Ownership and infringement of copyright in greeting card designs.

In the judgment of this Intellectual Property Enterprise Court case, the judge dealt with both issues of copyright ownership and authorship in the designs of greeting cards.

Business impact

This case serves as a reminder that the language of any assignment of intellectual property should not only be clear but also properly assigns the intellectual property in question.

It is important to note that a director of a company will not necessarily be employed under a contract of service. Also, a managing director, even if he occasionally acts as though he’s an employee as part of his managerial role, will not necessarily be an employee for these purposes. As a result, although this case is an exception to the rule, the legal title to the copyright will not vest in the company (i.e. the employer).  Instead the director, who is not an employee, will hold the copyright in any work carried out as a director on trust for the company.

Moreover, directors who own the majority, if not all, of a company’s issued share capital should be aware that they will normally be held liable for any wrongdoing committed by the company.

Overview

Mei Fields Designs Ltd (“MFD”) contended that it owned the copyright in the greeting card designs which were designed by Mrs Mei Fields.  MFD alleged that Saffron Cards and Gifts Ltd (“SCG”) infringed this copyright and also claimed that the sole director and shareholder of SCG was jointly and severally liable for SCG’s infringement.

The greeting cards which were, allegedly, copyright infringing were categorised as Group A and Group B.  Group A consisted of the greeting cards which were designed by Mrs Mei Fields before being produced and sold by SCG after 21 March 2016 – the date on which MFD’s licence with SCG allowing SCG to produce greeting cards designed by Mrs Mei Fields was terminated.  Group B encompassed 12 allegedly copyright infringing greeting cards which had been designed by SCG’s designers.

In respect of Group A, SCG claimed that Mrs Mei Fields never owned the copyright to her designs and that, therefore, the relevant copyright was not owned by MFD.  MFD contended that Mrs Mei Fields assigned the copyright in her greeting card designs to MFD.  However, SCG argued that Mrs Mei Fields was employed by Metropolis Worldwide Ltd (“MW”) when she designed the greeting cards and, as a result, the copyright in the designs was owned solely by MW.

As an alternative argument, SCG claimed that the greeting card designs were created by Mrs Mei Fields with numerous MW employees and, therefore, the relevant copyright was owned jointly with MW.  Indeed, SCG argued that MW had sold its intellectual property to SCG back in 2014 so any enforceable rights in such property were no longer held by MFD.

With regard to Group B, while SCG admitted that it had access to Mrs Mei Fields’ designs, SCG argued that the greeting cards were not copyright infringing as they were not similar enough.

The judge ruled that ownership of the copyright vested in MFD and that SCG as well as SCG’s sole shareholder and director were liable for copyright infringement.  They were liable not only for selling copies of the greeting cards after the licence agreement terminated in March 2016 but also for designing greeting cards which took the expression of the skill, judgement and creativity that went into the design of the greeting cards designed by Mrs Mei Fields.

Comment

In the context of employment, this case raised some important points in respect of both ownership of copyright and authorship with the judge, ultimately, pointing to the defendants taking “the expression of Mrs Fields’ skill, judgement and creativity” which is consistent with the test set out in Infopaq v Danske Dagblades Forening ECJ C-5/08which refers to labour or effort.

All of the circumstances need to be taken into account when it comes to deciding whether intellectual property was created during the course of employment.  Indeed, this will involve looking through employment contracts as well as any other employer-employee agreements which are in place in order to ascertain what each party’s role involves.

Employers should take note and always ensure that contracts are not only clear but that they encompass all of the creations that they are engaging their employee to create.  Moreover, employers should remain alive to the fact that contracts should be constantly reviewed in order to adapt to any role change within the organisation by the employee.

Case Mei Fields Designs Ltd v Saffron Cards and Gifts Ltd [2018] EWHC 1332 (IPEC) (6 June 2018).