IT

Damages when the software vendor doesn’t deliver

The NSW Court of Appeal has upheld the decision to award damages for a defective computer system as the cost of replacement and also included a component for an employee’s time spent working on solutions for the problems.

Some facts

SEMF is an engineering and project management consultancy.

In 2013, it engaged Renown to supply and install an upgraded project management and accounting system. The upgraded system was to be based on Microsoft Dynamics SL 2011.

When installed, between 2014 and 2016, the system was defective. The defects related mainly to the module which was supposed to enable SEMF’s employees to generate real-time reports through a web-based browser. SEMF’s employees spent considerable time and effort and incurred significant costs in trying to remedy the defects before Renown conceded it wasn’t possible to fix the problems.

By the time of the trial in 2021, the Microsoft Dynamics SL 2011 software had itself been superseded by the Microsoft Dynamics SL 2015 and then the Microsoft Dynamics SL 2018 package. SEMF had therefore arranged for the installation of a new system based on the 2018 package.

The trial judgment

At first instance, the trial Judge, Ball J found Renown had breached the contract to supply and install the system. His Honour gave judgment for $662,344 comprised of:

  1. $631,894 for the costs of installing a new system based on Dynamics SL 2018, less $52,218 for maintenance fees payable to Microsoft from 2016;
  2. $84,744 paid to Mr McLean, an employee who was found to have been engaged specifically to work on solutions to the problems with the Renown System and the implementation of the Business Portal. However, damages were not allowed for the time of other SEMF employees performing tasks which would not have been necessary had the Renown System not been defective, by reason that the extent of the diversion was not established, a substantial portion of the time claimed was in respect of administrative staff and there was no evidence that SEMF had had to employ additional administrative staff, and the disruption to the business was not so great as to justify an award of damages based on employee costs;
  3. $27,184 for additional licences, $13,935 paid to Plumbline, $7,320 paid to Ms Nicholls, and $800 paid to Pinnacle Analytics. These items either were not, or are no longer, in dispute;
  4. less, a set-off in favour of Renown for $51,315 in respect of unpaid invoices.

On appeal

On appeal, Renown contended Ball J was wrong to assess damages at the date of the trial rather than the breach. It argued further that the damages should be the difference between the value of the system as delivered and the value of the system it had contracted to supply and that no allowance for the employee should be included.

As we all no doubt recall, the measure of damages for breach of contract is:[1]

The rule of the common law is, that where a party sustains a loss by reason of a breach of contract, he is, so far as money can do it, to be placed in the same situation, with respect to damages, as if the contract had been performed.

Brereton JA (with whom Meagher and Mitchelmore JJA agreed) considered that contracts of this kind for the supply and installation of software systems were analogous to building construction contracts. While the general rule is that damages for breach of contract are assessed at the date of the breach, that is not always the case in such cases as the loss actually suffered can be affected by the date the defects are discovered.

Accordingly, Brereton JA considered SEMF was entitled to its reasonable costs of rectification when those costs were incurred. At [20], his Honour explained:

the principle emerges that the proper measure of damages in a case such as the present is the reasonable costs of rectification, which will be the costs when they were actually incurred (if they have been incurred by the date of trial), so long as they are not unreasonable; or (if they have not been incurred already), the reasonable costs as proved as at the trial, unless it is established that by not conducting rectification works earlier the plaintiff has unreasonably failed to mitigate its loss.

Further, SEMF had allowed Renown an extended period of time to rectify the defects which came to an end when Renown itself concluded it could not fix the defects. Hence, there was no suggestion that SEMF had unreasonably failed to mitigate its loss.

Replacement or fixing the defective module

Renown further contended that the costs of rectification should be limited to fixing the defects in the specific, faulty module.

In a conclusion that will surprise no one who has ever tried to unscramble these things, however, the expert evidence was that identifying the defects and appropriate remedies would be extremely time-consuming and expensive and might never be possible. Accordingly, the expert evidence demonstrated that replacing the whole system with the new 2018 system would be the more efficient and costs effective solution.

