In an unusual case centring on a software
development outsourcing contract, a development company pulled out
of an agreed mediation process in order to seek a court order which
declared them innocent of copying the other company's technology.
The court had to make its decision without analysing any of the
software involved.
It lost that case and has now also lost its
appeal against the original judgment. "I am being asked to make a
declaration that software, which I have not seen, does not infringe
any copyright in another software product which I have not seen and
in respect of which copyright has not been demonstrated," explained
the original trial judge.
Point Solutions was commissioned by Focus
Business Solutions to do some outsourced contracting work on
Focus's market leading software, Goal. Both companies make software
for the creation of electronic application forms in the financial
services sector.
After it won the Focus contract, in April
2001, Point began to develop its own competing software, called
Acuo. When Point began to win work for which Focus was also
bidding, that company asked for the return of the copies of its
software.
A year later Focus wrote to Point asking it to
prove that it had not copied its software when building its new
product. The company had had a similar disagreement with a former
partner company, Synaptic. "What has happened between Focus and
Point Solutions is strikingly similar to what has happened between
Focus and Synaptic," wrote Frank Murray, chief technology officer
at Focus.
"As a result of this and particularly the
speed at which you have launched a competing product, I am sure you
will understand that I need confirmation that you have not
undertaken any copying of Focus' software and solutions," wrote
Murray. "I strongly suggest that before you reply, that you give
serious thought to what constitutes copying. Indeed, Synaptic
failed to understand that copying covers more than just literal
code copying, it also covers, for example, the use of the structure
of the product as a 'springboard' in producing your own
product."
The dispute rested on the fact that Point had
had access to Focus's source code in the course of its contract
work and was able to see how the software was put together. The two
companies agreed to appoint an independent expert to analyse each
company's source code and decide whether or not copying had taken
place.
In August 2003 the companies agreed on a
person and a process for this mediation. By the following March
Focus had produced a technical primer for the expert, though much
more slowly than had been anticipated, and Point had produced none
at all. Point suddenly withdrew from the process, blaming Focus's
slow progress.
Point then began its lawsuit seeking a
declaration of non-infringement of copyright. Perhaps the most
unusual aspect of the case was that both companies agreed to
proceed without an expert witness to analyse the actual software.
The court's decision, then, had to be made without any direct
evidence on the software programs themselves.
"It is difficult to avoid the conclusion that
the outcome of these proceedings is unsatisfactory; and that the
outcome would have been equally unsatisfactory had the decision
gone the other way," said Lord Justice Chadwick, one of the three
judges, who gave a unanimous decision. "But that is the effect of
the way in which both parties chose to conduct the proceedings.
They chose to deny the judge the assistance of the expert's report
which Master Bragge had directed.
"They chose to put the judge in the position
where the only question which she could decide was whether Point
had established on the balance of probabilities, by the evidence
which it adduced, that it had developed the Acuo software without
copying," said Chadwick. "Point accepted that burden."
The course was conducted using the testimony
of the managing director and chief technical architect, a Mr Green
and a Mr Blatchford, as the main evidence relating to the nature of
Point's software. It emerged that a significant amount of
development had been carried out in India, but none of those
developers was made available by Point to give evidence.
The original trial judge, Judge Kirkham, said
that she developed doubts about the credibility of Green and
Blatchford. "I am not confident that Mr Green and Mr Blatchford
have presented a full and accurate picture," she said in her
ruling.
The Appeals Court found that Kirkham correctly
characterised the case when she said that she was "not trying a
case as to whether or not there has been copying. [I have to
decide] whether Point have demonstrated, on balance of
probabilities, independent design."
"There were grounds upon which she could take
the view that Mr Green and Mr Blatchford were unreliable
witnesses," said Chadwick in his Appeals Court ruling. "It follows
that I would hold that the appellant has not shown that the judge
was wrong in finding that Point failed to establish on the balance
of probabilities that it did not copy Focus' source code in
creating the Acuo range of products."
The appeal was dismissed.
