Shanley v Lloyds TSB Insurance Services Ltd & Anor

A gratuitous and informal copyright licence is construed objectively and extends no further than is necessary to give effect to the purpose for which it was granted. Such a licence is ordinarily personal and does not permit assignment or sub-licensing unless that was contemplated by the parties. Mere inactivity does not establish acquiescence or estoppel; the question is whether it would be unconscionable to enforce the copyright. Where software is supplied for commercial use to generate business records, the licence may, by implication or estoppel, extend to storing and viewing those records for business and regulatory purposes after other use has ended.

The claimant owned copyright in software forming part of a building-insurance scoping tool. He alleged that Halifax had agreed to use the software only for testing and evaluation, followed by negotiation of a commercial licence. He also alleged that Halifax had infringed copyright by allowing Lloyds to use the tool.

The defendants denied the alleged agreement and relied on a gratuitous licence, implied permission, acquiescence and estoppel. A further issue concerned whether Halifax could retain and view archived records created during the period of permitted use.

1. Alleged agreement. The claimant failed to prove the alleged oral agreement. The court assessed the evidence with caution, having regard to the claimant’s fabrication of an earlier written agreement and to inconsistencies in the defendants’ evidence. Contemporary documents, subsequent conduct and the overall probabilities were materially inconsistent with the claimant’s case. The approach in Grace Shipping v CF Sharp & Co [1987] 1 Lloyd's Rep 207, following The Ocean Frost [1985] 1 Lloyd's Rep 1, and the relevance of subsequent conduct identified in Carmichael v National Power Plc [1999] 1 WLR 2042, were applied.
2. A gratuitous and informal licence arose from the parties’ conduct. It permitted Halifax to use the software for its business with its contractor network. The licence was personal to Halifax. It did not authorise assignment or sub-licensing to Lloyds. Applying Robin Ray v Classic FM Plc [1998] 25 FSR 662, the licence extended only to the minimum necessary to secure the contemplated entitlement and did not cover new and unexpected opportunities.
3. There was no acquiescence or estoppel in favour of Lloyds. Acquiescence is an inferred waiver of rights, and mere inactivity is insufficient: quiescence is not acquiescence. The relevant question is whether enforcement has become unconscionable, as explained in Lamare v Dixon [1873] LR 6 HL 414. The defendants failed to establish the necessary knowledge and unconscionability.
4. The Halifax licence extended, by implication or estoppel, to storing records created during the permitted period and viewing them thereafter for business and regulatory purposes. The reasoning in Fisher v Brooker was treated as consistent with that conclusion.
5. The claim against Halifax was dismissed for use before 9 December 2011 and for limited archive use, but otherwise succeeded. The infringement claim against Lloyds succeeded. Directions concerning the consequences of the findings were to be addressed separately.

First-instance decision. No earlier appellate decision is stated in the judgment.