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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> THJ Systems Ltd & Anor v Sheridan & Anor [2023] EWCA Civ 1354 (20 November 2023) URL: http://www.bailii.org/ew/cases/EWCA/Civ/2023/1354.html Cite as: [2024] ECDR 4, [2023] EWCA Civ 1354 |
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ON APPEAL FROM THE HIGH COURT OF JUSTICE,
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES,
BUSINESS LIST (ChD)
John Kimbell KC sitting as a Deputy High Court Judge
Strand, London, WC2A 2LL |
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B e f o r e :
LADY JUSTICE ASPLIN
and
LORD JUSTICE ARNOLD
____________________
(1) THJ SYSTEMS LIMITED (2) OPTIONNET LLP |
Claimants |
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- and - |
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(1) DANIEL SHERIDAN (2) SHERIDAN OPTIONS MENTORING CORPORATION |
Defendants |
____________________
Richard Davis KC (instructed by Freeths LLP) for the Claimants
Hearing date : 7 November 2023
____________________
Crown Copyright ©
Lord Justice Arnold:
Introduction
Background
The Claimants' pleaded case
"38. … The Claimants' position regarding copyright in the Software is as follows …:
…
38.2. Further, the Software produces when used images including, but not restricted to, risk and price charts. Each of the images generated by the use of the Software are the intellectual creation of Mr Mitchell as author of the Software and comprised and comprises an artistic work pursuant to section 4 of the 1988 Act of which Mr Mitchell is the author under section 9(3) of the 1988 Act, THJ is the Owner, and the LLP is the exclusive licensee;
…
(together, the 'Works').
39. The copyright in the Works is subsisting. Mr Mitchell is a British Citizen, and is domiciled and resident in the United Kingdom.
40. By letter dated 28 January 2016, [the Claimants' then solicitors] identified at least seven occasions on which SOM continued to use images generated by the Software after termination of the SOM Software Sub-Licence Agreement on 25 January 2016 without the licence of the Claimants or either of them. … By way of example only, … images generated by the Software were used in:
40.1. A presentation published on YouTube on 27 January 2016;
40.2. An Earnings class hosted on Mr Sheridan's website on 27 January 2016. …
The Claimants reserve the right to plead further instances of infringement following the provision of disclosure by the Defendants.
…
42. In the premises, the Defendants have infringed THJ's copyright in the Works … as follows, doing so, in each case, without the licence of the Claimants or either of them:
42.1. The Defendants have communicated the images generated by the Software to the public in the UK, contrary to section 20 of the 1988 Act".
The Defendants' pleaded case
"49. As to sub-paragraph 38.2, it is admitted that the Software, when used, generates images including risk and price charts. The Defendants do not plead to any other images, as the Re-Re-Amended Particulars of Claim do not contain any allegations of copyright infringement in respect of any other types of images …. It is denied that the risk and price charts generated by the Software are the intellectual creation of Mr Mitchel as alleged or at all. The risk and price charts comprise simple graphs which plot third party data, selected by the user, against time: the data plotted originates from outside the Software. Furthermore, to the extent that there is any intellectual creation in the images generated by the Software, which is denied, that is provided by the user selecting which option to depict and the time period over which to display it: that user is the 'person by whom the arrangement necessary for the creation of the [artistic] work are undertaken' in accordance with section 9(3) of the Copyright, Designs and Patents Act 1988 and accordingly the author of the images generated by the Software, to the extent that they are copyright works at all. Accordingly, it is denied that the types of image pleaded by the Claimants amount to artistic works authored by Mr Mitchell and owned by THJ in which copyright is capable of subsisting as alleged or at all. In the premises, if copyright exists in the images pleaded to, the Defendants are the copyright owners or co-owners of the copyright in displayed images and image outputs generated by their use of the Software.
…
51. For the reasons set out above, paragraph 39 is denied, insofar as it relates to the pleaded images generated by the Software. Save as aforementioned, paragraph 39 is admitted.
