Third Party Created Copyright Works — Who Owns Them?

Businesses often fail to ask this question and incorrectly assume that if they pay a third party to create an advertisement, logo, software, website, photograph or other copyright work, they will own copyright in such works.

The Australian Copyright Act 1968 (Cth) generally provides for an employer to own copyright works created by employees unless there is an agreement to the contrary or the work was created outside the scope of employment. However, most third party created works are not treated in the same way.

Unless there is a written agreement between the parties in relation to ownership of copyright, subject to certain exceptions, it is likely the third party creator will own copyright in the work.

Failure to secure copyright ownership of key works may cause problems and additional expense when the business or assets are later sold and the parties realise such works are owned by a third party.

The risk and additional problems caused by not obtaining copyright was illustrated in an English High Court case last year (Griggs Group Ltd & Ors v Evans & Ors ([2003] EWHC 2914)). Griggs, the UK manufacturer and distributor of Dr Martens shoes, commissioned an advertising agency to create a new logo for Dr Martens. The agency sub-contracted Evans, a designer, to create the logo but there was no written agreement as to ownership of copyright in the logo. Evans subsequently purported to assign copyright in the logo to a competitor of Griggs.

The High Court found:

• Evans, the designer, was the legal owner of copyright in the logo as there was no assignment of copyright to the advertising agency or Griggs

• Griggs had an exclusive right to use the logo and was the beneficial owner of copyright in the logo.

If the creator insists on retaining copyright, the parties should enter a written licence which sets out the terms of the licence. There are advantages to an exclusive written licence, for example, the exclusive licensee has the same rights and remedies as the copyright owner in relation to bringing copyright infringement proceedings against third parties. A licensee using a copyright work under an implied licence will need the licensor to participate in any infringement proceedings.

Some copyright works (eg a logo or drawing) may also be registered as a trademark. The protection provided under the Trademarks Act 1995 (Cth) is distinct from the protection under the Copyright Act.

The creator of a copyright work will still hold moral rights in any works they create which cannot be assigned under Australian copyright law.

Detailed moral rights consents may need to be obtained from the creator to allow the work to be dealt with in the future.

When copyright works are created by a third party:

• a written assignment of copyright in the work should be obtained, or

• if the creator does not agree to assign copyright, the parties should enter a written licence setting out the terms under which the work can be used. For example, whether the licence is exclusive, term of the licence, territory, permitted users of the work, whether modifications can be made to the work and who owns copyright in such modifications.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.