This article was published by the French office of the firm - Jacobacci Avocats

(Court of Appeal of Paris, Pôle 5-2,  decisions of September,14, 2012, PIBD n°971 III, p.720 and march, 22, 2013, PIBD n°983, III, p.1183 and Cour de cassation, 1st civil chamber, December, 19, 2013, n° 12-26409)

French Labour Law has historically been very protective of the interests of employees owing to the employee’s supposedly weak position, resulting from the fundamental characteristic of the employment relationship: the employee’s subordination to the employer. 

The legal framework for this situation becomes even more complicated when the employee creates products protectable as works under French Law – which the employer intends to market as its own – in which case the employee becomes what is termed an Author-Employee. Here, the author’s right to protection under intellectual property law, which provides the author with economic and even moral control over any exploitation of their work, is combined with the statutory protection of the employee from supposed domination by the employer. It has been demonstrated, however, that this accumulation of protection may be not only impracticable for the employer to accommodate, but it can even rise to the level of being entirely unfair.

Recently this situation has become even more complicated following the decisions rendered in the VAN CLEEF & ARPELS and LALIQUE cases, both of which caused a sensation in France by allowing for dismissal of (former) employees’ claims against employers after qualifying the works at issue as « collective ». This categorization enabled the Court of Appeal to apply a special regime that is more favourable to the employer but, as we will see later, was perhaps applied too broadly in these cases.

A distinction in any case must be made between three types of works created by employees.

In the first category of works, referring to those created by civil servants and software works – which category is applied by courts as an exception and without any consistency whatsoever -, all of the essential rights (the patrimonial rights) relating to the work are granted directly and automatically to the employer, while the moral rights are reserved to the employee.

With regards to the second category of works, i.e., those created by journalists, as well as audio-visual and advertising works, there is a presumption of assignment of the patrimonial rights with limits that are more or less defined by unnecessarily complex and unstable special regimes.

As for the rest, defined as common law rights, the very first article of the French Intellectual Property Code (article L.111-1) holds that the employer obtains no rights while, accordingly, the employee maintains exclusive ownership of all rights deriving from the works.

Leaving aside the first two categories – since, even though the situation is usually far from simple, the employer generally establishes the strict minimum requirements for obtaining ownership of the patrimonial rights – let’s turn our focus to the last category, by far the most worrying because it is the most unpredictable and one that may pose significant challenges for an employer seeking to manage intellectual property in accordance with both the legal and business requirements.

As a broad outline, the employer can try to settle this problem in two radically different ways: the employer accepts the grant of the patrimonial rights to the sole benefit of the employee and seeks to provide for an assignment of such rights to the employer (1) or the employer seeks to challenge the employee’s ownership (2).

  1. The impracticable solution of assignment

Without entering into all the details, we will simply note that the assignment of patrimonial author rights is an extremely delicate and high-risk operation.

The formal conditions for such an assignment imposed by law can be satisfied without undue effort, however the rule set forth in article L.131-4 of the Intellectual Property Code providing that the employer pay the employee an additional sum as compensation that is proportional to the net income generated by the exploitation of the work vis-à-vis the public is much more difficult to satisfy or avoid, let alone calculate.

It must be noted that global or catch-all contract provisions that provide for the assignments of any future works created by the employee are prohibited. This prohibition forces the employer, if not to execute assignments on a case-by-case basis at the time each individual work is created, then at least to set up a confirmation mechanism for global assignments that is activated as each work is created. A recent case shows, however, that in this situation the employer frequently forgets to perform this case-by-case confirmation or, in an even more complex scenario, the employee may suddenly refuse to confirm the assignment of the work at issue (Cour d’Appel de Paris, pôle 6-6, February, 6, 2013, TG n° 11/02922 and comment of Professeur André Lucas in Propriétés Intellectuelles 2013, n°49, p. 393).

Finally, as most conflicts arise at the termination of the employment contract – when the employee has nothing to lose in terms of their salary, and everything to win in terms of author rights – it must be noted that the issue of automatic assignments becomes even more complex against the background of labour law litigation (The economic violence can invalidate the consent of the assignor, even if this economic violence cannot be presumed: cassation, 1ère ch. civile, 3/4/2002, with comments of  Professeur Christophe Caron in CCE 2002, § 80, p. 23 and Professeur Jean-Pierre Gridel in D. 2002, n°22, p.1860 et s.).

The option of challenging the employee’s ownership is no less perilous for the employer.

  1. The weakness of challenging

A very special category of collective works, the so-called « œuvres collectives », escapes the automatic granting of proprietary rights to the Author-Employee. Thus, and as an exception to the general rule, article L.113-2 of the Intellectual Property Code vests ownership of the Intellectual Property for particular collective works created by several authors in a person, or even in a corporate entity, which had initiated and managed the creation process.

Some employers have therefore succeeded in rejecting their former employees’ claims by categorizing the works at issue in litigation as “collective”, as was the case in the recent VAN CLEEF & ARPELS and LALIQUE decisions.

The legal definition for collective works is rightly qualified as «obscure et emberlificotée » (Bernard Edelman, « l’œuvre collective : une définition introuvable » in D. 1998, chronique, p.141 to 144), pursuant to article L.113-2 § 3 and according to which collective works are works in which the individual employee’s personal contributions are merged into the overall work « (…) without it being possible to attribute to each author a separate right in the work as created».

However, what renders the aforementioned case law so fragile is that it has not yet set forth the manner in which this merger functions at law to justify this qualification of employee works as a collective work, thereby producing such generous results for the employer (See in this regard the critical comment of Professeur André Lucas in Propriétés Intellectuelles n°45, p.400 and n°48, p.288).

So, what can be done?

As expected, it is not easy to move forward in such a minefield and without any tailored solutions to guide employers and employees alike in protecting works created during the course of employment.

Indeed, the employer must carefully examine each case, one by one, and even work by work, in order to make an educated decision on whether to move in the direction of either claiming collective works, or setting up a system of assignments or successive confirmations of assignments.

In any event, the employer will have to accept its burden to set up heavy and constraining internal procedures in order to adequately manage this delicate question and the employer would be well advised to putt such system in place quickly without relying on a reform of French law, which has been expected in vain for too long (despite the efforts of an ad hoc Commission created more than ten years ago and the old report entitled Gaudrat & Massé about the same question and on line at:   http://miage.univ-nantes.fr/miage/DVD-MIAGEv2/Droit_files/Rapport%20Gaudrat%20Droit%20d'auteur.pdf ).