Copyright Aid

Hi

My wife created some graphics for a small local business, unfortunately they only had a verbal contract, but she agreed to develop logos at a reduced rate. The logos were delivered and are being used by the business, however when my wife invoiced the company they refused to pay & effectively 'fired' my wife.

We wrote to the company stating that the business should cease to use the logos/graphics until the invoice had been settled. After they refused to pay, we started a small claims case against the company, however had to discontinue the case as (unbeknown to us) the director did not file the annual return for the company thereby causing the Ltd company to be automatically struck off the register. This happened after the case had commenced but unfortunately meant there was no point in continuing the case.

However, the director set up a new Ltd company the day after the original company was dissolved on Companies House, with a slightly different name. The business has continued trading uninterrupted on the same premises and continued to use my wife's graphics. Note some instances of the logos were removed e.g. online instances, however the logos & designs were included in the shopfront signs and continue to be used without permission to this day.

Should our next course of action be: 1. write again to the director under the name of the new ltd company to give notice to this company to cease use of the signs (which no doubt they will ignore). 2. write a separate letter advising that we will take court action to get an injunction to have the signs / graphics removed and to seek damages.

Should we send letters 'without prejudice'?

Question on damages; as I mentioned, there was a verbal agreement to charge a reduced rate to the 'original' company & this agreement was honoured in the invoice which was produced. As no agreement exists with the 'new' ltd company are we justified in charging a standard market rate for the graphics rather than the amount on the original invoice?

Reading through other posts in these forums it seems that the continued use of the graphics (even though some instances were removed) constitutes an intentional breach of copyright? Further, I wonder if the actions of the director in dissolving the original company while not following due process & setting up a new entity while continuing to use the graphics would amount to flagrancy, but clearly I am no expert!

Appreciate any thoughts

Hi DJS,

Irrespective of the history of this company and its predecessor, their use of the logo is an infringement of copyright and so you should certainly send a cease and desist letter. There is no point in making it a 'without prejudice' letter unless you intend to discuss terms for settling the matter in the same letter, which I suggest would not be advisable. Address the C&D letter to the director personally and make it clear that your dispute is with him in his personal capacity as the director and controlling mind behind the company, as well as the company itself, as this will make it more difficult for him to pull the same stunt of winding up the company again. The legal term is joint tortfeasor, but you may wish to avoid that!

You can certainly resume your small claim, but this time as a copyright matter (via the IPEC Small Claims Track) rather than as a money claim. However that route would not allow you to seek an interim injunction as the court rules do not permit that particular remedy. You would certainly be able claim aggravated damages due to flagrancy since you had already pointed out the infringement to the previous company, and the director has knowledge of this fact, and yet the infringement is still continuing. It would be a matter for the court to decide whether the winding up of the previous company was an additional factor which contributed to the flagrancy. And of course, if your claim is successful your wife will be entitled to interest on the damages.

And yes, since the original 'contract' ended with the dissolution of the first company and you are now dealing with a different legal entity in the form of the new company, any previous agreement as to the fee your wife was going to charge is now void and you can base your claim on the market rate. It may be that if this claim goes to court, the court will set a separate level for damages for the period before the winding up of the first company, but that is a detail for later.

Make sure you get photographs of the continuing use of the signage and any company stationery which bears the disputed logos, and retain any screenshots you may have made of the previous use on the internet.

Hi Andy

Thanks so much for your response, you have provided a lot of reassurance at a very stressful time.

Just to clear up one point in my mind - at first we will send the C&D notice; should we also seek damages in a separate letter, notwithstanding the result of the C&D notice; i.e.

If C&D is complied with - can / should we also pursue the director/company for damages as well?

If the C&D is not complied with, should we consider writing again to seek damages and notify of our intention to take the matter to court?

If damages are paid, does this also amount to the company in question 'purchasing' the graphics IP and therefore allow them to continue use?

Lastly if the matter does get to court, I understand we cannot ask for an interim injunction, but, should we win, is the court able to award damages and order the removal of the graphics - or is it one or the other?

Once again many thanks, really appreciate your input!

Hi DJS

Before going on to try and answer your questions, I need to issue a caveat. We cannot provide specific legal advice on which you conduct litigation. That would be contrary to the Legal Services Act 2007. Ideally you should get that advice from your own solicitor, or if that is unaffordable, contact the IP Pro Bono unit.

So with that in mind, as it seems that you are primarily seeking payment and that an injunction would only be sought if the company fails to provide the payment, I suggest that the C&D letter should also introduce the issue of payment of the fees due to your wife, plus a small uplift to cover the hassle of having to pursue this debt. On that basis the 'cease' element is intended to prevent any further infringement while a settlement is negotiated. If your wife is happy to agree to suitable terms for the future use of her artwork (which I suggest should be contained in a simple but clear licence document), then clearly the 'desist' element will be contingent upon the company agreeing to the terms. However the letter should make it clear that at all stages you reserve the right to bring a claim in the courts, with the added financial implications of this for the company. I think it should be obvious to them that, based on the details you have provided here, they would lose any court case.

So your wife has two options: go for a damages in respect of the infringement to date and a cessation of the use of the images going forward, or a suitable settlement which includes the claim for past use and also a licence for some fixed or indeterminate period into the future. I advise her not to assign (that is, permanently transfer ownership of) the copyright unless she gets and receives a very favourable offer from the company.

And if the matter goes to court you are entitled to ask for damages, possibly with a component for flagrancy) and an injunction. Assuming that you are successful in court you will also be entitled to ask the court to award you all of the court fees which you incur, including the extra fee for seeking an injunction.

Thank you Andy, much appreciated.