COPYRIGHT
16 The sensible starting point for the analysis of the copyright claim is to look first at the sales of the Phone Wizard software in the period following the orders made by Besanko J on 15 January 2003. In relation to that period the transfer of the copyright in the software and the terms of the orders made by Besanko J mean that there is no doubt that TCI owned the copyright in the transferred software, whatever may have been the position in the absence of that agreement. After 15 January 2003 the only issue is whether Logea breached that copyright in selling the copies of the Phone Wizard to MSA.
17 TCI put its argument squarely on the basis that Logea had breached TCI's copyright in the computer programs comprising the Phone Wizard. TCI did not seek to argue that the visual representation displayed on a computer screen in the operation of the Phone Wizard comprised an artistic or literary work separate from the program that generated that display. Although some evidence was given which might be thought to be relevant to that issue, it does not need to be further considered. The issue can be considered solely in relation to the computer program.
18 For the purposes of the Copyright Act 1968 (Cth) ('the Act') a computer program is a 'set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result' (see definition of 'computer program' in s 10 of the Act). A computer program is a 'literary work' (see definition of 'literary work' in s 10 of the Act). Subject to a number of qualifications (some of which are considered further below) the original author of a computer program has the copyright in that program: s 35(2) of the Act. The copyright entitles the owner to various monopoly rights in relation to the program, including the right to reproduce and copy it, to make an adaptation of it, to publish it to the public and to enter into a commercial rental arrangement in relation to it (s 31 of the Act). Breach of those monopoly rights is an infringement of the copyright. It is not necessary that the relevant reproduction be an exact copy. It is sufficient if there is a reproduction or copying of a 'substantial part' of the program: s 14(1) of the Act. Copyright is also infringed by the sale of the computer program without the permission of the copyright owner in circumstances where the person selling it knew, or should reasonably have known, that the making of the program was a breach of copyright: s 38 of the Act.
19 Plainly enough the actions of Logea after 15 January 2003 in reproducing the Phone Wizard (or any computer program comprised within it) and in selling it to MSA was a breach of the copyright of TCI if TCI had the copyright in the Phone Wizard. The question then becomes, was the software program(s) for the 'Phone Wizard' a copy of a 'substantial part' of the software program(s) in which TCI held the copyright pursuant to the deed made on 15 January 2003?
20 It is clear that Mr Murray was the original author of all of the relevant software programs. The relevant software programs were 'applications programs' (see the definition in the Glossary of Terms in the Report of the Copyright Law Review Committee Computer Software Protection (1994) ('the Report') and see Appendix N of that Report). In order to write the applications programs Mr Murray used a programming language called Pascal. This language provides structure for writing computer code (the instructions) within a piece of software that tells a computer what to do which instructions can be interpreted by the relevant operating system, in this case, Windows. In order to simplify the programmer's task Mr Murray also used a software system called Delphi. This operates with Pascal so as to enable the programmer to create the various screen objects that he or she seeks to have displayed on the screen by the program. This includes the various permutations of size, colour, shape, position and so on that the programmer wishes to have displayed by the program. Delphi then writes the relevant computer code in order to achieve that outcome. The programs written by Mr Murray included both 'source code' and 'object code'. For present purposes 'source code' is code capable of being read and understood by humans. 'Object code' is code capable of being read and understood by machines. Mr Murray wrote the source code using Pascal and Delphi. Those programs and the Windows operating system then produced the relevant object code to enable the computer to give effect to the instructions contained within the source code.
21 It is obvious that some of the computer code written by Mr Murray in different programs will necessarily have some similarity to other code in different programs even if the programs do not involve any breach of copyright. So, for example, Pascal requires that the first couple of lines of code contain various identifying words. The order in which these words are entered can be varied, but it might be expected that any programmer using Pascal might usually write these lines in the same way. Similarly, if the programmer uses Delphi to develop the Pascal code for (say) displaying a blue dialogue box of a particular size and position on the computer screen then the resulting computer code will be the same if the box is the same, even if the programs have nothing to do with each other. The Windows operating system also imposes its own constraints and conventions upon the programmer. The result is that it can be expected that there will be some similarity in computer code even if there is no copying. Of course, this is not a surprising result. It is comparable to the constraints imposed by the conventions of language, spelling and grammar in relation to other forms of literary works.
