Any update on your final agreement?
I did contact the UK Film Council who awarded the development grant to the film project I was working with. They confirmed that while they require "all rights" to be acquired for film property, the details of how those rights are acquired are not a concern. My giving the company a perpetual use license royalty free is sufficient for what they actually need, and it has nothing to do with "ownership" or "work for hire". I don't think the filmmakers were actually lying to me about this, but they weren't telling the truth.
So what I will propose to the filmmakers is that (i) I won't sign a post-facto work for hire, which is of questionable legality at best, but (ii) I will give a perpetual use license royalty free for the initial images, and (iii) agree to finish their project on a WFH basis, so long as the terms are established before work is begun, and where certain rights are granted back to me in the process. There was never a problem with them granting back certain rights to me.
I think this is fair...morally, and legally. We'll see if this works, and I'll update after the matter gets settled.
