DOES YOUR STARTUP COMPANY REALLY OWN ALL THE RIGHTS TO ITS LOGO?

March 22nd, 2017

By Pascal Lauzon, Partner and Lawyer & Martin Nolet, Lawyer

The logo plays a central role in a company’s communications and marketing strategy. McDonald’s golden arches, Starbucks’ siren, Apple’s apple, and Nike’s swoosh are convincing examples of this.

When it comes time to create a logo that will match the company’s strategy and branding, the entrepreneur or the corporate executive will often look to communications professionals, like graphic artists or marketing and ad agencies. Once the job is done, he will pay the amount agreed on by the parties and will take possession of the logo which, hopefully, will become an important asset in the development and expansion of the business. End of story? Not necessarily.

Assignment of copyright is anything but automatic

Although the logo was created at the company’s request and a sum of money was paid for its design, there is still a strong possibility that the company will not really own all of the rights to the logo, or may not have the right to alter it in order to keep up with market trends.

Indeed, the Copyright Act (R.S.C. (1985), c. C-42) stipulates that the author of a work is the first owner of the copyright to that work, not the person who paid for its creation (except for a work created by an employee, in which case the employer is deemed to be the first owner). In addition, the logo’s author also holds moral rights to the work, which gives the author a certain right to approve its use and modification, even if he might otherwise have assigned his copyright as such.

What it means in practice?

In practice, paying for a logo without obtaining a valid assignment of the related copyright and a waiver by the author to exercise his moral rights to the work could put the company in a potentially problematic position.

For example, the company might pay for its logo, but without theoretically having the right to reproduce it in contexts that were not originally contemplated or agreed to by the author. Worse yet, if the company did not obtain a waiver of the author’s moral rights to the logo, that author could try to stop the company from making any modifications or using it in connection with a service, institution, cause or product which he considers prejudicial to his honour or reputation. In other words, your company could be hampered in its decisions concerning its logo and might have to pay a further amount, which may not be negligible, to obtain an assignment of all the related rights still held by the author.

Not owning the copyright to its logo might also prevent a company from obtaining financing. Indeed, copyrights are part of your company’s assets and can potentially be used as collateral with financial institutions.

Furthermore, not owning the copyright to the logo could prove especially problematic in the context of the sale of the business, especially if an important part of the business’ value is attributable to its brand image and the logo is one of its key assets.

One might also wonder what would happen if a competitor or some other person decided to identify themselves using a logo almost identical to that of your company. If you do not own all the rights to your logo, challenging that competitor’s or other person’s use based on copyright might be impossible if the real owner of the copyright does not agree to go ahead with a challenge. Worse still, that competitor or other person might even catch you unawares and acquire the copyright to your logo before you do, which to some extent would turn the tables in its favour.

Note that the above also applies to the content and presentation of your Website; if it was created by an outside consultant, your company might not own the rights to its content and could find itself in the position of being unable to prevent a competitor from copying parts of your site outright.

Simple to prevent... and to cure

Fortunately, a wise entrepreneur or corporate executive can avoid such problematic situations. All they have to do is obtain an assignment of the copyright related to the logo and a waiver by the author to exercise his moral rights to the material. The inclusion of a few sentences to this effect in a written contract is all that is needed.

The team of intellectual property professionals at BCF can help you determine whether your company owns all of the rights to its logo, and to any other graphic or visual elements covered by copyright. If necessary, we can help you take the proper steps to correct the situation, whether the work was created in the past or is about to be created.

Only then will your company really own all the rights to its logo!