1Roger L. Wollman became Chief Judge of the United States Court of Appeals

for the Eighth Circuit on April 24, 1999.

2The HONORABLE JOHN R. TUNHEIM, United States District Judge for the

District of Minnesota, sitting by designation.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 98-2281

___________

Ron and Judy Kirk, doing business as *

Iowa Pedigree, *

*

Appellees, * Appeal from the United States

* District Court for the

v. * Western District of Missouri.

*

Gary Harter, *

*

Appellant. *

___________

Submitted: January 14, 1999

Filed: August 27, 1999

___________

Before WOLLMAN1 and FLOYD R. GIBSON, Circuit Judges, and TUNHEIM,2

District Judge.

___________

WOLLMAN, Chief Judge.
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In this copyright dispute, the district court entered judgment on a jury verdict in

favor of Iowa Pedigree. Because we find that Harter was an independent contractor,

we reverse.

I.

Iowa Pedigree, a partnership owned by Ron and Judy Kirk, is in the business of

assisting dog breeders and brokers to comply with American Kennel Club (AKC) and

United States Department of Agriculture (USDA) licensing and registration

requirements. Iowa Pedigree sought to develop computer software that would aid its

customers in conforming to these regulations.

In 1989, Ron Kirk learned from a kennel owner that Harter had written a

computer program that allowed the owner to track information on the dogs bred and

sold by the kennel. In May of 1989, Kirk asked Harter to develop a computer program

for Iowa Pedigree to assist dog brokers with AKC and USDA regulations. Harter

agreed and eventually helped Iowa Pedigree develop the software.

For the next six years, Harter worked on a variety of projects for Iowa Pedigree.

He developed several computer programs, maintained the computers at Iowa Pedigree,

and serviced the software of Iowa Pedigree’s clients. In 1996, several customers

terminated their relationship with Iowa Pedigree and began receiving services directly

from Harter. Iowa Pedigree then sued Harter for copyright infringement,

misappropriation of trade secrets, and tortious interference with business expectancies.

The jury found that Harter was liable for copyright infringement. In addition, the

jury found that Harter had misappropriated Iowa Pedigree’s trade secrets in violation

of Iowa law and that he had tortiously interfered with the business expectancies

between Iowa Pedigree and its customers. In addition to awarding compensatory

damages, the jury awarded punitive damages in the amount of $50,000.00. The district
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court entered judgment against Harter, but set aside the verdict in favor of Iowa

Pedigree on the claim of misappropriation of trade secrets.

II.

The central issue in this appeal is whether Iowa Pedigree is the sole owner of the

copyrights to the computer programs. The Copyright Act provides that an employer

is the author when an item is considered a work made for hire. See Community for

Creative Non-Violence v. Reid, 490 U.S. 730, 743-44 (1989); 17 U.S.C. § 201(b). 

See also 17 U.S.C. § 101 (defining work made for hire as “a work prepared by an

employee within the scope of his or her employment”); MacLean Assoc., Inc. v. Wm.

M. Mercer-Meidinger-Hansen, Inc., 952 F.2d 769, 775-76 (3rd Cir. 1991) (explaining

work made for hire doctrine). Whether the computer programs in this case are works

made for hire turns on the nature of the employment relationship between Iowa

Pedigree and Harter. See e.g. Siebersma v. Vande Berg, 64 F.3d 448, 449 (8th Cir.

1995) (explaining the significance of employment status in a copyright ownership case

involving a computer programmer). 

To determine the employment status of an individual under the copyright statutes

when there is no written employment agreement, we look to the common law rules of

agency. See Reid, 490 U.S. at 750-51. In applying the common law test, we examine

several factors to determine employment status, including “the hiring party’s right to

control the manner and means by which the product is accomplished.” See id. at 751.

