TMI Blog2011 (8) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... ated services of management of certain programmes. The Respondent No. 1, Gemalto Terminals India Pvt. Ltd (hereinafter referred to as the Gemalto ) (formerly Axalto Terminals India Pvt. Ltd. and prior to that known as Schlumberger Measurement and Systems India Ltd), is engaged in providing computer hardware terminals for retail establishment. 3. Since the Gemalto does not do any software development business, it has engaged the Pine Labs from time to time to develop certain software applications and backend host applications to service its various clients. In the year 2003 Gemalto was approached by the IOCL to develop a customized fleet card system and in pursuance to this Gemalto issued a work order dated 17.11.2003 to the Pine Labs. Under this work order the Appellant was required to develop software application for IOCL fleet card system and provide complete gamut of services related to operationalisation and maintenance this system. This Work Order provided that 50% of the charges would be for host license as agreed upon. After designing fundamental system architecture and writing of various components of the software, the initial trial version 1.00 was ready for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 29th June, 2009 expressed its willingness to the Gemalto to work on this project also. Though the discussions in this regard were held however, no consensus could ever be reached between them. Thereafter, the Pine Labs discovered that the Gemalto had sub-contracted aforesaid contract to the Respondent No. 3 M/S QCI Technologies Pvt. Ltd. to create and develop software for the HPCL-ICICI card program. Since this program system was to be interacting with the existing IOCL system, the Pine Labs apprehended that the source code of the IOCL program would be handed over by the Gemalto to the M/S QCI Technologies Pvt. Ltd. 7. The prospect of distribution of the source code of the software developed by it to the third party was sufficient to raise an alarming bell in the ears of the Pine Labs and immediately it claimed ownership of the software developed for IOCL Card Fleet Program. The genesis of this claim was founded upon the reason that due to operation of Section 19(5) and (6) of the Copyright Act the assignment of copyright in respect of Original Version 1.03 was only for 5 years and that too within the territorial limits of India as the terms regarding time perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oyee unless there is an agreement or intention to contrary. The Pine Labs had contended before the Learned Single Judge that this intention is to be deduced from MSA which is an assignment agreement. It was further contended that only the MSA should be seen for inferring the real intention of the parties and not the prior correspondences and agreements including the email dated 20th February, 2004 wherein the Pine Labs has stated that the work has been created for a valuable consideration for and on behalf of the Gemalto and the Pine Labs has been paid in full and the copyright and other rights vest with the Gemalto and the Pine Labs does not claim any right in the same . While referring to the decision of Bombay High Court in Zee Entertainment Enterprises Ltd v. Mr. Gajendra Singh and Ors. 2008 (36) PTC 53 (Bom), the Ld. Single Judge observed that the documents and their relation, by whatever names or howsoever these are stated in the agreements, would not preclude the court from examining the real intention of the parties for measuring the ownership of the work by applying the intention test. The Ld. judge, for the purpose of interim applications, has taken a prima facie view th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an equitable title in favour of the Gemalto. In order to decide the fate of interim applications pertaining to the matter in hand, the Ld. Judge relied upon the decision of the Supreme Court in Dalpat Kumar v. Prahlad Singh AIR 1993 SC 276 which provides for a threefold approach to be adopted by courts while dealing with such cases. These are as under: Whether the Plaintiff is able to prove a Prima Facie case in its favour? In whose favour Balance of Convenience lies? Whether the denial of relief would result in Irreparable Injury to the Plaintiff? 12. In view of the aforesaid judicial reasoning, the learned Single Judge has taken the view that not only doubt can be expressed on the claim of ownership by the Pine Labs even on prima facie front, though the issue involved needs to be examined at trial, the MSA appears to be an assignment in equity or an agreement to assign rather than actual assignment agreement and this goes against the Pine Labs. As far as balance of convenience is concerned, the Ld. Single Judge found it to be tilted in favour of the Gemalto as Ld. Single Judge is of the view that if interim protection is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... foresaid Agreement reads as follows: 7.1 Axalto shall be entitled to all property, copyright and other intellectual property rights in the Project Materials which property, copyright and other intellectual property rights Pine Labs as beneficial owner assigns to Axalto. Pine Labs shall advise Axalto in writing and ensure that the Project Materials do not infringe the intellectual property rights of any third party. Despite the assignment , the learned Single Judge concluded that Clause 7.1 did not mean that the copyright was assigned to Respondent No. 1, on the other hand, the entire Agreement read as a whole indicated that it was only an agreement to assign. Prima facie, we are not in agreement with this conclusion of the learned Single Judge because of the plain language of Clause 7.1 reproduced above. It is also submitted by Learned Counsel for the Appellant that Clauses 18 and 20 of the Agreement have been ignored by the learned Single Judge. It is submitted that both these Clauses indicate that the relationship between the Appellant and Respondent No. 1 was on a principal to principal basis and that any understanding that the parties had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) wherein it is specifically stated by Respondent No. 1 that version 1.03 of the software application is not in use at present in any of the systems of Respondent No. 1 and in any of its projects including IOCL, BPCL or the HPCL-ICICI Bank projects. Taking all