Securing a clear and effective assignment of rights from a designer of a commissioned work, such as a logo, is essential to avoid the uncertainty and expense of claims as the business grows.
It is not uncommon for the formalities surrounding IP ownership to take a back seat, particularly in start-up businesses where the focus is on developing the core business activities. Early stage administrative oversights in dealing with IP assignments can leave a business vulnerable, as Innocent smoothies recently found out.
Copyright ownership and assignment
In the UK, the first owner of copyright is the author of the work.
Where a work is made by an employee in the course of his employment, the employer is the owner, unless there is any agreement to the contrary.
Care needs to be taken when commissioning works: the business commissioning the work will usually want to secure a formal assignment of the copyright in the commissioned work; otherwise, the ownership of the work is likely to remain in the hands of its author.
An assignment of copyright should be in writing and signed.
The Innocent ‘Dude’ logo
In its early days as a start-up, the company behind Innocent smoothies commissioned its well-known logo (a simple face with a halo called ‘the Dude’) from a design agency called Deepend. A written agreement was prepared, but not signed, which provided for Innocent to, “receive full intellectual copyright of any work, creative ideas or otherwise, presented by [Deepend] and then subsequently approved by [Innocent]”.
Deepend later went into liquidation, having never received the shares Innocent agreed to allot in return for its design and promotional work. When a takeover of Innocent by Coca-Cola was rumoured to be on the cards, an enterprising (there may be less generous expressions) individual saw an opportunity to cash in on the absence of a signed assignment by purchasing any copyright in the Dude still owned by Deepend from its liquidators and asserting claims.
Who owned ‘the Dude’
The starting point is that an employee of Deepend created the Dude; its first owner was Deepend. So did ownership transfer to Innocent?
In the absence of any evidence that Innocent and Deepend ever signed the agreement, the court was not able to find that that there had been an assignment of the legal title to the copyright work.
Innocent did not, however, find itself in at the deep end. The court was prepared to accept that all the evidence pointed to a clear acceptance between Innocent and Deepend that the unsigned agreement took effect and was binding, and that there was therefore an equitable assignment.
Of wider interest to the relationship between design agencies and commissioning clients, the court also seemed to suggest there was much to be said for an assignment being implicit in circumstances where:
- the logo was prepared specifically for and approved by Innocent;
- innocent collaborated closely with Deepend in the production of design materials;
- it was unrealistic to envisage Deepend using the logo for themselves or other clients.
When commissioning works from third parties, it is important to remember that the commissioner does not automatically own the copyright in commissioned works. A simple (and signed) copyright assignment can help to avoid the uncertainty and expense of wrangles over ownership.
Design agencies should ensure they are paid before copyright transfers (Deepend never did receive the promised allotment of shares). Design agencies may also not wish to cede ownership of all works produced for a client; it is not uncommon for rejected works to be recycled for other clients. Design agencies’ terms should make clear what copyright transfers and when.