When a member of staff writes a report, designs a logo, builds a software application, or produces any other creative work as part of their job, a question arises: who actually owns the copyright? The answer can have significant commercial consequences, and it is not always as straightforward as people assume.
This article sets out the legal position under English law, explaining the key rules, the grey areas, and what both employers and employees should do to protect their interests.
The Starting Point: Copyright Belongs to the Author
Under the Copyright, Designs and Patents Act 1988 (CDPA 1988), the "author" of a work is the person who creates it. The author is the first owner of any copyright in that work. So, as a general rule, the person who creates a work owns the copyright in it.
However, this general rule is immediately qualified by an important exception specifically designed for the employment context.
The Employee Exception
As a general principle of UK copyright law, copyright in works created by employees during the course of their employment is usually owned by the employer rather than the employee, unless there is an agreement providing otherwise.
This is the central rule governing employee-created copyright in the United Kingdom. It means that where the relevant conditions are met, copyright vests automatically in the employer from the moment the work is created, and no assignment or further paperwork is required.
Three conditions must be satisfied for this rule to apply:
- The creator must be an employee;
- The work must have been made in the course of that employment; and
- There must be no agreement to the contrary.
Each of these conditions requires careful consideration.
Condition 1: Employee or Independent Contractor?
The first question is whether the person who created the work was an employee or an independent contractor (such as a freelancer or consultant). This distinction is critical, because the rule only applies to employees. It does not apply to self-employed individuals engaged under a contract for services.
Where a business commissions a freelancer to create a work like a website, a set of illustrations, or a marketing campaign, the freelancer retains the copyright by default, even if they were paid a substantial fee for the work. The business will often have an implied licence to use the work for the purpose for which it was commissioned, but the scope of any implied licence will depend on the circumstances.
If a business engages contractors or freelancers to create anything that may be commercially valuable like software, branding materials, marketing content, product designs, they do not own the copyright simply because they paid for the work. A written copyright assignment is essential.
Whether a person is an employee is determined by the ordinary principles of employment law, including factors such as: the degree of control exercised over how the work is done; whether the individual is integrated into the organisation; the mutuality of obligation between the parties; how the arrangement is described; and how tax and national insurance contributions are treated. The label given to the relationship is not conclusive as courts look at the substance of the arrangement.
Condition 2: In the Course of Employment
Even where the creator is clearly an employee, the employer's copyright only arises in respect of works made in the course of that employment.
The CDPA 1988 does not define what "in the course of employment" means. Courts have therefore developed guidance through case law.
The guidance includes a non-exhaustive list of factors relevant to the assessment, like the terms of the contract of employment, where and when the work was physically created, using whose materials and equipment, the degree of direction or instruction given to the employee, whether the employee could refuse to create the work or if work was integral to the employer's business. No single factor is determinative. Courts undertake an overall assessment of all the circumstances.
Working at Home Does Not Mean the Employer Loses Ownership
A common misconception is that if an employee works on something at home, in their own time, using their own computer, the copyright must be theirs. This is not correct.
As confirmed by the Court of Appeal, what matters is not where or when the work was produced, but whether the work fell within the scope of the employee's duties. In other words, whether it was what the employer was paying the employee to do.
Works Created Outside the Scope of Employment
Conversely, an employee who creates something entirely outside their job description, on their own initiative and without any connection to their employer's business, may well own the copyright personally.
The boundary is not always easy to draw. An employee who is a software developer might write a mobile application in their spare time that has nothing to do with their employer's products. Whether that application was created "in the course of employment" will depend on an analysis of what the employee was actually engaged to do, and how close a connection exists between the app and the employer's business.
Condition 3: Agreement to the Contrary
The employer's default ownership of works created in the course of employment can be modified in either direction, by express contractual agreement.
An employer could, for instance, agree in the employment contract that certain categories of work created by the employee will remain the employee's property, even if created during working hours. Conversely, an employer might include contractual provisions requiring the assignment of certain categories of work that might otherwise fall outside the default employment ownership rules.
It is therefore essential for both employers and employees to review the intellectual property provisions in their employment contracts carefully. Vague or broadly worded clauses can have unintended consequences for both parties. A well-drafted IP clause will clearly define which works vest in the employer and which, if any, the employee may retain.
