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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Point Solutions Ltd v Focus Business Solutions Ltd & Anor  EWHC 3096 (Ch) (16 December 2005)
Cite as:  EWHC 3096 (Ch)
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B e f o r e :
|POINT SOLUTIONS LIMITED||Claimant|
|FOCUS BUSINESS SOLUTIONS LIMITED|
|FOCUS SOLUTIONS GROUP PLC||Defendants|
Mr Peter Colley of Counsel (instructed by Moore) for the Defendants
Date of hearing: 21, 22, 23, 24, 25 and 30 November 2005
Date of draft judgment: 12 December 2005
HTML VERSION OF JUDGMENT
Crown Copyright ©
I am obliged to Mr Fernando, Miss Edwards-Stuart and Mr Colley for their assistance with this matter.
ContentsParagraphs 1-15 Introduction
Paragraphs 16-49 Background
Paragraphs 50-58 Focus' advice to sales force 2002/2003
Paragraphs 59-61 Expert evidence in the proceedings
Paragraphs 62-69 The Law
Paragraph 70 The Issues
Paragraphs 71-76 Has there been sufficient assertion? 9 October 2002 letter and subsequent correspondence
Paragraphs 77-87 Swiss Life
Paragraphs 88-94 The Exchange
Paragraph 95 Point's defence
Paragraphs 96-114 Has Point proved that it did not copy Focus' source code?
Paragraphs 115-121 Utility
Paragraphs 122-131 Discretion
Paragraphs 132-138 Conclusions
A declaration that the claimant's Acuo software modules, namely (i) Acuo Enable/Professional (ii) Acuo Web and (iii) Acuo SDK, do not infringe the literary copyright (if any) subsisting in the source code for the Focus Goal software or any of its constituent modules, namely (i) Goal Offline Viewer (ii) Goal Online Viewer (iii) Goal Builder, or any other copyright (if any) subsisting in any work making up the Focus Goal software.
An injunction to restrain Focus from representing to any person that the Point's Acuo software infringes any copyright owned by Focus.
The contents of a letter dated 9 October 2002 from Focus to Point.
From 15 October 2002, Focus and Point discussed a proposed voluntary arrangement for determining whether or not infringement had taken place. Focus expressly and by implication maintained their allegations of infringement during these discussions.
In or around December 2002, Mr Mark Loosmore acting for and on behalf of Focus represented to Richard Leadbeater of Swiss Life that Point's Acuo software infringed the copyright in the Focus Goal software, thereby seeking to prevent Swiss Life from purchasing Point's software and services.
Frank Murray, acting for and on behalf of Focus, represented implicitly to Paul Creamer of Marlborough Stirling that the Acuo software infringed the copyright in the Focus Goal software.
In their defence dated 10 January 2005, Focus repeated at paragraph 7 the allegation that Point's software had been created in an "impossibly short time frame" and thereby expressly and/or implicitly alleged that Point's software infringed the literary copyright in the Focus Goal software.
"We wrote to you last year (8 November 2001) in connection with the return of our software and manuals for which we asked you to provide a completed schedule which itemised the software which you duly completed and returned on the 30 October 2001.
Original Contractual Relationship
By an agreement (Software Outsourcing Agreement) dated 25 April 2001 you agreed to use your expertise to configure and use software packages supplied by Focus to perform services referred to in the above agreement.
I am now writing to seek confirmation of the provenance of the software you have developed in order to compete with Focus. Our main concern relates to the speed with which you have developed your product.
You may be aware that we had a partnership with Synaptic Systems, as a result of which they, like you, had access to our software. We subsequently discovered that they, like you, had developed a product to compete with ours in an impossibly short time frame. We took legal action against Synaptic, as a result of which they were forced to admit substantive copying, obliged to pay our costs and substantial damages and also required to destroy their code (on oath). Focus values its partner relationships and has put a great deal of trust in these in the past. However, we cannot allow such relationships to result in our IPR being compromised. Synaptic significantly breached our trust and copied our software in order to compete with us.
