IT Human Resources Plc v Land

A copyright licence may be oral, implied from agreed terms, or inferred from conduct. The person asserting a licence bears the burden of proving it. A director who deliberately supplies company copyright material to a third party without the company’s agreement may infringe copyright and breach fiduciary duties. Deliberate, intentional breach of duty can postpone limitation under section 32 of the Limitation Act 1980. Relief under section 1157 of the Companies Act 2006 requires honesty and reasonableness. An inquiry into remuneration loss should not be ordered where the evidence gives no worthwhile prospect of recovery and the director earned the remuneration received.

IT Human Resources plc claimed that its former director, David Land, infringed copyright in the Interact recruitment software by supplying it to Nationwide Technology Recruitment Ltd and by making a later backup copy. It also alleged breaches of fiduciary duty, deliberate concealment, and intentional breaches sufficient to extend limitation under section 32 of the Limitation Act 1980.

Mr Land accepted ownership of the source-code copyright and the fact of several supplies, but relied on an alleged oral permission or agreement. The principal issues were whether that permission existed, whether the claims were time-barred, whether fiduciary duties had been breached, and what relief was appropriate.

1. Copyright ownership and infringement. The 1999 agreement, properly construed, vested copyright in the Interact system, including the database schema. Mr Land supplied copyright material to Nationwide up to April or May 2003 and made a backup copy of the Nationwide database on 12 December 2006. Those acts infringed ITHR’s copyright unless authorised.
2. Licence. A licence need not be written, contractual or supported by consideration. It may be express, implied from agreed terms, or inferred from conduct, but the burden lay on Mr Land. He failed to prove the alleged agreement or permission. The contemporaneous documents instead showed contemplated future commercial negotiations, which failed in 2002.
3. Fiduciary duties. Mr Land used ITHR’s copyright material for Nationwide without agreement or consideration to ITHR. Each supply was a breach of his duties to promote ITHR’s success and avoid conflicts involving its property, information or opportunities. He also breached the duty to disclose his wrongdoing, although that finding did not affect the outcome because no loss from non-disclosure was established.
4. Relief and limitation. Mr Land had acted neither honestly nor reasonably, so relief under section 1157 of the Companies Act 2006 was unavailable. His intentional infringements were deliberate breaches under section 32(2) of the Limitation Act 1980; his failure to disclose also amounted to deliberate concealment under section 32(1)(b). Limitation therefore ran from October 2009, and the claims were timely.
5. Remedies and counterclaim. ITHR was entitled to an inquiry or account concerning the supplies. No inquiry was ordered concerning remuneration because the evidence showed no worthwhile prospect of proving recoverable loss. Mr Land’s counterclaim for £1,750 in unpaid June 2011 director’s fees was allowed.

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