The pitfalls of electronic signatures in copyright assignments

In South African law the assignment of copyright shall only have effect if it is “in writing signed by or on behalf of the assignor”. The use of electronic signatures is becoming commonplace, but not all electronic signatures are the same. If an electronic signature is used in a copyright assignment that does not meet the requirement of an “advanced electronic signature” in South African law, the assignment is likely invalid.

Those whose practices include the assignment or licensing of intellectual property would be well advised to note the pitfalls discussed below and to review any relevant agreements where electronic signatures may have been used.

The Copyright Act

The requirement that an assignment of copyright be in writing and be signed is found in section 22(3) of the Copyright Act, and the same requirements apply to exclusive copyright licences.

An amendment to the Copyright Act, the Copyright Amendment Bill, has recently been sent back to Parliament by the President. Regardless, although the amendment would have affected section 22(3), the provisions requiring an assignment agreement to be written and signed would have remained. It is therefore reasonable to assume that a revised amendment bill would also include this provision, making this topic relevant in the long term.

Electronic signatures

The Electronic Communication and Transactions Act (“ECTA”) gives legal force to electronic signatures and distinguishes between an “electronic signature” and an “advanced electronic signature” (or “AES”). The differences are briefly discussed below. However, if you are uncertain whether you have been using an AES, then you most likely have not.

ECTA provides a very wide definition for an electronic signature as “…data attached to, incorporated in, or logically associated with other data and which is intended by the user to serve as a signature”. Drawing from the Supreme Court of Appeal (“SCA”) case of Spring Forest Trading v Wilberry, if a piece of data is intended by the user as serving as their signature, it would satisfy the definition of an “electronic signature”. On that occasion the SCA held that the typewritten name in an email signature would qualify as an electronic signature of the sender.

This definition would therefore also include a digital image created from a person’s hand-written signature, that is “dragged and dropped” into an electronic document, for example. It is conceivable that this may be one of the most common forms of electronic signatures used today, along with the so-called S-signature e.g. /JOHN SMITH/.

An AES has much more onerous requirements. This includes using cryptographic certificates from an organisation accredited by the South African Accreditation Authority (“SAAA”) which the applicant uses to digitally sign an electronic document. It provides the ability to verify the authenticity of the signature and the identity of the relevant party from a trusted third party. Unless you are signing a document using an SAAA-accredited product or service, the electronic signature would not meet the requirement of an AES. The Post Office and LAWtrust are currently the only SAAA-accredited providers of authentication and certification products and services. It may come as a surprise to some that an electronic signature created by a well-known service provider such as DocuSign would also not meet the requirements of an AES, as it is not SAAA-accredited.

The requirement for an AES in copyright assignments

In terms of ECTA, if a signature is required by law without specifying the type of signature, only an AES (and not a simple electronic signature) will satisfy this requirement. The Copyright Act explicitly states that a signature is required for copyright assignment agreements to be effective. Since the Copyright Act is silent on the type of signature, the requirement under ECTA for an AES is triggered.

Written agreement vs written signature

Some practitioners hold the view that copyright assignments must have a “written signature” and that the use of electronic signatures in copyright assignment agreements are therefore excluded outright. This is not the case, in our view.

The “written” requirement in section 22(3) refers to the document or agreement itself (distinguishing it from an oral agreement), and not the signature. Having the written agreement totally in electronic form is perfectly acceptable. This much is clear from section 12 of ECTA, which provides that a requirement in law that a document must be in writing is met if the document is in the form of a data message accessible in a manner usable for subsequent reference. A PDF document would fit this definition.

General IP assignment clauses in contracts

Copyright assignment is often lumped into the same clause with the assignment of other IP rights, e.g. designs, patentable inventions, trade marks, etc. However, the statutes governing these other IP rights are silent on the requirement of a signature to be effective.

For example, section 60(1)(a) of the Patents Act reads:

“An applicant for a patent or a patentee may in writing assign his rights in an application or patent to any other person.”

There is no mention of a signature being required in this statute, which means that an AES is not required for an electronically signed assignment agreement of a patent or patent application.

If such a “combined” assignment agreement is signed with a simple electronic signature, the copyright part would be ineffective while the other IP rights are effectively assigned.

Signed and scanned agreements

What about a copyright assignment agreement that is printed, signed by hand, and scanned? Would the resulting electronic document include a signature comprising “data intended by the user to serve as a signature”? It would seem so.

However, the fact remains that the relevant party did in fact sign the assignment agreement by hand, despite an electronic copy of the hand-signed document being kept for future reference. It could be problematic if the authenticity of the electronic copy is ever challenged, and the originally hand-signed copy cannot be produced.

Other documents that require an AES

An AES is also required by law for a number of other electronic documents, such as the alienation of immovable property, a long-term lease, and a will.

Why copyright assignments have this same onerous requirement, whereas assignment of other forms of IP rights do not, is unclear.  It is likely that a great many copyright assignments may be ineffective through having been concluded using electronic signatures that are not AES’s.

Conclusion

Until an amendment to the Copyright Act removes the requirement for the assignment of copyright to be in writing and “signed”, or specifies the type of electronic signature required, its silence on the matter seems to necessitate the use of an AES if it is electronically signed.

If the parties to an IP transaction involving a copyright assignment or an exclusive licence do not have the means to apply electronic signatures with the properly accredited digital certificates, we recommend an old-school approach: print the agreement and sign it in wet ink.