As the author of a creative work, you are the one who owns copyright to it in the first instance. There are two exceptions to this rule. The first is if you are an employee and you created the work as part of your job. In that case, your employer is who owns copyright to the work. The second exception is if you created the work as a work for hire. In that case, the individual or company who hired you to create the work owns the copyright to it.
What about when you own the company? Who owns the copyright then?
You are Not Your Company
Many creative professionals operate their businesses through a company, usually an LLC or an S Corp. Individuals who own their own companies are not necessarily employees of that company. If you own a single member LLC, you are a member of the LLC, not an employee. If you own all the shares of an S Corp. you are a shareholder of that company and may not be an employee. In either case, you own the copyright to any work you create and not your company. (NOTE: This may be different in a multimember LLC or an S Corp. with more than one shareholder. It depends on the language in the corporate governing documents.)
In the case of a single member LLC or a wholly-owned S Corp., the bigger question is not who owns copyright to the creative work, but rather who should own it? Does it make more sense to hold the copyrights as an individual or to transfer copyright ownership to your company? This is a strategic decision. You need to look at why you set up your company in the first place and what you plan to do with your copyrights in order to decide how copyright ownership should be held.
Creating Multiple Revenue Streams
Your copyrights have the potential to be income producing assets generating multiple revenue streams. A writer can license print book rights, audio book rights, foreign language rights, English language in foreign territory rights, and option the work for performance or a screenplay—each to a different entity, for example. Visual artists can license their work to fabric manufacturers, or for wallpaper, for calendars, coffee mugs, any number of consumer products for sale by retail chains, or as backdrops to ad campaigns or video productions.
When deciding who owns copyright—whether to keep ownership of your copyrights in your own name or to transfer copyright ownership to your company—you need to assess which option offers greater protection for those income streams.
Assessing the Risk to Decide Who Owns Copyright
When making the decision about whether you or your company should own your copyrights, you need to consider the risks to which you and your company are exposed. In other words, how could you or your company get sued?
Almost all creative professionals—writers (fiction, non-fiction, and memoir), visual artists, filmmakers, musicians, graphic designers—have exposure to claims of infringement by a third party. If you infringe someone else’s creative work, that person is probably going to sue you personally, not your LLC. They may not even know about your LLC and in any event, they think you did the infringing, not your company. Creative professionals can also be sued for defamation, invasion of privacy, or violation of someone's right of publicity. If you signed a contract, you could be liable for breach of contract. Simply put, operating through an LLC will not save you from being sued personally.
Your company could get sued for exactly the same things.
Protect Your Income by Protecting Your Assets
The primary purpose of operating through a business entity is to protect yourself and your personal assets from liability. After all, LLC means limited liability company. If there is a judgment against the LLC (or an S Corp.), the creditor has recourse against the assets of the company. But the creditor can’t get to your personal assets. Copyrights owned by the company could be exposed to claims by the company’s creditors.
On the other hand, if you hold your copyrights as a personal asset, they could be exposed to your personal creditors. For instance, Toni Braxton filed for personal bankruptcy and lost the copyrights to her portfolio of songs.
Your membership interest in the LLC (or your shares in an S Corp.) is a personal asset. But it is a personal asset that comes with another layer of protection. In most states, creditors cannot directly attach the assets of the LLC or an S Corp. to enforce a personal debt. Instead, the creditor can get a charging order which entitles them to the member's distributions from the LLC. This is a state law issue. Some states are more debtor friendly than others; plus, the answer may be different for single member LLCs.
Because in most states creditors cannot directly attach the assets of the LLC or an S Corp. to enforce a personal debt, it is easier to protect the revenue streams generated by your creative work if your copyrights are held by your company. Your personal creditor may get to the revenue itself, but not to the creative work that generates the revenue. Once the debt or judgment is paid, you still own the income generating asset—the copyright.
Tax and Estate Planning Considerations
Recent discussions in the Creative Law Center monthly membership workshops uncovered two reasons why holding your copyrights in an LLC offers greater benefit than holding them individually or in an S Corp.
