arts, Inc., et al. as Amici Curiae 4 (hired party who receives a salary and is treated as an employee for Social Security and tax purposes is an employee within § 101(1)). Even the one Court of Appeals to adopt what it termed a formal, salaried employee test in fact embraced an approach incorporating numerous factors drawn from the agency law definition of employee which we endorse. See Dumas, 865 F.2d, at 1104.

    221

    9. The concept of works made for hire first arose in controversies over copyright ownership involving works produced by persons whom all parties agreed were employees. See, e.g., Colliery Engineer Co. v. United Correspondence Schools Co., 94 F. 152 (CC SDNY 1899); Little v. Gould, 15 F.Cas. 612 (No. 8,395) (CC NDNY 1852). This Court first took note of the work for hire doctrine in Bleistein v. Donaldson Lithographing Co., 188 U.S. 239, 248, 23 S.Ct. 298, 299, 47 L.Ed. 460 (1903), where we found that an employer owned the copyright to advertisements that had been created by an employee in the course of his employment. Bleistein did not, however, purport to define "employee."

    223

    10. See Varmer, Works Made for Hire 130; Fidlow, The "Works Made for Hire" Doctrine and the Employee/Independent Contractor Dichotomy: The Need for Congressional Clarification, 10 Hastings Comm.Ent.L.J. 591, 600-601 (1988). Indeed, the Varmer study, which was commissioned by Congress as part of the revision process, itself contained separate subsections labeled "Works Made for Hire" and "Works Made on Commission." It nowhere indicated that the two categories might overlap or that commissioned works could be made by an employee.

    225

    11. See, e.g., Preliminary Draft, at 259 (statement of Horace S. Manges, Joint Committee of the American Book Publishers Council and the American Textbook Publishers Institute) ("There would be a necessity of putting people on the payroll whom the employers wouldn't want to put on the payroll, and where the employees would prefer to work as independent contractors"); id., at 272 (statement of Saul N. Rittenberg, MGM) ("[T]he present draft has given more emphasis to formalism than necessary. If I commission a work from a man, ordering a work specially for my purposes, and I pay for it, what difference does it make whether I put him under an employment contract or establish an independent contractor relationship?"); id., at 260 (statement of John R. Peterson, American Bar Association) ("I don't think there is any valid philosophical or economic difference between the situation in which you have a man on a continuing basis of orders which justifies placing him on your payroll, and the situation in which you give him a particular order for a particular job").

    227

    12. The parties to the joint memorandum included representatives of the major competing interests involved in the copyright revision process: publishers and authors, composers, and lyricists. See Copyright Law Revision: Hearings on H.R. 4347, 5680, 6831, 6835 before Subcommittee No. 3 of the House Committee on the Judiciary, 89th Cong., 1st Sess., pt. 1, p. 134 (1965).

    229

    13. An attempt to add "photographic or other portrait[s]," S.Rep. No. 94-473, p. 4 (1975), to the list of commissioned works eligible for work for hire status failed after the Register of Copyrights objected:

    231

    "The addition of portraits to the list of commissioned works that can be made into 'works made for hire' by agreement of the parties is difficult to justify. Artists and photographers are among the most vulnerable and poorly protected of all the beneficiaries of the copyright law, and it seems clear that, like serious composers and choreographers, they were not intended to be treated as 'employees' under the carefully negotiated definition in section 101." Second Supplementary Report of the Register of Copyrights on the General Revision of the U.S. Copyright Law: 1975 Revision Bill, Chapter XI, pp. 12-13.

    233

    14. Strict adherence to the language and structure of the Act is particularly appropriate where, as here, a statute is the result of a series of carefully crafted compromises. See Rodriguez v. Compass Shipping Co., 451 U.S. 596, 617, 101 S.Ct. 1945, 1957-58, 68 L.Ed.2d 472 (1981); United States v. Sisson, 399 U.S. 267, 291, 298, 90 S.Ct. 2117, 2134, 26 L.Ed.2d 608 (1970).

    235

    15. In framing other provisions of the Act, Congress indicated when it intended to incorporate existing case law. See, e.g., H.R.Rep. No. 94-1476, p. 121 (1976), U.S.Code Cong. & Admin.News 1976, p. 5736 ("There is . . . no need for a specific statutory provision concerning the rights and duties of the coowners [sic] of a work; court-made law on this point is left undisturbed"); S.Rep. No. 94-473, supra, at 104 (same).

    237

    16. Over the course of the copyright revision process, Congress frequently endorsed a negotiated compromise which years later in 1976 it formally enacted with only minor revisions. See Mills Music, Inc. v. Snyder, 469 U.S. 153, 160-161, 105 S.Ct. 638, 643-644, 83 L.Ed.2d 556 (1985).

    239

    17. Petitioners concede that, as a practical matter, it is often difficult to demonstrate the existence of a right to control without evidence of the actual exercise of that right. See Murray v. Gelderman, 566 F.2d 1307, 1310-1311 (CA5 1978).

