Autodesk, Inc. v Dyason, M.P

Re: AUTODESK INC. AND AUTODESK AUSTRALIA PTY. LTD.
And: MARTIN PETER DYASON; CHRISTINE DYASON AND PETER VINCENT KELLY
15 IPR 1
No. V. G68 of 1989
FED No. 431
Intellectual Property
(1989) AIPC para 90-589

COURT

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY
GENERAL DIVISION
Northrop J.(1)

CATCHWORDS

Intellectual Property - copyright - definition of computer program contained in Copyright Act 1968 - infringement action - whether device produced by applicants to prevent the use of its computer program in a computer without the presence of the device contains a computer program - whether a similar device performing the same function produced and sold by the respondents to licensed users of the applicants computer program contains a computer program - whether the respondents device is a reproduction in a material form of the applicants' device - whether the provision of the respondents' device to licensed users of the applicants' computer program constitutes an authorisation by the respondents of the reproduction by the licensed users of the applicants' computer program.

Copyright Act 1968 s.s. 10, 13, 14, 31, 36, 115

Apple Computer Inc. v. Computer Edge Pty. Ltd. (1984) 1 FCR 549

Computer Edge Pty. Ltd. v. Apple Computer Inc. (1986) 161 CLR 171

Interstate Parcel Express Co. Pty. Ltd. v. Time-Life International (Nederlands) B.V. (1977) 138 CLR 534

University of New South Wales v. Moorhouse (1975) 133 CLR 1

WEA International Inc. v. Hanimex Corporation (1987) 77 ALR 456

HEARING

MELBOURNE

#DATE 7:8:1989

Counsel for Applicants: Dr Emmerson, Q.C. with Mr Panna

Solicitors for Applicants: Stephens

Counsel for 1st and 2nd Named
Respondents: Mr Burnside

Solicitors for 1st and 2nd Named
Respondents: Messrs Westgarth & Middletons

Counsel for 3rd Named Respondents: Mr Ritter

Solicitors for 3rd Named Respondents: Messrs Nevett, Couth, & Wilson

JUDGE1

A. Introduction

Essentially, this proceeding raises for consideration the construction and application of amendments made to the Copyright Act 1968 by the Copyright Amendment Act 1984. The purpose of the amendments was to ensure that a computer program was a literary work within the Copyright Act thereby conferring copyright in a computer program on the owner of the computer program. The amendments were made and came into operation on 15 June 1984 at a time after a Full Court of the Federal Court had on 29 May 1984 given its judgment in Apple Computer, Inc. v Computer Edge Pty. Ltd. (1984) 1 F.C.R. 549 and before the High Court had given its judgment on the appeal from that judgment, namely 6 May 1986; see Computer Edge Pty. Ltd. v Apple Computer, Inc. (1986) 161 CLR 171.

Because of the unusual nature of the particular events occurring immediately before the institution of the proceeding; much evidence was led by the applicants which, in the result, need not be considered in detail because of the evidence given by the respondents. Further, lengthy and detailed evidence of a technical nature was given by experts in computer technology to explain how various pieces of computer equipment functioned. In the result, particularly with regard to the facts of this proceeding, it is not necessary to consider that evidence in detail. Nevertheless that evidence was of great assistance in enabling the Court to understand the very able submissions made by counsel. From the final submissions made by counsel it became apparent that there was little real dispute on factual matters but the construction of the relevant legislation and the application of the provisions of the Copyright Act to the facts of this case were debated most strongly.
B. General Perspective of Facts
In order to understand the issues, it is helpful to set out a general perspective of the facts leading to the institution of this proceeding. The applicant Autodesk, Inc. is a company incorporated under the laws of the State of California in the United States of America. Autodesk Australia Pty. Ltd. is a company incorporated under the laws of the State of Victoria and is a wholly owned subsidiary of Autodesk Inc. Autodesk Inc. is the owner of the copyright subsisting in the United States of America and other parts of the world including Australia, in a computer program known as "AutoCAD". Autodesk Australia is, throughout Australia, the sole and exclusive licensee of Autodesk Inc. with respect to its copyright in AutoCAD.
AutoCAD is a very sophisticated computer program designed to assist the process of drafting. It is designed for the purpose of facilitating the drafting of architectural and engineering plans and designs. The letters "CAD" in the name AutoCAD represent "computer assisted drafting". In Australia, AutoCAD is sold by Autodesk Australia to dealers who then sell AutoCAD to persons for use with their own computers and related equipment. Normally the end purchaser, the user, already has the computer and equipment necessary to use AutoCAD but on occasions the dealer sells a computer and equipment to the user at the same time as the sale of AutoCAD. The dealer assists the purchaser in utilising the program. AutoCAD costs about $5200 to purchase. From time to time modifications and improvements are made to AutoCAD by the applicants and these can be purchased by users as replacements for the previous AutoCAD. The cost of the replacement AutoCAD is less then the cost of the purchase of the first program. The user always purchases an AutoCAD program from a dealer. The purchase does not result from a contract of sale between either of the applicants and the user.
When a user purchases AutoCAD he acquires a package which includes a number of disks. The computer program is contained in the disks. A person having those disks is able to make copies of them and as a result the program contained in the disks can be transferred from disk to disk thereby enabling the program to be used by a multitude of persons at any one time. These persons may, but need not, be employees or associates of the original purchaser of the program. A user may be conducting an engineering or drafting office in which a large number of members would want to make use of the program on different computers at the same time. This could be achieved by the user making a number of copies of the program, a process which is cheap. The user would not need to purchase more than one AutoCAD to enable this to be done. Apart from any issue arising from the application of copyright law, as a matter of commercial reality, a supplier of a computer program may decide to limit the use of the program to any one computer at any one time irrespective of whether it be at work stations at the user's office or by other persons not directly connected with the user. The difficulty of enforcing such a limitation of use of a computer program is apparent.
Having made the commercial decision to limit the use of AutoCAD to any one computer at any one time, the applicants developed a method by which they sought to enforce the limitation. The applicants developed and produced the AutoCAD hardware lock which is a physical device. It is designed to prevent the AutoCAD program being used unless the lock is in position. In this regard the AutoCAD lock, in some respects, can be looked upon as a key enabling the AutoCAD program to be used or run in a computer. The program will run only if the AutoCAD lock is in place. By limiting the supply of the lock, the applicants sought to limit the use of AutoCAD. Even if the program was copied onto other disks, those disks could not be used and the program could not be run without utilising the lock, only one of which was supplied with each AutoCAD package. Thus when a user purchased AutoCAD, the package supplied included a lock. Each lock had a serial number. The lock is black and rectangular in shape. The main part of the lock is about 75mm long, about 43mm wide and about 15mm deep. On one end is fitted a plug containing 25 holes. The plug is fitted into the outward or serial port of the computer. On the other end of the lock is fitted a socket containing 25 pins onto which can be plugged a lead connecting the computer to peripheral equipment such as a screen or a printer. This socket contains 25 holes to take 25 pins but an adaptor is supplied in the package which reduces the outlet holes from 25 to 9. The plug and socket each consist of shiny metal-like material. On each corner of the lock is a lug. Each of the two lugs at the computer end of the lock contain a screw to enable the lock, when plugged into the computer, to be secured to the computer. Each of the lugs at the peripheral end of the lock is designed to receive a screw from the fitting plugged into the lock. Apart from the words and signs depicting the computer end and the peripheral end of the lock, the only other signs on the lock are the word "AutoCAD", the logo of Autodesk and the serial number of the lock.
To be effective, the AutoCAD lock had to be difficult to copy. A lock device could not be placed on a disk since a disk can be copied easily. Hence the lock took the physical form it did. Further the lock had to be such that it was unlikely that it could be duplicated accidentally. How these objectives were sought to be obtained and how the lock operates will be described in some detail later in these reasons but for present purposes it is sufficient to say information is contained in the AutoCAD program which is transmitted to the lock. If the lock is not in place, the program does not run. If the lock is in position and gives the correct response to the information received, the program continues to run. In a matter of seconds, a further challenge is trasmitted by the program and the same procedure is followed. This continues during the whole of the time the program is running.
The AutoCAD lock was designed, produced and sold for one purpose only, namely to limit the use of the AutoCAD program. The program could be run if, and only if, the lock was in position and operating effectively. The program could not be run without the lock. Copies of the program could be made but, in the absence of the lock, those copies could not be run. Consistently with this policy, replacement locks were provided in exceptional circumstances only.
The respondent Kelly is an electronic designer. He was trained as a radio technician in the Royal Australian Air Force. Since his retirement from the Air Force in 1973 he has worked essentially as an independent consultant designing electronic circuits to perform specified functions desired by his customers. He purchased a personal computer about 1986. He knew of the existence of the AutoCAD program at the time he purchased his computer. He knew that it was designed to assist in drafting. He knew of a company, Assco Vic. Pty. Ltd., which was a delear in computer equipment and programs for business and professional use, including drafting. He knew Assco was a dealer for AutoCAD. During 1988, from his dealings with Assco and from his own knowledge of the industry, he formed the opinion that there was an opening in the market for AutoCAD sales in the western suburbs of Melbourne. He entered into an arrangement with Assco by which they would assist him in explaining how AutoCAD operated with the intention that he would open a business in the western suburbs using the name Assco for the marketing of AutoCAD and other electronic equipment. With this object in mind Mr Kelly worked with Assco for some four months in the latter half of 1988 learning how the business should be conducted with regard to marketing, handling customers, obtaining stock, providing delivery and service and the concept of running the business. The major part of the work was directed to AutoCAD. This included the obtaining of experience in the operation of the AutoCAD program to enable him to advise eventual users and to assist them in implementing AutoCAD. In order to obtain this experience he took home an AutoCAD program, including the AutoCAD lock, to practise with on his own computer. In doing this he used drawings provided by Assco. One of his rooms at his house was used by him as his workshop for using his computer and testing and making electronic circuits. He was aware of the function of the AutoCAD lock and the fact that AutoCAD would not operate without the lock in place.
He was interested to discover how the lock worked. He never looked inside a lock, but using an oscilloscope he looked at the electronic signals passing from the computer to the lock and from the lock to the computer while AutoCAD was being run on the computer. Only 9 of the points were needed to be tested since the lock had a 9 pin adaptor. The lock could remain in position while other programs were being operated on the computer since the lock, in those circumstances, was said to be transparent in that electronic transmissions could pass through it to the peripheral equipment and the required information could be passed from the computer to the peripheral equipment through the lock without interference. When in operation, electrical charges of low voltage namely 5 volts are sent along a line connecting the computer to the lock and from the lock to the computer and the oscilloscope showed when the charge was present. Digital circuity only was involved. The oscilloscope used had a dual channel and Mr Kelly was able to compare the stimuli going to the lock and the responses from the lock back to the computer. Mr Kelly conducted his investigations over a lengthy period of some six to eight weeks. At that stage, his investigations resulted from curiosity only. He discovered that the output from the lock occurred only when there occurred what he described as "a coincident negative edge on the output from the PC (computer) to the lock". He said "there appeared to be a direct tie-up between a negative transition from the PC and a charge in response from the lock. A possible charge. Sometimes it did not charge; sometimes it did. But it only ever did charge when there was a negative transition. I started to get the ideas that there was a reptitive process".
Using other electronic equipment readily available, Mr Kelly was able to ascertain a pattern based on what was described as the negative edge being the occasion on which the electronic charge went off the line. He prepared his own program to produce a standard stimulus to the lock based on the AutoCAD program to enable him to look at the response from the lock simplified by the application of a standard stimulation. Putting the matter in simplified form, without knowing how the AutoCAD lock worked, Mr Kelly broke the code on which it operated even though the method was different to that used by the lock.
It is not necessary to explain in detail how Mr Kelly broke the code but as a result, Mr Kelly produced a prototype of a device which could be used with a computer to enable the AutoCAD program to run without the AutoCAD lock being used. A more detailed description of how this device worked will be given later in these reasons. At this stage, it is sufficient to say that Mr Kelly became aware that he could produce a device which performed the same function as the AutoCAD lock.
The proposed arrangements between Assco and Mr Kelly had come to an end. Knowing of the high cost of AutoCAD and the restrictions placed upon the use of AutoCAD by the limited availability of the AutoCAD lock, Mr Kelly thought there might be a market available for the sale of his device to the users of AutoCAD. He sought legal advice on whether he could do this legally. He was referred to a patent attorney and sought an answer to the question of whether he was permitted or entitled under the law to manufacture and sell his device to users of AutoCAD. By letter dated 24 October 1988, the solicitor for Mr Kelly advised him that the device could be produced "by you without any real substantive fear of a patent or copyright action being taken against you successfully." A copy of the advice from the patent attorney was enclosed with the letter.
As a result of this advice, Mr Kelly decided to manufacture his device and to test the market. For some six years he had been friendly with the respondents Martin Dyason and Christine Dyason who are married. Mr Dyason has had experience in marketing including experience in the United States of America. Mr Dyason knew of the experience and skill of Mr Kelly in electronics. Mr Kelly told Mr Dyason that he was able to produce a device that could be used in connection with AutoCAD instead of the AutoCAD lock and that he had received legal advice that he could in law produce and sell the device without breaking the law. The respondents agreed that they would test the market by Mr Kelly producing his device and that the Dyasons would advertise it and attempt to sell it. They decided that the marketing would be done in such a way as to conceal the identity of the maker and seller of the device until the success of the project was established. They said they would adopt this plan because of fears of the reaction of the applicants when they discovered what was happening. As a result, Mr Kelly made a number of his devices. He made them at the workshop at his home. The device was called the "Auto-Key" Hardware lock.
The first run of the Auto-Key lock was coloured red while the second run was coloured black. The Auto-Key lock is larger than the AutoCAD lock, the increase arising from the fact that it does not have the lugs fitted at each end. The width of the Auto-Key lock is about the same as the AutoCAD lock as extended by the two lugs on each side. The Auto-Key lock is about 75mm long, about 57mm wide and about 20mm deep. It has a shiny metal-like plug containing 25 points to be inserted into the outward port of the computer fitted to one end a socket containing provision for 25 pins fitted at the peripheral end. It does not contain any provision to enable it to be secured to the computer by screws, but has a provision for screws to be inserted at the peripheral end. Apart from the words and signs depicting the computer and the peripheral end of the lock the only other word on the device is "Auto-Key".
Late in the year 1988, the respondents implemented their plan to manufacture and sell the Auto-Key lock. They advertised the lock by means of an advertisement as follows:

