COMMENT: In this Judgment, the Hon’ble Delhi High Court has
laid down the important proposition.
1. A computer database is a collection
of information stored on computer media. The information may be a list of
clients and their addresses or it may be the full text of various documents or
it may be a set of co-ordinates relating to a three-dimensional building
structure. The range of things which may be included in a computer database is
enormous. The information contained in the database may, itself, be
confidential and protected by the law of breach of confidence but what of the
copyright position (Para 8).
2. A in General Guide (1981 Ed). The
authors have stated that it is not possible to provide an exhaustive list of
all that a Court may regard as confidential or a trade secret. However,
some examples of what has been held to constitute the subject matter of an
action to protect confidential information or a trade secret include (amongst
others) customers lists and information concerning the proposed contents of a
mail order catalogue. (Para 9).
3. Even compilation of clients‟
database has been held to be amounting to literary work wherein the author has
a copyright. In M/s Sanmar Specialty Chemicals Ltd. (Para 12).
IN THE HIGH
COURT OF DELHI AT NEW DELHI
CS(OS) 1436/2012
Reserved on:
17th July, 2013
Decided on: 8th
August, 2013
M/S VOGUESERV
INTERNATIONAL PVT LTD .....Plaintiff Through: Mr. Rajat Wadhwa, Advocate.
Versus
RAJESH GOSAIN
& ORS .....Defendants Through: Mr. Anurag Ahluwalia and Mr. Rahul,
Advocates for Defendant Nos. 1 & 3.
Mr. Rajesh
Dwivedi, Advocate for
Mr. A.K. De,
Advocate for Defendant No. 2.
CORAM:
HON'BLE MS.
JUSTICE MUKTA GUPTA
I.A. No.
9538/2012 (by Plaintiff u/Order XXXIX Rule 1 & 2 CPC) and I.A. No.
13187/2012 (by Defendant Nos. 1 & 3 u/Order XXXIX Rule 4 CPC for vacation
of order) in CS (OS) 1436/2012
1. The
Plaintiff, a company incorporated under the Companies Act filed the suit
against the Defendants, its ex-employees inter alia seeking a decree of
permanent injunction against the Defendants restraining them from contacting or
dealing with Companies namely "STRAUSS innovations" (Germany),
"BOLTZE" (Germany), "IMPRESSIONEN" (Germany),
"SCHNEIDER" (Germany), and DS PRODUKTE" (Germany) in any manner
whatsoever or from using any other information, material, electronic in and
other data belonging to Plaintiff Company and seeking return of the said
information, electronic data, documents etc.
2. By way of an
ex-parte ad-interim injunction dated 18th May, 2012 this Court in IA No.
9538/2012 restrained the Defendants from using the data of the Plaintiff in
respect of the abovementioned clients as also contacting them. Defendant Nos. 1
and 3 filed I.A. No. 13187/2012 under Order XXXIX Rule 4 CPC seeking vacation
of the ex parte ad interim injunction. Thus the two applications are taken up
for hearing.
3. Learned
counsel for the Plaintiff contends that the Defendants in their written
statement do not deny that they are using the data, material and information
prepared while the Defendants were in employment of the Plaintiff. The case
of the Defendants is that the client details of the plaintiff are in public
domain and in the absence of any contract with the client which clearly
authorizes the Plaintiff alone to deal with the clients in India in the
business transactions, no exclusivity can be claimed. This contention of the
Defendants is wholly erroneous in view of the decision of this Court in Diljeet
Titus, Advocate and others vs. Alfred A. Adebare and others, 2006 (32) PTC 609
(Delhi). Relying upon Homag India Private Ltd. vs. Ulfath Ali Khan, MFA No.
1682 of 2010 decided by the Karnataka High Court on 10th I.A. Nos. 9538/2012 and
13187/2012 in October, 2012 it is stated that in an identical case the Court
was pleased to grant temporary injunction. It is further contended that though
the Defendant Nos. 1 and 3 have filed an application under Section XXXIX Rule 4
CPC however, the Defendant Nos. 2 and 4 have not filed any application and thus
they are conscious that their acts were illegal and contrary to the law. Hence
the ex-parte order granting injunction is liable to be confirmed.
