Copyright - PQ Systems Europe Ltd. v Aughton

Author Rob Farrow  Licence CC BY-SA 2.0 Deed Source Wikimedia Commons
Jane Lambert

Business and Property Courts, Intellectual Property (Chancery) Mr Justice Zacaroli PG Systems Europe Ltd. and another v Aughton and another  [2023] EWHC 581 (22 March 2023)

This was an action for copyright infringement and breach of confidence. It was brought by a software house against its former director and programmer. The claimants were a US company called Productivity-Quality Systems, Inc. ("PQS") and an English company called PQ Systems Europe Ltd. ("PQE").  The transcript refers to them collectively as "PQ".  PQE was not a subsidiary of PQS but it was founded, owned and run by the same person. When that founder died both companies passed into the hands of his successor.    The first defendant, Jeff Aughton ("Mr Aughton"), worked for PQE from 1989 to 2015  On leaving that company, Mr Aughton developed software packages that were similar to PQE's.  He marketed his software through a company called Factoria Limited ("Factoria") which he and his wife set up. The claimants suspected that Mr Aughton's programs were copies of their own.  They issued these proceedings on 25 Sept 2019.

The Trial

The action came on for trial before Mr Justice Zacaroli on 8, 9, 10 and 13 Feb 2023.   The learned judge handed down judgment on 22 March 2023 (see PG Systems Europe Ltd. and another v Aughton and another [2023] EWHC 581).  By para [151] of his judgment his lordship concluded that Mr Aughton had infringed PQ's copyright and breached his contractual duties of confidentiality by producing and supplying the packages known as InSPC v1 and InSPC v2 respectively.

The Software

InSPC v1 was an SPC program for creating charts. It tapped into an existing data collection system, written in VB.NET. According to the judge, It had broadly the same functionality as the claimants' CHARTrunner program. A later version provided a self-contained system, maintaining its own database with broadly the same functionality as the claimants' SQCpack. InSPC v2 was similar to InSPC v1 but it was written in C#. The claimants alleged that those packages reproduced a suite of programs that Mr Aughton had called "ProSPC". He developed that software at home in his own time between 2007 or 2008 and 2013 while he was still employed by PQE. The claimants alleged that PQE was entitled to the copyright in those programs by virtue of s.11 (2) of the Copyright Designs and Patents Act 1988.

The Issues

Mr Justice Zacaroli set them out at para [31] of his judgment:

"(1) are the copyright and confidential information in ProSPC owned by PQ?
(2) was InSPC v1 copied from ProSPC, so as to infringe the copyright in ProSPC or misuse any confidential information in ProSPC? and
(3) was InSPCv2 copied from ProSPC, either directly or – more likely – indirectly via InSPC v1?"

Were the Copyright and Confidential Information in ProSPC owned by the Claimants?

It was common ground that copyright subsisted in a computer program whether in source or object code as an original literary work and that such copyright would be infringed by copying or making an adaptation of the work.  Copying is presumed where there is objective similarity between the alleged original and the putative copy, It is then up to the alleged copyist to rebut the presumption. 

Mr Aughton's contract of employment defined "Confidential Information" as:

"information (whether or not recorded in documentary form, or stored on any magnetic or optical disk or memory) relating to the business, products, Company software and software development, affairs and finances of the Company for the time being confidential to the Company and together with information relating to the customers, suppliers, agents of the Company and trade secrets including, without limitation, technical data and know-how relating to the business of the Company or any of the business contacts."

Clause 13.2 of that contract prevented him from 

"at any time (whether during his employment or afterwards) from using or disclosing to any person any Confidential Information, except in the proper course of his duties or where use or disclosure was authorised by PQ or required by law, where the information is already in the public domain or where it was protected within the meaning of s.43A of the Employment Rights Act 1996,"

The judge referred to s.11 (2) of the Copyright, Designs and Patents Act 1988:

"Where a literary, dramatic, musical or artistic work, or a film, is made by an employee in the course of his employment, his employer is the first owner of any copyright in the work subject to any agreement to the contrary."

He directed himself that this involves an analysis of two questions, which often merge into one which is set out in §5-18 of Copinger & Skone James on Copyright::

"(a) whether the work which was done was the kind of work which the employee was engaged to do (i.e. whether it was within the scope of the employment) and, if it was, (b) whether the work was in fact done in the course of that employment at all."