"AutoCAD USERS The "Auto-Key" HARDWARE LOCK is guaranteed to run ALL RELEASES of AutoCAD.

$499

Auto-Key, 725 2924, P.O. BOX 87, RICHMOND, VIC.< 3121"

The Dyason's went to extreme lengths to prevent their identity becoming known to purchasers and to other people. They never used their surnames. They adopted unusual procedures in relation to invoices, delivery and payment with respect to the Auto-Key lock. It is not necessary to detail the procedures adopted. It is sufficient to state they were adopted in an attempt to conceal their identity. In their evidence, each of the respondents said this was done deliberately. I accept the fact that, despite the unusual nature of the procedures, each of the respondents thought that the manufacture and sale of the Auto-Key lock was not in breach of copyright law. The hearing to date has been limited to the issue of liability and so it was not necessary to lead evidence as to the number of Auto-Key locks that were sold. It is sufficient to say that a substantial number were sold and the respondents admit that between December 1988 and March 1989 they produced and sold the Auto-Key lock throughout Australia to users of AutoCAD.
It must be remembered that the Auto-Key lock was designed, produced and sold for one purpose only, namely to enable the AutoCAD program to be run. The market involved "AutoCAD Users" only. The Auto-Key lock was of no use to any other person. The Auto-Key lock permitted AutoCAD to be run without the use of an AutoCAD lock. Its only function was to enable AutoCAD to operate without an AutoCAD lock.

On 23 March 1989, the Court made orders authorising the applicants to enter the dwelling house occupied by Mr and Mrs Dyason to search for and take documents and things relating to the Auto-Key lock, restraining them from selling the Auto-Key lock and directing them to disclose the source from which they had obtained Auto-Key locks. The method by which the applicants were able to identify the Dyasons of itself is fascinating but not relevant to these reasons. As a result of information given by the Dyasons pursuant to that order, Mr Kelly was identified as the person supplying the Auto-Key locks. Thereafter, on 3 April 1989 Mr Kelly was added as a respondent and similar Anton Pillar type orders were made against him. The respondents gave undertakings that until the hearing and determination of this application they would not make, advertise for sale or sell the Auto-Key lock. Those undertakings remain in existence and so the interim injunctions were not continued.
C. Relevant Copyright Law
Under s.115 of the Copyright Act, the owner of a copyright may bring an action for an infringement of the copyright. The nature of copyright in works is described in s.31 as follows:-
"31.(1) For the purposes of this Act, unless the
contrary intention appears, copyright, in relation to a
work, is the exclusive right-

(a) in the case of a literary, dramatic or musical work, to do all or any of the following acts:

(i) to reproduce the work in a material form;

(ii) to publish the work;

(iii) to perform the work in public;

(iv) to broadcast the work;

(v) to cause the work to be transmitted to subscribers to a diffusion service;

(vi) to make an adaptation of the work;

(vii) to do, in relation to a work that is an adaptation of the first-mentioned work, any of the acts specified in relation to the first-mentioned work in sub-paragraphs (i) to (v), inclusive; and

(b) ....

(2) The generality of sub-paragraph (1)(a)(i) is not affected by sub-paragraph (1)(a)(vi)."

The present case involves copyright in a literary work. Sub-section 36(1) describes what constitutes an infringement of copyright as follows:-

"36.(1) Subject to this Act, the copyright in a literary ... work is infringed by a person who, not being the owner of the copyright, and without the licence of the owner of the copyright, does in Australia, or authorizes the doing in Australia of, any act comprised in the copyright."

