Ownership of designs and models resulting from commission

The European Court of Justice (ECJ) recently admitted a preliminary ruling (Case C-32/08), issued by Alicante Mercantile Court No 1, regarding certain provisions of the EU Community Designs Regulation (6/2002). The Alicante court is responsible for cases dealing with Community trademarks, designs and models in Spain.

Article 14(3) of the regulation provides that:

"where a design is developed by an employee in the execution of his duties or following the instructions given by his employer, the right to the Community design shall vest in the employer, unless otherwise agreed or specified under national law.”

In a literal sense, this article refers only to Community models or designs developed by a worker as part of an employment relationship. In this regard, the Spanish judge queried whether the rule established by Article 14(3) could be extended to designs and models created within the framework of a contract subject to labour legislation or a work assignment (ie, subject to civil law). This matter is highly relevant from a practical point of view as many designs and models result from work commissioned by a principal, and carried out by a design company.

Therefore, the Spanish judge asked the following question:

“Must Article 14(3) of [the EU Community Designs Regulation] be interpreted as referring only to Community designs developed in the context of an employment relationship where the designer is bound by a contract governed by employment law whose provisions are such that the designer works under the direction and in the employ of another, or must the terms ‘employee’ and ‘employer’ in Article 14(3) of [the r]egulation be interpreted broadly so as to include situations other than employment relationships, such as a relationship where, in accordance with a civil/commercial contract (and therefore one which does not provide that an individual habitually works under the direction and in the employ of another), an individual (designer) undertakes to execute a design for another individual for a settled price and, as a result, it is understood that the design belongs to the person who commissioned it, unless the contract stipulates otherwise?”

Unless the ECJ rules otherwise, it seems likely that the terms ‘employee’ and ‘employer’, contained in Article 14(3), should be interpreted within the scope of the Labour Law, and thus such terms designate the parties to a contract subject to labour regulations. Consequently, the rule established in Article 14(3) could not be interpreted beyond the framework for which a labour contract was expressly foreseen.

Further grounds support the strict interpretation of Article 14(3) - in particular, the fact that Article 14(1) of the regulation sets down a general rule that the right to a Community design shall vest in the designer or his or her successor in title. The granting of any rights over a design or model to any party other than the author of the same constitutes an exception to this rule. Furthermore, and given the exceptional nature of Article 14(3), the latter must not be interpreted beyond its literal interpretation, which is limited to labour contracts.

In view of the ECJ’s possible negative answer to these first two questions, the Spanish judge also set down several other subsidiary queries as follows:

• If it is understood that the production of designs within an employment relationship and the production of designs within a non-employment relationship constitute different factual situations, then: 

 

• is it necessary to apply the general rule in Article 14(1), and consequently must the designs be construed as belonging to the designer, unless the parties stipulate otherwise in the contract; or 

• must the Community design court rely on national law governing designs in accordance with Article 88(2) of the regulation? 

• In the event that national law is to be relied on, is it possible to apply national law where it places on an equal footing (as Spanish law does) designs produced in the context of an employment relationship (ie, the designs belong to the employer, unless it has been agreed otherwise) and designs produced as a result of a commission (ie, the designs belong to the party who commissioned them, unless it has been agreed otherwise)?

The fundamental issue derived from the questions raised by the Mercantile Court judge lies in Article 88(2) of the regulation, according to which “on all matters not covered by this regulation, a Community design court shall apply its national law, including its private international law”. However, the interpretation of this provision raises at least two doubts in respect of the case at hand.

First, it must be decided whether the hypothesis regarding Community designs and models resulting from commissioned assignments falls within the scope of the regulation. On a first-opinion basis, it is worth considering that such hypothesis is not regulated, bearing in mind that the subject matter of the regulation (at least in an express sense) refers to Community designs and models created within the framework of a labour relationship. However, on a second-opinion basis, it could be argued that the Community designs or models resulting from commissioned assignments fall within the scope of the regulation, particularly according to the general rule set forth in Article 14(1). In accordance with this second opinion, the ownership of the Community design or model would correspond to its author or successor, rather than to the commissioner of the corresponding work, unless the transfer of such rights to the commissioning company should have been expressly agreed in the work assignment contract or, having interpreted the work assignment contract in accordance with the appropriate criteria, it can be deduced that the parties desired to carry out such a transfer. This second opinion seems more precise.

Second, if it is considered that the hypothesis regarding Community designs and models resulting from commissioned assignments does not fall within the scope of the regulation, the latter’s Article 88(2) orders the court responsible for Community trademarks, designs and models to apply its national legislation. This leads to further doubt as to which national legislation should be used (ie, “national legislation” on national drawings and models or national legislation applicable to Community designs and models). Choosing the first option, the case would be resolved, at least in Spain, by virtue of Article 15 of the Law on the Legal Protection of Industrial Designs Law 20/2003), according to which:

“when the design has been developed by an employee in the execution of his/her functions or following the instructions received from the latter’s employer or on a commission basis within the scope of a service relationship, the right to register the design will correspond to the employer or to the contractual party that commissioned the design, unless stated otherwise in the agreement.”

Therefore, Spanish national legislation in respect of Spanish drawings and models regulates designs and models developed as part of a labour relationship in the same way that it regulates those produced under a commissioned assignment: in both cases, ownership stays with the employer or commissioning company. Nevertheless, if it is understood that the “national legislation” referred to in Article 88(2) of the regulation corresponds to national legislation applicable to Community designs and models, in the event of a lack of such regulation (as is the case in Spain), the issue must be solved by applying Article 14(1), which would lead to the results discussed above.