A discount because the 2018 system was better than the 2011 system

The next question was whether some discount should be made because SEMF got a better, more modern system – the 2018 version – than what it had contracted for – the 2011 version.

The trial judge accepted there were situations where some allowance for “betterment” should be made. However, they did not apply here. SEMF had not consciously chosen an asset more valuable than the one being replaced. His Honour also considered that, save in one respect, there was no evidence of any benefit to be accounted for.

The exception to this conclusion was in respect of maintenance fees. Before the system was upgraded to the 2018 system, SEMF had not been paying maintenance fees to Microsoft, some 18% of the contract value each year.

In the Court of Appeal, Brereton JA accepted that the 2018 system did bring enhancements and improvements to the user experience over the 2011 system. However, SEMF would have been entitled to upgrade upon payment of the applicable maintenance fees.

There was a disagreement between the experts on whether an upgrade from the 2011 system to the 2018 system would have simply worked or would have required additional work. If such work was required, SEMF had been saved it and its damages might have been reduced on the “avoided loss principle”.

Under that principle, however, Renown bore the onus of proving what work would have been required and so the amount of costs saved. There was no evidence of what work would have been involved let alone its costs so, at [36], this argument failed.

The employee costs

Ball J had allowed for the costs of Mr McLean’s work to be included in the damages, but not other employees. The Court of Appeal upheld these findings.

Mr McLean was a casual employee, engaged for a specific purpose. While Mr McLean was initially engaged to work on a different project, from October 2015 he was engaged full-time to work solely on the implementation and attempted rectification of the system installed by Renown. At [39]: Brereton JA explained:

As a casual employee whose work was solely related to the Renown System, he fell in a different category from the other employees in respect of whom “diversion of time” was claimed but not allowed.

Renown Corporation Pty Ltd v SEMF Pty Ltd [2022] NSWCA 233 (Meagher, Brereton and Mitchelmore JJA)


  1. I thought it was the rule in Hadley v Baxendale (or part of it) but the High Court in Tabcorp Holdings Ltd v Bowen Investments Pty Ltd has ascribed it to Robinson v Harman.  ?

Damages when the software vendor doesn’t deliver Read More »

EIFY: terms of use

Following on from this week’s earlier post about the copyright issues in the EIFY case, McDougall J also held the “clickwrap” agreement was enforceable, but the breach did not result in any compensable loss.

You will remember that EIFY and 3D Safety provide competing web-based induction services for the construction industry. The principals of 3D Safety had accessed EIFY’s site in the course of developing its websites for Mirvac and Thiess.

Before a browser could access the web-based induction services provided by EIFY, he or she had to check a box acknowledging that he or she had read and agreed to the terms and conditions of use. McDougall J found this sufficient to form an agreement.

The registration details a user was required to input included an ABN and at least one of the 3DSafety principals had entered in his company name as well.

The terms and conditions, however, followed the modern form of drafting, referring to “you” and “your”. At [324] – [325], McDougall J found that this gave rise to a binding contract only with the particular user and not his or her company:

324 The strong impression conveyed by the terms of use overall is that they are directed to regulating the basis on which each person who has access to the website exercises that access. The terms of use appear to distinguish between those who access the website (“you”) and those with whom EIFY “enters into agreements” (“Clients”).

325 In the absence of any express acknowledgment, either in the registration webpages or in the terms of use themselves, that an individual who registers and thereafter accesses the site accepts the terms of use not only in his or her own right but also on behalf of his or her employer, I think that Mr Andronos’ submission on this point is correct. By clicking to acknowledge their acceptance of the terms of use, Messrs Conacher and Morrow indicated that they personally accepted those terms. That must mean that they agreed to accept those terms of use as regulating their personal access to the website. It does not follow, and I do not find, that by doing so they agreed to bind Services or Systems to those terms of use.

