In the case of Penhallurick v MD5 Ltd Michael Penhallurick lodged a copyright infringement claim at the Intellectual Property Enterprise Court (IPEC) against his former employer, MD5, over its sale of several versions of a tool for forensically examining computers that he had developed. This work was done while Mr Penhallurick was employed by the company MD5 Ltd.
The trouble begins due to Mr Penhallurick’s claiming that the final product is his alone, as the sole creator. He also held the opinion that he had completed early versions of the product before he worked for MD5 Ltd, which was essential to its final form. MD5 Ltd contended that all of the software was created in the course of Mr Penhallurick’s employment, therefore the copyright was owned by them.
Mr Penhallurick’s claim was dismissed at first instance in IPEC. The judge held that Mr Penhallurick had abandoned any software he had developed prior to joining MD5 and that all software developed after joining MD5 was created in the course of his employment. In particular, the judge made it clear that the quantity of work done by an employee at home or on a home computer is not the determinative factor, but rather the nature of that work and whether it falls with in the scope of his duties. In any event, the judge held that the copyright had been assigned to MD5 in 2008.
On appeal, the court focused on the interpretation of the 2008 agreement since, if that were effective in assigning the relevant rights, it would not be necessary to consider who was the first owner. There was nothing in the factual matrix to suggest that the agreement was intended to operate as a licence and no commercial logic for the assertion that ownership of the copyright in the software was to be split. Payment as a “bonus” rather than a royalty or licence fee was suggestive of an assignment rather than a licence.
The court therefore held that the 2008 agreement was effective in assigning all existing and future copyright in the VFC software from Mr Penhallurick to MD5.
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