Delhi High Court addresses copyright assignment issues

Lex Orbis
Manisha Singh Nair
[email protected]

The assignment of rights, and agreements entered thereby, have a crucial role to play in protecting, enforcing and managing one's rights. While the nature of agreements may conform to the specificities of a right assigned, the probability of issues coming forth to the courts cannot be disregarded.

In the realm of Indian copyright law, Section 18 of the 1957 Copyright Act authorises the owner of the copyright to assign his right to any person subject to limitations or conditions specified. In addition, Section 19 specifies the mode of assignment and mandates that an assignment has to be in writing, signed by the assignor or by his duly authorised agent, while mandating that the specifics of the assignment be decided by the parties. In this view, the recent case of Pine Labs Pvt. Ltd. v. Gemalto Terminals India Pvt. Ltd., 2010 (42) PTC 229 (Del.) deals with the issue of ownership of copyright. More specifically, it deals with the applicability of Section 19 to an 'equitable assignment' so as to determine its legitimacy.

Software company Pine was duly incorporated under the 1956 Companies Act as was Gemalto Terminals, which supplied computer hardware terminals to retail establishments. Gemalto approached Pine in 2003 to develop a certain software programme and manage the operations of the Fleet card Program proposed for Indian Oil Corporation (IOCL). In this pursuance, a Master Services Agreement (MSA) was entered into between the parties in June 2004. Pine had associated with Gemalto in the past, having written software programmes for them in two matters. Gemalto undertook a new project in 2009, which required customisation of the existing IOCL system. Though Pine had expressed its willingness to work on the said project, no formal agreement to undertake the same was arrived at between the parties.

Subsequently, Pine discovered that Gemalto had appointed a company to modify and adapt Pine's software for Hindustan Petroleum Corporation (HPCL). This brought Pine to the obvious realisation that the source code of the IOCL programme would be handed over by Gemalto to the sub-contracted company. Upon such realisation, two primary issues were brought forth: the court dwelling on ownership on the copyright; and, the legality of the 'assignment in equity' of the copyright.

The court determined that the ownership of copyright dwelled on the aspect relating to 'contract of employment' and 'contract for employment'. But the court differentiated between the two stating that unless an agreement/intention existed to the contrary, the former vested the employer with an ownership right, while the latter facilitated the ownership right to vest with the employee. In this light, the court held that there was no doubt that there existed a contract for employment; however, the concerned chain of events depicted an intention to the contrary. Thus, doubts over the ownership of copyright as claimed by Pine were raised.

Examination of the difference between 'assignment' and 'agreement to assign' facilitated the court to conclude whether there existed a lawful assignment. The court stated that 'assignment' referred to a 'beneficial assignment', while an 'agreement to assign' relates to an 'equitable assignment'. The court recognised the 'assignment in equity' and held that its very nature created an equitable title, which was independent of statutory legal assignments that imposed impediments of various kinds. Therefore, it was concluded that it was an 'assignment' that had to comply with the requisites as specified under Section 19 of the Act, but that 'equitable assignment' recognised oral assignment.

It was deciphered that 'assignment in equity', as based on the intention of the parties – whether express or implied – became unfettered and unbridled by the provisions of Section 19 in the instant case. This led the court to a further finding. That once equitable assignment was out of operation of Section 19, the question of reverting back the rights to Pine did not arise, as alleged under section 19 (5) and (6). This was due to non-specification of any territorial or time restriction in the agreement.

Applying the three-fold principles for grant of temporary injunction – namely, establishment of a prima facie case, tilt of the balance of convenience, and irreparable loss and injury being caused – the court vacated the earlier order that had granted an ad interim injunction in favour of Pine.