At every royalties seminar we have been running for 14 years for accountants, lawyers, executives, and business owners, the same questions repeatedly arise:

  • Who owns the rights to an employee-created intellectual property asset?
  • Is an employment contract sufficient to ensure the transfer of rights?
  • What should be done if an employee leaves before signing a rights assignment document?
  • Are documents other than the contract required for each individual asset?

These questions arise for lawyers across a wide variety of industries — from IT to the defense sector.

Many lawyers and business owners operate under the seemingly logical assumption that if an employee receives a salary, any work product they create automatically transfers to the employer.

Under Ukrainian law, this assumption is only partially correct — and sometimes entirely wrong. This gap between intuition and the law as written creates substantial legal risks.

What the Law Says

On 1 January 2023, the new Law of Ukraine “On Copyright and Related Rights” entered into force, definitively establishing that the employer holds the economic rights to a work made for hire, unless the employment contract between the parties provides otherwise.

Article 440 of the Civil Code of Ukraine:

“The economic intellectual property rights to a work created in connection with the performance of an employment contract shall transfer to the legal entity or individual for whom or in whose employment the author works, from the moment of creation of the work made for hire in full, unless otherwise provided by a contract or by law.”

Article 14 of the Law of Ukraine “On Copyright and Related Rights”:

“The economic rights to a work made for hire shall transfer to the employer from the moment of creation of such work in full, unless otherwise provided by this Law, by the employment contract, or by another agreement regarding the economic rights to the work made for hire, concluded between the employee (author) and the employer.”

Given this statutory presumption, economic rights to a work made for hire automatically transfer from the employee to the employer upon creation of the work. A separate contractual arrangement for the allocation of economic rights is not mandatory, except in the cases set out below.

Why This Does Not Apply to All Intellectual Property Assets

It is important to bear in mind that this presumption applies only to works protected by copyright, which in business practice include: websites, computer programs, databases, design mock-ups, marketing materials, audiovisual content, and textual materials.

With respect to other intellectual property assets created in connection with the performance of an employment contract, different rules apply.

Article 429 of the Civil Code of Ukraine:

“The economic intellectual property rights to an asset created in connection with the performance of an employment contract shall vest jointly in the employee who created the asset and the legal entity or individual for whom or at whose premises the employee works, unless otherwise provided by this Code or by a contract.”

In practice, companies may also develop and produce:

  • technical solutions that may qualify as inventions or utility models;
  • hardware-software complexes (hardware + software);
  • algorithms implemented in devices;
  • structural solutions for products;
  • product enclosure designs, packaging designs, graphical (UI) or software interfaces (APIs);
  • manufacturing processes, formulations, and formulae;
  • unique methods of organising production, logistics, and personnel management, which may be protectable as know-how;
  • logos, brand names, slogans, and commercial designations.
One Result, Multiple Legal Regimes

It is important to understand that one and the same intellectual output may simultaneously fall under several legal protection regimes.

For example, a company developing a comprehensive monitoring system for manufacturing or agribusiness purposes may create:

  • software for system management, data analysis, and response — a copyright-protected work;
  • a unique sensor design enabling data collection and transmission within seconds — a potential invention or utility model;
  • a threat-detection algorithm — a potential invention, utility model, or know-how;
  • the exterior appearance of the sensors — an industrial design;
  • a set of instructions governing the interaction of sensors and software with various devices (API) — know-how;
  • engineering documentation — know-how;
  • the product name and marketing slogan — a trademark.

Each of these assets is subject to a different regime of rights ownership and different documentation requirements. Let us therefore consider what companies need to take into account when these assets are created by its employees.

Documentation Required for a Work Made for Hire: The Example of a Computer Program

To ensure the automatic transfer of economic rights to a work made for hire, it is essential that the work exhibit the characteristics of an employee-created work.

Article 1 of the Law of Ukraine “On Copyright and Related Rights” defines:

“Work made for hire — a work created by an employee in connection with the performance of obligations under an employment contract.”

