Common Copyright Issues
Below are common legal issues that companies face relating to software. Ben assists companies facing these common issues.
Failing to Assign Software Code from Contractors
Ownership of source code is often the subject of disputes, mainly where contractors have written the code. Directors and managers often believe they gain automatic ownership of source code after paying third-party software developers to write it. While this may be correct if the company has a software development agreement with IP assignment clauses, the absence of such clauses can mean that the IP was not assigned to the company.
You might be surprised at how often software is developed without an agreement – or the correct assignment clause.
Assignment of All IP
Other issues arise when other copyrighted material (aside from source code) is not assigned. For example, companies must ensure that software development agreements assign text, photos, illustrations, and other images that form part of the software’s interface.
When the Founders Aren’t Employees
As we talked about, in the absence of an agreement, authors of software code who are not company employees in most circumstances will personally own the software.
Founders of tech and startups usually bootstrap their ideas into existence. The founders often only become company employees once they generate income. In these circumstances, without a contract, any source code created will likely vest in that author personally.
Further, where founders develop code before their company’s incorporation, that source code will also vest in the author(s) personally.
In the above scenarios, the directors must agree to transfer the copyrighted material to the company. This requires a deed of assignment to assign those rights in the source code.
Being Held to Ransom
Of course, it can be a massive problem if the software programmer or other source code owner does not agree to execute a deed of assignment. In many circumstances, authors of photos, illustrations, source code, and other literary works demand further payment to execute the deed.
Usually, when a designer, author, or software programmer is provided with a deed of assignment to sign, they will get legal advice. Their lawyer will advise them of their rights – including that they don’t have to sign it. The lawyer will also help them realise their asset’s commercial value. Of course, this doesn’t happen regularly, but it certainly does happen – especially if there is a dispute.
Therefore, it is critical to have well-drafted employment and contactor agreements that assign all intellectual property effectively.
Employees Stealing Software
Other complications can occur when employees take the source code they created. That employee then starts a rival software company.
Although intellectual property produced during employment usually vests in the employer, there is an argument that IP created at work was outside the employees’ job description and, therefore, does not vest in the employer.
Tips for Employers
Of course, employers should always get legal advice for their particular circumstances. However, below are some legal tips that employers should be aware of.
Gaining Access to Material
Employers may seek an order from the court to gain access to the former employee’s computers and storage devices to determine whether source code and databases have been copied, stolen, or adapted.
It is critical to have well-drafted employment and contractor agreements that accurately define employees’ roles and what work they are permitted to perform while at work.
Business owners should also ensure that any contracts they enter assign all intellectual property to their company. Remember, ‘software’ also includes mobile applications and websites.
Those going into business with others are reminded constantly to have legal agreements drafted by an intellectual property lawyer to ensure that any works they create vest in the company.
Frequently Asked Questions
How Do I Copyright Software?
The good news is that you don’t have to do anything because copyright vests into the author upon creating the source code, provided there is no agreement between two or more parties to say otherwise. This is an automatic right, as there is no copyright registration method.
What Are Employers’ Rights To Copyright Created at Work?
In Australia, copyrighted works created by an employee during employment vests in the employer. “In the course of employment” means during employment while carrying out their job description.
Which Court Are Software Disputes Heard In?
The Copyright Act is Federal legislation. Therefore, the appropriate jurisdiction for copyright disputes in software is in the Federal Court. Likewise, the Federal Court hears other intellectual property, such as trade marks, designs and patents.