Directors and partners should be quick to sort out who owns intellectual property rights – or they risk finding that the firm's interests outweigh their claims
The summary judgment of Mr Justice Laddie in the Eden Project case is a timely reminder to construction professionals of the duties of directors to their company and of the need to ensure that their intellectual property rights are properly safeguarded.

The dispute arose from the role that Jonathan Ball, an architect, played in the creation of the Cornwall visitor attraction and research centre. Initially, he and Tim Smit, the co-founders of the project, worked together. Ball and Smit decided that the project should be run by a charitable trust, which was formally constituted in January 1996. The name for the project was coined in about July 1995. The trust acted by means of an operating company – Eden Project Limited. Both Ball and Smit were directors of this company.

But by early 1997, relationships had become strained and in October 1997, Ball registered the name "The Eden Project" as a trademark in his own name. Last June, Ball was removed as a director of the operating company.

The present action concerns the claim by Ball for compensation for the work he put into developing the project – either on the basis of the time and disbursements he incurred and the effort and skill he brought to the project, or, alternatively, on the historic costs he had incurred and the value of the intellectual property rights.

  Ball's barrister asserted that the registered trademark belonged to Ball (or at least to him and Smit jointly) and that Ball had no obligation to transfer it to the operating company. Ball could decide not to sell the trademark or he could prevent the project using the name itself. The defendants claimed that the trademark should be assigned to the operating company.

The judge characterised the trademark as being fundamental to the business of the operating company and held that by registering it in his own name and for his own benefit, Ball had acted in clear breach of his fiduciary duty to the company. The judge noted that whatever he may have thought the company owed him for his past endeavours, he was not right to put at risk his own company's trading future for his own benefit. He considered that Ball's application for a trademark registration "was for his own personal interest and conflicted with the interests of the company that he was bound to protect". The remainder of the dispute, concerning Ball's claim for compensation for past work, is to be heard at the full trial later this year.

Whatever he may have thought the company owed him, he was not right to put at risk his own company’s trading future for his own benefit

The courts have characterised the duty owed by the director to his company as being of a fiduciary nature. One aspect of this is that directors are under an obligation to account for their handling of property. If the fiduciary relationship is broken, the director concerned is treated as if he were a trustee of the property that had been misapplied. Such a misapplication may occur if the director acted outside the scope of the company's constitution, preferred his interest to that of the company, did not act for a proper purpose, acted without being bona fide or did not act in the company's interests.

Partners are in a similar position to directors.

They are under a duty to account to the firm for any benefit derived without the consent of other partners from any transactions concerning partners' property. If a partner, or a director, owns any intellectual property rights (or indeed any other asset) personally, but is prepared to allow his firm to use them for its business, the terms of the arrangement should be documented and approved by full board meetings/partnership meetings.

The principal intellectual property right is copyright. The Eden Project case demonstrates that other types of intellectual property rights may also be used to protect a professional's rights. Generally, these rights will complement the protection granted by the copyright that exists in the professional's drawings and documents. Commonly, either symbols or words have been registered as trademarks. It may be that a particular technique, trade or project name could be the subject of a trademark. Other intellectual property rights include design rights, database rights or patents and designs that, like trademarks, need first to be protected by registration.