Other factors to be taken into account include

the skill required; the source of the instrumentalities and tools; the

location of the work; the duration of the relationship between the parties;

whether the hiring party has the right to assign additional projects to the

hired party; the extent of the hired party’s discretion over when and how

long to work; the method of payment; the hired party’s role in hiring and

paying assistants; whether the work is part of the regular business of the
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hiring party; whether the hiring party is in business; the provision of

employee benefits; and the tax treatment of the hired party.

Id. at 751-52 (citations omitted). No single factor is determinative of employment

status. See id. at 752.

“[W]hether a given individual is an employee or independent contractor is a

question of law, which must be decided by reviewing the particular facts of each case.”

Berger Transfer & Storage v. Central States, 85 F.3d 1374, 1377 (8th Cir. 1996)

(quoting Short v. Central States, Southeast & Southwest Areas Pension Fund, 729 F.2d

567, 571 (8th Cir. 1984)). See also Alford v. United States, 116 F.3d 334, 336 (8th

Cir. 1997); Birchem v. Knights of Columbus, 116 F.3d 310, 312 (8th Cir. 1997). In a

court-tried case, the findings regarding each of the underlying common-law factors are

reviewed under the clearly erroneous standard of review, with the ultimate question of

employment status being reviewed de novo. Berger v. Transfer & Storage, 85 F.3d at

1377-78 (citing Dole v. Snell, 875 F.2d 802, 805 (10th Cir. 1989)). In the present case,

however, the question of Harter’s employment status was submitted to the jury.

Because the evidence was largely undisputed, we need not dwell on the degree of

deference that should be shown to the jury’s findings regarding the Reid factors, for we

conclude that the evidence compels a determination that Harter was in fact an

independent contractor and not an employee, with the result that he was the owner of

the computer program and thus not liable for copyright infringement.

Throughout Harter’s relationship with Iowa Pedigree, his pay was reported to

the Internal Revenue Service by Iowa Pedigree on form 1099 as payment to an

independent contractor. Harter reported the pay as self-employed income. Iowa

Pedigree did not withhold any portion of Harter’s pay for income taxes, nor did it

withhold social security taxes. Harter received no medical, retirement, or vacation

benefits while working for Iowa Pedigree. Iowa Pedigree’s failure to provide

employment benefits or withhold any payroll taxes is probative evidence of Harter’s
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status as an independent contractor, as “every case since Reid that has applied the test

has found the hired party to be an independent contractor where the hiring party failed

to extend benefits or pay social security taxes.” Aymes v. Bonelli, 980 F.2d 857, 863

(2d Cir. 1992); see also Birchem, 116 F.3d at 313 (stating that financial relationship,

including tax treatment, is highly probative of employment status). 

Moreover, Harter received payments on an irregular basis. For example, in

August of 1991, he was paid on the 12th, 17th, and 19th, whereas he did not receive

any payment from December 19, 1989, to July 11, 1990. Harter did not use a time

clock or submit the number of hours he worked to Iowa Pedigree, except in the form

of an invoice. This absence of regular, periodic payments is an indicia of independent

contractor status. See MacLean, 952 F.2d at 777.

In addition, throughout his six-year relationship with Iowa Pedigree, Harter

continued to engage in computer consulting with other companies, a factor suggesting

that he was an independent contractor. See Berger Transfer, 85 F.3d at 1380 (stating

truck owner-operators driving for multiple companies was key in finding that they were

independent contractors); Aymes, 980 F.2d at 862 (finding computer programmer

highly skilled); Maclean, 952 F.2d at 777 (same).

In 1992, Harter hired a second programmer, Dennis Blazek, to work on a

particular project. Harter’s 1992 tax return shows that payments made to Blazek were

reported as subcontractor expenses, a fact indicative of Harter’s status as an

independent contractor. See Reid, 490 U.S. at 751-52 (hiring and paying assistants is

relevant to determining employment status).

Conversely, some factors support a finding that Harter was an employee of Iowa

Pedigree. Harter traveled extensively with Ron Kirk throughout the six-year period.

