UK: Who Owns the Copyright? Dealing with "Silent" Contracts

Article by Kit Burden and Duncan Pithouse

Griggs are the UK manufacturers of the Dr Martens footwear range. They operate under licence from the inventors of the Dr Martens boots in Germany. They are licensed, accordingly, to use the trademark "Dr Martens". In addition, Griggs have their own trademark "AirWair" which they use in association with the Dr Martens trademark.

Before 1988, both the Dr Martens and AirWair trademarks appeared separately in a stylised form on the Dr Martens footwear. In 1988, Griggs decided to combine the two logos into a single logo. Griggs commissioned a local advertising agency to create the combined logo, who in turn engaged a freelance designer, Ross Evans, to create the design. The agency purported to assign the copyright to Griggs, but Evans claimed that such assignment was invalid on the grounds he owned the copyright in it and had not himself assigned it to the agency. Griggs claimed that they were the owner of the beneficial (as opposed to legal) title to the copyright in the combined logo and being so, were entitled to an assignment of the legal title to them. The parties agreed that the combined logo was protected by copyright under the Copyright Designs and Patents Act 1988 ("CDPA 1988"); the issue in question related to the ownership of the copyright in the combined logo.

The CDPA 1988 provides that the "author" (i.e. the person that created the relevant work) is the first owner of copyright in the work except when the work is made by an employee in the course of his employment, in which case the first owner will be his employer, subject to any agreement between the employer and employee to the contrary.

The agreement between the advertising agency and Evans was silent in relation to the ownership of the title to the copyright in the combined logo. It was established that Evans, as a freelance designer, was the first owner of the legal title to the copyright and it was the ownership of the beneficial (or equitable) title that required consideration by the Court.

In the case of Robin Ray v Classic FM plc [1998] FSR 622, the Court laid down a series of nine principles for determining the rights of a contractor and his client in respect of ownership of copyright as follows:

1 The contractor is entitled to retain the copyright unless there is an express or implied term to the contrary;

2 The contract may provide expressly who shall be entitled to the copyright in work produced pursuant to the contract;

3 The mere fact the contractor was commissioned to produce specific work is insufficient to entitle the client to the copyright;

4 The law governing the implication of terms into a contract are well established and will not be broadened; see Liverpool CC v Irwin [1977] AC 239. The conditions to be satisfied are that the clause: (a) must be reasonable and equitable; (b) must be necessary so as to give business efficacy to the contract; (c) must be so obvious that it "goes without saying"; (d) must be capable of clear expression and (e) must not contradict any express term of the contract.

5 A minimalist approach must be taken to the implication of terms into a contract so that the clause must not provide for more than is necessary in the circumstances;

6 Following from the fifth principle, if a clause needs to be inserted into a contract to provide for rights in respect of a copyright work and the need could be satisfied by either an assignment or licence of the copyright, only the licence grant will be implied;

7 Circumstances may exist where it is necessary for the copyright to be assigned, but this is only likely to arise if the client needs, in addition to the right to use the copyright works, the right to exclude the contractor from using the copyright and the ability to enforce the copyright against a third party. Factors to be considered in determining this issue will be the price paid, the impact of the assignment on the contractor and whether it can sensibly have been intended for the contractor to retain copyright;

8 If necessity requires only the grant of a licence, the scope of the licence must be the minimum that is required to secure for the client the entitlement the parties must have intended to confer upon him; and

9 The licence scope should, accordingly, be limited to what is in the joint contemplation of the parties at the date of the contract, and should not extend to enable the client to take advantage of a new unexpected or profitable opportunity.

The Court held that Evans was the legal owner the commercial value of the logo actually arose not from the effort expended by Evans but by the subsequent use to which the logo had been put - that it has been used by Griggs on their footwear range and is an important trademark of their business. Accordingly, the Court held "it to be obvious (so obvious that it went without saying) that the right to use the logo, and exclude others from using the logo, was to belong to [Griggs] and not Evans".

Further, the Court considered (bearing in mind the fifth to seventh principles above) that Griggs was entitled to an assignment of the title to the copyright and not merely the licence. The Court based its decision on this matter on the fact that the licence that would have been granted would have been a perpetual, exclusive licence "which anyway is almost the same as a straight copyright"; that joining Evans into proceedings against an alleged infringer of the copyright would have been unsatisfactory and that Griggs could not have sued Evans for infringing the copyright (i.e. Evans could have used the copyright for his own benefit).

Taken together, the result was that a term was implied into the contract between the advertising agency and Evans assigning the legal ownership of the copyright to Griggs.

Intellectual property right ownership is usually one of the thorniest issues to be resolved when negotiating contracts. The parties will often fight tooth and nail to preserve or obtain the ownership of copyright and other intellectual property, often describing the issue as a dealbreaker or "showstopper" and thinking that it can make or break their future business activities. Whilst this case is a helpful restatement of the position governing ownership of the beneficial title to copyright and, with Lakeview v Steadman [2000] C.L.S.R. 16 (which dealt with the same issue in relation to copyright in software programs), can provide a useful mechanism to enable clients to obtain ownership of the copyright of material created specifically and uniquely for them, it should not be seen as a viable alternative to agreeing the terms of intellectual property right ownership in an appropriate contractual form during contractual negotiations.