Work made for hire: is it enforceable under armenian legislation?
Companies carrying out business in IT, engineering, pharmacy or other IP related fields often face this issue: Can they protect their creation from employees acting in bad faith? “Work made for hire” is considered the work created or to be created by the employee for the employer. In this scheme the holder of intellectual property is employer. This is quite common in a number of jurisdictions and the aim of such regulation is to protect the business interests.
The core questions here are the following:
(1) Do we deal with labour contract or another type of civil contract?
(2) With what type of intellectual property are we dealing with: copyright, inventions, utility models or industrial designs?
The general notion of “Work made for hire”, specified in the Civil Code of the Republic of Armenia, does not make any differentiation between types of contracts. It states that the author holds the rights towards results of intellectual works. The author of intellectual property has exclusive rights to use the objects of intellectual property at his discretion. However the author of intellectual property rights has the authority to transfer those rights to third persons. The Author also can enter into arrangement to transfer certain rights to third person.
The differentiation between types of contracts is being revealed in respective regulations.
The Law on Copyrights and Related Rights stipulates that economic rights in a work created on employment assignments or employment duties shall belong to the employer unless otherwise stipulated by the contract between the author and the employer.
The Law on Inventions, utility models and industrial designs states that in the course of performing service duties the right to receive certificate of Inventions belongs to the employer if such is prescribed in the labour contract.
Law on Legal Protection of Integrated Circuits Topologies stipulates that the exclusive right to use topology belongs to the author. The exclusive rights towards Topologies belongs to the employer, if otherwise is not stipulated in the agreement. The same refers to other types of civil contracts.
From the above-mentioned regulations only the Law on protection of integrated circuits topologies makes differentiation on labour and civil contracts. So in the case we are dealing with civil contract,
the agreement shall be drafted with more caution. Moreover, the right of intellectual property is not consistent in the regulations. For instance, the Law on inventions states that unless specifically specified in the labour agreement, the right towards intellectual property belongs to the employee. However, the Intellectual property right belongs to the employer in the law on Integrated Circuits, unless otherwise specified in the agreement.
So whenever drafting labour or civil agreement regarding the rights of Intellectual Property, the pre-caution regarding those regulations is a must.
Questions of enforcement
Here comes the issue of enforcing the rights and protecting the interests of the business both in the framework of labour contract and in the framework of other types of civil contract.
The Labour Code of RA stipulates certain grounds to terminate the contract. The employer cannot terminate the contract without bold proof of violation of the duties by the employee. Even if we have the fact of violation, in many cases it cannot be enough to terminate the agreement. The grounds of termination shall be in compliance of the Labour Code. With this respect the only ground to terminate the labour contract is when the employee has published or transferred business secrets. The termination is not the last issue here. In many cases business suffers damages. To get compensation of damages from the employee is another headache for many employers. The damage cannot be compensated in whole from the employee, if no agreement on full material responsibility has been signed.
In case of other types of civil contract the enforceability comes into effect, if there is a proof of damage.
Both in case of labour contract and in case of service contract, the damage can be compensated both from the person, who stole, or otherwise made available to a person violating the agreement, and from the person, who uses the object of Intellectual property unlawfully.
To sum up, Armenian legislation provides grounds for the companies to protect the objects of Intellectual Property as their property. However, employment and service contracts shall be accurately drafted and executed to protect legitimate interests and expectations of the employer or the client.
Davit Amiryan - Senior Associate
Disclaimer: The views and opinions expressed in this article are those of the author and shall not be deemed as legal advice. Examples of analysis performed within this article are only examples. They should not be utilized in real-world analytic products.