Clearsprings Management Ltd v Businesslinx Ltd

Clearsprings provided accommodation for asylum seekers. Businesslinx was a one-man company set up by a software developer to market web-based database software. Clearsprings wanted to acquire a system that would allow remote access to centrally stored data, but did not mention any wider use of the software (such as licensing third parties). The parties entered into a basic written contract which described the various software items that were to be written, but which made no mention of ownership of copyright in the software. The parties only discussed ownership of copyright once it was clear ownership was in dispute. Clearsprings relied on the fact that the software embodied Clearsprings’ business processes in electronic form, Businesslinx was really part of Clearsprings’ team and the size of the contract price.

When will a term be implied into a contract for the development of software giving a party the exclusive right to use the software?

There are some circumstances where a court may imply a term to the effect that the contractor should assign copyright to the commissioner of the work, or to provide an exclusive licence (see Ray v Classic FM [1998] FSR 622). The Judge said it was true that Businesslinx had been given a lot of material detailing Clearsprings’ business processes, but the law of confidence would protect this. A term could be implied that Businesslinx could not licence the software developed for Clearsprings as a whole to a third party. The Judge rejected the proposition that there was an exclusive licence in favour of Clearsprings (or that there was any obligation on Businesslinx to assign the copyright to Clearsprings).

Clearsprings therefore had a non-exclusive, royalty-free, perpetual and irrevocable licence to use the software developed by Businesslinx. This licence extended to repairing, maintaining and upgrading the software in line with its business of providing accommodation to asylum seekers.