A quick guide to the ins and outs of employees and contractor and who owns the intellectual property in the work they create.
Let’s say you’re making a game and you hire / pay someone to create a certain part of that game for you – e.g. the music, artwork etc - but since it’s just a small project and no one wants to spend the money, a written contract is never made up. Everyone is on good terms and working well together – no problems.
But then let’s say that the game, once thought of as a small project, becomes an absolute runaway success, and suddenly that £500 you paid that graphic designer or composer doesn’t seem very fair to them. Perhaps they (rightly or wrongly) believe their contribution is what “defined” the game and made it so popular and that they should be compensated accordingly.
So, who owns what and why does this matter?
Question 1 - Are they an employee?
Why does this matter? Normally, intellectual property rights (IPR) (e.g. copyright, design rights etc) in a piece of work are owned by the creator. But, if the creator is defined as an employee by law, the work was created “during the course of their employment” (more on this below), and the employment contract doesn’t say otherwise, then the employer would own it.
So if the creator is not considered an employee but rather a contractor / self-employed then they will normally own the rights to their work and can decide how their work is (and importantly, is not) used – e.g. in order to use their work in your game, you have to licence or buy it from them for £10,000.
Who is an employee? Now this is a tricky question and there are few hard and fast rules to go by - courts can and have made decisions that seem to go against first impressions, so please do always get legal advice. But here are a few things that might lead to someone being considered your employee*:
* The presence or lack of any one of these things alone doesn’t really determine the issue – it’s more about a consideration of all of them together. Also, there is no need for an employment contract to be in writing, so even if everything has been agreed verbally, you could still be an employee.
Question 2 – was the work made “In the course of their employment”?
So if you’re reading the above and don’t think that someone is your employee, then it’s likely that the creator themselves owns the work. This can certainly put you in a difficult position if your game is already being sold and the creator decides to hold you to ransom for their assets.
But if you’re reading and thinking that they are an employee, don’t rest easy just yet; the next step is to consider if they’ve made the work "in the course of their employment" with you. If they have, then you as the employer are likely to own the relevant IP.
Again, there is no quick and easy answer to this question and it’s necessary to consider a variety of factors and paint an overall picture of the facts. Some things that would indicate it was created in the course of their employment (and therefore belongs to the employer):
So if your employee has created a piece of work in the course of their employment, you are likely to own the IP in this. That said, there are still certain circumstances (beyond the scope of this piece) in which the employee may still have rights to the IP in their work.
Header Photo: (c) owned by Square Enix - thanks for making Vivi so awesome!