Software Owned by Contractor - Court

A recent case has illustrated the common legal difference between intellectual property (IP) produced by a freelancer and that produced by an employee. In the case of IP produced by an employee, the rights to the IP almost invariably rest with the employer. If the IP is supplied by a contractor, in the absence of a specific contractual arrangement to the contrary the courts will normally conclude that the IP belongs to the person who created it. In these circumstances, the law of copyright states that copyright rests with the author, although the person commissioning the work gains an implied licence to use it. In some instances, however, an implied transfer of copyright to the person commissioning the creation of the IP is considered to arise.

In the case in point, a programmer was commissioned to produce software for a company. Later on, a dispute arose as to who owned the copyright. At issue was whether the IP supplied led to an assignment of copyright or the creation of an exclusive licence to use the IP. Over £40,000 of royalties were at stake, claimed by the writer of the software, based on sales of the product incorporating the software. The court ruled that the copyright rested with the writer of the software, but the person commissioning it had an exclusive licence to its use. Accordingly the royalties were payable.