Media Law Clinic

By The Drum, Administrator

January 28, 2004 | 20 min read

Robert Burns, Senior Associate; David Mallon, Assoicate, Emma Bell, Partner; Stephen Harte, Associate at MacRoberts.

Q. I am currently in year nine of a 15 year lease on my business premises. I am looking to cut costs and one way to do this would be to move out of our premises and relocate to a smaller office. Where do I stand legally if I come out of this lease before the term is up?

Concerned, Perth.

A. A lease is simply a contract relating to property and like any other contract, once the terms are agreed and the contract concluded, the parties are bound by its terms until the contract comes to its specified end – in this case 15 years. If you have agreed to lease the premises for a term of 15 years, you are liable to pay rent and other charges for this entire period, as well as comply with the other terms, which may include an obligation to remain in the premises.

Often tenants want to leave premises before the expiry of their lease. To ensure that they are legally protected it is necessary to obtain a written renunciation of the lease from the landlord. Most landlords will insist upon payment of an agreed figure to grant a renunciation and if the landlord refuses to consent, the lease will continue for the full term.

Any attempt by you to avoid complying with the lease may result in the landlord raising a court action against you for breach of contract. So, before vacating the premises, ensure that the lease does not oblige you to remain in occupation for the entire period and remember that even if you vacate the premises, you will still be liable to pay rent and all other charges under the lease.

Kirsteen MacLeod, Senior Solicitor,

Media Unit, Burness Solicitors.

Q. A design company sells a brand which is sold to company A. Later it appears, slightly modified by others, to be used for a sister company B, but clearly intended to function so that A and B are recognised as part of the same organisation. If we get paid for brand A can we get paid for brand B, even if we did not modify it?

Confused, Stirling.

A. You need to investigate whether ownership of the brand has been validly transferred to company A in the first place. If the brand is a registered trade mark then the transfer must be in writing and signed by the design company. If this is the case then company A will become the new proprietor of the registered trade mark and should then take steps to register his interests at the UK Trade Marks Registry. This is usually done by forwarding a copy of the transfer document (usually called an assignation) to the Registry – so that notice is given to the world at large that company A is now the registered proprietor. If the brand has been slightly modified by others then company A has exclusive rights to challenge use of the brand or a similar brand by any others. Company A may have the right to sue any other persons for trade mark infringement under the Trade Marks Act 1994. However this will depend on how the brand has been modified and how it is being used ie whether the brand is being used on identical or similar goods and/or services. If the brand is being modified only for the purposes of use by company B then the design agency is unlikely to be able to claim any rights to the modified brand and is therefore unlikely to be paid.

Colin Miller, Partner, Biggart Baillie Solicitors.

Q. I am a small company of 15 employees. Due to losing a significant design contract, I need to streamline the workforce. I know that one of the people I intend to let go will cause problems and allege unfair dismissal. How can I ensure that I have covered myself against such a claim?

Worried, Glasgow.

A1. You are entitled to make employees redundant if the business no longer requires the work that they do but you shouldn’t use the loss of the contract as an excuse to dismiss troublemakers. You can’t prevent unfair dismissal claims but if you follow a fair procedure you should reduce the risk of claims like that being successful. You must identify the posts you no longer require. Next objectively justifiable selection criteria should be applied to each individual at risk of redundancy so you can score each of them. All employees at risk of redundancy must be consulted so they can have an input whilst the proposals are still at a formative stage. This means explaining why they are at risk, the selection criterion, scoring and whether there is any suitable alternative employment for them and considering any suggestions they make. Once final decisions are made, you should tell those to be made redundant, pay any redundancy due and either let them work their notice or pay them in lieu of notice.

Emma Bell is a Partner at MacRoberts Solicitors and an accredited specialist in Employment Law.

A2. Liability for employees assigned primarily to work on the contract that has been lost may transfer to the new contractor under the Transfer of Undertakings (Protection of Employment) Regulations 1981 (“TUPE”). Whether or not TUPE applies will depend upon a broad factual enquiry, involving assessment of any assets or employees to be transferred to the new contractor, the nature of the work, the customer base, the way in which the work is carried out, and related factors. Employees will need to be informed and perhaps consulted on the possible TUPE transfer. The new contractor may agree to take the employees or may agree to bear some of the cost of redundancies if there is a dispute as to whether or not TUPE applies.

