JustMed v. Byce, a decision by the 9th Circuit Court of Appeals, involved whether Byce, a programmer, owned the source code of devices owned by JustMed
The court ruled that, given the facts of the case, Byce was an employee rather than an independent contractor. If the court had decided that Byce were an independent contractor, he would own the rights to the source code because it was not contracted to be a work for hire. This is one of the risks of using the independent contractor label – something many early-growth employers do to avoid the burden of managing payroll and other functions.
Lesson: If you’re going to hire an independent contractor to work on a project that you want to own, make sure that the independent contractor agreement contains “work for hire” language in it. Otherwise, it’s safer to treat this person as an employee for payroll and other purposes, so that their employment status would make their contribution become a work for hire.