Who Owns Employee Inventions in Canada?

Most employers assume that if they pay for the work, they own the result. Most employees assume that what they invent is theirs. In Canada, both assumptions are wrong about half the time, because copyright and patents default in opposite directions.

That split is where disputes come from. This guide from the Business Law team at Libra Law explains the default rules, why they diverge, and what a properly drafted employment agreement needs to say.

Copyright Defaults to the Employer

Under the federal Copyright Act, where a work is created by an employee in the course of employment under a contract of service, the employer is the first owner of the copyright, unless there is an agreement to the contrary.

This covers a lot of commercial output: source code, marketing copy, design files, technical drawings, training materials, reports, databases, and photographs. If a salaried employee produces it as part of their job, the company generally owns it from the moment of creation.

Two important qualifications:

“In the course of employment” is a real limit. Work an employee creates on their own time, on their own equipment, unrelated to their duties, is not automatically captured.
Moral rights do not transfer. The author retains moral rights, including the right to the integrity of the work and, where reasonable, the right to be associated with it. Moral rights cannot be assigned, but they can be waived. If you plan to modify, crop, recolour, or repurpose creative work, you need a written waiver, not just an assignment.

Patents Default to the Employee

The Patent Act contains no equivalent provision. There is no statutory rule making an employer the owner of an employee’s invention.

At common law, the starting presumption is that the inventor owns the invention. An employer overcomes that presumption in one of two ways:

There is an express contractual assignment. The employment agreement assigns inventions to the employer.
The employee was hired to invent. The nature of the role makes invention part of the job.

Canadian courts assess the second route on the whole relationship rather than a single test. Factors that have been considered include whether the employee was hired for the express purpose of inventing, whether the employee had made inventions before, whether the employer offered incentives to innovate, whether the invention arose from a specific problem the employee was directed to solve, whether the employee held a position of trust, and how the parties behaved after the invention was made.

The practical consequence is uncomfortable for employers: a software engineer, a process technician, or a product designer may personally own a patentable invention created on company time and equipment if the contract is silent and the role was not squarely an inventing role. Litigating that question after the fact is far more expensive than drafting a clause before the fact.

Contractors Are a Bigger Gap Than Employees

The Copyright Act provision applies to employees under a contract of service. It does not apply to independent contractors.

That means when you engage a freelance developer, agency, designer, or consultant, the default is that they own the copyright in what they create, and you have an implied licence to use it for the purpose it was commissioned. Not ownership. Not the right to resell it, sublicense it, or fold it into a product you later sell.

This surfaces at the worst possible moment, usually in due diligence during a financing or a sale, when a buyer asks for a clean chain of title to the company’s core technology and nobody can produce a signed assignment from the contractor who built version one.

If you are unsure whether your workers are employees or contractors, the classification question has consequences well beyond IP. See our article on employee vs. contractor misclassification in Alberta.

The Other Categories

Trade secrets and confidential information. Protected not by registration but by contract and by the common law duty of confidence. Employees owe a duty not to misuse confidential information; senior employees and directors may owe stricter fiduciary duties. See directors’ duties and liability in Alberta.

Industrial designs. Ownership rules differ again, and where a design is created for another party for valuable consideration, that party may be the first proprietor. Do not assume the copyright rule carries over.

Trademarks. Ownership rests with the entity using the mark in trade, which is normally the business rather than the individual employee. The risk here is registration in a personal name, or a founder holding the mark outside the company.

What a Good IP Clause Contains

If you take one thing from this article, take this list. A defensible employment or contractor agreement should include:

A present assignment, not a promise. Language that assigns rights now (“hereby assigns”) rather than agreeing to assign later, which reduces the risk of an unenforceable future obligation.
A moral rights waiver, to the extent permitted by law.
A definition of covered IP tied to the scope of employment, with clear treatment of work created using company resources or confidential information.
A prior inventions schedule, listing what the employee already owned coming in, so the boundary is documented on day one rather than argued about on the way out.
Further assurances, obliging the employee to sign registration paperwork and cooperate with filings after the relationship ends.
Confidentiality obligations that survive termination.
Reasonable restrictive covenants, if any. Note that broad non-competes are difficult to enforce in Alberta. See non-compete clauses in Alberta.

The Timing Trap: Adding an IP Clause Mid-Employment

Here is where employers frequently create a new problem while solving an old one. If you discover the gap and ask existing staff to sign an IP assignment, you are amending an existing employment contract.

In Alberta, an amendment to an ongoing employment relationship generally requires fresh consideration. Something of value has to flow to the employee. Continued employment alone is usually not enough. Handing a long-service employee a new agreement with an assignment clause and no consideration risks producing a document that does not bind anyone.

Our article on fresh consideration and employment contract enforceability explains how to do this properly.

If You Are the Employee

Before signing:

Check how broadly “inventions” and “works” are defined. Some clauses reach into anything you create during the term of employment, including personal side projects.
Ask whether the clause extends past the end of employment, and for how long.
List your existing projects and prior inventions in a schedule. Silence is not protective.
Look for a moral rights waiver if attribution matters to your portfolio or professional reputation.
Have it reviewed. Our article on lawyer review of employment contracts before you sign explains what that involves.

Final Thoughts

Copyright generally lands with the employer. Patents generally do not. Contractors own their own work unless they have signed it over. Those three sentences explain most IP ownership disputes in Canadian workplaces, and all three are fixable with a clause.

If your company’s technology, brand assets, or product designs were built by employees or contractors without a signed assignment, talk to a business lawyer at Libra Law before it becomes a diligence problem.

This article is for general informational purposes only and does not constitute legal advice. For advice specific to your situation, consult a qualified professional.