IPC Global Pty Ltd v Pavetest Pty Ltd (No 3)

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FEDERAL COURT OF AUSTRALIA

IPC Global Pty Ltd v Pavetest Pty Ltd (No 3) [2017] FCA 82

File number: NSD 1203 of 2015
Judge: MOSHINSKY J
Date of judgment: 10 February 2017
Catchwords:

COPYRIGHT – infringement – literary work – computer program – software for materials testing equipment – where executives of applicant resigned and established rival company – where one of the executives retained copy of applicant’s source code – where executive copied that source code onto computer provided to rival company’s computer programmer – where programmer copied source code from system library of applicant’s software – where source code related to message format and data structures – whether respondent infringed copyright in applicant’s software – whether respondent’s software reproduced a substantial part of the applicant’s software

INTELLECTUAL PROPERTY – confidential information – computer program – software for materials testing equipment – where executive of applicant received copy of source code – where executive resigned and provided applicant’s source code to programmer of rival company – where programmer referred to and copied applicant’s source code in course of writing software – whether applicant’s source code was confidential – whether source code received by executive in circumstances imparting obligation of confidence – whether ‘springboard’ benefit gained
Legislation: Copyright Act 1968 (Cth), ss 10, 14, 22, 29, 31, 32, 36, 115
Cases cited:

Australian Medic-Care Company Ltd v Hamilton Pharmaceutical Pty Ltd (2009) 261 ALR 501

CA Inc v ISI Pty Ltd (2012) 95 IPR 424; [2012] FCA 35

Coco v AN Clark (Engineers) Ltd [1969] RPC 41

Del Casale v Artedomus (Aust) Pty Ltd (2007) 165 IR 148; [2007] NSWCA 172

IceTV Pty Ltd v Nine Network Australia Pty Ltd (2009) 239 CLR 458

IPC Global Pty Ltd v Pavetest Pty Ltd (No 2) [2016] FCA 1332

JR Consulting & Drafting Pty Ltd v Cummings (2016) 329 ALR 625

Leica Geosystems Pty Ltd v Koudstaal (No 3) (2014) 245 IR 422; [2014] FCA 1129

Nexus Adhesives Pty Ltd v RLA Polymers Pty Ltd (2012) 97 IPR 160; [2012] FCAFC 135

O’Brien v Komesaroff (1982) 150 CLR 310

Optus Networks Pty Ltd v Telstra Corporation Ltd (2010) 265 ALR 281

RLA Polymners Pty Ltd v Nexus Adhesives Pty Ltd (2011) 280 ALR 125

Smith Kline & French Laboratories (Auft) Ltd v Secretary, Dept of Community Services and Health (1990) 22 FCR 73

Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317

Zomojo Pty Ltd v Hurd (No 2) (2012) 299 ALR 261
Date of hearing: 14, 17, 19, 20 October and 7, 8 November 2016
Registry: New South Wales
Division: General Division
National Practice Area: Intellectual Property
Sub-area: Copyright and Industrial Designs
Category: Catchwords
Number of paragraphs: 222
Counsel for the Applicant: Mr R Cobden SC with Ms E Bathurst
Solicitor for the Applicant: Bird & Bird
Counsel for the Respondents: Mr CP Thompson
Solicitor for the Respondents: Stephens Lawyers & Consultants

ORDERS

NSD 1203 of 2015
BETWEEN:

IPC GLOBAL PTY LTD (ACN 168 265 156)

Applicant
AND:
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Details
Case
[2017] FCA 82
Decision Date

CaseChat Overview and Summary

IPC Global Pty Ltd sought to bring an action against Pavetest Pty Ltd for copyright infringement and breach of confidence in relation to software used for materials testing equipment. IPC Global alleged that Pavetest had infringed its copyright by copying source code and that Pavetest had breached a duty of confidence by using confidential source code in developing its own software. The case involved former IPC Global executives who had established Pavetest and allegedly used IPC Global’s confidential source code in developing Pavetest’s software. The court was required to determine whether Pavetest had indeed infringed IPC Global’s copyright by copying a substantial part of its software and whether Pavetest had breached a duty of confidence by using IPC Global’s confidential source code.

