Getting copyright ownership right

29 July 2004

Lorna Brazell

First ownership

In theory, ownership of copyright should not present any problem. Under English law, the creator or author of an original work generally owns any copyright in the work unless there is a contract varying that position.

The commonest contracts affecting copyright ownership are contracts of employment. Where an employee creates a copyright work in the course of his employment, the employer is the first owner of copyright in the work, subject to express agreement to the contrary. But ascertaining what acts fall within the course of an author’s employment is not always straightforward. Difficulties arise wherever a person is employed to do a skilled and creative job, in trying to decide how far their employment continues outside nominal working hours. For instance, a computer programmer who writes programs in his/her spare time may be developing from the code he/she was instructed to write at work. However, if the programming is not done under instructions or on work-supplied equipment or during the hours the employer is entitled to call upon, it is not self-evident that the work falls within the course of employment. The difficulty increases where the job ordinarily entails irregular working hours. A teacher who prepares and marks lessons in the evenings and at weekends is arguably still working in the course of his employment. If, however, the teacher is also ‘moonlighting’ as a private tutor and preparing materials for this purpose, those separate materials which are neither intended nor used for the employer’s business are less likely to be fall within the course of the teacher’s employment, even though they could be so used. Drafting employment contracts to include all possible copyright works created while the employee is employed is not easy.

Difficulties can also arise in connection with directors or other officers of a company who may not have any employment contract. However, as a recent case illustrated, a director owes a fiduciary duty to the company such that copyright in any work created by a director which relates to the company’s business is normally held by the director on trust for the company.

Ultraframe (UK) Limited v Fielding and othersconcerned the ownership of rights in conservatory designs created by the director of a company, who had then gone bankrupt. Ultraframe bought the rights in the designs from the director’s trustee in bankruptcy, and sued for infringement. The defendants claimed that actually they owned the rights, by virtue of a series of transactions with the companies which the designer had directed. The Court of Appeal held that a director would normally held any rights in his work on trust for his company, unless there was some reason to infer that he intended to do otherwise. As it was not the case here, the rights had not passed to the designer-director’s trustee in bankruptcy, and Ultraframe had no rights.

It is also crucial to distinguish between employment and contracting/consultancy arrangements. Where a person is hired to provide particular services, the relationship is not necessarily that of employer-employee and the copyright in any works created will not necessarily vest in the hirer. The principles of employment law determine whether there is an employment relationship or not.

Commissioning

Under the Copyright, Designs and Patents Act 1988 (“the Act”) there is no automatic vesting of copyright in a commissioned work in the commissioner of such a work. If copyright is to be owned by the commissioner, the contract commissioning the work needs to provide so expressly. Commonly, however, the contract is silent on the matter. This area is responsible for many misunderstandings since, to the lay person, it appears self-evident that something which he/she has paid for must belong to him/her.

Even though a licence for the commissioner to use the work will often be implied on the normal principles of business efficacy, the scope may be only such as is absolutely necessary (applying the minimalist approach to implied terms set out in Liverpool City Council v Irwin). This is a recipe for maximum uncertainty, since the parties will invariably disagree as to what is absolutely necessary.

Furthermore, where a first company commissions a second company or agency, which contracts out some of the work to third parties, it may not be sufficient to provide for the assignment of all rights to the commissioner. The contractor should also have an obligation to so conduct its business as to be able to deliver those rights. A clause that all “staff” of the contractor working on the project must have entered into a written contract with their employer will provide some protection. Reviewing the contractual arrangements of each and every individual hired by the contractor is clearly not practical but the arrangements for any specific key personnel could be checked prior to entering into the commissioning agreement. Particular regard should be paid to outside consultants, academic staff (the scope of their duties may be uncertain and their employing institution may have some rights in their work) and staff of foreign contractors (who may not be subject to English law).

Another less onerous solution is to include a warranty in the commissioning contract which will at least bring the issue to the contractor’s attention. However a warranty provides only a right to damages.

In some circumstances, an author commissioned to produce a work may be found to hold the copyright on constructive trust for the commissioner. In R Griggs Group Ltd and others v Ross Evans & others,a dispute as to the ownership of copyright in a logo arose. The Claimants, who sell “Dr Martens” footwear, commissioned a new design of logo from an advertising agency, which in turn commissioned the drawing from the First Defendant on standard terms. Nothing was said about copyright in the new design of logo, and the First Defendant subsequently purported to assign his copyright as author to the Second Defendant.

