Section 201(b) of the Copyright Act provides that in the case of a work made for hire, the employer or commissioning party is the author; not just the owner of all rights, but the author. There are two important consequences that flow from this distinction: term of protection, and termination of transfer rights, found in Sections 203 and 304. (Lack of moral rights under Section 106A is another but that right is very limited).
The term of protection for a work made for hire is not measured by the life of the author, but from the date of first publication or creation (whichever is shorter), and there is no termination right.
In its expansive treatment of work for hire (all works of all employees created in the scope of their employment, and nine enumerated categories of specially ordered or commissioned works), U.S. copyright law is quite exceptional: most countries for most works follow a natural law tradition, pursuant to which only living, breathing individuals can be authors. This is not to say other countries don't recognize the economic realities of the employment relationship. They do, by vesting most rights in the employer, but the employer is not the author. This distinction between authorship and ownership in the employment field emanates from a natural rights conception of authorship. That conception posits a strong bond between the individual and his or her work, hence the strong continental droit moral tradition.
The U.S. Supreme Court has variously described the rationale for our copyright law. Sometimes the Court emphasizes a utilitarian purpose (bringing works to the market). At other times, the
Court emphasizes the need to protect the fruits of authors' mental and creative labors. These two rationales need not be in conflict, and indeed James Madison believed them to be harmonious. But no one seriously believes that U.S. copyright law has a natural rights foundation. The Supreme Court's 1834 Wheaton v. Peters opinion, finding there is no federal common law of copyright and only statutory rights, eliminated that possibility.
The exclusively statutory basis for copyright has not eliminated all doubts, though, about Congress's power to sweep into work for hire any old arrangement. One basis for doubt is the Constitution, Article I, section 8, clause 8 of which limits Congress's power to grant exclusive rights to "authors."
But who are "authors?" The Constitution doesn't say. Should we take an originalist approach and say authors are those whom the Founding Fathers would have regarded as authors (assuming we could figure that out)? Do we take the Learned Hand "living Constitution" approach and say authors are those who would be regarded as authors under today's standards (assuming again we could figure that out)? Is there any difference between 1790 and 2005 on that score? Or, might we take some other approach, perhaps a law and economics approach (an author is the entity that can most efficiently exploit the work), a contract approach (an author is whomever the parties decide the author is), or should we defer entirely to Congress under the very generous Eldred standard of review?
One view that Congress can't do what it wants came from an unexpected source, an opinion by the legendary Second Circuit Judge Henry Friendly in Scherr v. Universal Match Co., 417 F.2d 497, 502 (2d Cir. 1969). Judge Friendly wrote that "the course of decision has gone past the point of argument" that employers cannot be authors, but he added that it would be "quite doubtful that Congress could grant employers the exclusive right to writings of employees regardless of circumstances." (He did not go further into what those other circumstances might be).
Twenty two years later, another legendary Second Circuit Judge, Jon O. Newman, citing Scherr, stated in dictum that the work for hire doctrine "is not constitutionally suspect." Childress v. Taylor, 945 F.2d 500, 506-507 n.5 (2d Cir. 1991), and presumably he meant under all circumstances. Are we to assume then that authorship is merely a social construct that Congress is free to adapt as it deems the circumstances require? Judge Posner, citing Michael Foucault ("What is an Author?") appears to adopt this view. See Law, Pragmatism, and Democracy 607 (2003); Law & Literature 381 (Rev. ed. 1998). It is a view that might also mesh with Eldred's standard of review.
But it may not appeal to originalists, and to others, Judge Friendly being one example. The enormous economic consequences of termination of transfer rights, particularly those for legacy sound recordings in the 1972-1977 period of Section 304 terminations, for which the more liberal work for hire approach of the 1909 Act governs, as well as for 1978 and beyond works, for which Section 203 governs (actually, an author can have both a Section 203 and 304 termination right if rights in a 1909 Act work were conveyed on or after January 1, 1978) may be sufficient to see a resurgence of interest in the constitutional meaning of "author."