    241

    18. See, e.g., Hilton Int'l Co. v. NLRB, 690 F.2d 318, 320 (CA2 1982); NLRB v. Maine Caterers, Inc., 654 F.2d 131, 133 (CA1 1981), cert. denied, 455 U.S. 940, 102 S.Ct. 1432, 71 L.Ed.2d 651 (1982); Restatement § 220(1).

    243

    19. See, e.g., Bartels v. Birmingham, 332 U.S. 126, 132, 67 S.Ct. 1547, 1550-51, 91 L.Ed. 1947 (1947); Hilton Int'l Co., supra, at 320; NLRB v. A. Duie Pyle, Inc., 606 F.2d 379, 382 (CA3 1979); Restatement § 220(2)(d).

    245

    20. See, e.g., NLRB v. United Ins. Co. of America, 390 U.S. 254, 258, 88 S.Ct. 988, 990-91, 19 L.Ed.2d 1083 (1968); United States v. Silk, 331 U.S. 704, 717, 718, 67 S.Ct. 1463, 1470, 1470-71, 91 L.Ed. 1757 (1947); Dumas, 865 F.2d, at 1105; Restatement § 220(2)(e).

    247

    21. See, e.g., United Ins. Co., supra, 390 U.S., at 258, 88 S.Ct., at 990-91; Dumas, supra, at 1105; Darden v. Nationwide Mutual Ins. Co., 796 F.2d 01, 705 (CA4 1986); Restatement § 220(2)(e).

    249

    22. See, e.g., United Ins. Co., supra, 390 U.S., at 259, 88 S.Ct., at 991; Bartels, supra, 332 U.S., at 132, 67 S.Ct., at 1550-51; Restatement § 220(2)(f).

    251

    23. See, e.g., Dumas, supra, at 1105.

    253

    24. See, e.g., United Ins. Co., supra, 390 U.S., at 258, 88 S.Ct., at 990-91; Short v. Central States, Southeast & Southwest Areas Pension Fund, 729 F.2d 567, 574 (CA8 1984).

    255

    25. See, e.g., Dumas, supra, at 1105; Darden, supra, at 705; Holt v. Winpisinger, 258 U.S.App.D.C. 343, 351, 811 F.2d 1532, 1540 (1987); Restatement § 220(2)(g).

    257

    26. See, e.g., Bartels, supra, 332 U.S., at 132, 67 S.Ct., at 1550-51; Silk, supra, 331 U.S., at 719, 67 S.Ct., at 1471; Darden, supra, at 705; Short, supra, at 574.

    259

    27. See, e.g., United Ins. Co., supra, 390 U.S., at 259, 88 S.Ct., at 991; Silk, supra, 331 U.S., at 718, 67 S.Ct., at 1470-71; Dumas, supra, at 1105; Hilton Int'l Co., supra, at 321; Restatement § 220(2)(h).

    261

    28. See, e.g., Restatement § 220(2)(j).

    263

    29. See, e.g., United Ins. Co., supra, 390 U.S., at 259, 88 S.Ct., at 991; Dumas, supra, at 1105; Short, supra, at 574.

    265

    30. See, e.g., Dumas, supra, at 1105.

    267

    31. In determining whether a hired party is an employee under the general common law of agency, we have traditionally looked for guidance to the Restatement of Agency. See, e.g., Kelley v. Southern Pacific Co., 419 U.S. 318, 323-324, and n. 5, 95 S.Ct. 472, 475-476, and n. 5, 42 L.Ed.2d 498 (1974); id., at 332, 95 S.Ct., at 480 (Stewart, J., concurring in judgment); Ward v. Atlantic Coast Line R. Co., 362 U.S. 396, 400, 80 S.Ct. 789, 792, 4 L.Ed.2d 820 (1960); Baker v. Texas & Pacific R. Co., 359 U.S. 227, 228, 79 S.Ct. 664, 665, 3 L.Ed.2d 756 (1959).

    269

    32. Neither CCNV nor Reid sought review of the Court of Appeals' remand order. We therefore have no occasion to pass judgment on the applicability of the Act's joint authorship provisions to this case.

  • 2 Avtec Systems, Inc. v. Peiffer (1994)

    1

    21 F.3d 568
    1994 Copr.L.Dec. P 27,242, 9
    Indiv.Empl.Rts.Cas. (BNA) 532,
    30 U.S.P.Q.2d 1365

    2
    AVTEC SYSTEMS, INCORPORATED, Plaintiff-Appellant,
    v.
    Jeffrey G. PEIFFER; Kisak-Kisak, Incorporated; Paul F.
    Kisak, Defendants-Appellees.
    AVTEC SYSTEMS, INCORPORATED, Plaintiff-Appellee,
    v.
    Jeffrey G. PEIFFER; Kisak-Kisak, Incorporated, Defendants-Appellants,
    and
    Paul F. Kisak, Defendant.
    3

    Nos. 92-2521, 92-2607.
    United States Court of Appeals, Fourth Circuit.
     Argued June 7, 1993.
    Decided April 6, 1994.

