A complicated agreement was reached between ICEL and Virrage
Industries to develop infection control software for hospitals. The
agreement was complicated by the fact that Virrage shared a
director with Link Information Systems (LIS), a company that had
failed to produce the software under a previous agreement with
ICEL.
The LIS agreement contained a clause which said: "Title to
product passes on full payment of purchase price. At that time,
Title, copyright and all other property rights in the Software
System shall remain vested in ICE".
ICEL and Virrage came to an agreement on the work, which said:
"For avoidance of doubt the specification will be the same as ICEL
previously agreed with Link Information Systems unless both parties
agree that amendments should be made".
According to the High Court's ruling, ICEL said that this meant
that under the new agreement it would own the copyright in the
resulting software.
"ICEL says that, although there is no reference in the Agreement
as to who was to hold the relevant intellectual property rights, it
is to be inferred from the overall background that copyright in the
software that ran the system was at all times to be vested in
ICEL," said the ruling.
"The Defendants assert that, even where a work the subject of
copyright is commissioned, the copyright is vested in the author(s)
of the work, unless there is an express agreement to the contrary
or such an agreement arises by necessary inference," said the High
Court judgment, by Judge Chambers QC. "To the extent that inference
is relied upon, the exercise involves considering the situation not
only from the viewpoint of the person asserting that copyright has
passed but also that of the person(s) from whom such a right is
said to have passed."
"It is said that, to the extent that any right is shown to have
passed by necessary inference, such a right will only be the
minimum required by the inference. Thus, if a licence is enough to
meet the inference, there will be no presumption that ownership has
passed or will pass," he said.
The Court rejected the suggestion that two Virrage directors,
rather than the company, owned the software.
ICEL told the High Court that though no mention was made in its
agreement with Virrage of the copyright passing to it, it was "so
obviously the understanding between the parties that no mention
needed to be made".
The High Court disagreed. "As more than one sale is
contemplated, there is not to be a transfer of the ownership of the
copyright when a sale is made," said the ruling. "In order to make
the 'sales' ICEL will not need to have ownership of the copyright:
a right to sub-licence will be just as efficacious."
The ruling said that a clause of the agreement did establish
that if the software was completed and was sold outright by ICEL,
copyright would pass to it so that it could be sold on, but that
this situation did not arise.
"I find that there was no term in the Agreement to the effect
that ICEL either had or was to have ownership of the copyright in
the software before there was an agreement for its sale to a third
party," said Judge Chambers. "In particular, I find that the
Agreement did not provide for ICEL to have ownership of the
copyright in the software before it had been paid for unless there
was an agreement for the sale of the software that provided for
such payment."
The ruling is presently available online at Casetrack.com
and the Practical Law Company, each of which requires a paid-for
subscription. The case is Infection Control Enterprises Limited v
Virrage Industries Limited and Aidan Cartwright, [2009] EWHC 2602
(QB).
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