In this excerpt from the Business Structures for Creatives workshop, Maryland Attorney Dan Gartrell explains the negative tax ramifications of holding your intellectual property assets in an S Corp.
In this excerpt from the Estate Planning for Creatives workshop, Maryland Attorney Cheri Dorsey explains why holding your copyrights in an LLC is beneficial from an estate planning perspective.
How to Assign Copyright to Your Company
Apply for copyright registration on your work and identify yourself as the author and initial claimant. Then make an assignment of copyright to your company in which you "sell, assign, transfer, and set over to [your company] the entire United States, foreign and international right, title, and interest in and to copyrights, copyright registrations or applications pertaining to [the work]." The transfer or assignment document can be filed with the Copyright Office. The transfer is effective even if the document is not filed with the Copyright Office.
You can name your company in the rights and permissions section of the application. You can do this even if you decide not to transfer your copyrights. This manages the expectations of potential licensees—that they are dealing with a company and not an individual.
Copyright Practice Tip
Listing your company as the rights and permissions manager of your copyright helps to manage expectations of potential licensees—that they are dealing with a company and not an individual.
The current term of copyright is the life of the author plus 70 years. If the author is a company, the duration of the copyright is 95 years from publication. With the approach suggested here, the math favors a creator who lives 25 years or more from publication. Depending on your age, your estate will have a longer period of time for controlling and licensing your copyrights with you as the author.
There are a number of considerations that go into deciding who owns copyright to your creative work. This post outlines one way of handling the issue. Add salt and pepper to taste.
Updated: August 25, 2021
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What would happen to the copyrights owned by my own LLC if I eventually decide to sell my company? Do I sell them to the new owner or can I transfer the ownership back to myself? Thank you!
I love this article! Well done!
If I am a co-founder and significant shareholder in an S-Corp, and I am the only one that wrote the software, and no transfer letter/agreement exists, then does the copyright normally belong to me personally? If it was just me as the only owner, then you are clear that the answer is yes. However, with there being two other owners (none have more stock that I do), how does that normally play out?
I was a trade instructor for the navy, but not a curriculum designer. As a hobby I spend a lot of time trying to improve curriculum, some failed, but I think I have what I want the title is Content On-Demand, the online apprentice for machinist, it was my idea, my original work, the navy rejected using it, I would say 80% was done on my time, the navy rejected using it, I was never directed to do it , the Navy doesn’t use it, the Navy refused to pay overtime to get it completed and also removed me from my position of instructing to go a different direction…Do you thing I can copright it?
Tom, Given those facts, I believe the Navy would be hard pressed to say that the work was completed in the scope of your employment. Because it was not, you own the copyright and may register the work.
Thank you for helping me to understand the dynamics of copyrighting, Kathryn!
Where can I contact you for service? I currently have two companies who wish to purchase my LLC which I sell educational materials.
You can email me at kathryn “at” creativelawcenter.com or call me at 410-783-7575. I look forward to hearing from you.
Thank you for this article, it has a lot of helpful information.
I have one question about the rights and permissions manager. If my company is the rights and permissions manager of my copyrights but is not the owner of them, can the company license the rights?
Or do I need to specifically grant third-party licensing rights to my company?
The company is an S Corp, I own 100% of it.
Your company can negotiate the deal, but I recommend that you sign the contract as the author. Third party publishers are likely going to require your signature, apart from your role in the company, in any event.
Thank you so much. Then the royalties would come to me personally, as opposed to my company? I’m not sure what the advantage is to having a company as rights and permissions manager if it does not own the copyrights?
You can specify that the income go to your company even if you are the copyright owner. You company is managing your business. Having a corporate entity can protect you against many contractual claims. Whether to run your business through a corporate entity is often a question of ease of administration and taxes, in addition to liability protection.
Thank you, I appreciate it.
I started a record label in NY, as aLLC partnership, we produced many songs that may become hits, artist is becoming famous, but generating very little income at this time.. I may have to dissolve the LLC , question is How do we keep the publishing rights to the songs?