22 Mr George, a research fellow and software engineer at the University of South Australia gave evidence in relation to the similarity between some of the software on which TCI had the copyright under the deed of 15 January 2003 and some of the software for the 'Phone Wizard'. It would appear that some of the object code necessary to make the software operational was not supplied to Mr George. The result was that Mr George could not actually operate the programs, other than E-call24.com and Phone Wizard. Nor could he identify what use particular files might serve either in those programs or in other programs.
23 Notwithstanding those limitations, he was able at least to compare the various software files that had been provided to him. Accepting, as he did, that some similarity was the inevitable result of the constraints of computer language and of computer syntax and of operating systems, Mr George conceded that a numerical comparison of the number of lines of code that were exactly the same was unlikely to mean very much by itself. He accepted in particular, that such comparisons were of limited value in relation to short lines of code and in relation to short files. Instead he attempted to 'rank' particular computer program files on the basis of the number of long lines of code (more than 25 characters in the line) that were exactly the same. The purpose of doing so was to identify the particular computer files that should then be compared line by line in order to identify relevant similarities. As he put it in his evidence:
'HIS HONOUR: Mr George, as I have understood your evidence - and tell me if I have misunderstood - your mathematical calculations and comparisons drive you to a ranking of files?---That's correct.
And for the purpose of seeing in fact what are the files that you should be looking at more closely?---Yes.
And you have then looked at them more closely, line by line, and that is your appendix 2?---Yes.
The mathematical calculations identify all sorts of things but the consequence of it is you look at it line by line, which is your appendix 2, and then you look at those lines and see what they show you?---Yes.'
24 The result of that 'ranking' was the identification of two files to be compared. The first was a Phone Wizard file called phonewiz_svr.pas. The other was a much longer file called aus3000_1.pas. It was accepted by both parties that the file aus3000_1.pas was one of the files contained on a disc delivered to TCI pursuant to the Supreme Court order. It can be accepted that aus3000_1.pas was a file in which TCI held and holds the copyright. It is not altogether clear what product that file formed part of. Mr George was unable to say. His evidence was that the file was to be found in a directory '\edgley\Ecall24_src'. This may suggest that the file formed part of the E-call24.com product, but no evidence was led to establish that it did so. Mr George's evidence was that he was unable to say what product the file was associated with. (The question of what was the relevant 'computer program' is discussed further below).
25 Some 86% of the lines of code in phonewiz_svr.pas are exactly the same as lines of code in aus3000_1.pas. On the other hand, given the greater length of aus3000_1.pas, only 28% of the lines of code in that file are exactly the same as those in phonewiz_svr.pas. Accepting Mr George's evidence, these mathematical similarities are of only limited relevance in themselves. The purpose of doing the mathematical exercise is to identify the relevant files which then needed to be compared line by line. For this purpose Mr George prepared a document which set out, line by line, the code for the two files. All lines of code that were exactly the same as a line of code in the other file were marked (see exhibit A 14).
26 When the respective lines of code are compared it is clear that that there are large numbers of lines of code which are not only the same, but which are more or less in the same sequence. For example, lines 304-446 of phonewiz_svr.pas (totalling 142 lines) seem to be not only the same as lines 1187-1332 of aus3000_1.pas (totalling 145 lines), but, save for the addition of an extra 3 lines of code in aus3000_1.pas, they seem to be in the same sequence. Is this evidence by itself, sufficient to establish that there has been a 'substantial' reproduction or adaptation so as to involve a breach of copyright?
27 In this regard I note that the High Court has held that in determining whether something is a reproduction of a substantial part of a computer program the 'essential or material features of the [computer program] should be ascertained by considering the originality of the part allegedly taken'. This is to be assessed with 'respect to the originality with which it expresses that algorithmic or logical relationship' which is the essential feature of a computer program: see Data Access Corporation v Powerflex Services Pty Ltd (1999) 202 CLR 1 ('Data Access') at 33.
