Pine Labs Pvt. Ltd v. Gemalto Terminals India Pvt. Ltd. & Others

A.K. Sikri, J.

These two appeals have been preferred against the order/ judgment dated 08/12/09 passed by the Ld. Single Judge of this court in I.A. No. 12825/09 and I.A. No. 13030/09 in CS (OS) No. 1876/2009 whereby the ad-interim ex-parte injunction, which was earlier granted in the favour of Appellant, has been vacated.

2. To narrate the genesis of the instant dispute, the facts are succinctly reproduced as under:

The appellant Pine Labs Pvt. Ltd. (hereinafter referred to as the "Pine Labs") is a software development company and also provides related services of management of certain programmes. The respondent no.1, Gemalto Terminals India Pvt. Ltd (hereinafter referred to as the "Gemalto") (formerly Axalto Terminals India Pvt. Ltd. and prior to that known as Schlumberger Measurement and Systems India Ltd), is engaged in providing computer hardware terminals for retail establishment.

3. Since the Gemalto does not do any software development business, it has engaged the Pine Labs from time to time to develop certain software applications and backend host applications to service its various clients. In the year 2003 Gemalto was approached by the IOCL to develop a customized fleet card system and in pursuance to this Gemalto issued a work order dated 17.11.2003 to the Pine Labs. Under this work order the appellant was required to develop software application for IOCL fleet card system and provide complete gamut of services related to operationalisation and maintenance this system. This Work Order provided that 50% of the charges would be for host license as agreed upon. After designing fundamental system architecture and writing of various components of the software, the initial trial version 1.00 was ready for trial by June 2004. Meanwhile, keeping in view the growth of business and deepening relationship, a "Master Agreement for Development Services" (MSA) dated 24.06.2004 was entered into between the Pine Labs and the Gemalto containing certain terms, on which the Pine Labs was to provide certain services to the Gemalto. Further terms were to be set out in the Subsidiary Agreements which were to be agreed between the parties from time to time for each new project.

4. After the execution of the MSA, the first complete version of the software i.e. Version 1.03, which could be put to commercial use, was provided to the Gemalto on 16th August 2004 along with a written manual which set out the full system specifications and details regarding the same. The Pine Labs continued further to develop and write aforesaid software and accordingly updated Versions of the same were handed over to the Gemalto from time to time. Details are as under:

Version of SoftwareDate on which it was provided to the RespondentDate on which assignment is submitted to be expired

Version 1.0316 August 200415 August 2009

Version 1.0427 May 200526 May 2010

Version 1.0524 March 200623 March 2011

Version 1.0614 September 200613 September 2011

Version 1.0721 January 200920 January 2014

Version 1.0810 February 20099 February 2014

5. The relations between the Pine Labs and the Gemalto were invigorating until the Gemalto made a bid for a card program of HPCL invited by ICICI Ltd.(herein Respondent No.2). Vide e-mail dated 26.06.2009, the Gemalto informed the Pine Labs that it has been awarded the contract for HPCL Fleet Card Program and that this program would be customizing and interacting with the existing IOCL system, for which the software was developed by the Pine Labs.

6. The Pine Labs vide e-mail dated 29th June, 2009 expressed its willingness to the Gemalto to work on this project also. Though the discussions in this regard were held however, no consensus could ever be reached between them. Thereafter, the Pine Labs discovered that the Gemalto had sub-contracted aforesaid contract to the Respondent No.3 M/S QCI Technologies Pvt. Ltd. to create and develop software for the HPCL-ICICI card program. Since this program system was to be interacting with the existing IOCL system, the Pine Labs apprehended that the source code of the IOCL program would be handed over by the Gemalto to the M/S QCI Technologies Pvt. Ltd.

7. The prospect of distribution of the source code of the software developed by it to the third party was sufficient to raise an alarming bell in the ears of the Pine Labs and immediately it claimed ownership of the software developed for IOCL Card Fleet Program. The genesis of this claim was founded upon the reason that due to operation of section 19 (5) and (6) of the Copyright Act the assignment of copyright in respect of Original Version 1.03 was only for 5 years and that too within the territorial limits of India as the terms regarding time period and territorial limit of the assignment were nowhere provided in any of the agreements, which deal with the subject matter in question, entered into between the parties. These provisions of the copyright statute are as under:

"19. Mode of assignment.-

........................................

(5) If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment.

(6) If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within India."

As far as later versions are concerned, as per the Pine Labs, they are mere primarily adaptations of Original Version 1.03 wherein either a few new features were added or performance aspects of the original version were improved and this was achieved by way of creating additional software code and incorporating the same into the source code of the original version. The assignment in respect of the later versions was strictly restricted to the newly created additional source code and it cannot be construed as re-assignment of copyright in the original version 1.03.

8. In an attempt to get a stamp of Judicial approval on its claim, the Pine Labs filed a suit bearing No. 1867/2009 along with I.A. No. 12885/09 on the original side of this Court inter alia seeking reliefs of declaration relating to expiry of the assignment under section 19; injunctions seeking restraint against infringement of its copyright and mandatory injunction relating to enforcement of its moral right under section 57. On the first date of hearing on 07.10.09, an ad-interim ex-parte injunction was granted to the appellant. However, subsequently, after hearing both the parties, the learned Single Judge vide order dated 8.12.2009 has vacated the aforesaid injunction.

