Businesses commonly require their employees and independent contractors to sign agreements assigning ownership of all work product and related intellectual property rights to the business; but, such assignments may not work for future-created works (works created after the agreement is signed), and that copyright in a work can only be assigned by an agreement that is signed after the work is created. Businesses should consider implementing practices to address this issue and ensure that they acquire appropriate rights in their workers’ work product.
Century 21 Canada Ltd. Partnership v. Rogers Communications Inc. involved a dispute over the unauthorized copying of property descriptions and photos from Century 21′s website for use on a real estate listings website operated by Rogers’ subsidiary Zoocasa. Century 21 sued Rogers based on license and assignment agreements signed by the co-plaintiffs before the property descriptions and photos were created. The Court decided that Century 21 could not win because the license and assignment agreements did not give Century 21 ownership of copyright in the property descriptions and photos or an exclusive license to use them. The Court followed a 1924 decision that an agreement cannot effectively assign legal ownership of copyright in a nonexistent (future-created) work. Instead, a purported assignment of copyright in a future-created work gives the assignee only an equitable interest in the copyright when the work is created and a right to require the copyright owner to execute a proper assignment of copyright after the work is created, which might be difficult to do in many circumstances.
This is a big deal. The decision that the common law does not recognize as valid an assignment of property that does not exist when the assignment is signed – could apply to all kinds of intellectual property rights and thereby limit the effectiveness of work product ownership agreements signed when a worker is first engaged. While employees’ work, under the Canadian Copyright Act are deemed to belong to the employer, there are no similar statutes to create that situation for other kinds of intellectual property, such as patentable inventions created by employees or for any intellectual property rights (including copyright) created by independent contractors.
To address these risks, businesses should ensure that when employees or independent contractors are first engaged, they are required to sign an agreement that includes appropriate assignments and exclusive licenses of work product and related intellectual property rights and that obligates the worker to execute further agreements to confirm the business’ ownership of future-created work product and related rights. For workers who are already engaged, businesses should consider requiring them to sign a supplemental agreement (supported by valid consideration) to address these issues. In addition, businesses should consider implementing a practice of requiring that each worker sign a confirmatory work product ownership agreement on a routine basis (for example, when annual bonuses are distributed) and upon termination or disengagement (including as part of a severance agreement).