18 April, 2018
EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd [2017] NSWSC 1310
What you need to know
The Federal Court held that there is no copyright in the functionality or the “look and feel” of a computer program.
Without express words to the contrary, assignments of copyright do not include an assignment of any causes of action that might exist prior to the date of assignment.
What you need to do
If you are claiming infringement of copyright in respect of source code or object code, you must provide evidence of access to or copying of the code, and should provide a comparison between your code and the code you allege is infringing.
If you want to protect the functionality of a computer program, you must consider other rights (eg, patents). Also consider having parties agree to confidentiality obligations before sharing any sensitive commercial information.
Ensure your IP assignments include the rights that you require (eg, rights in respect of any existing causes of action or a general statement to that effect, and rights to any pre-existing intellectual property you want assigned which should be listed in the assignment).
Background
EIFY Systems Pty Ltd (EIFY) brought an action against 3D Safety Services Pty Ltd (3D Safety) alleging 3D Safety had infringed copyright in its e-Induct system. EIFY also sought to establish rights through contractual or equitable duties of confidence, fiduciary duties, and misleading or deceptive conduct. Each of these claims failed.
EIFY and 3D Safety were in discussions to enter into a joint venture centred around the integration of the two parties’ IT systems: EIFY’s e-Induct (which delivered online induction training to workers) and 3D Safety’s consolidated online safety management system (3D System). Integration was essential to the possibility of a joint venture, as the selling-point to customers would be a single system for induction, plant management, access control, site control and safety management. Integration of these two systems required a rewrite of the 3D System’s source code to the language of the e-Induct system. The parties signed a document in July 2011, introducing a “critical timeline”, and noted that the parties could terminate their relationship if the rewrite was not completed by 30 September 2011.
The rewrite had not been completed by 30 September 2011, but neither party sought to terminate the agreement at that time. A demonstration of the integration between the systems on 9 December 2011 failed. As a result, 3D Safety decided to terminate the joint venture and continue to develop its own system for online inductions and training that could operate with their 3D System.
Copyright in e-Induct
EIFY claimed copyright in the following aspects of the e-Induct system as “original literary works”:
- the e-Induct source code and object code associated with the web pages;
- its structure or sequence or organisation; and
- the layout, format and look of the e-Induct web pages.
For the reasons set out below, Justice McDougall found that EIFY had been unable to prove a breach of copyright.
Source code and object code
Copyright can exist within source code or object code as a “literary work”. However, whether copyright in the e-Induct code had been infringed by 3D Safety’s induction system could not be resolved because EIFY did not provide any evidence that 3D Safety had accessed or copied the e-Induct code (ie, copying). Further, EIFY provided no comparisons between the e-Induct code and any allegedly infringing work produced by 3D Safety to show a similarity between the codes (ie, reproduction of at least a substantial part).
EIFY had sought to rely on expert evidence that “[i]n cases where the screens are very similar, the underlying Object Code in the Video RAM is also very similar”. However, the Court held that this did not demonstrate that the similarity of the object code resulted from any act that could constitute infringement of copyright subsisting in the object code of e-Induct.
Structure, sequence and organisation
Justice McDougall emphasised the distinction between design and functionality made by Justice Arnold in SAS Institute Inc v World Programming Ltd [2010] EWHC 1829 (Ch):
“… there is a distinction between protecting the design of the program and protecting its functionality. It is perfectly possible to create a program which replicates the functionality of an existing program, yet whose design is quite different.”
While 3D Safety may have replicated the functionality of e-Induct in their system, it did not follow that they hadcopied e-Induct’s design. Justice McDougall held that there is no copyright in the functionality, or the “look and feel” of a computer program, and therefore the claim failed.
Layout, format and look
As noted above, Justice McDougall held that there was no copyright in the “look and feel” of a computer program. EIFY had attempted to rely on US decisions that suggested such a right could exist. However Justice McDougall rejected the application in the Australian context because: first, the US list of copyright categories is an illustrative list, while the Australian list of copyright categories is exhaustive; and second, there is disagreement within the US courts as to whether such a right could exist.
Copyright and assignment
EIFY claimed copyright in 34 images that had been used in both systems as “artistic works”. EIFY claimed that the copyright in these images was assigned to it from Clearsite on 14 May 2015.
EIFY’s claim in respect of these images failed because Clearsite’s assignment did not assign to EIFY any causes of action that Clearsite may have had in respect of those images prior to 14 May 2015 (ie, when 3D Safety developed its system). An assignee can only sue for breaches of the assigned copyright prior to the date of assignment if those rights of action are assigned. EIFY did not provide any evidence of a copyright breach occurring after 14 May 2015, and therefore the claim failed.
This claim also failed on the basis that the assignment did not assign copyright in those images. The assignment related to intellectual property that had been developed as part of the “consultancy services” provided by Clearsite to EIFY. However, the 34 images had not been developed as part of those consultancy services and therefore the rights to them did not vest in EIFY through the assignment.
Conclusion: establishing copyright claims and assignment of IP rights
Parties looking to establish copyright claims in computer programs should provide evidence of copying of or access to the code in issue, and a comparison with the alleged infringing code. It is insufficient to rely on arguments about similarities of “look and feel” or functionality.
Parties should be careful with assignments of intellectual property rights to ensure that they are getting all the rights they require. This includes any causes of action that might exist, as well as specific pre-existing works that should be listed in the assignment.
For further information, please contact:
Kellech Smith, Partner, Ashurst
kellech.smith@ashurst.com