9. The Ld. Single Judge analyzed the matter from two perspectives. Firstly, from the point of view that, what is the ownership status of the Pine Labs and secondly that what is the nature of assignment. On the first issue, the Ld. Judge came to the conclusion that it is an admitted fact that the Pine Labs has taken the status of independent contractor and this makes the agreement to develop the software in question a contract for service. Section 17 of the Copyright Act provides that in the case of contract for employment, the ownership vests with the employee unless there is an agreement or intention to contrary. The Pine Labs had contended before the Learned Single Judge that this intention is to be deduced from MSA which is an assignment agreement. It was further contended that only the MSA should be seen for inferring the real intention of the parties and not the prior correspondences and agreements including the email dated 20th February, 2004 wherein the Pine Labs has stated that "the work has been created for a valuable consideration for and on behalf of the Gemalto and the Pine Labs has been paid in full and the copyright and other rights vest with the Gemalto and the Pine Labs does not claim any right in the same". While referring to the decision of Bombay High Court in Zee Entertainment Enterprises Ltd v. Mr. Gajendra Singh and Ors., 2008(36) PTC53 (Bom), the Ld. Single Judge observed that the documents and their relation, by whatever names or howsoever these are stated in the agreements, would not preclude the court from examining the real intention of the parties for measuring the ownership of the work by applying the intention test. The Ld. judge, for the purpose of interim applications, has taken a prima facie view that doubt can be expressed over the ownership of copyright as claimed by the Pine Labs especially when an intention to contrary can be inferred from the email dated 20th Feb 2004 and the admission of the Pine Labs that the MSA is an assignment and that it has assigned the rights including the copyright to the Gemalto by virtue of the MSA.

10. The second limb of the approach, which the Ld. Judge took, was to analyze the nature of assignment. After referring to various authorities on Copyright, a prima facie conclusion is arrived that MSA is, in fact, an "agreement to assign" or "assignment in equity". It has been observed that "the equitable assignment exists in cases involving the agreement to assign future work and equitable assignment generally flows from contractual relations where work is commissioned. Applying the said principles to the present case, it can be said that a bare reading of clause 7 of the agreement demarcates the two interests, the beneficial interest and the equitable interest." Ld. Single Judge came to the conclusion that the intention of the parties, under MSA was to create influence of equitable title in favour of Gemalto. Relevant para is as under:

"72. The usage of the expression "beneficial owner" in context of the plaintiff makes the intention of the parties to enter into agreement clear and unequivocal, demarcating the two interests. The intention further is clarified once the agreement provides for future obligations of the parties. It is a matter of fact that MSA was entered into in June, 2004 and future software was developed between June-August, 2004 and subsequently, at the time of agreement, the software was yet to be created. The intention is again reflected when the right to enforce is accorded to the defendant. It is also not disputed that the plaintiff was paid for the creation of the work. Rather, the plaintiff himself in his email acknowledged that the plaintiff has been paid with respect to the creation of the work. Under these circumstances, one can say with the certainty that the present agreement or MSA is an agreement wherein intention of the parties, whether express or implied, is such so as to create inference of equitable title in favour of defendant no1."

11. All this made the Ld. Judge came to the prima facie finding that the MSA is an agreement to assign and that it creates an equitable title in favour of the Gemalto. In order to decide the fate of interim applications pertaining to the matter in hand, the Ld. Judge relied upon the decision of the Supreme Court in Dalpat Kumar v. Prahlad Singh, AIR 1993 SC 276 [LQ/SC/1991/704] which provides for a threefold approach to be adopted by courts while dealing with such cases. These are as under:

`Whether the Plaintiff is able to prove a Prima Facie case in its favour

`In whose favour Balance of Convenience lies

`Whether the denial of relief would result in Irreparable Injury to the plaintiff

12. In view of the aforesaid judicial reasoning, the learned Single Judge has taken the view that not only doubt can be expressed on the claim of ownership by the Pine Labs even on prima facie front, though the issue involved needs to be examined at trial, the MSA appears to be an assignment in equity or an agreement to assign rather than actual assignment agreement and this goes against the Pine Labs. As far as balance of convenience is concerned, the Ld. Single Judge found it to be tilted in favour of the Gemalto as Ld. Single Judge is of the view that if interim protection is allowed to continue at this stage, it would cause more inconvenience and irreparable loss to the Gemalto rather than the Pine Labs. The Court also found support from that fact that the Pine Labs has itself calculated the loss at Rs. 20,00,000/- which fades the element of irreparability as far as losses to it is concerned.

13. Consequently, the learned Single Judge vacated the interim order on the condition that the Gemalto shall deposit a sum of Rs. 20,00,000/- with the registry of this court within two weeks. Challenging this order, these two appears are preferred by the Pine Labs.

14. When these appeals came up for hearing on 17th December, 2009, counsel for Gemalto as well as the respondent no.2 appeared on caveat. After hearing the counsel for the parties, the appeal was admitted and in the stay application filed by the Pine Labs seeking stay of the operation of the orders of the learned Single Judge, notice was issued for 24th February, 2010 and operation of the impugned order dated 8th December, 2009 was stayed on certain specific terms as contained in the said order. Since this order passed in the said application broadly reflects the arguments/stand taken by parties, we deem it proper to reproduce the said order:-

"Notice.

Learned counsel accept notice on behalf of Respondent Nos. 1 and 2 and seek some time to file a reply. They may do so within four weeks. Rejoinder thereto be filed within four weeks thereafter.

Notice may now be issued to Respondent No.3, returnable on 24th February, 2010.

The Appellant is aggrieved by an order dated 8th December, 2009 passed by a learned Single Judge in CS(OS) No. 1876/2009 vacating an ex parte ad interim injunction granted in favour of the Appellant.

Broadly, the facts of the case are that the Appellant had entered into an agreement with Respondent No.1 to develop software for the use of Respondent No.1 in the IOCL Fleet Card Program. The version eventually launched was version 1.03 and the parties also entered into an Agreement called the Master Agreement for Development Services dated 24th June, 2004.

