Many corporates and start-ups that enlist third-party graphic designers to create logos or corporate identities during a rebrand are unaware of the legal implications of contracting third parties and thus often find themselves in costly and time-consuming litigation.
This is because, under South African law, a third-party graphic designer commissioned to design a corporate's logo will own the copyright in said work.
It is often assumed that by paying a third-party graphic designer for such services, the completed work will become the commissioner's property. This misconception is at the heart of the issue: despite the fact that the ideas for the logo may have originated with the commissioner and money had exchanged hands, the copyright in the logo remains with the third-party contractor.
To avoid this situation, a logo must be assigned from a third-party graphic designer to the corporation or start-up when they commission the third party to assist with the design. This assignment must be in writing and should also make provision for the transfer of the moral rights in the copyrighted work.
The South African courts held that where the copyright in a logo has not been transferred, the following consequences may arise and possibly invalidate later trademark applications and registrations:
- The third-party graphic designer can allege that the corporation or start-up is not the genuine proprietor of the trademark, as it can claim an earlier IP right in the logo.
- The trademark application can be deemed contrary to law, as its use is likely to be tantamount to copyright infringement of the third party's work.
- If the corporation or start-up is aware that the copyright should be assigned and nevertheless neglects to assign it, a later trademark application may be deemed to be in bad faith.
This scenario is widely referred to as the 'copyright conundrum' because the law in this regard is deemed to be largely illogical and impractical in the commercial sphere, where corporates regularly commission third parties to design their companies' corporate identity, including logos, unaware of the fact that they must assign the copyright vested therein. One way of overcoming this is to sign a deed of assignment at the start of the interactions with graphic designers, which states that all works that the graphic designer creates are assigned to the entity that instructed them (ie, the corporation or start-up).
A new Copyright Bill has been passed and is with the president for signature. If signed, the position described above will be reversed and copyright will automatically be vested with the commissioner of the work.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