A work qualifies as a work made for hire when it:

1. Is created by an employee with whom an employment relationship has been duly established

Compliance with labour law requirements when onboarding employees is essential: a written employment contract must be entered into, or an order (instruction) of appointment must be issued, for each employee involved in creating the work.

2. Is created within the scope of the employee’s job function

The employee’s functional duties (job function) must include the creation of works made for hire — for example, the development of computer programs, databases, and the like. The functional duties are detailed in the employee’s job description.

3. Is created pursuant to an assignment issued by the employer (or the employer’s designated officer)

An order directing the relevant department’s employees to develop a software product, accompanied by a technical specification for that product, constitutes sufficient documentation. Technical specifications for developing a software product must clearly define the product’s task, purpose, and requirements.

Technical specifications must be communicated to employees by any convenient means that allows confirmation of delivery — for example, via email, a corporate messenger, a CRM system, or other platforms such as Jira, Slack, Trello, or GitHub.

The method of communicating technical specifications must be approved in the employment contract or in an internal Policy on the Creation of Works Made for Hire. Employees must acknowledge the relevant Policy in writing.

4. Is duly delivered and accepted, thereby fixing the date of creation, which marks the moment copyright arises

An order or act commissioning the work, or a deed of acceptance and transfer of the work created pursuant to the technical specification (with actual identification of the work), constitutes sufficient documentation. It is also advisable to retain version control histories for computer programs in the relevant project management systems (Jira, Slack, Trello, etc.) as additional evidence of completed tasks and deliverables.

Is Separate Remuneration Required for the Creation of and Transfer of Rights to a Work Made for Hire?

Pursuant to Article 14(2) of the Law of Ukraine “On Copyright and Related Rights”:

“Where economic rights to a work transfer to the employer, the employee who is the author of the work made for hire shall be entitled to remuneration. Where the employee’s job duties explicitly provide for the creation of works made for hire of the relevant types, the author’s remuneration for the creation and use of such works, as well as for the transfer of rights thereto, may be included in the employee’s salary pursuant to an agreement between the employee and the employer.”

Accordingly, there are two available approaches:

  • pay the author’s remuneration to the employee separately from their salary; or
  • include the remuneration in the salary, provided that two conditions are met:
    • the employee’s job duties must explicitly provide for the creation of works made for hire of the relevant types;
    • the contract must expressly provide for such inclusion.

What If the Employee’s Job Duties Do Not Include Creating Works Made for Hire?

If a work is created by an employee whose job duties did not include creating works made for hire, an automatic transfer of economic rights to the employer is not possible. In this case, the economic rights to the work vest in the employee.

The question of transferring economic rights to the employer is then governed by civil (contract) law. An agreement for the assignment of economic rights to the copyrighted work may be entered into.

Since in this scenario the employer and employee are parties to a civil-law relationship, including remuneration in the salary is not possible. The agreement must expressly provide for the payment of remuneration, and such payment must be evidenced by payment documents or a deed of acceptance and transfer of the work.

As we can see, on the one hand, the economic rights in a work made for hire automatically transfer to the employer and do not require a separate rights-allocation agreement. However, the employer must take a series of steps to document this fact. Only where the employer wishes to include the author’s remuneration in the salary must a separate agreement be concluded between the employer and the employee.

Case Law on Confirming the Status of a Work Made for Hire

An example of a case in which it became impossible to confirm the employee-created status of a work due to the absence of properly executed documentation is Case No. 522/20810/19 (ruling of the Odesa Court of Appeal dated 27 February 2024, upheld following cassation review).

A former lecturer brought a claim against the State University “Odesa Polytechnic” in connection with the university’s publication on its website of textbooks that reproduced his earlier works. The university contested the claim on the basis that the textbooks were works made for hire created within the scope of the associate professor’s job duties.