According to the Appellant, in terms of Clause 7.1 of the Agreement, the copyright and other intellectual property rights in the software program were assigned to Respondent No.1. Clause 7.1 of the aforesaid Agreement reads as follows:-

"7.1 Axalto shall be entitled to all property, copyright and other intellectual property rights in the Project Materials which

Property, copyright and other intellectual property rights Pine Labs as beneficial owner assigns to Axalto. Pine Labs shall advise Axalto in writing and ensure that the Project Materials do not infringe the intellectual property rights of any third party."

Despite the "assignment", the learned Single Judge concluded that Clause 7.1 did not mean that the copyright was assigned to Respondent No. 1,on the other hand, the entire Agreement read as a whole indicated that it was only an agreement to assign. Prima facie, we are not in agreement with this conclusion of the learned Single Judge because of the plain language of Clause 7.1

reproduced above.

It is also submitted by learned counsel for the Appellant that Clauses 18 and 20 of the Agreement have been ignored by the learned Single Judge. It is submitted that both these Clauses indicate that the relationship between the Appellant and Respondent No.1 was on a principal to principal basis and that any understanding that the parties had prior to the aforesaid Agreement would not bind either of them. Clauses 18 and 20 of the Agreement read as follow :-

"18. RELATIONSHIP

Nothing in this Agreement shall be taken to create any joint venture, partnership or other similar arrangement; the parties shall at all times stand in relation to each other as independent contractors. Neither party is or may hold itself out to any third party as being the agent of the other.

20. WHOLE AGREEMENT

This Agreement constitutes the entire understanding of the parties with respect to its subject matter and supersedes any prior agreements or understandings or representations (unless fraudulent), whether written or oral. The parties agree that it will not have any right of action against each other arising out of or in connection with any such representation unless fraudulent. All warranties, conditions and other terms implied by statute or common law are excluded to the fullest extent permitted by law."

It is submitted that the learned Single Judge relied upon some e-mail correspondence exchanged between the Appellant and Respondent No.1 (despite Clause 20 of the Agreement) and concluded that the relationship between the Appellant and Respondent No.1 was a master servant relationship. Prima facie, we are of the opinion that the learned Single Judge erred in relying upon the e-mails exchanged between the Appellant and Respondent No.1 for arriving at a finding adverse to the Appellant in view of Clause 20 of the Agreement. We are also of the view that the learned Single Judge erroneously ignored Clause 18 of the Agreement which clearly indicates that the relationship between the Appellant and Respondent No.1 was a principal to principal arrangement.

It is submitted by learned counsel for the Appellant that even though Clause 7.1 of the aforesaid agreement does not mention any period of validity of the assignment, reliance is placed on Section 19(5) and 19(6) of the Copyright Act, 1957 to contend that the assignment would be valid only for a period of five years that is till 24th June, 2009 and will not have any extra territorial application. Our attention has also been drawn to paragraph 7(ii) of the Written Statement filed by Respondent No.1 before the learned Single Judge (page 224 of the paper book) wherein it is specifically stated by Respondent No.1 that version 1.03 of the software application is not in use at present in any of the systems of Respondent No.1 and in any of its projects including IOCL, BPCL or the HPCL-ICICI Bank projects.

Taking all these facts into consideration, we are of the prima facie view that the Appellant has made out a case for interference with the order passed by learned Single Judge. We, therefore, stay until further orders the operation of the impugned order dated 8th December, 2009 and restrain Respondent No.1, their assigns, licensees, agents, contractors, employees from in any manner infringing the copyright of the Appellant in the software known as Version 1.03 for the IOCL Fleet Card Program and further restrain them from reproducing the work in any material form including the storing of it in any medium by electronic means, making or issuing copies of the work to the public, or to make any translation or adaptation of the work or to sell or give on commercial rental or offer for sale or for commercial rental any copy of the work.

We clarify that the interim order is only with respect to version 1.03 of the software application and does not affect the relationship that the parties have with respect to subsequent versions of the software application."

15. After service of notice to other respondents, the aforesaid application came up for hearing. It was agreed that instead of hearing the application, the appeal itself can be argued finally. Thus, the appeals were listed for hearing and heard finally.

16. Mr. Rakesh Tiku, learned Senior Counsel who appeared for the Pine Labs advanced four proposition to placate the case of the Pine Labs with simultaneous attempt to find fault in the impugned order of the learned Single Judge. These are:-

(1) Clause 7 of the MSA has clear language which assigns in presenti, software to be developed, in future by the Pine Labs to Gemalto. As period or territory of assignment is admittedly nowhere stated in the MSA or in any other document, by virtue of the deeming provisions of Section 19 (5) and 19(6) of the Copyright Act, the assignment is deemed to be for five years and for territory of India only.

(2) Although the language of clause 7.1 is abundantly clear and in presenti, even if the Gemaltos contention that it was only an "agreement to assign", then the agreement to assign would be void for uncertainty under Section 29 of the Contract Act. If not, as the period of assignment or territory is not stated in the agreement to assign, the agreement would also be subjected to the deeming provisions of Section 19 (5) and 19 (6).

(3) Version 1.03 is the fundamental and basic version and other versions (1.04 onwards) are merely adaptations of Version 1.03 and only a minor new code has been written to improve performance or add new features to version 1.03. Each subsequent version is a "derivative work" of version 1.03 and new literary work created is only the incremental source code and there is no "reassignment" of the source code of version 1.03.

