IBS Technologies v APM Technol

Out-Law Guide | 02 Nov 2007 | 8:31 am | 5 min. read

In circumstances where the claimant sought in injunction to prevent copyright infringement the injunction was not granted (but a speedy trial ordered) because the effect of the injunction would be to put a stop to the defendant's business.

IBS Technologies (Pvt) Limited v APM Technologies SA And Another

  • [2003] All ER (Ch.D) 105

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Facts

IBS Technologies (PVT) Limited ('IBS') owned the rights to an aviation software product "TopAir" and had copyright in its source code.  The product was developed and originally owned by a company called AeroComputer, which became insolvent and was subsequently dissolved.   IBS acquired the rights to TopAir at about that time.  The product had been  developed by a team of experts in the field of aviation software employed by AeroComputer including a Dr Pochon and several others. They went on to work for APM Technologies SA ('APM'). 

IBS alleged that when Dr Pochon left AeroComputer he took with him the TopAir source code and that this was used in the development of APM's new software system referred to as the 'APM System'. They alleged that APM had copied wholesale the TopAir source code. The functional and other similarities of a specific module of the APM System named 'SmartOps' caused particular concern to IBS and in March 2002 IBS wrote to APM complaining of its conduct in relation to TopAir.  In a letter dated 6 September 2002, IBS warned that it would seek an injunction to prevent any copying of TopAir. 

There was a considerable period of delay before that threat was implemented by IBS and the present court action against APM was not commenced until 10 January 2003.  In these proceedings, IBS sought to prevent APM from  pursuing four distinct types of activity.  These were:

  1. providing development, implementation and maintenance support to JMC Airlines Limited ("JMC"), who were users of TopAir; 
  2. providing or marketing any development, implementation and maintenance services to or for any other individual or corporation or doing any act with respect to the TopAir source code and software;
  3. copying, modifying or adapting the TopAir code; and
  4. marketing SmartOps or providing any other product based on any copied, modified or adapted TopAir code.

In addition, IBS sought an order requiring APM to hand over any copies, modifications or adaptations of the TopAir code in its possession.

Judgment

The initial question for Mr Briggs QC, sitting as a deputy judge, was whether IBS had successfully disclosed a real issue for trial.  He quickly rejected the IBS arguments in relation to maintenance and support service.   He concluded that the real issue to be considered at this stage was the technical point as to whether the APM System was a colourable copy of TopAir, and consequently whether there was a serious issue to try in relation to breach of copyright.   He recognised that at this stage he was not required to determine this issue and, indeed, he lacked the technical expert evidence required to assess the existence or extent of any copying.

The Claimant put forward seven main arguments:

  1. There was a high degree of functional similarity between TopAir and the APM System, judging from a schematic description of the APM System on the Defendant's web site.
  2. The APM system was being developed by a team of experts which included the two principal architects of TopAir.
  3. Commencement of the development of the APM System began at almost exactly the same time as the demise of AeroCompuer; in effect the defendants simply carried on where they left off with TopAir.
  4. APM had access to the source code of TopAir. While IBS accepted that the Defendants had access to the source code from March 2002, it alleged that another copy was appropriated by Dr Pochon.
  5. Dr Pochon's own evidence showed that he harboured considerable bad feeling towards AeroComputer and so he had a motive to take and copy the software.
  6. IBS pointed to the considerable speed with which the APM System had been devised, tested and almost made ready for market, by comparison with the much longer time taken by the same designers to produce TopAir. They argued that the APM system could not have been an original creation and must have been a copy.
  7. APM had used software development tools which were outmoded, but were said to have been used to develop TopAir.

Mr Briggs QC rejected all but the fourth and sixth arguments. Much of IBS' argument was undermined by an offer by APM some time before the hearing to provide a copy of the TopAir and APM software to a qualified independent expert so that an independent opinion could be obtained in relation to the allegation of copying. IBS did not take up that offer. Mr Briggs QC nevertheless considered that the fourth and sixth arguments just satisfied the requirement of an issue to try.

Having established that there was a real issue to try, Mr Briggs QC moved on to consider whether APM should be granted an injunction until the trial took place.  This point was determined by balancing the likelihood and extent of damage that would be suffered by IBS if the order were not granted against the financial losses that APM would suffer if the order was made.  The potential for losses by APM was very great, given that APM would in effect be unable to pursue any of its main business activities.

JMC had contracted with AeroComputer in May 2000 for maintenance and support of TopAir, which it had purchased.  The contract allowed that, if AeroComputer became insolvent, then JMC was entitled to obtain maintenance and support services from any suitably qualified software maintenance specialist such as that employed by APM.  The contract clearly stated that JMC could make available the TopAir source code to such a specialist for maintenance and support purposes.  It was for this reason that Mr Briggs QC dismissed the first and second orders sought by IBS.  He also considered that, in order to provide the support and maintenance allowed/sought by the contract between JMC and AeroComputer, a specialist would have to undertake specialist copying of the source code and so the third order sought by IBS, which attempted to prohibit copying, was also dismissed.

Mr Briggs QC concluded that, if granted, the fourth request relating to SmartOps would effectively prevent APM from marketing the APM System in its entirety, since SmartOps was integral to the operation of the APM System as a whole.  He also refused to allow the blanket request for APM to hand over all copies of the TopAir source code as this would prevent it from carrying out the legitimate maintenance and support operations for JMC and other companies.

This meant that the two remaining issues to be dealt with were whether APM should be prevented from modifying or adapting the TopAir code and whether APM should be allowed to market the APM System within the United Kingdom.  He considered the commercial implications and likelihood of irreparable damage being suffered by APM if these orders were made.  He concluded that there was a real prospect that APM would suffer irreparable damage and so recommended a speedy trial should be made to determine the issue of copying.  The final decision to dismiss all of the orders requested by IBS was heavily influenced by the company's lack of funds and inability to compensate APM for its losses if it subsequently emerged that there had been no breach of copyright.

Commentary

Mr Briggs QC was not required to consider the issue of whether the TopAir source code had been unlawfully copied or 'stolen'. It is, however, clear that, while an issue to try was ultimately shown, the arguments put forward by IBS were regarded as tenuous.  The judgment repeatedly alludes to the lack of force in the arguments put forward by IBS but at the same time accepts that it was still open to IBS to construct a more convincing case before trial.

In any case where breach of copyright is alleged, it is plainly important to have clear and unchallengeable evidence of the copying. A case based on inference, is vulnerable to a vigorous attack. Had clear evidence been produced, in the form of an expert comparison of the two systems, Mr Briggs QC's approach is likely to have been different. Clearly Mr Briggs QC took a commercial view of the impact the orders sought would have had on the APM's business  and the IBS' financial position in determining that the orders should not be granted.