these facts into consideration, we are of the prima facie view that the Appellant has made out a case for interference with the order passed by learned Single Judge. We, therefore, stay until further orders the operation of the impugned order dated 8th December, 2009 and restrain Respondent No. 1, their assigns, licensees, agents, contractors, employees from in any manner infringing the copyright of the Appellant in the software known as Version 1.03 for the IOCL Fleet Card Program and further restrain them from reproducing the work in any material form including the storing of it in any medium by electronic means, making or issuing copies of the work to the public, or to make any translation or adaptation of the work or to sell or give on commercial rental or offer for sale or for commercial rental any copy of the work. We clarify that the interim order is only with respect to version 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rent from rights as an assignee. Gemalto is entitled to use the software as a licensee, but cannot be permitted to modify, adapt or reproduce the same. As recorded in the order dated 9th October, 2009, the Pine Labs had itself consented to let the Gemalto continue to use the version 1.03 or its variants in the IOCL program. The Pine Labs grievance was and is that the Gemalto have modified the version 1.03 for use in the HPCL programme which is a clear infringement of copyright and this infringement continues. If injunction were to be vacated now, Gemalto may adapt/modify this software for other programs or enter into arrangements which numerous third parties, which would cause grave loss and prejudice to Pine Labs. 17. In addition, the related argument advanced was that reliance on the email of February, 2004 which was written before entering into MSA was totally misconceived in view of Clause 20 of the MSA which categorically provided that all prior communication stood superseded. Additionally, it was also submitted that the conduct of Gemalto was blameworthy as inspite of injunction order dated 17th December, 2009 issued by this Court, the Gemalto had co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture invention divests the investor assignee of ownership in the invention and automatically vests ownership in the invention when invented in the assignee .... If the contract expressly grants rights in the future inventions, no further act is required once invention comes into being and the transfer of the title occurs by operation of law. He also took sustenance from the judgment of Federal Court in Speedplay Inc. v. Bebop Inc. 211 F3rd 1245 wherein the Court concluded that a present assignment was effectuated by language which provided that inventions shall belong to Speedplay and that Bryne hereby conveys, transfers and assigns the inventions to Speedplay. His submission was that in the present case, the MSA uses language more akin to the language used in Speedplay and Filmtec (supra), there is no use of futuristic words will assign but the word PineLabs as beneficial owner assigns.... Is used, which is a clear assignment in the present. In any case, no further act of the parties is needed to complete the assignment and neither has Gemalto pleaded that the assignment was not complete automatically by operation of law on the day ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Labs had agreed to assign to Gemalto all copyright and intellectual property rights in the works that Pine Labs was hired to develop and no actual assignment thereof can be assumed from the said clauses. It was envisaged that Pine Labs shall entitle Gemalto by doing all such things and sign all such documents or instruments reasonably necessary to enable Gemalto to obtain, defend and enforce its rights in the Project Materials, which means that, while actual assignment was yet to take place, equitable ownership was created by Pine Labs in favour of Gemalto under the MSA. 25. Mr. Sanjay Jain also pointed out that in paragraph 14 of the Plaint filed in CS (OS) 1876/2009 (page Nos. 102-123 of the appeal paper book filed by the Pine Labs), Pine Labs admitted that under Clause 7.1, the Pine Labs Plaintiff had agreed to assign the copyright in the software development developed by it to the Gemalto to Gemalto. Mr. Jain also argued that the statements of the Pine Labs based on the judgment in St Clair Intellectual (supra) was clearly misconceived and on reading of the relevant portion of the said judgment in entirety, it would be clear that the said judgment goes in favour o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smuch as, further steps were required to be effectuate an assignment under the agreement. 27. After giving the aforesaid interpretation to Clause 7 of the Agreement, the learned Senior Counsel submitted that Section 19 of the Copyright Act was not applicable to the instant case because of the following reasons: (a) In the absence of execution of an actual assignment document, that Section 19 cannot have any applicability in the facts of the case at hand. Conditions of Section 19(1) that the assignment should be expressly and clearly in writing are not met out, for Section 19(5) to be considered in the first place. Further, Section 19(2) of the MSA requires that the assignment of copyright in any work shall identify such work, and shall specify the rights assigned and the duration and territorial or the subject matter, inasmuch as per the own submissions of the Pine Labs, MSA is an omnibus or umbrella agreement providing for ownership of all types of intellectual property. Therefore, Section 19(2) not fully complied with, since the MSA does not outline the particulars of the work, whether present or future, the same cannot be treated as an assignment doc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings or otherwise to defend and enforce its rights. The only purpose of this Clause is that in case in future for the aforesaid purposes cooperation of the Pine Labs is needed that would be extended by Pine Labs to Gemalto. That has no bearing to Clause 7.1 which is to be construed singularly to ascertain as to meaning which is to be assigned and to decide as to whether the agreement is in present or it is in agreement to assign only. As stated above, the language of Clause 7.1 clearly suggests that it was an agreement in presenti 29. That apart, there is another significant aspect of the matter which needs to be