Canadian HR Reporter

CANADIAN HR REPORTER October 2, 2017 12 FEATURES/NEWS EMPLOYMENT LAW Who exactly is the owner of an employer's intellectual property? Assumptions can be dangerous when it comes to patents and copyrights By Donya Vahidi M any employers assume they own the intellec- tual property created by employees related to their business. is is a dangerous as- sumption — to retain ownership, employers must be familiar with the laws related to ownership and explicitly indicate in the employ- ment contract that any intellec- tual property developed by the employee under the contract is solely owned by the employer. Patents and copyrights are the most common areas of intellec- tual property that are often seen in employer-employee disputes. What's noteworthy is the laws that govern ownership vary when it comes to patents and copyright. Also, the rules are applied dif- ferently when it comes to employ- ees versus independent contrac- tors. As such, it is imperative that employers educate themselves on the distinction before beginning an employment agreement with a potential employee, to avoid own- ership disputes down the road. Copyright is the exclusive legal right to produce, reproduce, pub- lish or perform an original "work." e term "work" includes an ar- tistic, musical or dramatic work, and source codes in relation to technology, website content, user interfaces and logos. Given the broad spectrum, copyright own- ership disputes are inevitable in employer-employee relationships. e Copyright Act The Copyright Act specifically addresses ownership rules in the employer-employee context. Section 13(1) states the author of a work is the first owner of copy- right in the work. Despite this general rule, section 13(3) pro- vides that where a work is created in the course of employment, the employer becomes the owner of the copyright. For the employer to own the copyright of the work created by employees, the following three criteria must be met: • e work must be created under a "contract of services." • e work must be created by an employee, rather than an inde- pendent contractor. • e work must be created in the course of the worker's employ- ment, as part of his duties under the contract of services. The first two requirements speak to whether or not the work- er is an employee or an indepen- dent contractor. is should be on every employer's radar as contrac- tors typically own their intellectu- al property, even if such intellec- tual property is created within the scope of their engagement. Employers can solve this by clearly defining relationships in employment agreements. Courts often look deeper to determine what kind of relationship was formed. Courts will look at several factors, including but not limited to control by the employer, own- ership of tools, resources or mate- rials used in the scope of the work, compensation and risk of loss to the parties. As for the third requirement, it is not entirely clear what "in the course of employment" means. Often, this term is interpreted by determining whether the em- ployee is performing duties or tasks assigned to him by the em- ployer, while using the employer's resources and equipment, and during his employment hours. However, with more people working from home, it has be- come more difficult to determine what is created in the course of employment, and what is created with the employee's own resourc- es or during his own time. It should be noted that even if the above three criteria are met, employers are not automatically deemed owners of copyright if there is an agreement in place that indicates the employee retains ownership. e Patent Act e Patent Act is not as accom- modating as the Copyright Act in that it does not offer any guidance on the ownership of patent rights in an employer-employee context. As such, employers should be aware of how courts have treated this concept and the general com- mon law rules. A patent is an exclusive right granted for an invention. As many inventions are created by em- ployees under the course of their employment, disputes around the ownership of patents are also very common in the employer- employee context. Generally, the rule of thumb concerning patents is an employee owns her invention unless there is a written agreement in place that assigns or transfers the ownership of the invention to the employer. Where there is no provision that provides for the transfer of ownership, courts will look at the employee's duties under the contract, and if there is a duty to create that specific invention, the employer is deemed to own that invention. is is often referred to as the "hired to invent" rule. When determining whether an employee was "hired to invent," the courts will look at several factors, such as whether the em- ployee was hired to invent that specific invention, whether the employer was dealing with the employer's confidential informa- tion, or whether it was a term of the employment agreement that the employer could not benefit from the invention. It is important to note this is a grey area that is mainly fact-driv- en. e conduct of the employers and employees is often taken into account, along with language in the employment agreement. Employers should not assume all intellectual property created by employees will automatically be owned by the employer. Given the importance and val- ue of intellectual property, em- ployers must be familiar with the laws that govern ownership. At the very least, employers should have all employment agreements carefully drafted with such own- ership rules front of mind. ese agreements should iden- tify the intellectual property as specifically as possible, examine past and future intellectual prop- erty, and clearly explain which party retains ownership of such intellectual property. It is strongly recommended that employers have employment agreements drafted by experi- enced intellectual property law- yers who are familiar with these rules to avoid disputes over own- ership in the future. Donya Vahidi practises corporate com- mercial, intellectual property, technol- ogy and entertainment law at Bough- ton Law in Vancouver. For more infor- mation, visit www.boughtonlaw.com. Credit: Omelchenko (Shutterstock) Smith arranged to retrieve his personal items and left the facil- ity, leaving the impression he was happy with the resolution. e assistant manager inter- viewed Smith's new team leader and determined he had sworn at Smith over the paperwork, but Smith did so as well. e man- ager found this didn't constitute harassment, though he coun- selled the team leader not to swear around employees. Smith filed a complaint with the board, alleging his dismissal was a reprisal for raising complaints of workplace harassment. Board dismisses complaint e board found that the only person at FIO who decided the employment relationship was no longer viable was the HR repre- sentative — the two team leaders who Smith accused of harassment played no role in the decision. In addition, the HR representative took action to work out a reso- lution — she met with him mul- tiple times and, with the assistant manager, tried to work out a solu- tion where Smith could continue working at FIO, either under a third team leader or his current one — despite the fact Smith had shown a penchant for being late and had a poor rate of production. Regardless, Smith rejected the options he was given, said the board. e board determined Smith wasn't dismissed and he was simply offered a week's pay, which Smith accepted without coercion or com- pulsion. Since Smith had less than three months' service, he wasn't entitled to notice of termination under the Employment Standards Act anyway. It was a mutual deci- sion to end the employment rela- tionship, said the board. "ere is nothing in the evi- dence to suggest that (the HR rep- resentative) made her offer to Mr. Smith for any reason apart from the fact that there did not appear to be any other mutually satisfac- tory solution," said the board in dismissing Smith's complaint. "In such circumstances, I can- not find that the company com- mitted a reprisal for Mr. Smith having sought the enforcement of, or having exercised a right under, the act." For more information see: • Smith v. FIO Automotive, 2017 CarswellOnt 13278 (Ont. Lab. Rel. Bd.). Jeffrey Smith is the editor of Canadian Employment Law Today. For more information, visit www.employment lawtoday.com. No coercion, compulsion TERMINATION < pg. 5

• Cover