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In the recent IPEC case of Atelir v Kilnworx, the Judge decided that if logo designs are commissioned specifically for a company’s use, that company may be “equitably entitled” to copyright ownership in the logos, even if the ownership appears to have gone astray.
The circumstances of this case were that three individuals, Mr Bunting, Mr Sandhu and Mr Shabbir, set up the “Kilnworx Climbing Centre” in Stoke on Trent. The first individual was also a director of a second company called Atelier. He instructed a design company, Purple Penguin, to create some logo designs specifically for Kilnworx, though his Atelier company footed the bill for these. He then departed from Kilnworx after its failure to pay Atelier back for this and other payments, he claimed ownership by Atelier of Kilnworx’ logo designs and advised his former partners at Kilnworx, Mr Sandhu and Mr Shabbir, that in order to legitimately use the Kilnworx logos they would need to purchase the rights from Atelier. Kilnworx rejected this, Atelier alleged copyright infringement by Kilnworx who denied infringement claiming that it had, at all times, been equitable owner of the logo copyrights (since they had been specifically created for Kilnworx to use). Alternatively Kilnworx claimed that it, and not Atelier, benefited from an exclusive license from Purple Penguin under the copyrights.
The Judge cited “Griggs Group Ltd v Evans” (an earlier copyright ownership case). In “Griggs”, it was established that where a designer is commissioned to create a logo for a client, in order to give business efficacy to the contract of commission there will in the normal course be a presumption that the client has the right to prevent others from using the logo. It was also stated in “Griggs” that whilst on certain facts it may be that the designer is entitled to retain rights in the work pending further payment, the facts would have to point very clearly to such an arrangement with the commissioner of the logo. This is because in normal circumstances, if a company is having a logo designed for its use, it is hardly likely to be happy for the designer to be free to sell that logo on to a third party.
So, the Judge decided that under an implied term to the commissioning contract, Kilnworx in fact owned the copyright in the logos created for it. Payment by Atelier for the works did not entitle it to the copyright ownership.
Atelier had not been entitled to assume the legal interest in the copyrights, having been clearly aware of Kilnworx’ interest in them. Plus, Purple Penguin was the owner of the legal interest in the copyrights only in trust for Kilnworx and at the time they were created.
This case provides some reassurance to trade mark proprietors that they can, in certain circumstances, recover title to the copyright in their logos, relying on equitable principles. Nevertheless, every case turns on its facts and, in order to avoid disputes of this nature, a company should always take care, when commissioning a design company to create logos for it, to ensure in the commissioning process that legal title to the copyright in the logos will be assigned to it.