February 15, 2016

In one of the few copyright infringement decisions to be released recently by the Bureau of Legal Affairs, it held that a company is the author of the work, even if the work was created by an individual (the Complainant) while working for the company (the Respondent Company) under a Consultancy Agreement.

The Complainant executed a Consultancy Agreement with Respondent Company, which described the scope of work as including the development of training policies and procedures manual, training manuals, English education materials and lesson plans.  Complainant created a work entitled “Conversational English Study Guide First Edition” (the “Work”), which is intended to teach and improve one’s proficiency in the English language.  Subsequently, an agent or representative of Respondent Company applied to register the Work with the National Library.  Respondent Company also reproduced the Work as teaching materials in its classes and displayed copies of the Work inside its premises.

Complainant objected and demanded that the Respondent Company refrain from using his Work and to cancel the copyright registration issued by the National Library.  Complainant then sued the Respondent Company for copyright infringement.

Respondent Company disputed Complainant’s claim of ownership arguing that he was merely an agent of the Respondent Company and that the Work was created while Complainant was performing his regularly-assigned duties.

On the issue of ownership, the Bureau of Legal Affairs examined the Consultancy Agreement and found that despite the use of such title, its terms and conditions really defined an employer-employee relationship. The Complainant was engaged on an exclusive basis, with terms defining Complainant’s duties and responsibilities to Respondent Company.

Citing Article 280 of the Omnibus Rules Implementing the Labor Code, which provides that an employment is deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, the Bureau concluded that Complainant was a regular employee who was assigned to prepare the Respondent Company’s manual.  Accordingly, the Respondent Company is the owner of the Work.  Section 178.3 of the Intellectual Property Code awards copyright ownership to the employer for work that is produced by an employee as a result of the performance of such employee’s regularly-assigned duties, unless there is an agreement, express or implied, to the contrary.  In this case, Complainant and Respondent Company had no express or implied agreement to the effect that the Complainant would own the Work.  The Bureau’s conclusion that the Respondent Company was the rightful owner was further reinforced by the testimony of Complainant that he shared ownership of the Work with other employees of the Respondent Company.

The important take way from this case is that parties must pay close attention to the terms of an engagement agreement where a party is being paid to produce copyrightable work for the other. Defining clearly the scope of engagement and stipulating beforehand which party owns the copyright to the work product will lessen the possibility of ownership dispute arising between the party creating the work and the other who is paying for the work.  Contract clauses must be clear to make sure that the creator does not inadvertently sign away his ownership rights to the work.