Allowed

Khambadkone Meera Rao v. Rathina Pandian Selvan

Madras HC8 Oct 2021OA/396/2019

Case brief

AI extract

What is this about?

The High Court of Madras considered two original applications seeking interim injunctions to restrain the respondent from using the plaintiff's software and database following the termination of a franchise agreement. The court held that the software constituted a literary work owned by the plaintiff's late husband via assignment from the programmer's employer, allowing an injunction.

What did the court decide?

Interim injunction granted restraining the respondent from using the plaintiff's software and database pending disposal of the suit. Respondent allowed to use a different version of software without r

Khambadkone Meera Rao Vs Rathina Pandian Selvan — Intellectual Property | Madras HC (2021)

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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Reserved on: 05.10.2021

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Pronounced on: 08.10.2021

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Coram:

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THE HONOURABLE DR. JUSTICE G. JAYACHANDRAN

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O.A.Nos.396 & 398 of 2019
in C.S.No.263 of 2019

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Mrs.Khambadkone Meera Rao, Residing at No.204, R.V.Apartments, Pipeline Road, 11^th Cross Street, Malleswaram, Bangalore – 560 003. Represented through her Power of Attorney, Ms.Jyoti Rao. ... Applicant/Plaintiff /versus/ Mr.Rathina Pandian Selvan, Prop. of RITASS Mumbai, residing at G-1, 2^nd Floor, Parsn Nagar, No.36, VGP Road, Saidapet, Chennai – 15. ... Respondent/Defendant

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Prayer in O.A.No.396 of 2018 : This Application is filed under Order XIV Rule 8 Original Side Rules read with Section 55 of the Copyright Act, 1957 and order XXXIX Rule 1 and 2 of Code of Civil Procedure, 1908.

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(i). This application should not be treated as urgent?

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(ii). This Hon'ble Court should not pleased to pass an order of interim injunction restraining the respondent/defendant from using the infringing

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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computer software and database, as well as from contacting the plaintiff's customers or attempting to do business with them pending disposal of the above suit?

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(iii). And pass such further or other order as this Hon'ble Court may deem fit and proper in the circumstances of the case and thus render justice.

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Prayer in O.A.No.398 of 2019: This application is filed under Order XIV Rule 8 of Original Side Rules read with Section 55 of the Copyright Act, 1957 and order XXXIX Rule 1 & 2 of Code of Civil Procedure, 1908.

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(i). This application should not be treated the application as urgent?

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(ii). This Hon'ble Court should not pleased to pass an order of interim injunction directing the respondent/defendant to return the following taken by the respondent/defendant at the time of entering the franchise agreement:

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(a). updated customer contacts list originally provided by the applicant/plaintiff (names, addresses, email addresses, phone numbers) and the reports provided to each customers, and

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(b). all copies of software taken at the time of signing of the franchise agreement, pending disposal of the above suit.

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(iii). And pass such further or other order as this Hon'ble Court may deem fit and proper in the circumstances of the case and thus render justice.

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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For Applicant : Mr.V.Prakash, Senior Counsel for Mr.Gautam S.Raman For Respondent : Mr.Rahul Balaji

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C O M M O N O R D E R

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The Suit is for permanent injunction restraining the defendants, his men and agents etc., from using the software alleged to have been conceptualised and development by her late husband Mr.K.Muralidar Rao. The said software is meant for providing database to the clients particularly shipping companies in respect of imports and exports.

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2. The case of the applicant/plaintiff is that, on 04.12.1995 along with one Mr.A.Aiyasamy her husband started the Partnership firm M/s.Khambadkones. Later, Mr.A.Aiyasamy retired from the partnership and in his place the plaintiff was inducted. In the partnership firm, the defendant was employed to collect data from customers and assist in data entry. Subsequently, the defendant was appointed as Manager and on 31.07.2005, he was made a partner in the firm holding 5% shares. Later, the defendant retired from the partnership firm vide deed dated 01.10.2014. As per the reconstituted partnership deed, the plaintiff and

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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her husband continued to be the partners.

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3. The plaintiff claims that, the software was developed by her

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husband engaging the service of one Mr.Arvind Vyas, for collection of data and aggregation of data. The database created by her husband was first of its kind and it provides data of imports and exports related to multiple ports in India and inland

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destinations. The data are sourced from feeder operators and shipping lines. The data received includes: -

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Feeder Operator Name

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• Port Name • Port Terminal

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Vessel Name

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Voyage number

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Date of arrival

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Date of Berthing

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Date of Departure

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Details of containers loaded/offloaded (Import/exports, size of containers etc.)

