Kennedy v. Ruminski, 2014 FC 526

Key Principle:

Employers are automatically vested with copyright in any work employees produce during their employment, unless there is an agreement to the contrary. Where an employee’s prior work becomes commingled with work produced during employment, an employer can claim an interest in that prior work also. Therefore, it is very important for employees to either: (1) ensure that their personal projects do not intermingle with their employment duties; or (2) have a clear and robust written agreement in place that permits an employee to retain copyright in his or her personal projects.

Summary:

The Situation:

You are programmer that has been working on a custom data management system, “Terabytes R Us”, for quite some time. Your software is still in development, and you ultimately plan to market and sell it. You are, however, in need of a steady paycheck. You decide to seek employment, and successfully land a job with another programmer’s small development shop: “Landmine Software Solutions”. You are paid a salary, and “Terabytes R Us” becomes a key project for Landmine. In exchange for your employment, you enter into a “Memorandum of Understanding” with Landmine suggesting a split interest in “Terabytes R Us”, 80% in favour of Landmine and 20% for you.

You continue working on “Terabytes R Us” for some time, all the while collecting pay from Landmine and reporting your income as employment income when you file your taxes.

Your relationship with Landmine slowly erodes over time.

Landmine eventually asks that you load the “Terabytes R Us” software, source code, executable code and related documentation to an office computer for independent evaluation and completion. Landmine is now looking to bring this to market. You refuse. “Terabytes R Us” is your work, after all. You started working on this well before your employment with Landmine started, and you put in most of the effort in developing this software, even after you became employed with Landmine.

Landmine argues that it holds the copyright interest in “Terabytes R Us”, by virtue of its status as your employer. You vehemently disagree, and register copyright registration certificates in the code to maintain full copyright ownership rights.

The Conclusion:

Landmine’s argument is successful. It holds at least some copyright interest in “Terabytes R Us”, and it should therefore be treated as a work of joint authorship, even though you developed most of it on your own prior to being employed by Landmine. This is because all of the work you developed prior to your employment became commingled with the work you did during your employment. In other words, there is no part of “Terabytes R Us” separate and identifiable from the product as it now exists; your prior work has become part of the entire project. The Copyright Act automatically vests copyright in works created during the course of employment in the employer, unless there is an agreement to the contrary. The project was developed while you were employed. Given the “Memorandum of Understanding” you entered into, Landmine can successfully claim an 80% interest in “Terabytes R Us” (and it would have been 100% if this written agreement was not in place). Your copyright registration certificates are amended to account for the joint interest in this work.