Interpreting Section 19(5) of the Copyright Act, 1957 through Pine Labs v. Gemalto: When Does Contractual Intention Override the Default Rule?

Background

Pine Labs developed and maintained the software powering Indian Oil’s Fleet Card Programme under a work order issued by Gemalto. During performance of this engagement, the parties executed a Master Services Agreement (MSA) dated 24.06.2004 governing development of future software. Under Clause 7.1, Pine Labs ‘assigns’ copyright and IP in project materials to Gemalto, and Clause 7.2 obligated Pine Labs to execute further documents if needed to enable Gemalto to enforce those rights.

The first commercially deployable version 1.03 of the IOCL software was delivered dated 16.08.2004, followed by later versions. A dispute arose in 2009 when Pine Labs learned Gemalto was engaging with third-party vendor to develop software for an HPCL card programme that would interface with IOCL systems, raising the possibility that Pine Labs’ source code might be shared.

Pine Labs alleged that even if there was an assignment, Section 19 (5)[1] and 19 (6) limit it to five years and India-only, meaning copyright in version 1.03 reverted in August, 2009. Pine Labs also asserted that later versions were only adaptations, so assignment of new code did not amount to a reassignment of copyright in Version 1.03. It sought declaratory relief and injunction restraining Gemalto using or sharing the source code.

The core issues that arises in this case are as follows:

1. Did Clause 7 operate as an assignment within the meaning of Section 19?

2. If so, does failure to specify duration and territory automatically trigger Section 19 (5) & 19 (6)?

3. If Clause 7 was only an “agreement to assign”, does Section 19 still apply?

4. Does Section 19 (5) lead to expiry/reversion after 5 years in such software assignment cases?

Court’s Reasoning

The Single Judge refused injunction primarily because, according to him, Section 19 (5) and 19 (6) did not apply to the assignment between Pine Labs and Gemalto. The Judge examined Clause 7 of the MSA, which stated that Pine Labs ‘assign’ IP in project materials to Gemalto, but also required Pine Labs to execute further documents if needed.

The Court held that Section 19 (1) requires a formal written assignment and Section 19 (2) requires that the assignment identify the work and specify the rights, duration, and territorial extent. But here, no duration was stated, no territorial limit was stated, and the clause contemplated further documentation in the future. So, the Court concluded that Clause 7 showed only an “agreement to assign” or equitable assignment, not a complete statutory assignment under Section 19. That is to say, the legal title has not yet been transferred under Section 19.

Therefore, Section 19 (5) which provides for five years deeming rule and Section 19 (6) which provides for India-only rule do not operate where there is only an equitable assignment. Thus, Single Judge vacated interim relief[2] and thereafter, Pine Labs appealed before the Division Bench.

The Division Bench disagreed with the Single Judge’s interpretation of Section 19 and restored the injunction. The Division Bench read Clause 7.1 of the MSA and held that its wording showed an immediate assignment of copyright as the clause said ‘Pine Labs “assigns” the IP’ and it did not postpone transfer to a future event. Clause 7.2 only required Pine Labs to assist in enforcement, i.e.; procedural follow-up only. Therefore, the clauses operated as a present assignment of copyright, not merely an agreement to assign. So the transaction fell squarely within Section 19. The Bench further emphasized that none of the agreements stated any duration of assignment and its territorial extent which is a requirement under Section 19 (2). Thus the deeming rule under section 19 (5) and 19 (6) shall apply. Accordingly, it was held that the assignment of copyright in the software was deemed to last 5 years and extend only within India.

The Division Bench went further and said that assuming, for argument’s sake, that Clause 7 was only an agreement to assign, there was no later written agreement complying with Section 19 (1) or the work order would be treated as the operative assignment document. Either way, the duration and territory were still not stated and therefore, Section 19 (5) and 19 (6) would still apply. So, the Single Bench’s “equitable assignment doesn’t fall under section 19” theory was rejected outright.

Since no duration or territorial extent had been stated, Pine Labs had established a strong prima facie case that the assignment automatically expired after five years and was confined to India, and that any continued use, adaptation, or third-party sharing of the source code thereafter lacked statutory authority. The Bench also noted that Sections 19 (5) and 19 (6) were consciously introduced by Parliament through the 1994 amendment to prevent unintended perpetual assignments and to protect authors in situations where agreements are silent, so courts are not expected to infer permanence from contractual silence when the statute already provides the answer. In light of this statutory framework and the risk of irreparable prejudice flowing from possible disclosure or modification of the source code, the Division Bench restored the injunction in favor of Pine Labs.[3]

Analysis

The Pine Labs decision demonstrates one end of the spectrum, that is, where Section 19 (5) are applied strictly and automatically because the contract is silent on duration. The reasoning there rests on the clear statutory command under Section 19 (2) that an assignment shall specify duration, failing which Section 19 (5) deems the duration to be 5.

