A new court decision can change the game for software developed outside the course of employment
The general position under English law is that any intellectual property (IP) created by an employee during the course of employment is owned by their employer. This includes works created under the employee’s job specification; works commissioned by the employers; works developed with employer’s technology and resources.
However, sometimes employees can successfully argue that their work was created outside working hours, using only their resources and technologies and therefore it should not be owned by their employer.
However, a recent decision of Intellectual property Enterprise Court (IPEC) may suggest that it does not make a difference whether the employee produced the work in his own time, at home and on his personal computer when the nature of the work in question falls within the scope of his duty.
The case of Penhallurick v MD5 Limited  EWHC 293 (IPEC) deals with a copyright dispute in relation to Virtual Forensic Computing (VFC), software used by forensic investigators, that allows for seamless recreation of a digital crime scene using real, discovered evidence, between Mr. Penhallurick (Mr. P) and his employer MD5, a digital forensic company.
Mr. P developed a fully automated version of the VFC together with further software upgrades. MD5 considered themselves the sole owner of the VFC works as the employer, whilst Mr. P claimed to be the sole owner as he created the work at home and in his personal time; he used his own personal computer system for coding work; and he only copied compiled code to the work machine for testing purposes.
Interestingly, the court did not consider any of those factors and the judge only focused on whether the creation of VFC software fell within Mr. P’s duties as an MD5’s employees. The Judge found that making VFC software was indeed the main task for which MD5 hired Mr. P.
The only focus on the court was understanding the purpose of the employee’s duties under his contract of employment regardless of the amount of time the employee spent to develop the software outside his work hours, or the location and technology he used.
This is particularly relevant in the context of the new working from home regime that was forced upon us by the pandemic. When our home and work boundaries become more and more entwined, it will be even harder to make a distinction of what works can be created outside the scope of your employment. It is therefore crucial before any employee signs any contract to stipulate with their employers what “side-projects” fall outside the scope of their employment duties and potentially that employer will waive their rights upon those side projects.
Briffa are experts in all aspects of intellectual property law and practice, including advising clients in relation to IP clauses in contracts of employments. If you would like to arrange a free consultation with one of our specialist intellectual property lawyers, please contact us on 020 7288 6003 or [email protected].
Written by Elizabetta Bestetti, Solicitor