Penhallurick v MD5 Ltd

Whether a copyright work is made by an employee in the course of employment under Copyright, Designs and Patents Act 1988, section 11(2), requires a multifactorial assessment of all the circumstances. The work’s nature and whether it was a task for which the employee was paid may outweigh the fact that it was created at home or with personal equipment. Where the employee is paid to perform the relevant task, those matters will not generally alter the conclusion. A written agreement may assign existing and future copyright if its objective meaning covers both and it satisfies section 91. A statutory presumption of authorship or ownership is rebuttable on the balance of probabilities.

The claimant, a former employee of the defendant, claimed ownership of copyright in eight works concerning virtual forensic computing. The defendant counterclaimed for declarations of ownership, copyright infringement, breach of contract and related relief.

The court determined whether the software and user guide were created in the course of employment, whether a 2008 agreement assigned copyright in existing and future software, whether statutory presumptions assisted the claimant, and whether either party had breached the 2016 agreement. The court also considered an alleged alteration of source code supplied after the claimant left employment.

1. Disposition. The claimant’s claim was dismissed. The defendant’s counterclaim was dismissed except that the defendant was entitled to a declaration that copyright in the Third to Eighth Works was owned by it.

2. Under section 11(2) of the Copyright, Designs and Patents Act 1988, determining whether a work was made in the course of employment requires a multifactorial assessment of all the circumstances. The factors identified in Mei Fields Designs Ltd v Saffron Cards and Gifts Ltd [2018] EWHC 1332 (IPEC) were helpful, but the case was not to be approached by simply counting factors.

3. The central consideration was that creating and improving the VFC software was the task for which the claimant was paid. That was a strong indication that the Third to Seventh Works were made in the course of employment. Work performed at home, during personal time, or on the claimant’s own computer did not displace that conclusion. The same reasoning applied to the user guide, which supported the defendant’s product. The defendant was therefore first owner of the copyright in all six works.

4. The November 2008 agreement was binding and objectively meant that the VFC software was the defendant’s property. Its scope included copyright existing at the time and copyright arising from future versions. The bonus payments supplied consideration, and the agreement complied with section 91 of the 1988 Act. The reference to “access code” did not narrow the assignment to a distinct part of the software.

5. The presumption under section 104 of the 1988 Act was rebutted by the evidence. The court applied the approach in Henry Hadaway Organisation Ltd v Pickwick Group Ltd [2015] EWHC 3407 (IPEC), that the presumption could be rebutted on the balance of probabilities without a higher burden of proof.

6. The 2016 agreement was not an exclusive licence to commercialise the software. It required support and development services and recognised an exclusive licence concerning the claimant’s pre-employment methodologies. The defendant was entitled to stop the monthly payments and no breach by the claimant was established. The alleged source-code infringement counterclaim failed because the crucial opinion evidence was inadmissible.