A recent case dealing with a dispute over ownership of valuable software highlights how failing to agree, upfront and in writing, who is to own IP rights in commissioned material is asking for trouble. Carla Basso and Richard Menzies draw the lessons.
Topic: Intellectual property
Who: Laurence John Wrenn Integrated Multi-Media Solutions Limited v Stephen Landamore
Where: High Court
When: July 2007
Law stated as at: 29 August 2007
What happened:
This recent case highlights the importance for advertising and marketing agencies who are commissioning artwork, photos, designs, films, logos or other materials for a campaign to establish, right at the outset of that relationship, who owns the copyright in the commissioned materials. Often when an agency commissions a third party to produce such materials on its behalf it assumes that because it is paying for the work to be created, it will automatically own the underlying copyright in that work. Wrong! In fact, if an agency commissions a piece of work, legal ownership of the copyright will remain vested with its creator, unless there is a written contract, signed by the creator, which expressly transfers that ownership to the agency. Whilst a "copyright assignment" is not a complicated or costly form of agreement, the alternative may well be expensive and time-consuming litigation to determine the ownership of the materials, and there is no guarantee that the courts will ultimately come down in an agency's favour.
In some circumstances, the courts will protect a commissioner's investment, granting them a limited licence to use the commissioned work, but with the ownership remaining vested in the creator. For an agency, this is not always enough – ideally they want all the rights in the materials they have paid for, to give them certainty that the creator won't use them elsewhere, or worse, allow competitors to use them in a way that might spoil the original agency's campaign. On very rare occasions the courts will insist the creator does assign the copyright to the commissioner, but the courts are reluctant to imply a full transfer of copyright where the parties have failed to document copyright ownership, as the following cases show:
- In Laurence John Wrenn and Integrated Multi-Media Solutions Limited v Stephen Landamore (2007) Mr Wrenn set up a business manufacturing interfaces for certain car manufacturers and third-party audio equipment. In 1998 he incorporated a company, In Car Developments Limited (ICD), for this purpose. Mr Landamore was a computer programmer. From 2001, he wrote various computer programs for use in different kinds of interfaces, which Mr Wrenn marketed through ICD. The parties did not dispute that Mr Landamore was the author of those programs. The relationship between Mr Landamore and Mr Wrenn gradually deteriorated: Mr Landamore argued that he should be paid for the use of his interfaces, and Mr Wrenn argued that he should have access to the source code of the programs.
Although the parties later recorded copyright ownership terms in an agreement, in comments relating to the parties' earlier working relationship, the judge held that an exclusive licence, rather than an assignment, was all that was required on the facts. This arrangement meant that Mr Wrenn would have been able to use the programs while also ensuring that the developer would be protected against the non-payment of royalties. This protection would not have been available if an assignment had been implied.
- R Griggs Group Ltd and other v Evans and others [2005]
The Griggs Group ("Griggs") manufacture and sell Dr Martens footwear under licence from the registered trade mark proprietor. They also use their own registered trade mark Airwair. The two marks are incorporated into the form of a single stylised logo which is used on Griggs's footwear. The logo was created by Evans, a freelance designer commissioned by Griggs to combine the two logos. At the time the design for the logo was commissioned, neither Griggs nor Evans gave any thought to the ownership of copyright in the combined logo but, after Evans subsequently assigned copyright in it to Griggs's competitors, Griggs sought a declaration that they were the beneficial owners of the copyright.
In the circumstances, the court found it obvious that the right to use the logo, and to exclude others from using it, was to belong to Griggs and not Evans. In a departure from the minimalist approach to implied ownership of copyright advocated in the Robin Ray case, the court held that Griggs were entitled to beneficial ownership of the copyright in the combined logo and not merely to an exclusive licence to use it. The court stressed it was obvious that the logo had become an important trade mark of Griggs's business. It was clear that Griggs should be assigned ownership of the logo to prevent others (especially rivals) from reproducing it as otherwise the logo would have been useless to them.
- Clearsprings Management Ltd v Businesslink Ltd and another [2005]
This case concerned the ownership of copyright in software generated by a third party software development company under a software development agreement. As part of various services it provided to the Home Office, Clearsprings was required to report certain information such as dates of arrival and departure of asylum seekers from accommodation. It required a web-based database system to enable it to do this, and entered into an agreement with Businesslink for the development of software to provide such a system. To enable Businesslink to develop the software, Clearsprings provided information on its business practices. Businesslink had also borrowed from its pre-existing BusinessLinx software code in writing the software modules. The contract contained no express provision regarding ownership of copyright in the software.
Although the court in that case found that the software contained sensitive information regarding the commissioner's operating procedures, it decided it was sufficient to give the commissioner a non-exclusive licence to use the software. To ensure protection of the commissioner's operating procedures the court implied a restriction prohibiting the use of such information for purposes other than those of the claimant.
The court drew particular attention to the fact that it was common for software developers to reuse programs which were written for other customers. If Clearsprings had been assigned the copyright then Businesslink would have been prevented from reusing such programmes for other customers. Moreover, the contract price of £30,000 was in line with industry standards and that if it was the intention of the parties that the copyright was to be assigned then the price would have been greater.
Why this matters:
In the Clearsprings case, Christopher Floyd, QC commented "One should not forget that the starting point is that Parliament has conferred copyright on the author of the work and that there it will remain unless the circumstances are such as to make it necessary to imply obligations which have the effect of transferring it to the client or otherwise cutting down its scope".
These cases show it is unwise to rely on "circumstances" – the courts are reluctant to clean up a disorganised commissioner's mess, and even when, in exceptional cases they do so, the result is often far from satisfactory for either party.
The well organised commissioner will set out its position on copyright ownership from the outset, document this contractually, and retain copies of the copyright assignment agreement in order to prove its rights in the event of future claims. Which kind of commissioner are you?
Carla Basso, Associate
Richard Menzies, Trainee
Osborne Clarke, London
carla.basso@osborneclarke.com / richard.menzies@osborneclarke.com