4. Learned counsel
for the Defendant Nos. 1 and 3 contends that as per Section 27 of the Indian
Contract Act, any agreement in restraint of trade of business or lawful
profession is void to that extent. Hence even assuming there is any contract
though there is none, the Plaintiff cannot enforce the restraint. Relying upon
American Express Bank Ltd. vs. Ms. Priya Puri, 2006 (110) FLR 1061 it is
contended that facts like names of customers, telephone numbers and addresses
are well known and can easily be ascertained being in public domain and thus
cannot be treated as trade secret or confidential information. Referring to Ms.
Sanmar Specialty Chemicals Ltd. vs. Dr. Biswajit Roy, AIR 2007 Madras 237 it is
contended that confidentiality and Non-Compete Agreement where-under the
Respondents shall not disclose confidential information to any person after
cessation of in employment with the applicant and not to take up any employment
or involve himself with any other person or body corporate in the similar field
of activity which are competitive in nature and thus contrary to Section 27 of
the Indian Contract Act. Hence the interim order is liable to be vacated.
5. I have heard
learned counsel for the parties.
6. The case of
the Plaintiff is that the Plaintiff Company got engaged inter alia in the
business of trading of home textiles, home decorative, furnishing and clothing
etc. and provide comprehensive buying service to international buying
companies. It has developed and maintained various confidential data and
information regarding internal processes, specific client profile, client
details, business strategy and methods, finances, client budget, pricing
structure, upcoming projects, vendors business profiles etc. According to the
Plaintiff this confidential data was developed over a period of several years
by putting in extensive efforts however, the Defendants who are its former
employees had access to some of its secret and confidential data during the course
of their employment and all the four Defendants after resigning from the
service of the Plaintiff company in the second week of July, 2011 took wrongful
possession of various important and confidential files, documents, records etc.
and are now illegally using them for their own in advantage, contrary to the
terms and conditions of their appointment letter. Consequently the Plaintiff
registered a FIR against the Defendants on which certain data and records were
seized however the Defendants are still using the data which was
misappropriated and stolen from the Plaintiff Company and are contacting the
old clients of the Plaintiff. The Defendants in November, 2011 formed a new
company in the name and style of „Excel Buying Resources‟ in which they
continue to use the data of the Plaintiff Company and continued to be in touch
with the clients of the Plaintiff. One of the clients of the Plaintiff Company
under deception continued sending emails to Defendant Nos. 1 and 3 on their old
email accounts created by the Plaintiff Company on which the Defendants were
dealing with the Plaintiff”s customers.
7. The relevant
terms of agreement between the Plaintiff and the Defendants as per the
employment letter are as under: "1.......
2. ......
8. You shall
maintain complete secrecy of information and know-how regarding our business
that may come to your knowledge during the course of your tenure with the
Company. You shall not utilize, disclose or divulge the same to any other
person/Origination.
9. ....
17. You
recognize and acknowledge that the company shall own all work products created
by you during your term of service contract and ownership of all rights, titles
and interests of the intellectual proprietary rights, therein shall rest
exclusively with the company "Vogueserve International Pvt. Limited".
You also acknowledge that the restriction is reasonable and necessary to protect
the legitimate interest of the company. That any breach by you will result in
irreparable injury to the company for which a remedy at law would be
inadequate.
Accordingly, you
acknowledge that the company shall be entitled to temporary, preliminary and permanent
injunctive relief against you in the event of any breach or threatened breach
by you, in addition to any other remedy that may be available at law or
equity."
8. There is
no doubt that a contract for restraint of trade or profession is a void contract.
Vide Clause-17 of the terms of appointment of the Defendants it was agreed that
the Defendants recognize and acknowledge that the Plaintiff owned the products
created by them during their term of services, the ownerships of all rights,
titles and interest of the intellectual propriety rights were to vest in the
Plaintiff and in breach thereof the Plaintiff was to take recourse of legal
remedies. Thus the only thing which has to be seen is whether the
products/materials/data sought to be used by the Defendants is of a kind which
entails intellectual propriety rights in which case the bar under Section 27 of
the Contract Act would not be attracted. In Diljeet Titus, Advocate (supra)
this Court while dealing with a similar situation held that the copyright
exists not only in what is drafted and created but also in the list of clients
and addresses specially designed by an advocate or a law firm. It was held:
"23.
