Who: Atelier Eighty Two Ltd and Kilnworx Climbing Centre CIC
Where: The Intellectual Property Enterprise Court, UK
When: 30 July 2015
Law stated as at: 6 August 2015
What happened:
Background
In the summer of 2011, Mr Bunting, a director of Kilnworx Climbing Centre CIC (“Kilnworx”), commissioned logos from Purple Penguin Design Ltd (“Purple Penguin”) on behalf of Kilnworx. Here are the logos in question (the “Logos”):
The agreement between Bunting and Purple Penguin was verbal, with no express term dealing with the copyright in the deliverables.
At the time, Kilnworx was unable to pay Purple Penguin so Mr Bunting stumped up using another company of which he was a director, Atelier Eighty Two Ltd (“Atelier”). Kilnworx agreed to reimburse Atelier.
In November 2012, Mr Bunting resigned from Kilnworx. As part of his resignation, he offered Kilnworx the right to use the Logos for £5,000. This was on the basis that Purple Penguin owned the Logos and Atelier only held a licence to use them. Kilnworx declined the offer, believing that it was entitled to use the Logos and in December 2012, told Mr Bunting that it was unable to reimburse Atelier.
In August 2013, Purple Penguin assigned to Atelier its legal interest in the copyright in the Logos (“Logo Rights”).
Following this, Atelier asked Kilnworx to stop using the Logos. When Kilnworx failed to do so, Atelier claimed that it owned the Logo Rights (as it has paid Purple Penguin’s bill for designing the Logos) and that Kilnworx was infringing its copyright. Kilnworx in turn argued that it was the beneficial owner, or, at the very least, the exclusive licensee of the Logo Rights.
Legal analysis
As a starting point to decipher who owned the Logo Rights, Judge Hacon used the basic principles from Robin Ray v Classic FM plc [1998] ECC 488 (“Robin Ray“) as clarified by R Griggs Group Ltd and others v Evans and others [2005] EWHC 2291 (IPEC) (“Dr Martens“)
In Dr Martens, the defendant had designed a logo but the agreement did not deal with the ownership of copyright. Therefore, the defendant claimed he held both the legal and equitable interest in the logo copyright and the claimant only had a licence to use it, and the court agreed. On appeal, the court applied Robin Ray and found that:
“In order to give business efficacy to the contract, it will rarely be enough to imply a term that the client shall enjoy a mere licence to use the logo, and nothing more. In most cases obviously, it will ‘go without saying’, that the client will need further rights.”
In Robin Ray, it was held that the designer retains copyright in the event that there is no term to the contrary and the mere fact that the commissioner commissioned the work is insufficient to pass copyright. However, a term can be implied when: it is reasonable, equitable, necessary to give business efficacy to a contract, obvious, capable of clear expression and does not contradict any express contractual terms.
When it is necessary to imply a right to copyright, then only a limited licence will usually be given (the minimum possible). However, an assignment of copyright is possible in certain situations, and when this occurs, the price paid, impact of the assignment on the designer and original intentions of the parties should be considered.
Judge Hacon stated that, in addition to this:
“it is, after all, the client’s logo, intended to signal to the world that the goods supplied under that logo come from the client and no one else. This would mean either that the client retains ownership of the copyright or alternatively he has the benefit of an exclusive licence… it is normally to be expected that the designer will have no further conceivable interest in the work“.
The Judgment
Judge Hacon found that, as a director, Mr Bunting entered into the contract with Purple Penguin on behalf of Kilnworx and that there was an implied 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”.
Purple Penguin owned the Logo Rights on trust for Kilnworx when the Logos were created. When Purple Penguin sold its interests to Atelier, Atelier purchased these with knowledge of Kilnworx’s claim to the copyright. Therefore, Atelier was not a darling in equity; Atelier took the legal interest subject to Kilnworx’s equitable interest and Kilnworx had not infringed copyright.
Why this matters:
Every case turns on its own facts; but the decision in this case is not that surprising. It was Kilnworx who originally commissioned the logos for their use. Atelier’s payment of the invoices was insufficient to give them any equitable entitlement. It was Kilnworx, as commissioner, who held the equitable interest in the Logo Rights. The use of Robin Ray helped Judge Hacon balance the rights involved.
The case serves as a good reminder for businesses to obtain a clear assignment of copyright when commissioning a logo. Although this case shows that rights will probably belong to the commissioning company anyway, taking steps to obtain copyright in the first instance will protect both the business from litigation (like this case) and the logos from copyright infringement.
In addition, the case reminds us that the company using the logo may still be entitled in equity to call for the legal interest in the logo copyright, even if the legal interest has been assigned to another company. Therefore, don’t be afraid to claim what you believe is yours.