28 What then was the 'original' or 'essential' aspect of the computer program that it is alleged that the respondents have reproduced? There was little evidence in relation to this question. Mr George was unable to say what either file did. Mr Murray gave evidence that the phonewiz_svr.pas file was part of the source code for 'Phone Wizard'. He said that it was that part of that product that instructed the relevant computer (in this case the hardware box) to record telephone calls. However, there was no evidence of whether there was anything significant in the various lines of code in either file that were the same. There was no evidence that there was anything particularly original in the files themselves, in the particular code that was the same or in the relevant function being performed.
29 Mr Murray gave evidence that the code in the Phone Wizard (including the file phonewiz_svr.pas) was not the same as the source code in TCI's software. He acknowledged that there were some similarities, but said that the Phone Wizard had been totally rewritten by him. Such similarities as there were, he ascribed to the constraints of computer language within a context where the functionality of the programs was broadly the same. In relation to the particular lines of code that were the same and which are specifically identified above, Mr Murray said:
'What explanation do you have as to why they're the same?---The simplest thing is, it's very difficult to invent a square wheel. I've been dealing with this software for quite some time. I had an almost identical job, with the same hardware constraints, and I guess frankly, your Honour, it's remarkable that there is so much difference between them.
Yes. If someone else, completely independent of you, was doing the same task, would they end up with it being drafted the same way - that is to say, is the reason it's the same in part at least because it's you?---In part, your Honour, but also there are constraints put on by the hardware, and I would be very surprised if it didn't end up considerably the same - not as much the same, of course - they would probably use different variable names than I've used, but other than that, I would be surprised if it wasn't - what's your definition of the word 'considerable' - but it would be very similar.
This code here was not produced by Delphi? This is your drafting, not the machine's drafting?---That's correct, although there are some items in there which are absolutely unavoidable.
Yes?---Like, for instance, on page 76, lines 309, 310, 311, those constructs are demanded by the language that you're using …'
30 Mr George did not directly deal in his evidence with what conclusions should be drawn from the repetition of specific lines of source code in the different products. He did say, in apparent response to a question asked by Mr Brohir, that he did not think that the duplication of lines in phonewiz_svr.pas and aus3000_1.pas was 'unremarkable', but it is not altogether clear what was meant by that answer. Mr George did conclude that the 'Phone Wizard' was 'similar overall' to TCI's programs. However, that conclusion would seem to be based not only on 'some imitation' in the source code, but also on the similarity in the functionality and the screen appearance of E-call24.com (being the only TCI product that Mr George saw in operation) as against 'Phone Wizard'. He said that this similarity showed that the 'Phone Wizard' was a reproduction of TCI's copyright. Indeed, both Mr George and Mr Phillis gave evidence of the similarity both of the function and of the appearance of the E‑call24.com and of 'Phone Wizard'.
31 However, I am not sure what the purpose of that evidence actually was. It may have been based upon a view apparently held by Mr George that if the functionality and the appearance of the two products was the same this would necessarily mean that the computer code was also the same. If this was the view he held then it was a view that did not survive his cross examination. Mr George accepted in cross examination that various programming techniques could be used with the result that differently constructed code could have the same functionality and produce the same screen appearance. As pointed out above, TCI's case both as pleaded and as argued was squarely based upon breach of TCI's copyright in the computer program, not in the screen image considered separately from that program. This may have been a sensible approach for TCI to take: see the Report at 9.37 ff. Of course, functionality, as such, is not protected by the law of copyright. The result is that the functionality and the screen appearance are only relevant in this case for what they suggest about the programming code. Those suggestions do not take the matter very far when there is specific evidence of what the programming code is and when the only independent expert accepted that there may not be a direct relationship between similar functionality and screen image, on the one hand, and similar code on the other.
