Rights to works made for hire: copyright or employment contract?

In the modern world, intellectual, creative activity is becoming increasingly important in various spheres of human activity. Intellectual property is the driving force behind socio-economic development of society. A large number of works authors create during the performance of their duties. Recognition of works by officials significantly affects the volume of copyrights and the mode of use of these works. The concept of “works made for hire” is defined in Article 1 of the Law of Ukraine “On Copyright and Related Rights,” namely:

Works made for hire – a work created by the author in order of performance of official duties in accordance with the official task or employment contract (contract) between him and the employer.

From the definition of a works made for hire, its double character is seen. On the one hand, its creator, of course, is an employee and in this quality he has unquestionable rights as an author. On the other hand, the facility was created during working hours, paid by the employer and as a product of labor must belong to the employer.

Thus, for the work to be recognized as official, it is necessary to comply with the following requirements:

  1. creation of the work made for hire made for hireshould include the work duties of the author-employee of the enterprise, that is, not a labor contract between the employee and the employer, and the job description of the employee should be provided for the obligation of the employee to create such works;
  2. the author must create a work made for hire on the basis of a job or employment contract. At the same time, if the contract is urgent and it is enough to specify the task to create a work in the contract itself. It should be noted that until now, the concept of “service task” has not been concretized in the legislation, the requirements for the execution of the official task for the creation of the work have not been established. In practice, the official task is drawn up in the form of an order on the obligation of the employee to create a certain work, the appendix to the order is the official task, which indicates the characteristic of the future work and the criteria to which it must meet, as well as the timing of the creation of the work;
  3. official will be only those works made for hire that are created by the employee in connection with the performance of labor duties: if the employee creates any works not related to the performance of official duties, the employer can not apply for automatic obtaining of property rights to such works.

Copyright for official works until January 01, 2004 had a special status. Thus, in accordance with Part 1-2 of Art. 16 of the Law of Ukraine “On Copyright and Related Rights”:

  1. Copyright personal non-property rights to the works made for hire belongs to its author.
  2. The exclusive property right to an works made for hire belongs to the employer, unless otherwise stipulated by the employment agreement (contract) and (or) the civil contract between the author and the employer.

That is, the employer for obtaining property rights to the work was enough to conclude a labor contract with a hired employee, in which it is necessary to clearly prescribe the employee’s employment duties or develop job descriptions. In the case when the employment contract is indefinite or has a general nature, the employer had to issue an official task.

On January 01, 2004, the new Civil Code of Ukraine (hereinafter – the Central Committee of Ukraine) entered into force, introduced many novels in civil law that directly influenced the basic provisions and principles of regulation of public relations related to the creation and use of intellectual property objects. In accordance with Part 2 of Article 429 of the Civil Code of Ukraine, the intellectual property rights to the object created in connection with the execution of the employment contract belong to the employee who created this object, and to the legal or natural person where or with whom he works, jointly, unless otherwise established by the contract.

It is easy to notice certain differences in the interpretation of the ownership of property rights to the work. The law says that the exclusive property right to a work work belongs to the employer, unless otherwise established by labor or civil law agreement, and the Code – that the property rights to the object of intellectual property belong to the employee who created it and the employer (the customer) jointly, unless otherwise established by the contract.

Undoubtedly, the norm of the Code improves the position of the author, stimulates the freedom of creativity, protects the rights of the creator more.

However, this norm has complicated the regulation of the relationship between the employee and the employer in relation to the created works, in connection with the implementation of the employment contract. At the slightest loss, the employer risks suffering huge losses.

By allocating funds for the creation of the work, the employer pays the author’s remuneration to the employee and as a result falls into complete dependence on him: after all, before using the created work, he must obtain the permission of the employee – the author of the work. In the event of a conflict, which often happens in labor relations, an employee can easily not only disrupt the project, but also block the activities of the enterprise.

