Meridian International Services Ltd v Richardson & Ors

A contractor who creates copyright work retains copyright unless the contract contains an express or implied term to the contrary. An implied term transferring copyright requires strict necessity and must go no further than necessary to make the contract workable. The court must assess the objective background at the date of contracting, including the interests of all contracting parties, and must avoid hindsight. A client’s wish to control future exploitation or secure a commercial opportunity is insufficient. Where a licence is necessary, the implication is ordinarily limited to the minimum licence required. Confidential information may be protected through breach of confidence without implying copyright ownership.

The claimant commissioned software for GlaxoSmithKline’s Consumer Healthcare UK division. The source code was written by the third defendant while working through the second defendant. After relations between the parties broke down, the claimant claimed that the January 2006 agreement contained an express or implied term transferring copyright in the software to it.

The defendants denied that any such term had been agreed and counterclaimed that the customer had a sufficiently broad licence to use and develop the software. The court also considered, but did not grant separate relief concerning, equipment supplied for project use.

1. Express term. The claimant failed to establish that the January 2006 agreement expressly transferred copyright. The contemporaneous email summarising the agreement did not refer to ownership or intellectual property, and the claimant’s witnesses were not accepted as reliable on this issue.
2. Implied term. The principles summarised in Robin Ray v Classic FM plc [1998] EWHC Patents 333 applied. A contractor retains copyright unless an express or implied term provides otherwise. Implication is subject to strict necessity. The term must be reasonable and equitable, necessary for business efficacy, obvious, capable of clear expression and consistent with express terms. Where a grant of rights is necessary, the court must adopt the minimum necessary grant.
3. The relevant agreement was multilateral. Necessity had to be considered from the perspective of all parties, including the individual who was the first copyright owner. The claimant’s desire to prevent the defendants from exploiting the software, resell it, or protect its commercial position did not make an assignment necessary or obvious. A later, incomplete and negotiable customer contract could have been adapted and was not a sufficient basis for implying a term.
4. Even if the software embodied confidential information, that information could be protected by a claim for breach of confidence. It was unnecessary to imply copyright ownership for that purpose.
5. The counterclaim was unnecessary to decide. The judge indicated that he would have rejected the proposed unrestricted licence because the implied licence necessary to give the customer use of the software would not require the additional unrestricted terms contended for.
6. The court declared that IP Enterprises was the legal and equitable owner of all copyright in StratX. Counsel were invited to agree the minute of order and ancillary relief.