Opinion ID: 695159
Heading Depth: 3
Heading Rank: 1

Heading: Were the Works Made For Hire?

Text: 27 The district court applied the instance and expense test to the Nagel paintings. It found that [t]here is no doubt that Nagel was directed to create at least some of the works that appeared in Playboy prior to January 1, 1978. The portrait of Lillian Hellman, the art accompanying the Nellis article, and illustrations for features on travelers' aids (Playboy, March 1975) must have been 'motivated' or 'induced' by Playboy. Playboy, 831 F.Supp. at 311. The court made no specific findings as to whether any other particular paintings were made at the instance of Playboy, but concluded that many of the Nagel works in the pre-1978 period were created at the instance of Playboy. Id. at 312. The court, however, held that the paintings were not works for hire because they were not made at Playboy's expense. Although it was undisputed that Playboy paid Nagel a fee for each painting published by Playboy, the court concluded that the paintings were not made at Playboy's expense because Nagel provided his own tools, worked his own hours, hired his own assistants, and paid his own taxes and benefits and because [t]here is no indication that there was any real risk involved for Playboy. Id. at 311. 28 Playboy argues that these factual findings support the conclusion that Nagel was working as an independent contractor rather than as a formal employee of Playboy, but not the conclusion that the paintings were made at Nagel's expense. Dumas argues that this is an issue of fact, and, accordingly, we may reverse the district court only if its decision was clearly erroneous. 29 The parties do not dispute the underlying facts set forth by the district court: Nagel provided his own tools, worked his own hours, hired his own assistants, and paid his own taxes and benefits. The question which is raised, in our view, is a mixed one which we review de novo: whether those facts, as a matter of law, show that the paintings were made at Nagel's rather than Playboy's expense. See Weissmann v. Freeman, 868 F.2d 1313, 1317 (2d Cir.), cert. denied, 493 U.S. 883, 110 S.Ct. 219, 107 L.Ed.2d 172 (1989) (when a district court makes findings of fact predicated upon an incorrect legal standard such findings are not binding on an appellate court). 30 It appears that the district court used the wrong test to determine whether the works were made at Playboy's expense. The factors considered by the district court, as Playboy points out, are among the factors listed by the Supreme Court in Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52, 109 S.Ct. 2166, 2178-79, 104 L.Ed.2d 811 (1989), which may be used to show that an artist worked as an independent contractor and not as a formal employee. The factors have no bearing on whether the work was made at the hiring party's expense. 31 Our prior cases on work for hire under the 1909 Act have found the expense requirement to be met where a hiring party simply pays an independent contractor a sum certain for his or her work. See Brattleboro, 369 F.2d at 568 (price paid by merchants to newspaper for advertisement fulfilled the expense requirement); Yardley, 108 F.2d at 31 (expense requirement met when artist was commissioned to paint a mural for pay). In contrast, where the creator of a work receives royalties as payment, that method of payment generally weighs against finding a work-for-hire relationship. See Donaldson Publishing Co. v. Bregman, Vocco & Conn, Inc., 375 F.2d 639, 642 (2d Cir.1967), cert. denied, 389 U.S. 1036, 88 S.Ct. 768, 19 L.Ed.2d 823 (1968); Everts v. Arkham House Publishers, Inc., 579 F.Supp. 145, 149 (W.D.Wis.1984); cf. Picture Music, 457 F.2d at 1216 (finding a work-for-hire relationship where payment was a percentage of royalties, holding that [t]he absence of a fixed salary ... is never conclusive). The simple fact that Playboy paid Nagel a fixed sum for each of the works published in Playboy magazine is sufficient to meet the requirement that the works be made at Playboy's expense. 32 As we find that all the works in this time period were made at Playboy's expense, any of those works which were also made at Playboy's instance, and which Playboy had the right to control or supervise, are works for hire under the 1909 Act. See Picture Music, 457 F.2d at 1216. The district court did not reach these issues because it held that the works were not made at Playboy's expense. The court, however, did make a number of factual findings which are relevant to these points. 33 The court found that [t]here is no doubt that Nagel was directed to create at least some of the works that appeared in Playboy prior to January 1, 1978, Playboy, 831 F.Supp. at 311, and that Nagel was given specific instructions for his early submissions to Playboy. Id. at 310. The court credited a statement made by Hugh Hefner, the former editor of Playboy magazine, that At first we asked [Nagel] to illustrate a particular letter to the 'Advisor' every month, but soon ... [w]e asked him simply to give us a painting a month. Id. The court also found that: 34 Sometime after January 1977 but before August 1978, Nagel and Playboy fell into a course of conduct whereby Nagel would produce a few works for Playboy expecting them to be published; Playboy, in turn, expected to publish a few of Nagel's works. 35 Id. at 310-11. In addition, the court found that Playboy apparently was no longer controlling characteristics of the works by mid-1978.... The instance [beyond mid-1978] cannot be determined. The relationship was a continuing one, and plaintiffs have offered no evidence of any specific orders after 1976. Id. at 313. 36 These findings show that the relationship between Playboy and Nagel evolved over time. The district court found that the evidence presented was insufficient to show the exact date on which Playboy ceased giving Nagel specific assignments. Its best estimate was after January 1977 but before August 1978. From the court's findings we can draw the conclusion that at least during the time before January 1977, Playboy gave Nagel specific assignments and often asked him to illustrate particular articles that were to appear in Playboy magazine. It is safe to say that during this phase of their relationship, Playboy was the motivating factor in the creation of the paintings. Nagel certainly would not have created those particular paintings if he had not been given the assignments by Playboy. Thus, the paintings made during this time were made at Playboy's instance. 37 The district court also found that before mid-1978, Playboy not only had the right to control the works but it actually controlled certain characteristics of the paintings. Id. This, combined with the fact that the paintings created before January 1977 were made at Playboy's instance and expense, makes those works works for hire. The case, however, must be remanded for a determination of whether the paintings made after January 1977 but before January 1, 1978 were also made at Playboy's instance. 2 38