In bed with software developers—consider the divorce before the marriage takes place

In bed with software developers—consider the divorce before the marriage takes place

How did the High Court deal with a recent case where a software developer who was a company director, consultant and then an employee of one company, transferred that company’s software to a competitor?

In IT Human Resources plc v Land [2014] All ER (D) 182 (Nov), [2014] EWHC 3812 (Ch), the defendant director provided the copyright protected software of the claimant company to another company. The claimant brought proceedings for copyright infringement and breach of fiduciary duty. The Chancery Division, in allowing the claim, held that, among other things, the defendant had not acted with the claimant’s permission, and the claim was not time barred.

What was the factual background to this claim?

The claimant, IT Human Resources (ITHR), was incorporated in 1998. Its original directors were Mr Gallagher and the defendant, Mr Land. In 2004, Land became an employee of ITHR. Land was also a director of TBS Ltd, a software development and IT consultancy. The software the subject of the dispute was a multi-user software system designed to assist in the conduct of a recruitment business for IT technical staff, called Interact. It was created by Land. There was a February 1999 agreement between ITHR and TSB for the development and provision of the Interact software. It was not disputed that ITHR owned the copyright in the Interact source code.

Land provided IT services to various clients. Land developed and provided services for a computer recruitment system called Esprit to NTU Ltd, a competitor of ITHR. In early 2002 Land tried to broker a deal between ITHR and NTU to allow NTU to acquire a version of Interact (to replace Esprit) from ITHR. Gallagher and NTU could not agree a price for Interact and so these negations came to an end. However, Land provided versions of Interact to NTU for about a year without Gallagher’s knowledge. The name of the system was changed from Interact to Impact. Land invoiced NTU for a total of £8,000 in relation to Interact/Impact.

By July 2005 ITHR was planning a new recruitment system to be called Interact.net using different technology to Interact, which would require a rewrite by Land. Land started work on Interact.net in 2009. An ex-employee of NTU joined ITHR in 2009 and immediately recognised that the Interact system was identical to the Impact system he had used at NTU. He told Gallagher, Gallagher was apparently shocked, but did nothing apparently because he was concerned that confronting Land might jeopardise the Interact.net project.

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