Copyright And Computer Software

McDougall J, in the New South Wales Supreme Court, has dismissed mployeeIFY’s claims that 3DSafety infringed copyright in the “look and feel” or structure of EIFY’s website. If you are preparing terms and conditions for website use, you should read that part of his Honour’s decision too.

Amongst other things, EIFY provides web-based induction services for construction sites. Apparently, before a new employee or contractor can enter a building site and start work, he or she must undergo an induction process and pass certain tests. Historically, these induction processes were conducted “face to face” when the employee or contractor arrived on site for the first time. EIFY developed a web-based service for people to work through before they attended on site. The service included online tests to ensure that the worker had assimilated the required knowledge.

In 2011, EIFY and 3DSafety entered into a joint venture to integrate their respective systems. The joint venture vehicle was “Group”. However, the joint venture fell over fairly quickly and apart from some work for existing clients was inactive.

3DSafety subsequently secured contracts to provide web-based induction processes for Thiess and Mirvac. EIFY had evidence that at least two of the principals of 3DSafety had accessed sites prepared by EIFY repeatedly during the design process for the resulting websites. EIFY sued 3DSafety and those principals for breach of confidential information, breach of contract (the terms on which a browser was permitted to access EIFY’s website) and copyright infringement.

The copyright claims

In the end, EIFY claimed copyright in 5 types or categories of works in 8 different versions of its system:

  1. the structure or sequence or organisation of each System;
  2. the layout, format and “look” of the web pages implementing the System;
  3. the source code for the web pages;
  4. the object code for the web pages; and
  5. 34 images reproduced on 3DSafety’s websites for Thiess and Mirvac.

In the result, each claim failed.

Source code and object code

EIFY’s claims failed because there was no attempt in its evidence to compare the source code, or the object code, in the 3DSafety product to any version of EIFY’s product. There was also no evidence that 3DSafety ever had access to the source code or object code for any of the EIFY products.

At [410], McDougall J explained:

The high point of the evidence is an assertion by Professor Braun that “[i]n cases where the screens are very similar, the underlying Object Code in the Video RAM is also very similar”. Even assuming the requisite degree of similarity (and Professor Braun’s evidence, to the extent it was admitted, does not prove this), it does not follow that the object code underlying the screens in the 3D Safety online induction system (or any other functional part of that system) results from any act that could constitute an infringement of any copyright that subsists in the object code underlying the screens in any versions of the e-Induct System.

Seventeen years into the 21st century, if you want to prove infringement of the copyright in a computer program, you really do need to compare the code said to infringe to the code you are claiming copyright in.[1]

The structure, sequence or organisation of the EIFY System

McDougall J understood this to be a claim to copyright in the EIFY System as identified in paragraph 33AB of EIFY’s pleading which defined that structure in the following terms:

33AB The plaintiff’s expression of the Concept is by means of the following structure (or sequence or organisation):

(a) the preparation of a data base structure to cater to the requirements of the system;

(b) the creation of a system of modules and elements written in computer code to produce object code which creates the user interface in the appropriate sequence for the logical process;

(c) the inclusion in the user interface of digitized images to either provide information to the user for the particular stage of the induction process or to illustrate or enhance the induction procedure;

(d) a user registration process by the user entering personal information into a web interface backended by a data base to store the information, to link the employee to an employer;

(e) the acquisition of an access code (token) by the user or their employer;

(f) the collection of data and other information particular to the user as required for access to the workplace site to which the induction refers;

(g) the validation of the user’s ability to undertake the induction by verifying the existence of a pre-existing access code (token) and verification of the user’s identity;

(h) the commencement of the induction process once the token or access code is verified;

(i) a two factor authentication to confirm the user’s identity, via text message to a mobile phone or mobile device;

(j) the inclusion of user selectable actions to permit the user to move through the induction process and voiceover with relevant controls;

(k) the inclusion of safeguards at each stage of the induction process to ensure the user has correctly assessed the information, risks and requirements of each stage of the induction process, and to prohibit the user moving forward from one stage to the next without successfully completing a prior stage; and

(l) a final result screen to illustrate the final result of the induction procedure undertaken by the user, and including an option such as printing out a certificate or induction card

As with novels, plays and films, McDougall J accepted that “textual” infringement was not the only way copyright could be infringed. At [412], his Honour cited Arnold J’s decision in SAS Institute Inc v World Programming Ltd [2010] EWHC 1829 (Ch) to that effect:

…. I accept that copyright protection is not limited to the text of the source code of the program, but extends to protecting the design of the program, that is, what has been referred to in some cases as its “structure, sequence and organisation”. …. But there is a distinction between protecting the design of the program and protecting its functionality. It is perfectly possible to create a computer program which replicates the functionality of an existing program, yet whose design is quite different.

McDougall J also accepted that the application of the “structure, sequence, organisation” approach poses particular problems in the context of computer programs because it was perfectly possible to emulate the functionality of a computer program, even its ease of use, without copying (or even access) to the underlying code.[2] His Honour accepted Jacob LJ’s summation in Nova Productions Ltd v Mazooma Games Ltd [2007] EWCA Civ 219 at [52]:

Pumfrey J in Navitaire was quite right to say that merely making a program which will emulate another but which in no way involves copying the program code or any of the program’s graphics is legitimate.

In the absence of analysis of the code, McDougall J concluded that EIFY’s case confused the functionality of the respective programs with the protectable elements of the design of EIFY’s software. At [423], McDougall J said:

Returning to the distinction that Arnold J drew in SAS Institute at [232][110] , 3D Safety’s online induction programs for Thiess and Mirvac may well have replicated the functionality of EIFY’s existing online induction program. It does not follow that 3D Safety has thereby copied the design of EIFY’s program, and such other evidence as there is does not prove copying of design as opposed to replication of functionality.