(4) The injunction order has been in force for well over a year and the Gemalto has nowhere shown how any loss or prejudice is being caused to it. In fact, Gemalto has categorically stated that it is not using the version 1.03 in any of its programs including BPCL, IOCL, HPCL etc. so the balance of convenience is clearly in favour of the Pine Labs.

Use of the Software by the Gemalto is different from rights as an assignee. Gemalto is entitled to use the software as a licensee, but cannot be permitted to modify, adapt or reproduce the same.

As recorded in the order dated 9th October, 2009, the Pine Labs had itself consented to let the Gemalto continue to use the version 1.03 or its variants in the IOCL program. The Pine Labs grievance was and is that the Gemalto have modified the version 1.03 for use in the HPCL programme which is a clear infringement of copyright and this infringement continues. If injunction were to be vacated now, Gemalto may adapt/modify this software for other programs or enter into arrangements which numerous third parties, which would cause grave loss and prejudice to Pine Labs.

17. In addition, the related argument advanced was that reliance on the email of February, 2004 which was written before entering into MSA was totally misconceived in view of Clause 20 of the MSA which categorically provided that all prior communication stood superseded. Additionally, it was also submitted that the conduct of Gemalto was blameworthy as inspite of injunction order dated 17th December, 2009 issued by this Court, the Gemalto had continued with HPCL Drive Track Plus Program forcing the Pine Labs to file two contempt proceedings before the Trial Court which were pending.

18. We have taken note of the aforesaid arguments in brief which were forcefully refuted by Mr. Sanjay Jain, learned Senior Counsel who appeared for Gemalto as well as Mr. Sudhir Chandra Agarwal, learned Senior Counsel who appeared for Respondent no.2.

19. We would proceed to deal with the aforesaid proposition of the learned counsel for the appellant and while doing so, we will take note of the detailed submissions advanced by the counsel for the parties.

PROPOSITION NO.1

20. To buttress his argument that Clause 7 of the MSA in presenti, assigned the software to be developed in future, Mr. Tiku referred to the language of Clause 7 which reads as under:-

"7.1 Ownership of Project Materials: Axalto shall be entitled to all property, copyright and other intellectual property rights in the project materials which property, copyright, and other intellectual property rights Pine Labs as beneficial owner assigns to Axalto. Pine Labs shall advise Axalto in writing and ensure that the project materials do not infringe the intellectual property rights of any third party.

7.2 At the request and the expense of Axalto, Pine Labs shall do all such things and sign all such documents or instruments reasonably necessary to enable Axalto to obtain, defend and enforce its right in the project materials.

7.3 Upon request of Axalto, and in any event, upon expiration or termination of this Master Agreement, Pine Labs shall promptly deliver to Axalto all copies of the project material then in Pine Labs custody, control or possession.

7.4 The provisions of this clause shall survive the expiration or termination of this Agreement".

21. The submission of Mr. Tiku was that the language, i.e. the use of the present tense in the word "assigns" clearly, and without doubt conveys the meaning that assignment is in presenti. No further reference to anything else is required as the meaning is clear on a plain reading of the clause. He referred to the decision in the case of St. Clair Intellectual Property Consultants Inc. v. PALM Inc. et Al (Civil Action no. 06-040JJF-LPS} wherein it was held:-

"The present assignment of a future invention divests the investor assignee of ownership in the invention and automatically vests ownership in the invention when invented in the assignee"

". If the contract expressly grants rights in the future inventions, "no further act is required once invention comes into being" and "the transfer of the title occurs by operation of law".

He also took sustenance from the judgment of Federal Court in Speedplay Inc. v. Bebop Inc. 211 F3rd 1245 wherein the Court concluded that a present assignment was effectuated by language which provided "that inventions "shall belong to Speedplay and that Bryne "hereby conveys, transfers and assigns" the inventions to Speedplay.

His submission was that in the present case, the MSA uses language more akin to the language used in Speedplay and Filmtec (supra), there is no use of futuristic words "will assign" but the word "PineLabs as beneficial owner assigns." Is used, which is a clear assignment in the present. In any case, no further act of the parties is needed to complete the assignment and neither has Gemalto pleaded that the assignment was not complete automatically by operation of law on the day the works were created or that something else was required to complete the assignment.

22. On this interpretation which Mr. Tiku seeks to give to clause & of the MSA, he referred to the legal provisions contained in Section 18 & 19 of the Copyright Act. His submission in this behalf was that Section 18 deals with assignment of future work "or the prospective owner of the copyright in a future work may assign to any person the copyright". Proviso to Section 18 states that assignment in respect of future works comes into effect when the work is created. This enabling language for future works was added in the 1957 Act as it was not therein the 1914 Act.

23. Section 19 (5) and 19(6) have been inserted in 1994 whereas in 1984, the Act only provided that the identity of the work, period and territory should be specified, but did not provide for any consequence of not specifying the same. By a deliberate insertion of such sections 5 and 6, legislature has provided for a deeming consequence, which is absolute, without any exception and de hors any alleged intention or conduct of parties. No further action of either party was required to be taken to "complete" the assignment. Assignment for future works stood complete on the date of execution of MSA and parties understood it as such.