The LLC should transfer the copyrights it owns to whomever should own them before it is dissolved. The Membership Library contains a copyright transfer form agreement and an hour long workshop that explains how it all works. You can join the Membership here: https://creativelawcenter.com/register/membership-signup/
Hello Kathryn, I want to get a song copyrighted and submitted to CD Baby. I am the author. I created the music and lyrics. No one else is involved. I want to create a LLC to limit my personal liability. After looking at the SR Form it looks like I can make the LLC the claimant. So the LLC would own the copyright.
But I think I also need a contract which states I’m giving the rights of the song to my LLC. Is this correct? Where can I get such a contract? Does the contract need to be filed anywhere?
I secured a couple of sound recording copyrights listing my company at the time of registration as the Author. It was a sole proprietorship and I am listed as the registered agent. My company doesn’t exist anymore and I still want to protect my copyrights. Please advise.
If one person in a band writes the songs in a four person group, is there a way to reflect that in the operating agreement were the LLC, owned by all four, to copyright the material?
If I composed a song in 2013 and, therefore, own the copyright as of 2013 and transfer that copyright to a newly formed S corporation in 2021, should the company’s copyright notice appear with date of 2013 when the work was originally created or with a date of 2021 when the company acquired the copyright?
Great question. The copyright notice should contain the date of publication and the name of the owner of the copyright after the (c). So, it should look like this: (c) 2013 Company Name. The date of copyright acquisition is not used.
I stumbled across this blog and am happy I did!
I have a C Corp that I am employee of and have delivered residential single home architectural plans and images to a client as part of a simple proposal, between the C Corp and the client. I am also an officer of the C Corp.
I anticipate the client will infringe my copyright as they are demanding my original files, (not included in agreement) so that they can make their own changes through another party.
My questions are;
If I register the copyright under the C Corp, what protection of my copyright do I have myself?
Alternatively, as I am an employee of my C Corp, should I register the copyright individually and assign the rights for future litigation purposes?
If you prepared the plans as an employee of your C-corp, then your company is the author and holds the copyright in the first instance. The company can enforce the copyright against the client if there is an infringement. If you want to hold the copyright to the plans in your own name, the company will need to transfer them to you. There should be a provision in the contract that makes it clear that all rights to the plans remain with the company. If there isn’t, add one for future use. Contract provisions can be easier to enforce than copyright.
Am I understanding correctly that if copyright is assigned to an LLC, then suits for copyright infringement are effective only against the LLC, and in most cases, personal assets are no longer at risk?
Thank you so much for this helpful article!
Having the copyright owned by the LLC will not protect the author of the work from liability for infringement. I the LLC is the author, there is some measure of protection. An LLC serves to protect an individual from liability with respect to contracts that the LLC has entered.
Thank you so much for this helpful article. It was exactly what I was looking for. I’m so glad I found your website!
Thank you, Kathryn, for providing more priceless resources to creative professionals. We often get so wrapped up in the artistic process that we forget the business side of the “show business” mantra. No one likes discussing tax and estate planning, but they are necessary evils.
Thank you for hosting this site. My wife and I are the Directors/officers in an S-Corp we established. I wrote and conducted workshops for the last 30 years. The workshops are copyrighted in the company name. We are both retired and no longer conduct the workshops or handle the consulting projects. We have an agreement with another company to sell and conduct the workshops. Our S-Corp is paid a percentage of the sales. We want to dissolve the company. Can the workshops be transferred to us and copyrighted in my name when we dispose of the company assets?
Yes, you can transfer the copyrights from your S-Corp to yourself and dissolve the company. There are some tax ramifications that you need to consider. If the value of your workshop copyrights increased over time, you will have to pay tax on the fair market value of those assets when you transfer them out of the company. Check with your accountant.
Hello Kathryn, great informative article. I came across the following TIP in your article:
“Listing your company as the rights and permissions manager of your copyright helps to manage expectations of potential licensees—that they are dealing with a company and not an individual.”
As a musician I am not particularly interested in transferring my copyright to my LLC or any other individual or company.
Is there a specific form in the Creative Law Center Membership Group that lists the specific rights and permissions that the LLC would have on behalf of the copyright owner?
Thanks in advance for your time and help.
