Legal Updates

Intellectual Property Law – Copyright Infringement – Computer Software

The case of Point Solutions Ltd v Focus Business Solutions Ltd and Another [2007], which was heard in the Court of Appeal, involved a claimant who carried on business as a provider of computer software services, and in particular software for the creation and use of electronic application forms for provision to the financial services sector.

At the material time the defendants had for a number of years been the dominant supplier in that market. In April 2001, the claimant and the defendants entered into an outsourcing agreement under which the claimant carried out work for the defendants, work which included a review of a module in the defendants’ Goal software. In order to carry out that work, the claimant was provided with three modules of the defendant’s Goal software.

In the course of its business the claimant supplied a product known as Acuo Software, a product which had been developed over a period between  2 July 2001 and August 2002. The development of Acuo Software was in response to an approach from CMI, a well known pension provider.

In October 2001, the outsourcing agreement between the claimant and the defendants came to an end. Apparently, the defendants had learned that the claimant had been awarded the CMI contract, for which the defendants had made an unsuccessful bid, and that the claimant intended to bid for a different contract with H (the parent company of CMI) in direct competition with the defendants.

The defendants asked for the return of the three modules of Goal software. The claimant claimed to have complied with this request. In October 2002, the defendants wrote to the claimant to:

“Seek confirmation of the provenance of the software you have developed in order to compete with [the defendants]”

The defendants also sought confirmation that the claimant had not undertaken any copying of the defendants' Goal software or solutions. The claimant replied, confirming that it had not copied the defendants' software, and offered to make voluntary disclosure (to a mutually agreeable third party) of material that would confirm that there had been no copyright infringement.

The parties agreed to the identity of the experts to be instructed, and terms of reference on the basis of which they should be asked to act. However, the matter did not progress. Eventually, in December 2004, the claimant commenced proceedings seeking a declaration of non-infringement of copyright. It was directed that an expert's report be obtained, however the parties failed to comply with that direction. The judge refused to grant the relief sought, saying that she had been asked to make a declaration that software, which she had not yet seen, did not infringe any copyright in another software product which she had also not yet seen. She went on to hold that copyright had not yet been demonstrated with regard to such software.

The claimant appealed.  It submitted on appeal:

§   That the judge was wrong to find that the claimant had failed to establish on the balance of probabilities that it did not copy the defendant's source code in creating the Acuo Software;

§   That the judge had erred in finding that there was no utility in making a declaration even if there had been no copying; and

§   That her finding that she would have exercised her discretion against granting a declaration even if she had found in its favour on the issue of non-infringement was perverse.

The appeal would be dismissed.

The claimant had not shown that the judge was wrong in finding that it had failed to establish on the balance of probabilities that it had not copied the defendants' source code in creating the Acuo Software. Therefore, the other two grounds did not arise.

It is interesting to note that a judge should be slow to allow proceedings of this nature to be brought to trial in circumstances where the parties have chosen (for tactical and forensic reasons) to disregard directions already given for the provision of the expert assistance needed if the court is to decide the real question in dispute.

If you require further information contact us at enquiries@rtcoopers.com

Visit http://www.rtcoopersiplaw.com or http://www.rtcoopers.com/practice_intellectualproperty.php

© RT COOPERS, 2007. This Briefing Note does not provide a comprehensive or complete statement of the law relating to the issues discussed nor does it constitute legal advice. It is intended only to highlight general issues. Specialist legal advice should always be sought in relation to particular circumstances.

 

 

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