Is Your Logo a No-Go?

The yellow arches, the green and white mermaid, the white script on the red can.  You probably can match these descriptions to the brand — and this immediate recognition points to brand and logo strength. Oftentimes, in fact, your logo is your brand.  But is it really your logo? In fully developing this core part of their consumer identity, many businesses miss some basic steps they should take to avoid a situation where logo ownership is in jeopardy.

Part of determining who owns the interest in the logo design itself depends on the capacity in which the designer completes the logo development.   Most people and businesses look to hire a graphic designer for a one-time project-based job for which they intend to pay that designer a lump sum. Upon making payment, that person or business then owns the work, right? Nope.  That’s a copywrong.  You see, simply making payment for the logo doesn’t confirm or clear up ownership or associated rights (and limitations).

One step in determining ownership of the logo developed by the designer is to ask whether it is a work made for hire.  A work made for hire, under The Copyright Act, is defined as either “(a) a work prepared by an employee within the scope of his or her employment”, or (b) a specially commissioned work (as in the case of a graphic designer hired for a discrete project) in a number of enumerated categories if reflected in a written agreement signed by both parties.  If the design work was not completed by an employee, then the work is potentially a work made for hire, but only if the specially commissioned work falls into one of the enumerated categories and the parties have signed a written agreement stating that the work will be considered a work made for hire.  If the work is not a work made for hire at all, as with an independent contractor whose specially commissioned work doesn’t fall into one of the categories required under the Act, an explicit written copyright transfer agreement is required to transfer ownership in the logo design from the designer to the person or business for whom it was created.

So why does it matter who ultimately owns the logo?  As noted in another blog this week addressing copyright ownership, authors of original works are granted exclusive rights to reproduce the work or create derivative works.  If ownership of the logo isn’t effectively transferred to the business owner, the designer could demand that you refrain from publicly displaying the logo, reproducing it on your marketing materials, or any other sorts of uses exclusively granted to the creator and original owner of the copyrighted work.  Keep in mind that federal registration of the copyrighted work is not necessary to give the owner these rights which arise under common law.  What federal registration does allow the owner to do, however, is to proceed directly to court to enforce their rights without delay, pursue recovery of statutory damages in the absence of actual damages, and seek recovery of attorneys’ fees.  Resolving ownership in the copyright to your logo which defines and is at the core of your business marketing is essential to building brand strength and trademark development.

So that’s it, right?  Not quite.

Beyond establishing ultimate ownership of the copyright interests associated with your logo, you want to make sure that your written transfer agreement also addresses the designer’s contributions in creating the image to begin with.  An important step is to include representations and warranties on behalf of the designer that the designer will not include any elements into their design of your logo that either do or could potentially infringe upon the rights of any third parties.  Because who could get sued for the use if elements like these are incorporated into your logo?  You.  And you don’t want to end up in a lengthy (not to mention expensive) legal battle over misappropriation of another person or entity’s copyright or trademark interests encapsulated in your logo, or go through the difficult (and yes…expensive) process of re-branding after spending the time, energy and money to build your brand, likely in large part around your logo.  But can’t the designer take inspiration from various sources?  While there are shades of grey between the black and white letter of the law in this respect, there is no definite percentage or foolproof test to determine when an original design has been transformed enough such that it constitutes a new work not guilty of infringement.  In any event, this is not a gamble we counsel our business clients to take.

Even a brand as large as Nike can fall victim to untangling this web of ownership.  In 2015, Nike was sued by a photographer for alleged misappropriation of its famous “Jumpman” logo of basketball great Michael Jordan’s silhouette featured on Air Jordan’s and other merchandise.  At the core of the issue was who owns the copyright in the photograph that is believed to have inspired the logo?  The photographer claimed he retains ownership of the copyright in the photograph and the image was only licensed to Nike for limited time which has long since expired.  Ultimately, the lawsuit was dismissed in favor of Nike and denied a second time upon appeal as the court concluded that the photographer’s work was without sufficient originality to demonstrate copyright infringement.  Still, had the terms of the licensing agreements been clearer perhaps this dispute could have been avoided, which is why solid intellectual property counseling and planning is essential for your business.

What you can do is simple:  develop a solid written agreement that not only identifies exactly what you would like your designer to accomplish, but ultimately identifies the final design for your logo and resolves all ownership interests associated with it.  This agreement should include specific language identifying the work as a work made for hire including necessary written transfer language or otherwise providing for transfer of the copyright interests associated with your logo.  Whether payment is in the form of a lump sum or other fee structure, this must be included to provide adequate consideration to ensure the agreement is enforceable (see our other discussions on contract basics for more).  To protect yourself further, ask that your designer represent and warrant that the materials, images and other sources they use to develop your logo either belong to them or are original works and do not infringe on the rights of any third party.  Additionally, indemnification language in your agreement will come in handy if you find yourself in the unenviable position of defending yourself in a copyright infringement action caused by your designer’s breach.

Word to the wise, for even the simplest of tasks (and even if your best friend is your designer!) make sure to get a copyright transfer agreement and to include the protections outlined here.  If you’re going to go to the trouble to conduct trademark research in association with your brand planning, cover your intellectual property bases to secure your copyright interests to ensure your logo doesn’t become a no-go.

If you’re interested in learning more, join us at our January Shark Bite as we take a look at the evolving law of copyright and, in particular, examine a number of fun infringement cases that have made their way to the news headlines in recent years.