computer program

Is there a copyright work and who owns it?

Rees J, sitting in the NSW Supreme Court, had to grapple with some unusual, but basic, issues in finding that Metstech owned copyright in a range of works made by a Mr Chou. However, it did not own copyright in software made by Mr Martin; instead having an exclusive licence over that copyright including the right to access and modify the source code.

Some background[1]

Metstech designs and distributes telecommunications systems for underground mines. (The specific technology was a ‘leaky feeder system’ which allowed two way radios and mobile phones to communicate over long distances underground where ordinarily such radio communications were not possible.[2])

Image of an axial cable layout with a headend controller at one end, bidirectional amplifiers at various intervals and and a splitter adding a branch line
Leaky Feeder System

Metstech was formed by four individuals including Jefferson, Park and Chou. They or their family companies were the shareholders. Jefferson was the CEO and Park the General Manager. Park and Chou had experience in electrical engineering and had ideas about how a new and improved system to replace the poorly functioning existing systems. Jefferson provided the funding, to the tune of $700,000 over time.

In addition to being a founding director, Chou became an employee and was paid a salary after a short initial period when Metstech did not have funds. Part of Chou’s job included placing orders for the manufacture of Metstech’s products which he arranged through a family company and his company was permitted to charge a marked-up price to Metstech over the price charged by the manufacturer.

Although Martin was offered initial shares in Metstech and an employment contract, he did not take up either offer due to legal issues he was experiencing at the time. Nonetheless. in 2018, Martin designed the Raspberry Pi Software controlling the Metstech system. He was not paid for this work. He provided it to Jefferson including access to the source code for use by Metstech including permission to modify it.

Later, in 2019, Martin did become an employee of Metstech and made some further modifications of the Raspberry Pi Software at that time.

In addition to the funding provided by Jefferson, another company, Challenger, eventually contributed a further $750,000 towards funding the product development in return for the promise of a 20% shareholding and a nominee on the board of directors.

The development of Metstech’s products proceeded well and substantial orders were coming in. Jefferson came into dispute with the other directors over repayment of his funding and their demands for increased salaries. Challenger also became frustrated with the delays in issuing its shares.

Park, Chou and some associates “staged a coup” and replaced Jefferson as CEO excluding him from access to the company’s bank accounts. To fend off Jefferson and Challenger, they also engaged in a number of schemes to transfer Metstech’s assets and related IP to a “phoenix” company. In addition, in the process of decamping they deleted from the Metstech Google Drive accounts all the data and documents relating to PCB assemblies, source code, concept designs, PCB schematics and PCB layouts, firmware source code, manufacturing files, bills of materials and test results.

After Jefferson and Challenger got wind of some of the conduct, they initiated a deed of company arrangement and, after regaining control of Metstech, brought these proceedings seeking orders relating to its ownership of the copyright, remedies for breaches of obligations of confidence and tortious conspiracy to injure the plaintiffs by unlawful means.

The plaintiffs largely succeeded on their copyright claims and breach of confidence. The claims for tortious conspiracy to injure by unlawful means failed however.

Copyright in the Metstech “products”

The plaintiffs claimed copyright in various designs for printed circuit board (PCB) assemblies as artistic works[3] and, as either original literary or artistic works, PCB schematics, manufacturing documentation – source code, concept designs, PCB schematics and PCB layouts, firmware source code, manufacturing files, bills of materials and test results – and Metstech “firmware” which was installed in micro-processor units in various components.

A graphical representation of a circuit board layout on the left and on the right a photograph of printed circuit board showing various electrical components interconnected by metal strips

(A graphical representation of a PCB layout (on the left) and the corresponding PCB (on the right))

The plaintiffs also claimed ownership of the copyright in the Raspberry Pi software and later revisions.

Were there copyright works

It will be recalled that the defendants had deleted all the data and documents from their Google Drive accounts when decamping and, it appears, none of them produced anything by way of discovery or otherwise in evidence. According to the defendants, or at least Park and Chou, they did not have any documents because the products had been designed by the third party manufacturer.