One might add, if one turns to the definition of “computer program” in the Copyright Act 1968:

“computer program ” means a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.

it would seem to follow that one should be comparing the structure, sequence and organisation of the set of statements or instructions constituting the program.

“look and feel”

McDougall J noted there was already Australian authority rejecting protectability of the “look and feel” of a computer program.[3]

EIFY, however, argued that American case law provided for such protection and so StatusCard should not be followed. McDougall J rejected this submission for two reasons.

First, at [428] – [429] McDougall J pointed out that the US Copyright Act defined copyright subject matter differently to the approach taken in the Australian Act. Under the Australian Act, s 31 requires identification of something which fits within the specific category of a “literary work” – the pigeonhole approach. §102 of the US Act, however, defines copyright subject matter inclusively, not exhaustively.

Secondly, McDougall J pointed out at [430] that cases in the US subsequent to Whelan v Jaslow had questioned, or even refused to accept, that copyright extended to the “look and feel” of a program.

Turning to EIFY’s case, McDougall J held at [431] – [432] that the “Structure” of its System as defined was not itself a literary work. Further, its case impermissibly sought to conflate the “structure, sequence or organisation” of the System with those elements of the underlying program. Accordingly, this part of EIFY’s case failed too.

The 34 Images

There doesn’t seem to have been much debate that the 34 images in question were copies of the images EIFY claimed copyright in. The problem was that EIFY did not own copyright in the images.

It turned out that the original images had been created either by Group or by an entity called Clearsite, for Mirvac when Group was operating and had a contract to create a web-based induction service for a Mirvac site. Group of course was not EIFY, being the failed joint venture vehicle.

The evidence showed that employees of Clearsite had created a number of the images in question. Clearsite had been commissioned to create the images by Group, not EIFY, had invoiced Group and had been paid by Group.

Clearsite did execute an assignment of its copyright to EIFY. This did not help for two reasons.

First, at [446] – [448] the terms of the assignment defined the intellectual property assigned as the intellectual property resulting from the provision of consultancy services by Clearsite to EIFY. The images in question, however, had been created in the course of providing consultancy services to Group, not EIFY.

Secondly, the assignment was made on 14 May 2015. The allegedly infringing use of the images took place before that date. The assignment, however, did not include an assignment of the rights to sue for past infringements.

There may be a short post on a couple of points arising from the dispute over the “terms of use” later in the week.

 

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


    1. There are now more recent cases, but really you can’t go past Ibcos Computers Limited v Barclays Mercantile Highland Finance Limited [1994] FSR 275; 29 IPR 25 for a comprehensive tutorial on proving ownership, copying and substantial part.  ?
  1. At [414 – [420] citing in particular Navitaire Inc v Easyjet Airline Co [2004] EWHC 1725 (Pumfrey J).  ?
  2. Referring to StatusCard Australia Pty Ltd v Rotondo [2009] 1 Qd R 599 at [87].  ?

Blocking injunctions – the Bill

The Commonwealth Government has introduced into Parliament the Copyright Amendment (Online Infringement) Bill 2015. This bill will implement the second (or third) of the Government’s online infringement proposals.

The Bill would insert a new s 115A into the Act. Under s 115A, a copyright owner would have a right to apply to the Federal Court for an injunction against a carriage service provider[1] requiring the carriage service provider to take reasonable steps to block access to on online location outside Australia the primary purpose of which is to infringe copyright (whether in Australia or not).

The EM is at pains to stress that the website must be outside Australia – otherwise the copyright owner could sue directly – and its primary purpose must be copyright infringement. Thus, the EM says services like Youtube, iTunes and so on would not be exposed to the risk of injunction.

The bill does not prescribe what steps would be reasonable (to attempt) to block access, but presumably guidance may be sought from English decisions on this issue.

In deciding whether or not to grant the injunction, the Court will be directed to take into account a range of factors including, in particular, the flagrancy of the infringement and the proportionality of blocking access to the extent of the infringement.

Provision is also made for the person operating the website to be, or become, a party to the proceeding and to apply after an injunction has been granted for it to be rescinded or varied.

The carriage service provider will be liable for costs only if it enters an appearance and takes part in the proceedings. The bill does not make provision for whom should bear the costs of implementing and maintaining the injunction.

The injunctions provided by the English courts include a mechanism for copyright holders to “update” the webiste addresses so that, if the website operator changes the URL, it is an administrative exercise to notify the ISP. The Bill does not appear specifically to contemplate this, and it is unclear whether the Federal Court would, or should, adopt such a mechanism.

In addition to discussion of blocking methods, the Cartier[2] ruling in England includes an interesting discussion of the costs of such applications and also the costs incurred by the ISPs in implementing the injunctions. Apparently, after the initial cases, such an application typically cost the copyright owners around £14,000 with a further fee of around £3,600 per year per website for monitoring. The costs to ISPs reported by the judge ranged from a “low four figure sum per month” to a “low six figure sum a year”.

The Cartier case concerned websites infringing trade marks, not copyright. One might wonder whether the Australian law should also extend to trade marks?

The Senate has referred the Bill to its Legal and Constitutional Affairs committee for review. There is plainly not much to discuss about the bill, as the committee is due to report back by 13 May 2015 and you must make your submissions, if any, by 16 April 2015.

Copyright Amendment (Online Infringement) Bill 2015 (pdf)
Explanatory Memorandum (pdf)


  1. For you and me, that’s Telstra, Optus, iiNet/TPG, Foxtel etc., but real lawyers should go via s10 to here (take a tent and all necessary provisions and we’ll see you in several years).  ?
  2. Also known as Richemont after the third claimant.  ?