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Work of authorship made by employees is one of the most important matters for all employers whose employees can create original works of authorship. What rights does the employer have and what are the rights of employees, who owns that work of authorship, and what is the validity of copyrights, are just some of the questions clients ask us daily. It is important for all employers and employees to have a good understanding of copyright to protect their interests on time. When it comes to the IT sector and software copyrights, particular attention should be paid to the specificities in terms of which this industry differs from others.
Given the reasons above, we wanted to explain the rules that apply in the field of copyright in general, as well as to specifically address the copyright of software developed during employment.
For a work of authorship to exist, there are two conditions that must be met:
Saying that originality does not require innovation in the sense that the work must introduce novelties in that respective area, which is, for instance, an essential feature of patents. Unlike innovation, which is measured by objective criteria, originality is primarily measured subjectively, as to what feelings it evokes in those to whom it is directed (for example, viewers, readers, etc.). Originality is required mainly to protect other authors and works of authorship so that plagiarism does not become the subject of copyright protection, and its creator is the holder of the copyright. For this reason, originality is always examined in every specific case and represents a factual question.
What is specifically implied by the criterion of “originality” is determined through the case-law of each state by applying suitable legal tests. Thus, for example, according to the originality test established by the European Court of Justice in Infopaq International A/S v Danske Dagblades Forening, a work of authorship must satisfy the criterion of being “the author intellectual creation”. The work in question can pass the originality test of one part of the authorship work, such as 11 consecutive words.
The work of authorship must be expressed in a certain form. This criterion makes a key distinction between one’s original idea (which remained only at the level of an idea and not was expressed in some way) and the work of authorship. For some sorts of works of authorship (for example, works of architecture, sculptural works, films, etc.) it is not possible to create a work without expressing it in material form. On the other hand, some musical or dramatic works can exist without being expressed in material form. For them to be protected by copyright, they must be in a form that allows expression of that work of authorship. For example, choreography is a work of authorship, and its expressive form is human movement.
Work of authorship exists regardless of its scientific, artistic, or some other value, its contents, size, purpose, and way of manifestation, as well as the permissibility of public communication of its contents.
However, the protection of copyright does not apply to general ideas, methods of operations, procedures, or mathematical concepts as such, as well as principles, concepts, and instructions included in a work of authorship.
Written works (e.g. books, articles, brochures, translations, computer programs), spoken works (speeches, lectures, orations, etc.), dramatic works, works of music, films, fine artworks, works of architecture, applied art, etc. are considered as works of authorship, provided that the above-mentioned conditions are met.
Copyright and Related Rights Act explicitly stipulates that computer software can be protected by copyright.
The latest amendments to the Copyright and Related Rights Act brought novelties concerning legal regulation of the database. Specifically, the database is defined as a collection of separate data, authorship works, and other materials governed systematically or methodically, which are available separately, electronically, or in another manner. From the database as such, it is important to distinguish the contents of such a base. Exactly because of this, the Act defines that the protection of authorship rights does not include the contents of the database, nor is the protection in any other manner of the existing rights on database content limited. The Act specifically foresees that database protection that is available electronically will not include computer programs that were used for its creation or its use. However, not every database will enjoy protection as a work of authorship, but only the one that meets the basic criterion – originality.
You can find out more regarding authorship and related rights here.
The author acquires copyrights to their work of authorship as of the moment it is created. Even unfinished works of authorship, parts of original work, as well as the title of original work, shall be deemed as original work of authorship.
Therefore, for the author to enjoy copyright, it is not necessary to fulfill any formal requirements such as the publication of a work, its registration, or public communication in any other way.
By the very creation of the work of authorship, the author enjoys all the rights that belong to them, and these are the pecuniary and moral rights of the author. Pecuniary rights last for the life of the author and 70 years after his death, while moral rights of an author last even after the expiration of pecuniary rights, more precisely, these rights cannot become obsolete.
Pecuniary rights allow the author to commercially exploit their work, which means that they can, among other things, reproduce the work, place in circulation copies of the work, rent copies of work, broadcast the work, etc.
The moral rights include the author’s right to be recognized as the author of their work, the exclusive right to disclose their work and set the way in which it is to be disclosed, and that their name, pseudonym, or mark can be put on each copy of their work or be quoted at each public communication of that work, as well as the exclusive right to protect the integrity of their work.
Both, moral and pecuniary rights could be transferred by inheritance, except for the author’s moral right to modify the work and the right to publish an undisclosed work. Namely, if the author has prohibited publication of their work. Unlike pecuniary rights, the author’s moral rights cannot be transferred by contract.
Although your work is protected by copyright from the very beginning (without any obligation to register a work of authorship), authors may record and deposit their works of authorship and subject matters of related rights before the Intellectual Property Office. Depositing is one of the proofs of authorship of some work. However, it is important to understand that the Intellectual Property Office does not examine the content of the work of authorship, nor its originality, and the deposit does not confirm that the subject matter is a work of authorship.
Bearing in mind that the work of authorship represents the author’s intellectual creativity, only a natural person can be the author of the work. Therefore, a company that hires workers can not be an author. Namely, the idea of works of authorship is that the author leaves their personal mark on the work they created.
However, the author does not have to be the holder of all copyrights on that work. Transferable copyrights may be transferred by:
If an author has created a work as an employee in the performance of his duties, some of the copyrights on that work belongs to the employer according to the law itself, unless otherwise provided by a general regulation or employment contract.
For the employer to hold the copyright on the work of authorship, such work must be created within the employment.
In the event of a dispute, when concerning whether an employee was performing their duties, the courts consider whether the work of authorship was created using the funds of the employer or the employee’s resources. The courts also analyze whether a work of authorship was created in the workplace.
