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A couple of years ago, an IP audit on a small street furniture manufacturer entailed a review of all IP owned and licenced by the company.

One royalty agreement saw the company paying royalties to the holder of copyright in the steel bell bollard design that they were manufacturing. Our advice based on the copyright law in force at the time was that the company was free to manufacturer the bollards (depicted below) without having to pay further royalties as the designer’s rights had expired by operation of Section 52 of the Copyright, Designs and Patent Act 1988 (CDPA).

Section 52 contained an exception to the duration of copyright protection in certain artistic works, which have been industrially manufactured. This means where an artistic work had been reproduced more than 50 times, the period of protection was limited to 25 years to bring it in line with the limited duration of a registered design right, compared to other artistic works which would be protected for the lifetime of the creator plus 70 years. This applies to all works of artistic works, which can include any graphic work, photograph, sculpture or collage, work of architecture or work of artistic craftsmanship, whether 2D or 3D, although the most common articles to be put into mass production are usually works of artistic craftsmanship.

So what has changed?

On 28 July 2016 (repeal date) Section 52 CDPA was repealed and any articles affected by the provision could possibly have protection again. This will have far reaching consequences on older artistic works whose 25-year term may have already expired under Section 25, but now have reclaimed the right to prevent others from using the artistic for the remainder of the much longer term. Thankfully, the amendment does not have retrospective force and will not affect any acts done while the article was out of copyright protection but there are some key dates to be aware of.

To limit the overall impact of the repeal, the UKIPO carried out a consultation in 2015, which introduced some transitional provisions. There are three key periods to consider: the consultation was published on 28 October 2015 (consultation date) and for all contracts that were entered into before this date, the parties will benefit from a depletion period until 28 January 2017 (depletion date). Any articles already manufactured will have to be sold or destroyed by the depletion date. After this date no one may deal with any unauthorised copies of the protected article without permission of the author or unless an exception applies. All contracts that were entered after the consultation date would have to have been depleted by the repeal date.

When we advised our client that they no longer needed to pay royalties to the copyright holder of the bell bollard, they were reluctant to do so as they felt that they had a good relationship with the designer and did not believe the value of the royalties were worth putting that relationship in jeopardy. In order to better illustrate the above, let’s imagine that our client had terminated the contract on 1 January 2013 and carried on using the design. They continued to manufacture the articles and entered into four contracts for the sale of the goods.

  • Contract 1 was signed on April 2013 for a one off shipment;
  • Contract 2 was signed on January 2014 for the sale of goods into mainland Europe.
  • Contract 3 was signed on June 2015 for the sale of goods into the UK; and
  • Contract 4 was signed on November 2015.

The goods made under contract 1 will not be affected by the repeal as any dealings with the goods would be during the period when copyright no longer applied. Contact 2 may not have been infringement in the UK but despite the repeal of the copyright law in the UK, it is possible that copyright still applied in other countries and it may be unlawful to offer for sale or sell from the UK works that are protected in another country. The goods manufactured under contract 3 would all need to be sold or dealt with before 28 January 2017. Any further dealings with the goods after that date may be liable to copyright infringement. Contract 4 was signed after the consultation date and any goods already manufactured would have to have been sold or destroyed before 28 July 2016, any further dealings post that date may be liable for outstanding royalty payments.

In light of the above, what should our client be considering now?

  • If they haven’t done so already, carry out another IP audit as soon as possible;
  • Identify all existing products that may now be protected by copyright again and look to renegotiate the licence (if they haven’t fallen out with the designer). The term of the licence may be key in negotiations, depending on whether the licence ‘terminated on expiry of the 25 year period’ or refers to valid for the duration of the copyright;
  • Identify any stock that will need to be sold or destroyed. This may result in specific goods being completely removed from the product range and new marketing materials will need to be prepared;
  • It is also advisable to review any current copyright licences to ensure that the change in law does not impact on the terms of the licence. Often in royalty agreements there may be a reduction on percentages as the copyright protection draws to an end and these may need to be renegotiated;
  • Review the business model or plan and consider whether there are any alternative products or designs that can be developed which do not copy a substantial part of the existing article or artistic work.

Hopefully, the repeal of Section 52 will not have a significant impact on most businesses but there certainly is a risk for manufacturers that may have started reproducing goods in the mistaken belief that they are no longer protected by copyright. It is still early days but we expect a few demands for royalty payments to come through client’s door or worse yet, copyright infringement proceedings issued.