When four employees walked out, started a competitor, and began calling the firm’s clients, the Delhi High Court stopped them — because the compiled client database was the employer’s copyright.
The facts
Vogueserve International Pvt. Ltd. (home textiles and buying services) sued four former employees who left in July 2011 and set up “Excel Buying Services” in the same business. Vogueserve alleged they had “taken with them the client database and other confidential information” and were contacting named clients (STRAUSS, BOLTZE, IMPRESSIONEN, SCHNEIDER, DS PRODUKTE).
Their employment contracts contained confidentiality obligations, an acknowledgement that “the company shall own all work products created by you,” and an agreement to injunctive relief on breach.
The issues
- Does the material taken constitute intellectual property?
- Does Section 27 of the Contract Act (voiding restraints on lawful trade) strike down the clauses?
The arguments
- Vogueserve: the client profiles, strategies, pricing and vendor information were confidential and the compiled client database was a “literary work” protected by copyright, owned by the employer.
- Defendants: contact information is publicly available and so not protectable; and the non-compete clauses were void under Section 27.
What the court held
Justice Mukta Gupta upheld the interim injunction. The key findings:
- Section 17(c) of the Copyright Act — works created during employment belong to the employer absent a contrary agreement.
- A compiled client list, developed through “time, money, labour and skill,” is a literary work attracting copyright — it is the compilation and effort, not the raw public contacts, that is protected.
- Vogueserve therefore had a prima facie case and owned the database.
The takeaways
- A compiled database is copyright, even if individual contacts are public. The selection, arrangement and effort is what the law protects.
- Employer ownership by default. Under Section 17(c), work created in employment belongs to the employer unless agreed otherwise — put it in the contract anyway.
- Confidentiality clauses ≠ void non-competes. Protecting confidential information and employer-owned work is enforceable, distinct from an unlawful restraint of trade under Section 27. (See our note on the springboard doctrine.)
Frequently asked questions
Is a client database protected by copyright in India? Yes — a compiled client database created through skill and effort is a literary work under copyright, even if individual contacts are publicly available.
Who owns work created by an employee? Under Section 17(c) of the Copyright Act, the employer owns work made in the course of employment, absent a contrary agreement.
Are non-compete clauses enforceable in India? Post-employment restraints are largely void under Section 27 of the Contract Act, but confidentiality obligations and protection of employer-owned IP remain enforceable.
Can I stop ex-employees using my client data? Yes, where the data is a protectable compilation and/or confidential — as the Vogueserve injunction shows.
Legislation referred to
- The Copyright Act, 1957
- The Indian Contract Act, 1872