Auckland software house Advanced Management Systems has won a legal battle with the Ministry of Defence over copyright ownership of a payroll system originally developed for the navy.
AMS took the government to court over software system Leader, which it wrote for the Devonport naval dockyard 12 years ago. Leader cost more than $1 million and was installed in 1989 on top of AMS’s proprietary AMPS operating system.
AMS and Defence negotiated an agreement giving AMS the exclusive right to on-sell Leader. It was agreed that AMS would pay for ongoing development of the package.
In 1999 payroll services bureau NZ Payroll offered to buy 82% of AMS but the offer was rejected. NZ Payroll also approached NZ Defence, which had taken over the Leader contract from the Ministry of Defence, and in July 2000 the Defence Force sold Leader for $10,000 and assigned its agreement with AMS to New Zealand Payroll Software Systems, a subsidiary of New Zealand Payroll. It did so without notifying AMS.
AMS took Defence to court contending that although the MOD owned copyright in Leader as originally developed and installed in 1989, subsequent changes to the system were such that it should now be regarded that AMS owned 85% of the copyright and the MOD the remaining 15%. It also claimed Defence was not entitled to assign its interests in the marketing rights agreement or the original development contract without the consent of AMS.
The Auckland High Court has decided that AMS ownership amounts to 75%, with 25% owned by the Crown. It also found that the Crown was not entitled to assign its interest in Leader without the consent of AMS and in doing so had breached the contract and infringed AMS’ copyright.
AMS general manager Noel Reid says he can’t comment on the case because the parties are trying to negotiate a settlement over costs. He hopes to have reached an outcome by the end of February or March.