326 In short, Messrs Conacher and Morrow were bound by the terms of use. [3D Safety was] not.

The terms of use included clause 5:

  1. Access and Interference
    You agree that you will not use any robot, spider, other automatic device, or manual process to monitor or copy our web pages or the content contained herein without our prior written permission. You agree that you will not use any device, software or routine to interfere or attempt to interfere with the proper working of our Site. You agree that you will not take any action that imposes an unreasonable or disproportionately large load on our infrastructure. Much of the information on our Site is updated on a real time basis and is proprietary or is licensed to e-Induct® by our Clients or third parties. You agree that you will not copy, reproduce, alter, modify, create derivative works, or publicly display any content from our Site without the prior written permission of e-Induct or of the party authorised to grant such permission.

McDougall J was rather critical of the drafting of this clause. Nonetheless, he was able to find that Conacher and Morrow (the principals of 3D Safety)[1] had accessed EIFY’s site and breached the terms. However, this did not help EIFY.

This was because McDougall J found that the only breach of the terms had been accessing confidential information. The confidential information was confidential to EIFY’s clients, not to EIFY. As a result, his Honour considered EIFY would not be able to establish any loss to be compensated through damages.

EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd [2017] NSWSC 1310 (McDougall J)

  • By the time of the trial, Morrow had in fact ceased being a director and only held some shares.  ?

EIFY: terms of use Read More »

The Consumer Guarantees in the ACL apply to computer games downloaded from overseas’ vendors

The ACCC – the consumer watchdog – has successfully sued Valve for misleading or deceptive conduct in relation to its Steam gaming platform. The representations were along the lines of statements made in the terms and conditions like:

“ALL STEAM FEES ARE PAYABLE IN ADVANCE AND ARE NOT REFUNDABLE IN WHOLE OR IN PART”.

The ACCC’s case was that such statements were misleading because they were inconsistent with a consumer’s rights to return defective goods and receive a refund. These rights arose (in the case of defective goods) since s 54 of the Australian Consumer Law incorporates into all supplies of goods in trade or commerce to consumers in Australia a guarantee that the goods are of acceptable quality. If they are not, s 259, amongst other things, confers a right of action for compensation where the deficiency in quality could not be remedied or was a major failure and s 263 provides an entitlement to a refund.

Valve is based in Washington State, USA. It argued its arrangements with Australians were not subject to the Australian Consumer Law. There were 3 reasons:

  1. Valve’s conduct did not occur in Australia and it did not carry on business in Australia;
  2. The Steam Subscriber Agreement was governed by the law of Washington State in the USA and so the Australian Consumer Law did not apply; and
  3. The software games were not “goods”.

Conflicts of law rules did not exclude Australian Consumer Law

In (very) broad terms, section 67 of the Australian Consumer Law says that the consumer guarantee provisions of the Australian Consumer Law continue to apply where the proper law of the contract would be Australia (but for the terms of the contract which provide otherwise) or the terms of the contract provide that the laws of some other country govern the contract.

As noted above, Valve’s contract with subscribers (i.e., someone who “buys” a game through Steam to download or play) provided that the governing law of the contract was the law of the state of Washington in the USA and its courts had exclusive jurisdiction.

The parties accepted that this clause could not be relied on in face of s 67. However, Valve argued that nonetheless the “proper law” of the contract was the law of the state of Washington and not somewhere in Australia.

Edelman J noted that at common law, the proper law of a contract was that which had the closest and most real connection with the transaction. This was determined by consideration of:

matters including (i) the places of residence or business of the parties, (ii) the place of contracting, (iii) the place of performance, and (iv) the nature and subject matter of the contract (437). Each of these is considered in turn.

Valve’s customers, at least those who gave evidence for the ACCC, were resident in NSW, Victoria and Tasmania. Valve, however, had its offices in Washington State, USA and did not have offices in Australia. Edeleman J acknowledged also that it was seeking to enter into contracts with people from all over the world and was aiming to do so on consistent terms.