What Types of Works Are Covered?
The default employer ownership rule applies to literary, dramatic, musical and artistic works, and to films created by employees in the course of their employment. Software (including preparatory design materials for software) is treated as a literary work and is therefore also covered by this rule.
Sound recordings and broadcasts are subject to separate ownership provisions under the CDPA 1988. Accordingly, first ownership of copyright in those works is determined by the specific statutory rules applicable to those categories of work.
How Long Does Employer-Owned Copyright Last?
For most employee-created literary, dramatic, musical and artistic works, duration is calculated by reference to the life of the author, which is, the life of the employee who created the work, not the life of the employer company.
Although ownership may pass through sale, merger, insolvency proceedings or other transfers, copyright in employee-created works will generally continue to subsist until 70 years after the end of the calendar year in which the employee-author dies.
This has a practical consequence for businesses: the copyright in employee-created works may outlast the company itself, and the duration of protection will depend on the longevity of employees who may have left the business many years previously.
Moral Rights: A Separate Consideration
Separate from copyright ownership, employees who create works may retain certain "moral rights", which are personal to the creator and cannot be assigned or transferred, but they can be waived.
The principal rights commonly grouped under the heading of moral rights include the right to be identified as the author, the right to object to derogatory treatment of a work, the right not to have a work falsely attributed, and privacy rights in relation to certain commissioned photographs and films.
Some of these rights do not apply to computer programs, so their practical relevance would be limited in the context of employee software development.
Moral rights can be waived in writing, and many employment contracts and IP agreements include a waiver of moral rights for this reason.
Assigning and Transferring Copyright
Copyright is a form of personal property, which is transmissible by assignment, by testamentary disposition, or by operation of law.
Where a business wishes to ensure that copyright in works created by contractors, freelancers, or in other circumstances not covered by CDPA 1988, is transferred to the business, a formal assignment will be required. An assignment of copyright is not effective unless it is in writing and signed by or on behalf of the assignor. An oral agreement, however, clearly understood by both parties, will not transfer legal title to copyright.
Where copyright in future works needs to be captured, for example, in relation to works an employee or contractor will create over the course of a continuing relationship, future copyright may be assigned in advance by a written agreement signed by or on behalf of the assignor. Such an agreement will operate to vest the copyright in the assignee automatically once the work comes into existence.
Special Position: Crown Copyright
Crown copyright is a separate statutory regime under which copyright in works made by officers or servants of the Crown, or under the direction or control of the Crown, vests in the Crown rather than applying the ordinary employee authorship rule.
Similarly, works made under the direction or control of Parliament are subject to Parliamentary copyright, under which first ownership is determined by specific statutory provisions rather than the general employment rule.
Common Mistakes to Avoid
For employers:
- Assuming that work produced by contractors belongs to the business without a written assignment.
- Relying on broad or loosely worded contractual provisions that may not clearly capture all relevant categories of IP.
- Failing to obtain assignments of pre-existing IP that an employee or contractor brings to the role.
- Neglecting to include a moral rights waiver in contracts with creative workers.
For employees:
- Assuming that working on something at home, in personal time, on personal equipment, is sufficient to establish personal ownership.
- Failing to read and understand the IP provisions in an employment contract before signing.
- Creating works that are closely connected to the employer's business without first establishing in writing that the copyright is to belong to the employee.
- Purporting to license work to the employer when the employer may in fact already own the copyright as a matter of law.
Speak to a Specialist
Questions of copyright ownership can give rise to substantial disputes with significant financial consequences. Whether you are a business seeking to protect your intellectual property, an employee concerned about the ownership of work you have created, or an organisation engaging contractors on creative projects, specialist legal advice is invaluable.
How To Get In Contact
Our team of IP solicitors advises businesses and individuals on all aspects of copyright law, including the drafting and review of employment contracts, IP assignment agreements, licensing arrangements, and the enforcement of intellectual property rights. To find out more or if you require assistance with these matters, speak with our Intellectual Property Team on +44 (0)204 600 9907 or email info@culbertellis.com.
Accurate at the time of writing. This information is provided for general information purposes only and should not be relied upon as legal advice.
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