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Australia – Federal Court Finds That Copyright Subsists In Macros And Was Infringed.

29 October, 2012

 

CA Inc v ISI Pty Limited [2012] FCR 23

 

In brief

 

  • On 3 February 2012, Justice Bennett of the Federal Court found that macros can be classified as a “computer program” and therefore a “literary work” for the purposes of section 10 of the Copyright Act 1968 (Cth) (the Act) and attract copyright protection even where the macros require interaction with other programs to bring about a result in the mainframe computer.
  • This is a landmark decision as it is the first decision finding that copyright in macros was infringed. It is also worth noting that macros are not generally understood as a “computer program” in the IT industry.
  • Copyright in macros is infringed where there are textual and functional similarities between the macros.
  • The “interoperability” defence to copyright infringement of a computer program contained in section 47D(1) of the Act is not available when an independent third party has reproduced a computer program and provided that reproduction to a licensee of the computer program for its own commercial purposes.
  • Where a person has obtained confidential information in relation to a computer program whilst working as an independent contractor for the computer program’s licensee, the person owes an equitable obligation of confidence to the licensor in relation to that information.

 

Background

 

CA owns a database management system called Datacom. DB2 is a competing product supplied by IBM. Datacom and DB2 are incompatible with each other, making migration from one database to the other expensive, time consuming and difficult because the licensee would have to convert existing data into a compatible format and rewrite application programs. ISI created a product, 2BDB2, designed to enable existing Datacom licensees to migrate their databases to DB2 without having to rewrite their application programs.

 

Datacom licensees were required to run application programs to access information within their Datacom databases. Datacom included a number of macros designed to help licensees write their application programs (CA Macros). Macros are commands that when executed, cause a larger and more complex set of instructions to be undertaken within a computer program.

 

In order for the 2BDB2 software to successfully migrate data from Datacom to DB2, it had to mirror certain aspects of the functionality of CA Macros. ISI developed its own set of macros (ISI Macros) for use in 2DBD2, which was similar to the set of CA Macros. CA alleged that the ISI Macros infringed copyright in the CA Macros and Datacom. CA also argued that ISI had in the course of creating 2BDB2, breached an equitable duty of confidence owing to CA by accessing and using certain confidential information in Datacom which ISI had obtained whilst working as an independent contractor for Datacom licensees, to assist in the conversion of their databases from Datacom to D2B.

 

ISI argued its defence as follows:

 

  • Datacom and CA Macros were both not a “computer program” in which copyright subsisted for the purposes of the Act. Section 10 of the Act defines a “computer program” as a “set of statements of instructions to be used directly or indirectly in a computer in order to bring about a certain result”. ISI argued that Datacom was not sufficiently particularised in the evidence tendered to be a “computer program” (because CA had not provided the full source code for Datacom in evidence) and that the CA Macros were not a complete “set of statements or instructions” because they required considerable participation by many other elements to create something executable.
  • Even if the CA Macros were a “computer program”, the ISI Macros did not reproduce a substantial part of the CA macros because the only parts taken were those necessary in order for the ISI Macros to maintain compatibility between a Datacom licensee’s application program and D2B and this only represented 15% of the functionality of the CA Macros.
  • In the event that a substantial part of the CA Macros were reproduced, ISI sought to rely on the section 47D(1) defence which provides that a person does not infringe copyright in a computer program if they have made a reproduction of the program by or on behalf of a licensee of the program for the purpose of obtaining information necessary to enable the licensee to interoperate with the existing program.

 

Decision

 

Justice Bennett found in favour of CA, holding that:

 

  • Datacom and the CA Macros were both a “computer program” within the meaning of section 10 of the Act and therefore a “literary work” attracting copyright protection from the Act.
  • The ISI Macros infringed copyright in the CA Macros, but not in Datacom.
  • ISI had breached an equitable duty of confidence owing to CA in relation to certain parts of the information ISI obtained whilst working as an independent contractor for CA’s licensees.

 

Issue of whether copyright subsisted in Datacom and the CA Macros

 

Justice Bennett had little difficulty in finding that Datacom was a “computer program”, as CA had identified Datacom with sufficient precision, notwithstanding the fact that CA had not tendered the full source code for Datacom in evidence.

 

In finding that the CA Macros were also a “computer program” Justice Bennett held that even though the CA Macros required the participation of other components in order to bring about a result in the mainframe computer this did not mean that the CA Macros should be excluded from the definition of “computer program” in section 10 of the Act as being a “set of statements of instructions to be used directly or indirectly in a computer in order to bring about a certain result”. The CA Macros were a computer program as they were a set of instructions that were used to indirectly bring about a certain result.

 

Issue of infringement

 

Infringement of Datacom On the issue of whether Datacom was infringed by the ISI Macros, Justice Bennett found that CA had failed to adduce sufficient evidence about Datacom’s functionality and therefore her Honour was unable to perform a qualitative assessment of whether or not a substantial part of Datacom had been reproduced in the ISI Macros.

 

Infringement of the CA Macros

 

In considering whether the ISI Macros had infringed the CA Macros, Justice Bennett considered each different release (the ISI Macros had been updated a few times) separately. Justice Bennett found that the earlier versions of the ISI Macros had reproduced a substantial part of the CA Macros as some were literal copies of the CA Macros and there were textual and functional similarities between these versions of the CA Macros and the ISI Macros. Justice Bennett held that the 2011 version of the ISI Macros (which had been substantially rewritten) did not infringe the CA Macros because even though there was functional similarity between this version and the CA Macros, there was insufficient similarity of expression, form or parameters in the source code.

 

Justice Bennett held that the section 47D(1) defence was not available to ISI as this defence is only available to a person acting on behalf of the owner or licensee of the CA Macros and ISI had been acting on its own behalf in reproducing the CA Macros to create the ISI Macros.

 

Breach of confidentiality

 

CA had procedures in place to ensure the confidentiality of Datacom material, including tight security measures to ensure that persons with access to programming information were bound to keep the information confidential and also included a confidentiality clause in every software licence agreement for Datacom which also contains an undertaking by the Licensee not to change, disassemble, decompile or otherwise reverse engineer Datacom or to make copies or reproduce any part of Datacom. The Court found that it was relevant that the licences contained confidentiality provisions and that it followed that the information was imparted to ISI in circumstances of confidentiality, and ISI had breached its duty to CA.

 

Lessons

 

  • This case highlights the difficulty in proving copyright infringement of a computer program where insufficient evidence about its functionality is adduced.
  • Functional similarity between macros in itself will not necessarily be indicative of copyright infringement, unless there is also sufficient similarity of expression, being textual similarity of the source code.
  • The finding that an equitable duty of confidence was breached in this decision highlights the importance of having confidentiality clauses in licence agreements and imposing those duties on third parties who may gain access to the confidential information when acting as independent contractors for the licensees.

 

For further information, please contact:

 
Maria Marinelli, Partner, Ashurst 
 
Vern Phang, Ashurst 
 

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