Introduction
The commissioning rule in the Copyright Act 1994 automatically allocates copyright ownership to the “commissioner” for artistic works, film or sound recordings, and computer programs. Parties can however contract out of this default rule.
This means that if a client engages and agrees to pay a developer to write a computer program, the client will be the first owner of the copyright in that work, rather than the developer.
Parliament had until recently been considering reversing the commissioning rule by introducing the
Copyright (Commissioning Rule) Amendment Bill. The effect of the Bill would have been that the developer would be the default owner, subject to any agreement to the contrary reached by the client and the developer.
However, just last week the National Government announced its plans to freeze any further changes to the Copyright Act 1994 with a view to rewriting it in its entirety, because of the piecemeal changes that had been made or suggested by the previous Government.
Although it is too early to say what the new Copyright Act will look like, the chances are fairly high that the proposed new commissioning rule will, be incorporated into it.
With either default rule ownership of copyright works such as computer programs remains a contentious issue to be governed by contract.
Maxim Group v Jones Publishing is a recent High Court decision which provides a warning to parties wishing to contract out of the default rule.
The case
Maxim Group operated a business specializing in creative design work. The defendant Jones Group published a number of magazines including “Top Gear Magazine”, and “Dish”. Maxim provided design work and other services to the Jones Group for these magazines.
Maxim alleged that its contractual relationship with the Jones Group was governed by its terms of trade, and that these terms of trade had the effect of contracting out of the commissioning rule.
The terms of trade said that all creative work was to remain the property of Maxim, and could not be used until paid in full. However, two problems arose for Maxim:
- First, the Jones Group claimed that they were not aware of the terms of trade until proceedings were commenced, and that the work carried out was pursuant to specific quotes given for each task. No documentary evidence was produced which showed how or when the terms of trade were brought to the notice of the Jones Group.
- Secondly, even if the terms of trade were effective, Maxim routinely allowed use of the works before payment was due. This pattern of trading contradicted the terms of trade, and amounted to authorisation of the use of the work, which meant that Maxim could no longer claim infringement
For the above two reasons, the Court considered that Maxim’s attempt to contract out of the commissioning rule was ineffective, and that therefore Jones Group was the owner of the copyright.
Implications
Under the proposed Copyright (Commissioning Rule) Amendment Bill, it would remain open to define ownership of copyright by contract. The difference is that the onus of contracting out shifts from the person who creates the copyright work to the commissioner of that work. Despite the debate surrounding the merits of the rule change, the lessons to be taken from the
Maxim Group decision are that where, for example a developer wishes to contract out of the default rule, it is important for the developer:
- to bring the terms to the attention of, and have them accepted by, the client. Where specific quotes are given for each task, the general terms and conditions should be clearly incorporated into the quote;
- to act consistently with developer’s terms of trade;
- to be clear about excluding the default rule, and not make ownership dependent on other things such as payment.
Ownership should be contemplated at the outset of these relationships, especially where the parties’ understanding might otherwise be contrary to the position at law.