PQ Systems Europe Ltd & Anor. v Jeff Aughton & Anor.

Copyright in computer software may protect source code, object code and creative aspects of a program’s structure or design, but not functionality or ideas. Substantial similarity combined with a possibility of access may raise a prima facie inference of copying, including where similarities concern arbitrary or trivial features. Under Copyright, Designs and Patents Act 1988 section 11(2), ownership of software made by an employee depends on whether it was work of a kind the employee was engaged to do and whether it was made in the course of employment. The latter question requires a multifactorial assessment. Copying source code, including by translation or indirect use of an intermediate version, may infringe copyright and breach contractual confidentiality obligations.

The claimants, software businesses, alleged that software developed by the first defendant after leaving employment had been copied from software created during his employment and owned by them. The claims concerned copyright infringement and breach of contractual confidence in relation to two successive versions of the defendant’s software.

The principal issues were whether the earlier software had been created in the course of employment, whether the first subsequent version copied a substantial part of it, and whether the later version copied from the first. The court also considered the relevance of deleted source code and the defendant’s former directorship.

1. Ownership. The earlier software was made in the course of employment. It was software of precisely the kind the defendant was engaged to create. Applying the multifactorial approach in MEI Fields Designs Ltd v Saffron Cards and Gifts Ltd [2018] EWHC 132 (IPEC), relevant factors included the employment terms, place and time of creation, materials supplied, direction, ability to refuse the work and its integration into the business. The software was integral to the employer’s business, used its code and licensed resources, and was created in circumstances showing a potential business purpose. Copyright and confidential information therefore belonged to the claimants under section 11(2) of the Copyright, Designs and Patents Act 1988.
2. First version. The defendant had access to the earlier software. Identical arbitrary ordering and numbering in chart-type enumerations, together with other structural and functional similarities and the surrounding circumstantial evidence, established that at least a substantial part had been copied. Exact reproduction was unnecessary. The inference arising from substantial similarity and access was supported by IBCOS Computers Ltd v Barclays Finance Ltd [1994] FSR 275, and copying of insignificant features could be particularly probative, as illustrated by Billhöfer Maschinenfabrik GmbH v Dixon & Co Ltd [1990] FSR 105.
3. Later version. The later software was written in a different programming language, so the code comparisons could not establish the precise mechanism of copying. Nevertheless, the evidence supported the conclusion that a substantial part of the first version had been copied. Manual translation by reference to source code would infringe, as would automatic translation; it was unnecessary to determine which method had been used.
4. The copying infringed copyright and breached contractual confidentiality obligations. The contractual restriction made it unnecessary to decide the alternative equitable duty of confidence. The defendant’s fiduciary duties as a former director added nothing material to the result.

Judgment for the claimants on liability.