The case concerned a royalty free licence granted to Ferrania UK Ltd (FUK) by its sister company in 2003. FUK were entitled to use software for the purposes of a services agreement which they entered into with the Newcastle upon Tyne Hospitals NHS trust (the Trust) for an initial seven year period. The terms of the agreement was subsequently varied to allow the agreement to be extended in six month blocks. The Trust extended the agreement initially in September 2010 by six months to March 2011. It then subsequently extended the agreement in December 2011 by five six monthly blocks to 30 September 2013. FUK subsequently changed its name to Infinitt UK Ltd and is the Defendant in this case. Noemalife acquired the copyright in the software and is the Claimant.
The key issue at hand was whether the licence ended after the initial seven year period and whether a new licence came into effect for the following three year period for which a reasonable royalty was payable for use of the software.
The court held that that as there was no intention to create mutual legal relations between the parties for use of the software, no new licence came into effect after the initial seven year period. The court found that the first extension to March 2011 had been carried out in accordance with the contract between FUK and the Trust with the licence applying to this period. However, the additional 2½ year extension for use of the software was not carried out in accordance with the agreement and the licence no longer applied, as any extension to the agreement should have been in six month blocks. A new licence was therefore required for this period, but as there was no intention between the parties to create legal relations, no licence was granted. An amendment was submitted by the Claimant to bring a claim for copyright infringement for use of the software for the 2½ year period, but as the amendment was requested so late in the claim, the court rejected this amendment, but made it clear that this was not a bar to any new claim the Claimant wished to bring. The claim was therefore dismissed.
The case highlights the importance for businesses to properly licence their intellectual property rights to ensure they are completely protected and the rights can be exploited for the benefit of the business.