FilmFlex Movies Ltd v Piksel Ltd

The High Court has upheld a claim brought by FilmFlex, a provider of video-on-demand services, against Piksel, the developer of its software platform, seeking delivery up of the platform’s source code.

FilmFlex alleged an entitlement under three routes, namely (i) an contractual arrangement under which Piksel had deposited a copy with an escrow agent to be released in certain specified circumstances, (ii) an express contractual right to “access” the source code, and (iii) as a necessary consequence of the fact that it was the owner of the intellectual property rights in some of the software and the beneficiary of a perpetual licence in respect of the remainder.
 
Piksel resisted all three arguments, on the grounds that (i) the escrow release event in question no longer applied, since the parties had later signed a set of standard terms put forward by the escrow agent which provided for a narrower set of events, (ii) the right of access amounted merely to a right of inspection, without conferring a right to a copy, and (iii) the provisions relating to intellectual property rights did not confer any right to possession of the source code.
 
Rose J upheld FilmFlex’s claim on all three grounds, finding that:
(1)   The parties, by signing the escrow agent’s standard terms, could not be taken to have intended to extinguish the escrow provisions which they had specifically agreed between themselves;
(2)   In the context of sophisticated computer software and the definitions in the agreement, a right of access must mean a right to take a copy;
(3)   A right to (among other things) “modify” and “enhance” particular software implied a right to take a copy of the source code of that software, since that was the only commercially realistic way in which those rights could be exercised. 

The full judgment can be read here: http://www.bailii.org/ew/cases/EWHC/Ch/2015/426.html 

Tony Peto QC and Tom Cleaver acted for FilmFlex.