Employment contracts and copyright ownership

Starting point

As a reference point, consider the following contract clause which is probably quite standard:

Any discovery, development, invention, process, design, improvement in procedure, computer program, copyright works, trade name or trade mark made, discovered or created by the Director whilst in the service of the Group either alone or with any other person in connection with or in any way affecting or relating to the business of the Group or capable of being used or adapted for use therein or in connection therewith (“Inventions”) shall forthwith be disclosed by the Director to the Company and shall belong to and be the absolute property of the Company or such Associated Company as the Company may nominate for that purpose provided that this clause 14.1 shall not apply to those rights of the Director in Inventions which cannot under applicable law be vested in the Company as his employer (“Employee Rights”).

This refers to a Director and a Group, but the same clause could equally well be used for an Employee and a Company, who are the more relevant parties for this discussion. Now, a reasonable company might replace “capable of being used” with “obviously capable of being used”, and might specify “the Company’s current business” rather than just “the business of the Company”, but this wording is still problematic.

Problems

Even the adjusted wording would include the requirement that the company own, inter alia, “any copyright obviously capable of being adapted for use in connection with the Company’s current business” created by the employee. This means that if the employee took a picture of a scene in the company’s locality while out on the weekend, then they would have to decide whether that picture could be obviously adapted for use by the company (such as in advertising for the company) and it would automatically become the company’s property.

Not only that, but it also puts the onus on the employee to inform (“forthwith”) the company of the existence of this image and, by the same logic that says the image becomes the company’s property, the employee would not be allowed to copy the file to their computer without permission as that would be infringing the company’s copyright. Moreover, if they were to delete the file from the camera they could be charged with destruction of the company’s property. Such a contract, therefore, would quickly present a sort of Kafkaesque nightmare world that the employee could end up trapped in.

For a situation where the contract was more likely to be enforced, imagine if the employee wanted a piece of software for putting weather reports on their blog page, for example, and they ended up, on the weekend, writing a JSON to XML converter in PHP. This could easily be adapted for use by any company with a website, especially a company that hires web developers. The moment the employee pressed save in their editor, therefore, the software would belong to the company and the employee would not be able to use it in a way not sanctioned by the company. That employee certainly wouldn’t be able to open source it or even blog about it, especially if it were classed as a trade secret.

I think that one reason that a clause like this might seem so disconnected from reality is that it is anachronistic, in that it doesn’t consider that people would want to work on personal projects creating general purpose utilities which can incidentally be useful to the company they work at. The lawyers who write clauses like this also seem to have not realised that by stretching the boundaries on the things companies can take ownership of, they end up putting immense restrictions on what is actually the employee’s private life.

Even worse, clauses like this are actively detrimental to the company if someone creative and self-motivated signs them. Suppose that the government passed a law which said ‘Anything you create while employed belongs to your company’. A sensible employee should then simply stop creating things in their own time. They would throw away any camera and microphone and uninstall any text editor on their computer. After all, why would they go to the trouble of creating something in their own time just to have that creation taken from them by the company? Working on personal projects would thus become a soul-destroying, Sisyphean task to any free-thinking person, meaning the law (or such a clause) would actually be a disincentive for employees to create things and develop as professionals outside of company time. I don’t think the purpose of these clauses is to make employees less productive, or turn their hobbies into unpaid overtime for their companies, so I humbly believe that a compromise should be found.

Alternatives

By making minor adjustments to the wording of the above clause, it is possible to offer a slightly different set of rights and responsibilities for the two parties to agree to, which they may both find acceptable. The following sections, then, present diffs (figuratively speaking) to that original wording (or a version of that wording which is applicable to an employee and a company), along with the reason for proposing this wording.

