Jane Lambert
Business and Property Courts, Intellectual Property List (chD) (Mr Justice Zacaroli PQ Systems Europe Ltd and another v Aughton and another [2023] EWHC 581 (Pat)
This was an action for copyright infringement and breach of confidence. The claimants were two software houses, one English and the other American, which were at the relevant time owned by the same shareholder. The English company was PQ Systems Europe Ltd ("PQSE") and the American one was Productivity-Quality Systems Inc. The first defendant was one Jeff Aughton ("Mr Aughton"). He had been an employee and director of PQSE The second defendant was a company owned by the first defendant and his wife called Factoria Ltd.
The Claimants' Software
The claimants accused Mr Aughton of copying their software. That software was statistical process control ("SPC") and gauge management software. SPC is an analytical technique for improving industrial processes. The claimants' principal SPC product was SPCpack which was a full suite of SPC software incorporating a chart generating program called CHARTrunner. While employed by PQSE, Mr Aughton worked on a charting module called CHARTcore or PQChartCore, He also worked on an SPC program in Visual Basic ("VB.NET") called "ProSPC."
Mr Aughton's Software
Mr Aughton left PQSE in 2015 and started to develop SPC software in VB.NET which he called "inSPC". He later developed an enhanced version called "InSPC+". A few months after he left PQSE, Mr Aughton demonstrated his software to a US company called CyberMetrics Corporation. He collaborated with CynerMetrics to develop the software, He also wrote the InSPC and InSPC+ software in C#,
The Dispute
The claimants became aware of Mr Aughton's activities and obtained a copy of his software. It found many similarities between their software and his. They sued CynerMetrics in the USA in 2017 and the defendants in this country in 2019. The US litigation has been settled on confidential terms. CyberMetrics no longer promotes Mr Aughton's software on its website.
The Trial
The action came on for trial before Mr Justice Zacaroli between 8 and 13 Feb 2023. He handed down judgment on 22 March 2023. In para [151] of his judgment, he held that Mr Aughton had infringed copyright and breached his contractual duties of confidentiality in writing SPC software (see PQ Systems Europe Ltd and another v Aughton and another [2023] EWHC 581 (Pat) (22 March 2023)).
The Issues
At para [31] of his judgment, the learned judge identified the following key issues which I have reframed slightly:
(1) Whether the claimants own the copyrights in ProSPC and can prevent unauthorized use or disclosure of secret information relating to that software under the law of confidence;
(2) Whether the software that Mr Aughton developed after he left PQSE was copied from ProSPC, so as to infringe copyright in ProSPC or breach the above-mentioned obligation of confidence; and
(3) Whether the C# versions of Mr Aughtoin's software were copied from ProSPC, either directly or – more likely – indirectly via the VB.NET versions.
Copyright
Referring to §3-88 to §3-93 of the 18th edition of
Copinger and Skone James on Copyright and paras [20] to [37] of Lord Justice Lewison's judgment in
SAS Institute Inc v World Programming Ltd [2013] EWCA Civ 1482, [2014] RPC 8, Mr Justice Zacaroli directed himself at para [33] of his judgment that:
"Copyright subsists in both source code and object code and such parts of the design or structure of a computer program that are indicative of the creativity and skill of the author. To the extent that the code is dictated by technical function (i.e. where there are essentially no choices to be made by the coder as to how to express the code) it is not protected. Nor is the functionality of a computer program, nor the ideas that lie behind it, protected."
In the next paragraph, he referred to
s.16 and s
.17 of the Copyright, Designs and Patents Act 1988 ("the CDPA"). He noted that copying a computer program, or of a substantial part of it, amounts to an infringement. He also said that it is an infringement to make an arrangement, altered version or translation of a program by reason of
s.21 (4) CDPA.
Noting §7-26; of Copinger he said at [35]:
"Where there is a substantial similarity between the original work and the allegedly infringing work, coupled with proof of the possibility of access, then this raises a prima facie inference of copying, which (as much as a matter of plain rational thought as a proposition of law) it is for the defendant to answer:"
He also quoted Mr Justice Jacob's judgment in IBCOS Computers Ltd v Barclays Finance Ltd [1994] FSR 275, p.296-297:
"at this stage (namely 'was there copying?') both the important and the unimportant bits of the works being compared count. Indeed it is often identity of trivial matter which traps a copyist. As Hoffmann J observed in Billhöfer Maschinenfabrik GmbH v Dixon & Co Ltd [[1990] FSR 105 at 123]:
'It is the resemblances in inessentials, the small, redundant, even mistaken elements of the copyright work which carry the greatest weight. This is because they are least likely to have been the result of independent design.'"
