Form over function: Copyright in computer programs  

EIFY Systems Pty Ltd v 3D Safety Services Pty Ltd [2017] NSWSC 1310 

 

Facts 

The plaintiff EIFY provides web-based services to various industries, including an online induction service to qualify a person to work for a particular employer or construction site. Known as the “e-Induct System”, it consists of a series of web-pages through which a user progresses and completes a test or series of tests. A successful completion of the tests enabled the generation of an induction card. 

The defendants, 3D Safety Services Pty Ltd and its officers, offered web-based safety managements systems in the building, infrastructure and mining industries. 

In 2011, EIFY and the defendants decided to work together to integrate their systems. They hoped to present the integrated whole as an attractive package to contractors in the construction industry, and formed a company 3D Safety Group Pty Ltd to do this. The joint project fell apart by the end of 2011, and the parties went their separate ways.  

In 2012, the defendants created an online safety induction system that appeared similar to the e-Induct system in terms of structure, function, and organisation. EIFY commenced legal proceedings claiming that the defendants misappropriated its copyright and confidential information in the e-Induct System. 

 

The issues 

In regards to confidential information, EIFY claimed that the defendants owed it a duty of confidence arising either from contract or in equity. 

In regards to copyright, EIFY claimed that its e-Induct System was protected by copyright, which the defendants had infringed by creating an online safety induction system similar to its own product. 

 

The judgment 

The judge found that only two of the defendants owed the plaintiff a duty of confidence, which was based only in contract, not in equity. The judge also found that neither of the two defendants had breached that duty of confidence. 

In regards to copyright, the judge noted that the case presented by EIFY in its submissions conflated the e-Induct System as a whole (in which copyright cannot subsist) with the computer program that underpinned the System (in which copyright can subsist as a literary work). The judge particularly noted that EIFY did not put on any evidence comparing the source code of its e-Induct System with the source code of the defendants’ allegedly infringing online induction system. In the end, the judge found that there were two key types of copyright at issue: the source code, and 34 images that appeared in the program. 

The source code 

The judge found that there was no infringement of EIFY’s copyright in the source code. Referencing the reasoning of Navitare Inc v Easyjet Airline Co [2004] EWHC 1725 (Ch) and StatusCard Australia Pty Ltd v Rotondo, the judge pointed out that while it was accepted that the structure, sequence or organisation of a computer program may be subject to copyright, there was a distinction drawn between protecting the specific design (ie., source code) of the program and protecting its functionality (ie., what the program actually does). The judge rejected EIFY’s arguments based on American caselaw that the “look and feel” of a computer program could be protected by copyright, and noted that under Australian law it was perfectly possible to create a computer program which replicated the functionality of an existing program using a different design. 

On this basis, the judge found that while the defendants had created a computer program that replicated many of the functions of EIFY’s e-Induct System program, including the visual interface, they had not copied the actual source code. As such, there was no infringement of EIFY’s copyright.  

34 images 

The e-Induct System visual interface included 34 images in which EIFY claimed copyright. These images were created by an employee of a third-party, the copyright in which had been assigned to EIFY via a written agreement on 14 May 2015. The defendants used 34 similar images in the preparation of its own online induction program in 2012. 

The judge found that the 14 May 2015 assignment of copyright did not assign to EIFY any causes of action that the previous copyright owner may have had prior to that date. Referring to Insight SRC IP Holdings v Australia Council for Educational Research Ltd (No 2), an assignee can only sue for breaches of copyright prior to the assignment date if those rights of action, as well as the copyright, were assigned as well. The judge noted that EIFY had not proved any breaches of copyright in the images occurring after 14 May 2015 when it took ownership of copyright. It was also noted that in any case, it appeared that the images used by the defendants were taken from products created during the brief period the plaintiff and defendant operated their joint company in 2011. As such, EIFY’s case based on infringement of copyright failed. 

 

Final note 

This decision reinforces the distinction between the function of a computer program, and the actual copyright material within the program. It’s also a handy reminder that when drafting an assignment of copyright in the context of ongoing legal proceedings, to ensure that the assignment expressly provides for past rights of action.