32 In any event, I am not convinced either that the functionality or the screen appearance of E-call24.com and of Phone Wizard are so similar as to suggest improper copying. They are certainly similar. However, Mr George accepted that for the benefit of the consumers and to reduce the amount of training that might otherwise be required the computer industry does attempt to create some similarity in the appearance of software performing similar tasks. The similarity in appearance and practical operation of word-processing programs such as Word and Wordperfect is an obvious example. Such similarities are entirely desirable. They do not involve any breach of copyright. In my view the similarity in appearance and function of E‑call24.com and of Phone Wizard is of a similar order. Such similarity does not suggest or infer any breach of copyright.
33 An even more basic problem with the evidence of similarity in function and appearance is that the file (aus3000_1.pas) identified by Mr George as being that to be compared with phonewiz_svr.pas was not proven to be part of E-call24.com. As Mr George said in his report, 'The directory structure of the relevant CDs provide clues, but these are inconclusive'. However, the evidence of functional and presentational similarity was limited to E-call24.com and Phone Wizard. In the absence of any evidence establishing that the file aus3000_1.pas was part of E-call24.com, or that the same functional and presentational similarity existed with the other products in which TCI owned the copyright, it is simply not possible to draw any connection between the statistical similarity in the code contained in the two files and the functional and presentational similarity of the two products.
34 The result is that Mr George's evidence was not particularly helpful on the critical question of whether the fact that lines of code in the two different files (and, indeed, in other files) was the same, necessarily meant that Phone Wizard was a copy of a 'substantial part' of the E-call24.com or of any other software of which TCI owned the copyright.
35 In light of the limited exploration in the evidence of whether the Phone Wizard software code is a copy of a 'substantial part' of the code in which TCI owns the copyright I am not satisfied that Logea has infringed TCI's copyright. The only evidence of actual duplication of software code that is before me and on which the applicant can rely to establish an infringement of its copyright was the duplication between the files phonewiz_svr.pas and aus3000_1.pas. The evidence was insufficient to show that that duplication involved anything that was 'essential' or 'original'. The evidence was insufficient to satisfy me that the relevant duplication was other than the consequence of the task being performed, namely the recording of telephone calls for the purpose of training staff. This is not an original or unique function, as anyone who rings an airline can attest. The case that has been put requires a comparison line by line of software code between two particular files and only two files have been proved for that purpose. In each case the code was prepared using a proprietary software language. In these circumstances the evidence, such as it is, is simply insufficient to make any inference that there was some reproduction of the TCI's software. The only evidence that has been provided deals with the 'quantity' of any similarity rather than the 'quality' of it. I accept that if the evidence of quantity is very compelling, it may be sufficient by itself: see Accounting Systems 2000 (Developments) Pty Ltd v CCH Australia Ltd (1993) 42 FCR 470 ('Accounting Systems') at 509. However, that is not this case.
36 The above discussion assumes that the relevant files comprise 'computer programs'. It was not established that they do. It is clear that a computer program is not merely a specific instruction to a computer. Rather it is a set of instructions that are intended to achieve a specific result. Consequently a specific computer file is not necessarily a 'computer program'. In each case it is necessary to determine what the particular file does and what its relationship is with other files. It seems to me that there is no reason in principle why a computer program cannot form part of a larger computer program. The result may be that the file, considered by itself (which would probably include the relevant hardware and, probably, the relevant operating system), is fully functional, even if it also operates as part of a larger program. However, it is necessary for there be some evidence to show that the relevant file (or files or, even, part of a file), considered by itself, is fully functional such that it can properly be described as a 'computer program': see Accounting at 507-508; Data Access at 23-27; Australian Video Retailers Association Ltd v Warner Home Video (2001) 114 FCR 324 at 340-341. There was no such evidence in this case. This diminishes significantly whatever force there may otherwise have been in the statistical comparison of the two files phonewiz_svr.pas and aus3000_1.pas. If those files are not themselves computer programs, the question then becomes whether the similarity between the code in those files is sufficient to show that a 'substantial part' of the code in the entire computer program is the same. There is no statistical evidence in relation to that question: contrast Accounting at 391. Indeed, there was no evidence as to what computer program aus3000_1.pas was associated with. Even assuming it formed part of the E-call24.com program, there was no evidence as to what other files formed part of that program. Consequently, even if (contrary to my view) the statistical and line by line comparison of the files phonewiz_svr.pas and aus3000_1.pas did suggest that a substantial quantity of phonewiz_svr.pas was a copy of aus3000_1.pas this would not be sufficient to establish that a substantial quantity of the relevant computer program (be it Phone Wizard or some part of it) was a copy of some computer program in which TCI owned the copyright.
