No Copyright in mechanical compilation of Customer Database, Delhi HC [Read Judgment]

No Copyright in mechanical compilation of Customer Database, Delhi HC [Read Judgment]

Meera Emmanuel

The Delhi High Court recently reiterated that no copyright can exist in an information database that has been mechanically compiled, including the compilation of customer information devoid of application of any skill or judgment by the author.

Justice Rajiv Sahai Endlaw made the observation while dismissing a suit brought by a logistics company, Navigators Logistics Ltd (plaintiff) against its former employees (defendants), among others.

The suit was initiated on allegations that the defendants had misappropriated copyrighted material and confidential company information in violation of their employment contracts prior to their leaving the company. In this case, all the employee-defendants had resigned from the plaintiff company in May 2016 in quick succession.

The employment contract in question had prohibited the defendants from divulging “details of any of the trade secrets, research process, financial/administrative and/or organizational matters or any transactions or affairs of the company.”  

As submitted by the plaintiff, the material misappropriated by these employees included “confidential data, customer database, accounts information, airway drawings, airway bills templates, plans, reports, taxes and other financial information.”

However, the Court ultimately found that material to be examined primarily related to records of customer/clientele information and information concerning freight/carriage rates.

The plaintiff contended that such material comprised original and artistic literary works as defined in Section 2 of the Copyright Act, 1957. The case ultimately rested on the following query,

“… whether there can be any copyright in a list of customers/clients with their contact persons/numbers maintained by the service provider.”

Existence of copyright in literary works depend on the degree of skill/judgment

Reiterating a view he had already taken in the 2014 case of Tech Plus Media Private Ltd v Jyoti Janda, Justice Endlaw observed that the key to discerning whether copyright exists is to examine the degree of skill or judgment that has gone into the creating the said material.

It was held that no copyright subsists therein in the absence of employment of any skill judgment and labour in compilation thereof.

It was further held that without specifically averring as to the manner/technique/criteria employed in such sequencing/collection and the originality in the same, the plaintiff could not succeed in its claim.

It was yet further held that the compilation, in that case, was a derivative work in the sense of being a collection of the sequencing of already existing information and did not satisfy the standard of creativity required to qualify as a work in
which copyright subsists.

Where the material is merely a product of labour and capital, as was the case in the compilation of a customer database, no copyright could be claimed. To illustrate, the judge also took to recalling his days as an advocate,

As practicing Advocate, the list/compilation of my clients and their phone numbers was generated by my smartphone by entering the list of contacts in my phone. I never considered the same as a literary work or myself as the author of the said list/compilation.

This line of reasoning follows the principles laid down by the Supreme Court in the 2008 case of Eastern Book Company v DB Modak that to claim copyright in a compilation,

(i) the author must produce the material with exercise of his skill and judgment which may not be creativity (in the sense that it is novel or non-obvious) but at the same time it is not a product merely of labour and capital; and,

(ii) that the exercise of skill and judgment required to produce the work must not be so trivial that it could be characterized as a purely mechanical exercise.

In view of these observations, the judge noted that the material before it is not statutorily protected by the Copyrights Act. Moreover, in absence of any author, such unpublished material would not comprise copyrighted material under Section 13 (2) of the Copyrights Act. In this regard, the Court noted that the company (a juristic person) cannot be advanced as the author of the copyright either.

The plaintiff has not disclosed the identity of the author. The plaintiff does not claim any confidentiality about such identity. It was essential for the plaintiff to disclose identity of the author, to claim ownership of copyright.

Injunction to protect confidential information cannot be issued on vague allegations of IPR infringement 

Having established that no copyright exists, the judge then proceeded to examine whether the plaintiff can claim any relief for misappropriation of confidential information. However, the court could not make out a case on this ground either.

On the one hand,  the information claimed to be confidential related to information in the public domain or which were common knowledge in the relevant industry. The Court opined that there was no scope for terming such information as confidential or treating it as a trade secret.

On facts as pleaded in plaint it appeared that there can be no confidentiality about such a list… the list of customers/clients of the plaintiff, carrying on business in the field of logistic and freight forwarding, can only comprise of businesses/industry requiring carriage of goods and material and none else.

Names and contact addresses of such businesses are easily available in public domain. Any competitor of the plaintiff worth its salt would also know of such businesses/industry and be free to market his services to them, even if presently employing the service of the plaintiff.

I am thus unable to fathom the confidentiality therein… Every customer list cannot qualify as confidential information or a trade secret unless the confidentiality around such a list is of economic value/business value/commercial value…

On the other hand, the Court noted that the plaintiff had only made vague disclosures about the information it alleged was misappropriated by the defendants.  It was observed that the Court could not be expected to issue injunction orders when the plaintiff had not specified the information it sought to injunct the defendants from using.

In this context, the judge was prompted to take a critical view of similar cases where vague grounds were passed off in “high-sounding” phrasing, to extract Court reliefs which are ultimately unenforceable in the absence of any specific complaint.

In this context, it may be also mentioned that using such high-sounding/phrases which in fact have no content or meaning, a large number of suits are filed in this Court against the ex-employees and it has often been found that interim injunctions issued restraining the ex-employees from divulging the same to any other person remain unenforceable in the absence of particulars…” 

In this regard, Justice Endlaw also raised eyebrows against a June 2016 ex parte interim order passed by the Court on such vague allegations in the case before it.

I have wondered the purport of the interim order dated 3rd June, 2016 in this suit, restraining the defendants from utilizing, exploiting, copying, transmitting, publishing or releasing any confidential information and trade secrets of the plaintiff to any entity for any purpose whatsoever, without specifying as to which is that confidential information and trade secret.

In view of these observations, the Court ultimately concluded that it cannot pass an order of injunction as sought for by the plaintiff, more so because no clear grounds have been forwarded calling for the same.

This Court cannot pass such unenforceable order, the meaning whereof is not clear. It cannot be known, neither to the Court nor to the defendant as to what the defendant is injuncted from doing.

Another ground advanced by the plaintiff against the defendants was that they had violated an employment contract clause which prohibited them from working in a competitive industry for a period of one year after they left the plaintiff company. However, the Court pointed out that such a clause clearly violated Section 27 of the Indian Contract Act, which lays down that any contract in restraint of trade is void.

Therefore, the Court concluded that the plaintiff had no cause of action against the defendants and dismissed the suit.

Read the Judgment:

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