The court found that IPC Global had not established the necessary elements for copyright infringement. While IPC Global’s software contained certain features and structures that were also present in Pavetest’s software, the court concluded that these were not substantial enough to constitute a reproduction of a substantial part of IPC Global’s software. Furthermore, the court held that Pavetest had not breached a duty of confidence. Although some of IPC Global’s source code had been accessed and copied, the court found that this information was not confidential. Additionally, the court found that Pavetest had not gained an unfair advantage from using the source code, and therefore there was no springboard benefit. As a result, IPC Global’s claims for copyright infringement and breach of confidence were dismissed. The court ordered both parties to file and serve proposed minutes of orders and submissions in support of those orders by specified dates.

Orders

Orders of the court

1. By 4.00 pm on 24 February 2017, each party file and serve proposed minutes of orders to give effect to these reasons and a short outline of submissions in support of those orders.

2. By 4.00 pm on 3 March 2017, each party file and serve any short outline of submissions in response.

3. Liberty to apply.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

After quoting from relevant authorities, Ryan J said (at [73]):The fundamental principle discernible from the authorities is that a recipient of confidential information or trade secrets should not be allowed to use it as a springboard into a better position than would have been achieved from the use of publicly available information and the recipient’s own independent skill and ingenuity. Application of principles to the facts The main issue to be addressed is whether IPC Global has established each of the elements of the cause of action for breach of confidence. IPC Global submits that the information here is succinctly identified: it is the source code, and the collocation of ideas, structures and solutions within it. IPC Global also refers to, and appears to identify, Annexures “BJRF5” and “BJRF6” to Mr Fernando’s first affidavit, which are copies of the change log comments for the messaging format specification between the PC and the IMACS. I will refer to these as the UTS communications protocol documents. IPC Global notes that Mr Fernando gave evidence during cross-examination that these were confidential and was not challenged on that evidence. IPC Global submits that the source code for the UTS software is of a confidential nature, relying on a series of factors. In relation to unauthorised use, IPC submits that: Mr Feeley took copies of the complete source code of the UTS software to “have back-up copies for an emergency”; taking copies home for work or for offsite security is one thing – keeping the software and deploying it in a rival business is quite another; that does not negate the confidentiality of this material; nor does it of itself answer IPC Global’s claims; there is no evidence that IPC Global authorised Mr Feeley to copy and permanently remove this material; the sheer volume and complexity of the material taken by Mr Feeley point to a breach of Mr Feeley’s duty of confidentiality. IPC Global also submits that Mr Sinadinos breached his duty of confidentiality owed to IPC Global on the basis that he admitted that he knew that Mr Feeley had a copy of the IMACS firmware, that Mr Feeley had previously made copies of the UTS software when they were both engaged by Old IPC and that Pavetest’s software would use the same or similar message format to the UTS software. IPC Global also submits that Mr Feeley and Mr Sinadinos are the moving minds of Pavetest and accordingly their knowledge and awareness of confidentiality is to be imputed to Pavetest. In relation to “springboarding”, IPC Global submits that: with respect to TestLab (version 1), the evidence of springboarding is clear; Mr Li has conceded that, by having the source code for the UTS software, instead of developing it from scratch, he saved “about a couple of months of development time”; his oral evidence showed that to be a very significant underestimate; not only did Mr Li consult the source code for the UTS software to develop TestLab, but he admittedly copied it; in those circumstances, Mr Feeley’s evidence that he only gave the UTS software to Mr Li to “get an understanding of the application but more so to understand the communications interface and software design that had been done in the past and how we might do it differently in the future” ought not be accepted.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

For these reasons, IPC Global’s contract claims are not established.Conclusion I will make orders to the effect that each party file and serve proposed minutes of orders to give effect to these reasons and a short outline of submissions in support of those orders; and for the filing and service of submissions in response.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.