The first problem confronting the plaintiffs, therefore, was that they did not have copies of the works over which they claimed ownership. Who was the designer, and hence the author of the works, was the second problem.

Rees J was prepared to infer (at [591] to [603]) that there had been original works made by Chou in which copyright subsisted:

  • Metstech led expert evidence about the process and steps involved in designing and manufacturing products such as the PCB Assemblies including the need to document things such as functional specification, electrical schematic, PCB layout and manufacturing files, firmware code listing and compiled version of the firmware code (if applicable), bill of materials, assembly and testing instructions, troubleshooting guide, service manual, packaging information, data sheets and sales brochures. Much of this documentation would be required by the manufacturer to make such complex products
  • the design and specification of such PCB assemblies also required the use of specialised computer software such as Altium Designer and RhinoCAD. Metstech had bought or reimbursed Chou for purchases of this software and Chou was at all times anxious to ensure he had properly licensed copies of this software
  • Metstech bought or reimbursed Chou for the tools and equipment that would be used in developing and constructing models and prototypes.

Accordingly, at [603] Rees J held:

…. The disputed works must have been created and insofar as they are original literary or artistic works (or both) and that to the extent that they still exist, the employer owns them. ….

I am not sure about her Honour’s limitation “to the extent that they still exist”. Under the Act, the requirement is that the work be made in the sense of reduced to writing or some other material form.[4] The continued existence of the documents, however, would be relevant to orders for delivery up and provision of access.

Who was the author

As noted above, Park and Chou claimed that the PCB assemblies and other products were designed by the manufacturer and so, in the absence of any agreement to the contrary or assignment, any copyright belonged to the manufacturer.

Rees J rejected this claim. A number of factors led her Honour to this conclusion including:

  • Metstech’s products were original and not mere copies of existing products: [585]
  • Chou had the necessary skills to design the products: [583]
  • it was Chou who came up with the idea for the various products: [584]
  • there was voluminous correspondence describing Chou as the designer or in which he claimed to be the designer or attending to the design: [571] – [586]
  • Chou also spent hours explaining the intricacies of the system and the products to others: [586]
  • the purchase of the specialised software and the provision of the tools and equipment such as Altium Designer and RhinoCAD
  • Park and Chou first claimed that the manufacturer was the designer only when Metstech first went into administration. Prior to that, the voluminous contemporaneous correspondence such as emails repeatedly referred to Chou as the designer
  • not a single document was produced identifying the manufacturer as the designer.

Who was the owner

Rees J noted that it was not sufficient for Metstech to establish that Chou was the author and an employee. As the terms of s 35(6) make clear, Metstech also had to establish that Chou made the works in pursuance of his employment and not in the course of some extracurricular activities; at [564] adopting the question posed by Moore J in EdSonic v Cassidy:

did the employee make the work because the contract of employment expressly or impliedly required or least authorised the work to be made.

The volume of material referred to by her Honour in concluding that Chou was the designer left Rees J at [587] in “no doubt” that the answer to that question was “yes”.

There was one qualification to this conclusion at [588] – the work designing a splitter which Chou had done before he became a full-time employee being paid. While Chou was a director, Rees J doubted he qualified as an employee for the purposes of s 35(6) at that time.

However, Rees J held Chou was estopped from denying that Metstech was licensed to use these materials having regard to the circumstances in which he made the design and continued to develop the design for Metstech’s use after he became an employee.

A final issue insofar as the works made by Chou are concerned was whether Metstech or Metstech IP Pty Ltd (one of the defendants) owned the copyright.

In a not uncommon arrangement, the directors of Metstech, including Jefferson, Park and Chou, had set up Metstech IP to hold the intellectual property. The directors and shareholders of both companies were the same. Metstech IP had applied for R & D grants in respect of the development of the Metstech technology and, in the books of the companies, Metstech charged Metstech IP a fee for the development work. While that fee was not paid, Metstech IP had remitted tax rebates to Metstech.

