A recent High Court case has highlighted the importance of ensuring that the copyright in logo, created by a design company on behalf of a commissioning party, is properly assigned to the commissioning party.
This case, Fresh Trading Ltd v Deepend Fresh Recovery Ltd, concerned a logo commissioned by Fresh Trading, for which it was agreed that Fresh Trading would remunerate the design company with shares in its business. It was also agreed that if Fresh Trading approved the design, the copyright in it would assigned to them. The shares were never transferred. The design company’s alleged rights to the logo were then bought by a third party who then assigned them to a holding company. The holding company obtained a declaration of invalidity of the trade mark, which Fresh Trading appealed.
With no written assignment produced, there was no effective legal assignment. This prevented section 91 of the Copyright, Designs and Patents Act 1988 from applying, which normally vests copyright to successors in title, in this case the holding company. Instead, the court found Fresh Trading to be the equitable owners of the design, as this took place when they approved the design company’s logo. The failure to remunerate the design company with shares did not affect this equitable transfer. Additionally, the holding company could be estopped from enforcing its copyright at a late stage after Fresh Trading had established a successful business based on the logo.
Generally, the courts have tended to favour commissioning parties in such disputes: finding that in instances in which no written agreement can be produced, copyright is assigned to the commissioning party unless a mere licence would suffice.
Nonetheless, the dangers of failing to enter into a written assignment are clear: unnecessary and time-consuming litigation. The best course of action for any business looking to commission a design company to produce a logo on its behalf is to ensure that a written assignment is entered into before the design agency is instructed (and paid!).
If you wish to discuss any of the issues raised in this article or would like assistance preparing a simple assignment agreement please contact Rebecca Anforth, head of Intellectual Property, on 01872 226999 or firstname.lastname@example.org or Melanie Brown, author of the article.