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09 July 2012
The Patents County Court has refused to grant a declaration of ownership of UK and Community unregistered design rights in a bespoke product after the claimed 'commission' was found to be a straightforward supply agreement that did not operate to transfer ownership of rights to the designs.
Under Section 215(2) of the Copyright Designs and Patents Act 1998, "Where a design is created in pursuance of a commission, the person commissioning the design is the first owner of any design right in it".
The defendant, Datanetex, made and supplied three versions of a hazard-predicting product called HazKey to the claimant, Bruhn. Written agreements were in place for the development of the products, but they were entered into after the design drawings and research and development (R&D) had been completed.
Bruhn sought a declaration that it owned any IP rights that subsisted in the products. It claimed that it should own UK unregistered design rights by virtue of being the commissioner pursuant to Section 215(2), and that the court should make a similar ruling in respect of Community unregistered design rights (not covered by Section 215(2), but there being no equivalent provision in the Community Design Regulations), as it is logical for unregistered design rights to be owned by the same party.
Alternatively, Bruhn argued either that there was a commission in equity or that terms assigning design right to it should be implied in the contract.
Datanetex relied on a clause in its terms and conditions which stated that "Datanetex retains all Datanetex-owned IP in Product".
Deputy Judge John Baldwin QC concluded that the contracts to supply the products came into existence after the relevant design drawings and R&D had been carried out. Therefore, they could not have been created pursuant to a 'commission'. Section 215(2) thus did not apply and thus no statutory provisions could operate to transfer ownership of any design rights to Bruhn.
The judge also rejected Bruhn's argument that terms should be implied in the supply contracts assigning design rights to Bruhn. That would be contrary to Datanetex's express term in their terms and conditions.
The judge held that the burden of establishing a commission rested with Bruhn as the party asserting the commission. In his assessment, the judge found no oral evidence to suggest that at the time, either party had contemplated that any design rights in any designs made by Datanetex would belong to Bruhn; nor was there any evidence as to whether the parties had contemplated that the agreements were commissioning agreements that would fall within the scope of Section 215(2).
With regard to the alleged "commission in equity", the judge held that there was insufficient evidence to justify the intervention of equity. He explained that for equity to intervene, there must be something "which attaches to the conscience of Datanetex" – that is, it would be inequitable for Bruhn's claim to fail.
As an aside, the judge held that UK and Community rights should not be considered in the same way simply by virtue of equity to ensure that the same party owned both rights. These rights have a different provenance and should be considered separately.
Accordingly, the claim for a declaration of ownership was rejected.
This judgment is a warning to customers that order bespoke products or items that are not directly available off the shelf. It is considered a commission only if the contract was made and the obligation to pay arises before the creation of the designs. The best way for a customer to ensure that it owns design rights in the relevant products is to ensure that the relevant contracts contain express terms to that effect.
For further information on this topic please contact Clive Thorne or Nicole Jahanshahi at RPC by telephone (+44 20 3060 6000), fax (+44 20 3060 7000) or email (email@example.com or firstname.lastname@example.org).
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Clive D Thorne