REUTERS | Robert Pratta

Ask the team: is there an implied right to revoke a copyright licence?

A professional consultant often produces important documents relating to a project, many of which are subject to copyright, such as architects’ plans or engineering schematics. This is valuable material, which clients derive obvious benefits from. Accordingly, the parties to a professional appointment usually negotiate specific provisions relating to copyright material; but what happens if the parties fail to agree the terms of an appointment?

Professional appointments usually address copyright issues

In practice, the parties to a professional appointment usually agree express provisions dealing with copyright material. In the UK, a professional appointment usually deals with copyright by leaving ownership of copyright material with the professional consultant, while granting the client a licence to use that material. The precise scope of the copyright licence is subject to negotiation, but issues such as the use to which material can be put and whether the client can grant sub-licences are usually addressed directly.

Indeed, copyright licences are so common that practitioners may view them as boilerplate, including copyright licences referring to designs even where the professional consultant’s services do not include producing any designs.

Express terms may permit suspension of a copyright licence

Over the last decade professional consultants have increasingly demanded an express right to revoke or suspend a copyright licence if the client fails to pay their fees. Professionallly advised clients tend to resist this type of clause, but such provisions have found their way into several standard forms of professional appointment (for example, clause 6.3.2 of the RIBA Standard Conditions of Appointment for a Consultant 2010).

Is there an implied term permitting suspension of a copyright licence?

Even with the best of intentions, parties do not always succeed in finalising all the terms of a professional appointment. In that situation, the professional consultant cannot rely on an express term to revoke or suspend the client’s copyright licence, but can one be implied? There do not appear to be any reported Technology and Construction Court (TCC) cases on this question, so what is the correct position?

Rights arising from non-payment

The starting point is that, under English law, a client’s failure to pay generally gives the professional consultant the right to pursue payment as a debt. The professional consultant cannot automatically regard non-payment as a repudiatory breach permitting termination of its engagement, unless that is an express provision of the professional appointment or it is clear that time was of the essence when it comes to payment under the professional appointment.

From that perspective, a professional consultant seems unlikely to convince a court that non-payment justifies going beyond its common law right to pursue a debt and justifies revoking or suspending the client’s valuable rights under a copyright licence.

Recent authority

This view seems to be supported by a recent decision in the English courts, albeit in the Patents County Court (PCC), rather than the TCC. In Deakin and another (t/a Faith Image Source) v Card Rax Ltd and others the PCC refused to find an implied right to terminate a copyright licence for non-payment. While Deakin concerned artwork for greetings cards, it referred to heavyweight common law authority, citing the Australian case of Ng v Clyde Securities Ltd [1976] 1 NSWLR 443 (which did relate to an architect’s appointment). In short, the judge in Deakin considered the law on repudiatory breach and then asked whether a term permitting termination of the copyright licence could be implied by custom (that is, whether it could be said that such a term was “invariable, certain and general” in the trade or place in question). The court decided that there was no such custom in the greetings card trade.

We would strongly argue that there is no such custom in the UK construction industry, so we hope that the law is clear – at least until the industry changes its customs and practice, if it ever does. A professional consultant is unlikely to have an implied right to revoke a copyright licence.

2 thoughts on “Ask the team: is there an implied right to revoke a copyright licence?

  1. Unfortunately, this case resume does not get this right. The case was about whether in the absence of express terms, a failure to pay permitted the licensor to terminate the licence or sue in debt. This depended on the proper construction of the agreement and whether or not the licensor had granted a licence conditional on payment or a promise to pay. The court held, following Ng v Clyde Securities, that the licence was conditional on a promise to pay. It was not to do with whether a right to terminate could be implied by custom (although other parts of the judgment were concerned with customary terms e.g. a term requiring return of artwork delivered). I was the barrister in the case.

    For the construction industry (or more particularly, the architects), it reinforces that the Australian authorities which tend to favour that an architect’s licence is granted in return for a promise to pay (and thus a failure to pay gives rise to a cause of action in debt) are applicable in the UK. To the author’s knowledge, this is the first time in the UK that Ng v Clyde Securities has been applied.

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