    4

    [569] ARGUED: John P. Corrado, Michael Lee Zupan, Hazel & Thomas, Alexandria, VA, for appellant. Douglas James Cole, Taylor, Newsome, Tinkham, Lefevere & Cole, Fairfax, VA, for appellees. ON BRIEF: William S. Taylor, Tommye Jolly-Tinkham, Taylor, Newsome, Tinkham, Lefevere & Cole, Fairfax, VA, for appellees.

    5

    Before ERVIN, Chief Judge, PHILLIPS, Circuit Judge, and GEORGE ROSS ANDERSON, Jr., United States District Judge for the District of South Carolina, sitting by designation.

    6

    Affirmed in part, vacated in part and remanded by published opinion. Judge PHILLIPS wrote the opinion, in which Chief Judge ERVIN and District Judge GEORGE ROSS ANDERSON, Jr., joined.

    7
    OPINION
    8

    PHILLIPS, Circuit Judge:

    9

    In these consolidated appeals, we consider a number of copyright and state-law claims arising from the parties' failure to memorialize their intentions regarding ownership of a computer program. We affirm in part, vacate in part, and remand for further proceedings.

    10
    I
    11

    The facts, as described by the district court, Avtec Systems, Inc. v. Peiffer, 805 F.Supp. 1312, 1315-17 (E.D.Va.1992), are as follows. Avtec Systems, Inc. (Avtec) markets space-related computer services and products to the federal government. Its services include computerized simulations of satellite orbital patterns. Jeffrey G. Peiffer began working part-time for Avtec while in college and became the company's fifth full-time employee upon his graduation in 1984. During his career with Avtec, his job description included "implement[ing] computer simulation" and, specifically, simulating "satellite orbits." J.A. 232-33.

    12

    In 1984, Avtec purchased a Macintosh computer at Peiffer's suggestion. After Peiffer demonstrated the computer's abilities to Avtec President Ronald Hirsch and other employees, it became apparent that the company's orbital simulations would be enhanced in several respects by using a Macintosh. It is disputed whether that idea originated with Peiffer alone or in discussions with other Avtec personnel; it also is disputed whether Avtec authorized Peiffer to begin developing a computer program for that purpose ("the Program") as he did in 1985. Peiffer demonstrated the Program--called "the .309 version"--to Hirsch and others at Avtec that same year, and again during his 1988 performance  [570] appraisal as evidence of his initiative on the job.

    13

    At that point, Hirsch and another Avtec employee suggested several modifications to enhance the Program's utility as a marketing tool for the company. Peiffer charged time to an Avtec account for making those enhancements. Peiffer also received a $5,000 bonus in early 1989 for helping to land a contract by demonstrating the Program as a unique Avtec service. He performed similar demonstrations for other clients as well. Later that year, Avtec issued a written policy, of which Peiffer was aware, binding employees to duties of confidentiality and nondisclosure respecting the company's proprietary information and trade secrets.

    14

    In early 1990, another Avtec employee found some bugs in the Program. After Peiffer fixed them, that other employee presented the corrected version to a client. In 1991, Avtec labeled the Program as a trademark and advertised it as unique to Avtec. J.A. 331. At no time before his eventual departure from Avtec did Peiffer represent to his employer or to its potential clients that he had an ownership interest in the Program.

    15

    In 1992, however, when Peiffer was asked to demonstrate the Program to NASA as part of a contract bid, he used the old, uncorrected .309 version without informing anyone at Avtec or NASA of that fact. Peiffer concedes that Avtec did not win that contract in part because he showed the outdated version. Shortly there after, when Peiffer was again asked to demonstrate the program, he refused and said that he didn't have a copy of it at the office.

    16

    Unbeknownst to Avtec, Peiffer had met Paul F. Kisak early in 1989 and granted Kisak's company, Kisak-Kisak, Inc. (KKI) an exclusive license to market the Program. Sales generated $197,000 in gross revenues for KKI, of which Peiffer received approximately half.

    17

    Avtec registered for a copyright in the .309 version of the Program on March 27, 1992. Six days later, Avtec commenced this action against Peiffer, Kisak, and KKI (collectively, "defendants") charging copyright infringement, misappropriation of trade secrets, and breach of fiduciary duty.[1] Avtec also sought imposition of a constructive trust. On April 9, Peiffer registered his copyright claim in the .309 version, which he called MacOrbit, and another copyright claim in the 2.05 version, which he called the Orbit Program and identified as derivative of the .309 version. J.A. 1924-25. Defendants then counterclaimed for copyright infringement.