If TUPE does not apply, employees dismissed as a result of the loss of the contract will be redundant. Employees who are made redundant and who have over two years continuous service will be entitled to a statutory redundancy payment, as well as notice or pay in lieu. An employee who is made redundant may also claim unfair dismissal if they have over 1 year’s service and if the process used to effect the redundancy is defective. You should inform employees that there is a risk that their job is redundant and engage in individual consultation with those affected. Selection criteria may need to be applied to reduce numbers of employees who carry out similar work. Alternatives to redundancy should be considered, such as part-time work or job sharing. To ensure that employment claims are avoided, you may seek to negotiate compromise agreements with affected employees.

Murray McCall, Associate in the People Services practice area, McGrigors.

A3. The only way to prevent such a claim from ever being made is to enter into a Compromise Agreement with the employee. This is a legal agreement whereby the employee agrees not to bring a claim against you.

Alternatively, the best way to provide yourself with an adequate defence if a claim is brought is to ensure that, prior to finally taking the decision to make employees redundant, you adequately consult with them. You should announce to the employees the loss of the contract and explain that it could result in changes in the workforce and perhaps even redundancies. You should state that you wish to consult with them in relation to the impact of the loss of business and obtain their input and feedback before any decision is made as to whether the loss of business will actually result in a reduction in the workforce.

You should meet with the employees, their input should be obtained and they should also be consulted on how candidates for redundancy are going to be chosen from the workforce by agreeing on the readily assessable criteria that will be used to make a selection. After this, you will be able to decide whether you are going to make redundancies and if so, how many, and the manner in which the redundant candidates are going to be chosen.

Then you should consult with the potential candidates to see whether there is any other way of avoiding or reducing the effects of the potential redundancy situation, for instance agreed deduction of wages, job sharing, part time working. If there are no other alternatives, those potential redundancy candidates can be dismissed for reason of redundancy.

If there has been a robust and thorough consultation process, dismissed employees should find it very difficult to bring a successful claim to an employment tribunal.

Liam Entwistle, Senior Partner, Wright Johnston & MacKenzie.

Q. Where should the Intellectual Property Rights lie for creative work? Should clients’ own the rights once they have paid for the work? Or do the rights continue to lie with the consultancy and they simply licence the client to use the creative? Is there a standard practice?

Baffled, Aberdeen.

A. The key is to make sure the client gets the rights they need, while giving the consultancy fair compensation for the work done. The law provides that, unless otherwise agreed, most Intellectual Property Rights will continue to lie with the consultancy as creator, even although the client will have paid for the work. In many cases, the client will be able to imply a licence to use the creative work, but relying on implied licensing can throw up some unexpected results, and it is far better for everyone to know up front what will happen to the rights rather than spend time and money arguing over it later. Good practice is for the consultancy to have a set of standard terms and conditions which make it clear who will own the rights in the creative work, and set out the extent of any licence to be given. These conditions should be properly incorporated into a contract with the client before work is commenced.

Yvonne Dunn, Head of Creative Industries Team, Wright Johnston & MacKenzie.

Q. Our company sells second hand branded golf clubs on the internet. Are we legally allowed to used the brand names that we sell to market our products both online and off line?

Stumped, Inverness.

A. Generally, the second-hand sale of branded products is lawful and using the trademark to identify products as those of a particular manufacturer unproblematic. However, trademark issues will arise if the use made of the mark is not in accordance with honest business practices and either takes unfair advantage of or is detrimental to the distinctive character or repute of the mark. For example, if the second-hand goods have been altered in a fundamental or material way then the resale of those goods could potentially be an infringement of the trademark rights of the manufacturer. The basic rule for the second-hand trade is to act responsibly in identifying the origin of goods that are sold, bearing in mind the legitimate interest of the proprietor in maintaining the goodwill and good name of the brand itself.

David Mallon, Associate, Technology, Media and Communications Group, MacRoberts Solicitors.

Q. I want to buy the names of football players, for example Henrik Larson, Thiery Henry, and Patrick Viera to develop these URLs into fan websites. Am I legally allowed to do this?

