Dev loses copyright appeal over forensic software after judges rule suite was owned by his employer

Did it during work time and got paid for it, affirms Court of Appeal

A Briton has lost an appeal bid to claim copyright over software he wrote for his employer while being handsomely paid for doing so – despite saying he wrote parts of it in his spare time.

Michael Penhallurick had his case thrown out by Court of Appeal judges in London yesterday following his failed attempt to assert copyright over his Virtual Forensic Computing (VFC) suite in the High Court last year.

The former South Yorkshire police worker had claimed VFC was licensed to MD5 Ltd and the company infringed that licence when it stopped paying him sums of money he described as licensing fees, two years after he left MD5.

"The parties' subjective intentions are not relevant to interpretation," observed judge Sir Christopher Floyd. "As a consequence, it can often happen that the objective construction of an agreement does not align perfectly with the subjective intention of either party."

Thus, said Sir Christopher, the words "the software developed at MD5 Ltd by yourself and sold as VFC" in a 2008 agreement between the developer and the company legally meant that copyright over VFC was owned by MD5.

As previously reported, Penhallurick had been paid 7.5 per cent of VFC's annual sales, with those payments continuing for two years after his 2016 resignation. MD5 successfully argued in the High Court that the money was paid for ongoing support rather than royalties or licensing fees. The lack of a single clear contract resulted in the dispute going to court.

Discussing the 2008 agreement's mention of a "bonus", the Court of Appeal judge ruled: "I see no reason why that bonus should not be taken as valid consideration for the agreement to assign the copyright in such works as vested in the appellant as a result of his continuing work until the appellant left the respondent's employment. Section 91 of the CDPA 1988 would then treat such copyrights as vesting in the respondent by operation of law."

Praising barrister Nicholas Caddick QC's "ingenious" arguments on Penhallurick's behalf, Sir Christopher rejected them anyway and ruled in MD5's favour, with fellow judges Lord Justice Arnold and Mrs Justice Falk agreeing.

His Honour Judge Hacon, sitting in the High Court, had previously found that everyone at MD5 knew Penhallurick was writing VFC for the company, including creating multiple versions of it, and paying him a cut of the sales as compensation for his work.

As we said previously: if you're a dev working on something of your own, double check your contract of employment. Even if you're doing it mostly in your spare time. ®

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