The High Court of England and Wales (the Court) recently found that the commissioner of certain logos was entitled to an assignment of the legal interest in the copyright in those logos despite not itself paying the design fees.

Background

In Atelier Eighty Two v Kilnworx, the Court considered the ownership of certain logos designed by Purple Penguin, a design company, for Kilnworx Climbing Centre.  A director of Kilnworx Climbing Centre (Kilnworx) arranged to have invoices for the logos discharged by another of his companies, Atelier Eighty Two (Atelier).  Atelier later sent invoices Kilnworx for a range of expenses, including the outlay for the logos, but Kilnworx was never able to cover these costs.  Subsequently, the director parted ways with Kilnworx and, asserting that Kilnworx did not own the copyright in the logos, asked Kilnworx to pay him £5,000 to arrange for ownership to be transferred.

When it became clear that Kilnworx would not be discharging any of Atelier’s invoices, Atelier obtained a transfer in writing of the copyright in the logos from Purple Penguin, the designer.  Atelier then initiated court proceedings against Kilnworx, alleging that Atelier owned the copyright in the logos and that use by Kilnworx amounted to infringement of that copyright.

Court decision

The Court found that the first oral agreement between Kilnworx and Purple Penguin contained an implied term, “of the usual nature to be implied into a contract for the creation of a logo“, to the effect that Kilnworx would own the copyright.  As the law does not allow a transfer of the full legal ownership of copyright without an agreement in writing, the Court found that Purple Penguin had held the first legal ownership of the copyright on trust for Kilnworx.  So, when Purple Penguin transferred its legal interest in the logos to Atelier, Atelier merely held that legal ownership on trust for Kilnworx. Ultimately, Kilnworx was entitled to have that legal ownership transferred to it by Atelier, despite the fact that Atelier had paid the design fees.

Conclusion

Logos can be a valuable element of a business’s brand. Business owners should review their records to ensure that they have contracts with designers which transfer ownership of the IP rights in logos, both to protect the business’s brand and to shield the business from potentially costly infringement cases.

Contributed by:  Leo Moore and James Quaine