In a case decided recently where the agency sued the client for copyright infringement and breach of contract, the agency lost on both counts. WHY?
In this case, nobody disputed that the agency had a valid copyright. So, the question regarding copyright infringement turned on whether the client’s commercial was substantially similar to the agency’s pitch materials. The Court decided that the “undisputed evidence demonstrates that the overall concept, feel, setting, themes, characters, pace and sequence…” of the client’s commercial compared to the agency’s copyrighted pitch materials were “not substantially similar….”
Also, the Court held that in this case, there was no breach of contract for various reasons. The Court stated “[f]irst, and most important, the language of the (already existing non-exclusive) … Agreement does not suggest an intent to be bound.” Furthermore, “[t]he Court concludes the undisputed evidence shows there was no preliminary Type II agreement. Thus, the Court finds any contractual obligation to negotiate, in good faith or otherwise, is unenforceable.”
Best practice for agencies/businesses is to consider whether your current agreement, if there is one, covers new pitch work. If not, should a new agreement be signed for the new pitch? When was the last time your contract was reviewed and updated to protect your agency’s work? Does the client have contracts reviewed before executing? Legally, there is a lot to consider for both agencies and clients when signing agreements, hence, agreements need to be reviewed before being signed. Any questions? Feel free to contact me.
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