Learned Counsel next referred to the judgment of the learned single Judge of
this Court (as he then was) in Burlington Home Shopping Pvt. Ltd. v. Rajnish
Chibber and Anr. 61 (1996) DLT 6. After referring to the provisions of Section
17(c) of the Copyright Act which provides that if a work is made in the course
of other's employment under a contract of service, apprenticeship it is the
employer who is the first owner of the copyright therein in the absence of any
agreement to the contrary, a reference has been made as to what can be
compilations to be included in literary works and such information would
include a list of clients and their addresses. The relevant passages are
reproduced as under:
7. Copinger and
Skone James on Copyright (1991 Edn.) deal with law in the context of
compilation and state that 'compilations' are included in 'literary work'. They
further state: Trade catalogues are generally compilations, and as such are
capable of protection as literary works. On similar principles, a computer
database, stored on tape, disk or by other electronic means, would also
generally be a compilation and capable of protection as a literary work
8. David
Bainbridge has in SOFTWARE COPYRIGHT
LAW (at p.48)
dealt with computer database in the following terms:
A computer
database is a collection of information stored on computer media. The
information may be a list of clients and their addresses or it may be the full
text of various documents or it may be a set of co-ordinates relating to a
three-dimensional building structure. The range of things which may be included
in a computer database is enormous. The information contained in the database
may, itself, be confidential and protected by the law of breach of confidence
but what of the copyright position
The simplest way
of looking at a computer database is to consider the work it represents, for
example a printed listing of names and addresses, a printed set of
documents or a
drawing of a building. Those works are protected by copyright as literary or
artistic works. It does not matter if the work is never produced on paper and
only ever exists on computer storage media.
Example: XYZ
Supplies Ltd. has a computer database containing names, addresses, telephone and
fax numbers of customers. This database has been developed over a couple of
years and it is usual for a new customer's details to be entered directly into
the computer by XYZ's telesales' staff without a written record being made. The
customer database is protected by copyright as an original literary work
(assuming a modicum of skill and judgment is involved in compiling the
database, for example, if the telesales staff have to exercise judgment in
deciding whether to accept a new customer). Being a compilation, it is a
literary work. By storing the information in a database, it has been recorded
in 'writing or otherwise' as required by the Act ('Writing' is defined widely
and includes any form of notation or code regardless of the method or medium of
storage). Even if the database is never printed out on paper, it will be
protected by copyright.
9. What is
confidentiality or secret information has been dealt with by McComas, Davison
and Gonski in THE PROTECTION OF TRADE SECRETS - A in General Guide (1981
Ed). The authors have stated that it is not possible to provide an exhaustive
list of all that a Court may regard as confidential or a trade secret. However,
some examples of what has been held to constitute the subject matter of an
action to protect confidential information or a trade secret include (amongst
others) customers lists and information concerning the proposed contents of a
mail order catalogue.
12. From the
above statement of the authorities and the trend of judicial opinion it is
clear that a compilation of addresses developed by any one by devoting time,
money, labour and skill though the sources may be commonly situated amounts to
a 'literary work' wherein the author has a copyright.
9. Thus even
compilation of clients‟ database has been held to be amounting to literary work
wherein the author has a copyright. In M/s Sanmar Specialty Chemicals Ltd.
(Supra) relied upon by learned counsel for the defendant the court disposed of
the application in view of the specific contention of the Respondent therein
that the he was not using any of the confidential information that he acquired
from the applicants‟ company and all the information he was making use of are
easily available in the public domain. Learned counsel for the Defendants has
not been able to show that the data collected was in public domain nor can
claim benefit of Section 27 of the Indian Contract Act.
10 In the facts
and circumstances of the case I am of the considered opinion that the Plaintiff
has made out a prima facie case in his favour and in case the Defendants are
not injuncted, the same will cause irreparable loss to the Plaintiff. Consequently
the interim order dated 18th May, 2012 passed by this Court is made absolute.
11. I.A. No.
9538/2012 (by Plaintiff u/Order XXXIX Rule 1 & 2 CPC) is disposed of and
I.A. No. 13187/2012 (by Defendant Nos. 1 & 3 u/Order XXXIX Rule 4 CPC) is
dismissed.
(MUKTA GUPTA)
JUDGE
AUGUST 08, 2013
