Determining Ownership of Copyright and Software

A fundamental question that arises in many disputes is the most obvious – who owns the copyright in the software? Legal ownership and legal advice in most cases may be determined by reference to fundamental copyright principles. Determining the first owner of copyright is one of the key steps in determining whether a particular form of work under the Act is qualifies for protection in the United Kingdom. The rationale set out below applies equally to photographs, imagery, multimedia works, graphic designs, authored material, and artistic works. Copyright Legislation

The Copyright, Designs and Patents Act UK, clearly states that the first owner of copyright in a work is the author of the work. Due to the structure of the law, the author of a work is not necessarily the first owner of copyright. The author is the person who created the original protectable elements of the work, or played a non-trivial role in creating the work. Usually this is the person who reduces the idea to a material form, but is not necessarily the case, for instance where a person dictates a letter or other material, which is reduced to writing by a stenographer. Copyright is owned by the person dictating the material.

Ownership is qualified by the factual circumstances in which the work was authored. Where the copyright work is a literary, dramatic, musical, artistic work, or a film, and an employee authored the work in the course of their employment, the employer is the first owner of any copyright in the work subject to a written agreement to the contrary.

So, if the person made the copyright work in the course of their employment, their employer is the first owner of copyright. The next step to determining ownership is whether copyright has been assigned by the first owner to another legal entity. The generally accepted meaning of employment is a relationship where the employee has agreed that in return for some form of payment, they will provide their own work and skill in the performance of their services; they will be subject to another’s control of a sufficient degree to constitute an employer; and the other terms of contract are not inconsistent with the type of provisions found in employment contracts. If the contract falls within this description, the work must still have been created in the course of the employment under that contract.

Software Licenses and Assignment of Copyright

The Copyright, Designs and Patents Act states that copyright is personal property and is transmissible by assignment, testamentary disposition or operation of law. The law is brutally clear in relation to assignments of copyright: “An assignment of copyright is not effective unless it is in writing signed by or on behalf of the assignor.”

So, if there is no document assigning the copyright, there is no assignment of the copyright in the vesting work, unless it has been transferred by a testamentary disposition (the first owner of copyright died), or some other circumstance caused the ownership in the software to change – for instance the owner was a company and that company entered liquidation or administrative receivership.

Consequences of Copyright Ownership

Most commercial software is authored by persons working for a software house that has identified a need in the market, and software is written (i.e. authored) to penetrate that market segment. The software house would be the first owner of copyright.

To bring home the significance of this, the corollary from this rationale drawn from the law set out in the Copyright, Designs and Patents Act is this: if an independent contractor has been engaged to write and supply software for a customer (or any other work protected by copyright), unless the contract is in writing (or there is some other document dealing with copyright), copyright cannot be assigned, and the independent consultant maintains copyright ownership. Any money paid for the software will probably be considered a license fee to use the software, in the same way as when one purchases a book. When one purchases a copy of a book, one purchases the physical copy of the book and not the copyright vesting in it, which would otherwise entitle the purchaser to print the book commercially.

Exclusive Rights of Copyright Ownership

Copyright ownership brings along with it all the benefits of ownership of copyright – the power to prevent others from reproducing the work without the licence of the owner of the copyright.

Legal Advice – Complications and Complexity

Legal advice, legal issues and disputes though are rarely determined on such a simplistic application of the law. Legal advice is complicated by the possibility of joint ownership in copyright works, which is assumed for films under the Copyright, Designs and Patents Act. Indeed beneficial rights may have accrued in equity, such that the person who engaged the software house to write the software may have superior rights. One of the indicia that may displace the first owner of copyright in equity is whether the consultant could reasonably have been expected to exploit the work in their own right. In high value software developments, this is rarely going to be the case. This is but one factor that may be taken into consideration in the assessment of first ownership of copyright. The answer relies on the factual matrix of development project.

Again, other forms of copyright works, namely cable programmes, broadcasts and published editions are treated differently. The sensible advice is to speak to your legal advisor before taking legal action or making wild unsupportable statement as to ownership, as every set of facts is different. Ensure that the surrounding circumstances do not give rise to an equitable right in the software or other copyright work.

Managing Risk in Intellectual Property Transactions

Risk in transfers of intellectual property is by and large managed by contract. Rather than granting what is known as a mere license – which is in effect a licence revocable at will – properly managed transactions with dealings in intellectual property should involve granting a contractual licence, in writing. One of the main purposes of these contractual licenses to avoid the risk of a mere licence being implied – where the licensor may terminate the license at will. Managing legal risk and obtaining legal advice is about minimising risk and maximising legal certainty. Contractual licenses involve entering into a formal, legally binding agreement that satisfies the rudimentary requirements of contract law. Namely, that a reasonably certain offer has been made by one party and accepted by the other; the parties intend to be bound by the contract; consideration (i.e. a promise that has value) moves from both parties. This last requirement in the context of software licenses is usually characterised by the grant of the license by the licensor and the payment of money by the licensee. Such an approach is geared to avoid or narrow the possibility of disputes by the fact that the deal has been enshrined in permanent form and on specific terms. On a final note, the duration of copyright protection is calculated by reference to the author of the copyright work, rather than the first owner.

For more information and obtaining legal advice on technology contracts, contact Leigh Ellis at GIllhams Solicitors. Leigh is specialist information technology and intellectual property lawyer in London.

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