Can ITV Digital’s liquidator sell the rights in the lugubrious primate if creator Mother’s fees have not been paid?
Who: ITV Digital/Mother
When: May 2002
Perhaps the only positive thing to come out of the ITV Digital debacle, the "Monkey" character was a key part of ad agency Mother's services to ITV Digital. In the tradition of "flat Eric", the floppy, slightly beaten up looking character caught the public imagination far more than the product it was advertising and when the liquidator took control of ITV Digital's assets, Monkey must have been near the top of the list of items to be liquidated for cash to help pay off creditors. Sure enough, from the off, there was no shortage of interest in buying the icon, with Diamond White and Kwik Save apparently among those keen to make the character their own.
Ad agency Mother, however, had something to say about this. They argued that all the rights in Monkey worth having were not owned by ITV Digital at all, but were still with Mother. They cited their contract with ITV Digital. They said that a clause in it stated that all intellectual property rights in advertising supplied by Mother to ITV Digital would remain with Mother unless and until ITV Digital paid its dues under the contract. As Mother were at that time queuing up amongst the numerous other creditors of ITV Digital, this provision kicked in and saw to it, Mother said. that the liquidator had no rights in Monkey to dispose of. At the time of writing, no outcome of the dispute has yet been reported, but clearly no prospective purchaser of Monkey is likely to touch it with a barge pole unless and until this little local difficulty has been resolved.
Why this matters:
It is not uncommon for agency/client contracts to include a clause of the kind which Mother has cited in this case. If the wording of the clause is as has been suggested in the press, then ITV Digital would appear to be in a fix unless they stump up what is owed to Mother. Even if the liquidators had the wherewithal to do that, however, to do so in advance of the numerous other creditors could amount to an illegal preference open to challenge by others owed money.
There are three other scenarios which may not even apply in this case, but which are worth considering in this general context. First of all, if the Mother/ITV Digital contract had simply included an assignment by Mother of all intellectual property rights in advertising which it created for ITV Digital during the contract, then as a matter of law there would be a strong argument that the copyright assignment was still valid, with Mother left only with a claim in the liquidation for monies due to them under the contract. A second aspect would arise if Monkey had in fact been created by a subcontractor of Mother, for instance a TV commercial production company which had been retained by Mother to produce the first commercial which featured Monkey. If the character had been created by the production company and not Mother, then under the standard form contract between an agency and a production company for the production of TV commercials, all rights in Monkey would have stayed with the production company except for the purposes of its appearance in the TV commercial under production. This would have been the case unless an amendment to the standard form of contract had been negotiated and agreed before or after signature. A final aspect relates to the types of intellectual property rights that might apply here. Copyright has been mentioned in all the recent press reports, but another species of right might also be relevant, namely design right. If design right as opposed to copyright were the relevant intellectual property right and the Mother/ITV Digital contract had said nothing about intellectual property rights, then ITV Digital, by dint of it having commissioned the creation of Monkey, would automatically have owned the relevant rights in the character, regardless of whether it had paid up under its contract with Mother.