Martin John Coward v Phaestos Ltd and Others

JurisdictionEngland & Wales
JudgeMrs Justice Asplin
Judgment Date17 May 2013
Neutral Citation[2013] EWHC 1292 (Ch)
Docket NumberCase No: HC 10 C02788
CourtChancery Division
Date17 May 2013
Martin John Coward
(1) Phaestos Limited
(2) Mindimaxnox LLP
(3) Ikos Cif Limited
(4) Ikos Asset Management Limited

[2013] EWHC 1292 (Ch)


Mrs Justice Asplin

Case No: HC 10 C02788




Royal Courts of Justice

Strand, London, WC2A 2LL

Michael Bloch QC, Nicholas Saunders, James Walmsley, Tim AustenandAshton Chantrielle (instructed by Lewis Silkin LLP) for the Claimant

Richard Meade QC, Elspeth Talbot RiceQC, Adrian SpeckQC, James AbrahamsandIona Berkeley (instructed by Herbert Smith Freehills LLP) for the Defendants

Hearing dates: 5 — 8, 11 — 14, and 18 — 21 March 2013

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Mrs Justice Asplin Mrs Justice Asplin

This is a dispute as to the ownership of the intellectual property rights in certain of the Gauss software used by a highly successful quantitative trading business, the IKOS investment business which is now carried on through the Defendant companies. The IKOS business provides hedge fund and hedge fund management services to professional investors. Investment decisions are made by means of an automated system based on unique mathematical models and algorithms implemented in software and databases. It was not disputed that the business has been hugely successful, largely as a result of the software.

The Parties


The business was founded as a partnership in 1992 in England. The precise date on which that partnership was founded and whether it was Ms Elena Ambrosiadou's (Ms Ambrosiadou's) business in which the Claimant, her husband Dr Martin Coward (Dr Coward) participated or was a joint enterprise in which for a short time, others participated, are matters in dispute. Ms Ambrosiadou and Dr Coward are now estranged, Ms Ambrosiadou having filed for divorce in April 2009. It was around that time in December 2009, that Dr Coward left the IKOS business and sought to set up a rival organisation based principally in Monaco. As a result of those events, numerous sets of proceedings were commenced in a number of jurisdictions, including these proceedings.


Dr Coward is a mathematician and computer programmer with a PhD in Control Theory Engineering from Cambridge University. Until his resignation on 11 December 2009, Dr Coward was Chairman and a director of IKOS CIF Ltd, the Third Defendant, (IKOS CIF). It is not disputed that Dr Coward wrote the original software upon which the IKOS business was based and made a significant contribution to the development of the software over the years.


Ms Ambrosiadou is a Chemical Engineering graduate who obtained an MBA from Cranfield Business School and went on to work for British Petroleum before founding the IKOS business with or with the assistance of Dr Coward. She is a Greek national. It is not disputed that whilst Dr Coward focussed on the programming side of the business, Ms Ambrosiadou dealt with structural, legal, financial and human resources issues.


The Defendants are companies which are part of, or have been associated with, the IKOS business. The First Defendant, Phaestos Limited is a UK company, incorporated on 5 July 1991. During part of the time with which this case is concerned, it was called IKOS (UK) Limited. For the sake of simplicity I shall refer to it as IKOS UK throughout. It was one of the partners of IKOS Partners to which I shall refer below, until IKOS Partners was dissolved as of 31 December 2006. Between October 2006 and April 2008, IKOS UK provided programming, research and technical services to IKOS CIF. It is not disputed that some of the software used in the IKOS business was written by IKOS UK employees between March 1993 and April 2008.


The Second Defendant, Mindimaxnox LLP ("Mindimaxnox") is an LLP incorporated on 11 April 2008. It was previously known as IKOS Research (London) LLP. It provided programming, research and technical services to IKOS CIF. It is also not disputed that some of the software used in the IKOS business was written by employees of Mindimaxnox between April 2008 and December 2008.


The Third Defendant, IKOS CIF, is a Cypriot company incorporated on 29 December 1995. It was formerly known as IKOS OFC Limited. It has been IKOS Asset Management Limited's (IKOS AM) sub-investment manager since February 2006 (for the equities portfolio only) and since 1 July 2006 it has been IKOS AM's sub-investment manager for all the management of futures portfolios. It is not disputed that some of the software used by the IKOS business was also written by employees of IKOS CIF.


The Fourth Defendant, IKOS AM is a Cayman Islands company incorporated on 12 January 1996 and is the investment manager to the IKOS Fund which is a hedge fund also located in the Cayman Islands.


Currently, Ms Ambrosiadou is the Chief Executive Officer and a director of IKOS CIF and is the Chief Executive Officer and a director of IKOS AM.

The claims


Dr Coward's claim, in summary, is that he wrote a substantial part of the software used by IKOS in its business; and that he owns the copyright in that software. He contends that the copyright in such software was never the partnership property of IKOS Partners nor was it owned by IKOS CIF by which during part of the relevant period, he was employed and of which he was a director. He contends that the IKOS business had an implied licence from him to use the software and that that licence was determined by him in December 2009, so that IKOS's continued use of the software amounts to a copyright infringement.