    18

    After a three-day bench trial, the court found that Peiffer owned copyright in the later version of the Program, reasoning that he had not created it within the scope of his employment as is required by 17 U.S.C.A. Sec. 201(b) (West 1977 & Supp.1993) in order for copyright to vest in an employer. Avtec, 805 F.Supp. at 1317-19. On that basis, the court denied Avtec relief on Count I and--pursuant to defendants' counterclaim--ordered Avtec to withdraw its registration of copyright.[2] Id. at 1319, 1323.

    19

    Avtec prevailed on its state-law claims, however. The court held that, through its contributions to and use of the .309 version, Avtec had a trade secret in the use of that version as a demonstration and marketing device similar to "shop rights" that may arise in an employee's patented invention. The court also found that Peiffer and KKI had misappropriated that trade secret.[3] Id. at 1320-21. Upon finding additionally that Peiffer breached fiduciary duties owed to Avtec, the court imposed a constructive trust. The terms required Peiffer and KKI: (1) to grant Avtec a perpetual license (as long as defendants had a copyright interest) to use the Program "for the same purposes as a purchaser might lawfully utilize it"; (2) to pay Avtec 15% of gross revenues received from the Program in perpetuity from March [571] 1, 1989; and (3) to give Avtec all current and forthcoming versions, enhancements, and upgrades of the Program before making them commercially available. Id. at 1322-23.

    20

    Avtec's appeal and the defendants' cross-appeal from unfavorable portions of the judgment followed and were consolidated for hearing and disposition in this court.

    21

    We discuss in order the issue of copyright ownership as it bears upon the conflicting claims of copyright infringement in Avtec's principal claim and the defendants' counterclaim, the disposition of Avtec's pendent state law claims for misappropriation of trade secrets and breach of fiduciary duty, and the imposition of a constructive trust in favor of Avtec.

    22

    To recover on its copyright claim, Avtec had to show that it owned a valid copyright in the Program and that defendants encroached upon one of the exclusive rights it conferred. 17 U.S.C. Sec. 501(a); Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 660 (4th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 443, 126 L.Ed.2d 377 (1993). Those rights include the control of reproduction, distribution, and performance or display of the original, as well as the production of derivative works.[4] 17 U.S.C. Sec. 106.

    23

    These rights presumptively vest in the author--the one who translates an original idea into a fixed, tangible means of expression.[5] Id. Sec. 102(a). The presumption of authorial ownership falls, however, if the work is made "for hire," such as one "prepared by an employee within the scope of his or her employment." Community for Creative Non-Violence v. Reid, 490 U.S. 730, 737-38, 109 S.Ct. 2166, 2171, 104 L.Ed.2d 811 (1989) (quoting 17 U.S.C. Secs. 101(1), 201(b)). Under those circumstances, copyright vests in the employer for whom the work was prepared. Id. at 737, 109 S.Ct. at 2171. This exception is overridden only by a clear writing reserving authorship rights to the employee, 17 U.S.C. Sec. 201(b), which concededly did not exist in this case.

    24

    It is essentially undisputed that Peiffer was Avtec's employee at the time of the Program's inception. The contested issue throughout has been whether Peiffer created the Program within the scope of his employment. Reid instructs that common-law agency principles govern resolution of that question. 490 U.S. at 739-40, 109 S.Ct. at 2172-73 (citing Restatement (Second) of Agency Sec. 228 (1958)). As expressed in Section 228 of the Restatement, the key principle is that a servant's conduct is within the scope of employment "only if: (a) it is of the kind he is employed to perform; (b) it occurs substantially within the authorized time and space limits; [and] (c) it is actuated, at least in part, by a purpose to serve the master."

    25

    We agree with the district court that creation of the Program was "of the kind" of work Peiffer was employed to perform. See 805 F.Supp. at 1318. When that element of the Restatement test is met, courts have tended not to grant employees authorship rights solely on the basis that the work was done at home on off-hours. See Miller v. CP Chems., Inc., 808 F.Supp. 1238, 1242-44 (D.S.C.1992) (computer program prepared at home during off-hours, without direction or extra compensation from employer held work-for-hire), appeal dismissed, No. 93-1045 (4th Cir. April 13, 1993); Marshall v. Miles Lab., Inc., 647 F.Supp. 1326, 1330 (N.D.Ind.1986) (same, regarding article written for publication in scientific journal); In [572] re Simplified Info. Sys., Inc., 89 B.R. 538, 542 (W.D.Pa.1988) (same, regarding computer software).

    26

    On the other hand, copyright does not vest in the employer solely because "the subject matter of the work ... bears upon or arises out of the employee's activities for his employer." Melville B. Nimmer, 1 Nimmer on Copyright Sec. 5.03[B][b][i] at 5-28 (1993) ("Nimmer "). Thus, Avtec had to show that Peiffer was at least "appreciabl[y]" motivated by a desire to further its corporate goals in order to satisfy the third element of the work-for-hire test. Restatement (Second) of Agency Sec. 236 cmt. b; id. Sec. 235 (act falls beyond scope of employment if "done with no intention" to serve master) (emphasis added).

