The Federal Court has clarified the circumstances in which employers may claim ownership of copyright works created by their employees, and in particular how Courts will determine whether works are made in pursuance of an employment contract.

Background

From 2001 to 2002, EdSonic Pty Ltd and its director, Mr Robin Lick, worked with Ms Barbara Cassidy to adapt teaching materials she had previously developed into a format that could be delivered online (‘the online materials’) and subsequently commercialised. Ms Cassidy was to be compensated for her work with shares in EdSonic and royalties from any sale of the online materials.

During this same period, Ms Cassidy was separately offered a contract with the Property Council of Australia to write materials for its own courses (‘the PCA materials’). Wishing to avoid the paperwork required of independent contractors, Ms Cassidy asked EdSonic to enter the contract on her behalf. EdSonic agreed, and in turn employed Ms Cassidy to develop the PCA materials.

The professional relationship between Mr Lick and Ms Cassidy broke down in 2002, and in a subsequent action EdSonic claimed ownership of the online materials Ms Cassidy had developed for it.

Employment assignment under the Copyright Act 1968 (Cth)

EdSonic claimed that Ms Cassidy was an employee of the company when she developed the online materials, and was therefore entitled to claim ownership of them. EdSonic relied on section 35(6) of the Copyright Act, which provides:

Where a literary, dramatic or artistic work … is made by the author in pursuance of the terms of his or her employment by another person under a contract of service or apprenticeship, that other person is the owner of any copyright subsisting in the work …

The issues

The central issue in this case was the interpretation and application of section 35(6). In particular:

  • was Ms Cassidy an employee of EdSonic?
  • were the online materials produced in ‘pursuance of the terms’ of her employment?

Findings

Justice Moore noted the difficulties in precisely defining the relationship between Ms Cassidy and EdSonic: “some evidence points to [Ms Cassidy] having been an employee but other evidence points in the opposite direction”. However His Honour ultimately identified two distinct agreements between EdSonic and Ms Cassidy:

1. an agreement, compensated with shares and royalties, for the development of the online materials; and

2. an employment contract, remunerated by salary, for the purposes of developing the PCA materials and performing other work for the Property Council of Australia.

His Honour further held that:

  • in the absence of any direct authorities on section 35(6), the central question was not whether the author of a work was employed by the party claiming copyright at the time of creation, but instead whether the author made the work “because the contract of employment expressly, or impliedly required or at least authorised the work to be made.”
  • Ms Cassidy’s employment contract with EdSonic was limited to the development of the PCA materials, and did not include the online materials. Ownership of copyright in the online materials was governed by the separate agreement between the parties, and copyright ultimately lay with Ms Cassidy.

Lessons

This case serves as a timely reminder that:

  • Courts will only assign copyright to employers where works are created in direct furtherance of employment;
  • employers should ensure that employment contracts clarify the exact nature of their relationship with employees, and the precise scope and subject matter of employee duties; and
  • employers should understand the effect that parallel agreements with employees, such as license agreements or joint ventures, may have on their entitlement to claim ownership of resulting intellectual property.