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2009 MarsdenLR 717
HIGH COURT (KUALA LUMPUR)
RAMLY ALI, J
Onestop Software Solutions (M) Sdn Bhd & Anor – Plaintiff
Versus
Masteritec Sdn Bhd & Ors – Defendant
D5(IP)–22–1828 OF 2008
SL Su (Julia Low with her) (Tay & Partners) for the plaintiffs.
Colin Andrew Pereira (Goh Wong Pereira) for the defendants.
Important Points
Subject
Intellectual Property Law - Copyright Infringement
Act Referred
RHC 1980: O.24 R.10
Headnote
(B) Interlocutory Injunction - Principles for grant - (i) serious issues to be tried; (ii) damages will not be an adequate compensation; and (iii) balance of convenience favours the grant - Conflicting evidence on copyright infringement constitutes a serious issue to be tried - Causal connection established by access to source codes and short time between employment and launch of competing product. (Paras 12-17)
(C) Breach of Confidentiality and Fiduciary Duty - Proprietary information including technical data and business secrets is confidential - Employees and professionals (such as auditors) owe a duty of confidentiality and fiduciary duty not to misuse information obtained during the course of employment or professional engagement. (Paras 18-25)
(D) Discovery - Principles - Documents must be relevant and in possession of the party - Request for source codes at the interlocutory stage is premature and constitutes a fishing expedition if sufficient evidence of copying is already presented. (Paras 33-39)
Facts of the case:
A software company sought an interlocutory injunction against a former employee, a former auditor, and a company formed by them. The plaintiffs alleged that the defendants infringed copyright in their accounting software, breached duties of confidentiality, and breached employment and fiduciary duties by developing and selling a substantially similar software shortly after the employee's departure. The defendants sought discovery of the plaintiffs' source codes.
Findings of Court:
The court found that the plaintiffs established prima facie ownership of copyright. The similarities between the software and the defendants' access to source codes raised serious issues to be tried. Damages were deemed inadequate due to potential permanent loss of business and the defendants' lack of financial capacity. The balance of convenience favored the plaintiffs. The request for discovery of source codes was deemed premature.
Issues: Whether the plaintiffs established a serious issue to be tried regarding copyright infringement and breach of confidentiality; whether damages would be an adequate remedy; whether the balance of convenience favored the grant of an injunction; and whether the defendants' request for discovery of source codes was justified at the interlocutory stage.
Ratio Decidendi: The court ruled that unexplained similarities between software, coupled with access to source codes, create a serious issue to be tried for an interlocutory injunction. Professionals and employees are bound by confidentiality and fiduciary duties. Discovery of highly sensitive proprietary information like source codes is premature at the interlocutory stage if the threshold for an injunction is met.
Result: Plaintiff’s application for an interlocutory injunction allowed with costs. Defendant’s application for discovery dismissed.
Legal Category Hierarchy
-
intellectual property
-
copyright
- computer software
-
copyright
-
tort
- breach of confidence
-
employment law
- breach of contract
-
equity
- fiduciary duty
-
practice and procedure
- interlocutory injunctions
- discovery
Ramly Ali J
Enclosure 3 is an application by the plaintiff for an interlocutory injunction prohibiting the defendants from infringing the second plaintiff’s copyright in the QnE Software.
The plaintiff’s claim against the defendants are as follows:
(a)infringement of the second plaintiff’s copyright in the QnE Software;
(b)breach of duty of confidentiality to the plaintiffs;
(c)breach of the employment agreement by the second defendant;
(d)breach of fiduciary duty by the third defendant.
The principles governing the grant of an interlocutory injunction were laid down by Lord Diplock in the House of Lords in the case of American Cyanamid v Ethicon Ltd
(a)there are serious issues to be tried;
(b)damages will not be an adequate compensation; and
(c)balance of convenience favours the grant of the injunction.
The above principles have been adopted by the Court of Appeal in Keet Gerald Francis Noel John v Mohd Noor bin Abdullah & Ors
INFRINGEMENT OF THE SECOND PLAINTIFF’S COPYRIGHT IN THE QnE SOFTWARE
The plaintiff’s QnE Software is an accounting software specially designed for use by a person with minimal accounting background. The objective of the QnE Software is to bypass the in depth knowledge required to manage the financial affairs of a business and the day to day financial administration and reporting of a business. In the QnE Software, the plaintiff’s assert the following features which are protected under copyright:
(a)the computer program comprising the literal elements being the source codes;
(b)the computer program comprising the non-literal elements being the structure, modularity, architecture and design features of the QnE Software; and
(c)the user interface of the program (what appears on the screen display when the program is run).
Computer program is protected as a literary work under the Copyright Act 1987. Under s 3Copyright Act 1987, ‘literary work’ includes ‘computer program’. The case of Creative Purpose Sdn Bhd & Anor v Integrated Trans Corp Sdn Bhd & Ors
The English cases are instructive on the issue of copyright protection and infringement of computer programs as our laws are similar. In the English case of Ibcos Computers Ltd & Anor v Barclays Mercantile Highland Finance Ltd & Ors Ibcos Computers, Jacob J held at p 302 that:
I thoroughly agree with what Ferris J (in the John Richardson case) went on to say: ‘Consideration is not restricted to the text of the code …’. That must be right: most literary copyright works involve both literal matters (the exact words of a novel or a computer program) and varying levels of abstraction (plot, more or less details of a novel, general structure of a computer program).
I therefore think it right to have regard in this case not only to what Mr Turner (the plaintiffs’ expert) called ‘literal similarities’ but also to what he called ‘program structure’ and ‘design features’.
In respect of the user interface and the design of screen display of a computer program, they are protected as ‘artistic works’ under our Copyright Act 1987. Section 3 of the Actdefines ‘artistic work’ as including ‘a graphic work, photograph, irrespective of the artistic quality’.
In the present case the plaintiff has shown prima facie proof of ownership and subsistence of copyright. The plaintiffs’ affirmed in para 13 of the plaintiffs’ first affidavit facts which are required to be in compliance with s 42Copyright Act 1987. These facts are namely that:
(a)copyright subsists in the literary and artistic works of the QnE Software;
(b)copyright subsists in the QnE Software at all material times after the first publication of the QnE Software on or around 2001 (in the original version and all subsequent revisions thereof);
(c)the second plaintiff is the owner of the copyright; and
(d)copies of the QnE Software are annexed in the statutory declaration in exh ‘SML-6’ of the plaintiffs’ first affidavit.
Section 42 of the Actprovides that an affidavit made in accordance with the provisions of sub-s (1) of the sectionshall b
