Justice Burley of the Federal Court of Australia in the case of Siemens Industry Software Inc v Telstra Corporation Limited [2020] FCA 901 ordered that Telstra, within fourteen (14) days, provide to Siemens all documents in its control relating to the identity of certain Telstra Account holders. Those account holders were suspected by Siemens of having infringed the intellectual property rights in certain software owned by them. This order was made so that Siemens could ascertain the identity of potential infringers of its copyright that they had become aware of because of “beacons or canary tokens” in its software. The beacons or canary tokens reported the IP Addresses of those that installed pirated copies of their software to Siemens and provided a range of other information about the potential infringer.
The law on preliminary discovery
By rule 7.22(2) of the Federal Court Rules 2011 (Cth) (FCR) a prospective applicant (in this case Siemens) may apply to the Court for an order that another person:
- attend Court to be examined in relation to the description of a prospective respondent;
- produce to the Court at such examination any document or thing relating to the prospective respondent’s description; and
- give discovery to the prospective applicant of all documents relating to the prospective respondent’s description.
The prospective applicant is someone who “reasonably believes that there may be a right for the person to obtain relief against another person who is not presently a party to a proceeding in the Court.”[1] Such orders may only be made pursuant to rule 7.22(1), if the prospective applicant is unable to ascertain the description of a prospective respondent against whom they may have a right to obtain relief and the subject of the order (in this case Telstra) knows or is likely to know the prospective respondent’s description.
The facts of Siemens Industry Software Inc v Telstra Corporation Limited [2020] FCA 901
Siemens was the owner of certain software and as such had the sole and exclusive right to reproduce it. The software in this case was a suite of ‘high-end product lifecycle management software’ (PLM Software). The use case for this software is that it models real-world products and tests how they might perform in market conditions, without requiring producers to actually create them. PLM Software is of considerable value and in some instances, licences to use various modules of its modules cost as much as $337,514.45.
Siemens became aware of the unlicensed use of the PLM Software by way of an automatic reporting function (Beacons and Canaries), imbedded in the PLM Software to detect unlicensed commercial use and report that information back to Siemens.
Telstra was said to have been able to identify an alleged infringer because when an Internet Service Provider (ISP) provides its subscribers with access to the internet, they hold information such as personal and contact information of those subscribers. By cross-referencing the IP address generated in the automatic report function against the records of information gathered by Telstra, Siemens contended they had identified 20 potential infringers of their copyright.
Ultimately, Telstra was ordered to provide the information sought on their users to Siemens.
Not just a speculative case
In relation to the substantive proceedings, in this case a claim related to a breach of copyright in the computer code, there is no requirement that a prima facie case be shown (that is, a case with apparent strength) by a prospective applicant. It will be enough if a prospective applicant can show their case is not merely speculative and that an order identifying potential infringers is warranted.[2]
Therefore, the Court retains a discretion to, on the facts and evidence presented before it, deny or grant an application to identify potential infringers with consideration being given to just how speculative the Court perceives the substantive proceedings will potentially be.[3]
Practical considerations
There are a number of practical considerations in relation to seeking an order to identify potential infringers of intellectual property rights where third parties can assist to identify them. They include the ease of bringing an application for such an order, the requirement of any undertakings by a prospective applicant and any potential further requirement to compensate a third party for their efforts in providing information on a potential respondent.
An application for disclosure to a prospective applicant by a third party for materials identifying a prospective respondent may be a comparatively quick and inexpensive process. In this case, no oral hearing of the application occurred and it was instead decided ‘on the papers’.
Siemens provided two (2) undertakings to the Court (that is, a promise to the Court). The first was that it will not pursue any action against any individual who has not made commercial use of any of its software. Secondly, it provided an undertaking to send a standard form letter to the identified respondents designed to expeditiously resolve any dispute between parties.
Lastly, Siemens was required to compensate Telstra in the order of $18 per IP address for the information relating to prospective respondents. This rate was set by Telstra, seemingly not contested by Siemens and ultimately accepted by the Court.
It’s likely that the Courts attitude to Siemens future conduct of any proceedings against alleged infringers was looked upon very favourably by the Court.
Takeaways
One of the takeaways from this case is that the use of an ‘automated reporting function’ (ARF), canary tokens or beacons in software to report back to the owner about those that copied it was not questioned. In support of its application Siemens filed a confidential affidavit which would seem to have provided an explanation about how its ARF worked. Because of this the Court was prepared to make orders allowing for potential infringers of its copyright to be identified by a third party in circumstances where the ARF could not provide all the information and in this case Telstra has possession of it.
Links and further references
Legislation
Federal Court Rules 2011 (Cth)
Cases
Dallas Buyers Club LLC v iiNet Limited [2015] FCA 137
Hooper v Kirella Pty Ltd [1999] FCA 1584
Siemens Industry Software Inc v Telstra Corporation Limited [2020] FCA 901
Further information about software development
If your business needs advice on obtaining a Court order for a telecommunications company to hand over data about its users, contact us for a confidential and obligation-free discussion:
Malcolm Burrows B.Bus.,MBA.,LL.B.,LL.M.,MQLS.
Legal Practice Director
T: +61 7 3221 0013 (preferred)
M: +61 419 726 535
E: mburrows@dundaslawyers.com.au
Disclaimer
This article contains general commentary only. You should not rely on the commentary as legal advice. Specific legal advice should be obtained to ascertain how the law applies to your particular circumstances.
[1] Dallas Buyers Club LLC v iiNet Limited [2015] FCA 137.
[2] Hooper v Kirella Pty Ltd [1999] FCA 1584.
[3] Ibid, [33].
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