24. The attempt of the learned counsel for the respondents, on the other hand, was to demonstrate that Clause 7 was not to be read in the manner attempted by Mr. Tiku. It was argued that on the contrary, that clause 7.1 on which the Pine Labs were harping was to be read alongwith Clause 1 and 7.2 of the MSA. It was submitted that as per Clause 1 of the MSA, "Project Materials" means any and all works of authorship, products and materials developed, written or prepared by Pine Labs in relation to the Projects (whether alone or jointly with Axalto or any other independent contractor of Axalto and on whatever media) including, without limitation, any and all computer programs, data, diagrams, charts, reports, specifications, studies and inventions and all drafts hereof and working papers in relation thereto. It is thus submitted that a complete reading of the Clause 7 reaffirms that Clause 7.1 of MSA was an :Agreement to Assign" and not an "Assignment Deed". In fact, the plain and literal meaning of Clauses 7.1 and 7.2 clearly establishes that Pine Labs had agreed to assign to Gemalto all copyright and intellectual property rights in the works that Pine Labs was hired to develop and no actual assignment thereof can be assumed from the said clauses. It was envisaged that Pine Labs shall entitle Gemalto by doing all such things and sign all such documents or instruments reasonably necessary to enable Gemalto to obtain, defend and enforce its rights in the Project Materials, which means that, while actual assignment was yet to take place, equitable ownership was created by Pine Labs in favour of Gemalto under the MSA.

25. Mr. Sanjay Jain also pointed out that in paragraph 14 of the Plaint filed in CS (OS) 1876/2009 (page nos. 102-123 of the appeal paper book filed by the Pine Labs), Pine Labs admitted that under Clause 7.1, the Pine Labs plaintiff had agreed to assign the copyright in the software development developed by it to the Gemalto to Gemalto. Mr. Jain also argued that the statements of the Pine Labs based on the judgment in St Clair Intellectual (supra) was clearly misconceived and on reading of the relevant portion of the said judgment in entirety, it would be clear that the said judgment goes in favour of the Gemalto. To buttress this submission, Mr. Jain drew our attention to the following paragraphs of the said judgment :-

"I must next determine whether praragraph 6 contains the required present language of assignment to achieve what would have been an automatic assignment of the Roberts Patents to Mirage. The question of whether a contract creates a present assignment governed by federal law To determine if a contract creates a valid present assignment, the contractual language governs:-

Whether an assignment of patent rights in an agreement.. is automatic, or merely a promise to assign, depends on the contractual language. If the contract expressly grants rights in future inventions, "no further act (is) required once an invention (comes) into being," and "the transfer of title (occurs) by operation of law." Contracts that merely obligate the inventor to grant rights in the future, by contrast, "may vest the promise with equitable right in those inventions once made, " but do not by themselves "vest legal title to patents on the inventions in the promise."

Prargraph 6 provides that "all such inventionsshall be the sole and exclusive property of Mirage" there is no language of present conveyance..

In addition, under paragraphs 5 & 6 several steps are required to effectuate an assignment even after an invention comes into being. Thereafter, the employee must "assist Mirageto obtain. Patents, copyrights, and other statutory or common law protectionstogether with any assignments thereof to Mirage or to persons designated by Mirage." These additional steps emphasize that the assignment contemplated in paragraph 6 does not occur automatically and inexorably to operation of law"

26. Mr. Jain also made an endeavour to distinguish the cases of Speedplay and Filmtech (supra) by arguing that these very cases were distinguished in the case of St. Clear Intellectual (supra), since the agreement in question in such cases did not contain an analogous Clause 7.2 requiring further acts/steps for transfer of legal title. On the other hand, argued the learned Senior Counsel, in St Clear Intellectual (supra) wherein agreement in issue contained a provision akin to Clause 7.2 of the MSA, the Court held that the language used in the MSA did not constitute a present assignment, inasmuch as, further steps were required to be effectuate an assignment under the agreement.

27. After giving the aforesaid interpretation to Clause 7 of the Agreement, the learned Senior Counsel submitted that Section 19 of the Copyright Act was not applicable to the instant case because of the following reasons:-

(a) In the absence of execution of an actual assignment document, that Section 19 cannot have any applicability in the facts of the case at hand. Conditions of Section 19 (1) that the "assignment" should be expressly and clearly in writing are not met out, for Section 19 (5) to be considered in the first place. Further, Section 19 (2) of the MSA requires that "the assignment of copyright in any work shall identify such work, and shall specify the rights assigned and the duration and territorial or the subject matter, inasmuch as per the own submissions of the Pine Labs, MSA is an omnibus or umbrella agreement providing for ownership of all types of intellectual property. Therefore, Section 19 (2) not fully complied with, since the MSA does not outline the particulars of the work, whether present or future, the same cannot be treated as an assignment document and Section 19 (5) and (6) do not arise for consideration.

(b) Under Clause 7.2, Pine Labs agreed to sign all documents/instruments necessary to enable Gemalto to obtain, defend and enforce its rights n the project materials. The understanding of the parties was that, when called upon, Pine Labs would sign such assignment deeds, applications or affidavits which may be required to formally assign the legal ownership or title in such work to Gemalto.

(c) In view of the above, it was submitted that Gemalto is the rightful owner of the copyright in the software application(s) created by Pine Labs for Gemaltos various programs in question and thus has the right to call for formal assignment of such copyright, according to Clause 7.2 of the MSA.

(d) In paragraph 18 of the Plaint filed in CS (OS) No. 1876/2009, Pine Labs admits that "MSA continues to be in force". Therefore, as per Pine Labs admission, MSA continues to be in force and Clause 7 of MSA needs to be given full effect, including the execution of all necessary documents such as Assignment Deed for formal assignment of copyright in the work(s) in question in favour of Gemalto.

