Innocent has succeeded in holding onto its famous 'Dude' logo after an English High Court battle, despite not having signed a contract with the logo's designer. Even so, this case highlights the potential difficulties that can arise when businesses do not tie down contracts with key suppliers.
In 1998, the company behind Innocent smoothies reached an agreement with Deep End Design Ltd for Deepend to take on the design requirements for all aspects of the Innocent brand in return for shares in Innocent. Deepend created the now famous 'Dude' logo in March 1999 and Innocent smoothies launched a month later, but Innocent and Deepend never formalised their deal:
- a draft contract was left unsigned;
- Innocent did not transfer the shares to Deepend; and
- copyright in the 'Dude' logo was not assigned to Innocent.
Fifteen years later, Deepend tried to stop Innocent claiming rights in the 'Dude' logo, and the parties had to seek the court’s help.
The High Court in London found that Innocent was entitled to force Deepend to assign the copyright in the 'Dude' logo even though Deepend had never got its shares in Innocent, holding that:
• There was no valid legal assignment of the copyright in the logo to Innocent as their draft contract had never been signed and showed an intention to assign the copyright in future works only on the condition that Innocent approved Deepend’s designs. An agreement to assign copyright in future works could not be subject to further conditions.
- Despite that, it made no commercial sense to find the contract invalid even though it had been labelled 'Heads of Agreement' and 'Subject to Contract'. The parties had acted as if the contract was in force.
- The obligation on Deepend to transfer copyright to Innocent and the obligation on Innocent to transfer shares to Deepend were separate conditions. The only requirement for the transfer of copyright to take effect was Innocent’s approval of the designs.
- The 'Dude' logo had been created specifically for Innocent and was of no use to Deepend or any of its other clients. It was impractical to find that Innocent only had an implied licence to the copyright, as Deepend could terminate such a licence at any time with damaging consequences for the Innocent brand.
- Both companies were young start-ups in 1999, but the courts will not always be forgiving. For a key asset like a brand logo it is essential to get the (simple) paperwork in place.
- Designers should ensure assignment of copyright only takes effect once payment (or in Deepend’s case, their shares) is received.
- Where a design has clearly been created for a particular brand, the courts are usually willing to imply at least a licence to the copyright. However, third parties will be reluctant to invest in a business if a key asset could be taken away at a whim and taking the matter to court is an expensive way to ensure brand protection.
This article is part of BrandWrites by Bird & Bird - May 2015