The university failed to submit sufficient evidence in support of its position. In particular:

“No copy of the employment contract with the lecturer was provided, nor was any administrative document, deed of acceptance and transfer, or similar document produced that would confirm the issuance of an employment assignment to create the works or the date on which such assignment was given. The individual work plan submitted by the university did not contain an assignment to create the specific works in dispute. No evidence of payment of author’s remuneration to the lecturer for the creation of the disputed works was submitted either.”

The court’s position confirms that the existence of an employment relationship is not, in itself, sufficient grounds for the automatic transfer of economic rights to a work to the employer. In order to protect the company’s interests, the employer must organise thorough and complete documentation of the entire process of creating the work.

Documentation Required for Employee Inventions, Utility Models, and Industrial Designs

Where an employee creates an employee invention, utility model, or industrial design, it is important for the employer to properly document the creation process and the acquisition of rights. In practice, this requires the following key documents:

  • An employment contract, providing for the employee’s performance of research, design, or engineering work;
  • A job description or task assignment, confirming that the creation of the relevant solution falls within the employee’s functional duties and makes use of the employer’s experience, production knowledge, trade secrets, and equipment;
  • Written notification from the employee of the creation of an employee invention or utility model, including a description of the technical solution;
  • An internal decision by the employer regarding the disposition of the asset (filing a registration application, transferring the right to a third party, or maintaining the utility model or invention as confidential information), to be taken within four months;
  • A registration application for the invention, utility model, or industrial design;
  • An agreement with the inventor/author regarding the amount and terms of remuneration, commensurate with the economic value of the asset;
  • Confidentiality regime documents, where the employer decides to protect the solution as know-how.
Case Law on Employee Inventions

An illustrative case in this context is Case No. 127/18448/22 (ruling of the Vinnytsia Court of Appeal dated 28 April 2025, cassation proceedings open).

The former head of the State Research and Production Association “Fort” of the Ministry of Internal Affairs of Ukraine registered a number of patents in his own name for mechanisms of the Fort-28 pistol. According to his account, the concept for the technical solutions arose with him personally, and he filed the patent applications at his own expense. At the same time, a prosecutor acting in the interests of the enterprise maintained that the relevant technical solutions had been developed in the course of R&D work carried out at the enterprise, using its resources, equipment, production knowledge, and with the involvement of other employees.

The court examined a substantial body of evidence, including:

  • the terms of the contract with the former head;
  • an order “On the Performance of Research and Development Work”;
  • the quality standard in force at the enterprise, applied by employees during development work;
  • an estimate of expenditure on the product, including information on the time spent and the salaries of employees involved in the development;
  • records showing payment to the former head of a 30% supplement to his salary for performing research and development work.

On the basis of its review, the court found that the development of the disputed mechanisms had taken place in the course of the performance of the job duties of the enterprise’s design bureau employees and using the employer’s resources, and accordingly held that the solutions exhibited the characteristics of employee inventions. As a result, the patents registered in the former head’s name were declared invalid.

At the same time, this case illustrates an important practical risk: even where the employee character of an invention is established, the employer does not in fact acquire rights to it. The only available remedy in such a situation is invalidation of the patent — an outcome that merely removes the wrongful registration but does not restore the employer’s ability to obtain a patent for the same invention.

Conclusion

As we can see, the documentation requirements for a work made for hire differ substantially from those for an employee invention, utility model, or industrial design. What they have in common is this: the employer’s approach to documenting the process by which employees create intellectual property assets must be systematic.

To protect its interests, every company should:

  • identify the types of intellectual property assets that may be created by its employees in the ordinary course of business;
  • conduct an audit of the documentation relating to employees involved in the creation of those assets, covering: proper onboarding, definition of job duties, transfer of economic rights, and payment of remuneration;
  • develop and adopt an internal policy governing the process of issuing and communicating task assignments and delivering the resulting work product.

This approach will ensure the automatic transfer of economic rights from employees to the employer and protect the interests of the company that invests significant resources in creating intellectual property assets.

The next article will examine agreements for the creation of intellectual property assets on commission and the specificities of the transfer of rights to such assets.

Author: Anna Kravchuk