Indian Kanoon - Search engine for Indian Law

"All rights, title and interest in and to the software including without limitation any patent, copyright , registered design, trade mark, goodwill or other Industrial or intellectual property rights in connection therewith ('Newspage IP') shall vest solely and absolutely in Newspage or its licensors and no additional right or license shall be tinted to customer by implication, estoppel or otherwise.

In particular, but without limitation, save as expressly provided hereunder, Customer shall not without Newspage's prior consent (i) translate any portion of the software into any other format or language or otherwise modify, adapt, alter, translate, or create derivative work from the software; (ii) rent, lease, timeshare or otherwise grant access to the software or its results or sublicense, distribute or otherwise transfer the software to any third party or (iii) alter, modify, reproduce or create derivative works or adaptions of the software, or any part thereof, or merge the software with other software; (iv) reverse engineer, decompile, disassemble or otherwise attempt to derive the source code for the software, except and only to the extent that such activity is expressly permitted by applicable law notwithstanding this limitation (but in such instance only upon prior notification to Newspage) 5.5.3 There is a clear distinction between royalty paid on transfer of copyright rights and consideration for transfer of copyrighted articles. Right to use a copyrighted article or product with the owner retaining his copyright, is not the same thing as transferring or assigning rights in relation to the copyright. The enjoyment of some or all the rights which the copyright owner has, is necessary to invoke the royalty definition. Viewed from this angle, a non-exclusive and non- transferable license enabling the use of a copyrighted product cannot be construed as an authority to enjoy any or all of the enumerated rights ingrained in Article 12 of DTAA. Where the purpose of the license or the transaction is only to restrict use of the copyrighted product for internal business purpose, it would not be legally correct to state that the copyright itself or right to use copyright has been transferred to any extent. The parting of intellectual property rights inherent in and attached to the software product in favour of the licensee/customer is what is contemplated by the DTAA. Merely authorizing or enabling a customer to have the benefit of data or instructions contained therein without any further right to deal with them independently does not, amount to transfer of rights in relation to copyright or conferment of the right of using the copyright. Accordingly, in my view, receipts on account of sale of software license, is squarely covered by the decision of Hon'ble Apex Court in the case of Engineering Analysis (supra). Hence, I hold t receipts by way of sale of copyrighted software license are not taxable as royalty.