28. We are of the opinion that it is not necessary to go into the niceties of the arguments developed by either parties. The answer rests on the plain meaning that has to be assigned to the language used in Clause 7. It clearly suggests that agreement is in presenti whereby Pine Labs assigned the copyright and other intellectual right in the project material with the use of the words "assigns" and it makes clear that the Gemalto "shall be entitled" to all such rights which Pine Labs again "assigns". Clause 7.2 on which reliance has been placed by the counsel for the respondent, to buttress their submissions, would be of no avail to them. This Clause enables the Gemalto to obtain, defend and enforce its right in the project material assigned by the Pine Labs and only mandates that for proper defence enforcement of its right in the project material, if Pine Labs is required to do certain things or assigns certain documents or instruments, that shall be done by Pine Labs for which expenses shall be borne by Gemalto. Thus, it only secures the Gemalto by mandating the Pine Labs to take certain further steps or assign certain documents if they are required by Gemalto in any proceedings or otherwise to defend and enforce its rights. The only purpose of this Clause is that in case in future for the aforesaid purposes cooperation of the Pine Labs is needed that would be extended by Pine Labs to Gemalto. That has no bearing to Clause 7.1 which is to be construed singularly to ascertain as to meaning which is to be assigned and to decide as to whether the agreement is in present or it is in agreement to "assign" only. As stated above, the language of Clause 7.1 clearly suggests that it was an agreement in presenti

29. That apart, there is another significant aspect of the matter which needs to be highlighted at this stage. It is a matter of common knowledge that before assigning the MSA, two projects were developed by the Pine Labs for Gemalto on the basis of work orders. These softwares developed for Gemalto were meant for BPCL Programme and City-Maruti Program. They relate to the period prior to the signing of the MSA. Even when work order for IOCL Fleet Program was issued (with which we are concerned), there was no MSA. The MSA was entered into on 24th June, 2004. However, IOCL Fleet Program in the first workable version 1.03 was handed over to the Gemalto by the Pine Labs on 16th August, 2004 i.e. within a couple of months after the execution of the MSA on 24th June, 2004. In such circumstance, when the work order was placed prior to the execution of the MSA, a question could have arisen as to whether IOCL Fleet Program is covered by the MSA or not. This poser need not detain us for long for the simple reason that both the parties proceed on the basis that IOCL Fleet Program developed in the form of version 1.03. All thereafter are covered by the MSA.

30. At this stage, we would like to comment upon the findings of the Learned Single Judge to the effect that relationship between the parties was that of Principal and agent and which means that Pine Labs undertook the exercise for and on behalf of Gemalto. This finding, prima facie, appears to be contrary to clause 18 and 20 of the agreement. Clause 18 defines "the relationship between the parties" and categorically makes it clear that the agreement is not to be taken to create any joint venture, partnership or other similar agreement. On the contrary, both the parties are specifically leveled as "independent contractors" with further specific clarification that "neither party is or may hold itself out to any third party as being the agent of the other". Even otherwise, it seems to us that this discussion in the impugned order of the learned Single Judge is superfluous inasmuch as it was no where the case of the Gemalto that from very beginning copyright in the project developed by the Pine Labs belonged to Gemalto. On the contrary, even Gemalto has relied upon and proceeded on the premises that as per the MSA, the copyright in the version 1.03 was to be "assign" to Gemalto. Thus, even Gemalto proceeds on the basis that copyright belonged to the Pine Labs, the original creator and it has come in the Labs of the Gemalto by way of assignment.

31. We thus proceed further in the matter taking into consideration the legal consequences that are provided under the Copyright Act. Since IOCL Fleet Program is developed by Pine Labs, which is the creator of the said Program as per Section 17 of the Copyright Act, Pine Labs would be the first owner of the copyright in this work. Section 18 of the Act, however, permits the copyright owner to assign the copyright either wholly or partially and either generally or subject to limitation and either for the whole term of the copyright or any part thereof. Section 19 of the Act stipulates the mode of assignment. Sub Section (1) thereof provides that in no uncertain term that assignment has to be in writing signed by the assignor or by his authorized agent. As per sub Section (2) of Section 19 of the Act, the assignment of the copyright, any such work is to identify such work and also specify the rights assigned and the "duration and territorial extent of such assignment". Thus by agreement the assignment can be for a limited duration and limited territory. What happens if the agreement is silent on the duration and territorial extent of the assignment Answer is provided by sub Section (5) and sub Section (6) of Section 19 of the Act which reads as under:-

"19. Mode of assignment

(1).

(2)

(3).

(4).

(5) If the period of assignment is not stated, it shall be deemed to be five years from the date of assignment.

(6) If the territorial extent of assignment of the rights is not specified, it shall be presumed to extend within India"

32. In the present case, after analyzing the documents in question, we come to the conclusion that as no duration or territorial extent is provided in agreement or any assignment deed, provisions of Section 19 (5) (6) of Copyright would be attracted. In fact, as would be demonstrated hereinafter, this would be the situation even if we accept the contention of the respondent that Clause 7 of the MSA was an agreement to "assign" and not the "assignment" itself.

33. Let us examine the issue on the presumption that clause 7 of the MSA is an actual assignment agreement. Now since the prior communications and agreements cannot be referred to in the light of the language of clause 20 as the IOCL Fleet Card Program is now a subject matter of the MSA, Section 19(5) and (6) are bound to be attracted. Here plaintiff seems to win over the argument. Learned Single Bench has observed that to find the real intentions, the court has power to go beyond the language of clause 20 and has referred to prior communications to cast a shadow of doubt over the original ownership of the original author i.e. plaintiff. Here the learned Single Bench is not talking about intention as to the assignment but the intention as to the original ownership. But ownership from the inception is not even the case of the defendant. The Main thrust of the defendant is that the MSA is an agreement to assign. It is not the case of the defendant that a contrary intention, which could nullify the effect of natural vesting of copyright with the original author in case of a contract for services, can be found. The issue as to the original ownership hardly seems to be in defendants mind. Had it been the case, it would have raised the issue during the time when the MSA was being formalized. There is nothing on record to suggest that. The process of formalization of MSA seems to be a smooth one the same was a result of growing mutual business and deepening relationship between the parties, as per the defendants version of story itself. Even Clause 7 of the MSA talks about the plaintiff as a "beneficial owner". Thus, bypassing of the language of clause 20, in order to infer the real intention, can be done,(that too, if it is legally correct) only for the drawing some inference regarding assignment and not for the ownership.