Opt-in proposal:

Any … (“Invention”) shall forthwith be disclosed by the Employee to the Company whereupon the Company shall state whether or not this Invention shall belong to and be the absolute property of the Company …

In general, requiring an explicit “opt-in” to something helps people know where they stand, and this proposal means that the employee knows after creating each copyrighted work whether the company own it or not. At worst this means the company can claim ownership of, say, a weekend’s work, after the employee tells the company on the following Monday, and the employee can hand in their notice if they do not like the company’s acquisitiveness. After serving out their notice period, the employee can then recreate the copyrighted work from scratch (going on the same holiday again and taking all the same photos again, for instance) and look for a new job with a company that respects their private life and creative freedom.

Vetoable opt-in proposal:

Any … (“Invention”) shall forthwith be disclosed by the Employee to the Company whereupon the Company shall state whether or not they wish this Invention to belong to and be the absolute property of the Company … . If the Company do inform the Employee that they wish for this Invention to belong to and be the absolute property of the Company then it shall be so unless the Employee shall give notice as described in clause …

This is the nuclear self-destruct version of the opt-in proposal, because it always allows the employee to say “You may have forced me to leave my job, but I’m not letting you get your hands on my weekend’s work.” The employee should never have to exercise this clause, of course, and it still means choosing between losing a weekend’s worth of personal creativity, and losing a job which is putting food on the table, but it is a sort of “shirt off your back” protection for the employee.

Blacklist proposal [delete or add to list as appropriate]:

… . This clause shall not cover any images, sound recordings, private correspondence, blog posts, comments on or contributions to websites or databases, personal information, or software made available under a Free Software licence, created by the Employee outside of the hours of work defined in clause … or during the holidays defined in clause … .

A “blacklist” is another construction which helps people know in advance the outcome of a binary decision. In this case, an employee could safely create a private correspondence without worrying that they might inadvertently mention something that causes the correspondence to become the property of the company. For instance, someone might recount a very personal story to someone in an email not realising until after they had sent it that it would make the perfect plot for their company’s new advertising campaign. Not only would the employee be required to inform the company of their “creation” and hand the email over to them, but if their friend replied, quoting substantial parts of the email that was sent to them, they would be infringing the company’s copyright. A company may not want to give a blanket permission for an employee to work on Free Software projects (even if the employee is constrained by a non-compete clause), but a reasonable company should be able to make at least a token blacklist of things which they never intend to claim ownership of.

Non-enumerative blacklist proposal:

Any … (“Inventions”) … be vested in the Company (“Employee Rights”). … This clause shall not cover any Invention which is both created by the Employee outside of the hours of work defined in clause … or during the holidays defined in clause … and is neither published nor offered for sale by the Employee.

For some companies, the concern may be that the employee would try selling their “free time” work back to the company, as a de facto form of overtime pay. With this type of blacklist, though, if the employee offered some code for sale to anyone, but in particular to the company they signed this contract with, then the works would not be covered by the blacklist and thus would be eligible for the company to take ownership of for free.

Whitelist proposal:

… created by the Employee whilst in the service of the Company and as part of work assigned to the Employee by the Company and as part of the Employee’s role in the Company either alone …

An obvious alternative to a blacklist is of course a whitelist, where instead of specifying types of creation which the company can’t claim ownership of, the contract specifies only those types of creation which the company can claim ownership of. Namely, the company should only be entitled to appropriate the employee’s work if it is part of that employee’s assigned work or role in the company.

It may seem that this wording gives the employee an unreasonably strong position against the company, but notice that it does not limit the company’s rights to the employee’s creations based on geographical or temporal factors. This means that if the employee gets home after a day’s work and can’t help reaching for the computer and writing down an algorithm that solves a problem they encountered at work, that algorithm is owned by the company. Similarly if the company had a certain feature on their roadmap, and the employee decided to write a mockup of it on holiday, then when the employee got back to work they would have to inform the company and hand it over. If you still think this is an unreasonable thing for an employee to ask, then all I can say is that the previous company I worked for allowed me to adjust the copyright clause of their contract to include such wording, and I left them on good terms after many years of enjoyable and productive employment.