highlighted at this stage. It is a matter of common knowledge that before assigning the MSA, two projects were developed by the Pine Labs for Gemalto on the basis of work orders. These softwares developed for Gemalto were meant for BPCL Programme and City-Maruti Program. They relate to the period prior to the signing of the MSA. Even when work order for IOCL Fleet Program was issued (with which we are concerned), there was no MSA. The MSA was entered into on 24th June, 2004. However, IOCL Fleet Program in the first workable version 1.03 was handed over t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and either for the whole term of the copyright or any part thereof. Section 19 of the Act stipulates the mode of assignment. Sub-section (1) thereof provides that in no uncertain term that assignment has to be in writing signed by the assignor or by his authorized agent. As per Sub-section (2) of Section 19 of the Act, the assignment of the copyright, any such work is to identify such work and also specify the rights assigned and the duration and territorial extent of such assignment . Thus by agreement the assignment can be for a limited duration and limited territory. What happens if the agreement is silent on the duration and territorial extent of the assignment? Answer is provided by Sub-section (5) and Sub-section (6) of Section 19 of the Act which reads as under: 19. Mode of assignment (1).... (2).... (3).... (4).... (5) If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment. (6) If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within India 32. In the present case, aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Gemalto. In this case, since MSA is just an agreement to assign, there must have been a subsequent execution of actual assignment agreement in writing as per the requirement of Section 19(1) of the Copyright Act. The question is when did it happen? There is nothing on record to suggest a subsequent execution of assignment agreement in writing. It is not even pleaded. It this case, two things are possible. Either we can presume that there was no valid assignment of copyright in the software developed for IOCL Fleet Program in the favour of the Defendant; or, the work order is the assignment agreement within the requirement of Section 19(1). If former is the case then the Defendant hardly have any chance to succeed and if later is correct then Section 19(5) and (6) would automatically be attracted as the work order is silent on the time and territorial limits of assignment as we cannot beyond the work order, in the light of Clause 20 of the MSA to deduce the intentions. This shakes the foundation of the Defendant's position. 35. Thus, it can be concluded that whatever be the nature of the MSA, the provisions contained in Section 19(5) and (6) would inevitably be tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Ors. AIR 1993 SC 276, the Supreme Court explained the scope of aforesaid material circumstances, but observed as under: The phrases `prima facie case', `balance of convenience' and ` irreparable loss' are not rhetoric phrases for incantation, but words of width and elasticity, to meet myriad situations presented by man's ingenuity in given facts and circumstances, but always is hedged with sound exercise of judicial discretion to meet the ends of justice. The facts rest eloquent and speak for themselves. It is well nigh impossible to find from facts prima facie case and balance of convenience. 28. This Court in Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hira Lal AIR 1962 SC 527 held that the civil court has a power to grant interim injunction in exercise of its inherent jurisdiction even if the case does not fall within the ambit of provisions of Order 39 Code of Civil Procedure. 29. In Deoraj v. State of Maharashtra and Ors. AIR 2004 SC 1975, this Court considered a case where the courts below had refused the grant of interim relief. While dealing with the appeal, the Court observed that ordinarily in exercise of its ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Irreparable Injury. 39. On the first point i.e. Prima Facie Case , the Ld. Single Bench was of the view as under: On a prima facie case view, I have expressed my doubts on the ownership on the copyright over the works in the manner pleaded by the Plaintiff. It is a matter which is to be considered at the trial i.e. whether the Plaintiff's contention that there has been an actual assignment is valid or not, although prima facie, the said agreement appears to an assignment in equity or an agreement to assign rather than assignment. However, prima facie case does not mean that the Plaintiff has a better chance to win the case but it means that a substantial question of law and a triable issue can clearly be made out from the facts of the case. In In Burn Ltd. v. R.N. Banerjee 1958 SCR 514 the Apex Court made the following observations: A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same were believed. While determining whether a prima facie case had been made out the relevant consideration is whether on the evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rack Plus Program is already out there in the market and is being used by the Defendant therefore any adverse order will eventually stop the oprationalization of this program. At the same time, technically, a de novo development of new software of HPCL Drive Track Plus Programme which is not born out of the source codes of IOCL Fleet Card Program is always possible. Once it is found that the Plaintiff has a strong prima facie case and the Defendant has no right to use any subsequently developed version except version 1.03, in balancing the convenience, the inconvenience to the Plaintiff would be much more. 44. As far as irreparable loss to the Plaintiff is concerned, it appears that since the Plaintiff itself has calculated damages till that point of time at ₹ 20,00,000/- the learned Single Judge formed an opinion that the loss to the Plaintiff cannot be termed as irreparable and in the eventuality of Plaintiff succeeding at the stage of trial any loss which could have occurred to the Plaintiff can be calculated in monetary terms and the same can be awarded to then Plaintiff as compensation. This according to us is not a correct appreciation of pleadings. If one ..... X X X X Extracts X X X X X X X X Extracts X X X X
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