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2025 MarsdenLR 6141
HIGH COURT MALAYA PENANG
ONNET CONSULTING SDN BHD & ANOR – Appellant
Versus
AM PM PHARMACY SDN BHD & ORS – Respondent
[Civil Suit No: PA-22NCvC-199-12-2023]
Plaintiffs failed to prove ownership of copyright in the ODOO ERP system, thus cannot claim for infringement or breach of contract, leading to dismissal of their action.
Headnote:(A) Copyright Act 1987 - Sections 36(1) and 42 - Breach of contract - Plaintiffs alleged breach of confidentiality, copyright infringement, and negligence regarding the ODOO ERP system - Plaintiffs failed to prove ownership of copyright or the existence of the claimed work. (Paras 17-19, 19-21, 59-60)
(B) Duty of Care - Plaintiffs did not specify the duties owed by Defendants - No breach found. (Paras 80-82)
(C) Consent and Agency - Andrew's actions, as representative of Plaintiffs, constituted consent to migration of the ERP system. (Paras 86-89)
Facts of the case:
The Plaintiffs, a software provider and a web hosting service, sued the Defendants for breach of contract, copyright infringement, and negligence after the ODOO ERP system was migrated to a third-party server without their consent. The 3rd Defendant did not participate in the trial due to a prior consent judgment. (Paras 1-3)
Findings of Court:
The court found that the Plaintiffs failed to establish ownership of the copyright and did not prove any breach of duty or copyright infringement. (Paras 19-21, 60)
Issues: The main issues were whether the Plaintiffs owned the copyright of the ODOO ERP system and whether the Defendants breached any duty of care or confidentiality. (Paras 17-18)
Ratio Decidendi: The court ruled that the Plaintiffs did not provide sufficient evidence to establish copyright ownership or any breach of duty by the Defendants, emphasizing the necessity of proving the existence of the claimed work for copyright claims. (Paras 19-21, 59-60)
Result: Plaintiffs' action dismissed; costs ordered against them. (Paras 93)
Introduction
[1] This action arises from the download, transfer and migration of a certain 'ODOO ERP system' from the 2nd Plaintiff's hosting server to the 3rd Defendant's hosting server. The Plaintiffs sue the Defendants for multiple causes of action based on:- (i) breach of contract (specifically with regard to the duty of confidentiality), (ii) copyright infringement and (iii) breach of a duty of care in respect of the ODOO ERP system.
[2] The 3rd Defendant did not participate in the trial of the instant suit. This is because the 3rd Defendant and the Plaintiffs entered into a consent judgment on 5 August 2024. Accordingly, the reference herein to the Defendants shall mean the 1st Defendant ("D1") and the 2nd Defendant ("Andrew").
[3] After a full trial, I dismissed the Plaintiffs' claim. Here are the grounds of my judgment.
Background Facts
[4] The 1st Plaintiff ("P1") provides advisory and consultancy services, computer software solutions, computer applications and programming. P1 says that it is the ODOO partner in Malaysia. D1 says that P1 is actually a reseller of the ODOO software, which originated from Belgium.
[5] The 2nd Plaintiff is a web hosting provider. Its role in this matter was as the host server provider of the ODOO ERP system.
[6] P1 and D1 entered into a letter of confirmation dated 6 February 2018 ("letter of confirmation"). Whereby P1 would provide system consultation and install the ODOO ERP system, together with the ensuing post-implementation maintenance services, to D1 ("project"). D1 says it was agreed that P1 would implement a standard ERP (enterprise resource planning) software known as ODOO.
[7] P1 says that Andrew is the contractor appointed by it to develop and implement the ODOO ERP system for D1. Andrew is in charge of its installation, implementation and post-implementation maintenance. D1 says that Andrew was held out to be the project director.
[8] In early 2023, the ODOO ERP system supplied to D1 encountered the issue of low capacity. D1 was presented with two sets of solutions.
(a) First, by PW1 (Managing Director of the Plaintiffs), that the problem can be solved by upgrading the database, but a higher price is required to be paid.
(b) Second, by Andrew, that the problem can be solved by migrating the system to another server with a larger capacity. Andrew recommended the 3rd Defendant as the new hosting server.
[9] D1 accepted the second proposed solution of migrating the system to a new hosting server. Andrew then carried out the migration. The Plaintiffs say they are not aware of and did not consent to the migration.
The Plaintiffs' Case
[10] The Plaintiffs' case is this.
(a) P1, as the commissioner, ordered and paid for Andrew's services in developing the ODOO ERP system. Therefore, P1 owns the copyright therein.
(b) The act of downloading, transferring and migrating the ODOO ERP system to a third party hosting server, without their permission, constituted the following breaches:
(i) D1 breached the letter of confirmation. Specifically, the duty of confidentiality under cl 5 thereof;
(ii) D1 and Andrew jointly breached s 36(1) of the Copyright Act 1987 ;
(iii) D1 negligently breached the duty of care owed to the Plaintiffs in relation to the ODOO ERP system; and
(iv) Andrew breached his duty of care by conspiring with and assisting D1 in downloading, transferring and migrating the ODOO ERP system to the 3rd Defendant's hosting server.
(c) Consequent to the aforesaid breaches, P1 suffered losses in terms of technical support and post - installation maintenance for a minimum period of ten years at RM200,000.00 per year. The 2nd Plaintiff suffered losses in the form of hosting server fees on the ODOO ERP system at RM63,000.00 per year.
(d) The ODOO ERP system supplied to D1 is not an open source software. The modification works of the ODOO ERP system is the derivative work that constitutes proprietary software belonging to P1.
[11] At para 32 of the statement of claim, the Plaintiff
