Employees v. Independent Contractors: A Critical Difference in Technology Development
By Christopher G. Simboli
In today's business environment, the development of technology is occurring at an unprecedented rate, with new breakthroughs occurring almost daily. Artificial Intelligence (AI) is just one of the more recent examples of new technology implicated in this global development race.
In creating new technology, many businesses utilize their employees, engage independent contractors, or both. Many business owners assume that since these employees and independent contractors have been hired and engaged by the business, and are being paid for their efforts on behalf of the business, that the business will own the resulting technology that arises from these development efforts. This may be true, but only if the legal distinction between an employee and an independent contractor is recognized, taken into account and the proper legal protections put into place. In fact, failure to recognize this important distinction can result in the loss of significant value in the intellectual property assets of a business.
Generally, under the U.S. Copyright Act and its "work made for hire" provisions, the owner of the copyright in technology created by an employee working within the scope of their employment on behalf of the business will automatically be owned by the business. Intuitively, but wrongly, many business owners assume that this same principle would apply to the independent contractors used by the business to develop technology on behalf of the business. The reality is that absent a written signed agreement in place between the particular independent contractor and the business whereby the intellectual property rights in the developed technology are assigned by that independent contractor to the business owner, the...