What has happened between Focus and Point Solutions is strikingly similar to what happened between Focus and Synaptic. As a result of this and particularly the speed at which you have launched a competing product, I am sure you will understand that I need to seek confirmation that you have not undertaken any copying of Focus' software and solutions. I strongly suggest that before you reply, that you give serious thought to what constitutes copying. Indeed, Synaptic failed to understand that copying covers more than just literal code copying, it also covers, for example, the use of the structure of the product as a 'springboard' in producing your own product. It was Synaptic's initial arrogant response in this respect which caused us so much offence and strengthened our resolve.
We wish to assert that Focus products are original copyright works and to which the copyright vests in Focus.
Without a court order for advance disclosure or the carrying out of further investigations (including the analysis of your product), we are not in a position to confirm that no copyright infringement has taken place. Therefore we are requesting both a written confirmation from you in this respect and a voluntary disclosure by Point Solutions of such material that would confirm that no copyright infringement has taken place. We believe such material would be made available through a court order were we to seek any advance disclosure and, indeed case law supports the principle that an unreasonable refusal by you now to make advance disclosure may deny you the costs of doing so if a court is minded later to so order.
We are concerned to establish a voluntary agreement to determine that no copyright infringement has taken place and we look forward to hearing from you accordingly."
"I am writing in response to your letter dated 9 October 2002 concerning the provenance of our software.
I understand your concern following your experience with Synaptic.
I am therefore happy to confirm that we have neither copied code nor based any of our product suite on Focus' software or solutions. I would also like to make it clear that we have not used the structure of any of your products as a 'springboard' in producing our Acuo product suite.
We have been developing our Acuo product suite for over 15 months, and during the height of development have had a team in excess of 20 people working on it. We estimate that more than 20 man-years work has been carried out in the development of Acuo.
Because we believe that the architectural approach that we have taken provides us with a strong competitive advantage over other providers of PAC technology, including Focus, we would be unwilling to allow Focus representatives to have access to our source code.
We are, however, happy to make a voluntary disclosure of such material that would confirm that no copyright infringement has taken place, to a mutually agreeable third party. This is provided that Focus pay for all costs incurred and is on the understanding that no products, architectural diagrams, or source code will leave our premises.
I believe that it is in the interest of both companies to resolve this issue as soon as possible and clear any doubt over the provenance of our software.
I look forward to a speedy resolution of this matter."
i. To sign and return to us our terms of reference document and draft a legal primer for our review.
ii. To agree to use a professional technical dispute resolution service with expertise in copyright infringement [ie CEDR] or
iii. To accept our written confirmation that no copyright infringement has taken place and confirm that unless and until you commence litigation the matter is closed."
"Is it plausible that the Point software has been independently developed by (or on behalf of) Point?...
What evidence or indication is there (if any) that the Focus software has been used or is being used... by Point in the development of the Point software?
Can the experts identify any direct or indirect copying or other evidence of copying of the Focus software in the Point software?
"Our offer to enter into a non-determinative review made on the 25 August 2003 was on the understanding that Focus Solutions would move quickly forward with the review and that the process would commence within 2 weeks of Focus Solutions receiving the quote from the experts.
This clearly has not happened, the quote was received in September and despite receiving an e-mail on the 3 November from Frank Murray, stating that the review was just about to start, we have received no further correspondence until your e-mail.
We have suspected for a long time that Focus Solutions were trying to prolong the process and their inaction over the last 6 months has added further weight to this viewpoint. If Focus Solutions genuinely believed that we have infringed their copyright then they would have moved forward with the review without hesitation.
We do not accept the explanations you have provided as being valid reasons for such a long delay in the process. As a result of the inaction over the last six months and a change in our own circumstances our approach to this issue has now changed. We are not prepared to allow Focus Solutions to use this issue as an open ended threat and will not expend any more time, effort, or expense in any process that is non-determinative.
