Got What You Paid For? Why Express Terms Transferring Copyright In Software Are Crucial

The High Court's decision in Infection Control Enterprises Ltd (ICEL) v Virrage Industries Ltd (Virrage) [2009] EWHC 2602 confirms that where work is commissioned and the contract does not contain terms detailing how and when copyright in the commissioned work passes to the commissioning party, the courts will not imply an assignment of copyright where only a non-exclusive licence is necessary.

The UK Intellectual Property Awareness Survey 2006 (revised in 2007) published by the Intellectual Property Office indicated that approximately 30% of firms incorrectly believe that copyright in a commissioned work automatically vests in the commissioning firm. A further 40% are unsure in whom the copyright vested. Where work is commissioned and paid for, copyright in the commissioned work is owned by the author of the work. Section 91(1) of the Copyright Designs and Patents Act 1988 provides that future copyright (i.e. works that are not yet in existence) can be assigned. The assignment must be in writing and signed by the assignor (s.90(3)). In the absence of an express assignment, the courts will only imply terms necessary for the use of copyright by the commissioning party (established by Lightman J in Robin Ray v Classic FM [1998] FSR 622). This may result in the commissioning party receiving no rights at all or, at best, a limited non-exclusive licence to use the copyright in the work, rather than a full assignment of the copyright. Even if the courts grant a full assignment of copyright, the process of obtaining the assignment is lengthy, expensive, uncertain and can be easily avoided with appropriate drafting of the contract at the outset. The High Court heard that ICEL contracted with Link Information Systems Limited (LIS) to provide a software computer system intended to collate data relevant to the identification and eradication of hospital bred diseases like MRSA and C. difficile. The agreement between ICEL and LIS stated:

"Title to product passes on full payment of purchase price. At that time, Title, copyright and all other property rights in the Software System shall remain vested in ICEL"

LIS failed to...