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Shipping lines loading/offloading data may also be given.

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(a). Details of container (Import/Export, Full/Empty.) (b). Commodity (c). Port of loading (India/overseas)

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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(d). Port of discharge (India/overseas) (e). Final destination (India/overseas)

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(f). Other transshipment information.

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4. The plaintiff and her husband decided to leave for Australia to join

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their children. Therefore, to keep the business running smoothly, entered into a franchisee agreement dated 01.10.2014 with the defendant for a period of 3 years. The business was to be run as RITASS a Franchisee of Khambadkones. The entire existing establishment were taken over by the defendant in running condition. Under clause 6 of the Franchisee agreement, the defendant agreed to pay a total sum of Rs.1,25,000/- [Rs.65,000/- per month to Muralidar Rao (plaintiff’s husband) and Rs.60,000/- to the plaintiff]. The defendant began running the business from 01.10.2014 in the name of RITASS with all of the plaintiff’s infrastructure and clientele without any investment, except the promise to pay monthly franchisee fee as stated above.

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5. Just before expiry of the three years franchise period, vide letter

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dated 06.07.2017 Mr.K.Muralidar Rao, informed the plaintiff his intention not to

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extend the franchisee and the defendant was called upon not to continue the franchisee business after 30.09.2017. Also he was asked to handover the data

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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collected and the subscribers details. In response to this letter, the defendant surrendered the franchisee immediately vide letter dared 21.07.2017. He handed over the Khambadkones software program, annual and monthly statistics, shipping line contract details, Tally backup and cheque books. Also he stopped the franchisee payment. However, the defendant continue to carry on the business and collecting data and processing it through the Khombadkone software. He continue to use the email id containing the word d’KAMBAD’ and carrying on business under the name of RITASS, Mumbai.

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6. The suit is therefore filed alleging the defendant while surrendering

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the franchisee had retained the copy of the software as well as the staff and computers handed over to him while entering the franchisee agreement. He using the database created by Mr.K.Muralidar Rao and the software developed by Mr.K.Muralidar Rao, running the business under the name RITASS.

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7. Countering the above averments and allegations, the sole defendant one facts states that, he is a trained Software Engineer and was involved in the

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business along with the plaintiff’s husband late Mr.K.Muralidar Rao, from the very inception of the firm M/s.Khambadkones. He played very significant role in

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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establishing the business in the year 1995 by name and style M/s.Khambadkones. The original business plan of data aggregation service in the shipping industry

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emanated from him and he conceptualised and executed the business. Mr.K.Muralidar Rao, decided to commence the business along with the defendant. For about 9 years, he worked in the business. In fact, the entire business was conducted by him and in recognition of it he was made as one of the partner in the firm. The business involves collection of information provided by shipping lines and preparation of reports. No copyright is involved in the business as alleged by the plaintiff. In any case, after termination of the franchisee, entire software were returned. The database provided by the shipping lines does not

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belong to the plaintiff and in no case, the plaintiff can claim copyright over it.

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8. As per the counter, the defendant and Mr.K.Muralidar Rao were

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closely associated for nearly 20 years. In the year 2001, when the defendant

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wanted to move out from M/s.Khambadkones and start his own business, Mr.K.Muralidar Rao prevailed upon him and made him a partner with 5% shares and assured that, the entire business will be transferred to him. When Muralidar Rao decided to move to Australia in the year 2014, the franchisee model was agreed. The relationship with K.Muralidar Rao was always cordial and with

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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respect. Shockingly, due to the pressure from the family members, during the middle of the year 2017, notice in the name of Mr.K.Muralidar Rao was issued disclosing the intention to take back the business from the defendant. Considering the close relationship and immense respect, the defendant on 21.07.2017 terminated the franchisee and handed over all the software and other data. The mutual consent letter was executed between the parties wherein, it was agreed that, no mutual claims interest between them. Thereafter, the defendant is carrying on

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his independent business.