Clueless, Dundee.

A. Domain names are allocated on a first come, first served basis – so if the name is available, then you are entitled to buy it. There is no right of action in the UK for domain name infringement. However, where the name contains someone else’s trademark, whether registered or unregistered, that person may raise court proceedings against the registrant. Alternatively, the party aggrieved may complain to Nominet (or ICANN) to have the domain name transferred to them. In this case, the footballer would have to show that he (or she) has rights in the name and that the registration is abusive. The most common form of abuse is where someone registers the name and then holds it for ransom. Special rules apply to fan sites, however, and use of a footballer’s name may be regarded as fair use but the registrant must prove that the registration is not abusive.

John Reid, Solicitor, MacRoberts Solicitors.

Q. I work for a very well known advertising agency and have reason to believe that one of my creative ideas has been stolen by a client who saw it during a creative pitch that I gave to them to win their business and has passed it off to their current agency to use as their own idea. This is something that is happening more and more these days. Is there anything I can do about this legally?

Irritated, Ayrshire.

A. It is usual to insist on confidentiality agreements before disclosing valuable information, as this gives a contractual remedy against the person using the idea. In effect, you can sue them for breaking your contract, much as you would in any other contractual dispute. If you don’t have such an agreement, you should speak to a lawyer. Otherwise, it would be necessary to lie on the common law doctrine of confidential information, which is a notoriously difficult (though not impossible) thing to do.

Graeme Colquhoun, Associate and Head of the Competition Law Practice, McGrigors.

Q. I have recently discovered that I am pregnant and am trying to make plans for my maternity leave. The firm I work for is very small, only seven employees, and my employer is making life quite uncomfortable for me at the moment, with regards to attending maternity appointments and arranging for my maternity leave. I do not know if I can take much more pressure because of this. Where do I stand legally?

Stressed, Inverness.

A. Employees who are pregnant are entitled to take reasonable time off for antenatal classes. In addition, employees are entitled to take their maternity leave and the employer cannot refuse this. Subject to certain statutory restrictions, it is up to you when you commence your maternity leave. If the employer is making life difficult for you, you could argue that you have been treated less favourably on the grounds of your pregnancy and that this would be Sex Discrimination. If the Company continues to treat you in this way it may be possible for you to leave employment and claim unfair (constructive) dismissal on the basis that the employer has treated you so badly that you had no choice but to leave your employment. This is unfair dismissal and in addition, the employee would be entitled to claim Sex Discrimination. You do not need to take hassle that the employer seems to be giving you.

Paul Brown, Partner, Biggart Baillie Solicitors.

Q. If you are part of a partnership that owns a capital item, but the partnership agreement is unclear about the “rules” regarding the sale of said item, if there is a dispute as to whether it should be sold or not or for how much, how can the stalemate be broken? Can the majority force the minority to take a fair offer for their share? Can the majority, or any party for that matter, force a sale to the highest bidder on the open market?

Confused, Glasgow.

A. If the partners have not agreed, expressly or implicitly, as to how such matters are to be dealt with, then the majority of the partners may be able to sell the item, notwithstanding the objections of the minority, but only if the sale could be regarded as an ordinary matter connected with the partnership business. Furthermore, the majority cannot make any change in the nature of the partnership business, as this requires the consent of all of the partners. The answer to these questions will therefore depend a great deal on the facts of the situation and, in particular, the nature of the item and how it relates to the business of the firm. Ultimately, it would be for the court to determine how the partnership agreement should be interpreted and it is possible that they could clarify the “unclear” rules regarding the sale of such items and therefore find that the partners have, in fact, already agreed how to deal with such matters. If the partnership agreement provides for disputes to be resolved by arbitration or some other mechanism then it may be possible to avoid going to the courts.

Robert Burns, Senior Associate,

MacRoberts Solicitors.

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Q. What are the legalities concerning the area of agency commission and media owners – specifically, where clients have a direct advertising rate with the media owner, but where the same media owner refuses to honour this rate (for the same volume of business) to the agency but with the inclusion of agency commission. Bearing in mind that agency commission is paid to agencies for specific reasons and is not (or should not be) an additional discount to be offered to clients to make the rate more attractive, and therefore in some cases is a barrier to the agency securing business (because this situation automatically makes the agency seem more expensive).