In the present case the applicants allege the respondents, without their licence, did the acts in the copyright specified in paragraphs 31(1)(a)(i), (vi) and (vii) of the Copyright Act. In order to understand the meaning to be given to those acts with respect to the facts of this case, reference must be made to the relevant parts of the definitions of a number of the words and phrases used in sub-section 31(1). To this end, reference is made to s.10 of the Copyright Act. In that Act, unless the contrary intention appears, meanings are given to those words and phrases. The relevant parts of these meanings are set out:-

""work" means a literary, dramatic, musical or artistic work;"

"literary work" includes-

(a) ...

(b) a computer program or compilation of computer programs;"

"computer program" means an expression, in any language, code or notation, of a set of instructions (whether with or without related information) intended, either directly or after either or both of the following:

(a) conversion to another language, code or notation;

(b) reproduction in a different material form, to cause a device having digital information processing capabilities to perform a particular function;"

"material form", in relation to a work or an adaptation of a work, includes any form (whether visible or not) of storage from which the work or adaptation, or a substantial part of the work or adaptation, can be reproduced;" "adaptation" means-

(a) ...

(ba) in relation to a literary work being a computer program - a version of the work (whether or not in the language, code or notation in which the work was originally expressed) not being a reproduction of the work;"

Later in these reasons, reference will be made to other provisions of the Copyright Act, but the provisions set out are of crucial importance to the resolution of this case.

Prior to the amendments made in 1984, the Copyright Act contained no express reference to a computer program. In the Apple Computer cases, referred to at the beginning of these reasons, a majority of the Full Court of the Federal Court, speaking very broadly, held that a computer program being electrical impulses in a silicon chip and which could not be perceived by the senses and were not intended to convey any message to a human being and did not represent words, letters, figures or symbols, was a literary work within the then defined meaning of those words when used in the Copyright Act. The majority came to a similar view with respect to the adaptation of a computer program. A majority of the Full Court of the High Court held, again speaking very broadly, to the contrary with the result that copyright did not arise from those facts. It is fair to say that the amendments of the Copyright Act made in 1984 were designed to ensure that computer programs, even when constituted by electrical impulses which could not be perceived by the senses and were not intended to convey any message to a human being, could constitute copyright under the Copyright Act. The purpose was implemented by inserting the definition of "computer program" into s.10 of the Copyright Act and making consequential amendments to that section. Thus a new inclusive meaning was given to the words "literary work" to include "a computer program or compilation of computer programs", the words "material form" were given their meaning and paragraph (ba) was inserted into the meaning to be given to the word "adaptation".
It follows, therefore, that in the present case, the relevant law to be considered includes the definitions set out above. The definitions must be construed and applied to the facts founds. Nevertheless, a careful reading of the judgments in the Apple Computer cases is helpful to an understanding of the legal problems in copyright law arising from the development of new forms of expression in electronic processes.
D. Outline of Issues Raised by the Pleadings
It is not disputed that copyright exists in Autodesk Inc. with respect to AutoCAD. The applicants allege that the computer program contained in AutoCAD is, in part, contained within the AutoCAD lock. They say also that the AutoCAD lock is itself a computer program. The respondents deny this allegation. Thus, an issue arises as to whether a computer program or part of a computer program is contained within the AutoCAD lock. There is no doubt that if a computer program is contained within the AutoCAD lock, Autodesk Inc. is the owner of that computer program and that Autodesk Australia is, throughout Australia, the sole and exclusive licensee of Autodesk Inc. with respect to that copyright.
It is not disputed that since December 1988 the respondents have manufactured, advertised, offered for sale and sold Auto-Key locks. They deny that in so doing they have infringed the copyright of Autodesk Inc. in AutoCAD. In particular they deny the Auto-Key lock contains any part of the AutoCAD computer program, they deny the AutoCAD lock is itself a computer program and they deny that the Auto-key lock is a reproduction in material form or an adaptation of the AutoCAD computer program or any part of it. Further, they say that if the Auto-Key lock contains a reproduction in material form of the computer program, it was produced independently and was not copied from the AutoCAD computer program or any part of it. Thus issues arise as to whether the Auto-Key lock contains a computer program or part of a computer program and if it does whether the computer program so existing is a reproduction in material form of the computer program in the AutoCAD lock, of a part of the AutoCAD computer program or an adaptation thereof.
In addition a number of other issues are raised which, essentially, are subsidiary to the issues already stated. Thus the applicants allege, and the respondents deny, that the respondents, not being the owners of the copyright in the computer program, and without the licence of Autodesk Inc. have authorised the reproduction of the whole or a part of AutoCAD. Further the applicants allege and the respondents deny that the respondents in selling the Auto-Key lock to users of AutoCAD, have induced those users to breach the terms of the software licence agreement entered into between the applicants and the users of AutoCAD. Initially, consideration will not be given to these subsidiary issues.
E. How A Computer Operates
As appears earlier in these reasons, a purchaser of AutoCAD receives a package containing a number of articles. One article is a two sheet document headed "AutoCAD Hardware Lock, Reference Sheet." The Reference Sheet includes the following passages:-

"AutoCAD Hardware Lock

Enclosed with your AutoCAD manuals and diskettes is a small box with an electrical connector at each end. This device is a "Hardware Lock". AutoCAD cannot execute without a Hardware Lock properly attached to your computer. ...

Please note that only one Hardware Lock will be supplied with each AutoCAD package. If the device is lost, stolen, or totally destroyed, it will be necessary to purchase another copy of AutoCAD to replace it. It is therefore recommended that you insure the device, just like any other piece of computer equipment, for its replacement cost, namely the full price of your AutoCAD package. Should your Hardware Lock be damaged or otherwise fail in service, contact your AutoCAD dealer. You will need to return the original in order to receive a replacement.

The AutoCAD license agreement allows you to use one copy of AutoCAD on as many computers as you wish, provided that you use it on only one computer at any one time. If you use AutoCAD on more than one computer, you will need to move the Hardware Lock from one computer to another.

The Hardware Lock should be "invisible" to any program but AutoCAD, and to any peripheral devices connected to the same serial port. You should not need to remove the Hardware Lock in order to run other programs. The Hardware Lock does not prevent you from making backup copies of the AutoCAD software disks, nor does it prevent you from loading AutoCAD onto your hard disk. In fact, we encourage you to do these things. Also, no "key" disk is required to run AutoCAD."

