The Property Commissioning Conundrum – Who owns the copyright (and the trade mark)? (André van der Merwe)
With increasing frequency business owners or managers who realise that copyright is an important asset in their business, are confronted by this question. For certain works, the copyright will belong to the person or business for which the work was created, in terms of the Copyright Act, No 98 of 1978 (as amended) (-“the Act”). However, this is not the case with all types or categories of so-called ‘commissioned’ works.
Major problems can, and do, arise when a copyright work is created by an outside agency as a commissioned work that falls outside the scope of the commissioning provisions of the Act. In such a case, the agency, having been paid for executing such work, owns the copyright in such work. While this appears to be a purely copyright problem, it will be understood that an artistic work such as a commercial logo or device can also function as a trade mark.
The subsistence and exploitation of copyright is not subject to any formality. Consequently copyright, although subject to certain requirements, comes into existence immediately and automatically upon completion of a work as contemplated in the Act, both in South Africa and in all other member countries of the Berne Convention In respect of the work itself, several requirements must be met. Inter alia the work must fall within one of the categories of works as defined more fully in the Act, namely; literary works, musical works, artistic works, cinematograph films, sound recordings, broadcasts, including sound/audio and visual images, programme-carrying signals, published editions, of both current copyright and non-copyright works, and computer programs.
Section 21 of the Act deals with the question of ownership of copyright. As a general rule, the author of a work is the first owner of copyright in the work. In the case of joint authorship, such authors are the first co-owners of the copyright. There are, however, certain exceptions provided for under the provisions of the Act, namely in respect of:
• Newspapers, Magazines, etc:
Where an author, in the course of employment by the proprietor of a newspaper, magazine or similar periodical, under a contract of service or apprenticeship, produces a literary or artistic work for use in any such publication, the proprietor will be the owner of copyright in the work in so far as the copyright relates to use in such publications, or for reproduction of the work for purposes of publication. However, in all other respects, the author will be the owner of copyright.
• Commissioned Works:Where a person commissions; i) the taking of a photograph, ii) the painting or drawing of a portrait, iii) the making of a gravure, vi) the making of a cinematograph film or v) the making of a sound recording and pays or agrees to pay for it in money or money’s worth, and the work is made in pursuance of such commission, such person i.e. the commissioner will be the owner of copyright subsisting in the work.
This is the problematic, so-called ‘commissioning’ sub-section that will be discussed further below.
Employment Contracts: When a work is made in the course of an author’s employment by another person under a contract of service or apprenticeship, that other person (i.e. the employer) will be the owner of copyright subsisting in the work. Exclusion Agreements: The operation of law as detailed in the above exceptions, may be excluded by agreement between the parties. The agreement may be verbal or in a written form but should preferably be in writing for factual and legal certainty.
The State/International Organisations: That ownership of copyright in works made by or under the direction or control of the state, or such international organisations as may be prescribed, will initially vest in the state or the international organisation concerned, and not in the author. A closer look at the ‘commissioning’ subsection: Although the commissioning subsection has a long and interesting, but questionable history based on past British Copyright Acts, when the South African commissioning subsection is examined closely, it will be seen that the categories/types of commissioned works listed are not exhaustive and that most categories of works eligible for copyright protection are not covered.
This means that instead of ownership of all so-called commissioned works vesting in the commissioner, the ownership for most categories of works viz those that fall outside the scope of the subsection, vests in the author/creator with serious implications for the commissioner. Consequently the commissioner of a work is deprived of the benefits flowing from ownership such as the right to use the copyrighted work freely, to amend or copy the copyrighted work, to exploit such work jointly with a third party, to license the exploitation of such work to a third party, or various third parties, the right to alienate the work and the copyright associated with such work, and the right to enforce the copyright in an infringement situation.
Turning now to the categories or types of works specified in the subsection, some of these are interesting, to say the least. For
example: Reference to “the painting or drawing of a portrait” per se excludes for example; landscapes, still-life paintings/drawings or other artistic works. This implies that most artistic works are excluded from the scope of this subsection. As an example of this oddity, if a company commissions and pays an artist to paint a portrait of its chairperson, the copyright in the completed portrait will be owned by the company. However, if in similar circumstances, the company commissions and pays the same artist to produce, a painting of its headquarters building, the copyright in the completed painting will be owned by the artist and not by the company. This distinction, which from the type of artwork seems irrelevant leads to a dramatic difference in ownership, which is clearly unjustified.
A ‘gravure’, short for photogravure, is a remarkable type of work. This apparently describes a type of printing process or equipment used in the 19th century. The Concise Oxford Dictionary refers to this as being “a picture produced from a photographic negative transferred to a metal plate and etched in.” This is archaic, and printers today are no longer familiar with such old technology. The major criticism of this commissioning section is that the provision should be comprehensive in scope to be meaningful and not limited to a few categories/types of works.
Notable shortcomings flowing from the commissioning sub-section arise in a typical scenario that takes place when a business wishes to have a new logo/device designed for its products/services by an outside design agency. The problems arising from this situation appear to happen quite frequently in business practice. The business will normally commission and will pay the design agency to create a new logo for the business. Unfortunately, neither of the parties will usually be aware of the provisions relating to commissioner works, nor of the subsequent provision requiring an agreement to vary the effect of the problematic commissioning sub-section. When the logo, an artistic work, is completed copyright in the new logo will come into existence and will belong to the artist/agency because a logo cannot ordinarily be construed as a portrait and hence falls outside the scope of the commissioning section.
The business will generally assume (wrongly!) that it owns, or should own, the copyright in the logo. After all, it has paid the artist/agency an agreed amount of money for the original design that it regards as its property together with all rights associated with the design.
There are two major consequences of this rather unexpected situation:
• Firstly, the artist/ agency will have acquired the ownership of copyright that it does not want, nor need, and will generally not use/exercise. For example, when called upon by the business to stop or sue an infringer, a third party that copies the logo. The business has apparently ‘purchased’ only the artistic work i.e. the logo per se and not the copyright relating to the logo. Unfortunately, what the business has received, at most, is a licence to use the logo. To take legal steps it will either need the artist/agency to act against the infringer, which the artist/ agency will generally refuse to do, or it will first need the artist/agency to assign the copyright to the business in writing. In the writer’s experience certain artists/agencies may refuse to assign the copyright. This understandably leaves the business inan unenviable position.
• Secondly, in such a case the business invariably registers the logo as one of its trade marks. The incongruent position for the business is that it will then own the trade mark registration for the logo, but not the copyright in the logo. The provisions of the subsection are clearly limited, archaic and outdated and do not accord with modern commercial or business practice. It is submitted that the reasonable expectation of commerce and industry is that the Act should provide for ownership of copyright to vest automatically in the business in respect of all works it may commission. However, while the Act, and its provisions relating to commissioned works, remains in its present form, the best advice is for businesses in such a position to enter into a written agreement with every outside artist/ designer/agency it may commission.
It is imperative to note that for commissioned works, both already created and for future works, the copyright needs to be assigned and transferred to the business in writing.
André van der Merwe is one of South Africa’s leading Trade Mark specialists. After obtaining a B.Sc. in 1965 from the University of Pretoria, André went on to obtain a B.Proc in 1974 and then an LL.B in 1977 from UNISA. He was admitted as an attorney of the High Court of South Africa in 1975 and qualified as a patent agent in 1977. He is currently a director at DM Kisch Inc.