Copyright is a type of intellectual property that applies to literary works (deemed to include software), artistic works (e.g., graphic designs and web designs), musical works and dramatic works. Copyright protects the form of expression rather than the idea or content expressed. For example, copyright protects the words of a novel (the expression), but not the plot or themes (the idea or content).
Businesses are routinely involved in the creation of works subject to copyright, but often fail to consider ownership of copyright. Unless there is an agreement to the contrary: a) if an employee creates a work subject to copyright in the normal course of his employment, the copyright belongs to the employer; and b) if a contractor creates a work subject to copyright in the performance of a contract, the contractor owns the copyright and the customer has an implied licence to use the work for the purpose for which it was created.
The presumption of employer ownership in the employer-employee situation, makes sense to most people. However, the presumption of contractor ownership in the contractor-customer situation may come as an unpleasant surprise to the customer.
For example, if a business retains a graphic design firm to create a brochure for a run of 1,000 and their agreement says nothing about ownership of copyright, then the design firm owns copyright in the brochure and the business has an implied licence (that is, permission to do something implied by operation of law), to a run of 1,000. If the business were to later have 10,000 copies printed without the design firm’s permission, the design firm would be legally entitled to compensation for copyright infringement.
Another example is where a business retains a programmer to create some custom enterprise software for use by the business. Again, absent an agreement to the contrary, the programmer owns copyright in the software and the business has an implied licence to use if for the purpose for which it was created (that is, in its business operations). This means that, although the business paid the development costs for the software, the programmer, not the business, is entitled to sell copies of the software to others.
Thus, in a customer-contractor situation that may give rise to a work subject to copyright, it is important for the parties to have a clear and documented understanding about who will own the copyright. It is usually possible to reach agreement on this issue as either party may be willing to give up ownership of copyright for an adjustment in price or other consideration (e.g., the right to make more copies of a brochure at a low or no charge).