Miller v. CP Chemicals, Inc.
1992 WL 387627, 1992 U.S. Dist. LEXIS 22020, 808 F. Supp. 1238 (1992)
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Rule of Law:
A work created by an employee is a 'work for hire' under the Copyright Act if it is created within the scope of employment, meaning it is motivated at least in part by a purpose to serve the employer. The employer is considered the author and owner of the copyright unless the parties expressly agree otherwise in a written instrument signed by both of them.
Facts:
- David Miller, Sr. was employed by CP Chemicals, Inc. ('CP'), eventually becoming laboratory supervisor with responsibility for the lab's operation.
- To improve efficiency, Miller began writing computer programs to automate complex calculations for CP's products.
- Miller developed these programs mostly at his home, on his personal computer, and on his own time, without receiving overtime pay.
- After seeing the first program, Miller's supervisors encouraged him to continue writing programs for other company products, which he did.
- Miller alleged an oral agreement with his supervisors that he would retain the copyrights and that CP could only use the programs while he was employed.
- Miller created and signed a document granting CP the right to use the programs only during his employment, which was posted near the computer at work; CP never signed this document.
- CP terminated Miller's employment following his arrest on a drug-related charge.
- After his termination, CP continued to use the computer programs and refused Miller's demands to either return them or pay a license fee.
Procedural Posture:
- David Miller, Sr. filed a complaint against CP Chemicals, Inc. in the U.S. District Court for the District of South Carolina.
- The complaint alleged claims for copyright infringement, breach of an employment contract, wrongful conversion, breach of contract accompanied by a fraudulent act, and a violation of the South Carolina Unfair Trade Practices Act.
- Miller subsequently withdrew all state law claims except for the breach of employment contract claim.
- CP Chemicals, Inc. filed a motion for summary judgment on the remaining copyright infringement and breach of contract claims.
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Issue:
Do computer programs created by an employee constitute a 'work for hire' owned by the employer when they were developed primarily at home on the employee's own time, but were created to improve the efficiency of the employee's duties and directly benefited the employer's business?
Opinions:
Majority - Joseph F. Anderson, Jr.
Yes, the computer programs constitute a 'work for hire' owned by the employer. A work is created within the scope of employment if it is actuated, at least in part, by a purpose to serve the employer, making the employer the copyright owner absent a written agreement signed by both parties. First, the court dismissed the infringement claim on jurisdictional grounds because Miller failed to provide evidence that he had registered a copyright for the programs, which is a prerequisite to filing an infringement suit. Even if registration had occurred, the claim would fail on the merits under the 'work for hire' doctrine. The court applied the Restatement (Second) of Agency's test for scope of employment, focusing on whether the work was (1) the kind the employee was hired to perform, (2) occurred within authorized time and space limits, and (3) was actuated by a purpose to serve the master. Although Miller was not hired to write code and did the work at home, the programs were incidental to his responsibilities as lab supervisor and, most importantly, the 'driving force' behind their creation was to benefit CP by improving lab efficiency. Under § 201(b) of the Copyright Act, this makes CP the presumptive owner, and this presumption can only be rebutted by a written instrument signed by both parties. The alleged oral agreement and the notice signed only by Miller were insufficient to transfer copyright ownership to him. Finally, Miller's state law breach of contract claim was preempted by the Copyright Act because it sought to enforce an oral promise that directly contradicted the federal statute's requirements.
Analysis:
This case clarifies the application of the 'work for hire' doctrine in the context of intellectual property created by employees outside of their specific job description. It establishes that the employee's motivation to serve the employer is a key factor in the 'scope of employment' analysis, potentially overriding factors like the location and time of the work's creation. The decision strongly reinforces the strict statutory requirement under 17 U.S.C. § 201(b) that any agreement altering the default copyright ownership must be in writing and signed by both parties. This precedent serves as a significant warning to employees that informal or oral understandings regarding ownership of work-related creations are unenforceable and will not overcome the employer's presumptive ownership.
