The recent decision of His Honour Justice Moore of the Federal Court in EdSonic Pty Ltd v Cassidy (2010) 272 ALR 589 provides a clear explanation of when an employee will own copyright in materials they have created while at work. According to section 35(6) of the Copyright Act 1968 (Cth) (Act), if the work in which copyright subsists is created by an employee acting in the pursuance of the terms of his or her employment, then the copyright to the work will be owned by the employer.
Somewhat surprisingly, His Honour held that even though the respondent had created several Works during her employment by EdSonic Pty Ltd (EdSonic), she was the owner of the copyright that subsisted in them.
The applicant, EdSonic Pty Ltd (EdSonic), is a publisher of vocational education and training materials. The respondent, Ms Cassidy, was employed by EdSonic to develop materials to assist in the presentation of TAFE courses on business administration and management.
During this time, Ms Cassidy acted for EdSonic in two distinct capacities:
- she created and developed course materials for the Property Council (Property Council Works) on behalf of EdSonic, for which she was paid by EdSonic; and
- she created and developed course materials for the general market (Disputed Works) in conjunction with employees of EdSonic for which she received royalties.
Both parties accepted that there was no overlap between the efforts made by Ms Cassidy in these different capacities, indeed her method of remuneration in each role was wholly distinct. His Honour characterised that the first relationship between Ms Cassidy and EdSonic was one of employment, albeit employment with the limited object of the creation and development of the Property Council Works. In contrast, Justice North held that Ms Cassidy was not employed for the purposes of creating and developing the Disputed Works.
When Ms Cassidy ceased working with EdSonic, she notified her former employer that it was no longer permitted to use any works created by her. It is important for these purposes to note that neither party put ownership of the Property Council Works in dispute. Copies of the Disputed Works were subsequently sold. The consideration paid for this sale was held by Copyright Agency Limited until ownership could be officially determined. EdSonic then brought an application in the Federal Court for a declaration that it was the owner of the copyright in the Disputed Works. Ms Cassidy asserted ownership over the Disputed Works in her cross-claim.
In order to decide the competing claims to ownership, Justice Moore was required to determine whether section 35(6) of the Act operated to vest copyright in EdSonic; that is, to determine whether Ms Cassidy created the Works ‘in the pursuance of the terms of her employment’.
His Honour noted that there was no judicial comment on the scope of the operation of this provision and subsequently drew an analogy to the equivalent common law principle as it applies to patents. Justice Moore observed that in patent law:
- the mere existence of the employer/employee relationship will not give the employer ownership of inventions made by the employee during the term of the relationship;
- unless the contract of employment expressly so provides, or an invention is the product of work which the employee was paid to perform, it is unlikely that any invention made by the employee will be held to belong to the employer; and
- the court should dedicate its time to determining what the employee was paid to do.
His Honour noted that, like patent law, section 35(6) of the Act requires something more than the mere existence of an employment relationship, this being that the works must be created in the furtherance of the employees contract with the employer. It was held that this required the court to determine whether the employee created the work because the contract of employment expressly or impliedly required creation, or at least authorised, the work to be made.
In accordance with his findings on the status of Ms Cassidy as an employee of EdSonic, His Honour held that the only works regarding which EdSonic’s claim could possibly succeed were the Property Council Works, for these were the only works created in her capacity as an employee of EdSonic.
Based on the finding that she was employed for the limited purpose of creating and developing only the Property Council Works, His Honour held that the Disputed Works were not created ‘in pursuance of the terms of her contract’. As this was the case, it was held that Ms Cassidy, not EdSonic, owned the copyright in the Disputed Works.
The Federal Court’s decision in this case has provided some much needed clarity as to who owns copyright in works created by an employee. It highlights the importance of the terms of a person’s contract of employment, particularly when it comes to the job that they have been employed to do. This is particularly relevant to businesses that employ people in a manufacturing or creative role, for if the employee creates a work outside the scope of their employment, then the employer will not own the copyright.
For further information please contact Wayne Zappia, Partner on (08) 9288 6931 / firstname.lastname@example.org.