In the recent case of IPC Global v Pavetest Pty Ltd (No 3) [2017[ FAC 82, the Federal Court of Australia examined the overlap of copyright and confidentiality in the construction industry.
IPC alleged that Pavetest had infringed the copyright in software used to generate test results from its construction material testing equipment. IPC further alleged that a former employee and consultant (who both went on to establish Pavetest) had authorised the relevant infringement.
Relying on evidence showing that parts of the source code (i.e. the portion of the code intelligible to human viewers) in each of the software programs were in some places identical and in other cases highly similar, Justice Moshinsky held that Pavetest had reproduced a ‘substantial part’ of IPC’s original software. His Honour also applied the commonly acknowledged principle that, despite only around 800 lines out of a total of 250,000 lines of source code being reproduced, such an assessment required a consideration of both the quality and the quantity of the materials allegedly reproduced. As the two individuals seemingly obtained access to the source code in connection with their former relationships with IPC, they received access to that material in circumstances imparting an obligation of confidence. They had then both misused that confidential information in circumstances causing damage to IPC, i.e. by competing with IPC’s original product. The combination of this access and misuse conferred a substantial advantage on Pavetest (under the so-called ‘springboard doctrine’), particularly in light of the significant investment of time and effort this ‘piggy-backing’ saved Pavetest.
In recognition of the seriousness with which the Court viewed these matters, His Honour ordered that the respondents be restrained from infringing IPC’s copyright and that the infringing software be deleted or erased. The question of damages (or an account of profits) was reserved for later consideration.
This case serves as a useful reminder of some core commercial principles, namely that an employer should:
- carefully control access to its valuable IP and confidential material, and
- remain particularly vigilant for misuse in circumstances where existing relationships (such as employment) have broken down or ended.