Who owns the copyright relating to software developed as part of a collaborative effort of a number of individuals? A recent English case deals with some of the issues that arise in this context.
The plaintiff claimed it owned the copyright in a software system called MAT:share which supports the management of investments in hedge funds and other managed assets. The plaintiff alleged that three individual defendants and the corporate vehicle that used the software infringed copyright. A preliminary trial of an issue was directed to determine who owned the copyright.
The plaintiff worked as part of a team with the other three individuals to develop the MAT:share software. In early 2004, the plaintiff was invited to provide input into the project. There was a general exchange of ideas among the four individuals about the direction and method of development.
During the course of developing the MAT:share software, the plaintiff did not submit invoices to the corporate defendant. All of the development costs were being born by the partners personally, who were to receive shares in the corporate defendant in consideration of their respective contributions. There was an earlier agreement which provided that all software, methodologies and patents produced would be the property of the corporation which was the predecessor of the corporate defendant.
Since the plaintiff was doing a substantial amount of developmental work, it was later agreed that in addition to shares in the corporation, that he would be paid a deferred fee of ₤10,000. When the project was delayed, the plaintiff was not happy that he was not receiving a commercial rate for the work he was carrying out.
As a result, a consultancy agreement was prepared in April, 2005. The agreement provided that any work conceived, developed or produced by the plaintiff, whether alone or jointly with others in connection with the development of the software system would be owned exclusively by the corporate defendant and to the extent that such work was not be carried out during the course of the plaintiff's employment by the corporate defendant any intellectual property rights relating to such work would be assigned to it. The agreement provided that no variations would be made to its terms unless made in writing signed by the parties.
The plaintiff did not sign the consultancy agreement but he had previously sent an invoice for the deferred fee in the amount of ₤10,000 and accepted payment. He also acted as if he accepted the terms of the consultancy agreement and sent an email indirectly confirming his agreement to it.
Approximately six months later, the plaintiff retained a new lawyer and took the position that all intellectual property rights in connection with the software and related webpages belonged to him. Once this position was taken, the parties agreed to disagree and shortly thereafter the plaintiff commenced the action.
On considering the facts, the judge concluded that the plaintiff by continuing to work and accepting the payment had unequivocally demonstrated that he accepted the terms of the consultancy agreement. Furthermore, the plaintiff was estopped from denying that he was bound by the consultancy agreement and as a result of that could not rely on the fact that he had not signed the agreement.
While this conclusion was sufficient to dismiss the action, the judge also considered who owned the copyright in the software system assuming that the consulting agreement was not binding on the partners. The judge referred to the fact that the contract in place prior to the consultancy agreement was predicated on the basis that the copyright belonged to the corporate defendant's predecessor and concluded that the corporate defendant owned the copyright for the following reasons:
a) The very foundation of the venture conducted by the corporate defendant was the development of the software. It was what the whole enterprise was about and it would not make commercial sense if it did not own the copyright in the software system.
b) The object of the business was that the software system be exploited. An objective in bystander would conclude that it should be the corporate defendant who did so and that no single contributor should have a veto over how this was done.
c) One of the principle means of exploiting the software was by licensing it. The corporate defendant needed to have full rights in the software system in order to engage in such licensing.
While not stated expressly the judge presumably categorized the plaintiff as an employee of the corporate defendant or alternatively as an author of a work of joint authorship.
Disputes of this nature are quite common in the software area and other areas. To avoid such disputes, the key is to have a firm understanding at the beginning of the project concerning the ownership of copyright and other intellectual property rights, to commit that understanding to a written agreement and to have all the parties sign the agreement.
The judge's conclusions with respect to the ownership of copyright and that the plaintiff was bound by the consultancy agreement is also consistent with Canadian law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.