Auckland analytics services company Information Tools has been awarded an injunction against the developer of some of its software, Codeshed, also located in Auckland.
The injunction, heard and granted urgently in late January, requires Codeshed to supply an application called Online Analysis Program (OAP) to Information Tools and to put the source code of that application into escrow with a third party, until the court makes a further ruling on the matter.
Calls to Information Tools’ managing director, Ron Stroeven, were not returned. However, Codeshed’s Neill Millener told Computerworld the dispute is now heading to arbitration. He was not prepared to elaborate further.
According to a judgment from Justice Venning at the High Court in Auckland, the urgency of the application arose because of difficulties experienced by major clients of Information Tools in accessing the OAP program.
Information Tools reformats data from market research projects or clients to enable it to be used with a number of the its software products, notably one known as V3. The company has offices in the US, UK, Australia, Sweden, India and other countries, as well as international resellers of its services.
OAP enables online access to Information Tools V3 program and facilitates the presentation of material in V3 without the use of third party software. The judgment says Information Tools was reliant on Codeshed’s servers to ensure continuity of service to its clients.
“On the evidence significant disruption has occurred over the last few days concerning that. In the circumstances I accepted Mr Hazel’s submissions for the plaintiff that the injunction orders, at least in relation to the object program itself, were justified.”
Codeshed was established in April 2008 by members of the then in house software development team of the plaintiff. The companies entered a service agreement on 5 May, 2008 governing their relationship.
In addition to access, Information Tools argues the rights to OAP are owned by the company and it is entitled to the source code to the program under the service agreement. Under this agreement, Codeshed was to deliver copies of all source code being developed or modified for Infotools on a fortnightly basis.
Codeshed, however, argues the prototype of OAP was not commissioned by the plaintiff, but was developed independently by Codeshed.
“While the defendant may be prepared to concede that enhancements of the prototype to meet the plaintiff’s requests for functionality might be said to have been commissioned by the plaintiff, the defendant maintains the original OAP program and source code belong to it,” the judgment says.
Justice Venning finds there are serious questions to be tried as “the plaintiff has a strongly arguable case” that the OAP, including its original developed form, belongs to it.
He also expressed concerns about Codeshed’s financial position:
“On the other hand, apart from the difficulty of assessing damages to the plaintiff, there is a question mark as to the defendant’s ability to meet any damages award,” he wrote. “I note that as recently as 7 December, 2009 the defendant advised the plaintiff it had given staff termination notices and started the process of winding itself down as a trading company.
“I understand that the defendant now asserts that it is continuing to trade and is able to do so, but there is an issue as to its financial position.”