back to article Dev loses copyright appeal over forensic software after judges rule suite was owned by his employer

A Briton has lost an appeal bid to claim copyright over software he wrote for his employer while being handsomely paid for doing so – despite saying he wrote parts of it in his spare time. Michael Penhallurick had his case thrown out by Court of Appeal judges in London yesterday following his failed attempt to assert copyright …

  1. Anonymous Coward
    Anonymous Coward

    From memory...

    I believe from memory, my contract actually states "Any computer code or programs written or produced during paid working hours using company or non-company equipment, irrespective of whether code or programs are for company use, shall become the property of the company in perpetuity unless other reasonable grounds for release of code or programs to the individual creator have been granted.".

    So if I code on my own kit but I'm being paid, they've got me. Which kind of makes sense, I'm paid to work and while they pay me I'm paid to produce items to keep the company functioning. If I'm sitting the kitchen dining area during lunchtime on my own laptop coding some utils or games I doubt they'd care much, but if it's 3pm in the afternoon and I'm coding utils and apps based around using company data then they do have every right to demand ownership or any work I produce as they paid me to do it.

    1. ChrisC Silver badge

      Re: From memory...

      Yup, similar clauses in at least some of my contracts over the years too.

      Where this case gets a bit murky, and where I think MD5 need to take a look at their procedures, is that as a salaried worker, it's been clear both to me and my employers that

      a) I don't get a cut of the revenue from any sales of the stuff I develop for the company

      and

      b) any ongoing support hours I need to work for said stuff are taken out of my overall contracted hours, with no expectation that I'd provide those in addition to my contracted hours, nor be paid for doing so

      So the fact that this chap *was* receiving a percentage of the sales in addition to (presumably) his regular salary, and that it wasn't made crystal clear in either his main employment contract nor in whatever additional contract was written up to deal specifically with this bit of software, that these extra payments were in no way meant to imply that ownership of said software remained with said chap, makes me think he may have been a bit hard done by here.

      Not necessarily suggesting he should have been granted rights to the software, but perhaps at least been paid some additional compensatory sum by way of an "oops yeah, your contract really wasn't that clear and we can see why you might have thought you were entitled to something more" smoothing of the waters.

      1. DevOpsTimothyC Bronze badge

        Re: From memory...

        Sales staff earn commission on sales. That commission is often a percentage of the sale.

        I think everyone will agree that the key point here is that there wasn't something in writing that acknowledged ownership of the software in any way.

        As he was paid a salary I'd think the person paying the salary owns the IP.

        As he didn't sell the software to anyone else I'd think he didn't own the IP

        1. ChrisC Silver badge

          Re: From memory...

          Sales staff earn commissions as a way to incentivise them into selling more stuff. But the stuff they sell has almost always been developed by someone else, and it's *those* people who tend not to get paid anything other than their basic salaries for doing said development work, which is the crux of the previous comments.

          So yes, he was paid a salary, but he was ALSO being paid an additional fee specifically related to this piece of software, which means it wasn't nearly so clear cut prior to the outcome of this legal case that his having been paid a salary entitled the company to claim ownership of the IP for this specific software, and TBH I'm not sure it's even clear cut now - it all still feels a bit "he said, she said" in the absence of any actual written contracts which state clearly one way or the other what those additional payments were for, and I think the company was a bit lucky to find the judges siding with them on this occason.

          1. doublelayer Silver badge

            Re: From memory...

            I don't think they were lucky*. Essentially, he received a bonus that was directly proportional to the revenue his work generated. A lot of places tie bonuses to results in that way, although often without telling the person how they'll be calculated. Just receiving a separate payment for performance isn't that unusual, and it furthermore indicates that they were the ones selling the work (and the only ones to do so). That sounds like a normal setup to me and the suggested alternative sounds like a setup that would have undoubtedly had a contract to specify it.

            * I think they had the advantage in this case, hence not lucky, but that doesn't mean I think they're right. It's entirely possible that they intended a licensing arrangement originally and are now reneging on that intent. The problem is that neither side can prove it and, without proof, the company's story is a lot more plausible. Whenever you're doing something like this, make sure you have the contract and know what it says.

