The High Court has recently declared Innocent the owner of the copyright in its main brand logo (known as the “dude” logo) used on the Innocent branded range of smoothie fruit drink products. This follows a declaration by OHIM that its Community trade mark registration was invalid.
In the early stages of the Innocent business, Innocent hired a design agency ("Deepend") to do all the design work for its new brand. The parties negotiated a contract in which Deepend would assign to Innocent the copyright in any design work presented by Deepend and subsequently approved by Innocent. As part of this work, Deepend created the “dude” logo, which was adopted by Innocent and has been used on its product range ever since.
Deepend subsequently went into liquidation. Shortly before the liquidation was concluded, a friend of the designer who created the “dude” logo purchased from the liquidator all of Deepend’s interest in the copyright works that it had created for Innocent and then transferred these rights to his new company (“Deepend Fresh”).
Deepend Fresh then brought proceedings before OHIM to cancel Innocent’s Community trade mark for the “dude” logo on the basis that Deepend Fresh owned the copyright in the logo and any use by Innocent of the logo would constitute copyright infringement. Deepend Fresh’s cancellation action was successful and OHIM duly cancelled Innocent’s trade mark registration.
Innocent then appealed OHIM’s decision and issued a claim in the High Court, seeking a declaration that Innocent actually owned the copyright in the “dude” logo. OHIM suspended the appeal pending the outcome of the High Court proceedings.
The High Court granted the declaration. However, the decision was not straightforward.
No signed copy of the agreement between Innocent and Deepend was ever presented as evidence, as neither party could find a copy. Therefore the judge concluded that the parties had not got round to signing the contract. Sections 90 and 91 of the Copyright, Designs and Patent Act 1988 require that for an assignment of copyright and future copyright in the “dude” logo to be legally effective it must have been in writing and signed by the assignor (Deepend). Because there was no signed agreement, there was no legal assignment to Innocent of the copyright in the “dude” logo.
Furthermore, the judge construed the wording of the contract as meaning that the assignment would only take place on approval by Innocent of the design work. As a legal assignment could not be conditional on such an event, the contract could not in any event constitute a valid legal assignment of future copyright.
The court then considered whether there had been an equitable assignment of the copyright. The judge held that the parties had intended the contract to be legally binding, despite the fact that it was labelled “subject to contract” and “heads of agreement”, due to the conduct of the parties, which suggested that they had accepted and were operating under the terms of the contract.
The judge further commented that if he hadn't found an express equitable assignment, then he would have still found an implied assignment rather than an implied licence. In the judge’s view, to imply a licence would have been unrealistic and not commercially effective.
This case highlights an important issue for brand owners. It is vitally important to ensure that if you appoint a third party, such as a design agency, to design and develop your brand, you must have a written agreement with that third party assigning the intellectual property rights in those designs to you. Moreover, it is imperative that such agreements are in place at the beginning of the engagement – securing retrospective assignments can pose significant practical, legal and commercial problems.
Without such an assignment, proving ownership of the intellectual property rights (that you have commissioned and paid for) could prove very costly and time consuming, and may not always end in the desired result.