The Full Court of the Federal Court of Australia recently handed down its decision in Chhabra v McPherson.1
The case dealt with a dispute over the copyright in two logos used by the law firm “Kaden Boriss”.
The case provides some useful guidance on how to approach copyright assignment and licencing, to avoid issues down the track.
In 2013, Jamie McPherson and Damien van Brunschot (the Respondents), joined an international network of law firms branded “Kaden Boriss”.
“Kaden Boriss” was founded by partners Sunil Lal Chhabra and Kiran Ramrahka (the Appellants). Subsequently, the Appellants fell out with the Respondents, and sought to revoke their licence to use the “Kaden Boriss” brand in January 2017. Despite this, the Respondents continued to use the brand until October 2017.
The Appellants commenced proceedings against the Respondents, claiming that their copyright in the “Kaden Boriss” logos had been infringed by the Respondents’ continued use of the same.
To prove that they owned the copyright in the logos, the Appellants were required to demonstrate that the copyright was originally assigned to them.
The logos were created by Pulse Creative Group Pte Ltd (Pulse Creative) under instruction of Kaden Boriss Services Pty Ltd (KB Services). The written agreement between Pulse Creative and KB Services stipulated that Pulse Creative would assign to “the Client” “any present and future copyright…in the Works…upon payment of all fees relating to the creation of such Works.”
Although it wasn’t entirely clear who “the Client” was, the evidence revealed that KB Services never paid Pulse Creative for “the Works", prior to KB Service’s subsequent deregistration. Accordingly, Pulse Creative never assigned the copyright in the Kaden Boriss logos to KB Services.
The Appellants attempted to rectify this issue by way of a “Confirmatory Deed” entered into between Pulse Creative and the Appellants in 2017 (4 years after licencing use of the logos to the Respondents).
Although the “Confirmatory Deed” purported to operate retrospectively, the Court questioned whether the deed entitled the Appellants to claim damages for infringements occurring prior to the date of the deed (although this point was never agitated by the Respondents on appeal).
Licencing use of copyright
An owner of copyright may licence the use of that copyright to a third party. A licence is often given in return for a one-off (or ongoing payment) or royalty. However, a licence may also be granted free-of-charge, which is often referred to as a “bare licence”.
In Chhabra v McPherson, the Appellants claimed that it granted the Respondents a “bare licence” to use the logos, which licence was revokable at will and without advanced notice.
In 2017, after the parties fell out, Mr Lal (of the Appellants) purported to unilaterally revoke the “bare licence”.
The Court did not agree that the licence was a “bare licence”. Given the Respondents were required to pay a percentage of their client referral fees to the Appellants, the licence to use the brand was given “contractual effect”. Therefore, the licence was not revokable at will, and could not be revoked without just cause. Accordingly, the Appellants revocation of the Respondents licence was ineffective.
Further, and in the alternative, the Court found that even a “bare licence” cannot necessarily be revoked at will and without just cause. The Respondents required reasonable notice of revocation, and what was reasonable required an analysis of the factual circumstances of the case.
Accordingly, the Appellants claim failed on the grounds that there was never a valid revocation of the licence to use the brand.
Assigning and licencing copyright is not always a simple process.
Often an error is only identified much later, when it is too late to fix the problem. In the case of Chhabra v McPherson, the issues were identified at trial.
It is imperative that parties ensure they fully comply with the terms of a written assignment, to ensure a clean transfer of title. Further, the precise terms of a licence must be considered, so that the parties are fully aware of their rights and obligations with respect to use and termination.
If you require any assistance in reviewing or preparing written assignments and/or licences, please do not hesitate to contact Iain Freeman or Andrew Sutton.