            1. Dave314159ggggdffsdds Silver badge

              Re: From memory...

              "It's entirely possible that they intended a licensing arrangement originally and are now reneging on that intent"

              That's wildly implausible simply because it's such an unusual arrangement it would be obvious that there was a requirement to "make sure you have the contract".

              It's rather obvious that the plaintiff didn't actually believe that agreement was made, they just thought there was enough money involved to be worth trying it on in court.

    2. elsergiovolador Silver badge

      Re: From memory...

      That's quite a servile view of how employment work. In employment relationship, the employer is obliged to provide you work and you are obliged to do it and this is what you are being paid for.

      Unless you consider yourself as a slave, the employer does not own you. If they don't give you enough work to fill your day, it should be none of their business what you do with your down time.

      Anyway, when I see such clause in an employment contract, I just ask for it to be removed. Only once company had a problem with that, so I declined to accept the offer.

      These chancers look at every way to exploit their workers and you shouldn't give in to that, have some self respect!

      1. Doctor Syntax Silver badge

        Re: From memory...

        AFAIK it's the default position in employment law whether it's specifically stated in the contract or not. It's the same as if you work in a factory stamping out washers; the washers belong to your employer, not to you. Where it gets dodgy is if the contract tries to claim IP on anything you do outside of your employment. I'd certainly want that removed.

        By having a clause struck out which is specific about employer's ownership of IP on work done in the course of employment the employer loses nothing but might have made it worthwhile having a try if you'd hit the jackpot with something you'd written at home. They could argue that you'd waived your right to limit their IP claims to what you did at work. It might not be a strong argument but if the pay-day was worth it they might try and you might agree a deal rather than see it all disappear to the lawyers.

        1. elsergiovolador Silver badge

          Re: From memory...

          It's the same as if you work in a factory stamping out washers;

          What kind of IP a worker stamping washers create?

          1. The Basis of everything is...

            Re: From memory...

            Hey boss, if we can adjust the stamps like this, we can get an extra 10 washers out of each sheet of metal.

            Anyone can have a bright idea, even a washer stamper.

            1. Ken Moorhouse Silver badge

              Re: even a washer stamper

              Or Krispy Creme employee.

          2. Doctor Syntax Silver badge

            Re: From memory...

            "What kind of IP a worker stamping washers create?"

            None. Washer makers make washers, IP makers make IP. Clear, now?

        2. keith_w Silver badge

          Re: From memory...

          And if, you should devise in your own time, based on the knowledge you gained while employed, a program which would compete with the programs offered by the company which employs you, do you think that that IP should belong to you or to the company? There is a reason that these clauses exist.

          1. Doctor Syntax Silver badge

            Re: From memory...

            I'm sure there have been many products and services based on ideas gained in employment, proposed to the employer, turned down and then developed privately by the employee at the employee's own expense. What rights should the employer be able to claim in that?

            1. doublelayer Silver badge

              Re: From memory...

              It depends on the contract. The employer had turned it down, so most likely, they have waived their rights to have that project (if they had those rights in the first place). So on the face of it, you're probably fine. This is contract law though, so that's not good enough. Here are a few reasons you could still be restricted:

              1. If the project competes with their products, they could have a clause restricting competition. You couldn't distribute the project without angering them.

              2. If it used information they considered proprietary, from common code to knowledge of an algorithm, they could claim that your project was violating IP rights they held and sue you for that.

              3. If the contract says that they get ownership or first right of refusal over your external ideas, then you have to make sure that the right person turned it down. It's not enough for your manager to say they don't want to use it. Often, there will be a separate person who needs to agree. You really want to have the acknowledgement that you can develop it without them taking it in writing, stored on your own equipment, and unless really obvious, reviewed by someone at least familiar with contracts.

        3. Arthur the cat Silver badge

          Re: From memory...

          Where it gets dodgy is if the contract tries to claim IP on anything you do outside of your employment. I'd certainly want that removed.

