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54 mergers & acquisitions Ownership of software


on sale of a company Another month, another share sale (happily) completed. By and large the sale was straightforward but one point arose which I have seen before, writes Philip Weaver, partner, Pitmans LLP


In response to the standard warranty: “The company does not require any Intellectual property rights other than as disclosed in order to carry on the business as it is conducted at the date of this agreement,” the seller initially failed to make any disclosure. When it was pointed out that the target company must use software, the seller subsequently disclosed that the target company used a bespoke program for most aspects of its business. When pressed the seller disclosed that the program had been written and maintained by the seller’s friend.


The effect of Section 11 (i) of the Copyright, Designs and Patents Act 1988 (CDPA) is that the developer of software is the first


Deals


Pitmans acts for Dr John Cavill and Enterprise Ventures on investment into Qikker Holdings


Leading corporate law firm Pitmans LLP has acted on behalf of Dr John Cavill and Enterprise Ventures on their recent investment into AppLearn, a subsidiary of Qikker Holdings. The transaction was led by Pitmans’ corporate partner Roger Gregory and various other specialists across the firm.


AppLearn, a rapidly-expanding company founded in May 2011 by Mark Barlow, specialises in producing training modules for multi-national firms. These can then be viewed online or through apps on handheld devices. The company plans to double the office size at The Sharp Project and occupy space at ‘green screen’ studios in Manchester, increasing its team to 150 people.


AppLearn won £1.1 million in funding from the Regional Growth Fund for Venture Capital,


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owner of the copyright (unless the developer is an employee when, provided the development was created in the course of the employee’s employment, the copyright will belong to the employee). Clearly there are circumstances when a company would only expect to license its software.


In circumstances


where a program is specifically written for a company then a company might expect to own the copyright in the software. However, unless the company ensures when it acquires the software that the copyright in that software (and future amendments) is transferred to the company then copyright will belong to the developer and (subject to possible equitable considerations) the developer will


be able to terminate the informal licence on reasonable notice. On this occasion the developer was happy to enter into a last minute licence and maintenance agreement on reasonable terms. On other occasions I have found developers attempting to use their leverage position to extract better terms.


The clear message is that where this type of informal licensing exists between a non-employee developer and the company for bespoke (and often critical) software, a formal assignment of the copyright, in writing, should be put in place, whether or not a sale is contemplated.


As a wider point, this example is also proof of the need, during the process of disclosure against warranties in a sale, to think broadly about the implications of a warranty. Frequently the management of the target company will not have been through this process before, and will need to be walked through the context in which the disclosure letter sits, and encouraged to consider the realities of the way the business


operates, so that issues are properly identified and described. Without that degree of focus, the sellers giving the warranties may be much more exposed to the risk of claims after the sale than they would expect.


Details: Philip Weaver 0118-9570441 pweaver@pitmans.com


Enterprise Ventures and Dr John Cavill, who has now been made chairman of AppLearn.


Commenting on the case, leader of Manchester Council Richard Leese said: “This is another example of how public investment can stimulate job creation. AppLearn’s story so far is staggering and this is just the beginning for them.”


Gregory commented: “Pitmans was delighted to support Dr John Cavill and Enterprise Ventures through their investment into AppLearn’s business. This rapidly expanding, dynamic and innovative business provides a wealth of future opportunities for all parties, while creating more jobs for the region.”


Details: www.pitmans.com


on the sale of a south London portfolio to GRIP Unit Trust (GRIP), the Grainger-managed private rented residential fund.


The Tilt portfolio, comprising over 300 residential units in East Dulwich was sold to GRIP for £58.4 million. GRIP, one of the UK’s largest private rented residential property funds, was created in early 2013 by Grainger and APG, Europe’s largest pension fund asset manager.


The sale of Tilt will reduce debt while allowing Grainger to retain an equity interest in the portfolio and benefit from increased management fees.


The team from Bond Dickinson was led by experts from the firm’s residential, corporate, and employment teams.


Bond Dickinson advises Grainger on £58m property deal


Lawyers at Bond Dickinson have advised Grainger plc


The portfolio was originally purchased via a corporate acquisition in 2007. Grainger’s net cash inflow from the transaction is £54.5m and the sale was completed on August 6.


Legion worth £5m in first six months of 2013


Legion Trade Finance (LTF) has completed four deals in the past month, bringing the company’s total to over £5 million in the first six months of 2013.


Only in its second year of trading, the Henley-on-Thames- based business has facilitated trade worth over £20m, bringing much-needed financial support to SMEs neglected by traditional sources.


In the past month, LTF has provided funding to a manufacturer of engines against a confirmed order; a facility for specific purchases of testing equipment in the automotive industry; an importer of granite and a niche food supplier.


LTF is an independent financier assisting UK companies which need facilities to purchase goods from global suppliers, offering structured finance solutions including loans, paying suppliers direct and letters of credit.


THE BUSINESS MAGAZINE – THAMES VALLEY – SEPTEMBER 2013


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