His Honour next considered that the place of contracting was Washington State as that was the place where the electronic communication from the customer was received to form the contract. That is, presumably, the transaction was one where the customer made an offer to “buy” the game and the contract was formed when Valve accepted the transaction in Washington State.[1]

So, while the proper law of the contract was Washington State, USA, s 67 of the ACL applied.

Valve was carrying on business in Australia

Even though his Honour found that the proper law of the contract was Washington State in the USA, Edelman J nonetheless found that Valve both engaged in conduct in Australia and was carrying on business in Australia and so subject to the Australian Consumer Law.

You can see where this is going at [4]:

…. There are some difficult issues involved in determining whether “conduct” is in Australia, but even if Valve’s conduct was not conduct in Australia, the Australian Consumer Law would apply if Valve carried on business in Australia. Valve said that it does not carry on business in Australia despite Valve (i) having more than 2 million user accounts in Australia, (ii) generating potentially millions of dollars in revenue from Australia, (iii) owning, and using, servers in Australia, with original retail value of US $1.2 million, (iv) having relationships with businesses in Australia, and (v) paying tens of thousands of dollars monthly to Australian companies in expenses for running its business in Australia.

conduct in Australia

Despite the difficulties in determining where conduct takes place, Edelman J was able to find that Valve engaged in conduct in Australia. The conduct in question was the making of representations. The representations were made in the place(s) where they were received (otherwise, if no-one saw or heard the representation, there would be no conduct). Here, however, representations about “no refunds” were made directly to customers in Australia in “chat” sessions and when they signed up for accounts and “bought” games to download: [2]

…. The purchase of a game also required a consumer to click on a box that agreed to the terms of the SSA. The consumer provided Valve with his or her location as Australia at the time of purchase. Indeed, Valve priced some games differently in Australia (ts 120–121). The consumer might be told by Valve that “This item is currently unavailable in your region” (Court Book 347).

carrying on business in Australia

Accepting that “carrying on business” could have different meanings depending on the context, Edelman J accepted the approach advanced earlier by Merkel J in Bray:

… the ordinary meaning of “carrying on business” usually involves (by the words “carrying on”) a series or repetition of acts. Those acts will commonly involve “activities undertaken as a commercial enterprise in the nature of a going concern, that is, activities engaged in for the purpose of profit on a continuous and repetitive basis” ….

That was undoubtedly the case here. See the matters referred to in paragraph 4 above.[3]

Software downloads are “goods”

Computer programs are specifically included in the definition of “goods” for the purposes of the ACL. Valve argued, however, that what it was really supplying were services including the motion picures and audio which portrayed the images and sounds which the gamer interacted with.

Edelman J agreed that the film and audio files were not a computer program for these purposes, adopting the definition of a computer program as a set of instructions from the Copyright Act.

Under the ACL, however, it is not a question whether the supply is substantially a supply of services. Rather, the question is whether or not it involves a supply of goods. If so, the way the definitions are written, it doesn’t matter whether there is also a supply of services.

Valve further contended that it did not supply goods as all the subscriber had was a licence to use the software and, citing Cowell, a bare licence is purely a contractual right; not the supply of any property. One problem with this argument was that s2 of the ACL defined supply to include lease, hire or hire-purchase; terms sufficiently wide to encompass a licence. Another problem was that the argument did not take into account that subscribers could download games to play offline. They “physically” had the goods.

Valve therefore breached the consumer warranties implied by the ACL into each arrangement.

Interesting question whether foreighn companies systematically supplying goods or services over the internet to Australia will need to be registrered as a foreign company carrying on business in Australia under s 601CD of the Corporations Act? One may wonder about the practical ramifications flowing from that.

