Two Mexicans, Salvador Huerta Bustindui and Carlos Alvarez Delucio, created a drawing (right) in 1983 which was licensed to the Mexican IP law firm Clarke Modet y Cía. de México S.A., where they both were directors and stockholders. The firm used this drawing as an ornamental element in the company’s corporate image. In 1984 Messrs Huerta and Mr. Alvarez authorized the use of this drawing as a trade mark to identify that firm's legal services.

Following a decade of international use, the Spanish head office of Clarke Modet adopted this drawing as the main element of its corporate image, and applied for three trade mark registrations in relation to the image on the left before the Spanish Trade Mark Office in the name of Clarke Modet & Co (Spain), without informing Messrs Huerta and Alvarez or asking them for a licence. In 1996, once OHIM accepted CTM applications, the Spanish law firm applied and obtained a CTM registration for the same drawing, again without the knowledge or consent of Messrs Huerta and Alvarez. 

When the drawing's authors left the Mexican law firm in 1999, they sought payment of royalties for the licence to use the mark in Mexico. The Spanish head office supported its Mexican branch in seeking to show that the drawing was created under a labour contract and that the copyright therefore belonged to the Mexican law firm -- which later began Administrative and Civil proceedings in support of this assertion. Nevertheless, following several years of litigation, the authors proved to the satisfaction of the Mexican Courts in 2012 that they had created the drawing by themselves and that no rights were created or assigned either to the Mexican law firm or to its Spanish head office.

Mexican Labour Law provides that inventions created under a labour contract belong to the employer, and that the employee is only vested with a right to claim compensation for his services. Copyright Law however provides that an artistic work (such as a design) belongs to its creator, unless its services are requested and paid for by a third party, in which case copyright in the artistic work will belong to such party.

Recently Clarke Modet y Cía de México S.A. was ordered to pay over three million dollars to the authors of the drawing, since the firm had continued to use it unlawfully even after a judicial order was issued to stop such use. 

On the basis of the Berne Convention and their copyright in the drawing, the authors applied to Madrid’s Civil Court No. 3 for annulment of the three Spanish trade mark registrations, a claim for public acknowledgement of their authorship, and the payment of damages for more than 13 years' unauthorised use of the design and the misappropriation of the trade mark. This action was resolved in January 2014, when the court annulled the three Spanish trade mark registrations, finding that they were obtained in bad faith and against the provisions of Spanish Laws, since the copyright-protected design was registered as a trade mark without the express authorization of its rightful owners. The court ordered the firm to publish an Acknowledgement of Authorship of the drawing in the name of Messrs Huerta and Alvarez in two of the most important newspapers in Spain.

Both parties have since appealed this decision to the Provincial Court of Madrid.

This blogger notes that the ownership of the underlying copyright in artwork which is subsequently the subject of a trade mark application is an issue that crops up surprisingly often. Financial institutions, successful businesses and professional practices are all equally at risk of encountering problems of the sort described here. It's easy to be wise after the event, but it's best to prudent ahead of times and to make sure that the parties agree in advance what use is to be made of logo-friendly artwork -- and that the authors are kept informed of any further use, or change of use.

Class 46 is grateful to Carlos Alvarez Delucio for providing this information.