Settlement of the dispute between the SA Government and Global Health suggests the Crown use provisions in the Copyright Act apply to computer programs, but this doesn't mean governments can use software for free.
Can the Commonwealth and State Governments use software without a licence agreement? This question was going to be determined by the courts, but a mediation on 2 August between the South Australian Government and Global Health led to a settlement reflecting what we expected ‒ the Government will pay a licence fee, and that's it.
Copyright infringement versus Crown use
To recap, the SA Government continued using the CHIRON patent administration system after its licence agreement ended. Global Health claimed the SA Government was infringing its copyright and sought damages and an injunction to prevent continued use of the system. The SA Government admitted to using the system after the licence agreement ended, but said it could rely on the Crown use provisions in the Copyright Act to keep using the software.
Crown use provisions ‒ still clear as mud
When we looked at this case, we highlighted a drafting ambiguity in the Copyright Act which Global Health appeared to be relying on. We also predicted Global Health would lose that argument.
The settlement means the drafting ambiguity will remain for the courts to resolve another day (unless Parliament fixes it first). However, the terms of the settlement indicate Global Health realised it was fighting a losing battle. According to media reports, Global Health agreed to accept payment of a licence fee equivalent to what the SA Government had been paying when the licence agreement ended, which is consistent with Global Health accepting that the Crown use provisions applied.
The Government is in a special position
The key point here is that, despite using the software without a licence agreement, the Government only had to pay a licence fee equivalent to what it would have paid if it had a licence agreement. Anyone else who knowingly uses software without a licence is likely to be ordered to pay punitive or aggravated damages (in addition to any licence fee) or possibly an account of profits, we well as being ordered to stop using the software. But the Government has the benefit of the Crown use provisions, so it only has pay a licence fee and can keep using the software.
Why bother negotiating a licence agreement?
What incentive then is there for the Government to enter licence agreements in the first place? Why not simply use software and rely on the Crown use provisions to pay a licence fee only if found out? There are a few reasons why Governments don't (and can't) do this:
- the Copyright Act requires the Government to notify the copyright owner if it uses a copyright work under the Crown use provisions ‒ Governments can't choose whether or not to comply with the Copyright Act, so they have to do this;
- the licence fee the Government has to pay under the Crown use provisions will be determined by the Copyright Tribunal if it is not agreed. A Government relying on the Crown use provisions risks paying a higher licence fee than it might have paid under a negotiated licence agreement; and
- the Government will typically require support and other services from the software vendor, which practically means the Government will need to reach agreement with the software vendor at least on those matters.
The Crown use provisions are not intended to provide a back-door for Governments to use software without a licence agreement. They do however provide a Government with important protection where it needs to use software (or increase its use of existing software) and the copyright owner is unwilling to negotiate a licence agreement or insists on unreasonable terms.