Therefore, if the functional duties of the employee assume the creation or possibility of creating an official work, then in order to settle relations and avoid disputes in the future, you need to conclude a contract in writing. It should indicate that all property rights to the object of intellectual property created in the process of performance of the employee’s employment obligations belong to the employer.

After analyzing the legislation on this matter, we can conclude that it is possible to conclude both a labor contract and an author’s contract.

By concluding an employment contract, it is advisable to include the following conditions:

  1. all property rights to works created by the employee in connection with the execution of the employment contract and on the basis of the official task are transferred to the employer;
  2. if the creation of works made for hire is the sole or main responsibility of the employee, the contract may provide that the employer pays the employee wages for the creation of the employee and for the employer’s use of works made for hire;
  3. it is necessary to specify the list of official duties. This can be done in a separate job description;
  4. it is possible to issue an official task with a separate article in the contract or a separate document. At the same time, it is desirable to specify the requirements of the employer in the official task.

For copyright, the traditional form is a contractual form of legal relations between the author and the person who uses the results of the author’s creative activity. Based on this, we can say that one of the means of protecting the copyright for a works made for hire is a copyright agreement.

It should be noted that the author’s contract does not depend on the author’s labor relations with the employer or on whether the works made for hireis official or created by the author on its own initiative. Therefore, the second party in this agreement, according to the legislation of Ukraine, can be any subject of civil-legal relations.

The copyright agreement between the employer and the employee may be concluded in the event that the creation of works made for hire is not provided for by either the job description or the employment contract, or the issue of property rights to the works made for hire is not settled.

The relationship between the employer and the author in relation to the work created outside the framework of the employment agreement can be regulated by the following copyright agreements: the creation by order of the copyright object and the transfer of exclusive property copyrights.

The first type is laid before the creation of the work. It should indicate the essential requirements of the employer to the future work, the terms of creation, the amount and procedure of payment of remuneration and the provision that all property rights to the works made for hire created by the employer are transferred to the employer.

The second type of contract can be concluded after the creation of the works made for hire. In accordance with Article 1113 of the Civil Code of Ukraine, under the agreement on the transfer of exclusive intellectual property rights, one party (a person with exclusive property rights) transfers these rights in part or in full in accordance with the law and on the terms specified by the contract.

Currently, for the creation and use of the works made for hire, the author owns the author’s remuneration, the amount and procedure for the payment of which is established by the labor contract (contract) and (or) the civil contract between the author and the employer. So, when using the works made for hire, its author, in addition to wages, has the right to pay the author’s remuneration. To pay the author’s remuneration has the person who uses the works made for hire.

It should be noted that if an employee creates an object of intellectual property with the prospect of patenting, it is advisable to carry out all the work on the basis of a properly executed official task, in which it is necessary to specify a clear description of the characteristics of the future product, which will be useful in proving the priority of rights in disputed situations.

Thus, it can be concluded that the Central Committee of Ukraine in a new way regulated the issue of property rights to the works made for hire, created as a result of the fulfillment of the employment contract, taking into account the interests of the author and the employer. For copyright, the traditional form is a contractual form of legal relations between the author and the person who uses the results of the author’s creative activity. An agreement on the transfer of exclusive property rights can be concluded after the creation of the works made for hire. It is necessary to accurately determine alienated property rights, otherwise they will not be considered transferred. Of course, it is inconvenient to conclude separate author’s contracts for official authorship. It is easier to sign a contract once, and then issue orders about the job. It is necessary to accurately specify the property rights to be transferred. This provision is very important and requires special attention of the parties, since property rights not specified in the copyright as alienated are not transferred. Due to the fact that the Central Committee of Ukraine has not abolished the rules of the Law, it is better to consider it. At the same time, do not forget that in case of contradiction of the norms of the Civil Code of Ukraine, the Central Committee of Ukraine has the advantage. Firstly, in the hierarchy of normative legal acts it has the highest legal force in relation to the laws, and secondly, the date of adoption of this normative legal act is later in relation to the current Law of Ukraine “On Copyright and Related Rights.”

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