Satyam Computer Services Ltd v Upaid Systems Ltd
| Jurisdiction | England & Wales |
| Judge | The Hon. Mr Justice Flaux: |
| Judgment Date | 17 January 2008 |
| Neutral Citation | [2008] EWHC 31 (Comm) |
| Docket Number | Case No: 2007 FOLIO 1040 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 17 January 2008 |
[2008] EWHC 31 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Flaux
Case No: 2007 FOLIO 1040
Mr Anthony Boswood QC and Miss Anna Boase (instructed by Lawrence Graham) for the Claimant
Mr David Foxton QC and Mr Ricky Diwan (instructed by Freshfields Bruckhaus Deringer) for the Defendant
Hearing dates: 17–20 December 2007
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.
Introduction
This dispute centres on whether certain claims which the Defendant (to which I will refer as “Upaid”) has brought against the Claimant (to which I will refer as “Satyam”) in Texas are excluded by the terms of a Settlement Agreement dated 31 December 2002.
By an Order dated 11 September 2007 I ordered the trial of three preliminary issues to be heard by me commencing on 17 December 2007. Those three issues as set out in the Order are:
(1) whether any (and if so which) of Upaid's claims in the Texas proceedings have been finally compromised by Clauses 2.3 and 2.4 of the Settlement Agreement effective as of 31 December 2002?
(2) Whether any (and if so which) of Upaid's claims fall within the scope of the English jurisdiction clause contained in Clause 4 (c) of the Settlement Agreement?
(3) Whether Satyam is entitled to a final injunction as claimed in the Particulars of Claim?
The factual background
Upaid is described by its chairman Mr Simon Joyce (who gave evidence before me) as a leader in the invention, development and provision of state of the art software technology and payment processing platforms and services. These technologies are currently commercially deployed as pre-paid and pre-authorised payment, transfer and settlement solutions for mobile network operators, service providers, financial institutions and merchants around the world.
In about 1996, Mr Joyce and his co-founder of Upaid developed the idea of converting any telephone into a de facto pay-phone through the use of a pre-paid account associated with a caller personal identification number (PIN). In order to exploit the idea commercially, they decided to outsource the development of the computer based external platform and related software and identified Satyam as an entity which could carry out the software development work. Satyam is an Indian registered company, the business of which includes providing information technology services for the creation and development of software products in the telecommunications industry. Satyam employs skilled IT engineers.
The relationship between the parties was originally governed by a short and relatively informal memorandum of understanding dated 29 May 1997. From the outset, the work carried out by Satyam engineers was twofold. Some of them were involved in creating the core architecture and design of the external platform, thereby contributing to Upaid's inventions. In parallel with that inventive work, Satyam was carrying out the software product implementation work, which was an ongoing continuous and iterative process, carried out pursuant to a spiral model of working.
By June 1998, Upaid had realised that its inventions were patentable and valuable and to maximise their commercial potential decided to apply for a patent to the United States Patent and Trademark Office (USPTO). In order to do this, Upaid would have to demonstrate “unity of ownership” of the intellectual property rights in the inventions. To that end, it was necessary to procure the transfer to Upaid of any rights in the inventions vested in Satyam, or in inventors working for Satyam. Satyam's practice is to transfer to its customers the intellectual property rights to the products it creates, but the memorandum of understanding dealt only briefly with the ownership of inventions and was silent as to any intellectual property rights.
Accordingly from late June 1998 until the signature on 11 September 1998 of what became the Assignment Agreement, Upaid was negotiating with Satyam the formal documenting of a transfer to it by Satyam of any intellectual property rights. Although the detail of those negotiations is not relevant (and indeed is inadmissible), there are a number of background matters which are relevant and admissible: (i) the Assignment Agreement was not a pro forma document, but was drafted by Upaid's lawyers and was considered carefully by Satyam's legal department; (ii) Satyam was aware that this agreement was required for USPTO patent application filing purposes; (iii) the Assignment Agreement was being negotiated at the same time as a more formal agreement covering the parties' commercial relationship, which was required by the financiers with whom Upaid was dealing to raise funds via a private placement and which eventually became what is described as the “Services Agreement”; (iv) there was an element of urgency in that Upaid wanted to file a provisional patent application with the USPTO by 15 September 1998, the date of a trade fair in Milan, to give it a “priority filing date” thereafter protecting it from infringement by commercial rivals.
