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Author: Marsha Simone Cadogan
Copyright arises automatically when a work is created, is in a fixed format, and is original. Although registration is not mandatory under Canada’s Copyright Act, registration provides proof of ownership of the work. It can be relevant, especially where priority of rights is contested or when the owner intends to commercialize the work. The Copyright Act[1] governs rules on the assignment and licensing of copyright. The Personal Property Security Act (PPSA)[2] is the secured transaction legislation that governs security interests in copyright (and other types of intellectual property).
A copyright licence permits another person to do an act which would otherwise be infringing for a specific time. It can pertain to several aspects of the work or be limited to the permission to conduct a single activity with respect to the work. Two examples follow. A software licence may allow the licensee to download a software, but not to make copies of it for sale or to reverse engineer the software. The licensor of a cloud computing software may allow one person to use the software but restrict other persons in the same office from using the software without paying additional fees. In a copyright licensing model, the owner retains ownership of the copyright and does not lose associated rights.
This differs from an assignment of copyright. Here, the owner grants the assignee partial or all of the copyright, either for its entire term or for a time. For example, a developer creates software but chooses to sell it (including its source and object codes) to another company that can scale it more quickly. The developer assigns the entire copyright in the software to the company.
Assignments and any grant of licence in copyright, according to the Copyright Act, must be in writing, and therefore take effect upon a legally binding agreement between the assignor and the assignee, or the licensor and licensee. Moral rights cannot be assigned or licensed. However, they can be waived if this is done in writing.
When a registered copyright is licensed or assigned, these grants of rights can be recorded with the Canadian Intellectual Property Office (CIPO) to receive a certificate of registration.
Security Interest in Copyright
A security interest in copyright grants the creditor an interest in it to the extent of the security claim. Copyright owners who grant a security interest in their work do so for loan securitization purposes. The security interests attach to the work when (i) it has been given a value, (ii) the copyright owner (debtor) has the right to transfer ownership to others, and (iii) the copyright owner (debtor) has signed a detailed security agreement which has sufficiently identified the work. It establishes a priority claim for the secured creditor over unsecured claims against the debtor and against those who take a later interest in the work.[3]
Each province in Canada has its own secured transaction legislation (excluding Quebec). For example, Ontario’s PPSA is the appropriate personal security legislation if the debtor principally resides in Ontario or the debtor’s corporation is headquartered in Ontario. In this example, to perfect the security, a financing statement must be filed with the Personal Property Security Registry in Ontario.
If the copyright is CIPO registered, a recordal of the security interest in copyright can be made with CIPO.
Conclusion
As the first owner of copyright, the creator has a bundle of economic rights in the created work. An assignment of copyright grants all or a portion of these rights to another, for the entire period of the copyright, or a portion thereof. The owner does not retain the rights. This situation differs from a licensing of copyright, where ownership and associated rights are retained, but the licensee is permitted to use the work for specific purposes. The PPSA is the secured transaction framework in Ontario for registering copyright security interests. A copyright security interest grants the creditor the right to the work in the event the debtor defaults. Assignments, licences, or security interests in copyright are mechanisms that may inform the commercialization strategy of the copyright owner.
This post is for general information only and is not intended to be legal advice.
[1] Copyright Act, RSC 1985, c C-42.
[2] Personal Property Security Act, R.S.O. 1990, c. P.10 (PPSA).
[3] Ibid s.30(1).