Unpaid invoices, IP infringement and a non-responsive client
Global marketing agency.
Value of Dispute
The Commercial Dispute
A creative agency carried out work for their client, a data and storage solutions provider, for approximately three years. Its retainer consisted of a social media plan – with ongoing account management, planning and strategic development – as well as a number of specific projects for both the ‘core’ and ‘consumer’ brands.
During this time, a key contact on one of the projects suddenly left the company and another account manager became unresponsive to the agency’s emails. The agency’s access to key tools was abruptly revoked by its client, preventing it from publishing content and responding to consumers. A major project was also cancelled, but the agency was not paid for the outstanding work in progress that was due.
The agency began an account reconciliation exercise and discovered that during one quarter in 2016, a PO had not been provided by their client, and in turn, an invoice had never been raised by the agency. The client had always been slow at raising quarterly retainer POs, but the most recent invoices started to go unpaid.
At this stage, solicitors were instructed to seek to recover payment from the client. During this time, the agency noticed that the client had gone live with a campaign that they had originally proposed, using the agency’s proprietary code. It seemed highly likely to the agency that this misuse was due to the wrongful actions of the client’s previous employee, and was a clear IP infringement breach.
Further letters from the agency’s lawyer were sent to the client, outlining the details of the apparent copyright infringement and requesting an explanation. The client acknowledged the letters but never responded.
How Escalate Resolved – Services Used
The Escalate team was instructed and, following an initial unproductive exchange, a draft claim was served. This resulted in an offer of payment of £120,000, which was accepted by the agency.
Part of the claim included a proposed amount for IP infringement, regarding the agency’s code which was used without permission in a live campaign. There was also a proposed amount for the cancelled project that the agency had successfully tendered for, and started working on earlier on in their working relationship – the project was later released by the client themselves.
On top of this, an expected profit margin of 30% generated from ‘mini-campaign’ work that the client had come to expect, but were never actually covered under the agreed Statement of Works, was also included in the claim.
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