The computer program is contained in the diskettes referred to in this passage. The diskettes are commonly called disks or floppy disks since they are flexible. The computer program consists of a set of instructions encoded onto the disks. The set of instructions come within the word "information" and are sometimes referred to as software as contrasted with the word hardware. Sometimes the word software is used to describe the disks since they are flexible but this is misleading. Software is a word in common use to describe the information constituting a computer program. Hardware is a word in common use to describe the physical articles being the computer, its fittings and the physical articles which enable the computer to operate. On this terminology, the disks are hardware.
A computer program, essentially, is a set of instructions to the computer to perform a function. It is based on logic and to a large extent is based on algorithms. An algorithm is a procedure used to solve a mathematical problem. A computer is an electrical device which operates by the reception and transmission of electrical signals. The signals are coded into what is known as binary coding or the binary system. The decimal system is in common use. It is based upon ten digits namely 0 to 9 and these digits create numbers having a value depending upon the existence and placement of digits. The binary system is based upon two digits 0 and 1. Another system is known as the hexadecimal system which is based upon 16 digits 0 to 15 in decimal terminology. Computers operate on the binary system and the digits are transmitted by sending electrical signals where a low voltage or charge corresponds to the digit 1 and the absence of the voltage or charge corresponds to the digit 0. These transmissions operate at very great speed but always come back to the charge or no charge, the on or off, the positive or negative. Computers operate entirely in the binary language or system. Thus instructions to a computer must be converted into the binary language when information is stored in a computer. Information is stored in binary language in the memory hardware within the computer. Where information is processed within the computer it is processed in binary language and when information is transmitted from a computer to, for example, a screen or a printer, it is transmitted in binary language. Numbers can be expressed in binary language. When reduced to normal writing the numbers are expressed in what are called bytes consisting of a series of bits. The bits are either 1 or 0 and the existence and placement of these bits in a byte determine the number represented by the byte. But in the computer all this is represented by electrical signals or impulses.
When a computer receives a set of instructions it works through the instructions according to the pre-determined logic. Each instruction is a binary number and the computer moves from instruction to instruction to perform an electrical function. The sequence of instructions are contained in an electrical form. The instructions and functions performed within a computer cannot be seen or sensed by the human mind. In order for the human mind to understand and benefit from a computer it is necessary for a program to be written in a language, often called a higher level langauge, which can be sensed and understood by the human mind. That language of the computer program is converted into what is often called a computer or C language which can be read and understood by a trained human mind. In this form, the program language is often described as being the source code. The C language or source code is converted by machine into the binary language contained in the computer hardware whether a soft disk, a hard disk or some other form of material. In this form, the program language is often described as being the object code. The computer performs the instructions set out in the object code. The computer performs its function by fetching, interpreting and executing the particular instructions contained in the program as directed by the operator. The computer must then convert the answers to a language that can be understood by the human mind. Once a program has been encoded in a computer, a person may direct the computer to perform instructions contained in the program. In most cases, including AutoCAD, the instructions are performed with respect to other information stored in a computer. The directions can be given by the use of a keyboard or any of many other specialised ways including another computer. The result of the computer's functions can be seen by what appears on a screen or a printout or any of many other specialised ways. In this sense, an operator communicates with a computer and a computer communicates with a human being but the whole operation depends upon the computer operating pursuant to instructions contained in a computer program and information stored within the computer all of which are the result of the binary system operated by electrical impulses.
AutoCAD is a large and complex computer program. It can be copied easily from the soft disks contained in the AutoCAD package to a hard disk permanently installed within a computer. In most computers, the hard disk is capable of storing many programs. Once the AutoCAD program is stored on the hard disk, the soft disks can be removed from the computer. The computer is then capable of performing its functions pursuant to the instructions contained in the AutoCAD program depending on the directions given to it by the operator of the computer. In performing this function information is transmitted from the hard disk to another piece of equipment called a random access memory (RAM). This information is being replaced continually but is necessary for the proper function of AutoCAD and most computer programs. The program, however, is of no use unless the operator can see the answers given by the computer as a result of the direction given. The answers are transmitted by the computer to what is described as peripheral equipment, such as a screen or a printer, which is attached to the computer through what is called the serial or outward port of the computer. This is the socket into which a plug is fitted which connects wires from the computer to the peripheral equipment through which the computer transmits its information to the peripheral equipment. It is at this point that the AutoCAD lock performs its function.
F. How the AutoCAD Hardware Lock Operates
Written into the AutoCAD program is a set of instructions described as Widget C. Widget C is contained in the source code and the object code and thus is contained in AutoCAD when stored on the hard disk within a computer. Widget C comprises instructions to the computer requiring it to send out what has been described as a challenge to the AutoCAD lock. On receipt of the challenge, the lock processes the challenge and transmits its answer to the computer. The computer receives the answer, checks it against its own instructions, and if the answer is correct, continues to execute AutoCAD. If the answer is not correct, the computer ceases to run. This is achieved by preventing the information being transmitted from the hard disk to the RAM. This occurs if the lock is not in position or does not operate correctly. The transmissions to the peripheral equipment pass through the lock in its transmission mode. It is the computer which refuses to execute instructions when the challenge is not met. The challenge is repeated every few seconds.
At the hearing much detailed evidence was given by experts with respect to Widget C in both its source code and object code form and how hardware was used to give effect to the application of this part of the AutoCAD program. Widget C and the AutoCAD lock are complementary and in my opinion it does not matter which came first. Widget C is intended to operate with the lock. The lock has no practical use apart from responding to the challenge contained in Widget C.
The basic form of Widget C is a 127 state machine table which generates a series of 1's and 0's. By a combination of these 1's and 0's it is possible to achieve very many different numbers being, in binary terms, 1 raised to the power of 127 which in the decimal system is about 10 raised to the power of 38 and being billions. The final spot in the state machine is vacant but the way the program works this has the effect of what was described as a wrap-around. This results in a repeat search from the beginning of the state machine table. When the challenge is sent out, a number is chosen and as a result a series of 1's or 0's, ons or offs representing a charge or no charge in the electrical signal, being the binary representation of that number is transmitted to the AutoCAD lock whereupon the lock performs a series of steps. The lock identifies the signal as being directed to it. The string of 1's and 0's is received by what is called a clock within the lock. The clock does not count the number of 1's and 0's. The clock is a single pin digital to a system which causes something to happen but it is activated only by a transition either from 1 to 0 or from 0 to 1 and it is this transition which causes the logic circuit being the elctrical circuit that operates on binary numbers that the clock is attached to, to operate. When activated by the appropriate transition the logic circuit proceeds to another piece of equipment described as shift register.

The shift register operates as a pseduo-random sequence generator. A random sequence of digits being 1's or 0's occurs where there is no pattern by which any digit follows any other digit. Of necessity, there is an even chance that it will be either 1 or 0 but this chance is not sufficiently accurate for the purpose of digital processing. A program may provide for a longer series of 1's than of 0's in which case at any one time, the next digit would be more likely to be 1 than 0, but this chance is not good enough. A pseudo-random sequence generator has all the properties of creating a random sequence but even here patterns develop but the number of digits involved is so immense that the impression is created that the sequence is truely random. In the AutoCAD lock the random sequence pattern is based upon the 127 digits contained in the Widget C AutoCAD program.
In the AutoCAD lock shift register, the active part holds seven 1's and 0's but the sequence of these digits changes. Each time a transition is passed from the clock to the shift register, the sequence of the 1's and 0's is shifted one place to the right. As a result, the binary number represented by those digits is doubled. The two most significant digits, that is the sixth and seventh digits, are combined together through another piece of equipment called an exclusive or gate (an XOR). The output is fed back as the least significant digit, being the first digit and the process is repeated. In the AutoCAD lock system the sequence contains 127 digits and thereafter, the pattern is repeated. In any challenge, a particular number is chosen by AutoCAD and the correct response to that number must be given.
The number of sequences that can be created by the use of the 127 digit system is enormous being 2 raised to the power of 127. The actual response to AutoCAD depends upon a transition, but the response must be correct every time and the response is checked by AutoCAD by reference to the number chosen to constitute the challenge. A number is transmitted back to AutoCAD. That number is compared by AutoCAD with the number that should have come back and if correct the challenge has been met. This statement is taken from the evidence of Dr. Forward a reader in computer engineering at the University of Melbourne, a witness called on behalf of the applicants.
The process was described by Professor Dillon, professor for computing science at La Trobe University, a witness called on behalf of the applicants as follows:-

1. On instructions from the AutoCAD program, the computer generates a random number N.

2. The binary value of that number is transmitted to the lock.

3. The lock determines the value of N.

4. The lock generates the current value of 1 or 0, corresponding to the value of N and transmits it to the computer.

5. The computer relying on the program determines the value of N and generates the corresponding value of 1 or 0 corresponding to the value of N.

6. The computer relying on the program compares the value generated internally within it and that received from the lock. If they are the same, the challenge is satisfied.

The process was described by Dr Thorn, a reader in computer sciences at the University of Melbourne, a witness called on behalf of the respondents, by means of a diagram as follows:-

*********** DIAGRAM OMITTED ***************

The input transition is the challenge from the computer to the lock. It is based on a number determined pursuant to the program within the computer the details by which this is done need not be examined but is based on the selection of a number from the state machine in the program. The reference to shift left 1 place is the method by which the lock determines the number selected by the computer. It is a process based upon the shift register within the lock which has had information encoded on it being either 1's or 0's. These bits form bytes and in the logic circuit the 7th bit is shifted left 1 space. Under the information the 6th bit is always available to be transmitted to the computer but the 7th bit must pass through the XOR gate which is represented by the diamond. This exclusive or gate determines whether bit 6 is the same as bit 7. If the answer is yes the output is 1 or a charge. If the answer is no, the output is 0 or a no charge. It is the transition from 1 to 0 or 0 to 1 which determines the answer given to the computer.
A comparable diagram was given by Professor Dillon as follows:

*********** DIAGRAM OMITTED ***************

This diagram was explained by Professor Dillon. The shift register contains the information encoded on it in response to the 127 state machine table. This is represented by the Key. The clock detects each positive transition in the input data stream and this activates the shift operation in the shift register. The data is shifted at every positive transaction in the input data stream. The 7th bit is shifted out, and the first bit will be determined by the serial input provided by the XOR gate. The new 6th bit on the parallel output of the shift register is transmitted to the computer.
It will be noted that some confusion arises as to whether in the shift register the digits are shifted to the right or the left. For present purposes, it is not necessary to determine this conflict since the process is the important aspect and the process involved in each event is the same.
G. How the Auto-Key Lock Works
Earlier in these reasons, the method used by Mr Kelly in "breaking the code" of the AutoCAD lock is described. From his observations of the input and output of negative transitions, Mr Kelly perceived a repeating pattern. With the help of computer programs developed by himself, Mr Kelly prepared a source program consisting of a series of numbers based upon the repeating pattern of the AutoCAD lock operation. It was a tabular representation of the pattern. It was the program to be used for the preparation of a look up table to be coded into an EPROM (erasable programmable read only memory). The reason an EPROM was used was because the random nature of the output from the AutoCAD lock was relatively simple to record and place in memory on an EPROM being the information required to produce the same result as that flowing from the AutoCAD lock. The program for the look up table was prepared from the tabular representation. The possible stimuli numbers, being the numbers chosen by the AutoCAD program as part of its challenge, were identified to 128 in decimal numbers. Of these, the numbers 0 to 127 use the effective numbers representing the 127 numbers in the AutoCAD program and the 128th number had the effect of a wrap-around by which the process was repeated. These decimal numbers were the decimal numbers of the negative edges observed by Mr Kelly. These were then set out alongside each of the decimal numbers 0 to 127, a series of seven digits, a space, and an eighth digit which was under the letter D. These digits were in binary form. The seven digits were the address lines for the EPROM and are listed under the headings A6 to A0 respectively. They are the equivalent of the decimal numbers and represented the binary addresses to be stored in the look up table and the D column was the data or information to be stored in the appropriate position in the EPROM. Mr Kelly then placed the data digits onto the EPROM and each sequential address. The effect of this device was that AutoCAD would run with the Auto-Key lock being substituted for the AutoCAD lock.
The EPROM contained in the Auto-Key lock contains a set of digits in hexadecimal notation in the first 128 consecutive memory locations but the result is the same as if the digits being 1's or 0's as set out under the D heading in the program prepared by Mr Kelly were used. The sequence is identical to that contained in the original state machine table contained in the AutoCAD program and used in the AutoCAD lock shift register. To some extent the address lines used can be compared to addresses contained in a series of pidgeon holes in a large cabinet containing 128 pidgeon holes. Dr Forward describes how the Auto-Key lock operates as follows:-