51A. Paragraphs 40 and 41 and the sub-paragraphs to paragraph 40 are admitted, insofar as they refer to use of images generated by the Software.ItThe notice served on Mr Sheridan purported to expel him from the LLP as of 7 January 2016 and the SOM Software Sub-Licence Agreement was not terminated until 25 January 2016. … It is admitted that Mr Sheridan made some nominal use of the Software in the period between 25 January 2016 and 27 January 2016: … it … is not accepted that THJ had the authority to expel Mr Sheridan from the LLP or to terminate the SOM Software Sub-Licence Agreement to use the Software …. Mr Sheridan has made no use of the Software since his access to it was terminated on 27 January 2016. Save as aforementioned, it is denied, if it is alleged, that Mr Sheridan used the Software to generate any of those images after being expelled from the LPP: and the SOM Software Sub-Licence Agreement being terminated: it is admitted, however, that the images that appear in these two examples at the sub-paragraphs to paragraph 40 were generated in the short period after … his expulsion from the LLP [and] the SOM Software Sub-Licence Agreement was terminated but before access was removed …. The reservations of rights are noted. The Defendants position is that the question of whether or not copyright subsists in the works is a matter for the trial of liability and can be determined on the basis of the pleaded examples. The question of the extent of use is a matter for the trial of quantum and, if liability is found, the Defendants will provide disclosure in respect of all such use.
51B. … For the avoidance of doubt, it is denied, if it is alleged (which is unclear) that the Defendants or either of them have run the Software following the expulsion of Mr Sheridan from the LLP, save for the limited use by Mr Sheridan in the period between 7 January 2016 and 27 January 2016 … prior to the date when access to the Software was removed. The use of images about which complaint is made does not require (and does not result from) use of the Software by the Defendants or either of them. In the circumstances where it is denied that the pleaded images generated by the Software are capable of copyright protection, it is denied that the Defendants or either of them have infringed any copyright."
The Defendants' appeal
The law
The evidence
"116. I believe copyright subsists in the ONE Software and the images that it generates. The ONE Software can be likened perhaps to a video game. The software for a game performs thousands of calculations, which result in generating a series of images that we interpret as a form of video.
117. Similarly, the ONE Software performs thousands of calculations, to determine theoretical asset prices at various intervals, projected profit and loss, adjustments, margins, volatility etc.
118. All of these calculations result in generating an image or series of images as market data changes, which we can interpret as a form of video. Similar to the game, the user does not enter the raw data (some of which is market data) or perform the calculations themselves. The images, including line types, colours, transparencies, layouts, font types etc, were all designed by me as the developer."
"Q. Yes, you used a template from Dev Express?
A. I used the ribbon from Dev Express or Dev Components, whichever one it was to build the rest, everything else is my design. So how you put things together ----
Q. Show me and show the court which bits of this are your design that have not been copied off someone else or using a template or putting Lego bricks together created by someone else. Show me on here what is entirely original from you and nobody else?
A. Everything is original, because I designed how the ribbon looks, what goes into each component of the ribbon, what name you call it, what buttons, how you make the buttons work, how they work when you hover over it. Everything on there is my design. I use components, like a painter would use paint and a brush, I extract(?) into various locations and give them functionality."
The judge's assessment
"ii) The graphic user interface. This is the interface which enables communication between a computer program and a user. It comprises many individual 'frames' stored in the user's computer memory.
iii) Screenshots. This means all and any screenshot taken by users using their devices of their screens whilst the software is in use (i.e. when a user creates an image file which shows what is shown on the user's screen while they are using the software, including, graphs that are displayed to the user)."
"212. In relation to (ii) the Defendants did not dispute that individual frames of graphic user interfaces are capable in principle of constituting artistic works. However, they submitted that graphic user interfaces do not qualify for protection as artistic works automatically: they only qualify if they would otherwise meet the requirements for copyright protection as an artistic work.
213. In Nova Productions Ltd v Mazooma Games Ltd [2006] EWHC 24 (Ch) the author had designed the individual graphical components from scratch 'using various computer tools such as notional brushes and pencils and the screen colour palette', which had 'created a visual effect which is very similar to that of a painting of drawing' (see paras 98 – 106 of the judgment of Kitchin J).
