Why a design agency may own your brand's logo - not you

Business owners and marketing departments often use external design agencies to create logos and corporate identities, often investing a significant amount of time and money in the process.  

So you’ve got your business idea, you’ve done your research, you’ve looked into any applicable industry laws and now the fun part - designing your logo. You want the image in your mind to be positively conveyed to the public and you want your logo to be successfully synonymous with your brand and to achieve this many businesses will approach a design agency. 

Who owns your logo?

Beware: without a written agreement in place, if you engage a design agency to create your branding and logo, the legal owner of that branding or logo will be the creator of the design, or, assuming the designer is an employee, the design agency. This will be the case regardless of how much you paid for such logo and design to be developed. 

So if the design agency owns my logo, can I use it?

Yes, once you have paid for it, you will have an implied right to use the logo for the purpose for which the graphic designers were commissioned to create the logo. 

The design agency will however own the copyright in the logo and so will be able to restrict you from amending the logo without their permission. This may cause difficulty if, for example, you wish to use a different agency in the future to make small changes to the logo.    

So how can you ensure that you own your logo?

In this context the key provisions to consider in your contract with the design agency will be the intellectual property clause. Sometimes a design agency’s standard terms will provide that they retain all intellectual property rights in the work that they undertake for you. Another common provision is that the rights will only transfer or pass to the business upon receipt of full payment.

As a minimum, you should ensure the following issues are included in the contract with the design agency:

• Seek an assignment or transfer of the ownership of the rights in the logo in writing and ensure the document evidencing the transfer is signed. Whilst copyright is likely to be the predominant intellectual property right capable of protection at the outset it is preferable to ensure that you obtain a blanket assignment of all intellectual property rights in the agency’s work.
• Assurances regarding the originality of the work from the agency. In order for the work to have the protection of copyright the work must be regarded as original, and a degree of labour, skill or judgment to create the work must be exhibited. You should seek a warranty or contractual promise from the agency that they have used such efforts (and that such design is not similar to anything else they have created).
• Third party protection. In addition should also seek assurances that the design agency’s work does not infringe the intellectual property rights of a third party. Given that a third party is likely to contact you in the first instance if they spot an infringement, you should seek an indemnity (or a promise to pay) from the design agency for any third party infringement claim which results in you paying money to the third party.
• Waiving moral rights of the author. You should ensure that the author(s) waive any moral rights in the design agency’s work.  Moral rights protect the personal rights of an author or a creative artist, allowing them to protect the integrity and ownership of their work. These can be waived in writing and ultimately if an employee of a design agency/sole designer is being commissioned to produce such work for you, these rights should be waived after payment and transfer.
• Restricting future use by the agency. You may wish to ensure that your agency has no rights, or possibly only very limited rights, to use any of your logo at the end of the project and once it belongs to you, for example, the limited right to use the logo in a portfolio of their work.

Protection of your logo

Having invested time and money in the development of your logo, we recommend that you register it as a trade mark in the territories where you intend to trade under the logo. You may also wish to register other aspects of your corporate identity as trade marks, such as your business or product names.

It is important for businesses to be able to prevent the unauthorised use of their logo and protect their brand identity. This is much easier if you have obtained a registered trade mark. After registration, you may also use the ® symbol to indicate that the trade mark has been registered.  Before a mark has been registered you may only use the ™_symbol.

If you do not register your logo or branding as a trade mark, you will have more limited rights to prevent unauthorised misuse through the law of ‘passing off’. This is only available if you can prove that you have established goodwill in your brand, that the other party is misrepresenting that their goods or services are associated with you and that you have suffered (or are likely to suffer) financial loss as a result.

Your logo may hold a lot of value as a business asset and there is a risk that it could cost your business dearly if you cannot enforce your rights in it effectively.  For example, if you decide to sell your business, prospective buyers may view your brand as one of the most valuable assets you have. If there is any doubt about the ownership of your branding, this may jeopardise a sale.

John Stuart, the former Chairman of Quaker once famously said: "If this business were split up, I would give you the land and bricks and mortar, and I would take the brands and trademarks, and I would fare better than you."

In summary, it is very important to ensure that the intellectual property rights in your logo are transferred to you on completion of your logo design project and that you take appropriate steps to protect your investment in the branding. It is advisable to ensure you get appropriate legal advice regarding intellectual property rights early in the stages of the logo design project as well as at the end of the process.

Sheren Thiara covers outsourcing, technology and commercial matters at solicitor firm Wright Hassall LLP.