34. Now, lets presume that the MSA is an agreement to assign as argued by the Gemalto. In this case, since MSA is just an agreement to assign, there must have been a subsequent execution of actual assignment agreement in writing as per the requirement of section 19(1) of the Copyright Act. The question is when did it happen There is nothing on record to suggest a subsequent execution of assignment agreement in writing. It is not even pleaded. It this case, two things are possible. Either we can presume that there was no valid assignment of copyright in the software developed for IOCL Fleet Program in the favour of the defendant; or, the work order is the assignment agreement within the requirement of section 19(1). If former is the case then the defendant hardly have any chance to succeed and if later is correct then section 19(5) and (6) would automatically be attracted as the work order is silent on the time and territorial limits of assignment as we cannot beyond the work order, in the light of clause 20 of the MSA to deduce the intentions. This shakes the foundation of the defendants position.

35. Thus, it can be concluded that whatever be the nature of the MSA, the provisions contained in section 19(5) and (6) would inevitably be triggered.

36. Once we clear these cog webs and make the legal position obvious, the next question would be as to what should be the approach of the Court, in law, while dealing with the injunction petition. The legal position is fairly settled now.

37. The Supreme Court had an occasion to summaries the law on this point in a recent case titled Zenit Mataplast P. Ltd v. State of Maharashtra and Ors., (2009) 10 SCC 388 [LQ/SC/2009/1826] .

"25. Grant of temporary injunction is governed by three basic principles, i.e. prima facie case; balance of convenience; and irreparable injury, which are required to be considered in a proper perspective in the facts and circumstances of a particular case. But it may not be appropriate for any court to hold a mini trial at the stage of grant of temporary injunction (Vide S.M. Dyechem Ltd. v. Cadbury (India) Ltd., AIR 2000 SC 2114 [LQ/SC/2000/941] ; and Anand Prasad Agarwalla (supra).

26. In Colgate Palmolive (India) Ltd. v. Hindustan Lever Ltd., AIR 1999 SC 3105 [LQ/SC/1999/758] , this Court observed that the other considerations which ought to weigh with the Court hearing the application or petition for the grant of injunctions are as below :-

(i) Extent of damages being an adequate remedy;

(ii) Protect the plaintiffs interest for violation of his rights though however having regard to the injury that may be suffered by the defendants by reason therefor ;

(iii) The court while dealing with the matter ought not to ignore the factum of strength of one partys case being stronger than the others;

(iv) No fixed rules or notions ought to be had in the matter of grant of injunction but on the facts and circumstances of each case- the relief being kept flexible;

(v) The issue is to be looked from the point of view as to whether on refusal of the injunction the plaintiff would suffer irreparable loss and injury keeping in view the strength of the parties case;

(vi) Balance of convenience or inconvenience ought to be considered as an important requirement even if there is a serious question or prima facie case in support of the grant;

(vii) Whether the grant or refusal of injunction will adversely affect the interest of general public which can or cannot be compensated otherwise.

27. In Dalpat Kumar and Anr. v. Prahlad Singh and Ors., AIR 1993 SC 276 [LQ/SC/1991/704] , the Supreme Court explained the scope of aforesaid material circumstances, but observed as under:

The phrases `prima facie case, balance of convenience and irreparable loss are not rhetoric phrases for incantation, but words of width and elasticity, to meet myriad situations presented by mans ingenuity in given facts and circumstances, but always is hedged with sound exercise of judicial discretion to meet the ends of justice. The facts rest eloquent and speak for themselves. It is well nigh impossible to find from facts prima facie case and balance of convenience.

28. This Court in Manohar Lal Chopra v. Rai Bahadur Rao Raja Seth Hira Lal, AIR 1962 SC 527 [LQ/SC/1961/365] held that the civil court has a power to grant interim injunction in exercise of its inherent jurisdiction even if the case does not fall within the ambit of provisions of Order 39 Code of Civil Procedure.

29. In Deoraj v. State of Maharashtra and Ors., AIR 2004 SC 1975 [LQ/SC/2004/482] , this Court considered a case where the courts below had refused the grant of interim relief. While dealing with the appeal, the Court observed that ordinarily in exercise of its jurisdiction under Article 136 of the Constitution, this Court does not interfere with the orders of interim nature passed by the High Court. However, this rule of discretion followed in practice is by way of just self-imposed restriction. An irreparable injury which forcibly tilts the balance in favour of the applicant, may persuade the Court even to grant an interim relief though it may amount to granting the final relief itself. The Court held as under:

The Court would grant such an interim relief only if satisfied that withholding of it would prick the conscience of the court and do violence to the sense of justice, resulting in injustice being perpetuated throughout the hearing, and at the end the court would not be able to vindicate the cause of justice.

30. Such a course is permissible when the case of the applicant is based on his fundamental rights guaranteed by the Constitution of India. (vide All India Anna Dravida Munnetra Kazhagam v. Chief Secretary, Govt. of Tamil Nadu and Ors.(2009) 5 SCC 452)

31. In BombayDyeing & Manufacturing Co. Ltd. v. Bombay Environmental Action Group and Ors., (2005) 5 SCC 61 [LQ/SC/2005/646] , this Court observed as under:

The courts, however, have to strike a balance between two extreme positions viz. whether the writ petition would itself become infructuous if interim order is refused, on the one hand, and the enormity of losses and hardships which may be suffered by others if an interim order is granted, particularly having regard to the fact that in such an event, the losses sustained by the affected parties thereby may not be possible to be redeemed.