The two visited clients of Iowa Pedigree to “de-bug” their computer systems. Harter

attended several trade shows with Kirk, where he wore an Iowa Pedigree “uniform”
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and worked in the Iowa Pedigree booth, where he would answer questions regarding

the services provided by Iowa Pedigree. On these trips, Iowa Pedigree paid for

Harter’s expenses. Each of these facts favors a finding that Harter was an employee.

See Aymes, 980 F.2d at 863 (stating that right of the hiring party to assign projects is

strong evidence of employee status, although assignment of additional duties is not

necessarily inconsistent with an independent contractor relationship).

Although Ron Kirk had no computer skills, he directed the projects through his

knowledge of the AKC and USDA compliance requirements. In addition, he directed

the hours and days that Harter would work, a fact that suggests an employer-employee

relationship. See Reid, 490 U.S. at 752 (fact that hiring organization directed

sculptor’s work favored finding hiring organization controlled the project); Short, 729

F.2d at 574 (stating that a workers ability to determine when and how long he would

work favored finding that he was an independent contractor).

Although Harter did some work at home, he also spent a significant amount of

time in the Iowa Pedigree offices. The six-year duration of the relationship, and Iowa

Pedigree’s furnishing of equipment also favor finding an employment relationship. See

NLRB v. United Ins. Co. of America, 390 U.S. 254, 259 (1968) (finding permanent

relationship favored status as employee); Aymes, 980 F.2d at 864 (stating that work

done at company office supports employee status, but had negligible weight when

computer programmer needed access to hiring party’s computer hardware).

On balance, we conclude that the factors which might support a conclusion that

an employer-employee relationship existed are insufficient to overcome the evidence

that Harter was an independent contractor. Iowa Pedigree did not treat Harter as an

employee for tax purposes and did not pay him traditional employee benefits.

Furthermore, Harter was highly skilled, continued to consult with other companies, and

on at least one occasion unilaterally hired a subcontractor. We find the Second

Circuit’s reasoning in Aymes persuasive, and we therefore conclude that Harter was
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an independent contractor. See Aymes, 980 F.2d at 862-64 (finding that the skill, tax

treatment, and employee benefit factors compelled a finding that a computer

programmer was an independent contractor). Thus, as owner of the computer programs

he designed for Iowa Pedigree, Harter cannot be held liable for copyright infringement.

The jury was instructed that to find for Iowa Pedigree on its claim for tortious

interference, each of the following elements must have been shown by the weight of the

evidence:

First, plaintiffs had contracts or business expectancies with

customers which were terminated by the customers,

Second, defendant caused the customers to terminate their

relationships with plaintiffs, and

Third, defendant did so intentionally and without justification or

excuse, and

Fourth, plaintiffs were thereby damaged.

Jury Instruction No. 30. 

We will affirm the jury’s finding of tortious interference if it is supported by

substantial evidence. See Central Telecommunications, Inc. v. TCI Cablevision, Inc.,

800 F.2d 711, 732 (8th Cir. 1986). Liability for tortious interference with business

relations may not be sustained based “upon speculation, conjecture, or guesswork, and

no fact essential to submissibility can be inferred absent a substantial evidentiary

basis.” Mueller v. Abdnor, 972 F.2d 931, 938 (8th Cir. 1992). 

We conclude that there is insufficient evidence to support a finding that Harter

tortiously interfered with Iowa Pedigree’s business expectancies. The owners of the

former customers testified that they were unhappy with the continually rising prices at
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Iowa Pedigree, that they were uncomfortable with Iowa Pedigree because they believed

that Ron Kirk was divulging information regarding their businesses, and that they were

unhappy with the manner in which Kirk demanded payment for services. In addition,

the former customers testified they had solicited Harter and that he had not pursued

them. Accordingly, the judgment entered on this claim must be set aside.

Because Harter was an independent contractor and thus not liable for copyright

infringement, and because the claim of tortious interference with business relations is

not supported by the evidence, no basis remains for affirming the award of punitive

damages. Accordingly, it is set aside.

The judgment is reversed, and the case is remanded to the district court for entry

of judgment dismissing the complaint.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.