IP Law Daily, COPYRIGHT—D. Colo.: Graphic designer cannot sue her former client over materials created at its behest, (Jan 4, 2022)

By Matthew Hersh, J.D.

Because the artist created marketing materials for the client and understood that the client would continue to use the materials in the future, she implicitly gave the client a license.

A graphic designer’s copyright claim against a former client must be dismissed on the ground that she implicitly gave the company a license to use her content, the federal district court in Denver has held. The court, in rejecting the designer’s claim against a marketer of CBD-related products, found that the artist’s conduct and the nature of the materials she delivered to the company demonstrated that she intended the company to freely use the materials in the future (Martin v. Pure Spectrum CBD, LLC, January 3, 2021, Hegarty, M.).

Martha Martin is a professional graphic designer who lent her services to Pure Spectrum, a retailer of what it describes as “refined phytocannabinoid wellness products” that are packaged as gummies, softgels, oils, and “roll-on relief.” (The company bills itself as “a proud partner of USA weightlifting and the exclusive CBD product of Team USA). The designer worked to create product branding, logo design, packaging design, advertising, and marketing services.

Eventually the relationship between the designer and the CBD marketer deteriorated over a range of compensation issues. She sued for copyright infringement, securities fraud, breach of contract, and several other common law claims. The company moved for summary judgment on all claims, leading to this opinion.

Implied license. The court found that the artist implicitly gave a license to the company for her works, thus defeating her copyright infringement claim. Precedents teach that while exclusive licenses must be in writing, a court is free to find that a non-exclusive license is implied by the conduct between the parties. Although the Tenth Circuit has not established a test for implied non-exclusive license, courts in Colorado typically follow the three-part test developed by other circuits for an implied license: (1) a company requests the creation of a work; (2) the creator makes the particular work and delivers it to the company that requested it; and (3) the creator intends that the company copy and distribute her work. Here, the first test was concededly met, so the dispute revolved around tests two and three.

As to the second prong of the test, the court easily found that the artist delivered her work to the company. The artist claimed that she never “delivered” control of her designs to the company, but rather maintained exclusive control over those designs. But the artist “did not create these works in a vacuum,” the court observed. “Instead, she created them at the behest of” the company. Indeed, the court noted, she met with the representatives of the company to come up with ideas to redesign the retail space and create new product packaging, and she was paid a graduated monthly retainer for these works. Accordingly, the delivery question was easily resolved.

The question of intent required a more extensive analysis, but also was met by the company. Typically the question of intent involves weighing three factors: (1) whether the parties engaged in a short-term discrete transaction as opposed to an ongoing relationship; (2) whether the creator utilized written contracts limiting future use of the work, and (3) whether the creator’s conduct otherwise indicated that future use of the material was permissible. Here, while the evidence was to some extent contradictory, the designer appeared to acknowledge in an email that “typically clients own the work created for them. At least that’s how I operate.” Moreover, the court noted, the designer created multiple new product packaging designs, media campaigns, social media content, and the like. It was reasonable for her to have to understood, the court noted, that the company would continue to use and distribute such products for its business.

Finally, the court also found that the license was non-revocable. Although a license unsupported by consideration is revocable, in this case there was no dispute that company paid. And while the artist felt she was underpaid—a question addressed by other counts in her complaint—that was of no matter here. “Having received consideration,” the court held, “the implied license in this case is irrevocable.”

Other counts. The court also dismissed the artist’s other claims. The security fraud failed, the court held, because any promise of stock in the company was made only as a gift, and was not backed by consideration. The contract breach, unjust enrichment, and breach of fiduciary claims all failed for the same reason. Moreover, the court noted, the designer’s claim of conspiracy to commit fraud was based on the CEO’s alleged conspiracy with his own company—but it is “a well-settled tenet of corporate law that a director cannot conspire with the corporation which he serves.”

The case is No. 1:20-cv-00910-MEH.

Attorneys: Bill Reed (The Law Office of Bill Reed) for Martha Martin. Kimberly A. Bruetsch (Robinson Waters & O'Dorisio PC) for Pure Spectrum CBD, LLC.

Companies: Pure Spectrum CBD, LLC

Cases: Copyright