In Nexus Solutions Inc v Krougly, 2026 ONCA 199 (CanLII), the Ontario Court of Appeal (the “ONCA”) clarified the test for when an employer will own the copyright over software and other works that are created by an employee during their personal time. The decision highlights the limits to employers’ ownership rights under the Copyright Act, and reinforces the benefit for employers in knowledge-based industries to have employees sign written employment contracts with language protecting the employer’s intellectual property rights.
are generally the first owners of copyright. Section 13(3) is a limited exception where employers will own the copyright if an employee creates the work only in the course of their employment.
Nexus is a software company that develops and markets CEMView, an emissions monitoring system. During his employment, Krougly created Limedas, a competing program with similar functions but also substantially different including in its source code and the algorithms used by the software.
Krougly built Limedas in secret during his personal time. Shortly after resigning, Krougly attempted to commercially market his new software – including to Nexus’ customers.
Nexus sought a declaration from the courts that Nexus owned the copyright for the Limedas software, arguing that Krougly created Limedas while employed by Nexus.
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