‘Humpty Dumpty’ Copyright Assignments

A copyright assignment involves the transfer of part or all of the copyright in a particular work from one owner to another. If an agreement provides that ‘the Developer assigns all of the copyright in the Software to the Client’ most non-lawyers would assume that those words mean exactly what they say: that the copyright in the Software has been transferred by the Developer to the Client. Unfortunately, the actual legal position may not be quite so straightforward.

In Through the Looking Glass (Lewis Carroll’s sequel to Alice in Wonderland), Alice has the following conversation with Humpty Dumpty:

‘I don’t know what you mean by “glory”,’ Alice said.
Humpty Dumpty smiled contemptuously. ‘Of course you don’t — till I tell you. I meant “there’s a nice knock-down argument for you!”’
‘But “glory” doesn’t mean “a nice knock-down argument”,’ Alice objected.
‘When I use a word,’ Humpty Dumpty said, in rather a scornful tone, ‘it means just what I choose it to mean — neither more nor less.’

In this article, we look at some of the ways in which the law – just like Humpty Dumpty – gives different meanings to the (apparently) clear words used by non-lawyers.

The law relating to copyright assignments

Section 196(3) of the Copyright Act 1968 (Cth) provides:

An assignment of copyright (whether total or partial) does not have effect unless it is in writing signed by or on behalf of the assignor.

You’ll note that there are two major conditions that must be satisfied before an assignment of copyright is effective: first, the assignment must be ‘in writing’, and secondly, it must be ‘signed by or on behalf of the assignor’.

Common problems with copyright assignments

In our experience, problems with copyright assignments tend to arise in four main areas:

1. No writing

Section 196(3) clearly requires that the assignment be in writing. A verbal agreement, is not enough to assign copyright effectively. Therefore even if I announce to a room of 100 people that ‘I assign my entire right, title and interest in the copyright in this software application to you’ this will not transfer the legal ownership of the copyright.

2. No signature

Section 196(3) also requires there to be a signature on the written document. Therefore, simply writing down the above announcement wouldn’t be of any use either unless I also sign the document.

Often documents which appear to assign copyright are not signed for a variety of reasons. Sometimes they are provided as a ‘standard form’ contract which is agreed to by an exchange of emails. Contracts that are concluded on the web will usually not be signed. This will usually be the case with freelancing hubs such as upwork.com and 99designs.com.

3. Assignment by the wrong party

Occasionally the party who is purporting to assign the copyright doesn’t actually own it in the first place. This can occur when clients use marketing agencies, which often sub-contract work to freelancers. If a freelance illustrator has been engaged by a marketing agency to develop designs for a new brand, then it may be that the illustrator owns the copyright in the designs and not the agency. A written assignment executed on behalf of the marketing agency wouldn’t be effective to transfer the copyright.

4. Lack of specifity

Occasionally agreements are not worded properly. While the courts have determined that parties don’t need to use the words ‘copyright’ and ‘assign’ for an assignment to be effective, the absence of those words has prevented copyright from being transferred in some cases.

‘Humpty Dumpty’ copyright assignments

So what happens when there has been an ineffective assignment? This is where things start to get complicated.

An unwritten or unsigned agreement stating that ‘I assign the entire right, title and interest in the copyright in X to you’ is treated as splitting the ownership into two: the legal ownership (which belongs to me) and the ‘equitable’ or ‘beneficial’ ownership (which belongs to you). The law gives you (i.e. the ‘equitable assignee’) the right to compel the legal owner (i.e. me) to take the steps necessary to carry out our original intention by transferring the legal ownership of the copyright to you. In effect, you have a right to take me to court and to compel me to do what I said I would do.

Although nothing could be clearer than I assign the ‘entire right, title and interest’, this is not what has happened. In this article, we call these ‘Humpty Dumpty’ assignments because they are assignments which do not mean what they say.

Problems with ‘Humpty Dumpty’ copyright assignments

While an ‘equitable assignee’ has some rights in relation to the copyright, not being the legal owner can create difficulties.

Usually, an equitable owner of copyright cannot sue people who infringe the copyrighted works without ‘joining’ the legal owner to the proceedings. This can be expensive and inconvenient, especially if the legal owner of the copyright does not wish to co-operate at that stage.

Further, only having the equitable ownership of copyright can make it difficult to sell the particular copyrighted work to third parties. If a mission-critical software application or iconic element of your brand is not legally owned by you, this may scare away a potential purchaser, or at least create unwanted headaches during the due diligence process relating to the sale of your business.

Get it right from the start

Clearly, being an ‘equitable assignee’ is not ideal. It is better to ensure that the legal ownership of copyright is properly assigned at the start, or if it is too late, it’s better to sort out these issues at the earliest possible opportunity.

Unfortunately, over time relationships do break down, and it can be difficult to compel the legal owner to assign the copyright if they no longer wish to co-operate with you. Sometimes a number of years will pass before you realise that you need the legal ownership to be assigned to you. In this case, the business which created the copyrighted work may no longer exist, or you may not be able to find the copyright owner.

For these reasons, it’s better to ensure that you have an effective copyright assignment at the start, or (if you’ll excuse the pun) you’ll be calling for help from all of the king’s horses, and all of the king’s men. In this regard, we would strongly advise you to seek legal advice as to how to correct the situation, as signing an ordinary document after the fact may not be the correct thing to do.