Relying on the extensive review of the relevant law in Robin Ray v Classic FM and on the fact that the author had been paid the proper rate for the job, the Court considered the case to be one of the rare instances in which implying the grant of a licence to the commissioner would be inadequate in respect of business efficacy. The client would “surely need some right to prevent others from reproducing the logo”. Accordingly, the Court decided that implying an outright assignment was more appropriate in this case and made an order that the copyright be formally assigned.

Other circumstances where an assignment of copyright could be required include: where the artist works from sketches provided by the client; where the commissioner intends to sell copies of the commissioned work; and where the artist works with the client to produce a composite work.

Collaborating

In a collaborative work where separate contributions cannot be identified, the copyright is owned jointly between all the contributors. The rule as to authorship in modern forms of work such as films, sound recordings, broadcasts and typographical arrangements has been varied in recognition of the fact that such works are invariably collaborative. Thus the producer of a film is entitled to copyright together with the principal director. This means that they must exploit or enforce their rights jointly and act by consensus in all matters.

What contribution is required to become a joint author of a traditional copyright work is a source of uncertainty. Many works are the product of more than one mind, in the sense that an author may be inspired by another’s idea. There is a continuum between the slightest possible input and a contribution which is just short of 50% of the total work. Accordingly, what contribution will warrant a claim to joint authorship is a question of fact and degree. A mere suggestion will certainly not entitle the contributor to any share in the copyright but a contribution of significant skill and labour which is reflected in the finished work will.

In Cala Homes (South) Ltd v Alfred McAlpine Homes East Ltd, a building company executive gave very detailed oral instructions to a firm of technical draughtsman as to the design of new houses, including the materials to be used. The draughtsmen produced drawings according the instructions and claimed ownership of the copyright in the drawings. Laddie J considered that this was an exceptional case, where the skill and effort involved in “creating, selecting or gathering together the detailed concepts, data or emotions” provided to the draughtsmen deserved protection as much as the physical skill and labour in reducing them into written form. However, general directions leaving the detail and creative decision-making to the person actually carrying out the work would probably not attract such a protection.

By contrast, the degree of input required by an amanuensis to obtain copyright where there is no other claimant can be very little. In Walter v Lane, a journalist who took a shorthand note of a politician’s extempore speech and later wrote up an account from that note was held to have copyright. The account would clearly have infringed copyright in any notes the politician had used to prepare his speech, had any such notes existed, but in the circumstances of the case the reporter’s skill and labour in capturing the speech were sufficient to attract copyright.

Reproducing

An original work which incorporates elements of previous copyright works will be protected by copyright in its own right. Thus, a compilation of poems may have its own copyright by virtue of the skill and originality in making the selection and arranging them. However, each poem is still a copyright work so a licence from each and every author is needed to publish the collection.

The problems become acute in the production of multimedia products, where the new work by its nature involves the use of a number of different forms of work - literary, artistic or photographic works, film, video or sound recordings. A producer should invest considerable time and effort in making a catalogue of the works proposed to be included and obtaining the necessary licences in advance: the complications arising from identifying at a late stage in a project an unlicensed work can put the producer at a disadvantage with the copyright owner in attempting to obtain the required rights.

Presumptions and paper trails

Copyright in literary, dramatic, musical and artistic works in Europe now last for at least the entire lifetime of the author and a further 70 years after the author’s death. Inevitably, over such a period, copyright in most works will pass through a number of hands, often as one part of a larger transaction such as a sale of business assets. The chain of title is rapidly muddied and sometimes completely lost to obscurity. Any person acquiring title to a valuable copyright should therefore review the chain of title thoroughly before finalising the agreement, since the longer a chain stretches from a break before the oversight is noticed, the harder it will be to cure.

Sections 104-106 of the Act provide some help in establishing that copyright subsists and who held it at a given point in time by providing a number of helpful presumptions. But they are subject to rebuttal by evidence to the contrary. It is therefore important to retain as complete as possible a paper trail demonstrating how and where copyright in a work has passed. Breaks may, for example, arise where assets are transferred from a wholly-owned subsidiary to a parent company, without account being taken of the need for an assignment in writing to pass the title in copyright. As a result, a subsequent assignment by the parent company is ineffectual since the copyright is not legally owned. Transfers through inheritance are also problematic, since a vesting assent may be required to transfer title in copyright from the personal representative of the owner to the appropriate beneficiary, a formality that few personal representatives are likely to consider.

Conclusion

Although the principles are simple, the housekeeping associated with keeping matters straight is considerable and usually underestimated. Many companies would do well to revisit the processes they have in place, to establish where the cracks in their copyright protection may be and how they can be filled.