Destra Software Ltd v Comada (UK) LLP & Ors

Where software is developed collaboratively as the foundation of a commercial venture, the parties’ agreement may implicitly require copyright ownership to vest in the commissioning entity. The court must assess the commercial purpose, intended exploitation, enforcement needs and collaborative nature of the work. An individual contributor cannot ordinarily retain rights which would give a veto over the venture’s exploitation of its core product.

An unsigned agreement may nevertheless become binding where the protected party objectively recognises and performs its terms, including by invoicing and accepting payment under it. Implied terms are assessed objectively and cannot be founded on confidential matters known only to one party.

Destra claimed ownership of copyright in the MAT:share software and alleged that the defendants had infringed it. The action concerned preliminary issues directed by HHJ Birss QC relating to ownership and licensing.

The parties disputed whether a 2005 Consultancy Agreement was binding, despite not being signed by Destra. Destra alternatively argued that, under an earlier contractual relationship, it retained copyright subject only to limited licences. The central questions were whether the Consultancy Agreement bound the parties and, if not, what terms concerning copyright were to be implied.

1. The Consultancy Agreement was binding. Objectively, the parties had agreed its terms. Although it contemplated signature by both parties, that requirement operated for Destra’s protection and could be waived. Destra waived it by continuing the software work, invoicing under the agreement and accepting payment. The same conclusion was alternatively supportable by estoppel, applying Whitehead Mann Limited v Cheverny Consulting Limited [2006] EWCA Civ 1303 at [46].
2. Clause 7 therefore vested ownership of the relevant intellectual property in Comada Cayman and the claim failed.
3. Alternatively, the earlier agreement implied ownership in Comada or Comada Cayman. The implication of terms was assessed objectively and commercially. Relevant considerations included that the software was the foundation of the venture, was intended for exploitation in various ways including licensing, required full enforcement rights, formed part of the value of an enterprise intended for disposal, and resulted from collaborative work. The court applied the commercial reasoning in IBCOS Computers v Barclays [1994] FSR 275.
4. The court accepted the general principles in Robin Ray v Classic FM [1988] FSR 622 at 640–643, including the need for a fact-sensitive and ordinarily minimalist implication of rights. However, the facts supported ownership rather than a limited licence. Clearsprings Management v BusinessLinx Limited [2006] FSR 3 was distinguishable because, there, the parties knew that pre-existing software would be used; that knowledge was absent here.
5. An implied term cannot be based on secret information held by one party alone. The court followed its reasoning in Burrows v Smith [2010] EWHC 22 (Ch) at [44].
6. The ownership and licensing issues were determined against Destra and the claim was dismissed.