Can this work?

Daniel ...

Hi Naomi,

I have a couple of suggestions and comments to your question.

First, this is a very cumbersome way to structure a "separation" clause in a partnership or shareholder agreement. The usual way to structure this among shareholders is to guarantee 10% UNDILUTED shares (at the time of the agreement). If this is a partnership, then provide for an independent auditor or evaluation at the time of sale, and allocate 10% of the sale value based on that audit/evaluation.

Second, what you are mostly concerned is not a copyright, but a trademark associated with your services or products. That's what you advertise to consumers and what is placed in your marketing materials, on the products, etc. So, the question is whether you will build a brand based on your existing logo, or modify it for different products and/or services.

As for letting your business partner retain copyright, I agree that this has some unpleasant risks, particularly if the company logo has significant artistic/visual component and you have already invested a lot into marketing and advertisement. Please not that a copyright protects only the artistic impression that is part of the logo, but if you logo is a simple text or text with simple shapes, then you could change slightly and not infringe the copyright. The real question is how much of the logo is artistic expression and how much of it is simply text (note that words, simple phrases and titles are not copyrightable).

Hope this helps.

Daniel Basov
Solton Rosen & Balakhovsky LLP
110 Wall Street, 11th floor,
New York, NY 10005
212-344-1744
daniel.basov@srblaw.net

Isaac

Who currently owns the copyright to the characters and logo?
Who actually created them, and under what theory does whoever
did the creating own or not own the copyright?

I guess that doesn't answer your question directly, but it's
something I'd want to know if I were advising you.  It's also
something you probably should not discuss in detail here.

The significance of the question is that if a partner created
the artwork it is not clear absent an agreement in writing
that the company owns the copyright.

Naomi

As far as we can tell the copyright is owned by the company. Artwork was done whilst in the employ and requirements were discussed as a company. Finally the copyright statement says the company so there was never any question that it was given and therefoe belonged to the company.

Having said that I would have no problem letting her have the copyright back if this licensing thing was a worthwhile exercise. I just don't quite see how it could work in practise.

If the brand is not owned by the company and only licensed to them, what happens if the comapny is sold, presumably the buyer has to negotiate a fee for owning the license/copyright and in which case it would affect the sale price of the company.

I'm also not sure how watertight an agreement could be, I don't want to get halfway through building up a business only to discover my brand is no longer mine to use.

Finally I still don't understand how any of this "protects" her interest anymore than a simple agreement stating she can have 10% of the sale value of the company

StefanL

For me it sound very risky not to have the trademarks etc in the company. Bottom line is that you could end up with a company without its IP. If your partner dosen't trust you to uphold her rights, why should you trust her to uphold your rights?
Futhermore the business has only been up for 3 months, which (hopefully) only ia a small fraction of the time that the firm will operate, thus most of the value added to the logo will come from the later operations.