Copyright – who owns it?
The general rule is that the first owner of a copyright work will be the author of the work, for example an artist who creates a painting or drawing will be the first copyright owner of the work. There are a few exceptions to the general rule, including works that are created during the course of employment (in these circumstances copyright will be owned by the employer) and Crown copyright works.
It is important to keep the general rule in mind when you are thinking about instructing a third party to create content for your business, be it logo or brand design, website creation or software development. Both parties should be clear who will own copyright in any content created under the agreement as this will determine how you may legally exploit the work in the future.
Commissioned works – just because you’ve commissioned them, doesn’t mean you own them
The exception to the general rule – works created during the course of employment – does not extend to commissioned works or works created under a contract for services. Importantly, the law takes a narrow view on what amounts to an employment relationship and a contract for services (for example with a consultant or sub-contractor), or in the case of commissioned works, the relationship between the parties does not satisfy the legal definition of an employment contract. The work will therefore not be created during the course of your employment of the servicer provider and so the general rule will apply by default. This means the service provider i.e. the contractor, will be the first copyright owner of the work in the absence of a written agreement between the parties to the contrary.
I’m not the copyright owner – so what?
The copyright owner of a work has the exclusive right to carry out certain acts in relation to the work, for example they have the right to make copies of the work, to communicate the work to the public or to make adaptations of the work. If you do not own copyright in a work and you carry out any of these ‘restricted acts’ without a licence or the permission of the copyright owner, you will infringe the owner’s copyright. The copyright owner can enforce its rights against you by filing a copyright infringement action against you through the courts which, if successful, could result in you being ordered to pay significant damages and being restricted from making further use of the work in the future. If the work is integral for your brand, for example logo design, any restriction could have a huge impact on your business.
Smoothie maker, Innocent Drinks, learnt this lesson the hard way after finding themselves in a lengthy legal battle over copyright ownership of its distinctive logo, known as “the Dude”, originally created by a design agency which Innocent commissioned to produce the logo. So what went wrong? Innocent failed to put in place a clear agreement with the design agency setting out ownership of the designs before using the logo. The design agency later went into liquidation and its interest in the logo (and other works produced under the agreement) was purchased by a third party who attempted to enforce its rights against Innocent. In subsequent legal proceedings before the High Court, the court ruled that whilst there was no effective legal assignment of copyright in the design, there had been an equitable assignment of rights owing to terms set out within an unsigned agreement between the parties. Whilst the court ruled in Innocent’s favour in these proceedings, the outcome was obtained only after lengthy legal proceedings which came at a substantial cost to the business.
What should I do to ensure my business is the copyright owner of commissioned works?
Innocent’s case serves as a helpful reminder to ensure a clear agreement as to copyright ownership is entered into at the outset of any business relationship. You should ensure that when entering into an agreement with a third party for creation of works e.g. website development or logo creation, that you pay particular attention to the ownership clause (and if it doesn’t exist, insist that one is included in the agreement!). The creator may agree to either assign its rights in the work to you or to grant a licence to use the copyright, usually after you have approved the final proof of the work. Of the two, an assignment of rights is preferable over a licence, this is because you will become the new owner of copyright which will enable you to use the work freely, whereas a licence simply permits you to use the work, usually on restrictive terms.
My contractor has already finished the work – is it too late to obtain assignment of copyright?
No, you can make an approach to the contractor and request that they assign their rights in the work to you. If they agree (and they may require an additional fee to do so) you can enter into a stand alone assignment agreement which will transfer ownership of copyright in the work from them to you. It is important this agreement is accurate and correctly drawn up to avoid a situation where the assignment is deemed invalid. It is of course possible that the contractor will not agree to the assignment, and so it is always better to come to an agreement with the contractor before the work is undertaken. You will have more bargaining power at this point and so the contractor is more likely to agree.
If you would like any further information or assistance with ensuring that you own your IP rights or with any other aspects relating to IP, please do not hesitate to get in touch by telephone 01392 210700 or email enquiries@stephens-scown.co.uk