How does a small business retain ownership in a commisioned work?
If you are commissioned to produce a work and you do not produce that work in the course of your employment, you (the creator) will automatically own the copyright in it. If your employer is commissioned to produce the work, your employer will own the intellectual property rights in the work.
In order to be able to use the work, the customer will need either a licence from the owner or to take an assignment (transfer of ownership) of the copyright work from the owner. It is therefore in the customer's interest to negotiate either a licence or, preferably from the customer's point of view, an assignment.
You cannot be forced to assign ownership of the work to the customer and if you do agree to grant an assignment, you can insist that you do so only on terms that are acceptable to you, including the price payable by the customer. If you try to hold the customer to ransom, you may find that the customer takes its business elsewhere, but that is how the market place works. If you pitch the price at the right level, you should be able to obtain it. One tip is not to make the assignment effective until you have been paid in full.
If the customer cannot agree terms with you on an assignment and does not take its business elsewhere, the customer will need a licence to use the work and that again is a matter for negotiation.
If the parties fail to negotiate either a licence or an assignment, both are left with uncertainty. Because the customer is paying for the work, the law is likely to imply that the customer has a licence to use that work. Without that, the customer would be left with nothing in return for its money. However the customer probably wants to own the copyright or, at least to have exclusive rights and the difficulty in relying on implied rights is that they are not documented and no one is sure what the customer is allowed to do, or the extent of the customer's use.
Whether a court will imply an exclusive licence or go even further and imply an assignment of copyright is far from certain and will depend on the circumstances. In the case of R Griggs Group Ltd & others v Ross Evans & Raben Footware the court did imply an assignment. That case involved the ownership and use of a commissioned logo. The court was prepared to grant the assignment to Griggs (who commissoned the logo) because the judge thought it was, on the facts of the case, so obvious that it went without saying that the right to use the logo and the right to stop others from using it, was to belong to Griggs. In other circumstances the ownership of the rights might not be so obvious. In most cases the courts tend to imply as little as possible and are more likely to imply non-exclusive rights.
Most customers will be willing to negotiate to obtain an assignment or an express exclusive licence rather than rely on the uncertainties of an implied licence. The creator of the work holds a good hand of cards in those negotiations, but it is up to it to play that hand. To know how good your negotiating position is you need to know and understand some fundamental points about intellectual property.
If you would like further advice about any of the issues considered above please contact Christine Reid on 01865 864195 or email her at email@example.com
This article is not intended to be, and should not be taken as being, legal advice. The law often changes and it varies from jurisdiction to jurisdiction; the information in this article is generic in nature and specific legal advice should be taken before acting on any of it.