While Metstech IP had been set up to hold the intellectual property, however, there was no formal assignment of intellectual property rights in writing from Metstech to Metstech IP. As Chou had made the works as an employee of Metstech (and not Metstech IP) and in the absence of a signed, written assignment in conformity with s 196(3), Rees J held at [606] that Metstech was the owner of the copyright.

Copyright in the computer software made by Martin

The Raspberry Pi Software was a different case. When Martin wrote it, he was not an employee and had chosen not to become a director or shareholder. Nor was he paid for his work although he believed (at [106]) that “one day I might be compensated by the company if and when it was successful.”

When pressed by Jefferson, Martin transferred a copy of the source code and other documentation into a Metstech account and agreed that Metstech could amend the software as required.

Although Martin had not been engaged for reward to write the software, Rees J found ([231] – [233]) the circumstances gave rise to an implied unlimited and exclusive licence in Metstech’s favour which included the right to alter the software as need. (See also [161 and [623]])

Later, in July 2019, Martin was allotted 5% of the shares in both Metstech and Metstech IP. Jefferson and Park both considered this allocation was to secure the intellectual property in the software. Martin denied this.

As there was no written agreement formally recording the assignment, Rees J considered at [320] that s 196 precluded an assignment under the Act. Rees J also rejected at [324] Metstech’s argument that Martin understood the shares were in compensation for the transfer of ownership in the software. Her Honour appears to have considered the allotment was consistent, or at least equally consistent, with a payment to secure Martin’s continued involvement in the business.

Martin did become a full-time employee of Metstech and, in the course of his employment, he later made some further modifications to the software.

Distinguishing J R Consulting, Rees J held that the computer programs in this amended form were not new copyright works in which copyright subsisted. Martin’s evidence was that the changes were only “bug-fixes and minor enhancements”. Although the change logs showed 21 changes were made to the software in the relevant period, Metstech did not satisfy her Honour that they were more than trivial. At [620], her Honour explained:

The plaintiffs submitted that the changes made by Mr Martin were more than trivial, I am in no position to say one way or the other. I note that 21 changes were made from July 2019 to July 2020. Beyond that, I do not know. I am not satisfied that the changes made to the software after Mr Martin commenced his employment with Metstech were “original” in the requisite sense such that copyright in new versions of the software are a new work in which copyright subsists and is held by his employer, Metstech.

Thus, Metstech was left with its exclusive licence. However, this was enough for her Honour to direct that Martin continue to provide Metstech with access to the source code under the exclusive licence.

Confidential information and Conspiracy to injure

Rees J found misuse of Metstech’s confidential information on conventional grounds.

The plaintiffs alleged that the defendants (other than Metstech IP) had engaged in a tortious conspiracy to injure the plaintiffs and Metstech IP by unlawful means.

Rees J dismissed this claim, however, not as a result of any exoneration of the defendants’ conduct. Rather, damages are the gist of the action. Thus it is necessary for the plaintiff to plead that it has or will suffer pecuniary loss as a result of the conspiracy.

While the alleged conspiracy was pleaded at length, damages were neither alleged nor particularised. Nor did the plaintiffs’ evidence establish any pecuniary loss. Accordingly, at [659] her Honour dismissed the claim.

Her Honour’s decision serves as a useful warning about the risks of not documenting transfers of intellectual property in writing. That is not necessary in the case of an employee if you can prove they did the work in the course of their employment. The decision also provides a range of indications to consider if it becomes necessary to try to prove the existence and authorship of copyright works in the absence of documentary evidence.

