NSW Who Owns Copyrighted Code within a Company?

[cyphix]

Thanks for all the information.

The only document we all signed was a company constitution, we don't have a Shareholders Agreement or Replaceable Rule documents.

 

[Tim W]

I figured.
I encourage you to do them.
Pretty much any solicitor in general or commercial practice
can get you set up.

If your IP is complex, or high value,
or for some reason needs to be managed carefully,
then the advice of an IP lawyer may also be helpful.

 

[cyphix]

Ok excellent - thanks very much!

 

[Tracy B]

Hi guys,

I disagree. Absent an express term in a shareholder agreement (IP rights would not be dealt with in a constitution) any code written by an individual, whether an employee or contractor or shareholder or owner or person on the street, will belong to that person by default. Therefore, unless it is expressly provided for in the constitution that a shareholder can "pay" for their shares in the company through IP contributions, IP contributions will not be deemed to contribute toward the share-purchase price.

This is why there is always an IP transfer/attribution clause in the shareholders' agreement for joint ventures where company shareholders contribute IP or resources into a new joint venture company.

When starting up a company, one must deal with IP rights expressly, otherwise, things get messy. If the company itself purchases an IP right or licence, then the company, and not the shareholders, will own it.

 

[Tracy B]

However, note that as a shareholder, if you were to assert your IP rights against the company, the other shareholders and directors of the company will not be very happy, it will likely cause tension in the relationship.

 

[cyphix]

Thanks for your insight into this matter as well Tracy. Appreciate it.

 

[John R]

Absent an express term in a shareholder agreement (IP rights would not be dealt with in a constitution) any code written by an individual, whether an employee or contractor or shareholder or owner or person on the street, will belong to that person by default.

This is a general rule only and copyright ownership is a complex area.
As an additional consideration to the general rule, per section 35 of the Copyright Act 1968 (Cth), copyright, as IP rights, created during the course of employment will generally transfer automatically from employee to employer. You may consider reviewing the Australian Copyright Council's Fact Sheet on Ownership of Copyright [PDF] for further information. Hope this helps.

 

[Tracy B]

Thanks John for the update in relation to material contributed as an employee in the course of employment. I am curious as to the position in relation to independent contractors and shareholders in a company. My understanding was that this was not automatically attributed to the client or the company absent express agreement since independent contractors and shareholders are not in the same relationship with the other contracting party as employment. But I do agree that this area is quite complicated and that Cyphix should best seek an IP or coporate lawyer.

 

[John R]

Hi @Tracy B
My understanding is as follows:

Shareholders
Varies based on the actual company structure, any Shareholder's Agreement (or similar agreement) and any other role/s that the shareholder may have in relation to the company that reflects an employee or independent contractor relationship.

Independent Contractors

1. In an ideal world, a written agreement between the "commissioning party" (that is, the person or company contracting a third-party to create a copyright "work") will set out that copyright ownership will be assigned when the commissioning party pays (also referred to as "valuable consideration") for the work as agreed.
2. In the absence of an agreement, the independent contractor retains copyright ownership in the work (e.g. a book, computer program, etc.) except for photographs or artwork for private/domestic use (section 35(5)), sound recordings (section 97) and films (section 98) where copyright ownership transfers on payment unless otherwise agreed.

Hope this helps!