"The Auto-Key lock works in a similar way to the look-up table that is used in the AutoCAD programme which runs from the main memory of the computer. The look-up table is programmed into an EPROM ... and again, as there are only 127 binary numbers in the sequence, it is fairly easy to store those numbers in the read only memory. Then when the input from the AutoCAD programme comes into the Auto-Key lock the transitions on the input are counted by a simple binary counter which counts just in a straight binary code. Whereas the AutoCAD lock counts these in a pseudo-random sequence generator, the Auto-Key lock counts them in a plain and simple binary counter. So when the first pulse comes in it goes to one D. When the second pulse comes in it goes to two, three and so on, except that the one, two and three are binary coded. Now the counter is connected to the address lines of the read only memory and when the counter counts or increments, each time one of these pulses comes in it accesses the next number in the read only memory. The way that the read only memory works is that it has a number of cells in it and an address register and when you supply an address to the address register the contents of the cell addressed by that address register appears at the output. So as to the counter sequences, through its sequence of numbers going from one up to 127, it causes the output of the read only memory to follow the same pseudo-random sequence that the pseudo-sequence generator in the AutoCAD lock produces."

The process was described by Dr Thorn by means of a diagram as follows:-

*********** DIAGRAM OMITTED ***************

The letters "ROM" mean "read only memory". The letters "LSB" mean "least significant bit" and has the effect of neuturalizing the hexadecimal number in the EPROM and leaving the binary number to operate as in the AutoCAD state table.
The comparable diagram given by Professor Dillon is as follows:-

*********** DIAGRAM OMITTED ***************

There is no real dispute as to how the Auto-Key lock operates, but some confusion arises as to whether negative or positive transitions are the relevant ones to stimulate the lock. In any event, a transition is required and in fact the lock performs the function of the AutoCAD lock. Likewise, there is some confusion as to whether the reply from the lock to AutoCAD operates on a positive or negative transition. For present purposes it is not necessary to determine this confusion.
Further, it should be noted that the AutoCAD lock unlike the Auto-Key lock, does not contain a ROM or an EPROM. The shift register in the AutoCAD lock is hard wired. Each is a piece of hardware performing a similar function in moving digits. If anything, the hard wire system can operate more speedily than the EPROM.
H. Do the Locks Constitute or Incorporate Computer
Programs?
This question highlights the main issue raised in this proceeding. The answer involves a consideration of the definition of the words "computer program" in the Copyright Act. The definition, as far as I can discover, has not been considered in any previous authority. The definition had no application in the Apple Computer cases. This is a question which must be answered by the Court. The facts having been found, the definitions must be applied to those facts. The opinions of experts on this question do not bind the Court. The definitions have created a new concept of a literary work under copyright law. This new concept should not be restricted by rigid application of principles applicable to literary works not being computer programs.
The competing arguments can be summarised. Essentially, the substance of the case put by the applicants is referred to by Dr. Forward in his answer to the question "Does the AutoCAD lock have digital processing capabilities?". Dr Forward said:-

"Well, seeing that it takes one string of digits in and processes them to produce another string of digits out, a different string of digits out, it must have a digital processing capability."

To the question "Does the Auto-Key lock have digital processing capabilities?". Dr. Forward answered-

"Well, it has the same digital processing capability as the AutoCAD lock because if you put the same input into both locks they produce the same output."

Essentially, the substance of the case put by the respondents is expressed by Dr. Thorn in his statement. He stated that neither lock is a computer program "as that expression is understood and used within the industry", nor does either contain a computer program. He based his opinion with respect to each device on the following grounds:-
"(i) The device consists only of electronic

circuitry or hardware.

(ii) Although the presence of the device may be

detected by the execution of program instructions within the computer such that the Autocad software and the hardware lock interact, this interaction is no different from the interaction between a program and other hardware devices such as printers. The fact that a program may interact with, or depend for its operation upon the presence of, an item of hardware does not mean that the item of hardware is or contains a computer program."

In the present proceeding one language code or notation only is relevant namely the object code within each lock. Accordingly, for present purposes it is useful to set out the relevant part of the definition of the words "computer program" for the purposes of the Copyright Act as follows-

"an expression, in any language, code or notation, of a set of instructions (whether with or without related information) intended, ... directly ... to cause a device having information processing capabilities to perform a particular function;"

In considering the proper construction of this definition, the Court accepts the proposition that the amendments to the Copyright Act had the purpose of extending the rights of copyright to owners of computer programs. In so doing, it is appropriate for the Court not to take a narrow view of the definition of a computer program but to approach the question on the basis that as wide a construction should be given within the limits of the meaning of the words used in the definition.
There seems little doubt that each lock is "a device having digital information processing capabilities" and that each lock is devised "to perform a particular function". The reference to the performance of a function is a new concept in copyright in a literary work. Traditionally, function has played no part in considering whether a work was a literary work. Further, the reference to function removes the necessity to consider whether a literary work could be understood by a human being. Further, the Court is relieved of the obligation to decide whether a computer program affords pleasure in the form of literary enjoyment. The computer program must be intended to perform a function. There is no limitation on the nature of the function intended.
Nor can it be seriously denied that the encoding on the shift register or the EPROM of the digital information required to allow the locks to function constitutes an expression in a "language, code or notation". The information comprises electronic symbols which are not susceptible to the human being without the assistance of electronic and mechanical devices. Information of this kind goes to the very existence of a computer program and was the issue which caused divisions of opinion in the Apple Computer cases. The amendments to the Copyright Act were intended to remove this very difficulty.
The real difference between the parties on this issue is whether the information contained in the locks constitutes a set of instructions. Counsel for the respondents expressed their submissions on this aspect in a number of different ways. It was argued that the locks do not make calculations, indeed, it was said, they do not have the ability to do so. They do not record or store the number of 1's and 0's received from the computer or sent to the computer. There is nothing in the locks which analyses the information received. The AutoCAD does not contain any memory whether an EPROM or micro-silicon chip. The locks do not make comparisons between information received and information stored. It was said that the only thing the locks did was to respond slavishly in a pre-determined manner to simuli received, a negative transition, to give another stimuli to the computer. It was said neither lock fetched, interpreted or executed instructions.
Counsel for the respondents made reference to dictionary meanings of words used in the definition of a computer program. Thus, in the Oxford English Dictionary (2nd Edition), the word "instruction" is given a number of meanings including-

"3. Knowledge imparted concerning a particular fact or circumstance; information. An item of information imparted or acquired, an account, a narrative.

4(a) A making known to a person what he is required to do; a direction, an order, a mandate (oral or written). Now usually plural: discretions, orders

(b) Direction given to a solicitor or counsel

(c) Computers. An expression in a program or routine, or a sequence of characters in a machine language, which specifies an operation (especially a basic operation) and frequently also or more operands, and results in its performance by the computer".

The word "code" is given a number of meanings including:-

"3(c) Cybernetics. Any system of symbols and rules for expressing information or instructions in a form usable by a computer or other machine for processing or transmitting information."

The word "notation" is given a number of meanings including:-

"5. The process or method of representing numbers, quantities, etcetera by a set or system of signs; hence, any set of symbols or characters and to denote things or relations in order to facilitate the recording or considering of them."

