Non-profit volunteer gone bad

[Wedge87]

What is the name of your state (only U.S. law)? Colorado

I am on the board of directors for a youth sports club. The club formed two years ago. When formed, the club had four board members. We were pre-501c3 at that time. We were/still are volunteers, with the exception of paid coaches. One of the board members at that time asked her talented niece to create a website, create the club logo, and do other design work. There was never a contract for that work nor was there discussion of compensation at any time that the work would be recompensated at a later date. There was no question in anyone's mind that this work was pro bono. The aunt also gave some gift cards, etc as a "thank you" for labor. The set-up administrative fees for the website were split between the board members out-of-pocket.

The designer's aunt left the board disgruntled about 8 months ago. We are now coming up on the time to pay for the annual web domain fees, and recently received an email from the designer stating that the website would be shut down unless the club pays the designer $500 for the initial website design plus the initial web expenses ($418 that had already been paid / split evenly amongst the board members at that time). For the remainder of the design work (logo work primarily), she wants $5000 for all content and related property.

The only thing we really care about is the logo. This logo features prominently on our team uniforms and we desire to use it on our new website. Furthermore, it is a great design and is how we are known. We do not have the means to stroke a check for $5000....nor would we do so if we did as this situation seems an awful lot like extortion.

I am thoroughly confused on what the law says as to who "owns" the logo. Any advice on how we should proceed is greatly appreciated.

Thanks!

 

[STEPHAN]

Check the whois. Who owns the domain?

 

[Wedge87]

Check the whois. Who owns the domain?

We have equally split the cost of the web domain, but the designer has the username/password in her sole possession and I presume the domain has her listed as the "owner". I'm really not concerned about the website. It is the continued usage of the logo design that we care about.

My hope would be that since there was no contract for the design work (since it was pro bono) and the club has used the logo design now for two years, the logo would "belong" to the club and we could do a state trademark on it to protect it / our ability to use it going forward. I'm not sure this is the case however. We want to ensure we are doing everything on the "up and up".

Thanks!

 

[quincy]

We have equally split the cost of the web domain, but the designer has the username/password in her sole possession and I presume the domain has her listed as the "owner". I'm really not concerned about the website. It is the continued usage of the logo design that we care about.

My hope would be that since there was no contract for the design work (since it was pro bono) and the club has used the logo design now for two years, the logo would "belong" to the club and we could do a state trademark on it to protect it / our ability to use it going forward. I'm not sure this is the case however. We want to ensure we are doing everything on the "up and up".

Thanks!

What sort of logo is it? You mention "design." If it is an original and creative design, it could have copyright protection. If the logo design is copyrighted, the designer holds all rights in the design unless she has expressly signed these away in a written and signed transfer agreement. Payment would not be required for the transfer but the written and signed agreement would be.

The website may also have copyright-protected media. Any illustrations or photographs or artwork or text are copyrightable expressions. The code can be copyrighted.

If the logo is not copyright protected, the club (arguably) owns the trademark rights in the logo. The logo has been used exclusively by the club as an identifier for the club. It is the use of a trademark that confers trademark rights.

And there can be some style features of the website that are subject to trademark protection.

If the domain name uses the club's trademark in the name, it can be possible for the club/trademark holder to challenge as infringement anyone else who tries to use a domain name with the club's trademark.

A lot of issues.

It is best if the club has an IP attorney look at the specific logo and the website to see who might have rights to what. The club might find it easiest to pay the designer for the logo and the website- this after having a transfer of rights agreement drafted and signed by the parties.

 

[Wedge87]

What sort of logo is it? You mention "design." If it is an original and creative design, it could have copyright protection. If the logo design is copyrighted, the designer holds all rights in the design unless she has expressly signed these away in a written and signed transfer agreement. Payment would not be required for the transfer but the written and signed agreement would be.

The website may also have copyright-protected media. Any illustrations or photographs or artwork or text are copyrightable expressions. The code can be copyrighted.

If the logo is not copyright protected, the club (arguably) owns the trademark rights in the logo. The logo has been used exclusively by the club as an identifier for the club. It is the use of a trademark that confers trademark rights.

And there can be some style features of the website that are subject to trademark protection.

If the domain name uses the club's trademark in the name, it can be possible for the club/trademark holder to challenge as infringement anyone else who tries to use a domain name with the club's trademark.

A lot of issues.

It is best if the club has an IP attorney look at the specific logo and the website to see who might have rights to what. The club might find it easiest to pay the designer for the logo and the website- this after having a transfer of rights agreement drafted and signed by the parties.

Thank you for your reply. So many issues, as you say. The logo design is the club name with a couple mountains above. We do not believe the designer has copyrighted any material. We are a tiny (now-501c3) non-profit. The logo was an original creative design by the designer. Not sure if it matters, but there were specific logo design ideas provided that the designer then used to create the logo. The fee that the designer is requesting, 2 years after the work was performed ostensibly as pro bono, is outrageous and well beyond the means of what we can or would pay. I believe the request for money is an attempt to "stick it to us" because the aunt left the board disgruntled. Extorting a non-profit whose sole purpose is for the benefit of kids.....nice, huh? As such, I just don't see any way that she would sign a transfer agreement for the logo.

As far as the domain name, I am not that concerned as we have purchased another domain name which will suffice nicely. I suppose if the designer chose to continue to pay for the current doamin names and use them (for what purpose I wouldn't have any idea) then we might be able to to challenge as trademark infringement based upon what you stated.

If the logo has not been copyrighted, would it be safe for us to submit it for a state trademark? How would we know if it has already been copyrighted?

Thoughts? thanks again.

 

[quincy]

Thank you for your reply. So many issues, as you say. The logo design is the club name with a couple mountains above. We do not believe the designer has copyrighted any material. We are a tiny (now-501c3) non-profit. The logo was an original creative design by the designer. Not sure if it matters, but there were specific logo design ideas provided that the designer then used to create the logo. The fee that the designer is requesting, 2 years after the work was performed ostensibly as pro bono, is outrageous and well beyond the means of what we can or would pay. I believe the request for money is an attempt to "stick it to us" because the aunt left the board disgruntled. Extorting a non-profit whose sole purpose is for the benefit of kids.....nice, huh? As such, I just don't see any way that she would sign a transfer agreement for the logo.

Copyrights are automatic. The creator of an original and creative design has a copyright in the design. Registration of the design with the US Copyright Office is not necessary unless the copyright holder wants to sue an infringer. If the creative and original design is registered BEFORE an infringement, however, the copyright holder is eligible for statutory damages.

Whether the logo design has enough creative and original elements to it to entitle the designer to copyright protection for her design would require a personal review and analysis by an IP professional. But it is possible she could assert ownership rights in the logo.

That said, the club is the one with trademark rights.

If the designer asserts her rights in the design, she cannot use the design for anything without infringing on your trademark rights. It would essentially mean the logo has no home - it cannot be used by anyone for anything without agreement between the rights-holders.

As far as the domain name, I am not that concerned as we have purchased another domain name which will suffice nicely. I suppose if the designer chose to continue to pay for the current doamin names and use them (for what purpose I wouldn't have any idea) then we might be able to to challenge as trademark infringement based upon what you stated.

Correct. The designer could lose the domain name if the domain name has your trademark in the name.

If the logo has not been copyrighted, would it be safe for us to submit it for a state trademark? How would we know if it has already been copyrighted?

You would need to ensure there is nothing protectable in the logo design before registering the mark.

Again I recommend you have the logo and website personally reviewed to better determine who owns what. Your club does not want to get involved in a costly lawsuit if there is a way to avoid it. It is certainly best if there can be an amicable agreement reached between all parties.

Good luck.

 

[LdiJ]

What is the name of your state (only U.S. law)? Colorado

I am on the board of directors for a youth sports club. The club formed two years ago. When formed, the club had four board members. We were pre-501c3 at that time. We were/still are volunteers, with the exception of paid coaches. One of the board members at that time asked her talented niece to create a website, create the club logo, and do other design work. There was never a contract for that work nor was there discussion of compensation at any time that the work would be recompensated at a later date. There was no question in anyone's mind that this work was pro bono. The aunt also gave some gift cards, etc as a "thank you" for labor. The set-up administrative fees for the website were split between the board members out-of-pocket.

The designer's aunt left the board disgruntled about 8 months ago. We are now coming up on the time to pay for the annual web domain fees, and recently received an email from the designer stating that the website would be shut down unless the club pays the designer $500 for the initial website design plus the initial web expenses ($418 that had already been paid / split evenly amongst the board members at that time). For the remainder of the design work (logo work primarily), she wants $5000 for all content and related property.

The only thing we really care about is the logo. This logo features prominently on our team uniforms and we desire to use it on our new website. Furthermore, it is a great design and is how we are known. We do not have the means to stroke a check for $5000....nor would we do so if we did as this situation seems an awful lot like extortion.

I am thoroughly confused on what the law says as to who "owns" the logo. Any advice on how we should proceed is greatly appreciated.

Thanks!

I think it could very well be extortion and you should consider having a discussion with the police about it. If they decline to do anything about it then a discussion with an attorney might be in order.

 

[Taxing Matters]

I think it could very well be extortion and you should consider having a discussion with the police about it. If they decline to do anything about it then a discussion with an attorney might be in order.

I think there is no extortion here. This is a dispute over rights to creative work. They should have sorted out the rights at the time they had her do the work — i.e. ensure the organization would own the logo and other material she created before she did any work. Just because she did it (apparently) for free initially is no reason not to do the thing professionally and get the proper agreements in place. Now she is asserting it wasn’t done for free and it is not extortion to assert her rights in the property she created. The Colorado extortion statute, in relevant part, reads as follows:

A person commits criminal extortion if:
(a) The person, without legal authority and with the intent to induce another person against that other person's will to perform an act or to refrain from performing a lawful act, makes a substantial threat to confine or restrain, cause economic hardship or bodily injury to, or damage the property or reputation of, the threatened person or another person; and
(b) The person threatens to cause the results described in paragraph (a) of this subsection (1) by:

(I) Performing or causing an unlawful act to be performed; or
(II) Invoking action by a third party, including but not limited to, the state or any of its political subdivisions, whose interests are not substantially related to the interests pursued by the person making the threat.​

Colo. Rev. Stat. Ann. § 18-3-207(1).

As applied here, the state would have to prove that without legal authority, the designer and her mother made a substantial threat to cause economic hardship to the organization (presumably by shutting down the web site) AND that they threatened to do so by either (1) performing or causing an unlawful act to be performed or (2) invoke action by a third party whose interests are not substantially related to the person making the threat.

If the designer and/or her mother own the web site domain, then they have the legal authority to shut the web site down. That fails the first part of the requirement for extortion. Even if you got past that, you have the next part to get through. Even if you characterize shutting down the web site as a threat to cause economic “hardship” (and it appears that shutting down the site would not do that since the OP says they don't care about the site itself) the threat made has to be either (1) to do something unlawful, and no such threat has been made here or (2) invoke action by some third party whose interests are not aligned with the person making threat. The only action of a third party involved here is by the company providing the site, and since that company's interests will be aligned with the owner of the domain that part is not met either. Bottom line is that I don’t see the elements of the offense met here.

And putting those details aside, this is not the kind of case that a Colorado prosecutor is going to bring. This has far more the ring of a civil dispute than anything criminal.

 

[Taxing Matters]

If the designer asserts her rights in the design, she cannot use the design for anything without infringing on your trademark rights. It would essentially mean the logo has no home - it cannot be used by anyone for anything without agreement between the rights-holders.

I wouldn't go so far as to say the logo couldn't be used for anything. You are correct, of course, that she could not use it in a way that infringes on the trademark of the organization. But it’s worth noting that not all uses of the logo would infringe on the organization’s trademark, especially if that mark is not registered with the UTPTO. The mark is only being used very locally and only for the purpose of this athletic team. But some other person in some other part of the country might well be able to use that mark in some unrelated business (say sheet metal production or whatever) without infringing the rights of the organization. So, she might well have a market to sell the logo to that other person to use. [/QUOTE]

 

[LdiJ]

I think there is no extortion here. This is a dispute over rights to creative work. They should have sorted out the rights at the time they had her do the work — i.e. ensure the organization would own the logo and other material she created before she did any work. Just because she did it (apparently) for free initially is no reason not to do the thing professionally and get the proper agreements in place. Now she is asserting it wasn’t done for free and it is not extortion to assert her rights in the property she created. The Colorado extortion statute, in relevant part, reads as follows:

A person commits criminal extortion if:
(a) The person, without legal authority and with the intent to induce another person against that other person's will to perform an act or to refrain from performing a lawful act, makes a substantial threat to confine or restrain, cause economic hardship or bodily injury to, or damage the property or reputation of, the threatened person or another person; and
(b) The person threatens to cause the results described in paragraph (a) of this subsection (1) by:

(I) Performing or causing an unlawful act to be performed; or
(II) Invoking action by a third party, including but not limited to, the state or any of its political subdivisions, whose interests are not substantially related to the interests pursued by the person making the threat.​

Colo. Rev. Stat. Ann. § 18-3-207(1).

As applied here, the state would have to prove that without legal authority, the designer and her mother made a substantial threat to cause economic hardship to the organization (presumably by shutting down the web site) AND that they threatened to do so by either (1) performing or causing an unlawful act to be performed or (2) invoke action by a third party whose interests are not substantially related to the person making the threat.

If the designer and/or her mother own the web site domain, then they have the legal authority to shut the web site down. That fails the first part of the requirement for extortion. Even if you got past that, you have the next part to get through. Even if you characterize shutting down the web site as a threat to cause economic “hardship” (and it appears that shutting down the site would not do that since the OP says they don't care about the site itself) the threat made has to be either (1) to do something unlawful, and no such threat has been made here or (2) invoke action by some third party whose interests are not aligned with the person making threat. The only action of a third party involved here is by the company providing the site, and since that company's interests will be aligned with the owner of the domain that part is not met either. Bottom line is that I don’t see the elements of the offense met here.

And putting those details aside, this is not the kind of case that a Colorado prosecutor is going to bring. This has far more the ring of a civil dispute than anything criminal.

My feeling on the subject is due to the fact that this is a tiny 501(c)(3) organization which absolutely (per the OP) does not have the financial means to pay the money she is demanding. Therefore, it appears to me that this is an attempt to basically destroy or at least severely hamstring the organization. $5000.00 might not seem like all that much to a lot of people, but to a small non-profit organization it could be devastating. Certainly the designer and her relative (I believe it was her aunt rather than her mother) are well aware that the organization does not have the means to pay that kind of money. Hence, my opinion that its an attempt at extortion.

 

[Taxing Matters]

My feeling on the subject is due to the fact that this is a tiny 501(c)(3) organization which absolutely (per the OP) does not have the financial means to pay the money she is demanding. Therefore, it appears to me that this is an attempt to basically destroy or at least severely hamstring the organization. $5000.00 might not seem like all that much to a lot of people, but to a small non-profit organization it could be devastating. Certainly the designer and her relative (I believe it was her aunt rather than her mother) are well aware that the organization does not have the means to pay that kind of money. Hence, my opinion that its an attempt at extortion.

It might be an attempt to destroy the organization, but if so, not a very effective one I think. Bear in mind, the organization only needs to pay up if it wants the design and web site. It has already said it does not care about the web site. As for the design, if they do not want to pay that much or can’t pay that much, they have the option to ditch the design and come up with another one. Yes, that means they have to build up recognition with the new design, but that ought not significantly hinder it from its mission. The OP's problem is that they really like the logo, evidently it was very well done. So if the work is really that good, it has some value. Whether it is worth what they are asking for is something I can’t say as I’ve never seen it and I’m no art expert But perhaps they can negotiate some resolution to this.

In any event, even if that were the motivation, it still wouldn’t amount to extortion under Colorado law. As I noted earlier, they would have to be acting “without legal authority” in making the threat, and nothing here suggests that is the case. Moreover, it must be the act that the person threatens to do (i.e. shutting down the web site and refusing to allow use of the creative work) if her demand is not met that must be intended to cause economic hardship. The thrust of the statute here is that the threatened actions are wrongful, and so it is effect of the threat that the statute focuses on, not the effect of what the person is seeking to get the organization to do to avoid the impact of the threat. Put more simply, the statute looks at whether the threat to shut down the site and deny use of the logo would cause economic hardship, not whether the payment of the $5,000 would cause economic hardship.

 

[quincy]

I think it could very well be extortion and you should consider having a discussion with the police about it. If they decline to do anything about it then a discussion with an attorney might be in order.

It is not extortion to demand compensation for the use of one's rights-protected material.

... This is a dispute over rights to creative work. They should have sorted out the rights at the time they had her do the work — i.e. ensure the organization would own the logo and other material she created before she did any work ...

... This has far more the ring of a civil dispute than anything criminal.

Agreed.

I wouldn't go so far as to say the logo couldn't be used for anything. You are correct, of course, that she could not use it in a way that infringes on the trademark of the organization. But itÂ’s worth noting that not all uses of the logo would infringe on the organizationÂ’s trademark, especially if that mark is not registered with the UTPTO. The mark is only being used very locally and only for the purpose of this athletic team. But some other person in some other part of the country might well be able to use that mark in some unrelated business (say sheet metal production or whatever) without infringing the rights of the organization. So, she might well have a market to sell the logo to that other person to use.

Registration of a trademark is not a legal necessity in the US. It is the use of the mark that confers rights, with the first to use the mark as an identifier for a product or service the presumed owner of the mark. This of course is a rebuttable presumption.

There are very few uses of a logo that would be permitted. Trademark names can be far easier to use than a company's logo, but then only in a descriptive sense and for limited purposes. Although there can be (and are) similar logos, so the mountain design might be usable, if the trademark of the club is incorporated into the design, the club could challenge its use by others.

Trademark law centers on consumer confusion. Any use of another's mark that leads to or could lead to confusion in the marketplace is infringing on the first user's trademark rights. Any use of another's trademark (name, slogan, logo, colors, scents ...) that trades off the reputation of the trademark holder can violate a state's business practice laws.

Because the club has an internet presence, the trademark rights can (potentially) be asserted anywhere in the country.

... Bear in mind, the organization only needs to pay up if it wants the design and web site ... As for the design, if they do not want to pay that much or canÂ’t pay that much, they have the option to ditch the design and come up with another one ...

That is not necessarily true. The club may need to "pay up" if the design has copyrighted elements. The club would not (necessarily) have to pay for the logo otherwise. The club has established trademark rights in the club's name and the logo. They can potentially assert these rights.

 

[Zigner]

My feeling on the subject is due to the fact that this is a tiny 501(c)(3) organization which absolutely (per the OP) does not have the financial means to pay the money she is demanding. Therefore, it appears to me that this is an attempt to basically destroy or at least severely hamstring the organization. $5000.00 might not seem like all that much to a lot of people, but to a small non-profit organization it could be devastating. Certainly the designer and her relative (I believe it was her aunt rather than her mother) are well aware that the organization does not have the means to pay that kind of money. Hence, my opinion that its an attempt at extortion.

In other words, because the designer (and owner) of the intellectual property wants to be paid money to transfer his/her rights to another party, but that party can't afford it, it's extortion.

C'mon - we're talking legalities here...you know better.

 

[LdiJ]

In other words, because the designer (and owner) of the intellectual property wants to be paid money to transfer his/her rights to another party, but that party can't afford it, it's extortion.

C'mon - we're talking legalities here...you know better.

No, I am talking about someone who donated their services to a not for profit group and two years later appears to be trying to either take them done or damage them.

 

[Zigner]

No, I am talking about someone who donated their services to a not for profit group and two years later appears to be trying to either take them done or damage them.

Services, yes...but not the IP generated.