Do you own your logo? Commissioned works

commissioned works
13 Oct 2015

“Of course I do,” you say, “it’s mine”. But is it really? Did you or one of your employees create it? The chances are that it was created for you by an outsider, quite possibly by a design or branding agency. An agency that you instructed and paid.  But that doesn’t necessarily mean that you own the copyright in the logo. A number of companies have come to realise this over the years.

Copyright law’s a bit odd when it comes to what we refer to as “commissioned works”. In South Africa, for example, section 21 (1)(c) of the Copyright Act provides that where one party commissions another party to create a work, the copyright belongs to the party that commissions the work if it pays or agrees to pay for the work, but only in the case of very specific works. These works are photographs, portraits, gravures, sound recordings and films.

The section makes no mention of all the other kinds of works that enjoy copyright protection, such as computer programs, written works, musical works and logos. Which means that for these works the usual rule applies. Generally speaking, the usual rule is that the person who created the work is the first owner of the copyright in that work.

This rule can be circumvented easily enough. All you need to do is make sure that there’s a clause in your contract with the design or branding agency that says that on completion of the job the copyright in the logo is transferred to you – it’s important to know that an assignment (transfer) of copyright is only valid if it is in writing. It’s all so simple. But it’s often overlooked.

Lawyers love to tell the story of the company R Griggs, the owner of the famous Dr Martens footwear brand. A long time ago, the company commissioned an agency to create a logo and the agency was paid the agreed fee. Years later – by which time Dr Martens had become a very big brand – the agency claimed that it owned the copyright in the logo. The parties went  to court and the UK court came to the assistance of R Griggs. The court said that it was an implied term of the agreement between the parties that the agency would assign the copyright on completion of the job. The court therefore required the agency to formally assign the copyright to R Griggs.

More recently, there was a case in the UK involving Innocent, a company that produces smoothies. Many years back when Innocent was a start-up it commissioned an agency called Deepend to create the logo that it still uses today, one that’s known as “Dude”. The oral agreement was that the copyright would be assigned on completion of the job, and that Deepend would get shares in the start-up as payment. No written assignment of copyright ever took place, and no allocation of shares occurred.

Many years later, Deepend asserted its copyright in the logo. The matter went to court and the UK court again came to the assistance of the brand owner. On this occasion, the court didn’t follow the implied term approach. Rather, it adopted a very pragmatic approach, saying that it simply didn’t make sense for the copyright to belong to the agency. It ordered the agency to formally assign the copyright as had been orally agreed. As for the shares, the court said that this was a different matter that had to be dealt with separately.

There’s been a certain amount of discussion in South African IP circles of late about a more recent UK decision that deals with copyright in logos, the case of Atelier Eighty Two Limited v Kilnworx Climbing Centre CIC & Others [2015] EWHC 2291 (IPEC]. Here, once again, the court favoured the brand owner and it adopted the implied term approach. It said this: “There was an implied term in the contract. It was a term of the usual nature to be implied into a contract for the creation of a logo, namely that Kilnworx would own the copyrights in the logos.”

The court justified its finding by saying that it would be absurd to hold otherwise, given the nature of a trade mark: “Where a designer is commissioned to create a logo for a client, in order to give business efficacy to the contract of commission there will in the normal course be a presumption that the client has the right to prevent others from using the logo… after all, the client’s logo is intended to signal to the world that the goods or services supplied under that logo come from the client and no one else.”

The court described it as “unusual and commercially dangerous” for a brand owner to have its use of its logo subject to the approval of another. And even more bizarre for it to live with the knowledge that the logo could be sold to a third party: “Far less is the client likely to agree (or the designer likely to contemplate) that the designer will in certain circumstances be free to sell off the logo, possibly to a competitor of the client, and thereby give the competitor both the right to use the logo and to prevent others, including the client, from using it.”

The court did, however, recognise that there might be exceptional circumstances, for example where payment has not been made: “On certain facts it may be that the designer is entitled to retain rights in the work pending further payment. Plainly it cannot be ruled out as an impossibility. But it seems to me that the facts would have to point very clearly to such an arrangement having been agreed by the parties.”

Would a South African court take the same view? It might – South African copyright law is based on UK copyright law, and South African courts often regard UK decisions as being persuasive. And the argument that no company would contemplate its trade mark belonging to someone else is a compelling one. But there’s really no guarantee. And it’s absurd to take the chance, especially if you consider how easily the issue can be dealt with.

(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)

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