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9. On law, it is contended by the Learned Counsel for the defendant that, the plaintiff is not the owner of the software. Admittedly, the author of the software is Mr.Arvind Vyas, who is a Chennai based Computer Programmer. Therefore, the ownership claim made by the plaintiff is barred under Sections 17 to 19 of Copyrights Act, 1957. The plaint is bereft of details regarding the identification of the copyright, its author and the infringement. Software program is a form of copyright falling under the definition of ‘Artistic work’. The copyright protection, the software need to be original and sufficient effort must have put into it. As far as the software which is subject matter of the suit is not capable of protection since, it involves only feeding of data provided by the clienteles and

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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collation of them in a particular manner. No creativity or innovation could be identified in the subject software. In so far as database, the plaintiff’s claim on database is bereft of details. Data as such are not entitled for protection. For compilation of data to be copyrightable, the amount of sweat and labour is immaterial. It must involve modicum of creativity and creativity in the organisation, selection and arrangement of the database is required.

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10. In the course of the arguments, the Learned Counsel for the respondent/defendant referred the following judgments:-

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(i). Gee Pee Films Private Limited -vs- Pratik Chowdhury reported in 2001 SCC Online Cal 411 . (ii) . Zee Entertainment Enterprises Limited -vsGajendra Singh & Ors reported in (2007) SCC Online Bom 920 .

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(iii). Sri Lalgudi G. Jayaraman and others -vsCleveland Cultural Alliance rep. by its President Mrs.Uma Ganesan, and another reported in (2008) 4 LW 511 .

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(iv). Bharat Matrimony.Com Private Limited -vs-

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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People Interactive (I). Private Limited reported in AIR 2009 Mad 78 .

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(v). Tech Plus Media Private Limited -vs- Jyoti Janda reported in 2014 SCC Online Del 1819. ( vi). Exegesis Infotech (India) Private Limited and another -vs- Madimanage Insurance Broking Private Limited reported in (2016) 2 Bom CR 303 . (vii). Navigators Logistics Limited -vs- Kashif Qureshi and others reported in (2018) 254 DLT 307 . (viii). Eastern Book Company and others -vs- D.B. Modak and another reported in (2018) 1 SCC 1 .

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11. Heard the Learned Counsel for the applicant and the Learned

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Counsel for the respondent. Documents perused.

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12. The parties admit their proximity and the agreements between them. The partnership deed and Franchise agreement are admitted facts.

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13. The point involved in this case is whether the continuation of the business model by the respondent/defendant after termination of Franchisee using the software developed and used by applicant/plaintiff amounts to infringement.

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14. The primary objection to the applicant's case raised by the

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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respondent is that, whether applicant has any right over the data and the software. Being collected from difference source and developed by the computer programmer Mr.Arvind Vyas, prima facie the data collected and software designed carry copyright.

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15. In this regard, the contention of the Learned Counsel for the respondent is that, the author of the software is Mr.Arvind Vyas. There is no assignment of copyright in favour of the plaintiff/applicant. Admittedly, Mr.Arvind Vyas was employed by Mr.K.Muralidar Rao and it was developed by Mr.Arvind Vyas. While so, in the absence of any written assignment as contemplated under Section 18 of the Copyright Act, 1957, the applicant/plaintiff cannot claim ownership over the said software and cannot seek for injunction alleging infringement.

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Section 2 of the Copyright's Act, 1957 is extracted below:-

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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Section 2 of Copyright's Act, 1957.

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2. Interpretation :-

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(ffc).“Computer Programme” means a set of instructions expressed in words, codes, schemes or in any other form, including a machine readable medium, capable of causing a computer to perform a particular task or achieve a particular result;

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Section 2 of Copyright's Act, 1957. 2. Interpretation :......... ......... (O) “literary work” includes computer programmes, tables and compilations including computer [databases]”

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16. From the above said Sections, it could safely be concluded that,

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both “computer database” and “computer programme” are literary work which

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falls within the meaning of “Computer Programme” as defined under Section 14(b) of the Copyright's Act, 1957.

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17. In the present case, both the database and the software were

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developed and marketed by Mrs.Khambadkone. Later, franchised to the respondent for a term of three years, beginning from October – 2014. A close look

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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at the Franchisee Agreement we find,

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Clause 4 of the Franchisee agreement, which reads as below:-

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“4. The business of “ KHAMBADKONES ” franchised to the Franchisee shall be for running the business with its goodwill, assets and liabilities. All the staff may be taken over by the Franchisee in his pay roll and bestowed with attended salary, perks and amenitites. The Franchisee is at liberty to act according to his exigences however without detriment to the Franchisors or the goodwill of “KHAMBADKONES”. However the Franchisee is not entitled to borrow any money by mentioning the name of M/s.Khambadkones or in the name of M/s.Khambadkones. No damage, injury or liability of whatsoever nature shall be caused to the name of M/s.Khambadkones and the said name should not be given for lien, charge, security or for creating encumbrance. It is specifically agreed that the franchisors will continue to be the owners of the name M/s.Khambadkones and only the name has been franchised to the Franchisee for using as Franchisee on the terms mentioned herein.”

