Many employers assume they automatically own everything their employees create on the job. Under section 13(3) of the Copyright Act, an employer is the first owner of copyright in a work created by an employee in the course of their employment.
A recent decision from the Ontario Court of Appeal considered the scope of that provision. In Nexus Solutions Inc. v. Krougly, 2026 ONCA 199, the Court confirmed that an employer’s copyright claim under Canada’s Copyright Act hinges not on what the employer could have asked the employee to do, but on what they actually asked them to do. The result? Even when an employee secretly builds a competing product while on the payroll, the employer may have no copyright claim to it in some circumstances.
Background
Nexus Solutions Inc. is a software company that develops an emissions monitoring software called CEMView. Krougly was a senior software developer at Nexus and his job was to develop the existing CEMView software. He was explicitly told not to undertake any unauthorized software development. There was no written employment contract.
While still employed at Nexus, Krougly secretly began building a competing emissions monitoring program he called “Limedas.” He worked on it during his personal time and using his own equipment. After resigning, Krougly went so far as to market Limedas to Nexus’s own customers.
When Nexus discovered what had happened, it went to court seeking, among other relief, a declaration that it owned the copyright in Limedas under section 13(3) of the Copyright Act.