    27

    The district court found that Peiffer had not developed version 2.05 of the Program "within Avtec authorized time and space limits ... [and] was [not] motivated, at least in part, by a purpose to serve Avtec." 805 F.Supp. at 1318-19. On this basis, the court held that copyright vested in Peiffer, not in Avtec, and accordingly rendered judgment in favor of defendants on Avtec's claim and on their counterclaim.

    28

    Avtec contends that the district court should have applied the scope-of-employment test more flexibly in light of its finding on the pendent state-law claims that Peiffer breached duties that he owed to Avtec as its employee.[6] See id. at 1316-17. Defendants rightly question whether the outcome of pendent state-law claims may drive the analysis of the federal claim upon which jurisdiction is based. But we conclude that the court did err, however, by injecting into the analysis of copyright ownership an element contemplated neither by the Restatement's scope-of-employment test nor by the law of copyright generally--i.e., the court's preliminary finding that the .309 version of the Program differed materially from the 2.05 version in terms of the use to which it was put in the marketplace.

    29

    To reiterate, copyright protects not original ideas but their incarnation in a tangible means of expression. See generally Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 111 S.Ct. 1282, 113 L.Ed.2d 358 (1991). It appears undisputed that the original expression at issue here is embodied in the source code for the .309 version of the Program.[7] The commercial use to which that work is put does not alter the owner's exclusive rights to copy it and to prepare derivative works based upon it.[8] Cf. Mazer v. Stein, 347 U.S. 201, 218, 74 S.Ct. 460, 471, 98 L.Ed. 630 (1954) (exclusive rights undiminished regardless of the "intended ... or [actual] use in industry" to which the work is put); Rogers v. Koons, 751 F.Supp. 474, 477 (S.D.N.Y.1990), aff'd, 960 F.2d 301 (2d Cir.), cert. denied, --- U.S. ----, 113 S.Ct. 365, 121 L.Ed.2d 278 (1992).

    30

    Instead of focusing upon the question whether the .309 version was created within the scope of Peiffer's employment, however, the district court made a preliminary finding that Avtec used the original version solely as "a demonstration and marketing device," while the later 2.05 version was a " 'stand-alone' software package that could be marketed commercially," which Avtec neither  [573] could nor would have developed.[9] 805 F.Supp. at 1316. Relying on this utilitarian distinction between two versions of the program, the court expressly confined its decision on the question of copyright ownership to "the current 2.05 version" of the Program. Id. at 1318-19. Finding dispositive the facts that Peiffer worked on the Program at home, on his own equipment and time, as a "personal hobby, and not to satisfy specific work obligations for Avtec," the court reasoned that "while Peiffer allowed earlier versions of the Orbit Program to be used by Avtec for various client demonstrations, Avtec did not ... persuade the Court that Peiffer's development of the 2.05 version ... was actuated by his desire to serve Avtec" and held that Avtec could not "claim complete or joint ownership of the 2.05 version." Id. at 1319 (emphases added).

    31

    Defendants urge us to extend this express language to encompass the .309 version as well, arguing that such a finding is implicit in the court's order that Avtec withdraw its registration of copyright in that version. We do not believe the implication is possible; several factors weaken it. The first, of course, is the court's deliberately exclusive focus upon the 2.05 version in its express references to Peiffer's copyright ownership. The court did describe him as "the .309 version's creator," Id. at 1320, but that passing reference occurs in its discussion of Avtec's trade secret claim--in which consideration of Peiffer's copyright interest is, as we discuss below, notably absent, and in which the court found that Avtec had a significant interest in the "use" of the .309 version. Moreover, the court held that "Peiffer owns the version of the Orbit Program for which he made copyright application," id. at 1323, when he had in fact applied for copyright in both versions.

    32

    These factors call into question both the court's assessment of the evidence before it and its application of the law to the facts of the case. Anticipating our de novo review of the legal component of the scope-of-employment issue, the parties emphasize conflicting evidence supporting their respective positions on that issue. Avtec points to evidence that it authorized Peiffer to work on the project at home during off-hours and contends that Peiffer's resulting behavior compels the inference that he intended the work, at least in part, to contribute to Avtec's successful pursuit of its business objectives.[10] Defendants counter with the evidence relied upon by the district court that Peiffer developed the Program as a hobby and that Avtec failed to exercise significant control or supervision over the project.[11]

    33

    As indicated, we have concluded that the district court's resolution of the scope-of-employment issue was flawed by a misapprehension of the controlling legal principles. We are not in a position to resolve that heavily fact-laden issue in the first instance; among other reasons, credibility could be decisive. Though we regret the necessity,  [574] we must instead vacate those portions of the judgment respecting the claim and counterclaim for copyright infringement and remand those claims for reconsideration, in light of this opinion, of the dispositive common issue whether the original Program was created within the scope of Peiffer's employment. If upon that reconsideration the court again concludes that it was not so created, the court should of course again give judgment in favor of defendants on Avtec's copyright claim, and must of course then also reconsider the effect of such a finding upon defendants' counterclaim for copyright infringement.[12] Should the court conclude instead that Peiffer created the .309 version within the scope of his employment with Avtec, it must then determine whether defendants infringed the copyright (for example, by preparing unauthorized derivative works[13]); whether Kisak and KKI are liable for such infringement; and any statutory remedies that may be warranted by wrongful copying of protected material.[14] 17 U.S.C. Secs. 502-505.

