C Tek Software, Inc. v. New York State Business Venture Partnership

127 B.R. 501 (1991)

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C Tek Software, Inc. v. New York State Business Venture Partnership

United States Bankruptcy Court for the District of New Hampshire
127 B.R. 501 (1991)

KL

Facts

C Tek Software, Inc. (plaintiff) owned software called ClienTrak, which was used by banks and insurance companies to store information and generate correspondence. In 1987, C Tek sold a security interest in ClienTrak’s source code and copyrights from 1983 through 1987 to New York State Business Venture Partnership (NYSBVP) (defendant). In 1988, C Tek entered into a distribution agreement with Intelligent Investment Systems (IIS), giving IIS the right to produce and distribute derivative versions of ClienTrak without limitation. IIS made several improvements to ClienTrak after executing the agreement, including fixing software bugs impeding the program’s functionality, making the interface more user friendly, and improving the software’s importing, reporting, and communications functions. C Tek filed for bankruptcy in 1989 and sued NYSBVP as part of the bankruptcy proceedings to determine the validity of certain liens, including NYSBVP’s interest, if any, in the derivative versions of ClienTrak that IIS created. NYSBVP argued that its security interest in C Tek meant that NYSBVP owned the rights to any derivative works IIS created up until the filing of the bankruptcy action. IIS argued that it owned the copyright for its derivative works.

Rule of Law

Issue

Holding and Reasoning (Yacos, J.)

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