A case on computer software licences and back ups in Australia

A rare and interesting decision on the scope of (mainframe) computer software licences and s 47C (computer program back-ups) and s 47F (security testing) of the Copyright Act:

RWWA (which runs the West Australian TAB).  SAG granted it a non-transferable, non-exclusive licence to run the ADABAS database management software on its mainframe computer.  This was the software used for its its betting business.  

In addition to installing the software on its mainframe computer, RWWA arranged with KAZ to use KAZ’ mainframe for a ‘warm’ disaster recovery site: RWWA stored a mirror-image disk copy on KAZ’s mainframe computer.  Although a copy was stored on KAZ’s mainframe, it was not loaded into ‘memory’ except when being used in an actual disaster recovery situation or routine testing to ensure the back-up would work. Prior to this, RWWA had used back-up tapes stored off-site.

In a 268 paragraph decision, McKerracher J has held that RWWA did not breach of its licence by doing this and, in any event, was protected from copyright infringement by ss 47C and s 47F of the Copyright Act.  

The main issues were whether or not RWWA’s off-site storage and testing of the back-up and/or the involvement of KAZ entitled SAG to claim additional licence or maintenance fees (up to several hundred thousand dollars per annum).  In broad summary, SAG contended that

(1) storage and, in particular, the testing of the back-up was in breach of cl. 12.3 and required further maintenance fees or

(2) the involvement of KAZ was in breach of cl. 1.5 which prohibited ‘outsourcing’.

Cl. 1.5 provided:

1.5 The Licensee shall not assign, sub-licence, sell, lease, encumber, charge or otherwise in any manner attempt to transfer this Licence or any of its rights or obligations hereunder. The Licensee may not allow any third party to operate the System(s) on its behalf as part of any outsourcing, facilities management, application service provision or similar type of arrangement.

Clause 12.3 provided

12.3 Software AG hereby expressly authorises the Licensee to copy the System(s) (in object code only) and the Documentation for archival or emergency restart purposes PROVIDED THAT no more than (3) copies made by the Licensee of the then current system version shall exist at any time and all old versions shall be destroyed.

In rejecting SAG’s claims that cl. 12.3 did not protect RWWA, McKerracher J found:

186 Clause 12.3 is intended to be permissive. Objectively viewed, its purpose is to permit the licensee to reproduce the software to the extent that may be required for emergency restart purposes. To merely copy the distribution tapes or cartridges would be of limited practical use for that purpose. This is common ground amongst all experts. To construe cl 12.3 as being confined simply to copying tapes or cartridges of the unconfigured and uninstalled System would be a construction that is at least unreasonable and inconvenient but would also be unjust.

187 It is common ground that the System as supplied does include some source code. When the source code is converted to object code and is then linked to create load modules on installation of the System, the System as installed and configured then becomes a copy ‘in object code only’ and there is a copying of the System for emergency restart purposes.

and

203 As there is no technical meaning, the question is one of construction of the Licence Agreement. In my view the only sensible construction is that when the Licence Agreement refers to ‘use’ it means using the System within RWWA’s ordinary business or some other business, not for occasional testing for one DR Site. This must be so, in my view, if the DR Copy at the DR Site is authorised by cl 12.3 as I conclude that it is.

205 If the use by RWWA of the DR Site is authorised by cl 12.3, then the question as to whether or not the System is otherwise in use (for cl 1.1(d)), in my view, falls away. I consider that the use is so authorised.

Further, the copy was made for the purposes of emergency restart:

209 In a business which has an extremely high turnover of transactions and a substantial financial turnover, each day of delay is significant. In my view there is no scope for the argument that emergency restart simply means that the business has sustained a disaster or emergency which will require a restart at some leisurely pace in a week or so. In my opinion the whole concept of emergency restart means that as an essential part of a highly sophisticated business environment, the restart is required as quickly as reasonably possible.

Taking into account similar considerations, his Honor found that ss 47C and 47F would also operate to protect RWWA.

Nor was there any ‘outsourcing’ in breach of cl. 1.5:

249 Mr Fink who has had very extensive experience in the mainframe industry rejects the suggestion that the arrangement or contract between KAZ and RWWA is one which constitutes outsourcing in any sense. Rather, as a matter of practice and in accordance with the nature of the arrangement between KAZ and RWWA by its contractual documents, what KAZ provides to RWWA is an environment for the equipment on which the DR Copy will be loaded should an emergency occur. RWWA retains responsibility for the DR process. There is no evidentiary basis for suggesting that KAZ is in any way involved in operating the System. Without that evidence which, had it been available, may have been the closest there was to any ‘outsourcing’, none of the other suggested actions could constitute ‘outsourcing’ as it is used in the Licence Agreement.

Racing & Wagering Western Australia v Software AG (Australia) Pty Ltd [2008] FCA 1332 (29 August 2008)

What are you going to do

Twitter is a kind of IM (instant messaging, for those of you even squarer than me) for web browsing.  It used to be mainly for …; well, anyway, people who can’t hang around waiting for the email to come through are increasingly adopting it.

Some twitters (or is that tweeters?) are adopting the persona of fictional characters.  The creative ones getting right into character.  Marty asks the questions

Read more about Twitter, including a neat little video, here.

p.s.  I’d like to finish off with a “tweet tweet”, but your groans might be spared in case there’s a letter of demand out there somewhere.

IceTV transcript is up

and it certainly looks like House of Commons was right to warn database owners to be very afraid.

Gummow J opened with a bouncer to Counsel for Nine Network, the respondent, pointing out that the House of Lords in Ladbroke v William Hill overruled Lord Diplock who was then sitting as Diplock LJ in the Court of Appeal.  Followed up with:

GUMMOW J: What I am putting to you is that do not think that in this Court William Hill is the end of a rainbow.