In the judge's view there was no doubt as to the answer to the first question:

 "ProSPC was a piece of software that was precisely of a kind which Mr Aughton was engaged to do. On Mr Aughton's own admission, ProSPC was his own version of PQ's CHARTrunner software, but written in VB.NET, "

To answer the second question his lordship he referred to para [42] of David Stone's judgment in MEI Fields Designs Ltd v Saffron Cards and Gifts Ltd  [2018] EWHC 1332 (IPEC)::

"..... it seems to me that the question of whether or not given acts were carried out in the course of employment for the purposes of Section 11 of the CPDA is a multifactorial assessment, to be based on all the circumstances of the case. In most situations where an employment relationship has been conceded, there will be some factors which point to the copyright work being created in the course of that employment and some factors which point otherwise. The relevant factors may include:

(a) The terms of the contract of employment;
(b) Where the work was created;
(c) Whether the work was created during normal office hours;
(d) Who provided the materials for the work to be created;
(e) The level of direction provided to the author;
(f) Whether the author can refuse to create the work/s; and
(g) Whether the work is “integral” to the business."

The learned judge observed in para [51] that Mr Aughton had made two important admissions at a disciplinary inquiry in 2013 when his employer discovered that he had been in contact with a dismissed former employee:

"The first is that the routines he used in ProSPC were lifted from the CHARTcore routines that he wrote for PQ. The second is that, while he was the sole creator of ProSPC, he acknowledged that he had written it in the course of his employment and that it belonged to PQ."

Mr Aughton denied that he had made those admissions but the judge found otherwise. he also argued that he wrote ProSPC in his own time at home. That did not assist the judge because Mr Aughton did much of his work for PQE at home.    Mr Justice Zacaroli concluded at [76]:

"Taking Mr Aughton's admission made in 2013 that ProSPC belonged to PQ along with the other points set out above, in my judgment ProSPC was indeed written in the course of Mr Aughton's employment such that the copyright and confidential information in it belonged to PQ."

Was InSPC v1 copied from ProSPC?

This was an issue of fact rather than law. 

 In para [21] the judge said: that in most cases, questions of copying can be resolved relatively easily by comparing source code It was not possible in this case because there was no source code for ProSPC or InSPC v1 because Mr Aughton had deleted them. Only the object code was available for those two applications. The claimants sought to decompile the object code using commercially available decompiling software.  The problem with decompilation is that the decompiled code will not usually look much like the original source code.

In addressing this issue the judge took account of the fact that Mr Aughtin had access to ProSPC at all times while he was writing InSPCv1 as he retained a copy of the ProSPC software even after the disciplinary proceedings and his departure from the company.  There were identical objective similarities between the two suites which neither Mr Aughton nor his expert witness could explain away.  The judge drew unfavourable inferences from the deletion of the source codes of the two suites. He concluded at [111] that, in writing InSPC v1 and in seeking to make it available on commercial terms to a potential customer, Mr Aughton did copy and make use of at least a substantial part of ProSPC in writing InSPC v1.

Was InSPCv2 copied from ProSPC, either directly or  indirectly via InSPC v1?"

This was also an issue of fact upon which the judge had to rely on circumstantial evidence, Again there were objective similarities for which no persuasive explanations had been offered.  The judge found significance in the fact that Mr Aughton wrote InSPCv2 in C# rather than VB.Net with which he was more familiar after he had received the first letter before claim from the claimants' solicitors.   Having already rejected Mr Aughton's evidence that he had written the software as a hobby in his own time at home and that he had copied InSPCv1 from ProSPC the judge was inclined to find that InSPCv2 had been copied from InSPCv1. As he said at [149] he was unable to determine how the copying had been done but the evidence that he had and the inferences upon which he could draw were sufficient for a finding of copyright infringement and breach of confidence.

Comment

Mr Aughtin appeared as a litigant in person.  It is possible that the outcome might have been different had he been represented,  An experienced IP lawyer would have advised him on the merits at a time in which he could have settled more cheaply.  He or she could have ensured that the expert evidence would have been presented more effectively.  Other points on subsistence and ownership of copyright could have been taken, The proceedings could have been transferred to the Intellectual Property Enterprise Court in which time would have been saved and costs would have been lower.

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