Case Analysis: B.N Firos vs. State of Kerala & Ors.

Introduction

When a person or an institution develops a product, ownership of the said product is an incentive which drives people to deliver their best performance. If the work was collaborative in nature, then the issue of ownership is of paramount importance.

One such case came before the Supreme Court recently where ownership of a computer software/system was questioned. The state government, a global software giant and a computer developer were all parties to the suit which we are discussing today.

Brief Facts of the Case

In the year 1999, the government of Kerala along with Centre for Development of Imaging Technology (C-DIT), Thiruvananthapuram came up with an idea to provide a single window for bill collection. The project was conceptualized as a pilot project and if the software was successful in some districts then there was a plan to roll it out throughout the state.

Microsoft Corporation, the world-renowned technology company, offered to develop the software for the Kerala government without any consideration.

The appellant was part of the ‘Microsoft Developer Forum’ and was given the task of developing the software. The appellant stated that after initial work was completed, the software was tested at one of the centers and was a success.

The government informed the plaintiff of its plan to implement the software throughout the system and requested them to undertake the maintenance and customization of the software.

The controversy, in this case, arose when the appellant found out that the respondents were transferring essential rights to a third party which was a breach of contract as per the appellants. Sensing a threat to his literary work, the appellant filed an application to register his copyright.

Meanwhile, one of the respondents, Microsoft Corporation, filed criminal as well as civil suits against the appellants and prevented him from registering his copyright in respect to the ‘disputed computer system’.

The battle before the Courts

The respondents filed various cases against the defendants. In one of the suits, the Centre for Development of Imaging Technology prayed that the ‘disputed computer software’ be declared their exclusive property. The reason provided by the respondents was that the Microsoft Corporation offered to build the software free of cost and the appellant who was working with Microsoft cannot claim any rights as they were governed by a service agreement entered between the respondents and the appellants.

The High Court of Kerala, where the case was filed heard the contentions of all the parties and opined that notification issued by the state government was not bad in law and refused to quash it. The Learned Judge also directed the authorities to stop the copyrighting process that was initiated by the respondents. As per the order of the court, the respondents were directed to withdraw all the cases that were filed by them against the appellant. However, a condition was set by the court according to which the appellant should accept the decision of the Court and convey the same to respondents in 1 year.

Aggrieved by the order of the Single Bench, the appellant approached a Division Bench of the same court and appealed the decision. The main argument advanced by the appellants before the Division Bench was that the learned Judge failed to interpret Section 70 of the Information Technology Act correctly. The operating part of Section 70 is reproduced below:-

70. Protected System. –

(1) The appropriate Government may, by notification in the Official Gazette, declare any computer resource which directly or indirectly affects the facility of Critical Information Infrastructure, to be a protected system.

The petitioner claimed that the software built by him was a literary work according to the Copyright Act and is therefore protected. While challenging the ‘disputed notification’, the petitioner stated that the notification should have been issued only after all pending suits were settled by the court.

The Division Bench disagreed with the contentions that were raised by the petitioners and stated that harmonious interpretation of both the Acts (Copyright and Information Technology) was necessary. The court was of the opinion that ‘government works’ as defined by Copyright Act was correct to declare the software as ‘protected system’ because the software was developed for the government. The software was already implemented throughout the state, and any legal proceeding in relation to the use of it will cause unnecessary hindrance to the state government and its citizens.

Appellant moves the Supreme Court

When the appellant was not able to get a favorable order from the lower courts, he moved the Supreme Court. While arguing the matter before Supreme Court, counsel for the appellants advanced the following arguments:-

• Interpretation of Section 70 of the Information Technology Act was challenged again and a special reference was made to the amendments that were made to the Act in 2009.The counsel stated that the power vested in the state to declare any ‘government work’ protected was bad in law and it was unfair to the appellant whose intellectual property was at stake.
• References were also made to various provisions of the Copyright Act and it was contended that the appellant was the person who developed the ‘disputed software’ and as its creator, he should be granted a copyright on the software.

The respondents stated that the 4th respondent, Microsoft Corporation, had offered to develop the software free cost. It was also stated that the appellant was duly reimbursed by the respondents for the work that was done by him.

As per the respondents, Microsoft Corporation was the first owner of the software as it was them who gave the necessary support and infrastructure for the implementation of the idea. Respondents also stated that as the appellant was paid for the work that he had undertaken, he was more like an employee/partner but cannot claim to be the first owner.

The decision of the Court

While deciding the case, the Supreme Court considered the validity of section 70(1) of I.T Act and observed that the government can only declare only those systems ‘protected’ which are very important for the functioning of the state and as per the Learned Judge the software in question fits the bill.

While deciding whether the notification issued by the government of Kerala declared the ‘disputed software’ protected was bad in law, the court observed that as the parties were bound by the Memorandum of Understanding, the appellants cannot claim to be the first owner. As per the Judges, the appellants cannot be considered the first owner as the software was developed for/with Microsoft Corporation as partners and from the onset the respondents were bound by the terms of the agreement entered between by the parties.

The Supreme Court agreed with the decision of the High Court and dismissed the matter.

Conclusion

In light of this case, it can be safely assumed that the government was correct while declaring the ‘disputed computer software FRIENDS’ as protected. However, it can be observed that the decisions of the Court relied on the fact that Memorandum of Understanding clearly defined the scope of work and rights of the parties and as per that, the respondents were correct to claim the software as their own.

The appellant, in this case, might have felt short-changed but the facts reflect that he himself offered to work on the project and was even paid for the work so as per law he cannot claim ownership on something that was developed for his employer/partner.

 

WRITTEN BY

Shivendra Mishra