Working with design agencies

Creative agencies can give your brand and content a real boost, and we work with them regularly on rebranding and other projects. But your relationship with them is fundamentally legal in character, and you need to make sure you are not exposed.

Mathew Healey looks at the key issues you need to know about.

Many organisations will work with branding and creative agencies, in all kinds of contexts: designing promotional materials, devising new campaigns, or working on a brand ‘refresh’ or even a full rebrand.

This will often make good sense: how things look and feel is important, and it may be uneconomical for all but the biggest charities and non-profits to retain their own in-house teams. Of course, when outsourcing work, all kinds of contractual considerations apply, and where the subject matter is the generation of creative content, intellectual property considerations are extra important. Some of the key things you’ll need to remember are covered below.

Ownership of copyright

Always try to ensure any rights in any work created by the agency are transferred to you. The default setting is that any copyright work (which may include graphical works such as logos and website layouts, as well as any significant text) will belong to their creator, unless they are created by an employee in the course of their employment. This helps you when content is created in-house, but where designers are involved, they (either the individual or their employer) will be the first owner, not you.

What does that mean in practice? There are two main consequences. The first is the alarming possibility that, at some future point, the agency may seek to use those rights to block your use of the content or, more likely, to hold you to ransom. A claim for compensation is also a possibility.

In this kind of situation, the law provides you with some protection, but it is incomplete. As the client you would usually be seen to have an ‘implied licence’ to use the material in question – the court would usually infer that the parties obviously intended for the client to be able to use the design work in its campaigning or whatever else. However, this gives only limited permission; and we are aware of cases where agencies have made viable threats against former clients where the use of the content has extended beyond the activities originally discussed. This could include use in new countries, or new kinds of campaigns. We are even aware of a situation where a designer sought redress because its work had seen a ‘new’ use on the internet – a medium that was not on anyone’s radar when the content was designed several decades ago. We don’t know where this claim ended up, but it helps underline the kinds of risks you could face here.

The second consequence is simply that, if you do not own the copyright, you probably will not be able to rely on it to block others from imitating your branding (trade mark registration will often be able to help here, but not always). The law around licensees taking action to enforce copyright against infringers is complex and it makes things much more difficult. A claimant certainly would not be helped by the absence of a written agreement with the creator.

We would recommend ensuring that the terms of engagement with the agency include transferring all rights in any content they create to you. This can be arranged pre-emptively (a contract clause that basically says ‘anything we create in the course of our arrangement will belong to you’ should be effective and sufficient). In our view, it’s a completely reasonable thing to expect, and if a designer or agency is not willing to agree, then that should be a cause for concern. Sometimes they will want to retain ownership to showcase their work on websites and in portfolios: the best thing would be for this to be allowed via a (free, perpetual) licence granted from you to them, and not the reverse.

Warranty of originality

You should also seek a warranty of originality from the creative agency. This is a legal assurance by the design agency that the work has not been copied from elsewhere and empowers you to bring legal action if this turns out to be untrue. As with the transfer of copyright clause mentioned above, this is not likely to be included in the agency’s standard terms and conditions: again, if you encounter strong resistance then this should set alarm bells ringing.

Relatedly, you may also want to insist on an assurance that any work the agency creates for you is not ‘recycled’ and offered to another client in future.

It’s worth emphasising that these are not just theoretical considerations. In recent years, we’ve unfortunately had to deal with situations where (i) a logo created by an agency turned out to be directly lifted from a third party’s webpage and (ii) a campaign and brand devised for one agency client had been ‘redeployed’ with another client. Each of these situations may create all kinds of liabilities for the later user, first, for infringement of copyright in the copied design, but where the work in question is used by the relevant parties as a ‘brand’, for trade mark infringement and/or ‘passing off’. In our view, this kind of thing should never happen, and there are clear steps you can take to safeguard against it.

Trade mark clearance

A third thing to be careful of where ‘brand’ is concerned – names, logos and slogans – is whether adequate brand clearance has been carried out. I will point out that trade mark infringement differs from copyright infringement in that it can occur accidentally and innocently. You should also bear in mind that design agencies will often carry out basic checks to help ensure that names and brands do not fall foul of the law. These are likely to be well-intentioned and useful, but may be deficient in at least three areas. First, brand clearance is fundamentally a legal as well as a commercial analysis, and most agencies simply do not have this expertise in house. Second, a full clearance search is an involved process that may simply be unfeasible within the design budget. Last, with the best will in the world, the searcher is unlikely to be a neutral observer with regard to his creation: it’s simply not in an agency’s interest to create something exciting and ‘original’ only to find that its use could be blocked by a third party.

You should always check with your legal advisors whether any checks carried out are sufficient; they will be able to advise whether further searches should be conducted, and help you carry these out.

One final, important, overarching point: be very wary of agreeing to the designer starting work before these contractual points have been ironed out. Once you’ve told the designer to begin, the law is likely to consider that a contract exists, irrespective of whether anything has been signed. For the various contractual points discussed above, the ‘default settings’ are likely to be in the designer’s favour, and you may find it difficult to persuade the other party to agree to a different position once work has started.

For modern charities competing in a crowded marketplace, your creative content – and your relationship with your design agency or agencies – is key. But it’s also crucial that the relationship works for you from a legal standpoint.

This information is necessarily of a general nature and doesn’t constitute legal advice. This is not a substitute for formal legal advice, given in the context of full information under an engagement with Bates Wells.

All content on this page is correct as of May 6, 2020.