Many businesses are familiar with engaging a software developer to create a product or application, however the devil is in the detail when it comes to ownership of the end product.
Generally, an employer will own the copyright that is created by its employee pursuant to the terms of their employment, however this does not apply to software developers who operate as independent consultants.
Software developers
Software developer consultants that are contracted to create a software code for a business are the owner of that specific code that they create. This is pursuant to section 32 of the Copyright Act 1968 (Cth) which provides that an author of original work is the owner of that work.
Therefore, businesses need to be careful when engaging software developers and ensure that if they intend to own the Intellectual Property in the software code, they have a signed agreement in place to assign the intellectual property to the business.
What to look out for
Consultancy agreements sometimes contain a clause stating that when created, all of the software code is assigned to or will vest in the business owner (not the software developer). This will transfer full ownership of the software to the business owner. That said, the clause must be very specific about this.
If the agreement is silent in respect of the assignment or vesting of the software code, the business will only obtain a licence to use the code. That licence may be express pursuant to the contract which sets out the terms of the work. In the absence of any written agreement, the business will generally obtain an implied licence for the software code, but it will be limited to use of the software for the purpose which it was created for and paid for.
If the consultancy agreement does not contain an express provision as to drafting of the code, a separate agreement can be entered into between the software developer and the business which has the effect of assigning the ownership of the product to the business. In practice, this additional step of drafting an additional document to assign the intellectual property to the business is not preferred. We generally advise our clients to clearly express the assignment of the software code to the business in the software consultancy agreement itself.
Businesses also need to be aware of the specific employment agreement that it has with its employees who are software developers. The Copyright Act outlines that an employer will own the copyright of work that is created by an employee in pursuance of the terms of his or her employment. We recommend that the employment contract should go beyond this, including covering work that is created in the course of or related to the employment. In addition to intellectual property clauses within an employment contract, businesses should include a waiver of moral rights and ensure that the confidentiality clause is adequate and enforceable.
Rigby Cooke Lawyers can assist you with consultancy agreements, employment agreements and intellectual property advice.
This article originally appeared in the winter 2016 edition of InDispute. Other articles in this newsletter include:
- To freeze or not to freeze: hopping all the way to the High Court
- Getting it right: the importance of bulletproof expert evidence
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