AJPark

Most of your promotional and advertising materials are protected by copyright.  If you regularly work with design agencies, photographers and other creative people when developing brands and logos for the goods you sell and the services you offer, then having a basic understanding of the rules surrounding copyright ownership is essential. 

Copyright will exist in materials (“works”) created for your business.  An obvious example is your logo — but don’t forget about your product photographs, and catalogues, promotional and point-of-sale material.  There is also your advertising campaign material and, of course, your website.  

All of these creative works can be the subject of copyright and can have different owners.  There can be problems down the track if you do not know who owns the copyright for each of your “works”.  Future problems can be avoided by making sure at the outset that everyone is clear on their position, and that it is recorded in writing.

Let me explain the current copyright ownership rules.

First, the general rule is the original owner of copyright is the author (that’s the creator) of the copyright work. The creator can be a natural person or a company. But there are two main exceptions to the general “author is owner” rule.

Where a literary, dramatic, musical or artistic work (including a product design) is made by an employee during their employment, the employer will be the first owner of any copyright that is created.

And where a work has been commissioned, the person who commissions the copyright work will be the first owner of any copyright, provided

(i) the commissioning arose before the work was created and

(ii) the work was created in pursuance of the commission.

But here’s another exception — not all commissioned copyright works belong to the person who commissioned them.

The commissioning exception only applies to photographs, computer programmes, paintings, drawings, diagrams, maps, charts, plans, engravings, models, sculptures, films, or sound records. Quite illogically, works of architecture and literary works are not covered by this exception. 

The commissioning rule creates uncertainty because the rule only applies to certain copyright works.  The rule is inconsistent and causes the most difficulty when a person commissions someone to create a work that incorporates several copyright works.

These exceptions can be overridden by an agreement in writing. 

Here are some examples of how these exceptions currently work in everyday life:

• If an employee of an advertising agency creates a jingle, the advertising agency owns the copyright in that jingle.  However, if the advertising agency had a non-employee create the jingle, then that person owns it. This is because the definition of “employee” excludes an independent contractor. 
• If you commission someone to write a script for your advertisement, some copy for your advertising campaign, or some articles for your website, you probably don’t own the copyright (as they are literary works).  On the other hand, if you had someone take a photograph for you, then you will own copyright in it.
• A business commissions a designer to create a promotional brochure. The brochure may include drawings and text. The person who commissions the drawings will own copyright in the drawings. The person who creates the text (the literary work) will own the copyright in the text, even if they were commissioned to do so.
• Another example involves developing computer software and an accompanying manual.  The party who commissions the creation of the computer software would own the copyright in the software, but not the manual.

As you can see, the situation can become complex.

The ownership rules have created confusion, because the rules which apply to copyright ownership differ on the type of work involved.  Just because you have paid for it, does not necessarily mean that you own it.  It is not hard to imagine the comments that would be made when you found out you didn’t own this material, especially if you had paid for it!

The Copyright (Commissioning Rule) Amendment Bill introduced in August 2008 proposed to remove the commissioning rule exception. Unless you agreed in advance with your design agency that you would own copyright in any work the agency made, the agency would end up owning the copyright.   This would have given the agency broad exclusive rights to use the work, including showing the work to the public.

On the 16th of April, the government withdrew the Copyright (Commissioning Rule) Amendment Bill.  The government has not indicated why it has withdrawn the Bill.

The withdrawal of the Bill means that the law will remain unchanged. Whether the person who creates the work, or the person who commissions the work is the first owner of copyright will continue to depend on what the work is. The exception is where the parties agree on who will own copyright. Therefore, if you are going to commission a work or create a work for someone else, you should agree on who will own copyright before the work is created.

It will still be extremely important for businesses to have robust policies around copyright ownership. Such policies should include having standard contracts with design agencies, spelling out that anything the agency makes will belong to the business that is paying the agency to do the work.  While this will mean some up-front investment to develop template contracts, in the long-run it should reduce doubt and unnecessary legal costs that might arise when copyright ownership is disputed.

Make sure you know what you own. 

An edited version of this article was published in NZ Retail, June 2009.

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  Corinne Blumsky

  Partner