37 Two further matters need to be noted in regard to this issue. The first is that TCI argued that s 21(5) of the Act was relevant to my consideration of this question. That subsection provides:
'For the purposes of this Act, a computer program is taken to have been reproduced if:
(a) an object code version of the program is derived from the program in source code by any process, including compilation; or
(b) a source code version of the program is derived from the program in object code by any process, including decompilation;
and any such version is taken to be a reproduction of the program.'
In my view that subsection was intended to give effect to the recommendation in par 6.58 and following of the Report. It was intended to address the concern that the adaptation of source code to object code (or vice versa) was not an infringement of the owner's copyright. There is no suggestion in this case that there has been any relevant adaptation of source code to object code or vice versa. The issue in this case is whether there has been a reproduction of a substantial part of a computer program. For the purposes of this case the relevant code that was considered by Mr George and about which he gave evidence was source code. In my view s 21(5) of the Act has no application to this case. Even if it did, it would not obviate the need to resolve the issue of whether what had been reproduced was a 'substantial' part of the program, which is the issue that is dealt with above.
38 The second matter is that TCI placed particular reliance upon various e-mails between Mr Murray and MSA. These e-mails were sent during the course of the Supreme Court litigation between TCI and Scribe. The e-mails do not contain any admission by any of the respondents that any of them was deliberately breaching the rights of TCI. In an e-mail of 28 June 2002 Mr Murray claimed he was 'altering' the software so as to make it substantially different. Nevertheless, taken together the e-mails are consistant with Mr Murray's evidence, namely that he disputed that TCI owned the copyright in any of the software which was the subject of the Supreme Court proceedings, but that he was seeking to avoid whatever consequences might flow to his business from the interlocutory and final injunctions that were made in that litigation. He attempted to do so by incorporating Logea and by seeking to rewrite the software so as to avoid whatever rights TCI might have. Whether he was successful in that is the subject of these proceedings.
39 There is some suggestion in TCI's pleadings that in attempting to avoid the consequences flowing from the orders of the Supreme Court the respondents, or some of them, abused the processes of the Supreme Court. If that issue is to be pursued it must be done in the Supreme Court. That Court is a superior court of record - it has the jurisdiction, power and entitlement to protect its own processes.
40 Consequently I am not satisfied that the second to fifth respondents have breached TCI's copyright in any of the software programs transferred to TCI on 15 January 2003.
41 This conclusion has the necessary effect that the actions of the respondents prior to 15 January 2003 in relation to the development and sale of Phone Wizard could not have breached any copyright held by TCI prior to that date. Consequently there is no need to determine whether TCI held the copyright in any of the software programs before the transfer. However, most of the evidence put before me was directed to that issue, notwithstanding that its relevance was limited to the initial development of the Phone Wizard (which would seem to have occurred prior to 15 January 2003) and to the publication and sale of 'Phone Wizard' prior to that date. Having been fully argued it is appropriate that I say something in relation to it:
(a) The question of whether TCI held the software in the relevant computer programs before they were transferred to TCI on 15 January 2003 was one of the issues for resolution in the Supreme Court proceedings. The final resolution of those proceedings was the agreement to transfer the copyright and the orders made consequent upon that. One of those orders was an order dismissing the other claims made by TCI other than those in relation to which specific orders were made. This included an order dismissing an application by TCI for a declaration that TCI was the owner of the copyright in the relevant software programs. The second to fifth respondents argued that the effect of the order was that TCI could no longer argue that before 15 January 2003 it had been the owner of the software programs.
