In the case of IPC Global Pty Ltd v Pavetest Pty Ltd (No 3) [2017] FCA 82, the Federal Court was given the difficult task of determining what was a ‘substantial part’ of the source code of a piece of software for the purposes of constituting copyright infringement.

The case concerned allegations of copyright infringement and breaches of confidence relating to IPC Global’s software, where Pavetest used a small proportion of IPC Global’s source code in developing its own software. The decision is important as it found that reproducing even a small portion of source code can constitute copyright infringement.

IPC Global makes equipment for testing materials such as asphalt and other construction supplies. In mid 2012, two employees of IPC Global resigned. The employees subsequently established the company, Pavetest, which launched a range of testing equipment to compete with IPC Global.

At the time the employees resigned, one had copies of IPC Global’s software. The employee copied the software onto another computer and provided it to a programmer engaged by Pavetest to write Pavetest’s own software. The programmer referred to IPC Global’s software in writing a first version of Pavetest’s software.

A requirement of copyright infringement is that there needs to be reproduction of a ‘substantial part’ of the copyright work by the infringer. Therefore, IPC Global had to show that Pavetest reproduced a ‘substantial part’ of IPC Global’s software.

IPC Global’s software comprised about 250,000 lines of source code, which included about 40 different test modules. There was a significant amount of duplication of code across the modules. Only about 800 lines of this source code was shown to be identical or similar to Pavetest’s first version of source code.

The Federal Court found:

  • Pavetest infringed IPC Global’s copyright in the software by the act of the former employee copying the software onto the computer provided to the programmer. The former employees were also found to be liable as they authorised this infringement by Pavetest.
  • Pavetest infringed IPC Global’s copyright in the software by the creation of the first version of software, and the former employees authorised this infringement. The court was of the view that the first version reproduced a substantial part of IPC Global’s software, for the following reasons:
    • There was originality in the expression of the sequences of IPC Global’s source code.
    • Although the quantum of source code used by Pavetest is small relative to the total size of IPC Global’s software, the cases make clear that the emphasis is on a qualitative rather than quantitative assessment.
    • The parts of the software that were copied constituted a functionally significant part of the software, as they related to the interface or communication between the software and firmware.\
  • The two employees breached duties of confidence towards IPC Global relating to the software. The software was found to be confidential, and the employees misused the information by disclosing it to the programmer.

The case highlights that copyright infringement can be made out where only a small proportion of source code is taken from a piece of software, where that source code constitutes a functionally significant part of the software.