          I've known a US company try that after taking over a UK company. New contracts for all, complete ownership of IP of any sort (*) created by employees, triple the required length of notice and dismissal for not signing the new contract. General replies of "fuck off" and "learn about UK employment law" from the UK work force. Eventually they backed off.

          (*) Even if totally unrelated to the US company's products.

        4. Anonymous Coward
          Anonymous Coward

          Re: From memory...

          > AFAIK it's the default position in employment law

          I realise this specific case is in the context of English law, but please note: that is an important caveat, especially in these days of remote work and so on.

          In the continental tradition, things are not so clear, and even multinationals that should know better occasionally get caught out.

          As an example to which I can attest, the "all your IP are belong to us" boilerplate does not work in Austria, simply because authorship is not transferrable.

          What you can do is cede the enjoyment of some of the economic rights to the work to another party, but even then there are checks and balances.

          (The concept of copyright in the continental tradition, as in common law, comprises both moral and economic rights, but how those are treated differs quite significantly)

      2. Falmari Silver badge

        Re: From memory...

        @elsergiovolador “In employment relationship, the employer is obliged to provide you work and you are obliged to do it and this is what you are being paid for.”

        I disagree, the employer is not obliged to provide you work but they are obliged to pay you for your time even down time. During the time the employer is paying for, you are obliged to do work of the agreed type that the employer provides.

        You are being paid for your time and your salary is what that time is valued at. That value is based on your skills and ability to do the agreed type of work for your employer when that work is provided.

        If an employer fails to utilise you leaving you with down time that’s their problem, you still expect too and do get paid for that down time.

        Sure, the employer is not using that time, but they have still paid you for it. So why should you expect to own and therefore possibly sell work done in that down time? You have sold that time once it is not yours to sell again.

        1. W.S.Gosset Silver badge

          Re: From memory...

          Firemen being an example here. Their employer would have difficulty arguing in court that it had a legal contractual duty to commit arson.

          1. Falmari Silver badge

            Re: From memory...

            @W.S.Gosset Firemen that’s a great example. :)

          2. LybsterRoy Bronze badge

            Re: From memory...

            Fahrenheit 451

        2. bigtimehustler

          Re: From memory...

          So, you'd sit snd stair at the wall? I presume they don't let you watch TV in your paid for time either. So what exactly eoukd you do?

          1. Falmari Silver badge

            Re: From memory...

            @bigtimehustler “I presume they don't let you watch TV in your paid for time either.”

            I wouldn’t know I have never been in the situation of having downtime. As a programmer I have never worked for an employer unable to provide work for downtime to happen.

            I tend to have more than one piece of work on the go. My current dev work on the project I am on. Then there will be tasks I am working on in the background, those ‘can you look at this when you have some spare time’ jobs managers always seem to have.

            So, if for some reason I have finished my current dev work and can’t start on the next piece that I was scheduled to do, I would either pull something else off the backlog or work on a background task. In the event I could do neither, there is the option of pulling a bug from the maintenance team’s backlog.

            But if the day ever arrived when my employer failed to provide me work, they would probably be ok if I put my feet up and watched tv on my phone. Once I have cleaned the Rocking Horse Shit from the bottom of my shoes.

            I am sure if I asked my employer, if it would it be ok during downtime to pop out to another company who will pay me to do some programming work. I am sure my employer’s answer will be ‘sure of course you can, just clean your shoes first’.

  2. Aristotles slow and dimwitted horse Silver badge

    A Briton... overturned.

    In other news, another Briton, one claiming to be King, has failed to overturn the arguments of a man called Dennis and his "good lady" whilst attempting to repress them using the violence inherent in the system. Ultimately the court upheld the argument that Britain is in fact an Anarcho-Syndicalist commune and that a man can't expect to wield supreme executive power just 'cause some watery tart threw a sword at him!!

  3. trevorde Silver badge

    Good luck to my employer!

    At understanding my code! Even I can't understand it.

    1. veti Silver badge

      Re: Good luck to my employer!