The Assignment Agreement provided as follows:
“This Assignment is effective as of 1 January 1998 (“Effective Date”) and is by and between Satyam Enterprise Solutions, a company registered in India, with an address at 'Mayfair Centre' Sardar Patel Road, Secunderabad 500 003, India, and IN TOUCH Technologies, Limited (“ITTL”), a corporation of the British Virgin Islands, with an address at 8231 CR 500, Pagosa Springs, Colorado 81147, United States of America. Satyam has contractually developed, as works for hire, certain computer software entitled CallManager (comprising SwitchManager and CardManager) and NetManager which is described in the specification and representative portions of the source code thereof attached hereto as Exhibit A (“the Software”). ITTL desires to clarify its ownership of all worldwide right, title and interest in and to the Software, both object and source code and documentation for the code and any mask, works of or for the Software, and all worldwide copyright, patent, trade secrets relating thereto and all other worldwide intellectual property rights therein, including trademark and trade dress pertaining to the Software (the “Intellectual Property Rights”).
For good and valuable consideration paid, the receipt and sufficiency of which are hereby acknowledged, Satyam does hereby assign and transfer to ITTL in perpetuity, to endure from now until the end of time, all worldwide right, title and interest in and to the Software, and the Intellectual Property Rights in and to the Software including without limitation (1) all computer code, including object and source code and all documentation thereto and any mask works of or for the Software, (2) all copyright in and to the Software in all media now known or developed in the future, (3) all copyright applications and registrations and the right to seek and hold copyright registration or registrations and comparable rights in all countries throughout the world, (4) the right to seek patent protection and to own all patent applications and Letters Patent or similar legal protection for the Software in all countries throughout the world, including any continuation, division, continuation-in-part, re-examination, renewal, substitute, extension or reissue thereof or any legal equivalent thereof in a foreign country for the full term or terms for which the same may be granted, (5) all trademark applications and registrations in connection therewith, the right to seek trademark registrations and comparable rights in all countries throughout the world, and the good will appertaining to the trademarks and (6) all trade secrets in the Software. Satyam further authorizes and requests the Register of Copyrights of the United States and the Commissioner of Patents and Trademarks of the United States and any officials of any foreign country whose duty it is to issue copyright registrations, patents, trademark registrations or legal equivalents thereto to issue the same for or in connection with the Software to ITTL, its lawful successors and assigns.
Satyam further covenants that Satyam will, upon ITTL's request, provide ITTL with all pertinent facts and documents relating to the applications, registrations, Letters Patent and legal equivalents in foreign countries as may be known and accessible to Satyam and will testify as to the same in any interference or litigation related thereto and will promptly execute and deliver to ITTL or its legal representatives any and all papers, instruments or affidavits required to apply for, obtain, maintain, issue and enforce the applications, Letters Patent and legal equivalents in foreign countries which may be necessary or desirable to carry out the purposes thereof. All costs/expenses on this account will be borne by ITTL. In case Satyam incurs any expenditure on this account, the same shall be reimbursed by ITTL.
This Assignment shall not lapse if the rights assigned to ITTL are not exercised within a period of one year from the Effective Date. This Assignment and the relationship of the parties shall be governed by the laws of New York without reference to conflicts of laws principles. This Assignment supersedes any assignment(s) of the Software from Satyam to ITTL executed prior to the dates(s) of execution of this Assignment.”
As was accepted by Mr Venkataramani Murali, a senior vice president and director of Satyam who gave evidence, it was contemplated during the period of negotiation...
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