Who: Orvec International Ltd and Linfoots Ltd
When: 18 June 2014
Where: Intellectual Property Enterprise Court, United Kingdom
Law stated as at: 10 July 2014
A recent case heard at the Intellectual Property Enterprise Court provides a helpful reminder to those working on agreements between clients and advertising agencies that the courts will be reluctant to imply exclusive IP licences in relation to assets such as photographs.
If a client wants to prevent an agency from recycling such assets in campaigns for other clients then it should include clear wording to this effect in the agreement.
Orvec International Ltd (“Orvec”), a supplier of textile products such as blankets and headrest covers to airlines, brought breach of contract and passing off claims against Linfoots Ltd (“Linfoots”), its former advertising agency. The claims were brought on the basis that Linfoots had provided product photographs that it had created for Orvec to one of its other clients, Intex Company Ltd (“Intex”), for use in its advertising.
Intex had in fact been a supplier of textile products to Orvec for a number of years, such that some of the products shown in the photographs were manufactured by them. Since the photographs were taken, the relationship between Orvec and Intex had come to an end and Intex had started to compete with Orvec in the supply of textile products to airlines.
It was not disputed that Linfoots retained ownership of the copyright in the photographs. However, Orvec claimed that Linfoots had breached a term that should be implied into their client-agency agreement, which gave Orvec an exclusive and perpetual licence to use the photographs, by supplying those photographs to Intex for use in its advertising. Orvec also claimed that supplying the photographs had equipped Intex with the means to pass off, and therefore procured passing off, on the basis that Intex had used the photographs to pass off Orvec’s products as its own and misrepresent that various airlines were Intex customers.
Orvec’s argument for an implied term rested on the fact that some of the photographs included Orvec’s trade marks and/or the livery, trade marks and logos of Orvec’s clients. Orvec argued that Linfoots would have no conceivable legitimate use for the photographs displaying those markings and so the licence granted to Orvec in relation to those photographs must have been exclusive and perpetual.
Furthermore, as the implied term that set out the nature of the licence granted to Orvec must have been the same for all of the photographs created by Linfoots under the agreement, the implied term in relation to all of the photographs must have been that the licence granted was exclusive and perpetual.
The Intellectual Property Enterprise Court dismissed Orvec’s claims. Hacon J held that there was no reason to assume that where a photograph was created for a client which included the client’s trade mark, the parties must have understood that the client could expect to be able to prevent others from copying it. The client would have other rights in the trade mark itself which it could potentially rely on to stop other parties from using it. Hacon J referenced the simple and minimalistic approach required when implying terms into an agreement and ruled that the term that should be implied was that Linfoots granted Orvec no more than a non-exclusive and probably perpetual licence in the photographs.
In relation to passing off, Hacon J held that the alleged misrepresentations made by Intex – that it had passed off Orvec’s products as its own and misrepresented certain airlines as Intex customers – had not been established. The textiles shown had either been made by Intex or there was no inference that the airline had been a direct Intex customer.
Why this matters:
This case highlights that advertisers and their agencies must think very carefully about intellectual property issues when drafting client-agency contracts and make sure that their understanding is reflected in the agreement. Clients that do not want their agencies to recycle content such as photographs for other clients should expressly spell this out in their agreements!