Take, for example, the commission of a character to be used as a company logo. You, as the creator of the character, will own the copyright in your work, unless you are creating it in the course of employment. If your commissioner clearly states that they are commissioning it as a company logo, the intention is to use your character as a sign of origin in the course of trade.
Your character is likely to appear on packaging, the company’s website, and advertising without further payment due to you, as this is the extent of the usage of a logo under normal circumstances. Even if there is no contract, your oral agreement will grant an implied licence to your commissioner to use your character for that purpose (see our factsheet on the commission of logos: http://www.own-it.org/knowledge/logo-design-implied-licensing)
In this instance, your commissioner is using your copyright work as a trade mark. Your commissioner can protect the logo by bringing a claim of 'passing off' if a competitor uses the same, or a similar character, as a sign of origin (see our article on ‘passing off’ here: http://www.own-it.org/knowledge/passing-off-explained).
If your client wants to register your character as a trade mark (more on registered trade marks here: http://www.own-it.org/knowledge/own-it-factsheet-on-trade-marks), it is advisable to first request that you assign copyright, rather than relying on the implied licence, as such a licence may not extend to the registration as a trade mark. An assignment is basically a sale of copyright and should command a higher fee than just a licence, since all control over the right will transfer to the commissioner.
Design right protects the appearance of a product and is most likely relevant where your character design has been turned into a 3D design or it appears as surface decoration of a product. In these cases it can also be registered as a design (see our factsheet on design right: http://www.own-it.org/uploads/files/307/original/Registered_Designs_Factsheet.pdf). Again, if you are commissioned to create a character for merchandising, your client should request assignment of your copyright before registering your character as a design.
Tip: As implied licences are best avoided, always seek to have written commissioning contracts with your clients, so that your clients can use your characters as they intended and you can fully understand the extent of the usage and possibly charge a higher fee.
If you have specific questions on commissioning contracts or would like to discuss your contracts with a qualified legal professional, please register on the Own-it website www.own-it.org and submit a query www.own-it.org/advice (you must be logged in to see the enquiries form).
For more on character design and merchandising, book your place at our seminar on the topic with a trade mark attorney on the 6th of May in London: http://www.own-it.org/events/characters-illustration-animation-the-secrets-of-merchandising
Please note that the legal principles in this article are based on UK law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.