Courts have repeatedly recognized that this deeming provision was consciously introduced through the 1994 amendment to prevent accidental perpetual assignments and to secure some level of continuing control for authors and creators in situations of contractual silence. In such cases, particularly where the assignment clause is broadly worded but leaves duration unstated, courts have no hesitation in giving Section 19 (5) full effect, as seen in this present judgment.

However, the position is not that section 19 (5) is applied mechanically in every copyright transaction lacking a standalone “Duration” clause. They key inquiry is whether the agreement is silent or ambiguous; if it is, Section 19 (5) fills the gap. Courts have also underlined the need to read the agreement as a whole before defaulting to the statutory deeming rule. A leading example is “Dorling Kindersley (India) Pvt. Ltd. v. Sanguine Technical Publishers,”[4] where the Delhi High Court held that Section 19 (5) cannot be read in isolation and that the true intention of the parties must first be gathered from the contract itself. If the language of the agreement unmistakably reflects an intention that the assignment is for the full term of copyright or perpetual, courts have declined to artificially cut it down to 5 years merely because the agreement does not contain a neatly framed term clause.

Similarly, in “Shemaroo Entertainment Ltd. v. Amrit Sharma & Ors.,”[5] the courts treated phrases such as ‘absolutely,’ ‘perpetually,’ ‘for the full term of copyright,’ ‘worldwide,’ and ‘all right, title and interest’ as significant indicators that the parties intended a long-term or perpetual transfer, and therefore, Section 19 (5) not applied to frustrate the parties who clearly expressed intention.

Building on this line of reasoning, the Calcutta High Court in “Saregama Ltd. V. The New Digital Media & Ors.”[6] reaffirmed that the 5-year deeming rule under Section 19 (5) is not to be invoked merely because a contract lacks a standalone term clause; rather, the agreement must be read as a whole to ascertain whether the parties intended an absolute or full-term assignment of rights. Likewise, the Madras High Court in “Ghanshyam Hemdev v. Bharathi Raja,”[7] while dealing with digital film rights, rejected the defence that the assignment had automatically expired after five years and held that the contractual language clearly reflected an intention to transfer rights for the full term of copyright.

Conclusion

This jurisprudence makes it clear that the outcome ultimately turns on the precise contractual language, and it is therefore critical to examine the assignment clause and the agreement as a whole before invoking, or resisting, the deeming defaults under Section 19(5). These decisions, read together, underscores that Section 19 (5) is a protective default designed for cases of genuine silence or ambiguity, not a mechanism for override assignments where the parties have expressly contracted for a longer or perpetual transfer of rights. Courts apply them strictly where the agreement is silent or uncertain, as in Pine Labs, but refrain from applying them mechanically where the parties have expressly contracted for a perpetual or full-term assignment. The emerging principle, therefore, is a balance between statutory protection and commercial certainty.

Author: Aditi Yadav, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.

[1] The Copyright Act, 1957, § 19(5). 

[2] Pine Labs Pvt. Ltd. v. Gemalto Terminals India Pvt. Ltd. & Ors., 2009 SCC OnLine Del 4006, decided on 8 December 2009, Delhi High Court (Single Judge)

[3] Pine Labs Pvt. Ltd. v. Gemalto Terminals India Pvt. Ltd. & Ors., 2011 SCC OnLine Del 5719, decided on 3 August 2011, Delhi High Court (Division Bench)

[4] Dorling Kindersley (India) Pvt. Ltd. v. Sanguine Technical Publishers, 2013(56)PTC40(Del), decided on 1 July 2013, Delhi High Court (Single Bench)

[5] Shemaroo Entertainment Ltd. v. Amrit Sharma & Ors., FAO(OS) No.292/2012, decided 20 July 2012, Delhi High Court

[6] Saregama Ltd. v. The New Digital Media & Ors., 2018 (73) PTC 329 (Cal), decided on 22 December 2018, Calcutta High Court

[7] Ghanshyam Hemdev v. Bharathi Raja, C.S. No. 97 of 2021, decided on 31 March 2023, Madras High Court