It should be noted that no definition of the word "information" was referred to by counsel for the respondents. The word "data" was used on many occasions both during the giving of evidence and during submissions. The word "data" appeared to be used as synonymous with the word "information". The word "information" has a wide connotation. An instruction or a set of instructions are comprehended as constituting information. The defintion of the words "computer program" contains the words "related information" within the words in parenthesis immediately following the words "a set of instructions", In these reasons, the word "data" is not used. It does not appear in the definition of "computer program". Its use could cause confusion.
At a late stage of the submissions consideration was given to the meaning of the word "expression". In all the circumstances this word comprehends "manifestation" when used in the definition of "computer program".
A reference to any dictionary shows that the word "set" can have very many different meanings. In the context of the definition of "computer program" and "a set of instructions" the word set connotes the concept of a number or a group and in particular is used to identify such a number or group whether large or small. A computer program, of necessity, means the expression of a set of instructions. AutoCAD is a computer program thus it is an expression of a set of instructions. Within that set of instructions there must be many sub-sets of instructions and I can see no reason why each sub-set itself is not an expression of a set of instructions for the purposes of the definition of computer program. Widget C is a sub-set of instructions within AutoCAD. There may be sub-sets of instructions within the set of instructions constituting Widget C. The challenge resulting from Widget C is transmitted to the AutoCAD lock. In receiving, processing and responding to that challenge, there appears to be no logical difficulty in concluding that the sub-set of instructions within the AutoCAD lock, or for that matter, the Auto-Key lock, constitutes an expression of a set of instructions, if otherwise the locks come within the definition.

Based on the meanings of the words referred to by counsel for the respondents, it was suggested that the definition did not encompass hardware devices. This contention seems to be at odds with opinions expressed in the Apple Computer cases where all the information was encoded on a ROM or EPROM each of which constitutes hardware. Likewise, a disk is hardware. A computer program consists of a particular type of information. This concept will be developed later but for present purposes the comment is made that this contention cannot be used to support a submission that "it is an invasion of reasoning to include under the rubric "literary work" an electrical circuit which does not implement a set of instructions but performs an operation, namely because that operation can, but need not, be described in the language of logical processes". The development of this submission led to the contention that the locks performed no function other than that of being an electrical switch.
Counsel contended that under the definition the "set of instructions" and the "data processing device" had to be separate. It was urged that the instructions were the cause and the device the vehicle on which the cause was carried into effect and that the definition did not contemplate that the instructions be inherent in the "data processing device". It was argued that the locks were not "an expression in any language code or notation" of a set of instructions intended to cause a device having "data" processing capabilities to perform the particular function.
These submissions and contentions are not accepted. In the definition of computer program, the reference to a "device having digital information processing capabilities" is, in my opinion, sufficiently wide to include an ordinary computer and each of the locks. It is noted that the word "information" is used in the definition in this context also. It should be noted further that to be effective a computer program must make use of information provided by the owner of the copyright in the computer program only or by both that owner and the user of the program. The information within a computer program which constitutes the set of instructions is placed there only by the maker of the program. Those instructions can be brought into operation at the direction of the operator. That may be sufficient for the device to perform the particular function directed. The direction may be given by the program itself. In the present case, AutoCAD, to be effective, relies upon information entered into it by the maker. Neither lock depends upon information supplied by the user. Information is received by each lock from the computer without the need of instructions being entered into AutoCAD or the lock by the user. The lock responds and sends information to the computer. In this context, the information supplied by the user, except in relation to executing AutoCAD, is not relevant.
Each lock is a device designed to perform a particular function namely to respond to a challenge from AutoCAD. To do this, each lock has a digital information processing capability in the sense explained earlier in these reasons. Each lock depends upon that capability to give the correct response to the challenge. The new definition of "literary work" makes a computer program itself a literary work. In this case, it is not necessary to consider whether a computer program comes within the first limb of the definition of a literary work namely "a table, or compilation, expressed in words, figures or symbols (whether or not in visible form)". That limb is different to what was in the definition at the time of the Apple Computer cases namely "includes a written table or compilation". In those circumstances, the Apple Computer cases relied heavily on the concept of whether an object source which was not in a visible form, could be a literary work. That difficulty may have been removed by the expanded definition contained in the first limb but a consideration of that matter is not necessary to resolve the present issue.
The method by which the locks operate has been set out earlier in these reasons. The information sent to the locks, of necessity, constitutes instructions and in the context constitutes a set of instructions. Those instructions require the lock to give an answer. In the event, the answer is implemented by a negative or possibly a positive transition. Thus on every instruction being sent by AutoCAD, there would be an even chance that the response would be the correct transition. This chance is too great to satisfy the integrity of a computer program like AutoCAD. There should be no room for chance at all. Hence, there is a process encoded within each lock to ensure that the even chance is converted almost to a certainty. This was done in the AutoCAD lock in an attempt to make the AutoCAD lock effective and difficult, one cannot say impossible, to duplicate. Thus the performance of the digital information processing capabilities within each lock is to ensure the correct answer to each challenge. These challenges occur frequently and many transitions occur with respect to each challenge.
By way of analogy, it can be illustrated that information may constitute an instruction. A set of traffic lights, when operating, contain information which constitutes instructions. When showing red, the instruction is to stop, not to proceed. When showing green, the instruction is to go, to proceed, if desired. Each lock performs functions of a similar nature. The information from AutoCAD is in the nature of an instruction: tell me whether to stop or to proceed. Responding to that instruction the lock executes its digital information process capabilities in accordance with the information, being instructions, encoded in its shift register or EPROM as the case may be, and sends information to AutoCAD. This information is in the nature of an instruction to stop or to proceed. This is received by AutoCAD which translates the information received and acts accordingly.
In this respect, it is useful to refer to what was said by Mason and Wilson JJ in the Apple Computer case 161 CLR at p 194:-

"It is not correct to describe an object program as merely a sequence of electrical impulses within the computer. Electrical impulses there are, but those impulses serve to identify a set of instructions in machine readable language designed to guide the machine in its basic operations. They do not form part of the computer itself, notwithstanding that they may be embodied in a ROM or ROMs located permanently in silicon chips in a machine. They might equally well be contained in a magnetic disc or tape which can be inserted into or removed from the machine at will. The language may be recorded in visible form in binary or hexadecimal notation. The same result as is achieved by the use of an object program could be achieved by the manual operation of a computer in accordance with instructions written out in ordinary English and contained in a manual. The only problem would be that such a process would be impossibly tedious and therefore wholly impracticable."

This was written after the 1984 amendments had been made to the Copyright Act but in circumstances where those amendments had no application. What is said has application to the electrical impulses within the shift register of the AutoCAD lock and the EPROM of the Auto-Key lock.
In my opinion each of the AutoCAD lock and the Auto-Key lock is a computer program as defined in the Copyright Act and thus each is a literary work within the meaning of that phase as used in the Copyright Act. Put another way, a computer program is contained within each lock and thus each lock is a literary work.
I. Is the Auto-Key Lock a Reproduction in Material Form of the AutoCAD

Lock?

Having come to the conclusion that the AutoCAD lock is a literary work under the Copyright Act it is necessary to consider whether the respondents have infringed the copyright of Autodesk Inc. and of Autodesk Australia. The first issue to determine is whether the respondents, without the licence of the applicants, have done in Australia an act comprised in the copyright namely to reproduce the AutoCAD lock in a material form; see sections 36(1) and 31(1(a)(i) of the Copyright Act.
This aspect of the case, together with the other aspects based upon these sections of the Copyright Act, depends upon provisions which have been considered in many authorities involving copyright in literary works. Those authorities are relevant to the consideration of these aspects but at the same time, the amendments made to the Copyright Act in 1984 with respect to computer programs place a gloss on the application of those authorities. Further, in considering these aspects, regard must be had to the provisions of sections 13 and 14 of the Copyright Act. The relevant parts of these sections are set out:-
"13(1) A reference in this Act to an act comprised in

the copyright in a work or other subject-matter shall be read as a reference to any act that, under this Act, the owner of the copyright has the exclusive right to do.

(2) For the purposes of this Act, the exclusive right to do an act in relation to a work, an adaptation of a work or any other subject-matter includes the exclusive right to authorize a person to do that act in relation to that work, adaptation or other subject-matter.

14(1) In this Act, unless the contrary intention

appears-

(a) a reference for the doing of an act in relation to a work or other subject-matter shall be read as including a reference to the doing of that act in relation to a substantial part of the work or other subject-matter; and

(b) a reference to a reproduction, adaptation or copy of a work shall be read as including a reference to a reproduction, adaptation or copy of a substantial part of the work, as the case may be.

(2) ..."

On the first aspect, counsel for the applicants contended that the Auto-Key lock is a reproduction in a material form of the AutoCAD lock. They relied upon what was said by Gibbs C.J. in the Apple Computer case, 161 CLR at 186:-

"A reproduction within the meaning of the Copyright Act includes a reproduction of a substantial part of the work: see s.14 of the Copyright Act. The notion of reproduction involves two elements - that the infringing work sufficiently resembles the copyright work and that it was produced by the use of the copyright work. The latter element is satisifed in the present case where the appellants clearly appropriated for themselves some of the benefits of the respondents' work. The former element requires that there should be "a sufficient degree of objective similarity between the two works": see Francis Day & Hunter Ltd. v Bron (1963) Ch 587 at p 614; Lend Lease Homes Pty. Ltd. v. Warrigal Homes Pty. Ltd. (1970) 3 NSWR 265 at p 273; S.W. Hart & Co. Pty. Ltd. v. Edwards Hot Water Systems (1985) 159 CLR 466 at p 472".

