Copyright: first ownership, assignment and infringement of designs

Background

Where acts are carried out in the course of employment copyright vests in the employer (section 11, Copyright, Designs and Patents Act 1988) (CDPA).

Where a name claiming to be that of the author appears on copies of the work as published, that person is presumed to be the author of the work until the contrary is proved (section 104(2), CDPA) (section 104(2)). 

Facts

A designer, F, had operated a company, M, that sold greeting cards, including her own designs. M later entered into a company voluntary arrangement, but continued to trade. 

F set up a company, MD, to own and exploit her copyright in her cards' designs, having purported to assign to it all copyright in past and future cards under a contract. 

A company, S, which had bought M's business and assets, entered into a licence with MD to produce cards to designs licensed from MD: the agreement made clear that MD owned all copyright in the cards' designs. F initially designed cards for S under the terms of its licence agreement with MD, but the relationship soured after S launched two greeting card ranges which MD considered copies of F's cards, and S stopped paying MD royalties.

MD alleged that S had infringed its copyright in greeting cards, and S counterclaimed for a declaration of non-infringement.

MD argued that S had infringed its copyright in a number of cards, and that S's sole director and shareholder, ST, was also jointly and severally liable for those infringing acts. 

S argued that F had never owned the copyright in her cards because they had been created in the course of her employment with M: copyright was therefore held by M, or by F on trust for M, or by F jointly with M. S argued that, consequently, MD did not own the relevant copyright and that, in any event, the design of S's cards was not close enough to infringe any copyright. ST argued that he was not sufficiently responsible to be jointly liable for any copyright infringement.

Decision

The IPEC held that S had infringed copyright in two greetings cards.

Whether acts are carried out in the course of employment so that copyright vests in the employer under the CDPA requires a multi-factor assessment, based on all the circumstances of the case. Those factors include:

• The terms of the contract of employment.
• Where the work was created.
• Whether the work was created during normal office hours.
• Who provided the materials for the work to be created.
• The level of direction provided to the author.
• Whether the author could refuse to create the work.
• Whether the work was integral to the business. 

In the light of those factors, F had designed the relevant cards outside the scope of her employment with M.

Even if F had created the cards in the course of her employment, there had been an oral agreement between her and M which provided that she would own the copyright in the card designs.

S had failed to displace the presumption in section 104(2) that where a name claiming to be that of the author appeared on copies of the work as published, the person whose name appeared was presumed to be the author of the work until the contrary was proved. The cards relied on stated on the back "Designed by F".

There was no joint authorship with M, as the work had not been produced by the collaboration of two or more authors, with no distinction between each author's contribution. F was the sole owner of the relevant work. 

There was a valid assignment of copyright effective to assign F's copyright to MD. Although the wording in the document was internally inconsistent, including a term in the assignment stating that the assignee could license the designs with F's permission, it had to be considered in its commercial context. Since MD licensed, rather than sub-licensed, the designs to third parties, construing the document as an assignment was more consistent with the commercial consequences.

The designs of two of S's cards had been created by copying F's skill, creativity and judgment in designing certain cards. Copyright in those two cards had been infringed. The designs of the remaining 11 cards at issue were insufficiently similar to infringe.

ST was jointly liable for infringement as he had actively co-operated to bring about the act of the primary tortfeasor and also intended that his co-operation would help to bring about that tortious act. 

Comment

Copyright is automatically owned by an employer where a work is created in the course of employment. Here, on the facts, the work was found to have been created by F outside the scope of her employment. 

An assignment of copyright must be in writing, signed, and usually requires consideration to be a valid contract. Here a short, handwritten document was sufficient but because the terms were internally inconsistent (referring both to assignment and licensing) the parties were obliged to litigate to determine whether or not there was an effective assignment of copyright.  This decision highlights the importance of ensuring accurate and legally effective contracts are drawn up, both in relation to determining first ownership of copyright in an employment context, and as regards the validity of any subsequent transfer of ownership.

Case: MEI Fields Designs Ltd v Saffron Cards And Gifts Ltd and another [2018] EWHC 1332 (IPEC).

First published in the August 2018 issue of PLC Magazine and reproduced with the kind permission of the publishers. Subscription enquiries 020 7202 1200.