Software Solutions Ltd & Ors v 365 Health and Wellbeing Ltd & Anor

An XML schema defining the structure and validation rules for application files may form part of a software development system, even where it is implicit in the application files and contains no application-specific content. Contractual documents concerning software rights must be construed together, in their commercial context, to identify whether such material was retained or assigned. A schema is not necessarily a database merely because it structures data which is individually accessible; the constituent materials must themselves have independent informative value. For additional copyright damages, infringement may be reckless as well as deliberate. The liability judge may make findings relevant to flagrancy and benefit, but the damages court decides whether an award is required.

The claim concerned alleged copyright and database-right infringement in the IDEA System, an application-development framework, and in particular its XML Schema, by the defendants’ marketing of Beating the Blues version 5. Most liability issues were conceded. The remaining issues were whether the XML Schema formed part of the IDEA System or the Beating the Blues application, who owned the relevant rights under the 2002 Assignment and 2002 Licence, whether database right subsisted, and what findings were relevant to additional damages under section 97(2) of the Copyright, Designs and Patents Act 1988 and Article 13(1) of the Enforcement Directive.

1. Characterisation. The XML Schema was a structure and set of validation rules used by the IDEA Editor, Engine and Player. It applied across applications created using the system and was not limited to Beating the Blues. It was therefore properly characterised as part of the IDEA System.
2. Ownership. The 2002 Assignment and 2002 Licence formed part of one transaction and had to be construed together. Applying the objective, commercially contextual approach in Wood v Capita Insurance Limited, the XML Schema fell within the retained IDEA Software and the Source Code Materials. The First Claimant therefore owned the relevant rights, and BTB v5 infringed its literary copyright.
3. Database right. Although the statutory definition has a wide scope, the Claimants did not establish that the XML Schema itself was a collection of independent data. Its constituent categories lacked demonstrated autonomous informative value. Database right was therefore not established.
4. Additional damages. Infringement may be reckless or deliberate. The defendants acted recklessly by exploiting BTB v5 without making a sufficient technical investigation after receiving serious allegations of copying. The court found benefit from the infringement and distress relevant to the later damages inquiry, but did not find the alleged deliberate concealment or strategic delay proved. The claim was otherwise determined in accordance with the findings summarised at paragraph [178].