Australian Competition and Consumer Commission v Valve Corporation (No 3) [2016] FCA 196 (Edelman J)


  1. OK, that is an old-fashioned characterisation of the contractual formation, but Edelman J relied more specifically on UNCITRAL Model Law on Electronic Commerce 1996 with additional article 5bis as adopted in 1998 and the electronic transaction provisions in Australian laws such as Electronic Transactions Act 1999 (Cth) s 14B.  ?
  2. Ward Group v Brodie & Stone was distinguishable, at least because in Valve, there were (2.2 million) real purchasers. Gutnick was also distinguished as directed to different issues.  ?
  3. Catalogued again at [199] – [204].  ?

The Consumer Guarantees in the ACL apply to computer games downloaded from overseas’ vendors Read More »

Convergence review

It’s never too late to discover a government inquiry (at least before the legislation comes through)!

Back in December, the Minister for Broadband, Communications and the Digital Economy announced a Convergence Review.

Media Release, draft Terms of Reference and “home page“.

Given its departmental provenance and some of the discussion in the Background Paper, it might be thought the Review is mainly targeted at the Telco Act, the Radiocommunications Act and the Communications/Media regulator.  There are some interesting straws in the wind for IP however:

First, the first draft term of reference:

In light of convergence, the Committee is to review the current policy framework for the production and delivery of media content and communications services. The Committee is to:
  1. develop advice for Government on the appropriate policy framework for a converged environment;
  2. advise on ways of achieving it, including implementation options and timeframes where appropriate; and
  3. advise on the potential impact of reform options on industry, consumers and the community.

(my emphasis).

In the Background Paper, there are also some interesting IP-related aspects:

So, at pp. 14-15:

Another trend affecting business models is the trend towards the ‘granular’ nature of media consumption; for example consumers can now download songs, not albums; watch specific TV shows on demand and not the linear programming of a channel, and read a single news article through an online search engine, rather than purchase and read the day’s newspaper edition. In the online world the consumer is in the driving seat of their own media and entertainment consumption patterns with more choice and control than ever before. In addition to the rise of competing online platforms and fragmentation of the consumer market, another challenge to established business models is that digital revenues are not yet matching analog ones. In 2008, NBC Universal CEO Jeff Zucker famously stated that media companies should not ‘trade analog dollars for digital pennies’24. By 2009, he quipped that this may have increased to ’digital dimes’25. While online revenues are growing and the gap is reportedly closing26, ensuring ongoing investment while balancing the difference between analog dollars and digital cents presents challenges to established media companies.

On p. 16 under the heading ‘Policy settings that encourage Australian, local, and children’s content’, the discussion about Australian content quotas imposed on tv and radio, ends:

The rise of these alternative audiovisual services and the growing fragmentation of the media market raises questions as to appropriate policy settings to ensure the ongoing production and distribution of Australian media content which reflects and contributes to the development of national and cultural identity.

(Their emphasis)

And, of course, the paranoid among you out there in cyberspace, will no doubt recall the rather cavalier treatment (e.g. here and here) meted out to iiNet before it won the (first round of) the Roadshow case.

Now, you could have fun (and spend lots longer than a year) on this: e.g. Prof Gans lambasts the authors (and, I guess, indirectly the other copyright owners who have similar ideas), but (for balance) also the App Store and, of course, until the Floods came, we were all twisted up with Gerry Harvey wondering if putting a GST on online purchases (overseas) will change the fact that you can often buy things online from overseas for prices 30-40% less than in stores here. Assuming of course you can “buy”: compare the tv shows or movies or books in the iTunes store or on Kindle or audible from Australia to what you can get with a US address, maybe. Somehow, I have avoided mentioning Google so far. Wonder how many examples the Review will come up with which lead to peeling back regulation?

Now, the time for commenting on the draft Terms of Reference closed on 28 January, so the scope of the review may become clearer. Then, there will be an independent committee to conduct the review, with their report scheduled for 1st quarter 2012.