Instead we are now embarking on our own process to seek resolution. As a result of Focus Solutions not taking us up on our offer within the agreed timescales we reserve any rights and remedies we may have in relation to the statement made by Mark Loosmore to Richard Leadbeater.
You will be hearing from our solicitors in due course."
"If [Point] is concerned that [Focus] is wishing to preserve the ability to claim that its copyright has been infringed by [Point's] product subsequent to the expert determination, we can confirm that [Focus] would agree not to do so in the event of the experts finding no copying, since [Focus] does accept that copying is a pre-condition of copyright infringement"
Hammonds went on to query how Focus could be in a position to provide an acknowledgment of non infringement, as Charles Russell had requested. They said this:
"[Focus] has raised serious concerns with [Point] as to the circumstances in which the software in question came about. Bearing in mind the time, effort and expense involved in [Focus] developing its software, [Focus] has concerns as to the speed of development of [Point's] competing product which coincided with [Point] being given access to [Focus'] software. [Point] is simply not in a position to demand such an acknowledgement, without having given [Focus] a sufficient factual basis upon which to make a judgment. Since [Point] is (understandably) sensitive to the issue of allowing [Focus] access to its software development history [Focus] proposed a third party determination as a way of resolving this issue. In this light, we hope that [Point] will recognise that both its request and its proposed action are fundamentally misconceived."
"This is not a claim for copyright infringement in which the claimant must identify each copyright work on which it relies and give particulars of subsistence and ownership of copyright in each such work. Whether or not the claimant's own software enjoys the benefit of copyright protection is in fact irrelevant to the claimant's claim. In terms of copyright issues, the only issue that forms part of the claimant's positive case is whether or not the claimant's software infringes any copyright owned by the defendants. As part of that case, the claimant has pleaded facts to support its claim that the Acuo software was written and developed without reference to the defendants' source code. Without prejudice to the foregoing, the claimant has prepared a Components Schedule which is annexed to this Response to Request for Further Information which identifies each component piece of software that forms part of the claimant's Acuo software.
The programs listed in the Components Schedule have the original author of the program identified in the left-hand column, with the date of file creation and revision dates in the right-hand column. The original creator of each file was likely to have been wholly or substantially responsible for any subsequent amendments. It is possible that further individuals (being part of the claimant's development team or external consultants), who cannot be identified without an expensive, disproportionate and possibly fruitless enquiry, were from-to-time (sic) involved in suggesting alterations or additions to files identified in the Components Schedule even though their names do not feature in the left-hand column. However, the contribution of these further individuals to any file of which they were not the original authors is likely to have been limited."
Focus' advice to sales force 2002/2003
"What can be said about Point? At present Focus is engaged in correspondence with Point. Focus believes that Point has infringed the copyright in its computer software and has taken legal advice in relation to that issue. We are not in a position to say, at this stage, whether or not Point has, as a matter of fact, infringed our copyright. On the basis of the foregoing, you are entitled to tell customers the following:
That Focus has concerns about the provenance of the Point product.
That Focus is engaged in correspondence with Point in relation to the foregoing and that Focus is taking legal advice in that respect."
"I have recently been asked for general guidance as to what the Focus sales force can and cannot say in relation to the dispute with Point Solutions. As you appreciate, this is an important issue because Focus needs to be very careful not to make any statements which it cannot substantiate, otherwise it might find itself subject to a defamation claim...
What can be said about Point Solutions
At present, Focus is engaged in correspondence with Point Solutions. Focus believes that Point Solutions has infringed the copyright in its computer software and is taking legal advice in relation to that issue. We are not in a position to say, at this stage, whether or not Point Solutions has, as a matter of fact, infringed our copyright.
On the basis of the foregoing, you are entitled to tell customers the following:
That Focus has concerns about the provenance of the Point Solutions product;
That Focus is engaged in correspondence with Point Solutions in relation to the foregoing issue and that Focus is taking legal advice in that respect."
Expert evidence in the proceedings
CPR Part 40.20, which provides that the court may make binding declarations whether or not any other remedy is claimed.
