Software Code Written by Employee “At Home” and “On Own Time” Was Still a Work-for-Hire for Employer

The U.S. Court of Appeals for the Third Circuit dismissed claims by a former employee of the City of Wilmington, Delaware that he was the owner of a computer software program used by the City’s Department of Licenses and Inspections  to track traffic citations. Le v. City of Wilmington, No. 11-1770 (3d Cir. Apr. 24, 2012).

The plaintiff, Le T. Le, had been employed by the City in its Network Division as an information analyst. Le claimed that he developed the program prototype exclusively at home, on his own time.  However, he admitted that he installed the program on the City’s’s computer network for testing and feedback.  The City began using the program, and employees in the L&I department provided feedback in its ongoing development. Subsequently, Le registered the program in his own name with the U.S. Copyright Office. Without his supervisor’s permission, he also removed the program’s source code from the City’s network server, rendering the program useless to the City.

Le’s supervisor suspended Le, directed him to re-install the program, and threatened him with prosecution if he did not comply with this direction. Le installed the program, and then the City terminated his employment.

Le sued the City, alleging a variety of wrongs, and claiming that he owned the copyright in the traffic ticket tracking program. He also contended that the City had terminated his employment, and had decided to outsource the functions of its Network Division and terminate its employees in that division, for reasons of race, and thus had engaged in prohibited employment discrimination. The U.S. District Court for the District of Delaware granted summary judgment to the City, and Le appealed to the Third Circuit.

On appeal, the Third Circuit affirmed. In considering the question of copyright ownership, the court observed that the U.S. Copyright Act, in 17 U.S.C. § 201(b), provides that–

In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes [of the Copyright Act], and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright.

The court found that Le’s computer program was a work for hire. It reasoned as follows:

Le contends that he created the Work exclusively during his personal time outside of the office and that development of the source code was not within his job description.  There is no dispute that he developed the Work for the purpose of helping the L&I division reduce its workload and reliance on paper ticketing.  Additionally, the evidence suggests that Le used sample paper tickets and other resources from Wilmington (such as feedback from the L&I division) in developing the program and its source code…. Le admitted to reusing and modifying code from files he had created for other Wilmington owned programs in creating the source code for the Instant Ticketing program.  Finally, Le testified that the three year gap between the completion of the source code and the copyright registration was based on the implementation of the program which involved testing by the L&I, layout changes and other modifications.  For these reasons, we will affirm the District Court’s finding that the Instant Ticketing program was created within the scope of Le’s employment, for the benefit and use of his  employer.…  Consequently, there is no genuine dispute of material fact regarding whether the Instant Ticketing program and source code qualify as a work made for hire.

The court also found that Le had failed to establish a prima facie case from which an inference of unlawful discrimination could be drawn with regard to his termination and the outsourcing of the functions of the City’s Network Division.

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