April 2009

01 Apr 2009

Out of Commission?

A Bill to amend the Copyright Act 1994, which would abolish the so-called "commissioning rule", was introduced to Parliament by the Labour Government towards the end of 2008. This Bill currently sits as item 12 on Parliament's order paper and, on this basis, is likely to receive its first reading in the first half of 2009. 

The commissioning rule provides that those who commission and agree to pay for the creation of computer programs, designs and other artistic works, photographs, films and sound recordings, are the first owners of any copyright in the works created. The rule applies subject to agreement to the contrary.

Why Have a Commissioning Rule?

The commissioning rule is an important back drop to day-to-day business for a range of industries including those involved in software development, architecture, photography, visual arts, publishing, advertising, film and television and marketing.

The commissioning rule recognises the economic nature of copyright, and provides that those who invest in the creation of works with business application will in some circumstances own the rights. In the case of a commissioned work, the agreement to pay for the commission provides the author with an incentive to create the new work, and the person who commissions the work is granted copyright as an incentive to fund the creation of the new work. This recognises that, in many instances, the commissioner will often have directed or influenced the nature of the work created.

In each case, there is an opportunity to set out alternative copyright ownership rules by contract. This has meant, for example, that the standard terms of professional photographers always reverse the commissioning rule. More sophisticated contracting parties (such as software developers) will usually (but not always) also address ownership of copyright and other intellectual property in their contract.

While a contract which deals with the ownership of copyright and other intellectual property should always provide the best form of protection for a "commissioning party", life is not perfect, contracts are not always signed and laws like the commissioning rule provide an important safety net for many businesses. 

So Why Change It?

The commissioning rule is thought by some to be no longer necessary to protect investment. Similar jurisdictions, such as the United Kingdom and Australia, have repealed or narrowed the application of the commissioning rule in the last two decades. 

Some confusion and uncertainty has also arisen as a result of the somewhat arbitrary application of the commissioning rule to some works and not others. For example, a software program and the related software manual may end up with different copyright owners if they are separately commissioned in contracts which are otherwise silent about copyright ownership. Similarly, different copyright ownership rules apply to commissioned multi-media works (as compilations) and commissioned software. 

In comparison, the rule regarding works created in the course of employment applies to all works.

The Resulting Bill

Looking at the stated purpose of the Bill, it is far from clear that the issues have been considered and discussed in sufficient depth to warrant the radical legislative overhaul that has been proposed. The Explanatory Note to the Bill states that, amongst other things, the Bill aims to facilitate clarity about the rules for both the creator and the commissioner of copyright works.  

It is difficult to see how repealing such a well-known and important back drop to day-to-day business can "facilitate clarity", particularly in light of the distinctly opaque consultation process which has led up to the proposed amendments. In particular, the discussion papers issued by the Ministry of Economic Development (MED) in the lead up to the Bill focused primarily on the position of photographers, and observed that MED did not know much about any issues with the commissioning rule faced by other industries. The software industry, for one, would have believed that it was easy for MED to find out about its issues - a review of recent cases about rights in software would have readily revealed some concerns.

What Can You Do?

In our view, the Bill to repeal the commissioning rule has been introduced with insufficiently broad consultation to be confident that this change is justified across the broad range of industries it affects. 

The recent controversy around section 92A of the Copyright Act (also discussed in this ezine) shows that the Government is sensitive to changes to copyright laws and may therefore be keeping an open mind as to the merits of any repeal of the commissioning rule. Please therefore contact us if you would like to explore possibilities to lobby on this issue.

Author

Earl Gray

Partner - Intellectual Property

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