Who Owns Rights to Employee-Created Intellectual Property?
Who Owns Rights to Employee-Created Intellectual Property?
An Employer’s Perspective on Intellectual Property Rights in Kenya
Are you an employer running a software engineering company? Are you employing people to develop apps? Are you running an organisation where your employees generate creative or innovative work outputs? Have your employees ever laid a claim of ownership over creations that they have made at the workplace? Would they be entitled to such ownership if they were to make such claims?
On World Intellectual Property Day (26 April 2019), the Kenya Copyright Board (KECOBO) hosted a conference in Nairobi, Kenya where these and other issues regarding the ownership of employees’ creations in the workplace were debated. This annual conference is held with the aim of raising awareness on the role that intellectual property (IP) rights play in encouraging innovation and creativity. In view of the bustling creativity and innovation currently being experienced in the technology space in Kenya and an ever-increasing level of curiosity and conjecture regarding the attendant rights of ownership, this article seeks to shed light on how Kenya’s IP laws deal with innovations that arise in the course of employment and particularly to provide some clarity on the ownership of IP rights in this context.
Background – What is IP?
IP has been defined by the World Intellectual Property Organization (WIPO) as “creations of the mind such as inventions, literary and artistic works, designs and symbols (and) names and images used in commerce”.
It is broadly categorised into two parts: industrial property and copyright. Industrial property includes trade marks, patents, industrial designs and utility models. Copyright, on the other hand, relates to ownership and use rights subsisting in works such as literary, musical and artistic works, audiovisual works, photographs, broadcasts and sound recordings.
Relevant International Treaty Obligations
Several international laws and treaties to which Kenya is a signatory or has ratified are also relevant. These include:
- the Berne Convention for the Protection of Literary and Artistic Works (1886).This treaty deals with the protection of works and the copyright interests of their creators (authors);
- the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs) (1994). This treaty was agreed upon by all members of the World Trade Organization and provides for the adoption of minimum uniform IP standards of protection by state parties; and
- the Madrid Agreement Concerning the International Registration of Marks (1891) and the Protocol thereto (1989). These two instruments govern the Madrid system for the international registration of trade marks and together make it possible to protect a trade mark in a large number of countries by obtaining one international registration that has effect in each of the contracting parties designated under the registration subject to their own internal national approval procedures.
Trade marks are marks that are used in the course of trade for purposes of distinguishing one party’s goods or services from similar goods or services originating from another party. The Trade Marks Act (Chapter 506, Laws of Kenya) defines a mark as:
“a distinguishing guise, slogan, device, brand, heading, label, ticket, name, signature, word, letter or numeral or any combination of the above whether in a two-dimensional or three-dimensional form.”
Trade marks are used for branding purposes in all industries and sectors of commerce from fashion to entertainment, media, technology and hospitality and are, in many instances, high-value assets. Examples of famous trade marks include Versace, Google, The Hilton and Samsung.
Rights of ownership of trade marks arise either under common law (by virtue of bona fide commercial use) or through registration. Trade mark registrations are valid for a period of 10 years and may be renewed for further consecutive terms of 10 years each. There is no limit to the number of times that a trade mark registration may be renewed.
In Kenya, the registration of a trade mark serves as evidence of exclusive ownership and gives the owner the right to use the registered trade mark and the right to permit or to prohibit others (through infringement proceedings) from using it or any confusingly similar variations of it.
Copyright protects the original expression of an idea in tangible form. It offers no protection for concepts or ideas that have not been so expressed. As already pointed out, it protects literary works (including software), musical and artistic works, audio visual works, photographs, broadcasts and sound recordings.
In Kenya, copyright protection generally expires 50 years after the end of the year of occurrence of a particular event that is related to the copyright. In the case of books for example, the copyright protection expires 50 years after the death of the author while in the case of a film, the protection would end 50 years after the end of the year in which the work was made or published/publicised (whichever date is the latest). Once the 50-year period lapses, all copyright protection ceases and the subject work falls into the public domain.
Copyright protection generally arises immediately upon creation of an original work that is eligible for such protection. No registration is necessary for protection to arise. In Kenya, however, registration is possible and would serve as evidence of ownership in court proceedings. Copyright protection gives the copyright owner two sets of rights: economic rights and moral rights. Economic rights enable the copyright owner to carry out the following acts (and to generally exclude others from doing so):
- the reproduction of the original work or its adaptations in any material form;
- the distribution of the subject work by sale, lease or any similar arrangements;
- the communication of the subject work to the public; and
- the broadcasting of the work in whole or in part either in its original form or in its derived form.
On the other hand, moral rights consist of the author’s right to be named and acknowledged as having authored a work and to object to its alteration, mutilation or distortion.
Section 31 of the Copyright Act (Number 12 of 2001), bestows the original ownership of copyright, in any particular work, on the person who creates it. However, where the author of the work makes the work in the course of his employment, the Copyright Act adopts an employer friendly position and provides that the copyright shall, in that case, be deemed to be transferred to the employer upon the creation of the work.
This automatic transfer of copyright can however be excluded or limited by contractual agreement between the employer and the employee.