One to watch!

Lid dip: Mary Wyburn

Convergence review Read More »

Software licensing

Software licensing Read More »

The Digital Economy Down Under

Minister Conroy released on 14 July a report Australia’s Digital Economy: Future Directions, which he has described as a road map for Australia’s digital economy future.

Amongst other things, in (sort of, kinda, a bit) similar vein to the EU’s Commissioner Neely, the report notes:

The digitisation trend is changing customer habits and expectations. Increasingly, they expect an on demand experience, that is, the ability to enjoy what they want, when they want, on the device they want. This has been facilitated by digital video recorders and music and video sites that offer on–demand content for streaming or downloading.

The digitisation trend is changing customer habits and expectations. Increasingly, they expect an on demand experience, that is, the ability to enjoy what they want, when they want, on the device they want. This has been facilitated by digital video recorders and music and video sites that offer on–demand content for streaming or downloading.

but has attracted attention in the press for foreshadowing a crack down on file sharing.

Certainly, at p 19 (of the Snapshot), the report states:

Several rightsholder groups in Australia argued that a role for Government exists in addressing the apparent popularity of peer–to–peer file sharing of music and movies, without the necessary permissions of the relevant copyright owners. File–sharing is cited by the content industry as a barrier to further investment in sustainable and innovative content initiatives in Australia. However, some of the solutions proposed by rightsholders to address file-sharing have been criticised as raising issues of due process and consumer rights.

The Australian Government recognises a public policy interest in the resolution of this issue. The Government is currently working with representatives of both copyright owners and the internet industry in an effort to reach an industry–led consensus agreement on an effective solution to this issue.

Earlier, a pp 12-3, the Snapshot foreshadows further consideration of the scope and availability of the ‘safe harbours’ from copyright infringement:

At present it is unclear whether the present scheme works effectively for some types of online service providers that have subsequently grown in popularity since the scheme’s introduction. The platforms provided by newer online service providers allow social engagement, content distribution and political communications, through features frequently referred to as user–generated content and Web 2.0. This includes social networking sites such as MySpace, Bebo and Facebook (which launched in 2003–05), the online photo sharing site Flickr (which launched in November 2004), and video sharing sites like YouTube and Vimeo (which launched in 2004–05). ….

The limited availability of the safe harbours to those who qualify under that legislative triumph of drafting encompassed in the definition of “carriage service provider” has been under review now almost since before it was enacted. One wonders what there can be left to consider!

Also, with reference to Gov 2.0, the report does encourage Government to open access to appropriate categories of public sector information. I guess the devil lie in the detail of what is “appropriate”. For example. (Trying very hard not to mention that Senator Conroy is also the Minister responsible for the Government’s plans to censor the internet.)

In a positive move, consistent with the Gov 2.0 approach, the report has been released under a creative commons licence.

You can find the Snapshot (a 35 page synopsis) and the full report here in various formats.

The Digital Economy Down Under Read More »

Terms of Service Tracker

The blogosphere ‘lit up’ and Facebookers (?) went on the rampage when it emerged that Facebook was unilaterally changing its terms of use (and not telling anyone) – Facebook: All Your Stuff is Ours, Even if You Quit.

Jonathon Bailey at Plagiarism Today looks at the EFF’s new TOSBack so you can keep up to date with how your service provider is “shifting the goalposts”.

Google, for example, amongst other things insidiously changed “Terms of Service for Blogger.com” to “Blogger Terms of Service”. (Vote of thanks to whichever Supreme Being I’m following today that I don’t use Blogger!)

All joking aside (and remembering the outrage at Facebook – hope Twitter doesn’t own all my tweets?), this could be a very practical tool.

p.s. Facebook did allow its outraged users to set up a community on Facebook to campaign against the change.

