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Case law: Independent contractor found to be an employee, so intellectual property rights in his work belonged to his client

Contractors required to carry out work personally for a business client should ensure they are genuinely working for the business as an independent contractor, not as an employee, or risk the intellectual property rights (IPR) in their work automatically belonging to their client.

October 2018

This update was published in Legal Alert - October 2018

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

The general rule is that IPR, such as copyright, which is created by an employee as a result of work done in the course of their employment, legally belongs to their employer, and not to them personally.

In this case, a business wanted a particular individual – a former director - to carry out some work. It entered into a contract with his personal service company (set up by him for tax purposes) for him to do the work. The paperwork stated that the work was being done by him as an independent contractor or consultant (and therefore not as an employee).

A dispute arose as to who owned the IPR in the individual's work. The business claimed that the individual was an employee, rather than an independent contractor, so the IPR belonged to the business as his employer.

The High Court agreed. It found that the true relationship between them was that of employer and employee because the paperwork showed that, even though he was contracting with the business through his limited company, the business required him to do the work personally. He could not substitute anyone else to take his place – a hallmark of employment status.

IPR in his work therefore belonged to the business, as his employer.

Operative date

  • Now

Recommendation

  • Contractors required to carry out work personally for a business client should ensure they are genuinely working for the business as an independent contractor and not an employee, or risk intellectual property rights in their work automatically belonging to their client

Case ref: Sprint Electric Ltd v Buyer's Dream Ltd [2018] EWHC 1924

Disclaimer: This article from Atom Content Marketing is for general guidance only, for businesses in the United Kingdom governed by the laws of England. Atom Content Marketing, expert contributors and ICAEW (as distributor) disclaim all liability for any errors or omissions.

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