Optiver Australia Pty Ltd v Tibra Trading Pty Ltd

Federal Court of Australia|2009-02-06|Before: Tamberlin J

REASONS FOR JUDGMENT 1 These reasons concern the orders (including confidentiality orders) to be made in relation to the preliminary discovery application by Optiver Australia Pty Ltd (Optiver), consequent on the High Court dismissing an application for special leave to appeal from a judgment of the Full Court in Optiver Australia Pty Ltd v Tibra Trading Pty Ltd (2008) 169 FCR 435, as well as incidental orders as to the costs of the hearings on 3 October 2007 and 30 November 2007.

General or Particular Orders 2 The form of orders sought by Optiver (the proposed Orders) were furnished to the Court on 18 December 2008. Proposed Order 1 sought an order in the following terms: 1. The Respondents and each of them give verified discovery to the Applicant within 7 days of the making of this Order of all Documents in their possession, custody or power which relate to the question whether the Applicant has the right to obtain relief against the Respondents, or any of them, for any one or more of the following causes of action: (a) infringement of the Applicant's copyright in any Optiver Programs or Documents being related literary works, pursuant to the Copyright Act 1968 (Cth); and (b) breach of confidence in equity relating to, or arising from, directly or indirectly the Optiver Programs. 3 Order 2 as proposed by Optiver is expressed to be without limiting Order 1, and particularises a series of detailed orders relating to computer program source codes and object codes, to be produced by the Respondents within 7 days. 4 The first to ninth respondents (Tibra) submit that, in the circumstances, proposed Order 1 is oppressive and unnecessary and that, by formulating proposed Order 2, Optiver in an exhaustive way has identified documents which would provide it with sufficient information to enable a decision to be made whether to commence proceedings. 5 In my view, the preferable course at this stage is to make specific orders rather than the vague general orders proposed by Optiver, subject to specific subclauses of Proposed Order 2. If, after this specific discovery has been made, there is shown to be a need for further discovery, a subsequent application can be made by Optiver.

Proposed Order 2 - source CodeS AND OBJECT CODES 6 Optiver seeks in proposed Order 2 a series of documents including all versions, whether current, archived, deleted or otherwise, comprising or relating to source codes and object codes for Optiver Computer programs. 7 The expression "Optiver programs" is defined to mean twelve specific programs in a definition to the Proposed Minutes of Order, and "documents" is given the meaning in O 1 r 4 of the Federal Court Rules and this covers a broad range of records. The definition of "functions" in the proposed orders refers to groups of program functions. 8 Under proposed Order 2, documents relating to source and object codes and any historical source code repository are sought, together with source codes for share auto trading. Also included in the proposed order are all source code revision logs relating to the development of computer programs and documents evidencing communications as to the location of programs and the source or origin of computer programs that perform any of the functions, as defined. 9 An affidavit was filed on behalf of Tibra by Mr Andrew King (Mr King), sworn on 17 December 2008. Mr King is the eighth respondent in the proceedings and he is employed by Tibra Global, the fourth respondent. He is an experienced software developer. He points out that the source code repository is an historical facility which stores source codes written by software developers for Tibra Global's computer programs. During his employment with Optiver, Mr King worked on maintaining an automated trading program for twelve months, and was a team leader of the relevant project for approximately six months. He says that in relation to the expression "functions as defined in proposed draft orders," the programs did not perform some of those functions mentioned. 10 In relation to the difficulty, cost and expense of production of the documents sought in Order 2, Mr King says there are approximately 35 software developers world-wide employed at Tibra Global, with many additional staff involved in the production of trading systems, and that there would need to be at least 35 hard disk drives that would need to be duplicated to provide a digital copy for inspection by an independent expert. He says that approximately 30 percent of the hard disk drives are not located in Australia and that it would take at least one to three hours for each hard disk drive to be imaged in relation to the production to the disk drives data storage disks and memory sticks by the fifth to ninth respondents. 11 Mr King notes that Optiver has not limited its requests for production of the documents as to time, and says that compliance would involve a major interruption to work performed by each of the fifth to ninth respondents. 12 Mr King refers to the expression "object code," in respect of which the records are sought. He explained that computer programs are developed in stages and in the first stage a series of documents in a particular programming language are written in a way similar to writing which can be understood by humans. These documents are known as the "source code" and cannot be used by a computer. The second stage involves use of a compiler, which is a computer program that understands the programming language and which converts the source code into an object code. The latter is only created if the compiler can understand the source code, so that the object code is the final working computer program understandable by a computer which is used to run the computer. Where development involves a continual compiling of the source code into an object code this can involve carrying out the above process at least twenty times a day. When a particular code is satisfactorily developed then the change will be committed to the historical source code repository. Object codes are not stored. However, source codes are stored and if an object code is required in order to use a program at a later date the source code is run through the compiler. 13 Mr King's evidence is that to produce an object code for a particular version of the source code it would be necessary to obtain the source code from the historical source repository and run the program. He says that the automated trading application the subject of this proceeding was developed between June 2006 and December 2008, and there have been approximately 10,000 different versions or iterations of the source code developed collectively, and that in order to produce the object code for each of the 10,000 versions held in the repository of Tibra Global it would take in the order of 20,000 hours. 14 The evidence of Mr King was not challenged. In the light of the above, Tibra contend that the discovery sought in Order 2 is excessive. 15 In relation to a number of the paragraphs in Order 2, no time period is specified. The relevant time frame is over about two and a half years. However, in regard to the evidence of various versions of the programs over time and the importance of later versions in determining whether there has been a use of the original programs, I do not consider that the existence of a time limitation is determinative. The Full Court indicated that the current source code used by Tibra could be relevant but various iterations may, for example, bear the hallmark or footprints of copying from Optiver's program and information by and of indirect copying adaptations from intermediate versions. I agree that with regard to the continuing period of development of what is now the current Optiver program there may be a number of iterations of that program which may be relevant and I do not think the objection to specific dates or specific versions is appropriate. That is too restrictive. I do not therefore accept the submission by Tibra that Optiver's entitlement to inspect source codes should be limited to computer programs which performed the functions for example as at 5 September 2006 and 19 June 2007. 16 Having regard to the evidence in relation to the close connection between the object code and the source code as stated by Mr King, I do not agree with the proposition that the relevance of the object code to Optiver's case has not been made evident. 17 In the light of the material provided by Optiver on this application, I am not persuaded that the historical repository of source codes is irrelevant, nor am I persuaded that documents relating to it are unnecessary to enable a proper decision to be made under O 15A r 6 of the Federal Court Rules. 18 Some objections to Proposed Order 2 were made by Tibra on the basis that some of the sub-paragraphs replicate documents that will be produced under other subparagraphs, however I do not think this is a sufficient ground for objecting to those paragraphs. 19 Accordingly, my conclusion is that the documents as sought in Proposed Order 2 should be discovered.

