STRATECH SYSTEMS LTD v. ATAL TECHNOLOGIES LTD AND ANOTHER

STRATECH SYSTEMS LTD v. ATAL TECHNOLOGIES LTD AND ANOTHER

The court held ATAL was entitled to terminate the Sub-Contract because Stratech's continued and explicit threat to use programmable tokens to disable the AVRS constituted illegitimate pressure and repudiatory conduct; AMS and KMS were Custom Programs requiring delivery of source code and Stratech failed to deliver; AVRS was Contractor Supplied Software subject to an irrevocable licence on delivery; ATAL was awarded net damages of HKD 8,720,000 and Stratech's copyright and defamation claims failed for lack of proper pleading and proof.

Citation
STRATECH SYSTEMS LTD v. ATAL TECHNOLOGIES LTD AND ANOTHER
Parties
Plaintiff (hcct 56/2006); 1st Defendant (hcct 3/2007): ATAL Technologies Limited; Defendant (hcct 56/2006); Plaintiff (hcct 3/2007): Stratech Systems Limited; 2nd Defendant (hcct 3/2007): Poon Lok To Otto
Court
Court of First Instance
Jurisdiction
Hong Kong
Judgment Date
30 June 2011
Case Number
HCCT3/2007
Procedural Posture
Construction and Arbitration Proceedings (consolidated) / Judgment on Consolidated Trial (court of First Instance)
Outcome
Judgment for ATAL. Stratech's claims for copyright infringement and defamation dismissed. ATAL awarded damages against Stratech.
Legal Topics
Termination, Economic Duress, Repudiatory Breach, Damages Assessment, Set Off, Source Code and Software Ownership, Licence Vs Assignment, Acceptance of Deliverables, Variation Orders, Maintenance Obligations, Pleading Requirements for Copyright and Defamation
Source Language
EN
Contract Law Construction Law Commercial Law Intellectual Property Law Tort Law (defamation) Termination Economic Duress Repudiatory Breach +8 more

Case Brief

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Parties

ATAL Technologies Limited

Plaintiff (hcct 56/2006); 1st Defendant (hcct 3/2007)

Stratech Systems Limited

Defendant (hcct 56/2006); Plaintiff (hcct 3/2007)

Poon Lok To Otto

2nd Defendant (hcct 3/2007)

Procedural Posture

Construction and Arbitration Proceedings (consolidated) / Judgment on Consolidated Trial (court of First Instance)

Legal Issues

  1. 1 Whether ATAL was entitled to terminate the Sub-Contract for Stratech's breaches and threats to disable AVRS
  2. 2 Whether Stratech's programming/use of tokens constituted economic duress or repudiatory conduct
  3. 3 Whether AMS and KMS were Custom Programs requiring delivery of source code and whether AVRS was Contractor Supplied Software

Ratio Decidendi

The court held ATAL was entitled to terminate the Sub-Contract because Stratech's continued and explicit threat to use programmable tokens to disable the AVRS constituted illegitimate pressure and repudiatory conduct; AMS and KMS were Custom Programs requiring delivery of source code and Stratech failed to deliver; AVRS was Contractor Supplied Software subject to an irrevocable licence on delivery; ATAL was awarded net damages of HKD 8,720,000 and Stratech's copyright and defamation claims failed for lack of proper pleading and proof.

Court Disposition

Judgment for ATAL. Stratech's claims for copyright infringement and defamation dismissed. ATAL awarded damages against Stratech.

Orders

  • Judgment for ATAL against Stratech in the net sum of HKD 8,720,000
  • Interest on that sum at HSBC prime +1% from 3 August 2006 to date of judgment and thereafter judgment rate