Assignment of copyright in software under Indian Copyright Act
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Assignment of copyright in India - outsourced software contracts
The Delhi High Court
in a recent judgment
has laid down the law
in regard to ownership and assignment of copyright
for computer software. In the matter of Pine Labs Private Limited vs Gemalto Terminals India Private Limited and others ( FAO 635 of 2009 and FAO 636 of 2009), Justice A.K. Sikri and Justice Suresh Kait upheld Pine Labs' contention that the assignment of copyright in software developed by it for Gemalto came to an end after 5 years and thereafter, the copyright reverted to Pine Labs.
Section 19(5) and 19(6) provide that:
injunction was granted by the Single judge but was later vacated after hearing arguments. Pine Labs filed an appeal
before the Division Bench. Division Bench initially granted interim stay and vide judgment dated 3 August 2011 ruled in favour of Pine Labs.
The Bench relied upon section 19(5) and 19(6) of the Copyright Act and came to the conclusion that:
Gemalto contended that the MSA was only an agreement to assign and not an assignment and it was the equitable owner of the copyright. As such,section 19(5) and 19(6) of the Copyright Act had no application and Pine Labs was liable to execute documents assigning the copyright to Gemalto. This contention was overruled by the Bench which concluded that section 19(5) and 19(6) of the Copyright Act applied whether the MSA was an agreement to assign or an assignment.
contract/ commissioning works, not only for computer software but for all aspects where an author is contracted to write any literary work. Provisions of section 19(5) and 19(6) of the Copyright Act, which were inserted only in 1995 through an amendment, are unique to India and are often overlooked at the stage of drafting of contracts for assignment of copyright. This judgment clearly lays down that if the parties fail to provide for the period in the document by which assignment of copyright is made, then regardless of intention of the parties, the period of assignment would only be 5 years and the territory would only be the territory of India. Care should therefore be taken that if perpetual and worldwide assignment (or an assignment beyond 5 years) of copyright is envisaged by the parties, this should be specifically mentioned in the document through which assignment of copyright is made. Authors should note that in case of past assignments made by them, if more than 5 years have expired and the document of assignment did not specifically mention a term, the copyright may have reverted back to them.
The Delhi High Court
Delhi High Court
The High Court of Delhi was established on 31 October 1966. The High Court of Delhi was established with four judges. They were Chief Justice K. S. Hegde, Justice I. D. Dua, Justice H. R. Khanna and Justice S. K. Kapur.-History:...
in a recent judgment
Judgment
A judgment , in a legal context, is synonymous with the formal decision made by a court following a lawsuit. At the same time the court may also make a range of court orders, such as imposing a sentence upon a guilty defendant in a criminal matter, or providing a remedy for the plaintiff in a civil...
has laid down the law
Law
Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
in regard to ownership and assignment of copyright
Copyright
Copyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time...
for computer software. In the matter of Pine Labs Private Limited vs Gemalto Terminals India Private Limited and others ( FAO 635 of 2009 and FAO 636 of 2009), Justice A.K. Sikri and Justice Suresh Kait upheld Pine Labs' contention that the assignment of copyright in software developed by it for Gemalto came to an end after 5 years and thereafter, the copyright reverted to Pine Labs.
Facts
Gemalto had engaged Pine Labs for the development of software for various programs including the one for the IOCL Fleet Card Program. A Master Service Agreement ( MSA) was signed in June 2004. Clause 7 of the MSA provided that Pine Labs " assigns" all copyright to Gemalto. Pursuant to the MSA, Pine Labs authored a software program known as the Version 1.03 for the IOCL Fleet Card Program and a complete version of the same was provided to Gemalto in August 2004. Thereafter, certain other functionalities were added to the program and subsequent versions were also provided from time to time. In 2009, Pine Labs filed a suit in the Delhi high Court claiming that copyright had reverted back to it as the assignment had expired by virtue of section 19(5) and 19(6) of the Indian Copyright Act.Section 19(5) and 19(6) provide that:
- 19(5) If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment.
- 19 (6) If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within IndiaIndiaIndia , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
.
Injunction
Ex parteEx parte
Ex parte is a Latin legal term meaning "from one party" .An ex parte decision is one decided by a judge without requiring all of the parties to the controversy to be present. In Australian, Canadian, U.K., Indian and U.S...
injunction was granted by the Single judge but was later vacated after hearing arguments. Pine Labs filed an appeal
Appeal
An appeal is a petition for review of a case that has been decided by a court of law. The petition is made to a higher court for the purpose of overturning the lower court's decision....
before the Division Bench. Division Bench initially granted interim stay and vide judgment dated 3 August 2011 ruled in favour of Pine Labs.
Judgment
The bench observed that:The Bench relied upon section 19(5) and 19(6) of the Copyright Act and came to the conclusion that:
Gemalto contended that the MSA was only an agreement to assign and not an assignment and it was the equitable owner of the copyright. As such,section 19(5) and 19(6) of the Copyright Act had no application and Pine Labs was liable to execute documents assigning the copyright to Gemalto. This contention was overruled by the Bench which concluded that section 19(5) and 19(6) of the Copyright Act applied whether the MSA was an agreement to assign or an assignment.
Importance
This judgment is of significant importance in outsourcingOutsourcing
Outsourcing is the process of contracting a business function to someone else.-Overview:The term outsourcing is used inconsistently but usually involves the contracting out of a business function - commonly one previously performed in-house - to an external provider...
contract/ commissioning works, not only for computer software but for all aspects where an author is contracted to write any literary work. Provisions of section 19(5) and 19(6) of the Copyright Act, which were inserted only in 1995 through an amendment, are unique to India and are often overlooked at the stage of drafting of contracts for assignment of copyright. This judgment clearly lays down that if the parties fail to provide for the period in the document by which assignment of copyright is made, then regardless of intention of the parties, the period of assignment would only be 5 years and the territory would only be the territory of India. Care should therefore be taken that if perpetual and worldwide assignment (or an assignment beyond 5 years) of copyright is envisaged by the parties, this should be specifically mentioned in the document through which assignment of copyright is made. Authors should note that in case of past assignments made by them, if more than 5 years have expired and the document of assignment did not specifically mention a term, the copyright may have reverted back to them.