The Innocent "Dude" and the Construction of Terms

An interesting and noteworthy decision is the one made by Robert Engelhart QC in Fresh Trading Limited v. Deepend Fresh Recovery Limited and Andrew T R Chappel [2015] EWHC 52 (Ch). The Court found in favour of Fresh Trading Limited.

Proceedings were commenced by Fresh, who was seeking a declaration that it owned the copyright in the 'Dude' logo, following the invalidation by OHIM, based on requests made by Deepend, of certain Community Trade Marks belonging to Fresh, that incorporated the Dude logo.

Fresh Trading Limited is the company behind the Innocent Smoothie brand, and this case regards the copyright ownership in the stylised face with halo, the so called "Dude", which is the logo used by Innocent for the past 15 years. However, the logo was created by the company called Deepend design agency, back in 1999. It was created by Deepend as part of its remit to design a brand of smoothies for Fresh, which included name, logo, packaging, bottles.

The deal was that instead of receiving payment for the work done, Deepend would be paid in shares. The work was done but Deepend never received any kind of payment.

A draft set of Head of Agreement between Fresh and Deepend (which was not drafted by lawyers) was never signed but ownership of IP was dealt with at clause 5 which stated: "Fresh Trading Ltd. Receive full intellectual property of any work, creative ideas or otherwise presented by the agency and then subsequently proved by Fresh. Work not approved by Fresh remains under ownership of Deepend".

Fresh approved the Dude logo, there was no dispute about that however, as payment was never made, it was the Deepend's view that copyright belonged to them. The High Court disagreed and decided in favour of Fresh. The Judge found that, even in the absence of a signed contract, the parties acted in accordance with the unsigned Heads of Agreement. Based on his construction of the contract, and notwithstanding the provisions of s.90 and s. 91 of the Copyright, Designs and Patents Act 1977, there was an equitable assignment of copyright. His finding was that even if the shares were never allotted by Fresh, the consideration for the IP assignment was the promise to allot shared, rather than the actual allotment.

This decision shows how important and helpful it is for contracts to make it very clear, in unambiguous terms, that the transfer of IP rights is conditional on payment being actually made, and also deal with the possibility that payment may not be made, but the works used for an extended period.