214. In this case, the evidence as to the creation of the graphic interface was rather limited. At trial, Mr Mitchell's evidence was that he had obtained the components that are displayed on the End User's screen when the Software is in use from a third party library, but that he was responsible for the 'overall look and feel' of the display. I am satisfied that the work of creating the look and functionality of interface including the arrangements of the tables and graphs did involve the exercise of sufficient skill and labour for the result to amount to an artistic work. The analogy with the GUI screens in issue in Navitaire Inc v Easy Jet [2006] RPC 3 Ch at [98] is in my judgment apposite.
215. As to (iii) whilst the Defendants are right to point out that any particular screenshot of an image produced by the software in use is the combined product of the user and the programme, the image in each case is predominantly the result of the computer algorithms written by Mr Mitchell. The ONE logo for example is automatically generated by the software when in use regardless of what trading data the user wants to analyse. The same is true of the overall look, framing and lay out of the graphics and tables regardless of the shape of the graph or the numbers displayed.
216. I therefore accept the graphic interface, the graphic displays produced when the software is in use and the ONE logo were all artistic works in which copyright subsisted, that Mr Mitchell was the author and THJ the owner."
The appeal
The Claimants' cross-appeal
"14. There is a dispute between the parties over whether the videos post-2016 are relevant to this claim. This affects whether 19,500 videos between 2010 and 2020 are relevant or whether in fact 13,885 files relating to 2010 to 2016 are relevant. In either case, a complete review would be highly disproportionate in both time and costs.
15. In the meeting of 23 March 2021 (which I attended virtually), the Defendants' counsel confirmed that the Defendants accept they have made limited use of images of risk and price charts generated by the Software (as defined in the Re-amended Particulars of Claim) in presentations that were either produced after their licence was revoked or were produced prior to its revocation but were made available to their customers after that date. The Defendants do not accept that the images are copyright works but if they are found to be copyright works, their primary position is that the author of those works is the user of the Software, not Mr Mitchell. This is set out in the Amended Defence at paragraph 49 ...
16. If the Defendants are wrong and the Claimants demonstrate at trial that Mr Mitchell is in fact the author of the copyright works, the Defendants will accept that this applies to risk and price charts produced by any version of the Software. Accordingly, any video that was produced after January 2016 that contained a risk and price chart originating from the OptionNet Software will amount to an infringement, as will any video produced prior to that date that was still viewable after January 2016.
17. On this basis, the Defendants do not see any need to disclose the 5,615 videos post 2016 as these will not assist the court on the question of liability and will greatly increase the time and costs of disclosure. If the Claimants win on liability, their disclosure (or some sample of them) will become relevant on the question of quantum."
"On the pleaded case, the Defendants do not accept that the charts are artistic works (or, if they are, that the Claimants or either of them are the 'author' of those works). If the Defendants are wrong, they admit they have used the charts and accept that the extent of use will be relevant to a quantum hearing. In the circumstances, no disclosure is necessary in respect of the charts."
"'The Cs note that by para 32 of the Ds' skeleton argument it has now been conceded that the Ds have used the Cs' charts. Para 16 of Daniels 2 accepts that if the Cs prove authorship of the risk and price charts, any use of images from any version of the software after January 2016 will amount to an infringement."
"Your clients' position in relation to the post-termination videos is quite confusing.
1. In her statement of 4 June 2021, Ms Daniels at paragraph 16 conceded that if the Claimants demonstrate at Trial that Mr Mitchell is the author of the copyright works, the Defendants will accept that this applies to the risk and price charts produced by the ONE Software.
2. Ms Daniels went on to concede that any video that was produced after January 2016, that contained a risk and price chart originating from the ONE Software will amount to an infringement, as will any video produced prior to that date that was still viewable after January 2016.
3. On the same day, your client's Counsel stated in his skeleton for the Hearing on 7 June 2021 at paragraph 32.
'On the pleaded case, the Defendants do not accept that the charts are artistic works (…). If the Defendants are wrong, they admit they have used the charts and accept that the extent of use will be relevant to a quantum hearing.'
4. I have previously referred you to these two documents. It is clear that for whatever reason, notwithstanding both common sense and those unequivocal concessions, that your clients do not formally disavow their Defence to the copyright … claims.
5. The latest version of that Defence was served in early May 2022, and contains new statements of truth signed by Mr Sheridan (both on his own behalf and as the chief executive officer of SOM). That version still contains a denial in paragraph 51B that there has been any infringement.
