Does An Implied Licence To Use Software Continue After The Extension Of An Initial Term Of A Services Agreement?

Noemalife SPA v Infinitt UK Ltd [2013] EWHC 2376 (TCC)

Ferrania UK Ltd ("FUK") (a company later acquired by the defendant Infinitt UK Ltd) was granted a licence by its sister company in 2003 to use certain software (known as "RIS"), for the purposes of providing services to Newcastle upon Tyne NHS Trust (the "NHS Trust") under a managed services agreement.

The term of the agreement was a period of seven years but the agreement contained provisions by which the agreement could be extended for further six month block periods up to a maximum extension period of thirty six months. The provisions of the agreement provided that any amendment to the agreement, including to the agreement term, had to be made in accordance with the change control procedures set out in the agreement itself.

The initial term of the services agreement expired on 30 September 2010 and was extended for six months to 31 March 2011 by a contract change control note. In December 2010 the agreement was extended again, this time for 30 months (expressed as five blocks of six months) to 30 September 2013 all in one change control note.

The claimant Noemalife SpA ("Noemalife") had acquired the copyright in the software from FUK's sister company and argued that, at the expiry of the initial period in September 2010, a fresh implied licence came into effect on 1 October 2010, and that it was a term of that licence that the defendant would pay a reasonable fee for use of RIS.

One issue before the court was whether the licence granted to FUK in 2003 to use RIS for the purposes of providing services to the NHS Trust continued after the expiry of the initial seven year term, and if so, for what period.

The judge ruled that the original implied licence granted by FUK in 2003 was extended by six months to 31 March 2011. However, when the agreement was further extended, but not in accordance with the provisions of the agreement, no further licence to use the software could be implied for the further extension.

Noemalife had no contractual right to recover any sum from FUK in relation to the use of RIS for the purposes of providing services under the agreement to the NHS Trust beyond 30 September 2010.

Key Points

The fee for first six month extension: on the basis of the evidence, the judge found that there was no intention on the part of Noemalife to enter into any agreement in relation to a licence fee for RIS for the six months extension to 31 March 2011. The judge found that...