This case deals with an interesting problem posed by the Copyright Act, R.S.C. 1985, c. C-42. Where there is no written assignment or written license to use a work, does a person who contributed resources have any rights to the copyrighted product?
Facts
This case involves a piece of business simulation software that was originally developed for DOS. The original code for the software was developed in large part by Planification-Organisation-Publications Systèmes LTÉE (POPS). Any aspect of the code not developed by POPS was developed by a third party that assigned his rights to POPS.
The principals for POPS and 9054-8181 Québec Inc (IDP) worked together to promote the software, with the principals of IDP bringing pedagogical content, and POPS providing the software.
As WindowsTM became the dominant operating system, the POPS and IDP agreed that a WindowsTM version of the software needed to be developed. A joint venture was developed to further the development of the updated software. Any agreements between POPS and IDP were verbal, or unsigned. Through the development of the updated software, there had been no changes to the source code of the software.
IDP continued to provide pedagogical content to help POPS develop the software. IDP also paid $1000 per year to for the right to use the software in seminars.
Eventually, the principal of POPS became a shareholder and employee of IDP to help accelerate the development of the WindowsTM version of the software. IDP then spent a significant amount of money to update the software. The WindowsTM product still had significant bugs that made it difficult for a person to use the software. It is important to note that the source code remained largely unchanged through this process.
In the end there was a breakdown of the relationship between POPS and IDP. POPS claimed to revoke any license to IDP that permitted IDP to use or develop the software.
POPS then sued IDP for copyright infringement for continued use of the software. IDP counter-claimed seeking an order from the court that IDP had an irrevocable license to use the software.
Decision
The Chief Justice found that POPS was the owner of copyright in the software, but that IDP was to be granted at least an implied non-exclusive irrevocable license to use the software.
Analysis
The Copyright Act states an author is the first owner of the copyright in a work. The exception to this rule occurs where the author is an employee, where the employer would be the first owner of the copyright. The Copyright Act also requires any assignment or grant of interest by license to be in writing to be valid. According to statute, then, IDP could not have any valid ownership rights in the software, as there were no written agreements licensing the software.
However, since a non-exclusive license is not a grant of an interest, the Chief Justice found that the verbal and unsigned agreements between IDP and POPS to constitute a grant of a non-exclusive license.
Given the significant consideration IDP gave to the development of the software, the Chief Justice went further to find that IDP’s license is irrevocable. Since the license is non-exclusive, even though it is irrevocable, it is still not a grant of an interest under the Copyright Act, and therefore does not have to be reduced to writing.
Conclusion
This case shows that some rights may be recognized where a party has invested heavily in the development of a work, even though they may not have contributed to original expression of the work. These rights fall short of ownership in copyright or an exclusive license, however, the party cannot be stopped from using the work they invested in.
By Jahangir Valiani