Does your company own all of the copyrights created by its employees? If you hire an independent consultant and pay all of her invoices for services rendered, do you own the copyright embodied in her deliverables?

The answer to both questions depends on a range of factors. Canadian law treats ownership of intellectual property created by employees and independent contractors in different ways with different presumptions. The amount of money you may have paid to someone to innovate for you is largely irrelevant.

Section 13(3) of Canada’s Copyright Act provides that if an individual is an “employee”, and such person created the work product “…in the course of his employment…”, then the employer will own the copyright in the work product unless the parties had a contrary agreement regarding the same.

The analysis required by this provision is two-fold: first, you have to determine if an individual is factually an employee, or an independent contractor.

There are a range of factors to be examined in this regard including, the tax treatment on the employee’s remuneration, the hours worked by the employee, whether the employee has a fixed work area or office within the employer’s premises, ownership of the tools and resources used by the employee, the degree of control exercised by the employer over the employee’s work, whether there is a chance of profit or loss for the employee, and how the parties themselves viewed the relationship.

Depending on the answers to these factors, an employee may be found to be an employee per se; or, an employee may be found to be an independent contractor.

If the employee is, in the circumstances, an independent contractor, the next question is whether the parties signed an agreement?

Unless the employer and contractor signed an agreement confirming the intention of both parties that the employer is to own the copyright embodied in the contractor’s work product, regardless of the amount of money paid by the employer for the services, the independent contractor will be the owner of the copyright in her work product.

The employer will, however, have an unwritten license to the copyright in the work product. In turn, that raises the question of what the terms and conditions of the license are? The answer will depend on all the facts and circumstances in question.

If the employee is really an employee, the next step is to determine whether the work product created by the employee occurred “…in the course of his employment…”.

If an employee was not hired to invent or create, then arguably ownership of the copyright in any work product created will remain with the employee and not the employer.

On the other hand, if an employee was hired to create and the work product was created in the course of employment, the employer will be deemed to be the owner of the copyright in the employee’s work product.

To avoid any uncertainty involving ownership of copyright in an employee’s work product, prudent employers will generally have a comprehensive written employment agreement, customized for use with both employees and independent contractors, whereby the copyrights (and other intellectual property rights) in the employee’s work product are assigned to the employer.