The precise lines of code of which Dr Coward claims to be the author and the owner of the copyright or the co-author and co-owner were set out in a schedule which became known as Annex 4. At the beginning of the trial it was made clear that Dr Coward confined his claim to software which he claims to have written up to 31 December 2006 and not up to the date on which he resigned from the IKOS business in December 2009. In addition, before Dr Coward gave evidence, various amendments were made to the content of Annex 4 which is confidential. I shall refer to the software details of which are contained in Annex 4 in its final version, as "the Coward Software". In addition, where appropriate, references to software are in addition, intended to refer to the copyright in the software in question.


In response, the Defendants contend that the Coward Software became the partnership property of IKOS Partners and that all rights to it passed to IKOS UK as a result of the partnership dissolution agreement of 31 December 2006. As an alternative, it was contended that Dr Coward wrote the Coward Software in his capacity as an employee of IKOS UK.


If which is denied, the copyright in the Coward Software was owned by Dr Coward it is contended that a licence was granted by Dr Coward to the IKOS business in order to enable it to use the Coward Software and that the licence was irrevocable and exclusive or alternatively, that Dr Coward is estopped from asserting the copyright relied on against IKOS.

The Counterclaims


IKOS counterclaims against Dr Coward for copyright and database infringement and breach of confidence. The counterclaim arose in part from what was alleged to have been the use by Dr Coward of the software used by the IKOS business in November/December 2009 (the 2009 Software) in a new venture which he had set up in Monaco. However, claims in relation to copyright infringement and breach of confidence which would have required a detailed comparison of the 2009 Software and what became known as the New Venture Software are no longer pursued.


As I understand it, the counterclaim in relation to what became known as the Gardening Leave Code is also not pursued. This was a claim for copyright infringement and breach of confidence in relation to code which was allegedly written by Drs Drescher and Westphal during their notice period after they had left IKOS and before they joined Dr Coward's new business which it was alleged was incorporated in the New Venture Software. Undertakings have been offered but their precise nature remains to be determined.


Dr Coward admits that in November 2009, shortly before he left IKOS, he covertly downloaded a copy of the 2009 Software for his own purposes although he denies that he intended to use it commercially. In this regard, IKOS alleges copyright infringement. IKOS also counterclaimed for breach of confidence in respect of some material referred to as "the Burns materials" and "the Steyning materials". A regime for its return and/or destruction has been proposed by Dr Coward and is something to which I shall return.

Central questions — authorship and ownership


The central questions in the claim therefore, are first whether Dr Coward wrote the Coward Software and secondly, whether he owns the copyright in that software. As a result of the way in which the IKOS business developed, it is natural to seek to answer the questions as to ownership and authorship by reference to distinct periods of time and that is reflected in the way in which the agreed issues have been drafted. Accordingly, I will address the relevant periods and the issues which relate to them. Before doing so, I should set out the main legal principles which apply and which, for the most part, are not in dispute.

Legal principles

(i) Copyright and database infringement


The relevant provisions of the Copyright, Designs And Patents Act 1988 (the 1988 Act) are as follows:

"1.—(1) Copyright is a property right which subsists in accordance with this Part in the following descriptions of work—

(a) original literary, … works,

(2) In this Part "copyright work" means a work...

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2 cases
  • Dr Martin John Coward v Ms Elena Ambrosiadou
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 31 July 2019
    ...rejecting Dr Coward's central claim that he owned the copyright in the software written by him and used by IKOS in its business ( Coward v Phaestos [2013] EWHC 1292 (Ch)). Asplin J also rejected Ms Ambrosiadou's claim that the business was hers alone. Asplin J ordered Dr Coward to hand ove......
  • Sergio Mendes Costa v Dissociadid Ltd
    • United Kingdom
    • Intellectual Property Enterprise Court
    • 22 July 2022
    ...implication of terms into a contract. On the facts, McNair J found that to be 12 months (at pp.581 and 583). 79 Coward v Phaestos Ltd [2013] EWHC 1292 (Ch) was about the ownership of IP rights in software. One argument was that the claimant had granted a licence to use the software and a s......
2 books & journal articles
  • Table of Cases
    • United Kingdom
    • Wildy Simmonds & Hill Partnership and LLP Law - 2nd edition Contents
    • 29 August 2018
    ...[1991] BCC 200, [1991] BCLC 721, CA 98 Cowan v Wakeling [2008] EWCA Civ 229, [2008] All ER (D) 359 (Feb) 152 Coward v Phaestos Ltd [2013] EWHC 1292 (Ch), [2013] All ER (D) 222 (May) 51 Cox v Coulson [1916] 2 KB 177, 85 LJKB 1081, 60 Sol Jo 402, CA 15 Cox v Hickman (1860) 8 HL Cas 268, 9 CBN......
  • Property
    • United Kingdom
    • Wildy Simmonds & Hill Partnership and LLP Law - 2nd edition Contents
    • 29 August 2018
    ...which was only consistent with an implied agreement that it was an asset of the partnership; an 10 Coward v Phaestos Ltd and others [2013] EWHC 1292 (Ch), [2013] All ER (D) 222 (May). 52 Partnership and LLP Law unequivocal statement in an agreement with a third party as to the ownership of ......

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