However, the final answer to the question of whether a work of authorship belongs to an employee or an employer will depend on the particular situation. This can be seen from the case-law of far more progressive legal systems in the field of intellectual property, as is the case with Great Britain.
Namely, in the Software v. Magee case , before English courts, the question arose whether software that was created by an employee outside work time and on their equipment was created under employment or not. A company that sued their employee claimed that the employer was the holder of the right to software, even though the employee created the software in their spare time, bearing in mind that this software belonged to the same type of software that he was hired for during his employment relationship. The court adopted the company’s arguments and ruled that the employer is the copyright holder of the software.
If an author i.e. an employee has created a work of authorship within employment, the employer is authorized to disclose such work and to hold exclusive pecuniary rights on its exploitation within the scope of the employer’s registered business. This employer’s right is valid for five years from completion of that work unless provided otherwise by a general regulation or employment contract.
However, upon the expiration of a 5 years period or the period defined by a general regulation or employment contract, the author shall acquire the exclusive pecuniary rights on the work.
Hence, if you are an employer and want to reserve exclusive pecuniary rights to a work of authorship, you need to correctly define this in the employment agreement or general regulation.
The law provides an opportunity for the employer to enter a clause regulating employment-related relations with their employee, by which the pecuniary rights of the employee as an author of the work created in the labor relations will be regulated differently than the manner prescribed by the law. In this way, the employee can permanently transfer all the exclusive pecuniary rights to their employer. Thus, the employer removes the possibility that their employee, after five years from the commencement of the work, enjoys all copyrights instead of them and thus suffers economic losses, which could happen, if such a clause did not exist.
Furthermore, depending on the outcomes of the work’s exploitation, the employee as the author of the work is entitled to a special remuneration, which is determined by a general regulation or employment contract. However, there is a possibility that the employer prescribes that this kind of compensation will not be paid to their employee by the indicated acts (employment agreement or general regulation).
However, it is important to note that, unlike pecuniary rights, an employer cannot be the holder of moral rights, nor can these rights be transferred to the employer. In such a case, exclusively an employee as the author of the work can be the holder of moral rights.
When using a work created by an employee, the employer should quote the author’s name, pseudonym, or mark.
These rules refer to works of authorship that have been created within the scope of the employer’s registered business, while in other cases the holder of both pecuniary and moral rights is an employee. However, an employer may hire a person based on a service contract, specifically based on a copyright contract for jobs outside their registered business. By the contract of commissioning a work of authorship, as the type of copyright contract, the author undertakes to produce a work of authorship and to hand it over to the commissioning party, and the commissioning party to receive that work and pay him the agreed compensation. In this way, the employer can acquire all pecuniary rights even to a work that is not the result of his registered business.
The exception to the rule that employees acquire exclusive pecuniary rights after the expiration of a period of five years is the computer programs as well as a database created by an employee who has performed their work duties with the employer or by the person engaged by the company as an independent contractor (e.g. an entrepreneur who has created a computer program based on a contract of commissioning a work of authorship).
Namely, in this case, the employer is a permanent holder of all pecuniary rights on a computer program, and database unless provided otherwise by an employment contract.
Therefore, if an employee desires to negotiate different conditions, it is necessary to enter a clause into the employment agreement that regulates this matter differently. Otherwise, a legal provision will apply that fully benefits the employer, in contrast to other business activities.
However, it should be noted, that the exception provided for by the law applies to the scope and duration of pecuniary rights. Also, it should be taken into account that by the Act stipulates that the authors of the computer program and database have the right to a special compensation if it was foreseen by the agreement (not the employment agreement nor general regulation). Accordingly, for the IT sector too, the legal regime applies, according to which the employee as the author of the work is entitled to a special remuneration, provided that it is determined by the agreement.
For this reason, it is necessary for IT companies to define whether they will pay this compensation to their employees as the author of the work in their contract and to decide what will be the amount, if they opt for such compensation.
The law stipulates that the licensing of pecuniary rights may be either exclusive or non-exclusive.
In the case of non-exclusive licensing of pecuniary rights, the licensee shall be authorized neither to prohibit somebody else from exercising the copyright nor to license their right to somebody else. If the contract does not state whether exclusive or non-exclusive licensing is implicated, concerned licensing of pecuniary rights shall be deemed to be non-exclusive. This means that the person who acquired the pecuniary right from the author, and in this particular case, the employer from their employee, may transfer this right in its entirety to another person, i.e. economically exploit it only with the permission of the author, and in this case the employee.
In the case of exclusive licensing of pecuniary rights, only the licensee can be authorized to exploit the work of authorship in the way stipulated by the contract, as well as to license such rights to somebody else, with the author’s or their successor’s special permission. The right a licensee transfers to others is not a non-exclusive right unless otherwise is provided by the contract.
For this reason, the employer shall pay particular attention when deciding on mutual rights and obligations between them and the employee and in the employment contract necessarily enter a clause that acquires the exclusive pecuniary right on the computer program.
The person who has legitimately obtained a copy of that computer program for their own usual use, without the permission of the author and without paying the author’s fee, unless otherwise provided by the contract may copy the program permanently or temporarily when it is necessary for the use of the computer program in accordance with its purpose; eliminate errors in the program in accordance with its purpose; to load, to display, run, transfer or insert the computer program in the computer’s memory if it is necessary for the making of the computer program’s copy; also to translate, adapt, arrange and make other changes to the computer program as well as the copies made during this process. It is important to note that the law does not allow using the contract to prohibit the making of backup copies of the computer program on a lasting tangible carrier (for example, a USB) if it is necessary for the use of the computer program.