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18. It is clear from the said agreement no consideration passed under

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this Franchisee agreement, except the promise made by the Franchisee that he will pay Rs.65,000/- every month to the 1^st franchisee Mr.K.Muralidar Rao and

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Rs.60,000/- every month to the 2^nd franchisee Mrs.Khambadkone Meera Rao (plaintiff herein).

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19. Further, under this agreement, the respondent has been vested

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with all discretion in respect of the management of the business and liberty to run business without any reference to the Franchisor with utmost care and attention upholding the tradition and goodwill of “Khambadkones”. The Addendum to Franchisee Agreement was entered between the parties, during October – 2014. Wherein, the Franchisor was permitted to use the name RITASS the Prop.Mr.Rathina Pandian Selvan/respondent herein before subscribing the name of the Franchisee “KHAMBADKONES”. Wherever the name RITASS is used, the name of the Franchisee “KHAMBADKONES” should also be affixed. This would also show that, locked, stocked and barrelled franchisee in respect of the business

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including the name “ KHAMBADKONES ”, its database and the software was given to the respondent. A strong database already developed by the partnership firm has been given to the respondent under the Franchisee agreement. The software admittedly authored by Mr.Arvind Vyas, was used to collate the data in a prescribed order.

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20. As per definition under Section 2(d)(i) of the Copyright's Act,

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1957, in relation to a literary work or dramatic work, the author of the work is the owner of the copyright. But, in case, the work is made in the course of the author's employment under contract of service or apprenticeship, then the 1^st owner of the copyright will be his employer.

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21. Taking advantage of the difference between the “contract for service” and “contract of service”, the Learned Counsel for the respondent submit that, the employment of Mr.Arvind Vyas by Mr.Muralidar Rao is a contract for

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service, to program the software. Therefore, Mr.Arvind Vyas, is the 1^st owner.

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22. Per Contra, the Learned Counsel for the applicant would submit that, the work of Mr.Arvind Vyas falls under Section 17(c) of the Copyright's Act, 1957. As an employer, Mr.Muralidar Rao engaged Mr.Arvind Vyas and the software was developed based on the inputs given by Mr.Muralidar Rao.

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23. This Court firmly hold that, the plaintiff/applicant is the owner of

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the copyright because the software admittedly unique and class by itself for the

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purpose of generating information for shipping industries. Based on the data, the information provided under the organised manner is the uniqueness in the

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software. Mr.Arvind Vyas, who happens to be a computer programmer has admitted as the person who developed the software. To be noted Mr.Arvind Vyas, has not disputed or made any claim over the software. Therefore, it has to be presumed that Mr.Muralidar Rao, who engaged Mr.Arvind Vyas for developing the software, has paid him under the contract and such payment is made in the

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course of employment. Thus, being the employer of Mr.Arvind Vyas,

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Mr.Muralidar Rao had become the 1^st owner of the copyright.

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24. It is to be noted that pending suit, the software used by the defendant was sent for examination and report was recalled from IIT, Professor. The 1^st report of Indian Institute of Technology, Chennai, reveals that, the software used by the respondent is identical to that of the applicant's software. At the request of the respondent, who has pleaded that, he is not using the said software presently and he had programmed different software, the second software of the

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respondent was sent for examination with the following set of queries.

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25. The queries which were formulated by this Court, on 09.12.2020,

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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reads as below:-

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“(1). What is the similarity between the source code 'X' and the source code

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'Z' ?

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(2).What are the difference between the two source codes 'X' and 'Z' ?;

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(3). What is the program used in each of the softwares?;

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(4). What are the lines of code that are common, if any?;

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(5). Are there any identical structures that are in place in both softwares that would indicate reproduction and particulars in that regard?; and

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(6). Do the two software codes possible or likely to have been independently developed?”

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26. This Court received the report from IIT (M). The report says,

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“For Q5-Q6, we find some matches between the variables, tables (columns, schema) etc., between the two codes, at a superficial level. But we don't find it conclusive enough to call it either way.”