There are two answers to this. First, in order to raise the pleas of res judicata or of issue estoppel the order made by the Supreme Court must be a final adjudication on its merits of the cause of action and/or the ultimate facts that are sought to be relitigated in these proceedings: see Brookfield v Davey Products Pty Ltd [2000] FCA 448 at [37]-[39]. Given the terms of the settlement deed and the fact that a declaration may be refused for discretionary reasons I do not think that it can be said that the order of the Supreme Court dismissing TCI's application for a declaration that it owned the copyright can be considered a final adjudication on the merits of the issue of ownership.
Second, whatever the position might be in relation to the second to fourth respondents, Logea was not a party to the Supreme Court proceeding. Nor, for the reasons given above, was TCI aware of Logea or its role. There was no material before me to suggest that it should have been. Whatever might be said about the other respondents, in my view there is nothing to stop TCI pursuing its claim against Logea and, for that purpose, establishing that TCI owned the relevant copyright.
In my view TCI is not prevented from pursuing a claim for breach of copyright in the development, publication and sale of Phone Wizard by the Supreme Court proceedings or by the agreements and orders which resolved those proceedings.
(b) TCI asserts that Mr Murray, on behalf of Scribe, agreed that TCI should own the copyright in the software programs that he was authoring on the instructions of TCI. It was contended that the agreement was an oral agreement and that it was made at a meeting between Mr Phillis and Mr Murray in early 1996 and that it was renewed or remade subsequently. Mr Degenhardt also gave evidence in relation to the 1996 meeting. He confirmed that Mr Phillis asserted that he would own the intellectual property and that Mr Murray agreed. Mr Phillis also gave evidence that in 'early 2000' during the development of the E-call24.com program he asked Mr Murray who would own the software. He said that Mr Murray had agreed that TCI owned the software, but said that 'if something happened to me my wife would not hold the same view'. Mr Phillis also gave evidence of a meeting involving Mr Murray, Mr Beer and Mr Phillis on 6 May, 2002. His evidence was confirmed by Mr Beer. It was that Mr Phillis asserted ownership of the software on behalf of TCI and that Mr Murray agreed. That agreement was recorded in the minutes taken by Mr Beer of that meeting. However, the minutes taken by Mr Beer also record that the agreement was to be contained in a written agreement to be prepared by TCI's solicitors. This is consistent with Mr Murray's version of that conversation.
On the other hand, Mr Murray gave evidence that it was his understanding throughout the relevant period that an oral agreement was completely ineffective to transfer the author's rights to copyright. Although he was amenable to the transfer of the copyright he said that he told Mr Phillis that a written agreement was required for that purpose. He said that Mr Phillis agreed from time to time to have such a written agreement drawn up, but it was never done:
'HIS HONOUR: Mr Murray, you've given evidence of the discussions that took place between you and Mr Phillis over the years about the ownership of the software?---Yes, your Honour.
Was it your understanding that Mr Phillis wanted to own the software - sorry, the intellectual property?---Well, every time I brought it up he said he would get documents drawn up by Edgley. He never did, so ‑ ‑ ‑
No, I understand that, but this is what I'm trying to suggest to you: your position, as I understand it, was that unless an agreement was drawn up you owned the software?---That's correct.
You accept that Mr Phillis said that he was going to get some agreements drawn up?---Yes, your Honour.
Was it your understanding that if those agreements had been drawn up on Mr Phillis's instructions they would have involved Mr Phillis owning the intellectual property?---That's correct, your Honour.'
His evidence was that at the meeting at which Mr Beer was present he did not agree that Mr Phillis owned the software, only that Mr Phillis would do so after a written agreement was signed. As noted above, the minutes do record that a written agreement was to be prepared.
As can be seen the evidence of what was agreed at the various meetings is not so far apart as the pleadings or witness statements might suggest. There is no dispute that discussions took place as to the copyright in the computer programs. There is no dispute that Mr Phillis was asserting an entitlement to the copyright. There is no dispute that Mr Murray was prepared to transfer the copyright. There is no dispute that no written agreement to assign the copyright to TCI was ever prepared or executed until 15 January 2003. The only issue in dispute is whether Mr Murray asserted to Mr Phillis that it was necessary for any such transfer to be effected by an agreement in writing. On balance I am satisfied that he did make that assertion.