Software Solutions v 365 Health

9 February 2021

Jaani Riordan acted for the Claimants in a software copyright dispute involving mental health applications created using the Claimants’ multimedia software authoring tool.

The judgment offers a detailed examination of the rights subsisting in XML files and data formats, and the principles applicable to software licences and assignments.

The Defendants claimed to have acquired the software from an insolvent company (‘Ultrasis’) which had purchased certain applications from the Claimants in 2002 and licensed other rights in the Claimants’ software which were necessary to use and run the applications.  The licence terminated upon Ultrasis’ insolvency.  The Defendants continued to exploit the mental health applications, which made up 95% of their revenue.

The Defendants initially disputed that their applications reproduced any of the Claimants’ source code.  However, by the time of trial the issues had narrowed to (i) whether a core data structure common to both sets of software, called an XML schema, formed part of the Claimants’ software authoring tool, (ii) whether database right subsisted in the XML schema, and (iii) whether the Claimants should be awarded additional damages for flagrancy under s 97(2) of the Copyright, Designs and Patents Act 1988.

At trial HHJ Melissa Clarke held that the XML schema, when correctly characterised, was a part of the Claimants’ software development tool, and therefore owned by the Second Claimant.  Although it was not a “database” within the meaning of the Database Directive, the copyright in the XML schema was infringed by the Defendants.  The Defendants’ infringements were flagrant because the Defendants’ should have appreciated that they had no right to use the Claimants’ software and their evidence to the contrary was rejected.  In the circumstances, the infringements were flagrant as the Defendants had accrued benefits from the infringements, the Defendants were reckless as to whether they were infringing, and had caused significant distress to the Claimants.

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