Defining copyright boundaries in employment relationships

Who owns the copyright to works created under employment? This question represents the fundamental tension between copyright and labour law. Before we can answer the question, it is worth looking at when a work can be protected by copyright in the first place.

Originality as a requirement for copyright protection

The Court of Justice of the European Union has ruled that a work can be protected by copyright if it reflects the personality of the author by expressing their free and creative choices.

Copyright protection does not apply if another person with the same skills could create a similar work. For example, in engineering, conventional diagrams, such as user interface diagrams, are usually not sufficiently original to warrant protection.

In addition, for copyright protection to apply, the work must have been created independently. If the employer has given precise instructions for producing the work, the work is not considered sufficiently independent. The Finnish Market Court ruled in case MAO 302/18 that a supervisor had provided such detailed instructions for the modelling of a spacecraft that the employee did not obtain copyright to the work.

According to the World Intellectual Property Organization (WIPO) Copyright Treaty, copyright protection extends to personal expressions, not to ideas. If an employee develops a plan for a project, the plan documents may be protected by copyright, but the idea itself may be freely used by others. This distinction is particularly important for graduate engineers, whose work often produces new concepts and processes. These must be protected by other means besides copyright.

Employer’s right to use a work created in the course of employment

The fundamental tension between copyright and labour law has been resolved in legal practice and literature by the employer’s right of use. According to a generally accepted principle, the right to use a work created in the course of employment is transferred to the employer without a separate agreement, to the extent that this is necessary for the employer’s activities.

This means that the employer may use a work created under employment in the ordinary course of business without a separate permission or remuneration, but the other aspects of copyright, such as the right to modify, assign rights to or publish the work, belong to the employee. The exception is computer programs, where copyright automatically passes to the employer under the law.

The employee may use their creation alongside their employer, on the condition that the employee does not breach their duty of loyalty. The employee cannot therefore use the work they created in a competing activity during their employment relationship.

Assignment of copyright by agreement

The employee may assign rights to the employer that go beyond the right of use by agreement. It is common for engineers to assign all copyrights to the employer under their employment contract without a separate compensation. In this case, the employee does not even retain a parallel right to use the work, but they give up all rights as formulated in the contract.

This practice is problematic for the employee, as the assignment provision also often cover works created outside the employment relationship and any means of exploiting them that may be invented in the future. Employers have been reluctant to negotiate this term of contract, leaving the employee with the option of not signing the employment contract, which is not always possible in practice.

Nordic labour law includes the principle of employee protection, which is why many terms and conditions of employment are mandatory. In terms of copyright, legislation has not imposed any restrictions on agreements, but has allowed a free culture of negotiation to develop. In practice, however, employers and employees are not on an equal footing in these negotiations.

Directive to improve the position of authors

The Digital Single Market (DSM) Directive recognises the weak bargaining position of authors. The aim of the Directive is to strengthen the position of authors in copyright transfers. In Finland, the law following the Directive entered into force on 1 January 2023 and provides that authors are entitled to appropriate and proportionate remuneration for the exploitation of their work. The employer is also obliged to report on the exploitation of the work, so that the author can assess whether the remuneration has been fair.

Remuneration can be paid either as a fixed sum, a one-time payment or in proportion to the extent of using the work. It may also be included in the author’s monthly salary. In terms of TEK members, ensuring the appropriateness of the remuneration is problematic, as contracts do not usually specify any remuneration for the transfer of copyright.

In case of disagreement, the employer should demonstrate that the author has received legal remuneration for the transfer of copyright. If the remuneration has not been explicitly specified, the burden of proof may be difficult to meet. It would therefore be in the interest of both parties to agree on a remuneration for copyright transfer in a fair and transparent manner.

Author works at TEK as a lawyer.