Kathryn, thank you very much for this valuable article!
I’m a California-based visual artist. I filed copyrights under my name so far. I own all the shares of my S Corp. If I pay myself salaries and put in a written contract to make myself an employee of my S corp, then transfer copyrights of works created solely by myself to my S corp, will that avoid plaintiffs or business creditors from going after my personal assets in case of getting sued for copyright infringement? (Altho I don’t expect to be sued since I’m very careful about not to infringe others’ works, just in case…) Thank you!
Kathryn, does it turn away film producers when screenwriters list the copyright in their screenplay in their single member LLC name? Is it a strategic error to register the copyright in the LLC because the reversion rights are waived, or is this not the case?
In Johnson v. Storix, a federal court found that the sole owner of an S-corp implicitly transferred all his registered copyrights to the corporation upon its formation and that the corporation owned all his derivative works even when he was the sole shareholder, officer and director because he paid himself a salary. The Ninth circuit upheld the decision because the author signed a corporate annual report saying he transferred assets from his sole proprietorship to the corporation when it was formed and the report was therefore a confirmation of a prior oral agreement.
Wow. Slightly confusing set of facts. But if I understand correctly, the annual report was the written transfer of copyright. That’s what it takes . . . a transfer in writing by the copyright owner. Very interesting case. The first document provided as a template in the Creative Law Center membership is a Copyright Transfer Agreement. It’s a fundamental document when it comes to controlling rights in your creative properties. Understanding how it works is essential.
What’s interesting is the annual report wasn’t an agreement at all, much less one that shows a clear and unambiguous intent of the author to transfer all exclusive and irrevokable copyrights. The new (supposed) owner can’t record the transfer with the Copyright Office without such a written agreement, so no one has any right to enforce the copyrights anymore. By far the stupidest ruling of a copyright ownership transfer. See Johnson v. Storix (2014).
Very interested about this. I recently sold my shares in a multi member LLC. As part of the LLC, I signed no documentation transferring any image rights to the company. I brought in several clients, one of which was a corporate video client. My former members have all of the image and audio files in their possession for that job. I was the one who captured all of those images, and the job is yet to be delivered. My question is…do those files belong to me? And if so, how do I get them back? The contract with the client had my name and not the company name on it. I have a strong relationship with this client and don’t want to lose it. Thanks! 🙂
Thank you so much – this is an excellent article!
My husband is in a unique situation – he used to be part of a small publishing company that was involuntarily dissolved several years after he left. While he was still there (as part owner) he created a book, with a contract (which was apparently never signed!) specifying that the trademark & copyright rights to the book were split 50/50 between him and the company, and specifying (among other things) that he can only work on related projects with the (now defunct) company’s permission. Added twist: the contract specifies that the 50% rights are granted to the company AFTER the designated payment of his advance… and as part of my husband leaving the company, they required him to sign a document that seems to say he’s giving them his shares in the company in exchange for not having to pay back the advance.
We’re trying to figure out the ownership of the rights now – did the company’s 50% revert to him, or to the other owners? What about the permission requirements of the contract? It’s a MESS!
Thanks! this is exactly what I was looking for and I like your writing style.
I am contemplating bankruptcy because of a lawsuit unconnected to my work as a writer. I hold copyrights, but my publisher has kept the books in print and holds certain rights by way of contract. My publisher is the licensee, yes? So are my copyrights at risk–can the BK trustee claim then as part of the BK estate–if my publisher has prior claim?
First let me say that I am not a Bankruptcy attorney so you need to double check this with one. Your copyrights may be at risk but I don’t think the rights can be taken from the publisher. The revenue stream from the publisher might be part of the bankruptcy estate, though.
Great information! I signed up for your mailing list today, then found you again in a Google search about a problem I have. In 2009 I set up a one-member LLC and registered a copyright for my new book to the LLC. A couple of years later I went out of business and closed the LLC. Now I am about to set up a new LLC to sell the book, but the copyright is still in the name of the closed LLC. Since the old LLC no longer exists as a legal entity, how do I transfer copyright?