Terms of Service Tracker Read More »

Use of Software and those computer defences again

You’ll recall that SAG licensed its database software to RWWA. RWWA engaged KAZ to provide disaster recovery services and installed a copy of the software on KAZ’ off-site servers. Meckerracher J dismissed SAG’s claim that this was unlicensed and therefore infringement of its copyright. (link via my attempt to summarise here).

The Full Court has substantially dismissed the appeal, but found the judge was wrong to the extent his Honour considered s 47F of the Copyright Act 1968 would have provided a defence also.

On the question of licence construction, their Honours found that the proposed use fell within the terms of the licensed use “for … emergency restart purposes“:

34 The phrase “for … emergency restart purposes” is more ample than, for example, “in order to restart the System in an emergency”. A penumbra surrounds “emergency restart”. It is a natural reading of the composite phrase to include within its coverage testing whether the copied System will restart should an emergency occur.

35 If one were to regard the phrase “for … emergency restart purposes” as open to two constructions, SAG’s construction, in our view, results in a meaning that would be unreasonable or inconvenient. The purpose behind clause 12.3 is to protect RWWA from serious loss in an emergency, whether caused by a breakdown of its mainframe or some external event putting it out of action. It would be an unreasonable and inconvenient result if RWWA were to be unable to take sensible steps to make it more likely that the purpose behind clause 12.3 would be achieved, by testing the copied system in order to maximise the chance of the restart occurring in the event of an emergency arising.

36 Further, we agree with the primary judge’s observation quoted at [28] that SAG’s interpretation would make clause 12.3 a pointless exception to the other prohibitive or restrictive provisions of the agreement, and that such a construction would provide very little scope for achieving the purpose of clause 12.3 described above.

The expert evidence was also consistent with this.

While the Licence Agreement did (by clause 1.4) expressly prohibit the software being installed at any location other than the “designated location”, the clause had to be read in context and clause 12.3, as SAG acknowledged, did permit RWWA to use the software “for archival or emergency restart purposes”. Clause 1.2,which prohibited “use” on anything other than the designated hardware, similarly had to be read down.

If the terms of the licence had not been capable of construction to permit this (fairly typical) type of disaster recovery strategy, however, s 47F would not have protected RWWA. S 47F provides a limited defence for “security testing”. However:

55 What s 47F(1) permits is the reproduction of the original copy for the purpose of testing the security of that copy. The original copy is the copy RWWA is licensed to use. The permitted testing is of the security of that copy. The passages from the primary judge’s reasons quoted at [49] appear to us to be saying that the testing of the functionality of the DR Copy at the DR Site is the testing of the security of the original copy at Osborne Park. That, in our view, is not what s 47F(1) authorises. On the facts of this case, what it permits is the making of a copy of the installed copy at Osborne Park for the purpose of testing the security of the installed copy. As it seems to us, the primary judge’s construction of the provision enables the DR Copy at the DR Site to be tested so as to determine its efficacy should the installed copy at Osborne Park for some reason be no longer available.

and, given the unchallenged expert evidence on the issue:

68 For the above reasons we are unable to accept RWWA’s contention, which the primary judge appears to have adopted, that “testing … the security of the original copy” extends to what was done at the DR Site, namely testing of the DR Copy to ensure that the System would be capable of being restarted and operated without the loss of data. In our view, “testing … the security of the original copy” should be confined to testing the original to ascertain its security from unauthorised access or against electronic or other invasion.

The Court noted, but did not need to consider the correctness, of his Honour’s conclusion that s 47C would also have protected RWWA.

So, an appellate level illustration providing some confirmation of how strictly the the Courts will approach the gobbledygook enacted in the special computer program defences. Make sure you draft your software licences to provide the protection actually needed – especially if the software needs to be used in a “disaster recovery” situation.

Software AG (Australia) Pty Ltd v Racing & Wagering Western Australia [2009] FCAFC 36 (Spender, Sundberg and Siopis JJ)

Use of Software and those computer defences again Read More »

Pirated software at work

Pirated software at work Read More »