In April 2001 when Focus Solutions, a dominant supplier of
software to financial services institutions, asked a smaller
software firm, Point Solutions, to review modules of one of its
products, Goal: Builder, a tool that can be used to
develop insurance products. At the time, it did not expect Point to
become a rival.
But one month later, Point was approached by Clerical Medical
International and struck a deal to develop software for the
investment firm. This was Point's first paying customer. Within two
months, Point had begun development of what it called
Acuo. The software was delivered to CMI six months later,
on 11th January 2002. A variation, Acuo Web,
was commercially released in August 2002.
Shortly afterwards, Point received a letter from the Chief
Technology Officer of Focus. "I am now writing to seek confirmation
of the provenance of the software you have developed in order to
compete with Focus," wrote Frank Murray. "Our main concern relates
to the speed with which you have developed your product."
The letter mentioned another firm, Synaptic Systems, with which
Focus had contracted, only to find, as Murray put it, “that they,
like you, had developed a product to compete with ours in an
impossibly short time frame.”
Requesting confirmation that Point had not copied the Focus
software, Murray advised that legal action had been taken against
Synaptic. "What has happened between Focus and Point Solutions is
strikingly similar to what happened between Focus and Synaptic," he
warned.
Point denied that any copying of code or structure had taken
place. It also refused to allow Focus access to Acuo's
source code. However, Point suggested that a third party could
check the code.
Negotiations began over the use of an independent expert, but
disagreements arose over costs and the identity and terms of
reference for the expert. Eventually, Point announced that it was
no longer proceeding; that it would instead seek a court's
declaration that it had not infringed upon copyright.
So Point filed suit in December 2004, requesting a declaration
and an injunction, prohibiting Focus from representing that
Acuo is in breach of copyright.
It was a peculiar case for Judge Frances Kirkham.
“I am being asked to make a declaration that software, which I
have not seen, does not infringe any copyright in another software
product which I have not seen and in respect of which copyright has
not been demonstrated,” she wrote.
She took a cautious approach.
“In my judgment, the absence of tested evidence brings this case
close to the category of cases where the court is asked to answer a
theoretical question,” wrote Judge Kirkham. “The court should not
grant a declaration which it is not satisfied is in respect of
matters which are proven; which is necessary, which will be useful
and which is accurate and which is appropriate in the context of
the case.”
Unlike most intellectual property rights, copyright does not
have a statutory-based right of action in cases where there are
unjustified threats of infringement action. For such copyright
cases the court has to look to general rules of procedure, and a
discretionary ability to grant declarations.
The question for the court was, firstly, whether this
discretionary right had been triggered.
According to the court papers, Focus had been careful not to
accuse Point of copyright infringement, often saying that it was
concerned that there may have been infringement but that it could
not yet say whether there had been actual infringement.
According to Judge Kirkham, the October letter was sufficiently
implicit in its accusation as to trigger the discretion.
“The letter went further than merely expressing Focus' concerns,
as they allege,” she found. “Of itself, in my judgment the letter
does assert, by implication, that Point had copied and it was, at
that time, sufficient assertion of right to trigger the exercise of
discretion to grant declaratory relief.”
But the Judge then found that Point had not sufficiently
established that it had not copied the Focus software in developing
the Acuo products.
She explained:
“I cannot be confident that Point's approach
has been sufficiently transparent and accurate to enable me to
conclude, on the basis of largely untested evidence, that Point are
entitled to the declaration they seek. Focus have succeeded in
casting doubt on Point's claim to have created their Acuo software
by independent design to the extent that Point have not discharged
the burden of persuading me, on balance of probabilities, that they
did achieve the design independently.”
She therefore refused to grant the declaration.
In her opinion, neither party had pursued the alternative
solutions with urgency. In addition, it was Point who pulled out of
the attempt to use an independent third party.
“In my judgment the refusal by Point to continue with the
independent expert scrutiny process is a factor which weighs
against them,” she wrote.
Judge Kirkham was also concerned that to grant the declaration
would then prevent Focus from bringing an infringement claim in the
future.
“It would be unjust to do so in circumstances where the court
had not examined the evidence which a court would normally expect
to see to be able to determine, on all available evidence, whether
or not there had been infringement,” she concluded.