    34
    II
    35

    On their cross-appeal from the judgment against them on Avtec's claim for misappropriation of trade secrets, the defendants raise two major issues. Apparently for the first time on appeal, they contend that the trade secrets claim is preempted by the federal provision of a cause of action for copyright infringement. See generally Sears, Roebuck & Co. v. Stiffel Co., 376 U.S. 225, 84 S.Ct. 784, 11 L.Ed.2d 661 (1964). Because Avtec did not treat the issue as waived, and because we find it necessary to vacate the judgment and remand for reconsideration of the trade secrets claim, we note that the defense must fail under this circuit's recent decision in Trandes Corp., 996 F.2d at 660.

    36

    The Trandes court considered whether the Copyright Act preempted an action brought under Maryland's trade secrets statute which, like the Virginia law at issue here, closely tracks the Uniform Trade Secrets Act. Compare Md.Com.Law II Code Ann. Sec. 11-1201(e) (1990 & Supp.1993) with Va.Code Ann. Sec. 59.1-336 (Michie 1992) and UTSA (reprinted in 2 R. Milgrim, Trade Secrets app. A (1991)). We rejected the preemption defense on the basis that recovery for trade secret misappropriation requires proof of breach of confidence--an element of proof additional to those necessary for recovery in an action for copyright infringement. Trandes, 996 F.2d at 659-60; H.R.Rep. No. 1476, 94th Cong., 2d Sess. 132 (1978) reprinted in 1976 U.S.C.C.A.N 5659, 5748 (anticipating no preemption of actions to enforce "[t]he evolving common law rights of ... trade secrets ... as long as the cause[ ] of action contain[s] elements, such as ... a breach of trust or confidentiality, that are different in kind from copyright infringement."). The same result follows here.

    37

    Defendants argue alternatively that the trade secrets claim fails on the merits. In Virginia, a trade secret is information such as "a formula, pattern, compilation, program, [575] device, method, technique, or process" that has independent economic value due to its secrecy and that is subject to reasonable attempts to keep it secret. Va.Code Ann. Sec. 59.1-336. Misappropriation is the improper acquisition or disclosure of a trade secret by one who "knew or had reason to know" that acquisition occurred "under circumstances giving rise to a duty" to maintain confidentiality. Id. Thus, the hallmark of a trade secret is not its novelty but its secrecy. Dionne v. Southeast Foam Converting, 240 Va. 297, 397 S.E.2d 110, 113 (1990).

    38

    The court found that Avtec had an interest--described variously as a "trade secret," a "license," and a "right" akin to the equitable "shop rights" of patent law--in the "use of the .309 version ... as a demonstration and marketing device." 805 F.Supp. at 1320. There is no difficulty in finding the existence of a trade secret in the source or object codes to computer programs where question of copyright ownership is not in issue, Trandes, 996 F.2d at 662, or, even more clearly, where the owner of the alleged trade secret also owns copyright in the material sought to be protected.[15] E.g., Computer Assocs. Int'l., Inc., 982 F.2d at 715-16, 720. Of course, a plaintiff "may not obtain a double recovery where the damages for copyright infringement and trade secret misappropriation are coextensive." Id. at 720.

    39

    But defendants rightly question a judgment that, in effect, imposes liability upon a copyright owner for "misappropriating" his own work.[16] As discussed above, the court made no express finding that Peiffer owns copyright in the .309 version of the Program, and that question has been remanded for resolution by the district court. Expressing no opinion upon it, we do note a critical consequence of a ruling upon it in Peiffer's favor in regard to Avtec's trade secret claim. It would mean that from the moment of the Program's inception, Peiffer has owned the exclusive right to license performances of the original and of any derivative works. And as discussed above, absent a written agreement regarding Avtec's use of the Program, any use license held by Avtec would be implied and therefore nonexclusive. See n. 12, supra. Avtec offers no authority, and we have found none, for the proposition that the alleged "owner" of a trade secret, Dionne v. Southeast Foam Converting & Packaging, Inc., 240 Va. 297, 397 S.E.2d 110, 113 (1990), could maintain the secrecy of material that is subject under federal law to publication at the will of another. We do not believe that a nonexclusive use license in copyrighted material can support the reasonable expectation or right of secrecy necessary to predicate a claim that the identical material is a trade secret protectible under Virginia law.[17] See Restatement (First) of Torts Sec. 757 cmt. b (1939) (trade secret must have "a substantial element of secrecy ... so that, except by the use of improper means, there would be difficulty in acquiring the information"; one factor in determining trade secrecy is the ease or difficulty with which the information could be properly acquired by others) (emphasis added).

