By Julian Dobre
Employees generate some of an employer’s most valuable intellectual property (“IP”) in the course of their employment. But an enterprising employee may develop a side project or hustle that blurs the lines of ownership. In this blog, we discuss important considerations to determine ownership of a side project, including the different types of IP, contract considerations, use of employer’s resources, and how to protect a side project.
What Type of IP is your Side Project?
To determine whether your employer owns the IP in your side project you need to determine what kind of IP it is, all of which have different considerations and laws that governs them:
- If the IP in your side project is a “work” including art, literature, film, photography, music, performances, or software, this is governed by the Copyright Act.
- If the IP in your side project is a “trademark”, including names and brands, this is governed by the Trademark Act.
- If the IP in your side project is an “invention”, including a product, composition of matter, machine, or process, this is governed by the Patent Act.
- If the IP in your side project is an “industrial design”, this is governed by the Industrial Design Act.
What’s in the Contract?
In many cases, whether the IP in your side project is owned by your employer comes down to what your job duties are. Some employment contracts may clearly spell out your duties in a detailed list. Others do not give clear expectations, leaving your job duties open, ambiguous, and boundless. The more likely the side project is considered a job duty under the contract, the more likely it belongs to the employer.
If your contract states you should be dedicating your full attention to the job, it is questionable whether you are allowed to have a side project at all. If all of your attention belongs to the employer, then any projects created by that attention may be too. Some contracts may state you can have a side project only with the consent of your employer, in which case, it is important to have that consent in writing.
Additional documents may be brought into the contract in the appendices, enclosures, or otherwise. These may include the employee handbook, IP policy, or marketing policy, all of which need to be read in conjunction with your employment contract.
Did You Use Employer Resources?
It is important to avoid using any employer resources if you want to retain ownership of your side project. By using employer resources, you make it more likely that the IP was created in the course of employment. This includes your time and energy. Don’t work on, talk about, or think about your project during work hours, including with other employees or staff. Don’t use the employer’s equipment, premises, internet, email, hardware, or software. Refrain from putting a single datapoint on their server or taking up any of their bandwidth.
Case Study: I Created a Lead Generation Site
In this case study you are in a sales role. As a side project you created a lead-generation website that you use to drive sales at work. Your colleagues get leads the old way: coffees and cold calls. You created a new brand and never reference your employer. You used all your own resources to create and maintain it and only worked on your own time. Your employer noticed a huge bump in your productivity and they want in. Do they own the lead-generation site?
The first step is to determine what kind of IP the lead generation site is. As a combination of literature, images, and software, the lead generation site is likely a “work” or copyright. This situation is then governed by section 13 of the Copyright Act, which sets out 3 conditions that must be true for an employer to own the copyright in their employee’s work:
- You are an employee rather than a contractor,
- You created the IP in the course of employment, and
- There is no contract that states you retain the IP.
Whether you are an employee or contractor depends on a number of employment law factors, including the degree of control the employer has over your work, whether they own the resources you use for work, and whether you are able to work for multiple employers at the same time. If under the above considerations you are a contractor, the IP is yours unless a contract says otherwise. If you are an employee, the IP belongs to the employer unless a contract states otherwise or if the IP was created in the course of employment.
Whether the IP was created in the course of employment depends on a number of factors, including your use of employer resources and whether creating the side project is considered a job duty. Your contract might not explicitly say “employee shall create a lead generation site”, but there may be terms of the contract that when read broadly bring the website into the fold. Since your role is to sell, and the website facilitates sales, a broad reading of the contract may consider it a job duty. You may further be expected to use your creativity and innovativeness for the benefit of your employer, so creating a new tool (even one that the employer never asked for) could be considered a job duty. The more likely the side project is considered a job duty under the contract, the more likely it belongs to the employer.
How Do I Protect My Side Project?
The first step in protecting your side project is determining who owns what. It is recommended to do a thorough review of your situation with a lawyer knowledgeable in business, employment, and IP.
Incorporation may add a protective layer between your side project and your employer. If the IP of the side project is held by a corporation, then the employer, who has a legal relationship with you personally, is more distant with the IP.
Think about registering your copyrights, trademarks, patents, or industrial designs. By building up a portfolio of your IP you create a paper trail of the ownership.
Add clarity of ownership with a contract. As long as ownership of the side project remains unclear this uncertainty benefits the employer. If your employer already knows about the side project (and you don’t want to keep it a secret), you could approach them to sign a new contract or modify your existing contract to transfer the IP or extinguish their rights in it.
Julian Dobre is a Technology & IP Lawyer at Donna Purcell QC Law.