Metstech Pty Ltd v Park [2022] NSWSC 1667


  1. As her Honour’s narration of the facts is some 550 paragraphs, this is necessarily a very “potted” outline.  ?
  2. The system consisted of long lengths of coaxial cable (serving as the antenna) strung along the shafts, with a headend controller (a Raspberry Pi computer), a number of bi-directional amplifiers (BDAs) and splitters, the BDAs (at least) including printed circuit boards (PCBs) custom-designed for the system).  ?
  3. At [551], her Honour identified the claim as being to PCB assemblies as artistic works and, at [558], her Honour noted that text and numerals on the a PCB, in engineering drawings and installation instructions could be both artistic works and, “to the extent the figures are deployed”, literary works citing Lumen Australia Pty Ltd v Frontline Australasia Pty Ltd [2018] FCA 1807; (2018) 137 IPR 189 at [206]-[209] (per Moshinsky J); Anacon Corp Ltd v Environmental Research Technology Ltd [1994] FSR 659 (per Jacobs J) (circuit diagram). The parties do not appear to have raised issues about the exclusion of circuit layouts from the definition of artistic work in s 10 of the Copyright Act 1968 or of “corresponding designs” under s 74 and the copyright / design overlap provisions of the Copyright Act or of the effect, if any, of the exclusion by Designs Act 2003 s 43 (but not in reg. 4.06) from registration of integrated circuits as a design although, from the description of the PCB assemblies in the judgment, it would appear they did not constitute “integrated circuits” on the reasoning of Moshinsky J in Lumen Australia Pty Ltd v Frontline Australasia at [298] – [311] and of course, as Moshinsky J found, the copyright / design overlap provisions do not apply to literary works.  ?
  4. Copyright Act 1968 s 32 and s 22(1)  ?

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Patenting computer programs or business methods in Australia

At the end of August, Middleton J overturned the Commissioner’s refusal to grant an innovation patent for RPL’s computerised method entitled ‘Method and System for Automated Collection of Evidence of Skills and Knowledge’. Instead, his Honour held that the method was a manner of manufacture and, novelty and inventive step having been satisfied, patentable.

What the claimed invention was

In essence, the claimed invention allowed a user to access a single point of entry (for example, over the internet using his or her browser), retrieve information about particular qualifications, which was presented in the form of questions to the user, then provide answers and supporting documentation (still for example over the internet), which was then processed by a relevant certifying institution and, if the relevant criteria were satisfied, the relevant qualification would be awarded or, if not, the user could be presented with information about what further steps needed to be undertaken to satisfy the necessary criteria.[1]

This bald summary hardly does justice to what was involved. For example, there are a large number of registered training organisations or TAFEs (RTOs). Collectively, they offer some 3,500 different qualifications and some 34,000 Units of Competency. Any individual RTO therefore offered only a very small set of qualifications or units. RPL’s method, first, circumvented the need for an individual user to identify which RTO was appropriate as RPL’s method retrieved all the necessary information from online databases. Then, RPL’s method converted the criteria into a form of questions which the user could answer. So, to take an example from the judgment, the element of competency required for a particular unit relating to aged care:

demonstrate an understanding of the structure and profile of the aged care sector

became:

Generally speaking and based upon your prior experience and education, how do you feel you can demonstrate an understanding of the structure and profile of the aged care sector?

and a particular performance criterion associated with that:

all work reflects an understanding of the key issues facing older people and their carers

was converted in RPL’s method to:

How can you show evidence that all work reflects an understanding of the key issues facing older people and their carers?[2]

for enabling individuals to get their competency or qualifications recognised under the nationally accredited Unit of Competency scheme.

The specification identified the advantages flowing from this method with its single point of contact:[3]

Individuals are provided with a service which simplifies the identification of relevant Units of Competency, and the gathering of associated assessment information to enable [recognition of prior learning] to be performed. Training organisations are relieved of much of the administrative cost associated with performing [recognition of prior learning]. By the time the training organisation is contacted, the relevant Unit of Competency has already been identified, and required information associated with each of the assessable criteria has already been gathered and packaged in a form enabling an efficient assessment in relation to the [recognition of prior learning] process.

Why this constituted a (patentable) manner of manufacture

Middleton J noted at [127] that the test for “manner of manufacture” laid down in NRDC, CCOM and Grant required that the claimed invention result in an artificially created state of affairs in which a new and useful effect may be observed. This had to be of utility in practical affairs or be of an industrial, commercial or trading character and belong to the useful arts, not the fine arts, so that its value lay in a field of economic endeavour.