6. Your client's Trial statement appears to have been drafted with the pleading in mind and disregarding the concessions made by Ms Daniels and your clients' Counsel. For instance, at paragraph 94, Mr Sheridan states
'Students were left out in the rain because we could no longer use SOM's license for ONE Software with the back testing to dissect bad trades. I could not even let students use their own ONE Software in our sessions for fear of further reprisals and claims. It was devastating because I could not really precisely help the student who needed me to review and correct mistakes on a bad trade.'
7. I have only observed small parts of a small number of the videos on the 11 May 2022 list (ie those produced 31 January 2016 – 10 September 2020). A number of those that I have observed, clearly have on the screen risk and price chart images generated by the ONE Software and it is clear from the video recordings, that the Software is being used as the images change as you watch the video.
8. The fact that the ONE Software was being used, is supportive of the proposition that Ms Daniels and your client's Counsel were correct to make the concessions; and flies completely in the face of the pleaded defence at 5[1]B and Mr Sheridan's Trial witness statement at paragraph 94.
9. Until 11 May 2022 … sight of, and access to, those videos was, of course, denied to my clients.
10. As you know, considerable work is still to be undertaken to analyse the post termination videos and will only commence with the benefit of the TAR after your clients supply the .arf format videos by 30 September 2022.
11. There is still a 'window of opportunity' for the parties to reach some degree of understanding in relation to this aspect.
12. To assist that process, I attach a (Second) Notice to Admit Facts within the next 21 days [sic].
…"
"24. Are the risk and price charts generated by the Software capable of protection as artistic works under section 3 [sic] of the Copyright, Designs and Patents Act 1988 (the '1988 Act')?
25. If so, who is the author of those works under section 9(3) of the 1988 Act?
26. If Mr Mitchell is the author of such works, have they been infringed by Mr Sheridan and/or SOM by the use of images generated by the Software in:
a. a presentation published on YouTube on 27 January 2016; or
b. an earnings class hosted on the website operated by Mr Sheridan on 27 January 2016?"
"Even if artistic copyright subsists in the graphic user interface or the Screenshots (which is denied), it is denied that there was any communication by Ds to the public in the UK in relation to the communications listed at Issues 26(a) and (b) such as would engage UK copyright law. The relevant principles on targeting were summarised in Warner v TuneIn [2021] EWCA Civ 441; [2022] 2 All ER 35 at para 61. Cs rely on no specific factors to suggest the UK public was targeted, whilst the available indications (such as pricing in US dollars) do not point objectively towards a UK audience being targeted. The Court should not find that these materials were targeted at the UK public."
"229. Both events appear to have physically to have taken place in the US and therefore any communication originated there. The Claimants did not identify any factors which might support a targeting case and offered no evidence that the communications complained of had reached the UK.
230. For the reasons set out above, I am persuaded that the Claimants failed to prove a claim for infringement of copyright. I will make declarations as to the copyright in the Works but the claim for damages and the claim for an inquiry as to damages are dismissed."
"It is now apparent that there was a misunderstanding as between the Cs and the Ds as to what matters were, and were not, before the Court on the liability part of the trial. The Cs' draft contains on the first page a recital that the Ds in June 2021 admitted that if the Cs demonstrated that Mr Mitchell (as opposed to the Ds or some other User of the Software) was the author of the risk and price charts they had infringed copyright.
The statement of Alice Daniels stated: [quoting paragraphs 15 and 16].
That admission was never withdrawn, and this position was reflected in paragraph 51A of the Amended Defence: [quoting the last two sentences].
The Claimant[s] succeeded at trial in establishing that the works were ones in which copyright subsisted and that Mr Mitchell, rather than some other user, was the author. The Claimants say that it should follow that the Order should contain the declaration sought at G, and the directions sought at 1(c) and (d). I apologise for not making this clear beforehand in my written submissions in response to those of the Ds."
"… the Claimants appear to be trying to rely on witness evidence that they did not rely on at trial, and an argument about an alleged admission which has never been raised before (certainly not at trial, which would have been the proper time for doing so.
