Can I take legal action over non-payment and unauthorised image use?
Freelancer’s Question: My client owes several invoices’ worth of non-payments totalling almost £6,000. Worse still, the client is using a website I designed containing illustrations I created, but which is not paid for yet. So they’ve taken the website and run!
I’ve provided the client with ‘late payment’ reminders; even a payment plan, and they are clearly having financial difficulties. But there’s underhandedness too. Notably, I was pushed into putting the new website live, as they claimed they needed the site operable as part of a list of ‘verifications’ required by their US-based bank to release funds -- to pay me, former staff and a freelance SEO worker. If I withheld the site, nobody would be paid, they claimed.
In hindsight, this was likely a ploy by the client to get hold of the site. Since I put it live, and given I was unpaid, I closed the site. But in the interim, the client must have got a backup of the site (which contained my illustrations which the client tried to trademark by asking me to send over the artworks but I declined). And the client used a hosting/ tech support firm to put the site back online. In so doing, the client blocked my access. So I can’t access my images.
Today, I’m unpaid, the site is online and I’m worried they will try to trademark my images. The client is an American citizen but working as a small company, using online systems and fintech widgets to facilitate third-party payments. For my part, I‘m contracted as a supplier to work in-house and have a standard-looking contract, plus NDA. Is there likely to be a breach of my contract by the client, based on the circumstances I’ve outlined? If not, what are my rights and could I take legal action, for IP infringement and non-payment?
Expert’s Answer: There are a number of possible issues here, including potential breach of contract, a debt recovery claim, and infringement of Intellectual Property (IP) rights.
It is hard to provide specific feedback regarding a breach of contract without seeing the terms of the contract you had in place.
This is where a Service Agreement and Insurance each come into their own
Having a robust service agreement in place is so important – as is ensuring you have proper insurance in place for your professional activity, which may include taking out legal expenses cover so you do not have to pay lawyers’ fees out of your own pocket.
A service agreement is key for any freelancer to ensure the terms of your deal with your client are fair, such as setting out payment obligations, transfer and ownership of IP, timescales for deliverables, governing law and applicable courts -- and how disputes can be handled.
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Back to your question. In terms of IP infringement, you may have a claim for IP infringement against the client which is using your deliverables without your consent, unless under the terms of your agreement with the client, IP was transferred to the client upon creation and not upon payment.
You may also have a debt claim for the unpaid invoice, depending on the terms of your agreement. This may also be a breach of contract claim too.
However, as above, the redress you have depends on the contract that was agreed between you and your client.
It is difficult to sue a company which is in the US, as you would typically need to go through various hoops to serve the claim outside of UK, and any judgment obtained can be very difficult to enforce against a US based client without going through the relevant US courts.
Given the amount you are owed, the cost of pursuing the claim may be more expensive to you (in money and time), as court fees and lawyer fees would need to be paid by you (unless you have legal expenses cover). In addition, there is no guarantee you will get these sums back from your client – so you may end up being even more out-of-pocket. Yet, again, this depends on the contract you have in place with your client.
A formal ‘letter before action’ from a solicitor or legal advisory likes ours can prompt payment from your client. So you may want to try this route first, as this can save you both time and expense. Sometimes the ‘fear factor’ of receiving a solicitor’s letter is all that is needed to resolve the matter!
If your client is based in the US, you may be able to instruct a local collections agent in the US state where the client is based, who will attempt to recover the sum owed to you, without court proceedings. They will take a percentage fee from the sums recovered and this often comes down to a commercial negotiation based on the size of the debt.
Almost last but definitely not least, it is strongly recommended that you seek legal assistance to ensure the advice you receive is based on all of the facts of this case. A lawyer reading your contract will be able to fully understand and provide tailored advice to your situation.
Finally, please be aware, the contents of this article are for information purposes only and do not constitute legal advice or a client-attorney retainer. All parts of this article should be used in the manner for which it is intended. We at Gerrish Legal assume no responsibility for actions taken or agreements entered into on the basis of this article. But if you would like to receive legal assistance, please do not hesitate to get in touch.
The expert was Gabrille O’Sullivan, legal counsel at Gerrish Legal.