    40

    For the above reasons, we must vacate the portion of the judgment in favor of Avtec on its trade-secret claim, and remand it for reconsideration in light of this opinion. [576]

    41
    III
    42

    Peiffer argues that the district court erred as a matter of law in concluding that he bore any fiduciary duties toward Avtec and that he breached those duties. We have considered his arguments, and reject them. "A fiduciary relationship exists in all cases when special confidence has been reposed in one who in equity and good conscience is bound to act in good faith and with due regard for the interests of the one reposing the confidence." H-B Ltd. Partnership v. Wimmer, 220 Va. 176, 257 S.E.2d 770, 773 (1979). Employees owe their employers the duty to "be candid ... and [to] withhold no information which would be useful to the employer in the protection and pursuit of its interests." Community Counselling Serv., Inc. v. Reilly, 317 F.2d 239, 244 (4th Cir.1963). The district court rightly found that Peiffer breached those duties through his nondisclosure of his business relationship with Avtec's competitor KKI and by demonstrating the outdated version of the Program to Avtec's detriment and without its knowledge.

    43
    IV
    44

    In view of our disposition of the various claims, the remedial portion of the district court's judgment, including the constructive trust it imposed, must be vacated, with appropriate remedy to abide results on remand. If the court were to conclude that Avtec does hold copyright in the .309 version and all derivatives, any infringement of its exclusive rights may be remedied as provided under the statute. 17 U.S.C. Secs. 502-505. Specifically, Avtec would be entitled to all revenues generated through the infringement, and not merely a percentage of profits as was awarded under the constructive trust, and Avtec need only show, as it has, defendants' gross profits from the Program. Id. Sec. 504(b). If Avtec were to prevail on the reconsidered trade secret claim, the court should award such damages, not coextensive with any awarded for copyright infringement as could be shown. Computer Assocs. Int'l., Inc., 982 F.2d at 720.

    45

    Conversely, if the court finds against Avtec on the issue of copyright ownership, its damages would be limited to those flowing from the breach of fiduciary duty whose finding by the district court we have affirmed, while the defendants' recovery on their counterclaim would be limited to such statutory damages as they could prove entitlement to.

    46
    V
    47

    To summarize. We vacate those portions of the judgment which pertain to Avtec's claim and the defendants' counterclaim for copyright infringement, and remand for further proceedings consistent with this opinion. We vacate that portion of the judgment finding defendants liable to Avtec on the latter's claim for misappropriation of trade secrets, and remand that claim for further proceedings consistent with this opinion. We affirm that portion of the judgment determining that Peiffer breached fiduciary duties owed to Avtec. We vacate the entire remedial portion of the judgment to abide the determination of liability on the various claims upon remand.

    48

    SO ORDERED.

    49

    [1] A claim for misappropriation of business opportunity was later withdrawn.

    50

    [2] The court found that defendants-counterclaimants failed to prove damages from the "alleged" violation of Peiffer's copyright, and denied all parties costs and fees. 805 F.Supp. at 1323.

    51

    [3] Kisak had by then been dismissed as a defendant from all but the copyright infringement claim.

    52

    [4] A "derivative work" is a work based upon one or more preexisting works, such as a translation ... or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a "derivative work."

    53

    To "perform" a work means to recite [or] render ... it, either directly or by means of any device or process....

    54

    17 U.S.C. Sec. 101.

    55

    [5] The protected material in this case consists of the Program's source and object codes. Human beings write source codes, but computers can't read them until they are mechanically translated by compiling programs into object codes, which tell computers how to process data. Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 698 (2d Cir.1992). The parties have not raised, and we do not address, the issue of the potentially separate copyrightability of any screen displays arising from the Program's operation. See id. at 703.

    56

    [6] Because Avtec does not raise the issue, we do not address the court's rejection of the alternative contention that Avtec's copyright in the Program arose from its joint authorship of the work with Peiffer. See 805 F.Supp. at 1319.

    57

    [7] Thus, we reject as meritless defendants' contention that Avtec seeks copyright on ideas, not expression. See Appellee Br. 27-28.

    58

    [8] Certain types of noncommercial use may, of course, provide a "fair use" defense to a claim of copyright infringement, 17 U.S.C. Sec. 107, but there is no contention that the defense is applicable in this case.