PROPOSED Order 4 - confidentiality regime 20 Optiver's Short Minutes of Order provide for inspection by its solicitors within 21 days of all documents to be discovered, but specifies that access to computer codes and any documents for which confidentiality is claimed is to be limited to its solicitors and any independent expert Optiver may appoint, provided that those inspecting the documents and codes had signed a specific detailed Confidentiality undertaking. 21 The role of the independent expert is to consider the material produced and advise Optiver's solicitors whether there is sufficient material to support the making of a claim. This is to be done on the basis that there is no disclosure of the material to Optiver. 22 Tibra seek to know the name of the expert before inspection takes place and this, in my view, is a reasonable request. Tibra also wish to have a copy of the expert's report given to their solicitors, to ensure that the report does not disclose any sensitive information to Optiver. Again, this in my view is a reasonable request 23 Tibra propose that the discovered material be lodged with an independent third party, such as PriceWaterhouseCooper, to be kept at the premises of the third party and to be inspected by arrangement with the third party. 24 Optiver objects to this proposal on the basis that it is expensive, time consuming and inconvenient, and submits that custody of the documents and control of access should be given to its solicitors, who have signed a stringent confidentiality undertaking. In my view, having regard to the matters raised by Optiver, there is no justification or necessity for third party custody in this matter. Optiver's solicitors will be subject to a confidentiality undertaking, and they are officers of the Court. This is a sufficient protection of confidentiality. There is no basis for believing that the solicitors or the expert will fail to fulfil their obligations pursuant the undertaking, or as officers of the Court. See Seven Network Ltd v News Ltd (No 3) [2004] FCA 836 at [25].

Costs 25 There is basic agreement between the parties as to the costs of the earlier proceedings, and of this proceeding. The only point of difference is minor and semantic, but for the sake of clarity I would delete the words "applies fully" and substitute the words "has observed its lists of documents" in accordance with the suggestions of the respondent. 26 I direct the parties to bring in Short Minutes to give effect to these reasons at a suitable time to be arranged with my associate. I certify that the preceding twenty-six (26) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Tamberlin.

Associate: Dated: 6 February 2009 Counsel for the Applicant: Mr P. W. Flynn

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