The High
Court said that the company failed to prove that its ownership of
the material was a term of the agreement and said that it could not
claim intellectual property rights in the software.
Meridian won a contract for the development of a piece of
software, called StatX, from pharmaceutical giant GlaxoSmithKline
(GSK). It ran into financial difficulties and could not pay staff.
A backlog of other work prevented the software being started until
some of the workers at the company left over unpaid wages.
Those workers set up another company, IP Enterprises, and
proposed to Meridian that it carry out the work, paying Meridian a
‘finder’s fee’ of 20% of the £200,000 cost of the project. The
parties met in January 2006 in what was described in court as “an
angry and difficult meeting”.
They agreed that IP Enterprises would carry out the work, though
after haggling the fee to be paid to Meridian was set at 30% of the
fees paid.
In court Meridian claimed that at that meeting it was agreed
that it would own the copyright in the software once it was
finished. IP Enterprises disputes that claim. There was no mention
of it in a confirmation email sent by IP Enterprises after the
meeting. That email said “This is as I understand the situation as
we agreed yesterday – if you do not agree please let me know
today”.
John Bobeckyj, the chief executive and sole shareholder of
Meridian, did not dispute IP Enterprises' account of the meeting at
the time.
Robert Ham QC, sitting as a deputy High Court judge, said that
he did not believe Bobeckyj’s account of the meeting, and that in
fact he did not find any of Bobeckyj’s evidence reliable. “Mr
Bobeckyj came across like a salesman with an answer for everything…
Mr Bobeckyj’s evidence before me was similarly dishonest,” said Ham
in his ruling.
The Court found that Meridian’s claim that there was an express
term of the agreement in that January meeting that awarded it
copyright was not established.
Meridian then claimed that there was an implied term in the
agreement that it should own the copyright. An implied term of a
contract is something so obvious that it need not be stated,
something without which the contract cannot be effective. It cannot
contradict any term of a contract that is actually expressed.
The Court said that when framing implied terms, courts must not
go any further than what is necessary to make the contract
function. Meridian relied on a contract signed after the fact and
the evidence of Bobeckyj that its terms were the same as those in
an earlier draft contract.
“In my judgment, the existence of a draft contract the terms of
which are not known but which were still open to negotiation is an
insufficient basis for the implication of a term,” said Ham in his
ruling.
“No contract having been entered into, it would have [been]
possible to adapt the terms of the contract to the January
agreement and it was not necessary to imply a term in order to make
the January agreement workable,” he said. “The contract with GSK
could have been adapted to bring it into line with the January
agreement. Nor in my judgment was it so obvious as to go without
saying that a term should be implied.”
The High Court found that IP Enterprises was the owner of all
copyright in the StratX software.