      That's why the best programmers make their money in maintenance, not development.

      Most software gets developed and used for a brief period in exactly one environment, where it just happens to "work" (for values of work that mean "do something that someone happens to want done at that time"), and then break as soon as something about the environment or the task changes. Something like 93% of it then gets abandoned and replaced with something new, whether better or worse at this particular task, for the new environment.

      The other 7% gets painstakingly updated and transferrred to the new environment. That's a painstaking and expensive process, which is why it's only used on a small minority of items.

  4. Ken Moorhouse Silver badge

    MD5 Ltd

    He made a bit of a hash taking this to court.

  5. Michael Hoffmann

    Contract versus open source?

    Disclaimer: not expecting actual legal advice, just a sort of general "should be fine" or "seek council right away":

    In a similar situation on a much smaller scale, where my employment contract stipulated similar things regarding "you write it on company time, it's ours", however the tool I wrote was explicitly written under the Apache Software license - not just by my own decision, but by manager request.

    I plan on removing company specific sections and putting it all up on Github, maintaining the same license. However, there is/was talk to embed the tool into a wider proprietary tool stack of (soon to be former) employer. There it may play a small but crucial role.

    Who owns what, if anybody owns anything?

    1. Brewster's Angle Grinder Silver badge

      Re: Contract versus open source?

      It's late, here. But I think you're conflating two things. Who owns the code (the copyright) and what they're willing to let people do with it (as set out in the licence).

      So it sounds like you agree your employers are the copyright holder but they pretty much waved their rights by licensing it under the Apache Licence. As the copyright holder they can, of course, chose to licence it in other ways as well. They might even be able to revoke the licence. But while the licence holds you can upload it to github and they can use it in a commercial product.

    2. doublelayer Silver badge

      Re: Contract versus open source?

      Your first question is easy: your employer owns the copyright. This means you'll want their permission before you upload it. They might want to review what parts you're taking out first. Since they suggested Apache licensing to you, I'm guessing they already planned for this, but it never hurts to have an email saying so to avoid the problem this article describes.

      Your next question seems to be around the use of the software. This chunk:

      "However, there is/was talk to embed the tool into a wider proprietary tool stack of (soon to be former) employer. There it may play a small but crucial role."

      I'm assuming that the employer you're talking about is the one you originally wrote this for. If not, only the first point below applies. Your employer has no problem here for two reasons. First, Apache 2.0 is a permissive license, so you can put code into proprietary systems. Unlike copyleft licenses such as the GPL, you don't have to use the same license for other components. Second, as they own the copyright to the code, they are permitted to apply a different license to it. If this had been the GPL, but you wrote all of it, the employer that owned it could still use it in a proprietary system because their version would use their own license instead. Therefore, your component can be used in a proprietary system without having an effect on the licensing or distribution of that system.

    3. W.S.Gosset Silver badge

      Re: Contract versus open source?

      > explicitly written under the Apache Software license

      I'd be bloody careful here. Unless and until they've actually issued that software in _public_ with that licence attached (public "Notice"), they could argue in Court that it was still an internal matter and had not been formally finalised, and as such had not yet been swapped out of normal IP situation into Apache.

      If they've been providing the software publicly with this licence, this caveat won't apply. Just make sure you document/evidence the hell out of that before releasing any code: get screenshots, copies of signed contracts/receipts-or-invoices, the works.

  6. msobkow Silver badge

    When you develop software while being paid for that project, it is owned by whoever is paying for it. If there is any hint in your mind that it should be otherwise, get it in writing before you write the software! Always.

  7. Anonymous Coward
    Anonymous Coward

    "Praising barrister Nicholas Caddick QC's "ingenious" arguments on Penhallurick's behalf, Sir Christopher rejected them..."

    It is not a compliment to be told by an appeal judge that your arguments are "ingenious".

    1. Norman Nescio

      It is not a compliment to be told by an appeal judge that your arguments are "ingenious".

      Much like a ministerial proposal being labelled "courageous" (Yes Minister, Episode 6).

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