A dispute between two software houses remains unresolved after the Court of Appeal refused to rule that one company definitely did not copy the other's software. The ruling does not mean that copying did take place, though.
In an unusual case centring on a software development outsourcing contract, a development company pulled out of an agreed mediation process in order to seek a court order which declared them innocent of copying the other company's technology. The court had to make its decision without analysing any of the software involved.
It lost that case and has now also lost its appeal against the original judgment. "I am being asked to make a declaration that software, which I have not seen, does not infringe any copyright in another software product which I have not seen and in respect of which copyright has not been demonstrated," explained the original trial judge.
Point Solutions was commissioned by Focus Business Solutions to do some outsourced contracting work on Focus's market leading software, Goal. Both companies make software for the creation of electronic application forms in the financial services sector.
After it won the Focus contract, in April 2001, Point began to develop its own competing software, called Acuo. When Point began to win work for which Focus was also bidding, that company asked for the return of the copies of its software.
A year later Focus wrote to Point asking it to prove that it had not copied its software when building its new product. The company had had a similar disagreement with a former partner company, Synaptic. "What has happened between Focus and Point Solutions is strikingly similar to what has happened between Focus and Synaptic," wrote Frank Murray, chief technology officer at Focus.
"As a result of this and particularly the speed at which you have launched a competing product, I am sure you will understand that I need confirmation that you have not undertaken any copying of Focus' software and solutions," wrote Murray. "I strongly suggest that before you reply, that you give serious thought to what constitutes copying. Indeed, Synaptic failed to understand that copying covers more than just literal code copying, it also covers, for example, the use of the structure of the product as a 'springboard' in producing your own product."
The dispute rested on the fact that Point had had access to Focus's source code in the course of its contract work and was able to see how the software was put together. The two companies agreed to appoint an independent expert to analyse each company's source code and decide whether or not copying had taken place.
In August 2003 the companies agreed on a person and a process for this mediation. By the following March Focus had produced a technical primer for the expert, though much more slowly than had been anticipated, and Point had produced none at all. Point suddenly withdrew from the process, blaming Focus's slow progress.
Point then began its lawsuit seeking a declaration of non-infringement of copyright. Perhaps the most unusual aspect of the case was that both companies agreed to proceed without an expert witness to analyse the actual software. The court's decision, then, had to be made without any direct evidence on the software programs themselves.
"It is difficult to avoid the conclusion that the outcome of these proceedings is unsatisfactory; and that the outcome would have been equally unsatisfactory had the decision gone the other way," said Lord Justice Chadwick, one of the three judges, who gave a unanimous decision. "But that is the effect of the way in which both parties chose to conduct the proceedings. They chose to deny the judge the assistance of the expert's report which Master Bragge had directed.
"They chose to put the judge in the position where the only question which she could decide was whether Point had established on the balance of probabilities, by the evidence which it adduced, that it had developed the Acuo software without copying," said Chadwick. "Point accepted that burden."
The course was conducted using the testimony of the managing director and chief technical architect, a Mr Green and a Mr Blatchford, as the main evidence relating to the nature of Point's software. It emerged that a significant amount of development had been carried out in India, but none of those developers was made available by Point to give evidence.
The original trial judge, Judge Kirkham, said that she developed doubts about the credibility of Green and Blatchford. "I am not confident that Mr Green and Mr Blatchford have presented a full and accurate picture," she said in her ruling.
The Appeals Court found that Kirkham correctly characterised the case when she said that she was "not trying a case as to whether or not there has been copying. [I have to decide] whether Point have demonstrated, on balance of probabilities, independent design."
"There were grounds upon which she could take the view that Mr Green and Mr Blatchford were unreliable witnesses," said Chadwick in his Appeals Court ruling. "It follows that I would hold that the appellant has not shown that the judge was wrong in finding that Point failed to establish on the balance of probabilities that it did not copy Focus' source code in creating the Acuo range of products."
The appeal was dismissed.