You’d have to check your state’s law on this, but if all debts of your earlier LLC were paid when the LLCs affairs were wrapped up, then the remaining assets (the copyright) would be distributed to the member (you). It would probably take the form of a written transfer authorized by the person winding up the affairs of the LLC with an effective date of when the LLC finished winding up and before it was dissolved. Check with a local lawyer. It should not be that big a deal. The problem comes in if the LLC was never properly shut down.
This situation is very similar to my own. I had a one member LLC in California, the copyright to a screenplay was filed in the name of the LLC and the author (me and my writing partner who is now deceased). I dissolved the LLC in CA. Since then I have established a one member LLC in GA. But the copyright office says I personally do not own the copyright. If I understand your response to Julie correctly, if I obtain a written transfer authorized by the person who dissolved the CA LLC with an effective date of when the LLC finished being dissolved, I would then personally own the copyright. Is that correct?
This is incredibly useful. Can I just ask one thing: when you say that I or my LLC can be sued for a number of reasons (breach of copyright, etc) does that mean that I’m no better protected (in a legal sense) if the copyright is in my name or my LLC? Obviously I don’t plan on being sued, but I’d like to protect myself as much as possible early in my career.
If you are the author of the [allegedly] infringing material, you’re likely to get sued regardless of who owns the copyright. Using an LLC to hold the copyright to creative work does not protect against liability for infringement. If the copyright is held by a multi-member LLC and you find yourself in a personal bankruptcy situation, the copyright would be protected from your personal creditors. If the copyright is held by you personally and the LLC runs into financial trouble, the copyright would be protected from the LLCs creditors.
Hi Kathryn, I’m in New York City and have multiple copyrights for music and books in my name. These books are publishing by my company which is a C-Corp formed one year ago. Before that I was a Sole Proprietor and under that business setup most of the books/music was created. From reading your article it seems like I should switch all my copyrights to my C-Corp to protect them from being sold in a personal bankruptcy. Sound about right?
It almost sounds right (keep in mind that I am not a bankruptcy attorney). If you are the sole shareholder of the C-Corp, then the entirety of the C-Corp would become part of the bankruptcy estate if you filed for personal bankruptcy. The copyrights, as assets of the C-Corp, would end up there, as well. If there are other shareholders in the C-Corp, and you filed for personal bankruptcy, then only your interest in the C-Corp becomes part of the bankruptcy estate (your right to distributions, for example). The copyrights remain with the C-Corp and could not be touched by your personal creditors. A shareholders agreement may control what happens to your interest after filing for bankruptcy. This is worth double-checking with a bankruptcy attorney. It’s not a copyright specific issue.
I am entering into a contract with a photographer to sell her photos through a third party site. She wants the contract to be with her LLC. It is not a single-member LLC, she owns it with her husband. Must she formally assign her copyright to the LLC in order to enter into a contract with my company through the LLC? I assume the answer is yes.
That would be the cleanest way to do it. You need to have a contract with the person or entity that controls the rights to the photos before you can license/market them for her. A transfer or assignment (these words are used interchangeably) of the copyrights in the photos to the LLC would accomplish that.
Thank you Kathryn. The information is clearly stated very helpful.
Thank you for this! This was exactly what I was looking for ?
Complicated question…hope I can explain right….
There was a copyright assigned to an corporation in 2012. With a creation date of 2000. Found out the corporation was not even in business in 2000….can the copyright still be valid?
Then they filed a supplement, in 2015, to the first copyright naming a different corporation the author and the 2012 company as claimant. I don’t know if there is an agreement transfer be the company was no longer in business as of 2009…would the copyright still be valid?
Kathryn, thanks so much for this valuable information. I was hoping you would entertain a follow on question about the creative work itself. When selling the creative work (the object itself) through a single member LLC and copyright remains with the author. What actually gives the LLC the right to transact the sale?
Thanks in advance,
With a single member LLC, there’s an implied transfer of the work itself from the creator (the sole member) to the entity. The entity can then sell what it owns, the work. You are correct that the bundle of rights that makes up the copyright stays with the creator in the absence of a written transfer. From a tax perspective, there’s really no issue because of the pass through nature of the entity. Great question.