The second element mentioned by Gibbs C.J. has been established in this case. Mr Kelly had access to the AutoCAD lock. He made a close study of it. He made an analysis of its response to the challenge from AutoCAD. Based on the results of his studies he prepared a computer program to determine the information to be placed in the EPROM which forms the basic component of the Auto-Key lock. Based on the results of his study he produced a computer program which was designed to perform and in fact performed the same function as the AutoCAD lock.
Counsel for the respondents denied that the first element described by Gibbs C.J. had been established. In particular, they denied that there was "a sufficient degree of objective similarity" between the Auto-Key lock and the AutoCAD lock so as to satisfy the requirements of paragraph 31(1)(a)(i) of the Copyright Act.
There is a difference in form between the hardware within the AutoCAD lock and the Auto-Key lock, namely the shift-register and the EPROM. But the Court has concluded that each lock constitutes a computer program. Each performs the same function. It is this function which is the essential aspect of each lock. Function has a particular importance in the definition of a computer program and regard must be given to this concept of function in considering the question of whether there is a "sufficient degree of objective similarity" between the two locks.
Having regard to the definition of computer program, it seems that the particular method by which "a device having digital information processing capabilities to perform a particular function" is not really relevant in considering whether the Auto-Key lock "sufficiently resembles" the AutoCAD lock. In any event, on the findings made, in my opinion the processes adopted in the Auto-Key lock to produce the same function as the processes adopted in the AutoCAD lock do sufficiently resemble the literary work of the AutoCAD lock as to come within the first element of the test propounded by Gibbs C.J.
This conclusion is supported by the definition of the words "material form" inserted into the Copyright Act 1984. These words appear in paragraph 31(1)(a)(i) and did so at the time of the Apple Computer cases. At that time, no defined meaning was given to them and this led to differences of opinion being expressed as to their meaning in the Apple Computer cases. Now, those words, when used in relation to a work, include "any form (whether visible or not) of storage from which the work ... or a substantial part of the work ... can be reproduced."
In the present case, the form of the reproduction is, in my opinion, irrelevant. There is no doubt the whole of the function of the AutoCAD lock has been reproduced in a material form by the Auto-Key lock. Thus it is not necessary to consider whether a substantive part of the work has been produced.
Many of the submissions put to the Court on this issue by counsel for the respondents were based upon the source code Widget C being part of AutoCAD and another source code being part of AutoCAD and described as SPTEST.C. These would be accepted as being works within the Copyright Act but the submissions proceeded on the basis that the AutoCAD lock was not a work. The argument then was that the AutoCAD lock was not a reproduction in material form of either Widget C or SPTEST.C. It was argued that there was no resemblance between any part of those programs and the Auto-Key lock. Reliance was placed upon the fact that different methods were employed between those programs and the method used in the Auto-Key lock. There may be similarity in logic, but not appearance, and therefore there could be no resemblance. Further, it was put, and is accepted, that Mr Kelly had no access to either Widget C or SPTEST.C.
These submissions do not take notice sufficiently of the 1984 amendments made to the Copyright Act. Too much reliance was placed upon the problems apparent in the Apple Computer cases and the submissions made did not accept the dramatic and extensive changes brought about by the amendments. Under the amendments, the expression of a set of instructions in object code can constitute a work in its own right. On the facts of this case a finding has been made that the AutoCAD lock and the Auto-Key lock each constitutes a computer program under the Copyright Act and thus each is itself a literary work under that Act. In this context, regard must be had to the function of the computer program in determining resemblance. Physical appearance is immaterial. The hardware or physical equipment within which the expressions of the sets of instructions are contained, is immaterial. The fact that Mr Kelly did not see Widget C, nor for that matter, the internal mechanisms of the AutoCAD lock, are immaterial. Mr Kelly knew of the function of the AutoCAD lock, he discovered how it performed that function, and prepared the expression for his own set of instructions for the Auto-Key lock to enable it to perform the identical function. This constitutes the resemblance between the two computer programs.
In my opinion, the respondents in manufacturing, advertising for sale and selling the Auto-Key lock in Australia without the licence of the applicants have infringed the copyright of Autodesk Inc. in the computer porgram in the AutoCAD lock and the rights of Autodesk Australia as being the sole and exclusive licensee of Autodesk Inc. with respect to its copyright in that computer porgram by reproducing that computer program in a material form in the Auto-Key lock.
Having come to this conclusion, the applicants are entitled to injunctive relief for infringement of copyright. It is not necessary, and in any event it would not be helpful and would be contradictory to consider the other aspects raised under sections 36 and 31 of the Copyright Act. Thus I do not consider further any issue arising under paragraphs 31(a)(vi) and (vii) of the Copyright Act with respect to adaptations of the AutoCAD lock or adaptations of Widget C as contained in AutoCAD. But before leaving this matter, it should be noted that the 1984 amendments to the Copyright Act included the insertion of paragraph (ba) into the definition of "adaptation". This new paragraph extends the meaning to be given to the word "adaptation" in relation to a literary work being a computer program. It uses the word "version", a word used in each of paragraphs (a) and (b), but the definition does not apply to a work being a reproduction of the work.
J. Have the Respondents, Without the Licence of
Autodesk Inc., Authorised the Reproduction of the
Whole or Part of AutoCAD?
This issue was described earlier in these reasons as a subsidiary issue. It is a separate cause of action to the matters discussed already since it does not depend upon the Auto-Key lock being a reproduction of the AutoCAD lock. In these circumstances this issue should be determined.
Under s.36 of the Copyright Act an infringement of copyright occurs if a person, not being the owner of the copyright and without the licence of the owner of the copyright, authorises the doing in Australia of any act comprised in the copyright. Here the relevant act is that referred to in paragraph 31(1)(a)(i) of the Copyright Act namely the exclusive right to reproduce the work in a material form. On this issue, the relevant work is the computer program being AutoCAD. The person who reproduces the work in a material form is said to be the user of AutoCAD being a person who has purchased AutoCAD from a dealer of the applicants.
In the present case, there is evidence given by a user of AutoCAD that he purchased an Auto-Key lock from the Dyasons, and in the presence of Mr Dyason removed the AutoCAD lock from the computer and plugged in the Auto-Key lock. The AutoCAD ran. Implicit in this is that, in the process, information was transcribed from the hard disk in the computer to the RAM in the computer and that this constituted a reproduction of part of the program from the form contained in the hard disk to the form contained in the RAM. Implicit also is the fact that the user would have seen that AutoCAD operated by a representation on peripheral equipment connected to the computer. It is not necessary for me to determine in this case whether that constitutes a reproduction of the work but in all probability it does not. That is the result derived from AutoCAD not the computer program itself.
This case concerns copyright, not the physical form on or in which the copyright resides. AutoCAD is sold throughout the world. In the United States of America and in Canada the AutoCAD package does not include the AutoCAD lock. AutoCAD sold in those countries does not include the challenge contained in Widget C nor any comparable challenge. Thus, AutoCAD sold in that form has no mechanism to prevent it being run. This fact is consistent with what is included in the AutoCAD packages sold in Australia.

The evidence shows that in Australia, as a general practice, dealers selling AutoCAD explain to prospective purchasers the existence and purpose of the AutoCAD lock. In broad outline the prospective purchasers are told that AutoCAD can be run only when the AutoCAD lock is fitted to the computer, that the user can make as many copies of AutoCAD as desired but only one program can be run at any one time, the limitation being the fact that one AutoCAD lock only is supplied with each package. They are told that a copy could be transcribed to a computer at their home as well as at their place of work but that it would be necessary to carry the lock with them whenever they wanted to use the program at different places. The AutoCAD lock has been in use since about 1986. Before that time, AutoCAD did not need the AutoCAD lock to be fitted before it could be run in a computer. Users still retaining those versions of AutoCAD do not need an AutoCAD lock. I am satisifed that since the lock was first introduced, purchasers of the AutoCAD package within Australia knew of the existence of the AutoCAD lock and the need to fit it to a computer to enable the program to be run.
Among the articles contained in the AutoCAD package purchased from dealers of AutoCAD are a number of smaller packages each sealed in a clear plastic package. Included within one of those packages is the document headed "AutoCad Hardware Lock, Reference Sheet", part of which is set out earlier in these reasons. In the same package is another document headed "Software Licence". The logo of Autodesk appears at the top right side of the document over the words "Autodesk Australia Pty. Ltd." The document has fixed to it the details of the AutoCAD program, its release identification, its serial number and the serial number of the hardware lock included in the package. This is either typed on a separate piece of paper stuck to the software licence or is typed directly onto that document.
There is then set out in large and clear form the following:-
"WARNING - THIS SOFTWARE IS COPYRIGHT.

Read this notice carefully before opening and using this package.

