Do You Own Your Work? IP Clauses Explained

As a freelancer, the work you create is often your most valuable asset. But who actually owns it once you deliver it to a client?

The answer lies in your contract's intellectual property clauses—and getting them wrong can cost you your rights, your portfolio, and future revenue. According to the Freelancers Union, 71% of freelancers struggle to get paid, and disputes over ownership make collection even harder.

Before signing, upload your contract to Contract Analyze - Pact AI to identify risky clauses and verify compliance.

With 64 million Americans now freelancing—38% of the U.S. workforce contributing $1.27 trillion annually—understanding IP ownership isn't optional. It's essential.

The "Work Made for Hire" Trap

This is the most critical concept for creatives to understand.

Under 17 U.S.C. § 101, a "work made for hire" has a specific legal definition with severe consequences: the client owns the copyright as if they created the work themselves. The freelancer—the actual creator—is not considered the legal author at all.

This means:

• No ownership – The client holds copyright from the moment of creation
• No royalties – You cannot earn future revenue from the work
• No termination rights – Unlike other copyright transfers, you cannot reclaim rights after 35 years under Section 203
• No portfolio usage – In some cases, you cannot even display the work

The Two Categories of Work for Hire

The Copyright Act recognizes only two situations where work-for-hire applies:

1. Employee Work

Work prepared by an employee within the scope of employment. The Supreme Court's landmark decision in Community for Creative Non-Violence v. Reid (1989) established that courts must apply common-law agency principles to determine employee status.

In CCNV v. Reid, sculptor James Earl Reid created a statue for CCNV depicting the plight of the homeless. Despite CCNV's direction on the statue's design, the Court unanimously held Reid was an independent contractor—not an employee—because he:

• Supplied his own tools
• Worked in his own studio without daily supervision
• Was retained for a short period
• Had absolute freedom over when and how to work
• Hired and paid his own assistants
• Received no employee benefits or tax withholdings

2. Specially Commissioned Work

For independent contractors, work-for-hire applies only when ALL of these conditions are met:

The nine eligible categories are:

1. Contribution to a collective work
2. Part of a motion picture or audiovisual work
3. Translation
4. Supplementary work
5. Compilation
6. Instructional text
7. Test
8. Answer material for a test
9. Atlas

Critically, most freelance work doesn't qualify. Logo design, website development, illustrations, photography, and marketing copy are NOT among the nine categories. A "work for hire" clause in these contracts may be legally unenforceable—but signing it still creates disputes and litigation risk.

Pact AI is trained to detect work-for-hire language instantly, alerting you before you sign away rights you may not even be legally required to transfer.

The Playboy v. Dumas Warning

In Playboy Enterprises v. Dumas, the Second Circuit examined 285 artworks created by freelance artist Patrick Nagel for Playboy magazine. The court found that works created after the 1976 Copyright Act required proper written agreements to qualify as works for hire.

Works created between 1978-1979 were held NOT to be works for hire because the written agreements were insufficient—giving Nagel's estate, not Playboy, the copyright.

The lesson: Even major publishers get work-for-hire wrong. The written agreement must be clear, signed, and in place before work begins.

Licensing Instead of Assigning

There's a smarter alternative to giving away your IP: grant a usage license instead of a full assignment.

Assignment vs. License: Key Differences

Both exclusive licenses and assignments must be in writing to be valid under copyright law. However, non-exclusive licenses can be granted orally or implied through conduct.

Example License Terms

Instead of "Client owns all rights," propose specific usage grants:

• "Client may use the logo for marketing purposes in North America for three years"
• "Client receives exclusive digital rights; print rights require separate license"
• "License renews annually at $X unless terminated by either party"

The Section 203 Safety Net

Even if you assign your copyright, Section 203 of the Copyright Act provides a crucial protection: authors can terminate transfers after 35 years.

In a recent case, members of 2 Live Crew successfully used Section 203 to reclaim ownership of their music catalog. The jury found they were independent contractors, not employees, making their original agreements terminable.

Important: Termination rights do NOT apply to works made for hire. This is another reason to avoid work-for-hire clauses when possible—they eliminate your 35-year recapture right entirely.

Portfolio Rights

Even when a client requires full IP assignment, you should negotiate a portfolio rights clause.

This clause explicitly permits you to display the work for self-promotional purposes. Without it, you may be legally prohibited from showing your own work to prospective clients.

Sample Portfolio Rights Language

"Notwithstanding the assignment of rights above, Creator retains the nonexclusive, perpetual, worldwide right to display, reproduce, and distribute the Work in Creator's portfolio, website, and promotional materials solely for the purpose of showcasing Creator's professional capabilities."

What to Include

Be specific about permitted uses:

• Website portfolio display
• Social media posts
• Award submissions
• Case studies (excluding confidential information)
• Pitch decks for prospective clients
• Physical samples and print materials

If the Client Refuses

A client who refuses portfolio rights should raise a red flag. Your portfolio generates future business—giving it up has real economic value.

If you must sign away portfolio rights, charge more. The restriction has quantifiable impact on your earning potential.

Pact AI can suggest portfolio rights insertion if your contract includes IP assignment but lacks display protections.

Moral Rights: The VARA Exception

The Visual Artists Rights Act (VARA) provides limited "moral rights" protection for visual artists—even after selling their work.

Under VARA, artists of qualifying works retain:

• Right of attribution – To be credited as the creator
• Right of integrity – To prevent modification that harms your reputation
• Right against destruction – For works of "recognized stature"

VARA applies only to:

• Paintings, drawings, prints, sculptures
• Still photographs produced for exhibition
• Single copies or limited editions (200 or fewer), signed and numbered

VARA does not cover posters, applied art, motion pictures, or merchandising items. Moral rights cannot be transferred but can be waived in a signed written agreement.

In 2018, a federal judge cited VARA in awarding $6.7 million to 21 graffiti artists whose works at the 5 Pointz building were destroyed by the property owner.

Red Flags to Watch For

Be cautious when contracts include:

Negotiation Strategies

1. Start with a license – Propose usage terms before accepting assignment
2. Limit the scope – Restrict by time, geography, medium, or industry
3. Carve out portfolio rights – Always protect your ability to showcase work
4. Price assignment higher – Full rights transfer should cost more
5. Question work-for-hire – Most freelance work doesn't qualify anyway
6. Get everything in writing – Oral agreements are unenforceable for exclusive transfers

New Legal Protections for Freelancers

Recent legislation strengthens freelancer rights:

California Freelance Worker Protection Act (effective January 1, 2025)

• Requires written contracts for services over $250
• Mandates payment within 30 days unless otherwise specified

New York "Freelance Isn't Free" Act (expanded statewide August 2024)

• Written contracts required for work over $800
• Payment due within 30 days of completion
• Double damages for non-payment

These laws don't directly address IP ownership, but they establish that freelance agreements must be in writing—creating an opportunity to negotiate IP terms before starting work.

Conclusion

Your creative work has value—protect it. Before signing any freelance contract:

1. Identify work-for-hire language – Understand what you're giving up
2. Know if it's enforceable – Most freelance work doesn't qualify
3. Propose licensing instead – Retain ownership where possible
4. Negotiate portfolio rights – Never lose the ability to show your work
5. Get it in writing – Oral agreements won't protect you

Use tools like Pact AI to instantly identify IP red flags and missing protections, giving you the knowledge to negotiate better terms before you sign.