Stiearc Systems Pty Limited v Paywell Australia Pty Limited [2010] NSWSC 1018

New South Wales Supreme Court

CITATION : Stiearc Systems Pty Limited v Paywell Australia Pty Limited [2010] NSWSC 1018

HEARING DATE(S) : 17, 19 August 2010

JUDGMENT DATE : 1 September 2010

JURISDICTION : Equity Division

JUDGMENT OF : Rein J

DECISION : Initial maintenance fees and additional maintenance fees are not included in the 15 per cent royalty payable pursuant to cl 3.2 of the Joint Venture Agreement.

CATCHWORDS : CONTRACT - construction - joint venture agreement - agreement to develop and license computer software to third parties - where royalties payable on "sales" of software by either party after termination of agreement - whether "sales" included initial maintenance fees and additional maintenance fees paid by licensees to either party

LEGISLATION CITED : Copyright Act 1968 (Cth)

CATEGORY : Principal judgment

CASES CITED : Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 The Movie Network Channels Pty Ltd v Optus Vision Pty Ltd [2010] NSWCA 111

PARTIES : Stiearc Systems Pty Limited (plaintiff) Paywell Australia Pty Limited (defendant)

FILE NUMBER(S) : SC 2009/289632

COUNSEL : C Champion (plaintiff) E Elbourne (defendant)

SOLICITORS : MatthewsFolbigg Lawyers (plaintiff) UBK Lawyers (defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Rein J

Date of Hearing: 17, 19 August 2010 Date of Judgment: 1 September 2010

2009/289632 Stiearc Systems Pty Limited v Paywell Australia Pty Limited

JUDGMENT REIN J:

Background 1 The plaintiff, Stiearc Systems Pty Limited ("Stiearc"), is a computer software developer. On 25 September 2002, Steiarc entered into a Joint Venture Agreement ("JVA"), with the defendant, Paywell Australia Pty Limited ("Paywell"). Paywell is a licensor of software, including Paywell software. The purpose of the JVA was for Stiearc to develop an improved version of Paywell's "Paywell Payroll System" by use of Stiearc's "GENSOL" system. The new payroll system was to be commercially exploited by both parties under the name "Paywell Plus". 2 Stiearc and Paywell undertook the development of Paywell Plus from March 2002 to mid-2003, when Paywell granted the first licenses to third parties for the use of Paywell Plus. Stiearc continued its development work on Paywell Plus to improve and upgrade it until Stiearc terminated the JVA on 13 May 2005. 3 Both parties jointly own the copyright in Paywell Plus: see cl 7.2 of the JVA, which is at page 81 of Exhibit A. Paywell and Stiearc are to pay each other royalties in respect of licences of Paywell Plus sold by either party to third parties during the term of the JVA (see cll 10.1 and 10.2 of the JVA) and after the termination of the JVA (see cl 3.2 of the JVA). 4 Stiearc's claim is, in effect, for an audit of the royalties to which it is entitled. There was a dispute as to how that audit is to be conducted, but agreement has now been reached as to a scheme for that to occur. The only remaining issue is one of construction of cl 3.2 of the JVA, which applies on termination of the JVA.