Article by Lucy Rana and Tulip De
S.S. Rana & Co. Advocates
Brief Facts of the Case
In this case, an individual named Tarun Tyagi (hereinafter referred to as the Petitioner) filed a petition to quash an order passed by the Chief Metropolitan Magistrate on November 6, 2013.
Background of the Case
Initially, a complaint was filed against the Petitioner by Unistal Systems Pvt. Ltd. (hereinafter referred to as the Complainant Company), where the Petitioner was an employee from 2003 to 2005. The Complainant Company is engaged in the business of providing data recovery services.
Allegedly, after leaving the Complainant's services in September 2005, the Petitioner set up a company named M/s Prodata Doctor Private Limited (hereinafter referred to as the Petitioner's Company). The Petitioner's Company was also engaged in a similar business of data recovery and developing software applications for computers.
The Complainant Company, suspecting theft of its source code by the Petitioner, registered an FIR with the CBI (Central Bureau of Investigation). It alleged that around March 2005, the Petitioner had stolen the source codes of a software known as "Quick Recovery," which was offered for sale by the Petitioner's company under the name "Prodatadoctor."
In response to the complaint, the CBI seized documents and disks from the Petitioner's company. Meanwhile, in 2008, the Complainant Company filed a suit for perpetual injunction and damages against the Petitioner, alleging infringement of its copyright of the software named Quick Recovery. The suit was based on the claim that the Petitioner had stolen the source code of software developed by it and sold it through the company owned by the Petitioner after making some cosmetic changes.
Legal Implications
Section 66 of the Information Technology Act, 2000, implicates penalties and/or imprisonment for those who commit computer-related offenses like damaging computer systems or networks or stealing, concealing, destroying, or altering any computer source code used for a computer resource with the intention to cause damage.
Pursuant to the above, the CBI filed a charge sheet against the Petitioner under Section 66A of the Information Technology Act and the Copyright Act.
Thereafter, the Petitioner applied for copies of documents, but the application was dismissed by the impugned order passed by the Chief Metropolitan Magistrate. The court stated that no cloned copies of hardware containing incriminating evidence could be prepared with the protected software to avoid further misuse by the Petitioner during the case's pendency.
Petitioner's Submission
The Petitioner argued that rewriting a language freely available online based on an original idea is permissible by law. Hence, the Complainant had no copyright in the software source code.
Court's Order
The High Court of Delhi, considering the case's facts and circumstances, did not set aside the impugned order of the Trial Court. It observed that the facts indicated a risk of the software being misused by the Petitioner.
The Court concluded that the findings in the impugned order were free from any infirmity, and hence no interference was warranted.
Conclusion
The present case reflects a very sensitive issue, i.e., theft of data or source codes by employees. As a company's data is accessible by employees, it becomes vulnerable to IP infringement. Therefore, it is essential to ensure adequate data protection and incorporate confidentiality clauses in employment agreements to firmly prohibit data misuse by employees.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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From India, Malappuram
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1446S.S. Rana & Co. Advocates
Brief Facts of the Case
In this case, an individual named Tarun Tyagi (hereinafter referred to as the Petitioner) filed a petition to quash an order passed by the Chief Metropolitan Magistrate on November 6, 2013.
Background of the Case
Initially, a complaint was filed against the Petitioner by Unistal Systems Pvt. Ltd. (hereinafter referred to as the Complainant Company), where the Petitioner was an employee from 2003 to 2005. The Complainant Company is engaged in the business of providing data recovery services.
Allegedly, after leaving the Complainant's services in September 2005, the Petitioner set up a company named M/s Prodata Doctor Private Limited (hereinafter referred to as the Petitioner's Company). The Petitioner's Company was also engaged in a similar business of data recovery and developing software applications for computers.
The Complainant Company, suspecting theft of its source code by the Petitioner, registered an FIR with the CBI (Central Bureau of Investigation). It alleged that around March 2005, the Petitioner had stolen the source codes of a software known as "Quick Recovery," which was offered for sale by the Petitioner's company under the name "Prodatadoctor."
In response to the complaint, the CBI seized documents and disks from the Petitioner's company. Meanwhile, in 2008, the Complainant Company filed a suit for perpetual injunction and damages against the Petitioner, alleging infringement of its copyright of the software named Quick Recovery. The suit was based on the claim that the Petitioner had stolen the source code of software developed by it and sold it through the company owned by the Petitioner after making some cosmetic changes.
