Fresh Trading Ltd v Deepend Fresh Recovery Ltd & Anor

An unsigned commercial agreement may become binding where the parties objectively agreed its terms and their conduct waived a subject to contract qualification. An agreement to assign future copyright ordinarily creates an equitable, rather than legal, assignment. Under sections 90 and 91 of the Copyright Designs and Patents Act 1988, legal assignment requires the statutory formalities, and section 91 does not operate where copyright first vests in the creator and transfers only upon later approval. Where a commissioned work is approved under the agreement, equity may recognise the intended transfer despite the absence of a legal assignment.

Fresh claimed ownership of copyright in the “Dude” logo and other design works created by Deepend for Fresh’s smoothie business. Deepend’s liquidator assigned any intellectual-property rights to Mr Chappell, who later assigned them to Deepend Fresh. The parties had agreed an unsigned document headed “Heads of Agreement”, including a clause providing for transfer of copyright in work approved by Fresh and remuneration by shares.

The court considered whether the agreement was binding, whether it effected a legal or equitable assignment, when copyright transferred, and whether Deepend Fresh’s counterclaim was barred by equitable doctrines or unsuitable for injunctive relief.

1. Fresh was the equitable owner. The counterclaim was dismissed and a declaration was to be made.
2. The court was not satisfied that Deepend had signed the agreement. Sections 90 and 91 of the Copyright Designs and Patents Act 1988 therefore could not produce a legal assignment. Section 90 requires a signed assignment, while section 91 concerns future copyright and operates when the copyright comes into existence. Here, copyright first vested in Deepend’s employees and transferred only in works subsequently approved by Fresh.
3. The unsigned agreement was nevertheless binding. Objectively construed, the parties had agreed terms governing their relationship and had acted upon them. The heading “Heads of Agreement” and the prospect of later detail did not prevent contractual intention. Although “subject to contract” normally indicates that parties are not yet bound, that qualification may be waived by unequivocal conduct.
4. Clause 5.1 transferred copyright in work approved by Fresh. The transfer obligation and the obligation to allot shares were concurrent, not conditional upon actual share allotment. The agreement was specially tailored and did not incorporate standard design-agency conditions retaining copyright until payment.
5. An agreement to assign future copyright may create an equitable assignment when its contractual conditions occur. Fresh had approved the works, and the promise to allot shares was sufficient consideration. Actual allotment was not a precondition to equitable ownership.
6. It was unnecessary to decide acquiescence, estoppel and laches. The court nevertheless indicated that Fresh’s long use of the logo, Deepend’s knowledge of the growing business, and the absence of any copyright claim until 2009 would have made those arguments powerful.