By Tesia Doblanko, Associate In Nexus Solutions Inc. v Krougly, 2026 ONCA 199, the Ontario Court of Appeal (“Court”) found copyright ownership vested with an employee and clarified the requirement of “in the course of employment” under section 13(3) of the Copyright Act.[1] As detailed in a recent post, Employee Created Works – Who Owns It?, section 13(3) of the Copyright Act provides that an employer will be the first owner of copyright, in the absence of any agreement to the contrary, when the author of a work is employed under a contract of service and the work is made during their employment. Background Nexus Solutions Inc. (“Nexus”) is a software development company which developed and marketed a continuous emissions monitoring system called CEMView. The employee, Vladimir Krougly (“Krougly”), was a full-time senior software developer employee. Krougly’s job description included writing source code specifically for CEMView. While still employed with Nexus, Krougly began secretly developing a competing software to CEMView, named Limedas. In comparing CEMView to Limedas, each software performed similar functions but certain features differed. Krougly resigned from Nexus, and shortly thereafter took steps to commercialize Limedas. At trial, the Trial Judge found that Limedas was not created by Krougly in the course of his employment with Nexus, and thus Krougly was the owner of the copyright in Limedas. This finding prevailed notwithstanding that the software was secretly developed while Krougly was employed by Nexus and competed with Nexus’ CEMView software. The Employee as the Copyright Owner For an employer to own the copyright in an employee created work, the creator of the work must be an employee, the work must be created in the course of employment, and there must be no agreement to the contrary. On appeal, it was undisputed that the first and third conditions were satisfied as Krougly was an employee and there was no contract that addressed copyright and ownership of employee-created works. The appeal centered on whether Limedas was created in the course of Krougly’s employment. While it may not always be clear cut whether a work was created within the course of employment, the Court in Nexus referenced a non-exhaustive list of factors that may assist in this determination, including: terms in the employment contract, where and when the work was created, who owned the resources used to create the work, what direction or instruction was provided to the author, whether the author could decline creating the work, and whether the work is considered integral to the employer’s business.[2] On appeal, the Court considered the following factors: Was Krougly directed to create Limedas? At trial, the Trial Judge found that Krougly was not directed by Nexus to create Limedas, which supported the finding that the work was not created in the course of his employment. On appeal, Nexus proposed that the better inquiry is to determine whether the work made by an employee would fall within the general category of work that the employer could direct the employee to create.[3] The Court did not agree, reasoning that whether a task falls within the scope of an employee’s employment depends on whether the task has been assigned to the employee.[4] Therefore, the key is whether the employee’s employment responsibilities include the creation of the work, rather than if the employer could potentially request the creation of the work. In this case, Krougly was specifically assigned to develop source code for CEMView. Did Nexus expend resources to develop Limedas? The Trial Judge considered it relevant to the inquiry that Nexus did not expend resources to develop Limedas. On Appeal, Nexus claimed that this was an error on the basis that Nexus could not have expended resources to develop Limedas because it was not aware of Krougly’s development of the software. On this point, the Court found that the Trial Judge did not make an error in considering this factor, along with several other factors, in determining the copyright ownership of Limedas.[5] Notably, it was stated that: Krougly continued to receive the same salary when he began developing Limedas, Krougly undertook the creation of Limedas on his own time, Krougly used his own equipment to create Limedas, and Nexus did not otherwise fund the creation of Limedas.[6] Was developing Limedas a part of Krougly’s employment responsibilities? On appeal, Nexus argued that correspondence between Nexus and Krougly discussed the possible development of a new product, and thus the development of Limedas was part of Krougly’s employment responsibilities. The Court found that Nexus had not provided evidence to support a finding that a decision to move forward with a new product had been made, or that Krougly was assigned the task of creating this new product.[7] Rather, the evidence supported a finding that Krougly’s role was limited to developing CEMView.[8] The Court dismissed the appeal brought by Nexus, thus affirming the Trial Judge’s finding that Krougly was the owner of copyright in Limedas. Key Takeaways for Employers Employment Agreements: Section 13(3) of the Copyright Act applies as a default rule in the employment context to determine copyright ownership, unless there is an agreement to the contrary. Employment agreements can specify arrangements for the ownership of copyright to increase clarity and avoid surprises down the road. Clearly Defined Employment Responsibilities: As section 13(3) of the Copyright Act relies upon a fact driven analysis of the actual responsibilities of an employee, accurate and clearly defined roles and responsibilities of the employee may provide clarity on whether the creation of a copyright-protected work falls within the scope of an employee’s employment. Competitive Works: Even when a work created by an employee is related to the employer’s business, it does not automatically result in the copyright being owned by the employer. Should you have any questions or concerns with respect to copyright-protected works developed in the course of employment, please do not hesitate to contact a member of the Parlee McLaws Employment or Intellectual Property groups. This article is for general informational purposes only. Specific legal advice should be obtained based on your particular circumstances. [1] Nexus Solutions Inc. v Krougly, 2026 ONCA 199. [2] Ibid at paras 10, 29. [3] Ibid at para 32. [4] Ibid at para 34. [5] Ibid at paras 48-49. [6] Ibid at para 48. [7] Ibid at para 51. [8] Ibid at para 52.