Intellectual Property Works created in the course of
employment - a brief guide
This note summarises the current state
of the law on employees’ rights to the ownership or the financial
benefits of intellectual property they create in the course of
their employment.
Ownership
The general position is that
intellectual property rights created by employees in the course of
employment will be owned by the employer unless there is
an agreement in place to the contrary.
There are express statutory
provisions:
· Section 11 (2) of
the Copyright, Designs, and Patents Act (CDPA) 1988 and
· Section 39 of the
Patents Act 1977
dealing with ownership of employee
works. Under these provisions, employers essentially gain
ownership of intellectual property rights in respect of any works
created by an employee which he/she
· was required to
produce under the terms of their employment contract or
· could reasonably
be expected to produce under the terms of that contract.
Obviously, the wider the job description
of the individual employee, the more difficult it will be for
him/her to avoid the effects of Sections 11(2) and 39
above.
Even if the work is created by the
employee in their own time and using their own resources, the
employee will not necessarily be able to claim any rights in that
work, if the employer shows that the nature of the work created was
that which could be reasonably contemplated as part of the
employee’s duties. This is demonstrated by the case of Missing
Link Software v Magee [1989]FSR 361. There, the court
held that copyright in a software programme written by an employee
outside his work time and on his own equipment was made in the
course of employment, as it fell within the scope of the tasks that
Mr Magee was employed to carry out.
Consequently, Amicus members who wish to
retain their rights in respect of ownership of work created in
their own time should ensure that their contract of employment
expressly provides for this to happen.
Financial benefits
Where an employee creates a copyright
work in the course of their employment, they have no statutory
right to share in the financial success of their work unless they
have entered into a separate agreement with their employer to that
effect.
The position with regard to inventions
and patents is slightly different. As explained, an invention
devised by an employee in the course of employment will belong to
the employer. However, in exceptional circumstances, an
employee inventor may be entitled to receive compensation from the
employer where the invention or patent is of outstanding
benefit.
In order to pursue an application
for compensation, the following criteria must be
established under Section 40 of the Patents Act 1977 (as amended by
the Patents Act 2004):
(i) the employee has made an
invention belonging to the employer for which a patent has been
granted;
(ii) having regard to among other things
the size and nature of the employer's undertaking, the invention
or the patent for it (or the combination of both) is of
outstanding benefit to the employer; and
(iii) by reason of those facts it is
just that the employee should be awarded compensation to be paid by
the employer.
There is no definition of outstanding
benefit under the Act. However, the benefit to the employer must be
in money or money’s worth. In Memco-Med Patent [1992] RPC
403, Aldous J held that in order for the benefit to be
"outstanding", it must be something out of the ordinary when looked
at in the total context of the activities of the employer concerned
and not something that one would normally expect to arise from the
duties that the employee is paid for. It is also helpful to
consider what the employer’s position would have been had the
patent not been granted.
The burden of proving an
outstanding benefit for employees is very difficult. To date
there have been no reported successful cases. In view of
the lack of guidance from case law or statute on the meaning
of outstanding benefit, advising on the likely outcome of
litigation is currently very difficult.
Opting out
Finally, both Acts contain provision for
individual contracts of employment to opt out of their provisions
regarding ownership of IP rights and some contracts of employment
do provide that such rights vest with the employee or that the
employee will share in their financial success. For example,
some Universities have developed Intellectual Property Policies
which include revenue sharing schemes from the exploitation of IP
created by employees in the course of their employment. Such
schemes are of course a vast improvement on the statutory position,
which (as we have seen) generally does not allow for employees to
share in the financial success of the IP works they have created
and the development of such schemes in other sectors should be
actively encouraged.
April 2007