Legal Implications
Section 66 of the Information Technology Act, 2000, implicates penalties and/or imprisonment for those who commit computer-related offenses like damaging computer systems or networks or stealing, concealing, destroying, or altering any computer source code used for a computer resource with the intention to cause damage.
Pursuant to the above, the CBI filed a charge sheet against the Petitioner under Section 66A of the Information Technology Act and the Copyright Act.
Thereafter, the Petitioner applied for copies of documents, but the application was dismissed by the impugned order passed by the Chief Metropolitan Magistrate. The court stated that no cloned copies of hardware containing incriminating evidence could be prepared with the protected software to avoid further misuse by the Petitioner during the case's pendency.
Petitioner's Submission
The Petitioner argued that rewriting a language freely available online based on an original idea is permissible by law. Hence, the Complainant had no copyright in the software source code.
Court's Order
The High Court of Delhi, considering the case's facts and circumstances, did not set aside the impugned order of the Trial Court. It observed that the facts indicated a risk of the software being misused by the Petitioner.
The Court concluded that the findings in the impugned order were free from any infirmity, and hence no interference was warranted.
Conclusion
The present case reflects a very sensitive issue, i.e., theft of data or source codes by employees. As a company's data is accessible by employees, it becomes vulnerable to IP infringement. Therefore, it is essential to ensure adequate data protection and incorporate confidentiality clauses in employment agreements to firmly prohibit data misuse by employees.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Source:
<link no longer exists - removed>
From India, Malappuram
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Appeal in the Supreme Court
The individual should appeal in the Supreme Court without being browbeaten by a superior party, i.e., his employers. It appears that the ex-employee is giving good competition to his ex-employers, and they do not have any star geek to upgrade and improve their product.
The State of IT & Software Industry
In the world of IT & software, changes take place at lightning speed. The fact that the employer company is still stuck with their decade-old product, which the employee may have helped develop, shows the poor capability of the company. Imagine Bill Gates or Microsoft or other such companies suing their ex-employees for using source codes of WordStar, Lotus 123, etc., which have now already become defunct. There is no data theft involved here; it's merely the use of certain software which may be freely available on the open-source platform.
Judicial System and Company Tactics
Companies try to do such things knowing fully well that the present judicial system is ill-equipped to handle such issues. I know a case where a telecom service provider filed lawsuits against its consumers alleging that after terminating their services, they have not returned a vital piece of sophisticated technology developed after years of expensive research, which is the product and belongs to the company. Any idea what that piece of sophisticated and expensive equipment was, which the customer did not return to the company? It was not a mobile phone or internet router or any such thing. It was a SIM card! For which the customer, who was a subscriber for years, and has paid bills of thousands every month, was being hounded.
Focus on Innovation
Instead of indulging in such tactics of harassing ex-employees, the company should focus on developing new products. To all practicing lawyers, I also request that one should have balanced, pragmatic, and realistic views of issues.
Warm regards.
From India, Delhi
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The individual should appeal in the Supreme Court without being browbeaten by a superior party, i.e., his employers. It appears that the ex-employee is giving good competition to his ex-employers, and they do not have any star geek to upgrade and improve their product.
The State of IT & Software Industry
In the world of IT & software, changes take place at lightning speed. The fact that the employer company is still stuck with their decade-old product, which the employee may have helped develop, shows the poor capability of the company. Imagine Bill Gates or Microsoft or other such companies suing their ex-employees for using source codes of WordStar, Lotus 123, etc., which have now already become defunct. There is no data theft involved here; it's merely the use of certain software which may be freely available on the open-source platform.
Judicial System and Company Tactics
Companies try to do such things knowing fully well that the present judicial system is ill-equipped to handle such issues. I know a case where a telecom service provider filed lawsuits against its consumers alleging that after terminating their services, they have not returned a vital piece of sophisticated technology developed after years of expensive research, which is the product and belongs to the company. Any idea what that piece of sophisticated and expensive equipment was, which the customer did not return to the company? It was not a mobile phone or internet router or any such thing. It was a SIM card! For which the customer, who was a subscriber for years, and has paid bills of thousands every month, was being hounded.
Focus on Innovation
Instead of indulging in such tactics of harassing ex-employees, the company should focus on developing new products. To all practicing lawyers, I also request that one should have balanced, pragmatic, and realistic views of issues.
Warm regards.
From India, Delhi
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