Creating company marketing material? Don’t be Innocent

When a company commissions a third party such as a designer to create material, the third party owns the copyright in it, unless there are contractual provisions to the contrary. Often when design agencies undertake work a formal assignment of the copyright is overlooked.

One such case, Fresh Trading Ltd v Deepend Fresh Recovery Ltd, involved the copyright of the logo of the well-known smoothie business Innocent. The design agency, from whom Fresh Trading (the owner of Innocent) commissioned the logo under a consultancy agreement, went into liquidation.

The agency’s purported interest in the logo under the agreement was bought by a third party who subsequently assigned the interest to a holding company. The holding company then obtained from the OHIM a declaration of invalidity of the registration of Innocent’s community trade mark of the logo, based on the holding company’s alleged ownership of the copyright in it.

Fresh Trading started proceedings in the High Court. As neither party was able to produce a signed copy of the original agreement and there was no mention of any such copy in emails, the judge decided there had not been an effective legal assignment of the copyright to Fresh Trading. However, he found that there had been an equitable assignment, as the agreement provided that copyright ownership would pass on approval of any designs by Innocent. Such approval had occurred and the fact that the design agency had not received the remuneration provided for in the agreement did not negate the assignment.

The judge added that even if he had not found an express assignment on the facts, there was an implied assignment of the copyright as this was the only arrangement that made commercial sense. Furthermore, even if Innocent had not owned the copyright, the holding company would have been stopped from enforcing its copyright at this late stage after Innocent had built up such a substantial business based upon this logo.

The case is a useful reminder to a company using design agencies that the contract should provide for a legal assignment to the commissioning company of the IP rights created by the agency. Such matters are often overlooked, but until this is done, the company may only have an argument as to equitable title to the IP rights.

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