Software litigation – how much evidence is enough?

Litigation involving software commonly involves allegations of copyright infringement and breaches of contractual obligations of confidence.  However, without an “anton pillar” style order, it can be challenging to substantiate the extent of any alleged breach due to the technological nuances involved with properly analysing available evidence.   This make it difficult for the plaintiff to decide whether or not to initiate legal proceedings against an infringing party.  In circumstances where a prospective applicant does not have complete access to the source code, it may be desirable to make an application for discovery prior to the start of proceedings pursuant to Rule 7.23 of the Federal Court Rules 2011 (Cth) (Rules).

How can an Order for discovery be made before proceedings are initiated?

Rule 7.23(1)(b) of the Federal Court Rules 2011 (Cth) provides:

“(1)      A prospective applicant may apply to the Court for an order under subrule (2) if the prospective applicant:

• reasonably believes that the prospective applicant may have the right to obtain relief in the Court from a prospective respondent whose description has been ascertained; and
• after making reasonable inquiries, does not have sufficient information to decide whether to start a proceeding in the Court to obtain that relief; and
• reasonably believes that:

(i)      the prospective respondent has or is likely to have or has had or is likely to have had in the prospective respondent’s control documents directly relevant to the question whether the prospective applicant has a right to obtain the relief; and

(ii)     inspection of the documents by the prospective applicant would assist in making the decision.

(2)       If the Court is satisfied about matters mentioned in subrule (1), the Court may order the prospective respondent to give discovery to the prospective applicant of the documents of the kind mentioned in subparagraph (1)(c)(i).“

The case of Qudos Mutual Limited v Infosys Limited [2019] FCA 702

In the recent case of Qudos Mutual Limited v Infosys Limited [2019] FCA 702 (Qudos Mutual) applied to the Court for an order requiring Infosys Limited (Infosys) to provide discovery of potentially infringing source code.  The threshold issue for the Court was whether the prospective applicant already had sufficient information under Rule 7.23(1)(b) of the Federal Court Rules 2011 (Cth) to allow it to make the decision whether or not to initiate proceedings.

By way of background, Qudos was looking to undertake a major overhaul to their systems to transition to a fully integrated banking platform that included core banking, customer relationship management, online banking, and mobile applications.  In March 2015, Qudos engaged Infosys to provide a range of these services and the parties entered into a Master Banking Service Agreement (MBSA).  However, the relationship between the parties broke down and Qudos issued a notice of termination of the MSBA in October 2018.  By this time Infosys had produced seemingly similar software for Australian Military Bank Limited (AMB).  Qudos alleged that Infosys, in developing the software for AMB, had breached their obligation of confidence, breached terms of the MSBA and also infringed copyright which subsisted in the software.

Qudos sought to commence proceedings based on the above causes of action but alleged that they did not have sufficient information to do so.  Because of this Qudos filed an Originating Application seeking Orders pursuant to r 7.23(1)(b) of the Federal Court Rules 2011 (Cth) for production of documents.  While Infosys did voluntarily provide some documents in accordance with agreed Consent Orders made on 20 December 2018, Qudos was not satisfied that they provided sufficient information to allow it to decide whether or not to commence proceedings.

December 2018 Consent Orders and the parties’ arguments

On 20 December 2018, Consent Orders were made that required Infosys to produce the following documents:

“(1)       a copy of the source code underlying the AMB UX;

(2)        records of design meetings held by Infosys and AMB employees to design the AMB UX, and the wireframe drawings, emails and design work produced in those meetings;

(3)        any design brief that AMB provided to Infosys for the AMB UX;

(4)        documents recording the specific requirements that AMB requested for the development of the AMB UX; and

(5)        documents recording the design inputs and wireframe drawings that AMB provided to Infosys for the AMB UX.“

Although Infosys provided the source code specified in Order 1, they produced an updated version of the AMB source code rather than the version that Qudos had alleged was potentially infringing.  Qudos argued that they were unable to effect a proper comparison of the source code to determine whether or not the AMB code amounted to a “substantial reproduction” of the Qudos code.

[For a discussion of the test for a substantial reproduction see our commentary: What is the test for substantial reproduction of computer code.

It was also argued that they were unable to determine whether Infosys had misused Qudos’ confidential information.  Infosys argued that the information available was sufficient and that a party cannot rely on preliminary discovery merely in the hope that it will be comforted in taking a decision in respect of which it already has sufficient information.

Orders made

Burley J considered that the opportunity of Infosys to have access to the UX and UI of the Qudos code, the common elements within the structure of the code, and the unexplained references to Qudos-related data objects or variables in the AMB UX Code provided a causal connection between the sets of code.  However, His Honour did not consider that this causal connection provided sufficient information for assessing whether the AMB code had been a substantial reproduction of the Qudos code.  Because of this, Burley J found in favour of Qudos and determined that the appropriate Order was for Infosys to provide:

“(1)     A copy of:

• the source code of the user acceptance testing website (the Qudos UAT site) hosted by Infosys Limited on the NextDC data centre (or any equivalent data centre) which contained a copy of the online and mobile banking platform developed by Infosys for Qudos pursuant to the Master Banking Services Agreement dated 25 March 2015, as at 19 February 2018; and
• the source code of the user experience and user interface of the mobile and online banking solution that Infosys Limited developed for Australian Military Bank Limited (the AMB UX code) as at 19 February 2018, including the revision history thereof up to that date.

(2)      Documents recording the development and preparation by Infosys of the source code identified in (1)(b) up to 19 February 2018, including minutes of meetings and correspondence between Infosys Limited and Australian Military Bank Limited related to its development and preparation.“

Takeaways

Where allegations of copyright infringement are made relating to software, the alleged infringer may be required to provide the entirety of the source code before a prospective applicant decides to proceed with legal proceedings.  Such an order for discovery may be granted on the basis that the prospective applicant does not have enough information to determine the degree of any reproduction of the source code.  Further, this would require the prospective respondent to provide the version of the source code as it was while the alleged infringement was ongoing.   Given the widespread use of version control software and code repositories it seems implausible that a respondent could not easily provide the version of source code requested for comparison.

Links and further references

Cases

Qudos Mutual Limited v Infosys Limited [2019] FCA 702
IPC Global Pty Ltd v Pavetest Pty Ltd (No 3) [2017] FCA 82

Legislation

Copyright Act 1968 (Cth)
Federal Court Rules 2011 (Cth)

Further information about software and copyright infringement

If you need assistance to with any litigious matter involving software and copyright infringement, contact us for a confidential and obligation-free discussion:

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.

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