Frustrated, Edinburgh.

Stephen Harte, Associate, Technology, Media and Communications Group, MacRoberts Solicitors:

A. Media owners are free to set prices freely unless they are considered to have a dominant position in a certain market. Where suppliers have a dominant position then they must not abuse that dominant position. In certain circumstances it can be abusive to charge different prices to different customers for equivalent transactions and the Office of Fair Trading and Offcomm have powers to investigate complaints. The legality or otherwise of market behaviour can only be determined after a comprehensive economic analysis of the market and the effect of the allegedly abusive behaviour on it. It is likely that the media owner would argue that they are able to offer a special rate to direct clients because they do not have to pay agency commission on those transactions and, accordingly, that same rate cannot be offered where an agency expects to receive commission too. In such circumstances it is unlikely that this would be considered abusive but much depends on the precise market conditions.

A design company sells a brand that is sold to a company A. Later it appears, slightly modified by others, to be used for a sister company B but clearly intended to function so that A and B are recognised as part of the same organisation. If we get paid for brand A can we get paid for brand B, even if we did not modify it?

David Goodbrand, Associate,

IP and Technology Unit, Burness:

“This question goes to the very heart of intellectual property (“IP”) law: who owns the IP rights in a creative work? The “brand” which the design company has created for company A may be capable of being protected by various forms of IP rights including: Copyright – which protects original literary and artistic works; Design right – which protects the appearance and features of new designs. These IP rights will, by law, belong to the design company, unless there is an agreement between the parties to the contrary. You ought to look at the contractual terms upon which the design company undertook the work for Company A. If the design company has not assigned its IP rights to company A, it will own the rights. In such circumstances Company A may only have an implied right to use the brand for its own purposes.The ownership of IP brings with it certain rights. An owner is entitled to take action against any party who copies, adapts or otherwise uses its IP without its permission. If the brand is modified by a third party, that party may be infringing the IP rights of the design company. If the adapted brand is then used by company B, then company B may also be infringing the design company’s IP rights. The design company may be able to negotiate a payment from company B and/or the third party by way of compensation for such infringement. However, a lot will depend on the nature of the contractual relationships between the parties.”

Where should the Intellectual Property Rights lie for creative work? Should clients’ own the rights once they have paid for the work? Or do the rights continue to lie with the consultancy and they simply licence the client to use the creative? Is there a standard practice?

Puzzled, Auchtermuchty.

Colin Miller, Partner,

Biggart Baillie Solicitors.

The answer depends on who you are. The legal answer is that, subject to one or two exceptions, intellectual property rights will almost always lie with the person who created the work in the first place. The exceptions include copyright works or patentable inventions created by employees in the course of their employment (under certain conditions). In those circumstances those rights remain the property of the employer. In the case of a consultancy, copyright and unregistered design rights will remain owned by the consultant, notwithstanding that the consultant may have already been paid for the work. In the case of registered designs ownership remains with the commissioner of the work. Therefore if you are commissioning a consultant to develop software or to produce graphics on your behalf then you should always ensure that all the underlying intellectual property rights are expressly assigned in writing to you, albeit that the relevant consultant may insist on being paid for the work before assigning the rights. If this is not done then the consultant will retain ownership and may attempt to restrict any subsequent use by you of those works.

Stephen Harte, Associate, Technology, Media and Communications Group, MacRoberts Solicitors.

Intellectual Property Rights, as a general rule, belong to the creator or, where created by employees acting within the course of their employment, to the employer of the creator.

The only way in which the rights can be owned by anyone else is if the rights are assigned to that person in writing. Without a written assignation then ownership does not transfer, even if the work in question has been commissioned and paid for. Clients should make sure that they either own the rights in the work or have sufficient permission (a licence) from the owner to do everything that they need to do with the work. Ownership of the rights is a commercial matter that, ideally, should be addressed before any money is paid.

If the work in question is of a “one-off” nature then there may be little commercial justification for the creator retaining rights. If there are aspects of the work that may be re-used by the creator then it is not unusual for ownership to be retained and instead a licence to be granted to the client.

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