CPR Part C1-001: Paragraph 1.4 which provides that the objectives of pre-action protocols include (1) to encourage the exchange of early and full information about the prospective legal claim and (2) to enable parties to avoid litigation by agreeing a settlement of the claim before the commencement of proceedings.
S70 Patents Act 1977 (as amended)
S71 Patents Act 1977
Copyright Designs & Patents Act (CDPA) 1988: Sections 1, 16, 18, 50A-50D, 107, 110 and 253
Text book :Laddie Prescott & Vittoria: Paras 3.125, 3.126 and 3.127
Clay, Clay & Booth  1 Ch 66
Russian Commercial & Industrial Bank -v- British Bank of Foreign Trade  2AC 438.
Wallersteiner -v- Moir  1 WLR 991
Metzger -v- Dept of Social Security  3 All ER 444
Leco & Land Pyrometers  RPC 133
Amstrad Consumer Electronics Plc -v- The British Phonographic Industry Ltd CA Fleet Street Rep 1986, p159
Filhol Ltd -v- Fairfax (Dental Equipment) Ltd  RPC 293
Patten -v- Burke Publishing  1 WLR 541
Plastus Kreativ AB -v- Minnesota Mining & Manufacturing Co  RPC 438
Wyko Group Plc -v- Cooper Roller Bearings  FSR 126
Messier-Dowty -v- Sabena  1WLR 2004
L'Oreal -v- Johnson & Johnson  FSR 686
Stoddard International Plc -v- William Lomas Carpets Ltd  FSR 44
FSA -v- Rourke  CP Rep 14
Guild -v- Eskander Ltd  FSR 3
Stephens -v- Cannon  EWCA Civ 222
Lever Faberge Ltd s-v- Colgate Palmolive  EWHC 2655 (Patents)
Has there been a sufficient assertion of right to trigger the exercise of the discretion to grant declaratory judgment.
Has Point established on the balance of probabilities that it did not copy Focus' source code in creating its Acuo range of products?
Independent expert scrutiny.
Whether the discretion should be exercised in favour of Point.
Has there been a sufficient assertion of right to trigger the exercise of the discretion to grant declaratory judgment?
"On 9 October 2002 we received a letter from Focus Solutions in which they expressed concern over the speed at which we had developed our software. They asked for written confirmation that we had not infringed their copyright, either by copying code or by using their product as a springboard to developing our own. They also asked us to agree to a voluntary disclosure of such material that would confirm that no copyright infringement had taken place, to a mutually agreeable third party.
On 15 October 2002 I replied to the Focus letter, confirming that we had neither copied code nor based any of our product suite on Focus' software or solutions, making it clear that we had not used the structure of any of their products as a 'springboard' in producing our Acuo product suite. I also agreed to make a voluntary disclosure of such material that would confirm that no copyright infringement had taken place, to a mutually agreeable third party.
On 9 November 2002 I received a second letter from Focus Solutions stating that they wanted to proceed with an independent review of our respective software to ascertain whether any infringement of their copyright had occurred, and stating the terms of the review.
On the 18 November 2002 I replied to the Focus letter, providing our response to their terms and once again agreeing to proceed with the review.
Since that date we have not heard from Focus Solutions.
I would like to reassure you that Point Solutions have neither copied code nor based any of our product suite on Focus' software or solutions.
We have been developing our Acuo product suite for over 15 months, and during the height of development have had a team in excess of 20 people working on it. We estimate that more than 15 man-years work has been carried out in the development of Acuo."
Has Point established on the balance of probabilities that it did not copy Focus' source code in creating its Acuo range of products
The purpose of this document is to state the findings of a review of the Focus 'Goal:Builder V2.1' software carried out by Point Solutions.
The aim of the review was to give a user perspective on the software covering:
Impact on productivity
Ease of binding date to a New Business message
An overall impression of the software, and suggestions for improvements."
The overall impression of Goal:Builder V2.1 is that it is a well tested, professional development tool which has had the bugs present in V2.0 ironed out."