It is unlawful to load this software into a computer without the licence of the Copyright Owner named below.

As purchaser of the authorised copy of the software contained within this package you are offered a licence by the Copyright Owner on the Conditions set out below:

- to store this software in any single computer which is under your control; and - to make copies of the software for security purposes only."

Some comments are made about this warning. It has ironic aspects. The notice comes enclosed within the outside covering within which the AutoCAD program is supplied. Further, the software licence is within a sealed package within the outside covering. It is impossible to read the notice on the licence before opening these packages. Further, the notice refers to "the Copyright Owner named below". No such copyright owner is named in the document although there is a direction on the "Licence Registration Form" that it, together with a survey, be sent to "Autodesk Australia" at a post office box number at Richmond, Victoria.
Six conditions are then set out, the first of which is as follows:-

"Conditions

1. You may not:

- Use this software, or any part or copy of it, on more than one computer at a time; - make copies of it except for security purposes; - loan, rent, lease or sub-licence this software, or any copy or part of it, to anyone else; - adapt this software, by decompiling it or otherwise;

- or make copies of its associated documentation."

After the conditions there appears the following:-

"Sign and mail this registration card today ONLY REGISTERED PRODUCT will be eligible for future upgrade. Your Authorised AutoCAD Dealer is your first point of contact for technical enquiries. However, if you need to contact Autodesk directly, you will be requested to provide your product serial number.

Completion and return of the registration card will also ensure that you will receive quarterly issues of Autodesk newsletter for AutoCAD users, Final Draft Australia."

The detachable licence registration form is directed "To: (Copyright Owner)". Provision is made for the signature of the purchaser by which it is confirmed that the purchaser accepts the licence offered on the conditions stated. The form also indicates the details of the program and lock similar to those attached to the software licence. In addition, a customer survey form is attached.
There was no direct evidence that purchasers of the AutoCAD package signed and returned the licence registration form. An inference is drawn that a majority would. By so doing they became entitled to obtain later improved versions of the program at a reduced price. Also by so doing they received a durable template to use on the digitizing tablet together with the supply of a quarterly newsletter. These matters are set out in a booklet supplied with the package and headed "Read This First".
Much was made between the differences of wording contained in the Software Licence, the AutoCAD Hardware Lock Reference Sheet and what dealers said they told the purchasers of the package with respect to the making of copies of AutoCAD. Reference was made also to s.43A of the Copyright Act, a section inserted as part of the 1984 amendments, allowing for the making of a back-up copy of a computer program. On the facts of this case, nothing turns on the effect of any differences. The applicants do not allege that more than one copy has been made by any one user. The issue is, what flows from the use of the Auto-Key lock instead of the AutoCAD lock?
A number of comments are made. The software licence makes no mention of an AutoCAD lock. In all probability the form of the licence has been drawn on the basis of the practice in the United States of America, where a lock is not required. If the applicants had wanted to make it a condition of the licence, it would have been a simple matter to include in the licence a condition that the user would use an AutoCAD lock only. This has not been done. The applicants considered, in all probability, that the lock could not be duplicated. Further, the AutoCAD Hardware Lock Reference Sheet does not state that no other device is to be used as a substitute for the AutoCAD lock. The wording on the reference sheet is consistent with the evidence of the dealers. The thrust of this material is to warn the user that AutoCAD won't run without the lock, that the lock is important and valuable, care should be taken of it, it is difficult to replace and it should be insured. There is no suggestion that a warning was given that AutoCAD was not to be used with any device as a substitute for the AutoCAD lock. In all probability there are a number of AutoCAD programs in use within Australia which do not need the presence of the lock in order to be run.
There is no evidence before the Court to suggest that users of AutoCAD have purchased the Auto-Key lock to enable them to make extra copies of AutoCAD to be disposed of and to be used together with the Auto-Key lock, at a profit to third persons. There is no evidence that any person, not being a purchaser of the AutoCAD program is using AutoCAD. The advertisements for the Auto-Key lock are directed to AutoCAD users. The names of some persons who have purchased the Auto-Key lock are before the Court, but there is no evidence that they have used the Auto-Key lock or the methods by which it has been used. There is no evidence to suggest that any AutoCAD user has used the program on more than one computer at any one time.
Counsel for the applicants contended, correctly in my opinion, that the respondents did not have the licence of the applicants to sell the Auto-Key lock in circumstances where the copyright in AutoCAD is in the applicants or one or other of them. Further, they contended, correctly in my opinion, that the users of AutoCAD being persons who have purchased the AutoCAD package, have a licence to run AutoCAD. The issue is whether these persons have a licence to run AutoCAD without the AutoCAD lock. On this aspect, counsel contended that the users of AutoCAD were not licensed to run AutoCAD except with the AutoCAD lock, or, put another way, it was a condition of the licence to use AutoCAD that it would be used with an AutoCAD lock and no other device.
A licence need not have a contractual base. A licence need not be granted by an express term of an agreement or for that matter any document or form of words. A licence can be implied from all the facts. Counsel for the applicants contended that on the facts of this case, the licence to use AutoCAD was subject to a condition that they would use AutoCAD only with an AutoCAD lock.
The existence of an implied licence arises where it is necessary to give business efficiency to the transactions involved. Thus it was contended that a person purchasing the AutoCAD package from a dealer has an implied licence to use AutoCAD in compliance with all the material within that package. The AutoCAD lock is in that package. AutoCAD cannot operate without the lock. Hence, the licence to use AutoCAD is limited to a use with the AutoCAD lock.
Counsel relied strongly on opinions expressed in Interstate Parcel Express Co. Pty. Ltd. v Time - Life International (Nederlands) B.V. (1977) 138 CLR 534. In that case, the appellant had purchased a series of books in the U.S.A. from a vendor who had the licence of the owner of the copyright in the books to sell these books in the U.S.A.. The appellant sought to sell the books in Australia and the owner of the copyright alleged that constituted an infringement of copyright. The appellant claimed it had an implied licence to sell the books in Australia. The issue was stated by Gibbs J. at p 539 as follows:-

"... the only issue that arises ... (on this aspect) ... in the present case is whether the appellant, when it imported the books into Australia for the purpose of selling them, or sold them in Australia, as the case may be, did so "without the licence of the owner of the copyright". The word "licence" ... appears to mean no more than "consent", and a licence for the purpose ... need not result from a formal grant, but may be given orally or be implied by conduct: see Copinger and Skone James on Copyright, 11th ed. (1971) par 404."

In that case, the appellant relied upon an implied consent and arguments were based upon analogy with rights arising from the purchase of goods subject to patent rights. The Court rejected these arguments.
It is not necessary to refer in detail to the reasons given in that case. The issue in that case is very different to the issue in the present case. In the present case, it appears that the applicants have not given any express licence in writing to users of AutoCAD to use the AutoCAD lock. At the very least, the I.P.E.C. case supports the view that the users of AutoCAD have an implied licence to use the copyright existing in the AutoCAD lock. The I.P.E.C. case is not authority for the proposition that implied prohibitions or negative obligations can arise from implied licences to use copyright. In my opinion, the facts of the present case do not give rise to an implied limitation on the use of the copyright in AutoCAD to the use of an AutoCAD lock. The software licence does not refer to any such limitation. There is no express licence to use copyright in the AutoCAD lock, but at least an implied licence arises but that implication does not carry with it a mandatory requirement that AutoCAD will not be used with any other device. The licence granted to use AutoCAD, at the most, is limited by the conditions set out in the software licence. There is no evidence that any user of AutoCAD has committed a breach of any of those conditions. At the time the user of the Auto-Key lock tested it, he was using AutoCAD on one computer only.
On this conclusion, the principles enunciated in University of New South Wales v Moorhouse (1975) 133 CLR 1 apply. The selling and supplying of the Auto-Key lock to users of AutoCAD does not, by itself, result in the user committing a breach of the licence to use the copyright in AutoCAD. It does not follow that AutoCAD will be used in more than one computer at any one time. See also WEA International Inc. v. Hanimex Corporation (1987) 77 ALR 456.
In my opinion, the applicants have failed to establish their claim based on this provision of the Copyright Act.
The applicants have not made out their case based upon the claim that the respondents had induced the users of AutoCAD who purchased the Auto-Key lock to breach the terms of their licence agreement with the applicants.
K. Conclusion
The applicants are entitled to an injunction restraining the respondents from infringing their copyright in the computer program contained within the AutoCAD lock. In the circumstances, the injunction should be granted and the proceeding be adjourned to a directions hearing on a date to be fixed. At that directions hearing, directions could be given as to the further conduct of the case. The question of costs to date will be reserved to a date to be fixed. The legal advisers of the applicants are requested to prepare minutes of order in conformity with these reasons. Orders will then be made. Until those orders are made, the existing undertakings given by the respondents will remain in operation. Although final in form, the orders to be made are interlocutory. In the circumstances of this case, all parties should have leave to appeal from the orders to be made and that leave should be incorporated in the minutes of order.

[1989] FCA 431

07 AUGUST 1989