Ontario court ruling reveals the real cost of vague duties and missing IP clauses
A senior software developer secretly built a competing product for approximately two years while being paid the same salary as before. When his employer sued to claim copyright ownership, it lost. On March 19, 2026, Justice Monahan of the Ontario Court of Appeal upheld that result: what an employer can direct an employee to do is not the same as what it actually did.
Vladimir Krougly was a senior developer at Nexus Solutions Inc., a London, Ont., software company. His assigned responsibility was to write source code for CEMView, a continuous emissions monitoring system used by heavy industry. He had no mandate to independently develop new software products.
By late 2008 or early 2009, while still employed full-time at Nexus, Krougly began secretly developing Limedas, short for "Live Measurement Data Acquisition System." Limedas performed similar functions to CEMView but had different source code, algorithms, and a more advanced communication protocol. The bulk of the work was done outside normal business hours and without Nexus property.
Krougly resigned effective January 4, 2011, and attempted to market Limedas commercially, including to some of Nexus's own customers. Nexus sued, arguing copyright belonged to the company because Krougly had created the software "in the course of" his employment.
The course of employment
Canada's Copyright Act grants employers first ownership of works created by employees "in the course of" their employment. Nexus argued that because Krougly could have been directed to build such software, it fell within his employment. The Court of Appeal disagreed.
"The fact that an employer could require an employee to carry out a task is a necessary, but not a sufficient condition for that task to fall within the employee's course of employment," Justice Monahan wrote. The test, the court held, is what the employer actually assigned.
The court identified the central question as "not what Nexus could have instructed Krougly to do but, rather, what Nexus actually asked him to do." Krougly's role had been confined to CEMView, and he was explicitly told that unauthorized software development would not be compensated.
The clause that was never written
Krougly had no written employment contract, no written agreement prohibiting him from working on his own projects on his own time, and nothing allocating ownership of anything he might create, whether during Nexus's time or his own.
Because Limedas was built on Krougly's own time, with his own equipment, and outside his assigned duties, copyright vested in him. The court held that where work falls within an employee's actual responsibilities, the employer holds copyright even if unaware of the specific work being done.
The trial judge had concluded with "considerable reluctance" that Nexus was not entitled to a proprietary remedy under copyright law, noting the statute is not meant "to punish bad actors simply because their actions may run afoul of their duties towards their employers." The trial judge acknowledged that Nexus may have remedies available to it in contract or otherwise. The Court of Appeal agreed, dismissing the appeal and awarding Krougly costs of $25,000, inclusive of taxes and disbursements.