    59

    We also note, for clarity's sake, a matter addressed by neither party: Publication of works prior to March 1, 1989 without notice of copyright ownership risks forfeiture of the Copyright Act's protections. 17 U.S.C. Secs. 401, 405; Michael D. Scott, Scott on Computer Law Sec. 3.37 (1991). Publication occurs upon "the distribution of copies ... by sale or other transfer of ownership" and by "offering to distribute copies ... for purposes of further distribution, public performance, or public display." 17 U.S.C. Sec. 101. "A public performance or display of a work does not of itself constitute publication," however, id., and it is generally agreed that "publication does not include the distribution of copies under an obligation of confidence." Scott Sec. 3.37 at 3-134.

    60

    [9] The court's analysis illustrates the tension between copyright law's competing policies of rewarding individual initiative and creativity versus promoting broad public access to original works, Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 2044, 45 L.Ed.2d 84 (1975), and implies an intention to resolve that conflict, at least with respect to computer programs having a relatively short market life, in favor of broad access. See Matthew R. Harris, Note, Copyright, Computer Software, and Work Made for Hire, 89 Mich.L.Rev. 661 (1990).

    61

    To the extent that any functional difference between the versions resulted from revisions of the original, the matter properly is addressed through derivative-works analysis undertaken after resolution of the copyright-ownership issue. See generally Stewart v. Abend, 495 U.S. 207, 110 S.Ct. 1750, 109 L.Ed.2d 184 (1990).

    62

    [10] It is uncontested that Peiffer invoked the .309 version to show his initiative at Avtec; that he made changes suggested by Avtec managers; that he demonstrated the Program at their request; that he was rewarded for doing so with a sizeable cash bonus; that he modified the Program at the suggestion and with the aid of other Avtec employees, billing the time to a specified Avtec account on at least one occasion; and that he failed at any relevant time to allege any proprietary interest in the Program. See 805 F.Supp. at 1315-16.

    63

    [11] The district court rightly questioned the extent to which an employer's control over a work remains a dispositive factor in "work for hire" analysis following the Supreme Court's qualified rejection of such analyses in Reid, 490 U.S. at 738-39, 109 S.Ct. at 2171-72. See 805 F.Supp. at 1318.

    64

    [12] As to that possibility, we offer these observations for such guidance as they may provide the court upon any reconsideration of the counterclaim. While, as the district court properly found, assuming Peiffer owned copyright, any infringement that occurred caused defendants no actual damage, Appellee Br. 47, defendants rightly contend that 17 U.S.C. Sec. 504(c) mandates consideration of statutory damages in lieu of actual damages, with modifications for instances of "innocent infringement." On this issue, we note that the court found implied in Peiffer's conduct a grant to Avtec of a limited use license in the Program. 805 F.Supp. at 1320. Expressing no view on the factual basis for that holding, which is not now in issue, we further note that such an implied license is necessarily nonexclusive and revocable absent consideration. See MacLean Assocs., Inc. v. Wm. M. Mercer-Meidinger-Hansen, Inc., 952 F.2d 769, 778-79 (3d Cir.1991); 3 Nimmer Sec. 10.02[B]. Thus, while an implied license may fail to vest a proprietary interest in the licensee that is enforceable against other licensees, it may provide a defense--properly pled by Avtec, J.A. 85--to the counterclaim. See MacLean Assoc., 952 F.2d at 779.

    65

    [13] Peiffer and KKI concede that "all versions of the Orbit Program" are "to some extent" derivative of the original .309 version, Appellee Br. 29. See Stewart, 495 U.S. at 223-24, 234-36, 110 S.Ct. at 1761-62, 1767-68.

    66

    [14] The parties concede that it is within the district court's discretion to award or deny attorneys' fees as part of the costs of the action. 17 U.S.C. Sec. 505.

    67

    [15] Although Avtec alleged in its complaint that defendants misappropriated its trade secrets in "the Program," in its client lists, and in its marketing techniques, J.A. 22-23, on appeal it focuses argument exclusively on the alleged trade secret in the Program, Appellant Reply Br. 21-26, and we confine our decision accordingly.

    68

    [16] With respect to whether copyright ownership may provide a defense to a claim for misappropriation of trade secrets, the defense cannot be overcome by invoking patent-law "shop rights." Congress expressly declined to incorporate such rights into copyright law. See 1 Nimmer Sec. 5.03[C] (citing H.Rep. No. 1476, supra, at 121, reprinted in 1976 U.S.C.C.A.N. at 5736-37).

    69

    [17] We reject defendants' argument that, even if Avtec had a trade secret, secrecy was lost when the company demonstrated the Program to clients. Trandes, 996 F.2d at 663-64. We do not address the alternative contention that Avtec failed to take reasonable steps to protect the secrecy of the source code because we anticipate reconsideration of the evidence on remand, noting only a tension between the district court's finding that Avtec did take such precautions, 805 F.Supp. at 1320, and the court's prior observation that "[t]he evidence is far from convincing that Avtec ever continuously possessed the software." Id. at 1319.

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