Copyright in Software Created by an Employee

The author of a work is the natural person who created it. Copyright arises the moment the work is expressed in any objectively perceptible form and comprises exclusive moral rights and exclusive economic rights. For both categories the Copyright Act provides that the author may not waive them and that they are non-transferable.

Moral rights include, for example, the right to claim authorship, the right to decide whether the work is to be made public and the right to decide how the author is to be identified.

Economic rights are rights of economic significance. The most important of them is the right to use the work, which covers in particular:

a) the right to reproduce the work

b) the right to distribute the original or a copy of the work

c) the right to rent out the original or a copy of the work

d) the right to lend the original or a copy of the work

e) the right to exhibit the original or a copy of the work

f) the right to communicate the work to the public

The author may also grant another person, by contract, authorisation to exercise the right to use the work. Without such authorisation, another person may use the work only in the limited range of statutory cases known as statutory licences. Granting the authorisation does not extinguish the author's right to use the work; the author merely becomes obliged to tolerate interference with that right by another person to the extent following from the contract. A contract by which the author grants the acquirer authorisation to exercise the right to use the work, for individual methods of use or for all of them, to a limited or an unlimited extent, is a licence agreement within the meaning of Section 46 of the Act.

The Copyright Act contains special rules on the exercise of economic rights where the author created the work in performance of duties arising from an employment or service relationship with the employer. These are known as employee works and the Act governs them in Section 58.

Unless agreed otherwise, the employer exercises the author's economic rights in such a work in its own name and on its own account. In the case of computer programs, the same regime also applies to works created to order, for instance under a contract for work.

The Act thus reflects the fact that the author's personal contribution to the creation of a computer program forms only part of the overall cost of creating the work. Parties who cannot be regarded as authors contribute substantially to the development of computer programs in financial, personnel, organisational and technical terms, yet without their input the work would probably never come into existence.

The exercise of exclusive economic rights means the entitlement to hold the rights and obligations arising from the commercial exploitation of the work, that is, in particular, the entitlement to use the work, to grant third parties a licence to use it, including the right to sub-license and to assign the licence, and to collect the proceeds of that exploitation. The employer also has standing in its own right to protect the copyright in an employee work to the extent laid down by the Copyright Act, in particular to seek a prohibition of unauthorised manufacture, unauthorised commercial distribution, unauthorised import or export of the original, a copy or an imitation of the work, unauthorised communication of the work to the public, and unauthorised promotion, including advertising.

The employee remains the author of the work and their moral rights remain unaffected, save for the statutory presumption that the author has consented to the work being made public, altered and adapted, including translation, combined with another work and incorporated into a collective work, and to the employer presenting the employee work to the public under the employer's own name.

The employer's entitlement to exercise the economic rights is not affected by the termination of the employment relationship. The employer may, however, transfer that entitlement to a third party only with the author's consent. The exercise of those rights passes to the employee as author only where the employer dies or ceases to exist without a legal successor. Should the employer fail to exercise the economic rights at all, or exercise them inadequately, the author may require the employer to grant them a licence.

A special rule governs the employee's remuneration for creating an employee work. Unless agreed otherwise, the author of an employee work is entitled to adequate additional remuneration from the employer where the wage or other remuneration paid to the author becomes manifestly disproportionate to the profit from the exploitation of the rights in the employee work and to the significance of that work. Under the express wording of the Copyright Act, however, this provision does not apply to computer programs.

The rules on employee works are throughout of a non-mandatory nature, and the parties may therefore regulate their mutual rights and obligations by contract in a different manner.