Then:

GUMMOW J: There is real question of what this notion of originality means in this “electronic age”, is there not?

Gummow J went on to describe Cramp v Smythson from the 1940s as the “elephant in the room” and then

GUMMOW J: I suppose what I am putting to you is, maybe some of the considerations that underpin the approach in Feist conceivably could underpin an approach to the notion of substantiality at the later stage in our law.

although his Honour did indicate that Counsel’s rejection of the relevance of Feist under our Act “may well be right”.  Nonetheless:

GUMMOW J: There will be a grant of a special leave in this matter. The Court will allow one and a half to two days, I think, and we expect to have the assistance of counsel to deal with this matter thoroughly without any reticence in starting at the bottom, so to speak, and we expect counsel to be familiar with the academic writing in this field. They have already been referred, I think, to an article by Dr Deazley in [2004] Intellectual Property Quarterly 121. There is also what may be a useful article by Professor Sterk in Michigan Law Review for 1996, Volume 94, pp 1197 called Rhetoric and Reality in Copyright Law. There is a lot of other material out there as well. I hope the arguments will be informed with all of that, at least in a suitable background.

We’ll have to wait a bit longer to see what the actual questions are.

Gripe sites and branding

What do you do when someone registers the domain name [yourbrand]sucks.com?  What should you have done before it got registered?

Apparently, more than 20,000 domain names take the form [yourbrand]sucks.com.  Sometimes, the person that registers it is just after your money (and lots of it); sometimes, they have a very serious grievance with your company and they want to air all the dirty details out there in cyberspace.

When they’re just after lots of your money, WIPO’s Overview of WIPO Panel Views on Selected UDRP Questions indicates that a majority of panellists will probably find the name is confusingly similar to your domain name (but by no means all), but your chances on the other 2 requirements are very hard to predict. Compare para. 1.3 to 2.4.  

 

In Australia, it is likely that a genuine gripe site won’t infringe your trade mark for the simple reason that the griper is not using your trade mark as a trade mark.  (I’m not sure if it would fall within s 122(1)(b), but s 120 specifically requires use as a trade mark and the cases derived from Irving’s Yeastvite v Horsenail indicate that use to refer to the trade mark owner’s own product marked with the trade mark is not use as a trade mark).  Of course, the griper might be engaging in defamation or slander of goods or something similar.

Now, Fairwinds Partners, who are Internet Strategy Consultants, have published a report via brandchannel (pdf) on this issue from a marketing perspective.  The report looks at what’s happening including the clever, but nonetheless brave, strategy adopted by Loews to use the name to field and address their customers’ concerns.

Brave because there aren’t that many brand owners who are going to want to see that word “sucks” joined with their prized asset; clever because … well, they are doing what the customer wants in the main: finding out about the problem and dealing with it.

Monopolies and IP round up

IPKat reviews 2 new texts on the “interface” between aspects of IP and anti-trust or competition and an economics “reader”:

(1) Nuno Pires de Carvalho, TRIPS Regime of Antitrust and Undisclosed Information; and

(2) Irina Haracoglou, Competition Law And Patents: a Follow-on Innovation Perspective in the Biopharmaceutical Industry; and

(3) Robert P. Merges (ed), Economics Of Intellectual Property Law.

IPKat’s review here,

and the IP Dragon entices us with news of a new (1 August) anti-monopoly law in China. which, apparently, reserves well-known trade marks and traditional Chinese brands on grounds of national security.

Simulating Madrid

WIPO has established an online simulator for Madrid system trade mark applications.

As it’s name suggests, it steps you through the various stages of making an application to obtain protection abroad.  It includes a fee calculator (presumably of the official fees).

Try it out here.

Lid dip, Marty.

IceTV in the High Court

The High Court has apparently granted special leave to appeal.  

Lid dip, Kim (who also has a link to David Lindsay‘s slides).

It can’t just be the “what is worth copying is worth protecting” rubric that requires reconsideration so maybe House of Commons is on to something with the injunction (presumably to database owners) to be afraid?  The transcripts seem to be running about 2 weeks behind. 

IPwars on the Full Court decision.  IPKat reviews Estelle Derclaye’s new text on sui generis database protection.

Is it a trade mark?

Sydney 2000?

Athens 2004?

World Cup 2006?

Beijing 2008?

According to OHIM’s Board of Appeal, World Cup 2006 and related labels like Germany 2006 are descriptive and lack distinctive character.  Accordingly, it ordered their registration as trade marks cancelled.  IPKat has more details here.

May be Parliament was on to something when it enacted the Olympic Insignia Protection Act 1987.

Imagine what would happen if someone did something like this to AFL Grand Final or Formula 1 Grand Prix?

ACTA DownUnder

It seems DFAT has been considering ACTA since December 2007.

An overview here and here.

Now, DFAT has called for submissions and has flagged these as interesting topics.

Lid dip, Cheng Lim.

Meanwhile, IPKat reports of a UK Intellectual Property Office consultation paper on penalties for copyright infringement.

IPKat also draws attention to some further EU perspective on counterfeiting here (scroll down to 7.2).

Suspending a trade mark opposition

On application by Darrell Lea, the Registrar suspended Darrell Lea’s oppositions to the registration of some purple trade mark applications by Cadbury purportedly pursuant to reg. 5.16.

Finkelstein J has now found that the Registrar does not have power to suspend oppositions indefinitely.

Given my involvement in matters purple, let me just refer you to Nicholas Weston’s consideration.

Darrell Lea Chocolate Shops Pty Ltd v Cadbury Limited [2008] ATMO 6 (15 January 2008)

Cadbury UK Ltd v Registrar of Trade Marks [2008] FCA 1126 (1 August 2008)