Employer v. Employee
Ownership of Intellectual Property
copyright 1997 Donald M. Cameron , Aird & Berlis
Contents
What's the Contract?
An Employment Contract will usually specify who owns the employee's work product (It's usually the Employer).
The "default rule" for ownership of intellectual property is that the person or persons who created the intellectual property is usually the first owner of it.
The
Inventions
The general principle of employee's ownership was established in the 1800's in Bloxam v. Elsee(1):
"...If a servant, while in the employ of his master, makes an invention, that invention belongs to the servant, not to the master; though if the master employs a skilful person for the express purpose of inventing, the inventions made by him will belong to the master so as to enable him to obtain the patent for them."
Many factors can be examined to determine whether the invention belongs to the Employer or to the Employee but the question always returns to one:
What was the scope of the Employee's job?
The easiest way to answer that question is to look to the employment contract, if one exists. Hopefully, the employment contract will be in writing and not merely be an oral agreement which is difficult to prove in court. If nothing exists on paper, then the court must, from the circumstances surrounding the employment, determine the express or implied terms of the contract of employment. Understandably, where nothing is in writing, there will be a great deal of uncertainty as to what are the terms of the contract.
Factors which assist the Employer in asserting that the invention belongs to it include:
- Was the Employee hired for the express purpose of inventing?(2)
- Was the invention created as a result of the Employee solving a problem he or she was instructed to solve?
- Was the Employee dealing with highly confidential information or confidential work?
- Did the Employee's invention arise following his consultation through normal company channels: that is, was help sought?
- Did the Employer have an incentive plan encouraging product development?(3)
- Once the invention had been created, did the conduct of the Employee suggest that ownership was held by the Employer?
- Was it a term of the Employee's employment that he could not use the ideas which he developed to his or her own advantage?(4)
Even if the Employee used his Employer's time and Co-Employee's material to bring his invention to completion and may have allowed the Employer to use the invention while in its employment, the invention does not necessarily belong to the Employer.(5) The mere fact that an inventor held a senior position in a company at the time he invented does not deprive the inventor of his rights to the invention if that is not what he was hired to do.(6)
The law in Canada was well (and dramatically) summarized by Mr. Justice Muldoon in the Comstock Canada case:
"Comstock submits that it is an implied term in a contract of employment that any Employee is a trustee for his Employer of any invention made in the course of his duty as an Employee, unless such an implied term is displaced by contrary agreement having legal effect. The meaning of implied term in this context is a term which is inherent in the nature of the contract which the law will imply unless the parties agree otherwise. Not so in Canada. The Spiroll case states the law. There is no such presumption permitting an Employer to claw out of an Employee's hand, without compensation, the fruits of his labour just by virtue of his employment. If the U.S. and English jurisprudence show such tendency, so be it. In Canada, the law first looks, of course, to discover if the parties have concluded an objectively provable or reasonably inferred agreement about inventions. If there be no objectively proved agreement, as here, then the circumstances of the employment could indicate the correct result, by inference. ... In the absence of reliable indicia, the inventor keeps the benefit of the invention."(7)
Copyright
The Canadian Copyright Act has codified ownership rights for copyrighted works. Generally speaking, the author of the work is the first owner of copyright in it.(8) If the author is employed for the purpose of creating the work, then the Employer is the first owner of copyright in it.(9) There are three conditions for the ownership to vest in the Employer:
1. The author must be "in the employment" of the Employer;
2. "Under a contract of service"; and
3. The work must have been made in the course of the employment.(10)
If the Employer does not own the copyright in the work and wants to obtain ownership of the copyright, it must have an assignment in writing from the owner of the copyright - otherwise, no effective assignment has been made.(11)
Endnotes
1. (1825), 1 C.&P. 558 at p.564, 171 E.R. 1316 and (1827), 6 B.&C. 169, 108 E.R. 415 (per Lord Tenterdon) as cited in Comstock Canada v. Electec Ltd. (1991), 38 C.P.R. (3d) p.29 (F.C.T.D. per Muldoon J.) at p.51.
2. Re: Equator MFG Co., exp. Pendelbury (1926), 1 D.L.R. 1101 at p.1105; Devoe-Holbein Inc. v. Yam (1984), 3 C.P.R. (3d) 52 at p.67; Scapa Dryers (Canada) Ltd. v. Fardeau (1971), 1 C.P.R. (2d) 199 (Que.S.C.) at p.204; W.J. Gage Ltd. v. Sugden (1967), 51 C.P.R. 259; Spiroll Corp. v. Putti (1975), 22 C.P.R. (2d) 261; and Comstock Canada v. Electec Ltd. (1991), 38 C.P.R. (3d) p.29 (F.C.T.D. per Muldoon J.) at p.51.
3. Worthington Pumping Engine Co. v. Moore (1903), 20 R.P.C. 41 (Ch.D.); Edisonia Ltd. v. Forse (1908), 25 R.P.C. 546 (Ch.D.); Mellor v. William Beardmore & Co. (1927), 44 R.P.C. 175 (Scotland C.A.); Adamson v. Kenworthy (1931), 49 R.P.C. 57 (Ch.D); Vookes Ltd. v. Heather (1945), 62 R.P.C. 135 (C.A.); Re: Selz Ltd.'s Application (1953), 71 R.P.C. 158; Patchett v. Sterling Engineering Co. (1955), 72 R.P.C. 50.
4. Comstock Canada v. Electec Ltd. (1991), 38 C.P.R. (3d) p.29 (F.C.T.D. per Muldoon J.) at p.53-54.
5. Piper v. Piper (1904), 3 O.W.R. 451 at p.455 (C.A.); Willard's Chocolates Ltd. v. Bardsley (1928), 35 O.W.N. 92 at p.93 (H.C.J.); Spiroll Corp. v. Putti (1975), 22 C.P.R. (2d) 261, affirmed 29 C.P.R. (2d) 260 and Comstock Canada v. Electec Ltd. (1991), 38 C.P.R. (3d) p.29 (F.C.T.D. per Muldoon J.) at p.51.
6. Anemostat (Scotland) Ltd. v. Michaelis, [1957] R.P.C. 167; Comstock Canada v. Electec Ltd. (1991), 38 C.P.R. (3d) p.29 (F.C.T.D. per Muldoon J.) at p.55.
7. Comstock Canada v. Electec Ltd. (1991), 38 C.P.R. (3d) p.29 (F.C.T.D. per Muldoon J.) at p.55-56.
8. Copyright Act s.13(1).
9. s. 13(3).
10. s. 13(3). Tele-Direct Publications Inc. v. Southam Inc., Federal Court of Canada Action No. T-1021-93, June 28, 1995 order of Pinard J.
11. Copyright Act s.13(4).
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