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27. It is the candid admission of the respondent that, soon after

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terminating the franchisee, he had been using the software and the database of

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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“KHAMBADKONES”. He has changed the software much later after institution of the suit and even that new software also have overlapping features. It may be true that, the data collected from two different sources are available as open source but collection of data and arrangement of the data in a particular manner for dissemination of knowledge cannot be termed as function done in the normal course without any innovative measures. The applicant cannot have any exclusivity or monopoly over the business model but the data collected for the past 20 years, which has created a strong database and the software developed based on the experience of Mr.Muralidar Rao cannot be exploited by the respondent, just because, he was associated with Mr.Muralidar Rao, for the past 20 years and once upon a time 5% partner.

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28. The Franchisee Agreement has transferred the Technology and infrastructure to the respondent only for a period of three years. Soon after the

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termination of franchisee, the respondent ought to have returned back all properties and materials both tangible and intangible without retaining it for himself to exploit. Retaining the copy of the database and the software for future exploitation by a franchise holder after termination of franchisee is certainly impermissible. No negative covenant in the franchisee agreement is required

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specifically. The absence of negative covenant will permit the defendant to run business similar to the business module of M/s.Khambadkones but not their database or software except on leave or license.

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29. The right to exploit the software must be by consent. Mr.Muralidar Rao had developed the software for the organisation by employing Mr.Arvind Vyas. Therefore, the 1^st owner of the copyright over the software can only be Mr.Muralidar Rao, who employed Mr.Arvind Vyas for developing the software. Under the Franchisee Agreement as the 1^st owner of the copyright, the partners of the KHAMBADKONES had entrusted the database and the software to the respondent. The name RITASS was also permitted to be used along with KHAMBADKONES under the franchisee agreement. After termination of the franchisee agreement, at the most the respondent is at liberty to commence a business on his own under his own tradename adopting the business modules.

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30. It is not the case of the respondent that, he has entitled to retain copy of the software or database given to him under the franchisee agreement dated 01.10.2014. It is the case of the respondent that, there is no innovativeness in the said software but it only helps to arrange the data and the data collected

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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which are not the exclusive property of the plaintiff. Both the sources of data are

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open and access to world. What is to be protected under the copyright is the innovative and distinctive manner in which the collected data's are arranged and made available to the customers. In this case, the software developed by Mr.Muralidar Rao helps to arrange the data as required.

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31. It is pertinent to refer the judgment of the Hon'ble Supreme Court

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in Eastern Book Company and other -vs- D.B. Modak and another reported in

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(2008) 1 SCC 1 , which has held that,

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“-Held, to claim copyright in a derivative work, the author must produce the material with exercise of his skill and judgment with a flavour of creativity which may not be creativity in the sense that it is novel or non-obvious, but at the same time it is not a product of merely labour and capital

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- The Copyright work which comes into being should be original in the sense that by virtue of selection, coordination or arrangement of pre-existing data contained in the work, a work somewhat different in character is produced by the author – To support copyright, there must be some substantive variation and not merely a trivial variation, not the variation of the type where limited/unique ways of

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expression are available and an author selects one of them which can be said to be a garden variety.”

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32 . The applicant herein through the affidavit had demonstrated the

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uniqueness of the software and skill involved in selecting, coordinating and arranging the data collected. Therefore, having prima faciely established that the

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data and software being used by the respondent, even after the termination of the franchisee, the applicant/plaintiff is entiled for the restrain order against the respondent from using the software database in the name Mrs.Khambadkone. While the first report shows, the software used by the defendant is verbatum copy, the 2^nd report of Indian Institute of Technology (IIT), Professor indicates that,

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there is a match between two codes at superficial level but they were not conclusive to call it or either way.

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33. In the opinion of this Court, the respondent, should have stopped

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with adopting business model and should have gone for a different software. To exploit the database collected over the years by Mrs.Khambadkone, the respondent

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had been continuously using the same software which has been found identical to

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that of the applicant and the new software alleged to have been introduced by the defendant is also not free from infringement. Since prima facie case for

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infringement of copyright is made out, injunction sought is allowed. However, any different version of software to be adopted by the respondent which has no resemblance of the software developed by M/s.Khambadkones, there shall be no bar for the respondent herein.

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For the said reason, this Court is of the view that the applicant is
entitled for an interim order of injunction as prayed for. In the result, the Original
Application Nos.396 & 398 of 2019 are allowed. No costs.
08.10.2021
Index : Yes
Internet : Yes/No.
bsm

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O.A.Nos.396 & 398 of 2019 in C.S.No.263 of 2019

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Dr.G.Jayachandran,J.

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bsm

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Pre-delivery common order in
O.A.Nos.396 & 398 of 2019
in C.S.No.263 of 2019
08.10.2021

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