Whitelist proposal with malicious employee defence:

… created by the Employee whilst in the service of the Company and as part of work assigned to the Employee by the Company and as part of the Employee’s role in the Company either alone … current business (“Inventions”) shall forthwith … . The Employee shall not attempt to sell or offer for sale any Invention to the Company. The Employee shall not offer to license or transfer ownership of any Invention to the Company in any way which puts a requirement or condition on the Company, whether financial or not. The Employee shall not sell any Invention to any third party without prior permission from the Company.

Again, if the company is motivated out of fear and mistrust of its employees, then it should be possible to construct a clause which prevents the employee from profiting from acting against the interests of the company. Wording like the above would remove from the employee any financial motivation for withholding code from the company, as the employee could only withhold code that they had not been asked to create and were not able to sell.

Free-for-all proposal:

Any … (“Inventions”) … However, any Invention which is created by the Employee outside of the hours of work defined in clause … or during the holidays defined in clause …, shall instead forthwith be made available to the company on an irrevocable, non-exclusive, transferable, royalty-free basis, requiring no attribution or other consideration by the Company.

Sometimes with legal documents, having a wording which (you think) specifies exactly what you want is less important than specifying something which is simple and unambiguous. With that in mind, a company might be happy to accept a simple clause like this, which says that anything the employee creates can be used by the company however they want. This means the employee cannot withhold any creation from the company, but nor can the company withhold a creation from the employee, if the employee created it on their own time.

Discoverability proposal:

Any … (“Inventions”) are not required to be disclosed by the Employee to the Company, but if the Company become aware of any Inventions created by the Employee the Company may state whether or not they wish this Invention to belong to … [This then continues like the vetoable opt-in proposal, or the basic opt-in proposal could be used]

An employee may find, when discussing these matters with their company or a company they are considering working for, that the company are realistic enough to acknowledge the possibility of an employee just creating something in private and keeping it a secret. A sufficiently motivated employee could keep working on whatever they wanted to and just never tell their company. In fact, the company might not want to be informed every time an employee takes a photograph and would expect the employee to just break this clause anyway. Personally, however, I do not like the idea of a contract that one party is expected to break routinely, as that allows the other party to selectively enforce it, waiting until the breaching party is of no use to them and suddenly using the contract and the long-running violations as a litigious weapon. Employees should not be chilled into unreasonable positions by a contractual sword of Damocles that they are assured “would never be used in practice.”

Conclusion

Legal contracts may require both sides to adjust their position before an agreement can be made, and it would perhaps be unsurprising if one side’s idea of what is fair is not seen as such by the other side. It is in the interests of both sides to find a mutually beneficial agreement, however, and I have suggested some ways of phrasing requirements which might make a company happy to employ someone if they agree to them. At the end of the day, though, if you are not comfortable with a contract, do not sign it (and if you haven’t read a contract, and understood it, then you should not be comfortable with it). Do not let anyone tell you that a written contract is necessary for employment. I have worked in jobs that did not require I sign a single thing, and still paid taxes on my income and fulfilled every other legal requirement.

Also, don’t let anyone tell you that you are “implicitly” bound by a contract just by turning up to work at a company and accepting a wage from them. By this logic, a company could “forget” to give you your contract in the first week, then after paying you for that week’s work, it could show you that the contract requires all sorts of things which were not mentioned at interview and would have made you turn down the job. A contract should require a “meeting of minds”, and if there has not been a meeting of minds on a certain issue mentioned in the contract, then I don’t see how a non-signing party can be said to be bound by it.

Where there may be an “implicit” contract, however, is if an employee has been working for a company for more than a certain period of time (3 months, I hear), after which they are automatically given certain rights (in certain jurisdictions). One of those rights is the right to not be fired for no reason, or possibly even if the reason is “the employee refuses to sign this contract”. If you feel you may want to take advantage of this legislation, you should check with a legal expert in your jurisdiction, or at least a human resources expert or recruiter. Waiting three months to sign a contract without raising the suspicions of your company is difficult, though, but not impossible.

That just leaves one question: How ironic is it if, the week that you sign a contract that requires you get permission from your company before writing each blog post, they refuse you permission to write a post that quotes the clause from the contract which gives them this power?