May 2021 - Bay of Plenty Business News

May 2021 BAY OF PLENTY BUSINESS NEWS 19
WFH doesn’t mean
you’re TOOC
In pre-Covid days, if you created copyright works such as drawings
or source code as part of your job, the odds are you would have
done so during “normal office hours” at your desk rather than at 9
o’clock at night in the comfort of your own home. It would have been
straightforward to establish who was the owner of copyright (TOOC)
in those drawings or source code.
INTELLECTUAL PROPERTY ISSUES
> BY BEN CAIN
Ben Cain is a Senior Associate at James & Wells and a Resolution
Institute-accredited mediator. He can be contacted at 07 928 4470
(Tauranga), 07 957 5660 (Hamilton), and benc@jaws.co.nz.
In these Covid-affected times,
however, many office-based
employees now work flexible
hours and work from home
(WFH).
Indeed, the 8.30am – 5pm
day in the office has almost
become a rarity rather than the
norm. As a result, ascertaining
who is the owner of copyright
in drawings or source code
may be a little harder to discern;
or at least, the topic may
be open for greater debate.
The need to be sure of
who owns what in an employment
context is perhaps more
important now than it used to
be.
The recent case of Michael
Penhallurick v MD5 Ltd [2021]
EWHC 293 in the Intellectual
Property Enterprise Court in
England, although relating to
events pre-Covid, illustrates
this need.
Penhallurick, a former
employee of MD5, claimed
ownership of copyright in eight
works relating to a technique
he named “Virtual Forensic
Computing” or “VFC”.*
The eight works comprised
different versions of the software
code (literary works), a
graphic user interface (artistic
work) and a user guide (literary
work).
It was established that the
first two works – the earliest
version of the VFC source code
and the object code compiled
from this code – were created
in 2005 and 2006, before Penhallurick
was employed by
MD5 in November 2006.
The Court found these
works were not relevant to
Penhallurick’s claim and consequently
focused its assessment
on the remaining six
works created by him after he
joined MD5.
Identifying the author
The Court found Penhallurick
was the author of the six
remaining works and therefore
was the first owner of copyright
in them – unless any
were made in the course of
his employment by MD5 pursuant
to the IP clause in Penhallurick’s
employment agreements,
in which case MD5 was
the first owner.
Which of these was the case
turned on the meaning of “in
the course of his employment”.
Why? Because of the poor
wording of the “Job Titles and
Duties” and intellectual property
clauses in Penhallurick’s
first employment agreement.
The Court ultimately found
that all of the works had been
created by Penhallurick in the
course of his employment with
MD5.
Of particular interest to
this author, and relevance to
this article given the current
fashion for working flexible
hours from home, however, is
the Court’s finding in relation
to the third and fourth copyright
works (“VFC Version 1”
and the graphical user interface
(“GUI”) for VFC Version
1) created by Penhallurick
in 2007. In respect of these
works, the Court said:
“[66] … It seems that Mr
Penhallurick took on the task
[of developing VFC Version
1 and GUI] with enthusiasm,
to the extent that he took his
In these Covid-affected times, however,
many office-based employees now work
flexible hours and work from home
(WFH).”
work home some of the time.
His staff annual appraisal of
August 2007 suggests that
much of the work must have
been done during working
hours at MD5.
“But whatever the exact
proportion done at home, it
does not displace the strong
and primary indication that it
was work done in the course
of his employment. The fact
that an employee does work at
home is relevant to the question
of whether the work is of a
nature to fall within the scope
of the duties for which he is
paid but it may or may not
carry much weight.
“Where it is otherwise
clear that the work is of such
a nature, in my view the place
where the employee chooses to
do the work will not generally
make any difference. The same
applies to the ownership of the
tools the employee chooses
to use, here sometimes Mr
Penhallurick’s own computer
system.
“If it is clear that the
employee is being paid to
carry out a task as agreed with
his employer, he may choose
to use tools supplied by his
employer or his own tools;
either way, the task is carried
out in the course of his
employment.”
Although it is not stated, I
am confident the same reasoning
applies to the time of day
the employee chooses to do the
work – that is, it doesn’t matter
whether you do the work
at 10am or 10pm, if the work
is carried out in the course of
your employment then any
copyright rights in it will be
owned by your employer.
What employees and
employers should do
Standing back, Penhallurick’s
case identifies two important
‘‘take homes” for both
employers and employees:
• First, if an employer is
going to make use of copyright
works created by an
employee before that person
is an employee, then
the employer should have
the employee assign copyright
in those works to the
employer at the same time
the employee becomes an
employee. Alternatively,
execute a licence agreement
with the employee at
the same time the employee
becomes an employee
to enable those works to
be lawfully used by the
employer;
• Second, the employer
should ensure employment
agreements, but particularly
those with employees
whose job it is to create
intellectual property,
adequately identify an
employee’s role and scope
of duties so that it is clear
what resulting intellectual
property the employer is
laying claim to by virtue of
the employment agreement,
irrespective of what time of
day and where that intellectual
property is created.
* VFC is a method of retrieving
an image of the hard disk without
writing on it, then booting
up the image on a virtual
machine so that the image can
be investigated. In developing
the technique, Penhallurick
had used a freely available
product called VM Software
to set up the replica of the
target computer’s hardware
and operating system. As computer
programs generally have
inbuilt safeguards to prevent
them from being manipulated
in this way, the method developed
by Penhallurick involved
a password bypass feature.
BEWARE OF FOREIGN IMITATIONS.
There’s no shortage of great ideas in New Zealand.
But for an innovative bunch, we’re not the best at
realising the full potential of our innovations, particularly
when exporting them.
At James & Wells, we can identify your competitive
edge, offer business strategies for specific markets and
help you own and leverage your intellectual property to
ensure no one steals the fruit of your labour.
www.jaws.co.nz | +64 7 928 4470