As technology continues to advance at a rapid pace, the surge in intellectual property infringement cases – ranging from copyright disputes over software to trademark violations – has never been more pronounced. Bentley Systems Inc. & Anr. vs Pushparaj Kandaswamy & Anr. (CS (COMM) 3586/2024), is one such case wherein the Delhi High Court was presented with a copyright infringement dispute involving the unauthorised use of the petitioner’s proprietary software, MicroStation, by the respondents. The petition was filed challenging the order dated September 12, 2024, passed by the learned District Judge, Saket Courts.
Facts of the Case
Bentley Systems Inc. (Petitioner No. 1) is a global leader in providing infrastructure software solutions, including the MicroStation software suite. MicroStation is a software used by professionals in architecture, engineering, and construction. The petitioners own the copyright in this software, as it was created by employees during their course of employment, thereby making it the property of the petitioners under the ‘work for hire’ doctrine under the Copyright Act, 1957. The petitioners’ software products are available for use under a valid license governed by an End-User License Agreement (EULA).
In June 2024, the petitioners discovered that the respondents were using unauthorised versions of their MicroStation software. The petitioners conducted an investigation, which revealed the illegal use of MicroStation software on at least 60-80 computer systems by employees of the respondent, Pushparaj Kandaswamy’s company. Consequently, the petitioners filed a commercial suit alleging copyright infringement.
On August 13, 2024, the District Judge, Commercial Saket courts, granted an ad-interim ex-parte injunction in favour of the petitioners, prohibiting the respondents from further infringing on the petitioners’ copyright. The court also authorised the appointment of a Local Commissioner to visit the respondents’ premises and document the unauthorised use of the software. During the execution of this commission on August 22, 2024, evidence was collected showing at least 21 instances of illegal software on the respondents’ systems.
Settlement Agreement
Following the discovery of the infringement, the parties engaged in settlement discussions and ultimately filed a joint settlement application. The settlement included terms for resolving the dispute amicably, including the payment of licensing fees and the cessation of unauthorised use of the software and its various versions or any other software programs. The settlement agreement was duly signed by authorised representatives of both parties and supported by relevant affidavits and Board Resolutions.
Despite the joint settlement application, the learned District Judge rejected the settlement on September 12, 2024. The court observed that the settlement extended beyond the pleadings of the case, particularly concerning the future sale of software licenses, and raised doubts about the settlement’s fairness due to the ex-parte injunction earlier issued in favour of the petitioners. The court suggested that the respondents may have been coerced into agreeing to the terms of the settlement due to the pressure exerted by the court’s prior orders.
Court’s Analysis
In the subsequent proceedings, the petitioners filed a petition challenging the District Judge’s rejection of the settlement. After a thorough review, the court found that the impugned order rejecting the joint settlement application was not substantiated by sound reasoning. The court noted that the parties had voluntarily entered the settlement through their authorised representatives without coercion or undue influence. Furthermore, the settlement was supported by Board Resolutions and affidavits, and there was no evidence to suggest that the settlement terms were unlawful or beyond the scope of the original dispute.
The court also highlighted that the respondent was a long-standing industry member who was well aware of their rights and liabilities and had voluntarily entered the settlement to resolve the dispute. As the terms of the settlement were lawful, the court concluded that there was no justification for rejecting the settlement application on the grounds raised by the District Judge.
Conclusion
The High Court, after analysing the facts and legal arguments, set aside the impugned order of the District Judge. It held that the rejection of the joint settlement application was erroneous, as the settlement had been entered into freely by the parties, and the terms were consistent with the legal rights and obligations of both parties. The court further decreed the suit in favour of the petitioners, incorporating the terms of the settlement into the decree. Consequently, the dispute was resolved amicably, and the parties were bound by the terms of the settlement.
The case is a significant example of the complexities of copyright infringement within the software industry. It highlights the challenges software developers and providers face in protecting their intellectual property rights, particularly in the digital age where unauthorised use of software is prevalent. The judgment also highlights the importance of robust licensing agreements and the legal frameworks in place to address and remedy copyright violations.
Authors: Manisha Singh and Manya Jain
First Published by: Mondaq here