IP in employment: who owns what?

When an employee writes code, designs a logo, writes a text or develops a new method as part of their work, who owns what is created? The question of intellectual property in employment is complex and often underestimated by both employers and employees.

Misunderstandings here can have serious consequences: a company that does not secure the right rights in the employment contract risks lacking rights to what it pays for. An employee who thinks they own their creative work may have misjudged the legal position.

This guide reviews the most important rules on intellectual property in employment: copyright, invention rights, and what the employment contract should contain.

What is intellectual property?

Intellectual property (IP) is rights to intangible assets:

• Copyright: literary and artistic creations (texts, software, music, designs and more)
• Patent law: technical inventions
• Trademark law: signs that distinguish companies' products
• Design law: the appearance and form of products
• Trade secrets: know-how and confidential business information

In employment it is primarily copyright and invention rights that are relevant.

Copyright and employment: the starting point

The Copyright Act protects the creator's rights. The starting point is that the person who creates a work is the author and holds the rights (section 1 of the Copyright Act).

Here is an important and often misunderstood point: there is no general statutory rule that an employee's copyright automatically passes to the employer. Instead, two different rules apply depending on what has been created:

Works in general: an unwritten main rule

For works created by an employee as part of their work, apart from computer programs, an unwritten main rule applies. Under it, the rights that are necessary for the employer's ordinary business at the time the work was created pass to the employer. The employer thus gets the right of use within its normal operations, but not automatically every conceivable right.

This means, among other things:

• The employee keeps their moral rights (the right to be credited and to object to derogatory changes). Under section 3 of the Copyright Act these can only be waived to a limited extent.
• Rights to uses that lie outside the employer's ordinary business (for example resale or licensing of the rights to third parties in new contexts) as a rule require an express agreement.
• Works created outside work and without using the employer's resources belong to the employee.

Computer programs: the statutory exception (section 59)

For computer programs (software), by contrast, there is a clear statutory rule. Section 59 of the Copyright Act provides that the copyright to a computer program created by an employee in the performance of their work or on the employer's instructions passes in full to the employer. The rule can be departed from by agreement, but it cannot be extended to types of work other than computer programs.

Only software created as part of the normal work or on the employer's instructions is covered. If an employee writes a program in their spare time about something unrelated to the job, it as a rule belongs to the employee.

Practical example

• A web developer at an e-commerce company writes a new checkout module as part of their daily work. This is software created as part of the work, and the copyright passes to the company under section 59.
• The same developer writes an open-source package in their spare time for a purpose unrelated to e-commerce. It belongs to the employee.
• The same developer uses the company's servers and working time on a side project. This is a grey area where the IP clause in the contract is decisive.

Employees' inventions

For patentable inventions, the Act on Employees' Inventions applies. In brief:

Inventions within the company's field of activity. If an invention has come about through the employee's work, or falls within the company's field of activity, the employer can require the rights to the invention to be transferred. The employee is entitled to reasonable remuneration if the value of the employer's exploitation exceeds what could reasonably have been assumed at the time of employment.

Notice and deadline. The employee must notify the employer of an invention, and the employer must within a deadline (as a rule 4 months) state whether the company wants the rights to the invention.

Free inventions. Inventions created with no connection to the work and outside the company's field of activity belong to the employee.

What should the employment contract say about IP?

A generic employment contract does not always cover IP questions sufficiently. Companies with IP-intensive business models (software, design, media, biotech) should have an express IP clause.

Essential elements of an IP clause

1. Definition of the company's IP. Describe precisely what belongs to the employer, for example IP created as part of the work, using the company's equipment, or within the company's business area.
2. Transfer of rights. The employee transfers the relevant rights to the company to the extent lawful, within the above definition.
3. Exceptions. State expressly what is not the company's IP, for example personal projects and open-source contributions unrelated to the work. A clear exception protects the employee's own projects.
4. Further development. Address what happens if an employee further develops the company's IP after the employment ends.
5. Assistance with registration. The employee undertakes to assist with patent and trademark applications and to sign the necessary documents.
6. Continuing effect. IP created during the employment belongs to the company, even if it is formalised or discovered after the employment ends. The clause should expressly apply after leaving.

Note that moral rights under section 3 of the Copyright Act cannot be freely transferred, and that a clause attempting to take over everything an employee creates (including private projects unrelated to the work) can be set aside as unreasonable under section 36 of the Contracts Act.

Confidentiality and trade secrets

In addition to IP rights, the employment contract should contain a confidentiality clause that protects the company's trade secrets and confidential information.

The Trade Secrets Act (from 2018, which implements the EU directive) protects companies' know-how, but only if the company actually treats the information as confidential, for example by access restriction and marking of documents. An express confidentiality clause supports the company's protection.

The confidentiality obligation should apply both during and after the employment, with a clearly defined scope and duration.

Creative content and marketing

Employees in marketing, design and editorial teams continuously create content with copyright protection: texts, photographs, illustrations and videos. The starting point is the unwritten main rule: the company gets the right of use within its ordinary business. But:

• Photographs and other works: the employee can in some cases keep the right to be credited.
• Moral rights: cannot be freely waived.
• Social media: who owns the accounts and content an employee has run for the company? This should be regulated in the contract, so it is clear that accounts and content created on the company's behalf belong to the company.

IP on leaving

When an employee leaves, it is important that the rights clearly stay with or pass to the company. It is recommended to:

1. Have a clear IP clause in the employment contract.
2. Have the employee sign a transfer declaration on leaving, where relevant.
3. Ensure that all access to code repositories, design programs and accounts is transferred.

Liability and sanctions for IP infringement

An employee who misuses the company's IP, for example by using code in a competing project or disclosing trade secrets, can incur, among other things:

• Liability in damages under employment and tort rules
• An injunction through the courts against continued use
• Criminal liability for an intentional, serious infringement, for example under the Criminal Code's rules on business secrets

Frequently asked questions

What happens if the contract does not mention IP rights?

Then the background law applies: the unwritten main rule for copyright, section 59 of the Copyright Act for computer programs, and the Act on Employees' Inventions for patentable inventions. These rules do, however, leave many grey areas, and an express clause gives far more clarity.

Can an employer claim all rights, including to spare-time projects?

No. A clause that takes over rights to everything an employee creates, including private projects unrelated to the work, can be set aside as unreasonable. The clause must be limited to work-related creations.

What is reasonable remuneration for an employee invention?

The law does not state a figure. The remuneration is calculated from the value of the invention and the resources the company and the employee each contributed.

Can I as an employee have open-source projects alongside my work?

Yes, but clarify it in the contract or ask for an express exception. Many companies have a policy for open-source contributions. Check your contract and ask if it is unclear.

What is the consequence if an employee takes code with them on leaving?

It can constitute an infringement of copyright and trade secrets. The company can seek an injunction and claim damages, and for an intentional act it can also have criminal consequences.

Conclusion

Intellectual property is often a company's most valuable asset. A clear IP clause in the employment contract, combined with a confidentiality clause, is the best protection. Remember at the same time that the background law treats computer programs (section 59) differently from other works, and that moral rights cannot be freely transferred.

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The content of this article is for guidance only and does not constitute legal advice. Consult a lawyer for advice on your specific situation.