Filmflex Movies Ltd v Piksel Ltd

Contractual arrangements must be construed as a whole and in their commercial context. Bespoke terms agreed between contracting parties may prevail over standard printed terms where the latter do not reflect the parties’ specific arrangements. A contractual right of access to source code may include the right to receive a copy where that is necessary to exercise rights to use, reproduce, modify or enhance the software. Ownership or licensing rights in intangible source code may therefore require the party holding the only usable copy to provide a copy, while retaining its own copy.

Filmflex Movies Ltd contracted with Piksel Ltd for the development and operation of an online video-delivery platform. The Master Services Agreement allocated intellectual property rights, provided for source-code escrow, and allowed FilmFlex to appoint third-party service providers. A later escrow agreement contained narrower release events than those stated in the Master Services Agreement.

FilmFlex appointed a third-party developer and sought delivery of source code and related documentation. The preliminary issue was whether, on the true construction of the contractual arrangements and in the events that had occurred, FilmFlex was entitled to delivery of the source code from Piksel or to require Piksel to procure its release by the escrow agent.

1. FilmFlex was entitled to delivery of the source code and Source Control Database by Piksel, and to require Piksel to procure delivery by NCC. The claim concerned a preliminary contractual construction issue.

2. The parties’ contractual obligations under clause 9.10 of the Master Services Agreement remained effective notwithstanding the later escrow agreement. The two provisions addressed different matters: clause 9.10 governed the obligations of FilmFlex and Piksel between themselves, while the escrow agreement governed when FilmFlex could demand release directly from NCC.

3. FilmFlex had appointed a third party to provide services in relation to the Platform. That event fell within clause 9.10.5. Piksel was therefore obliged to consent to and procure release of the source code and Source Control Database. If there were an inconsistency, the bespoke wording of clause 9.10 prevailed over NCC’s standard printed terms, applying the commercial principle identified in Homburg Houtimport BV and others v Agrosin Private Ltd and another [2003] UKHL 12.

4. Clause 9.11 conferred a direct right of access to the source code held by Piksel, not merely access to material held in escrow. In the context of source code, access included receipt of a copy because FilmFlex could not sensibly use, reproduce, modify or enhance the software by merely inspecting the code.

5. The intellectual property provisions in clauses 9.1 and 9.2 also supported an entitlement to a copy. The definitions of the ioko365 Materials and Company Platform Materials included source code. Where FilmFlex had rights to use or own relevant software, required a copy to exercise those rights, lacked a current copy, and Piksel could provide one while retaining its own, the contract required Piksel to provide it.

6. “Delivery up” meant providing a transferable copy in a format that FilmFlex could retain and revise independently, including by allowing the copy to diverge from Piksel’s copy and transferring it to a third party without further involvement by Piksel.