Patents are a form of protection granted to inventions that are new, non-obvious (to persons having ordinary skill in the art or technical field to which the invention relates) and industrially applicable. The Industrial Property Act (Number 3 of 2001) defines an invention as:
“a new and useful art (whether producing a physical effect or not), process, machine, manufacture or composition of matter which is not obvious, or any new and useful improvement thereof which is not obvious, capable of being used or applied in trade or industry and includes an alleged invention.”
Patents are more common in the scientific community and tend to confer a high degree of protection upon inventions due to the usually high investment costs that often go into research and development and the innate capacity of such inventions in many cases to significantly increase the value of any company that owns them. The patent system also encourages research, innovation and the creative abilities needed to spur economic growth since inventors are required to disclose the know-how behind their inventions in exchange for obtaining patent protection.
The government of Kenya has been promoting the country as an “innovation hub” by spearheading projects such as the “Huduma WhiteBox”, which is an online platform where innovators can submit their new ideas to government for analysis and consideration for government-funded development and roll-out. The Huduma WhiteBox gives preference to ideas and innovations that are aligned with the government’s “big four” development agenda, which covers affordable housing, manufacturing, food security and affordable healthcare.
Industrial designs are forms, shapes, colours and the general appearance of a product of industry or handicraft. Section 84 of the Industrial Property Act defines an industrial design as:
“any composition of lines or colours or any three dimensional form, whether or not associated with lines or colours provided that such composition or form gives a special appearance to a product of industry or handicraft and can serve as a pattern for a product of industry or handicraft.”
The shape of the Coca-Cola bottle is an example of a prominent industrial design.
In order to be protected, an industrial design must be new, that is, it must never have been disclosed to the public anywhere in the world. It must also only be concerned with the outward appearance of objects and not the method of its construction or its functionality.
In Kenya, industrial design registrations are valid for a period of 5 years and can be renewed for two further terms of five years each.
Ownership of IP rights under the Industrial Property Act
The Industrial Property Act similarly addresses the question of ownership of inventions, utility models, technovations and industrial designs that are created by employees in the course of employment. Like the Copyright Act, the Industrial Property Act also takes an employer friendly position on this issue.
The Industrial Property Act grants employers the right to a patent for any invention made by their employees in execution of their employment contracts. However, where the invention that an employee creates is of “exceptional importance”, the employee will be entitled to “equitable remuneration taking into account his salary and the benefit derived by the employer from the said invention. The Industrial Property Act directs that this position shall apply where the employment contract does not require the employee to exercise any inventive activity, but the employee nevertheless creates the invention using data or means available to him during his employment. The wording of the law on this point, however, is ambiguous as it does not go as far as to state that this is the only scenario where the requirement for remuneration shall apply. It is also not clear what criteria would be used to determine whether or not an invention, utility model or design is of “exceptional importance”.
Despite the ambiguity in the law, it is generally understood that an employee would solely own an invention or innovation only when they create it without any use of data, means or other resources or information which belong to the employer or are available to the employee by virtue of their employment.
The Industrial Property Act also recognises and provides for “technovations”. It defines a technovation as:
“a solution to a specific problem in the field of technology, proposed by an employee of an enterprise in Kenya for use by that enterprise, and which relates to the activities of the enterprise but which, on the date of the proposal, has not been used or actively considered for use by that enterprise”.
The Industrial Property Act grants an employee who develops a technovation:
- the right to a technovation certificate save where the employee’s duties comprise the making and proposing of technovations and the technovation relates to a field of activities for which he is employed; or
- the right to remuneration for his employer’s use or communication of the technovation to a third person.
In 2012, the case of Samson Ngengi vs the Kenya Revenue Authority (KRA) brought to light the debate regarding legal ownership of technovations in the employment context in Kenya.
Mr. Ngengi who was an employee of KRA developed a software programme known as the Geo-spatial Revenue Collection Information System (GEOCRIS), which was used to map property location, ownership and building details and the tax status of all taxpayers in the country. This innovation was a useful and effective method for the KRA to collect information in relation to income tax. KRA then used this idea to advertise for bids for the development of similar software without Mr. Ngengi’s consent and without acknowledging that he had created this programme.
Mr. Ngengi went to court to claim that KRA was usurping his IP rights through its development of a system that was similar to GEOCRIS. He obtained an provisional injunction barring KRA from dealing in GEOCRIS or developing any similar systems pending the hearing and determination of the suit. The suit was subsequently referred to arbitration. Despite the fact that the manner in which this case was determined is not in the public domain, the award of an interlocutory injunction (recognising the presence of an arguable case) demonstrated the willingness of the courts in Kenya to recognise and enforce an employee’s IP rights.
While there are specific laws in Kenya dealing with IP, there is still uncertainty as to how to determine whether a work or invention has been made in the course of employment. Therefore, it is important for employers to have IP policies that clearly set out (i) employees’ rights to technovation certificates, (ii) whether IP rights arising in the course of employment are to be vested in the employees and (iii) what constitutes the “course of employment” and “exceptional importance” in respect of inventions and innovations. Employers should also ensure that their employees’ contracts clearly delineate what lies within each employee’s field of activities for purposes of determining IP entitlements in order to reduce the risk of IP related disputes with their employees.