Rough for the smoothie; or not so Innocent ?

When advising on Intellectual Property Rights (IPRs) the one thing we always emphasise is to set out and document agreements from the start.  Anything else is a recipe for disaster either for the designer or the business commissioning the work. You might expect businesses with a high profile as innovative and efficient to get it right but here’s an object lesson in how to get it wrong.

Everyone knows the wunder-brand Innocent and their iconic logo of the sketched apple face and halo.  This was created in 1998 in a eureka moment of “back of the envelope” genius during a brainstorming session involving the designer and the three friends who founded Innocent.  The company owned by the designer (Deepend) and Innocent (Fresh Trading) had drawn up heads of terms by which design services would be provided in return for shares in Innocent.  So far so good, but then it all went wrong.

The parties couldn’t agree whether the heads of terms were ever agreed and neither could produce a signed document.  Then Deepend went into liquidation.  Innocent never allocated any shares nor paid anything.  Not so good, and about to get worse.

Innocent did quite well; they obtained a Community Trade Marks (CTM) for the logo.  In 2007 the liquidator of Deepend assigned the copyright in the “halo” logo to a Mr Andrew Chappell, who assigned it to a company which applied to cancel the CTMs on the grounds that it had the copyright in the original “halo” design.

The tribunal which determined CTM disputes (OHIM) concluded that copyright subsisted in the original “halo” logo, as it was a commission Deepend were the owners of the copyright, in the absence of any written assignment Deepend, Innocent’s CTM infringed the “halo” design, so were cancelled.

OHIM also rejected arguments that in these circumstances, where the business had used the logo without complaint for a decade, that it had acquired all rights by an equitable assignment, or that there was an implied term requiring assignment of the copyright to give commercial effect to the agreement.  Such arguments have succeeded in the English courts, but Innocent have a difficulty that even if there was an agreement they didn’t comply with their side of it – in short, they never paid.

This isn’t the end of the case and you won’t see the Innocent logo disappear from the shelves soon. Innocent (now owned by Coke) has made enough money to pay lawyers to appeal.  However, even if it succeeds it won’t recover most of those costs, management time will have been diverted and business planning disrupted.  Usually big share sales include warranties about the ownership of IPRs.  If the founders gave such warranties that could be costly for them.

Posted 8th May 2013

For advice on Intellectual Property contact Neil Howlett