In December the General Court of the European Union ordered the European Commission to pay €12 million in damages to Systran, a software developer. The damages relate to infringement of copyright and misuse of confidential information in machine translation software provided by Systran.

Over a number of years Systran created an adapted version of its Systran-Unix machine translation software so that it met the specific requirements of the European Commission. This work was completed by March 2002. In October 2003 the European Commission put out a call for tenders to update its machine translation systems. The work which was tendered included requirements for tenderers to carry out the maintenance and linguistic enhancement of the machine translation system. Systran advised the European Commission that the work that was being tendered would infringe the copyright in Systran's software. There was some correspondence between Systran and the European Commission and, following that, the European Commission took the view that no "probative documents" were produced by Systran to establish its rights and therefore Systran was not entitled to object to work being carried out by the successful tenderer.

Systran brought an action for damages against the European Commission because it considered that, following the award of the contract to the successful tenderer, the European Commission had unlawfully disclosed Systran's know-how to a third party and Systran's copyright was infringed by development of the EC-Systran Unix system by the appointed contractor without Systran's authorisation. Systran held copyright in the Systran-Unix product, which was very similar to the EC-Systran Unix software developed by Systran for, and used by, the European Commission. The European Commission believed that it had rights to some parts of the EC-Systran product but was unable to provide clarity about the specific parts of the product to which it had rights.

The contract between the European Commission and Systran did not deal specifically with know-how and development of the software by unauthorised third parties but the Court's view was that the European Commission had non-contractual liability and acted unlawfully by infringing the general principles common to the law of the Member States applicable to copyright and know-how.

The Court awarded €7 million to Systran for the fees which Systran would have charged for permission to use its copyright and know-how between 2004 and 2007, with a further award of €5 million for the effect that the European Commission's decision had on Systran's turnover. Finally, a further €1,000 was awarded as non-material compensation.

This case provides a reminder to those who commission third parties to write or develop software that it is important to consider what rights will be required if a further procurement exercise is carried out and a new contractor appointed, something that often happens in second generation procurement.