Thanks again for your timely response. One last question if I may. Would that implied ownership constitute “Personal Property” or “Inventory” to the LLC?
With great appreciation,
Are you working on your taxes? I think it’s inventory because the entity intends to sell the work. Personal property is equipment and material the entity uses to run its business . . . like computers and filing cabinets. You should double check that with an accountant.
Yes, working on Personal Property Taxes… You have been a great help! I will take your advice and confirm with an accountant and look forward to reading more of your post.
This concept of an “implied transfer” seems to run counter to what the article itself says:
“If you own a single member LLC, you are a member of the LLC, not an employee. . . . In either case, you own the copyright to any work you create and not your company.”
However, this is the second time I’ve run across this proposition. I can’t seem to find any primary sources that explicitly say this. Can you clarify what you’re basing this conclusion on?
Thanks for the info! I am wondering why you would want to first register the copyright to yourself (the individual) as the owner and author and then transfer it to your firm instead of just registering the copyright with the firm as the owner and author from the get go. Is there a difference between the two? I take it the firm owns all the rights at the end of the day either way.
The issue is less complicated if we’re talking about a single member LLC and you are the only member. In that case it’s a question of trying to maximize the duration of the copyright.
Let’s do the math. Say you’re 50 years old and publish a book today. If you live to be 85 years old, the copyright will last for a total of 105 years. Your heirs will have the benefit of revenues generated by the copyright after your death. If you apply for the copyright in the name of your LLC as the author by a work for hire agreement, that copyright will last for 95 years. There’s an extra 10 years by registering the copyright in your individual name. The numbers are even better for younger authors.
Also, the LLC only owns all the rights at the end of the day if you as the individual transfer them in writing.
My question: I assigned Authorship Of A SR Copyright to my company which is a sole proprietorship. I am the registered agent. Do I actually own the copyright.
As a sole proprietor, you own all the assets of the company. If you want to keep the record clear at the Copyright Office, you can file a transfer of copyright. (Sorry I missed your earlier question.)
Very helpful information! Thank you.
Welwyn Wilton Katz
You’re welcome, Welwyn. I’m glad you found it useful.
Thank you for this information. I will get on it a.s.a.p. I agree about how good your new website looks.
I’d be interested to hear whether you decide to transfer your copyrights to your company, Irene.
Your information is so valuable to anyone doing creative work. Great job with the new website, can’t wait to see more!
Thanks for reading, Paula. The Creative Law Center gives me the flexibility to offer a broad swath of resources to creative professionals — from copyright protection to business building to trademark and branding guidance. I’m looking forward to developing it in many directions.
Thanks so much Kathryn! This is another valuable post. This is an area that definitely needs to be considered, especially since I plan on being a full-time author and having multiple income streams. It gives me a lot to think about.
Again, thanks and I’m looking forward to your next post.
“Multiple income streams” is one of my favorite phrases. May you have great success with your plan to generate them. Upcoming posts will focus on establishing those revenue streams and protecting them.
Very informative. Thanks for posting.
Thanks for reading, Mary Ann. It’s always good to hear from you.
Perfect timing for me as I have been considering these very same concerns for a number of months. As always, Kathryn clarifies issues involved and options to consider. Excellent information from a pro. The self-publishing industry, of which I am a member, is fraught with legal exposures and opportunities in a variety of areas. Advance planning and arranging your business affairs properly will help you: (1) protect your intellectual property rights, (2) protect your personal assets (3) defend against the legal predators which see you as an opportunity, and (4) assure that your estate will survive intact and be there to provide valuable income for those you love.
Thank you, Kathryn.
You’re welcome, Thom. There are lots of pieces to building a successful career as a creative professional. Once you lay a solid foundation for your business, it’s easier to work on the fun stuff, the actual creating.
An interesting analysis of an issue I’ve never considered. Every case is different, so your mileage may vary, but it’s no less important to think about.
It’s true, Karl. Everybody’s situation is a little different. The business structures and protection mechanisms are the same. It’s how they are pieced together that requires some thought. Thanks for the comment.