Our clients' position on the draft order is simple: it must faithfully reflect the Judgment. It is not a vehicle for re-litigating the liability trial, or pursuing points which were not upheld in the Judgment and/or not pursued at trial. The trial on liability is the claimant's sole opportunity to establish breaches of duty. Otherwise, a claimant could have endless bites of the cherry."
"29. The claims proceeded from 7 June 2021 onwards on the basis that if the Cs proved that: a. the images were copyright works; and b. Mr Mitchell, rather than the Ds as users of the Software, was the author of the works; then each use post-termination of the images amounted to an infringement, and would be relevant to a later hearing on quantum. Disclosure of the post-termination videos, relevant to the period in which any infringement of copyright would have occurred, was not pursued at that stage.
30. Given that infringement was – on the basis set out above – admitted, the Cs were not, therefore, inviting the court to decide the question of infringement in an 'evidential vacuum' (see para 221 of the Judgment), but to find that: a. the Works were ones capable being copyright works; and b. Mr Mitchell rather than the 'user' was the author; in circumstances where the Ds admitted that their use post-termination amounted to an infringement of copyright, the extent of which would be the subject of further disclosure and evaluation in the trial on quantum."
"45. The Ds did not plead any point on jurisdiction or territory. In the light of the D's long-standing admission that if the Works were artistic work in which copyright subsisted, and of which Mr Mitchell was the author, the Ds had infringed copyright in the Works, there was no need for the Cs to analyse the Post-termination videos (and nor would they have had time to do so prior to the trial hearing given their very late provision), or request additional information and disclosure from the Ds, in order to deal with any issues as to infringement or targeting at trial.
46. Had the Ds not made their admission as to infringement in June 2021, and these points had remained in issue, the Cs would have dealt with disclosure of the Post-termination videos and Quantum Videos very differently, at a much earlier stage in the proceedings. Disclosure would not have been left as it stood at the time of the 7 June 2021 hearing before Deputy Master Nurse, and the Cs are likely to have undertaken further investigations and provided further witness statements.
47. I apologise for not dealing with this point expressly in the closing written submissions on behalf of the Cs, and also for the fact that the List of Issues for trial still included references to infringement. I regret that my oversights on these points may have resulted in a misunderstanding as to what points were, and were not, in issue at the liability trial, and caused additional work for the Court in considering this issue. The list of issues was produced by me from one circulated between the parties before Ds' admissions as to infringement in June 2021, and – as a result of the Cs' preparation for trial having been hugely disrupted by the Ds' last-minute application the previous week to adjourn the trial and strike out all references to the TAR – had to be done at a time when I was away from chambers on a residential course.
48. The Ds' June 2021 admission as to infringement informed the Cs' approach to their evidence, to the disclosure sought from the D, and to preparation for trial, and has never been withdrawn. Having made findings as to the subsistence of copyright in the Works, and as to Mr Mitchell's authorship, the Court is respectfully invited to make directions as to the inquiry / account as to quantum as set out in para 1 (c) and (d) the Cs' draft Order. It is submitted that, despite the confusion referred to above, it would be most unjust to the Cs to dismiss the copyright claim."
"I have checked the opening and closing submissions and there is no reference to Ms Daniel's witness statement. It is not referred to in the judgment and I do not consider it ought to be referred to in the order. Whilst I can see that the words at the end of para 51A of the Re-Re Amended Defence might be said to be somewhat unclear, I note that the Claimants' response in para 18B of the Reply is that 51A and 51B are 'impossible to understand'. It is not said in the Reply or so far as I know anywhere in correspondence that 'it is agreed that all issues of alleged infringement of copyright in videos post 27 January 2016 should be tried later'. Even if it was, no application was made to the court for a case management order to that effect. The 'reservation of rights' in para 40 of the Particulars of Claim is a warning that an application to amend might be made but no such application was forthcoming. There is also no reference in any of the submissions received by me during the trial that it was concerned only with infringement of copyright in the pre-termination videos. … The judgment deals with the issues as pleaded and as set out in the agreed and approved list of issues. I was therefore asked to rule on only two claims of alleged copyright infringement as identified in issue 26. The order on the judgment reflects my findings on the those infringement claims. I am satisfied that the judgment deals with all the points on copyright on which I received submissions. The approved order should I believe reflect the findings in the judgment."
Lady Justice Asplin:
Lord Justice Moylan: