Employee side projects: when can employers claim copyright?
Employees may develop software, designs, written materials, or other copyright-protected works that relate to their employer's business but which they regard as their own personal projects. In such cases, both the employer and the employee may believe they hold the copyright.
Employees may develop software, designs, written materials, or other copyright-protected works that relate to their employer's business but which they regard as their own personal projects. In such cases, both the employer and the employee may believe they hold the copyright.
The issue has become increasingly relevant as modern working arrangements blur the boundary between personal and professional work. Remote and hybrid work, flexible working hours, and the use of the same devices or software for both purposes can make that distinction less clear. Employees may also undertake freelance assignments or develop their own businesses alongside their employment. AI tools add another layer of complexity, particularly where employees use employer-provided tools or work-related materials for personal projects.
Under Serbian copyright law, employers acquire economic rights in works created by employees during employment in the performance of their work duties. Accordingly, three main conditions must be met for an employer to acquire rights in an employee's side project under the statutory regime:
- the author must be an employee;
- the work must have been created during the employment relationship; and
- the work must have been created in the performance of the employee's work duties.
The author must be an employee
The statutory rules governing works created in the course of employment apply only where the author is an employee. Whether an employment relationship exists is determined by employment law. Accordingly, these rules do not apply to works created by independent contractors, freelancers, commissioned authors, or others engaged outside an employment relationship. Such works are subject to a different legal regime.
The work must have been created during the employment relationship
The employer's rights do not extend to works created before employment began or after it ended. (This differs from patent law, under which certain inventions made within one year after termination of employment may still qualify as employee inventions.)
The work must have been created in the performance of the employee's work duties
Determining whether a work was created in the performance of work duties is often the most difficult part of the assessment. The question becomes particularly complex where an employee develops a project independently but its subject matter overlaps with their professional responsibilities.
Serbian copyright law does not specify the criteria for determining whether a work was created in the performance of an employee's duties. However, legal scholarship and case law, including from other jurisdictions, offer guidance on the relevant factors. The factors often overlap, and none is decisive on its own. Although the list is not exhaustive, three groups of factors are particularly relevant: a. scope of work duties; b. direction and initiative; and c. working time, location, and resources.
Scope of work duties
The first step is to establish what the employee's duties encompass. The employment agreement and job description provide the starting point, but other sources, including applicable laws, internal policies, specific assignments, or the nature of the employee's role, may also define or clarify those duties.
Where these sources do not provide a clear answer, other circumstances may help establish the scope of the employee's responsibilities, including the tasks they regularly perform, their function within the business, and their professional field. The potential usefulness of the work to the employer may also be relevant, but does not, in itself, establish that its creation falls within the employee's duties.
Works created independently, outside the employee's duties, generally remain under the employee's control. The position may be less clear where a work falls outside the employee's duties but relates to the employer's business or could compete with it. In Germany, some legal commentators discuss whether employees may have an obligation to offer the employer rights to use such works, particularly where they relied on the employer's resources or knowledge acquired through employment. Serbian copyright law does not provide for such an obligation. (By contrast, Serbian patent law grants employers the first right to protect inventions created outside regular duties if they relate to the employer's business or result from the use of its resources, information, or training.)
Direction and initiative
The extent to which the employer initiated, encouraged, directed, or supervised the development of the work may help establish its connection to the employee's duties. Relevant circumstances include, for example, whether the employer defined the requirements, reviewed drafts, set deadlines, or otherwise participated in the project's development. Mere awareness of the project, however, is not sufficient to establish that the work falls within the employee's duties. The employer's authority to direct the work may also be relevant, particularly whether the employee was obliged to accept the assignment or could freely decline it.
Side projects, on the other hand, often originate entirely from the employee, without the employer's knowledge or involvement. However, the employee's initiative does not necessarily place the work outside their employment duties, particularly where creating such works is already part of their role.
Working time, location, and resources
Employees often develop side projects outside working hours, at home, or using personal equipment. However, the time and place of creation are not decisive – a work may still fall within the employee's duties in these circumstances, just as a work created during working hours or at the workplace may fall outside them. Similarly, using the employer's equipment, software, or resources does not automatically give the employer copyright in the resulting work.
The use of the employer's copyright-protected materials or confidential information raises separate legal issues. Namely, even if employees own the copyright in their projects, they may be prevented from using or commercialising them if this would infringe the employer's intellectual property rights or breach confidentiality obligations.
How can employers avoid copyright ownership disputes?
Employers cannot always know what projects employees pursue outside work, but they can take steps to prevent ownership disputes. Employment contracts and internal policies should clearly define employees' duties, address copyright ownership, and set rules on using company resources. Employers can also require employees to disclose side projects that overlap with their duties or the employer's business, without requiring approval for every personal project. When a potential conflict arises, employers should address it early and clarify ownership with the employee in writing. This is particularly important if the employer intends to use the work or the employee has incorporated company materials into it.
