Software case highlights need to deal expressly with copyright ownership in contract if commissioner wants to own it – ICEL v Virrage, High Court

ICEL and Virrage entered into an agreement regarding the development of infection control software for hospitals. One of Virrage’s directors had also been a director with LIS, a company that had not supplied software under another agreement with ICEL. The agreement between ICEL and LIS said that ownership of the software would pass to ICEL upon payment of the purchase price. The agreement between ICEL and Virrage did not explicitly cover copyright ownership, but said that the specification would be the same as in the LIS agreement. A dispute arose between ICEL and Virrage over the copyright ownership.

The High Court sided with Virrage, which was represented by Matthew Arnold & Baldwin LLP in the case. The court dismissed ICEL’s arguments that in the absence of any express statements about copyright ownership, the background of the case would mean that ICEL was the intended owner. ICEL had argued that the intention of the parties was obvious so that no mention needed to be made about copyright being transferred. The judge said that any inferred right had to be the minimum required in the circumstances. Therefore, if a mere licence will suffice, there is no need to infer an assignment.

Paul Gershlick, editor of www.Upload-IT.com and a Principal at Matthew Arnold & Baldwin LLP, comments: ‘Although the case does not make new law, it is a useful reminder of existing law. Many people think that they own the software that they have commissioned just because they paid for it. However, the software developer owns the software unless something clearly and expressly is agreed in the contract. It is therefore important to address the issue in the contract.’