Law and technology

Computerworld reports on an employment dispute involving a web developer:

The case, heard by the Employment Relations Authority late last year, hinged on whether Michael Oliver, who did development work for Palmerston North firm Autoweb Solutions, was an employee or a contractor. The Authority determined he was an employee.

The employee/contractor distinction is an important one, and has been the source of a number of court disputes. While the Autoweb case was simply a wage dispute, the employee/contractor distinction could also potentially have intellectual property implications.

The default position under section 21 of the Copyright Act is that (most) copyrightable works created by an employee “in the course” of employment – e.g. software – are owned by the employer (whether or not the employee is actually paid). This is not the case if the person creating the work is a contractor. In that case, the so-called commissioning rule applies (see Copyright ownership and software development). If a developer had been “hired” (as an employee or contractor) to write some specific code, then the employer/hirer will likely have commissioned the work and will therefore own in.

But the situation could easily become more murky, with the possible result that a non-employee developer owns copyright in code they produced for their principal (though not in a “commissioning” situation) – for an example, see “Free design” and the commissioning rule. This cuts both ways: contractors should be careful not to be deemed employees in order to avoid the risk of IP created in the course of a project being inadvertently owned by their “employer”. Note that the words “in the course” are important, as discussed in the recent ERA case of Abbott v Chief Executive, Whitireia Polytechnic [2010] NZERA 766.

As is often the case, a proper contract is the answer – though as the Autoweb case makes clear, it is the substance of the relationship not the labeling of it that is determinative. In the case of employees, it is a legal requirement that there be a written employment contract. Contracts with contractors should clearly state which party retains any resulting IP.

Restraints of trade in employment

Computerworld reports on an Employment Relations Authority decision upholding a restraint of trade clause for a former IT account manager. Restraint clauses are common in the IT industry, as in others, and can be particularly important given the significance of IP and know-how in the IT sector. The article notes that the decision “belies the commonly-held belief that restraint of trade clauses are difficult to enforce”. It is true that the ERA and the Courts will strike down or limit unreasonable restraint clauses, but in recent years the Courts have tended to uphold restraint clauses. The conduct of the parties post-termination is also likely to be relevant, with “bad behaviour” on either side likely to be taken into account by the relevant authority.

Website terms

My latest Computerworld article is now online: Analysis: Cases clarify requirements for website terms of use

Facebook privacy investigation

The EU is investigating whether posting photos and other information about people on Facebook without their consent is a breach of privacy law. Privacy is a rapidly developing area, and the EU (for better or worse) leads the world in this area. The policies adopted in the EU are likely to influence privacy policy in other jurisdictions, including New Zealand where the Law Commission recently recommended leaving privacy to develop at common law (i.e. develop “organically”). It is reasonable to expect that with privacy, where Europe goes, the UK will go; and where the UK goes, New Zealand will eventually go.