Mr Justice Zacaeoli considered Mr Justice Pumfrey's judgment in Cantor Fitzgerald International v Tradition (UK) Ltd [2000] RPC 95, at p.193. which was a close parallel to the case before him. It concerned the ordering of a list of variables in a piece of code. He observed that where the order in which the variables appear is irrelevant, and a matter of arbitrary choice, then the reappearance of that order in a later code is "certainly a powerful indication" of copying.
Duty of Confidence
Clause 13.2 of Mr Aughton's contract of employment prevented him 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 authorized by his employer or required by law unless the information was already in the public domain or protected by s.43A of the Employment Rights Act 1996. "Confidential information" was defined 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."
According to para [87] of
Cantor Fitzgerald, the use of source code, even if only as a reminder when writing competing software, would amount to a breach of confidence.
Whether the Claimants own the Copyrights in ProSPC and can prevent unauthorized Use or Disclosure of Secret Information relating to that Software under the Law of ConfidenceMr Aughton claimed the copyright in the ProSPC software on the ground that he had written it at home in his own time on his own computer in pursuit of his hobby. PQSE disputed that claim and relied on
s.11 (2) CDPA:
"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."
Citing §5-18 of
Copinger, the judge held that that involved an analysis of two questions, which often merge into one:
"(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."
The answer to the first question was obviously "yes". ProSPC was a piece of software that was precisely of a kind which Mr Aughton was engaged to do. ProSPC was his own version of PQ's CHARTrunner software written in VB.NET. The second question involves a multifactorial assessment based on all the circumstances of the case. In
MEI Fields Designs Ltd v Saffron Cards and Gifts Ltd [2018] EWHC 1332 (IPEC), Mr David Stone identified the following factors in para [42] of his judgment:
"(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."
Mr Aughton's assertions were inconsistent with admissions that he made at a disciplinary inquiry after his employer had discovered that he had shared information with a former employee who had been sacked for gross misconduct. ProSPC was also similar to GAGEpack suggesting that it was written in the company's time. Mr Justice Zacaroli rejected Mr Aughton's contention and held at [76] that ProSPC was written in the course of his employment. It followed that the copyright belonged to PQSE and that the source code was caught by the confidentiality clause in his contract of employment,
Whether the Software that Mr Aughton developed after he left PQSE was copied from ProSPC, so as to infringe copyright in ProSPC or breach the above-mentioned Obligation of Confidence;
Mr Aughton had access to ProSky at all times. As Mr Justice Zacaroli observed at para [21] of his judgment, questions of copying can be resolved relatively easily In most cases, by comparing source code. In this case, it was not possible because Mr Aughton had deleted the source codes for ProSPC, InSPC and inSPC+. Only the object code was available for the programs. It had been possible to decompile the software from the object code but that did not restore the source code or the comments. Nevertheless, it had been possible to identify some similarities between Mr Aughton's software and ProSPC which Mr Aughton could not satisfactorily explain away. Nor could he persuade the judge that he had a good reason for destroying the source codes. His lordship concluded at [111] that in writing insSPC Mr Aughton had copied a substantial part of ProSPC.
Whether the C# Versions of Mr Aughtoin's Software were copied from ProSPC, either directly or – more likely – indirectly via the VB.NET Versions.
As it was written in C# it was not possible to carry out a meaningful comparison with the decompiled object code of ProSPC, Given the different syntaxes, there could be no direct matching between lines of code. However, there were still similarities relating to forms and definitions which indicated similar functionality. Those similarities in functionality were consistent with being written by reference to a running version of proSPC. The software that had been written in C# did not take advantage of some of the functions of the language and contained structures typical of VB.NET. The judge reminded himself that he had rejected Mr Aughton's evidence on other issues which justified scepticism. There were indications that Mr Aughton started to code in C# after legal proceedings had been threatened. Taking everything into account the judge concluded that it was more likely than not that the C# code had been copied directly or indirectly from ProSPC.
Further Information
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