Copyright and Commissioned Third Party Works - A Legal Minefield

Monday 4th January 2010

The scenario, you have an idea. However, you do not have the ability to produce the necessary designs, work and materials, etc. to exploit the idea. So, you commission somebody else to do this for you, who is independent of you and your business. It might be a single person, or a collection of people (e.g. a design agency).

When carrying out the commissioned work, valuable copyright works are created. You want to own these, so that you can exploit them and can prevent anyone else from exploiting them to your detriment.

Unfortunately, nothing was said nor agreed between you and the commissioned third party at the time you retained them, as to who would own the copyright works.

So, who owns the copyright in the commissioned designs, work and materials?

Copyright

The usual rule is that first owner of copyright in a new work is the creator of the copyright work (e.g. the creator of any new literary or graphic work, such as a software program, or a logo, or a drawing for the design of a new product).

There are exceptions to this rule. For example, if the creator is an employee and the copyright work is created during the course of his employment, the employer will be the first owner, subject to any agreement to the contrary.

However, if you commission an independent third party to produce a new design, piece of work or other material and, when doing so, they create a new copyright work, ownership of that copyright work will vest in and remain with the third party. The only exceptions to this are where there is a clear agreement to the contrary, or the factual circumstances are such that it must be implied that ownership of the copyright was to pass to the party who retained the services of the independent contractor. The mere fact that the independent contractor has been commissioned is not sufficient to entitle the party that retained the services of the commissioning

The case of R Griggs Group Ltd & Others v Ross Evans & Raben Footware [2005] highlights the problem.

In 1998, Griggs commissioned an advertising agency to combine its existing 'Dr Martens' and 'airWair' trade mark logos into one new combined logo. The advertising agency subsequently retained a freelance designer, Mr Evans, to do this work. However, there was no written agreement as to who would own the intellectual property rights, including the copyright, in the new logo created by Mr Evans.

The Court held that Mr Evans, the creator of the logo, was the first owner of the copyright in the new logo. However, on the facts of the case, it was obvious that the parties would have understood at the outset that the right to use the new logo, and to exclude others from doing so, belonged exclusively to Griggs.

However, in Clearsprings Management Limited (CML) v Businesslinx Limited & Another [2005] the Court's conclusion as to who owed the copyright in a new software programme was not so helpful to the commissioning third party.

In this case, CML provided accommodation and related services to asylum seekers. It was required to report certain information to the Home Office and, for these purposes, it needed a web-based database software programme. It commissioned Businesslinx, a software development company, to write such a program. Unfortunately, the contract was silent as to who would own the copyright in the software programme.

Businesslinx asserted that it owned the copyright in the programme, as it created the work. CML contended that it was an implied term of the contract that it would own the copyright.

The judge hearing the case held that CML had a licence to use the software programme for the purposes of its business. However, on the facts, he was not convinced that it had been the intention of the parties that CML should own the copyright in the software programme and, thus, it could not licence it to a third party without first obtaining (and paying money for) Businesslinx's permission to do so.

How should I protect my business?

The two cases mentioned above highlight the importance of clearly establishing and agreeing, at the outset of any commissioning arrangement, who is to own any copyright that is created when the commissioned third party carries out its contractual obligations. This will save the parties time and expense it the future, by avoiding the need for the Court to answer this question for the parties.

Thus, when commissioning another person or organisation to do work for you, it is best to deal with the issue of copyright (and all other intellectual property rights) ownership in a written contract that the parties enter into before any work is carried out. The parties will then know where they stand and can go forward accordingly.

As highlighted above, if you do not explicitly deal with the issue of ownership at the outset (e.g. in a formal written agreement), you may face difficulties in the future when you want to rely on the copyright.


Ashfords LLP is regulated by the Solicitors Regulation Authority. The information in this article is intended to be general information about English law only and not comprehensive. It is not to be relied on as legal advice nor as an alternative to taking professional advice relating to specific circumstances.