The instance-and-expense test is a legal standard commonly employed by courts to determine whether a product was a work made for hire. Work done by employees within the scope of their employment will generally be deemed made for hire. However, ownership rights between c…
Understanding instance and expense test
As the Second Circuit has explained, "instance" refers to the extent to which a hiring party provided the reason for, participated in, or had the authority to supervise the creation of the work. In particular "actual creative contributions strongly suggest that the work is made at the hiring party's instance." Notably, the presence of such authority, whether or not exercised, may be sufficient to meet this prong of the test. Conversely, if a creator creates the work of his or her own initiative, it will weigh against meeting this "instance" prong.
Next, the "expense" prong refers to use of the hiring party's resources to create the work. Payment of a lump sum meets this prong of the test. Conversely, if a creator is compensated through royalties or a profit-sharing system, it will be indicative of a finding against a work made for hire.
If a hiring party is able to satisfy the instance and expense test, it will be deemed the owner of the work, which can only be overcome by evidence of an agreement to the contrary.
How instance and expense test affects you
instance and expense test appears in U.S. legal practice across multiple practice areas. Knowing what it means — and when it applies — can determine the outcome of motions, filings, and negotiations. For non-lawyers, the value of looking up a precise definition is that legal terms often carry meanings that differ from everyday usage; relying on the common meaning can lead to costly missteps.
The mechanics of instance and expense test
In practice, instance and expense test is invoked when parties, judges, or attorneys need to identify the legal status of an issue, the rights of those involved, or the procedural step required next. The definition shown above is sourced from Cornell LII Wex , which is widely cited in U.S. legal practice. Because U.S. law is jurisdictionally layered — federal, state, and sometimes local — the precise application of the term can vary by court, so check the controlling authority for your specific case.