32. Thus, the law on the issue emerges to the effect that interim injunction should be granted by the Court after considering all the pros and cons of the case in a given set of facts involved therein on the risk and responsibility of the party or, in case he loses the case, he cannot take any advantage of the same. The order can be passed on settled principles taking into account the three basic grounds i.e. prima facie case, balance of convenience and irreparable loss."

38. Now, lets examine the case of plaintiff on the touchstone of three criterion discerning from aforestated well summarized legal position. These are:

1. Prima Facie Case;

2. Balance of Convenience; and

3. Irreparable Injury.

39. On the first point i.e. "Prima Facie Case", the Ld. Single Bench was of the view as under:

"On a prima facie case view, I have expressed my doubts on the ownership on the copyright over the works in the manner pleaded by the plaintiff. It is a matter which is to be considered at the trial i.e. whether the plaintiffs contention that there has been an actual assignment is valid or not, although prima facie, the said agreement appears to an assignment in equity or an agreement to assign rather than assignment."

However, prima facie case does not mean that the plaintiff has a better chance to win the case but it means that a substantial question of law and a triable issue can clearly be made out from the facts of the case. In In Burn Ltd. v. R.N. Banerjee, 1958 SCR 514 [LQ/SC/1957/94] the Apex Court made the following observations:-

"A prima facie case does not mean a case proved to the hilt but a case which can be said to be established if the evidence which is led in support of the same were believed. While determining whether a prima facie case had been made out the relevant consideration is whether on the evidence led it was possible to arrive at the conclusion in question and not whether that was the only conclusion which could be arrived at on that evidence."

40. In the light of our aforesaid observations, in conjunction with the discussion on the proposition we have dealt with, a prima facie case appears from the facts of the case in the favour of plaintiff. The credibility of the defendants arguments, at this stage, seems crumbling as its main defence that the MSA is an "agreement to assign" may not have any bearing at all upon the instant dispute. It tilts the scales in favour of the Pine Labs which has fair chance to succeed in the suit. We, therefore, hold that it has successful made out a prima facie case in favour.

41. As far as balance of convenience is concerned, the Ld. Single Bench was of the view that:

"The balance of convenience at this stage tilts towards defendant as the intention of the parties being the defendant shall remain the owner and further there is an equitable right which vests with the defendant and the plaintiff thus be not inconvenienced but the defendant will more inconvenienced at this stage if the injunction is granted/ continued against the prima facie equitable"

42. The question, which arises here, is that what is the subject matter of the convenience which we are referring to Is it the business being carried on by the defendant regarding IOCL Fleet Card Program by way of using different versions of the software developed by the plaintiff Or; it is the future venture of HPCL Fleet Card Program for which the software is being developed by a third party on the basis of source codes of the software developed by the plaintiff for IOCL Fleet Card Program. As for as the IOCL Fleet Card Program is concerned, it would be pertinent to note that order dated 09/10/09 has been passed in IA No. 13030/09 regarding continuation of IOCL card system on the concession of Pine Labs itself. Therefore, no question of hardship to the defendant would arise regarding IOCL Fleet Card Program.

43. As far as inconvenience to the defendant regarding HPCL Fleet Card Program is concerned, we can look into the matter from two perspectives- firstly from the defendants and then plaintiffs. From the defendants perspective it can be said that since the software for HPCL Drive Track Plus Program is already out there in the market and is being used by the defendant therefore any adverse order will eventually stop the oprationalization of this program. At the same time, technically, a de novo development of new software of HPCL Drive Track Plus Programme which is not born out of the source codes of IOCL Fleet Card Program is always possible. Once it is found that the plaintiff has a strong prima facie case and the defendant has no right to use any subsequently developed version except version 1.03, in balancing the convenience, the inconvenience to the plaintiff would be much more.

44. As far as irreparable loss to the plaintiff is concerned, it appears that since the plaintiff itself has calculated damages till that point of time at Rs. 20,00,000/- the learned Single Judge formed an opinion that the loss to the plaintiff cannot be termed as irreparable and in the eventuality of plaintiff succeeding at the stage of trial any loss which could have occurred to the plaintiff can be calculated in monetary terms and the same can be awarded to then plaintiff as compensation. This according to us is not a correct appreciation of pleadings. If one reads the prayer carefully, the plaintiff has prayed for passing, a decree for rendition of accounts for damages tentatively assessed at Rs. 20 lacs". Thus, not only the damages at Rs. 20 lacs are assessed tentatively, the plaintiff has sought specifically and separately also made a prayer seeking a decree for rendition of accounts. It is obvious expectation that the actual damages may be much more. Moreover, once it is found that there is no assignment of the impugned version of the programme by the plaintiff to the defendant and the use of this programme by the defendant amounts to violation of the plaintiffs copyright, the irreparable loss/injuries would be suffered by the plaintiff if the defendant is not prevented from using this programme.

45. In view of this, other arguments advanced by the learned counsel for the appellant need not even been addressed to as the present appeal warrants to be allowed on the aforesaid reasons. Accordingly, we set aside the impugned order passed by the learned Single Judge and direct that the injunction order dated 17th December, 2009 passed in this appeal shall operate during the pendency of the suit.

46. There shall, however, be no order as to costs.

Appeal allowed.