These criteria were satisfied. The results of the method were useful because at [129] it overcame difficulties involved in seeking out education providers and enabled recognition of prior learning. This was relevant to a field of economic endeavour: the education sector of the economy and thus had the necessary industrial, commercial or trading character.

While the information about RTOs and particular Units of Competency could be accessed individually in undifferentiated form over the internet, the method provided a single point of entry. In addition to the single point of entry:

[141] The computer programmed in accordance with the Patent further operates to process the retrieved information and to automatically generate data comprising an alternate means of presentation. This alternate means comprises a series of questions which can be presented to an individual user along with user interface elements which implement an online form suitable for the receipt of responses to those questions. An assessment server is programmed, again according to the teaching of the Patent, to present the form to the computer of an individual user, who preferably requires only conventional web browser software to access the assessment server via the internet. In particular, the form provides not only for user-entered responses, but also for upload of one or more files stored on the user’s computer which may comprise, for example, evidence of the user’s competency with regard to the recognised qualification standard. This access to an online form occurs as a result of the retrieval, processing and presentation steps being conducted according to the teaching of the Patent.

The various stages in this process each gave rise to the physical effect required under Grant in the various changes of state in the computer’s memory.[4] Grant itself of course involved no such transformation since it did not involve any use of any computer – just a scheme for the use of a trust.

The Commissioner had recognised that such a transformation did take place, but it was not sufficient. In a line of decisions beginning with Invention Pathways, the Commissioner had ruled that: [5]

the “concrete effect or phenomenon or manifestation or transformation” referred to must be one that is significant both in that it is concrete but also that it is central to the purpose or operation of the claimed process or otherwise arises from the combination of steps of the method in a substantial way. Consequently while the step of building a house involves a concrete physical effect it is peripheral to the method of acquiring a house and indeed could hardly be said to characterise the subject matter of the method such that it is considered an artificially created state of affairs. I consider the same to apply to a business scheme implemented in some part by computer and do not believe the patentability of such a method can arise solely from the fact that, in a general sense, it is implemented in or with the assistance of a computer or utilises some part a computer or other physical device in a incidental way.”

The Commissioner argued that the use of the computer here was not central to the method, being merely a “common mechanism to carry out the method in a convenient way.”

At [147], Middleton J rejected the Commissioner’s view that NRDC, CCOM and Grant required the requirement of substantiality or centrality of a physical effect in the sense the Commissioner contended for.

In addition, Middleton J rejected the Commissioner’s argument that the claimed invention could not be a manner of manufacture as it could be performed without the use of a computer. His Honour rejected this as a matter of principle at [157]: it was not an appropriate way to approach the assessment required under NRDC, CCOM and Grant. In any event, as a matter of fact, the magnitude of the task meant it wasn’t practicable without the use of a computer:

[158] … as a matter of fact I accept that the magnitude of the task performed by the invention (as previously described) and the express terms of the claims themselves mean that the computer is an essential part of the invention claimed, as it enables the method to be performed.

While his Honour accepted that US cases could be persuasive, he noted he was required to apply the tests developed under Australian law and did not find any assistance in the present context.[6]

At [171] – [172], Middleton J distinguished the recent rejection by Emmett J of Research Affiliates claims for a method of generating an index of securities and assets. In Middleton J’s view the central difference was that the specification in Research Affiliates “contained virtually no substantive detail about how the claimed method was to be implemented by a computer”.[7] In contrast, there was detailed information about these matters in RPL’s specification and the computer was central to the method’s working.

RPL Central Pty Ltd v Commissioner of Patents [2013] FCA 871


  1. The terms of claim 1 are set out here.  ?
  2. Taken from [21] and [24] of the Reasons.  ?
  3. At [42] of the Reasons.  ?
  4. At [143] – [144].  ?
  5. Myall at [53].  ?
  6. While his Honour did not put it this way, that is perhaps unsurprising given the rather uncertain state of the US case law, e.g.  here and here.  ?
  7. An application for leave to appeal from Emmett J’s decision has been filed: NSD328/2013.  ?

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