BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
INTELLECTUAL PROPERTY ENTERPRISE COURT
New Fetter Lane London |
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B e f o r e :
Sitting as a Judge of the High Court
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SOFTWARE SOLUTIONS LIMITED
(a company incorporated under the laws of the British Virgin Islands)
MINDLIFE SOLUTIONS LIMITED
(a company incorporated under the laws of Israel)
MINDLIFE (UK) LIMITED
Claimants
-and-
365 HEALTH AND WELLBEING LIMITED
JOHN FREDERICK SMITH
Defendants
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Mr Jaani Riordan (instructed by Rechtschaffen Law) for the Claimants
Mr Guy Tritton (instructed by Hill Dickinson) for the Defendants
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Crown Copyright ©
- The Claimants claim that the Defendants have infringed copyright and database right in a computer application development framework known as the ‘Integrated Development Environment for Applications’ (“IDEA System“) by marketing a mental health application called Beating the Blues (“BTB“), and specifically version 5 of BTB (“BTB v5″). Both the IDEA System and BTB are written primarily in the Java programming language.
- The IDEA System was developed utilising the XML format to create/structure, validate and run applications created using the IDEA System. Three of the main components of the IDEA System can be described as follows:
- The ‘Beating the Blues’ or BTB application was the first application built using the IDEA System. It is a mental health self-help tool which provides end-users with a clinical programme aimed at treating depression by means of a series of eight self-guided sessions. It is not disputed that it was initially developed by the Second Claimant, and the rights in BTB versions 1 and 2 were assigned by the Second Claimant to Ultrasis plc in 2002.
- The claim was issued in January 2016. The Defendants filed a Defence which, broadly, (i) denied that BTB v5 infringed the Claimants’ rights, asserting that in 2004/5 it had been completely rewritten from the versions created by the Second Claimant; and (ii) asserted that the Defendants had acquired all intellectual property rights in BTB v5 from the administrators of the Ultrasis group of companies in 2015.
- After a significant delay which appears to have arisen mainly, but not entirely, from the Defendants disputing the Claimants’ request for disclosure of the source code of BTB v5, computer experts were instructed by each side. A CMC took place before HHJ Hacon on 29 November 2019 which identified (and to a certain extent limited) the issues to be determined at trial. Expert evidence was then served sequentially. About a month before trial, being some 5 years after the dispute arose, and four years after the claim was issued, the Defendants notified the Claimants that they did not intend to serve any fact evidence and conceded liability on a number of issues.
- Although the Defendants have made no formal admissions, the effect of the Defendants’ concessions (and further clarification provided in subsequent correspondence between the parties and their legal advisors and at trial) means that the following is now common ground:
- Those concessions dispose of the majority, but not all, of the claim. The issues which remain for me to determine are very narrow:
- There are a few other minor consequential matters which remain outstanding in relation to the scope of the order that the Court will make.
- This section provides a high-level summary and explanation of the IDEA System and the BTB v5 software. I do not understand it to be contentious or disputed by the Defendants, but to the extent that it is, it is based upon evidence from the Claimants’ witnesses which I accept.
- The IDEA System is an advanced software authoring tool, which computer-assists users to develop and deploy multi-media applications using generic components without the need for such authors to know how to programme themselves, or even to understand the underlying engineering. At the time of its development, the IDEA System offered market-leading capabilities.
- The purpose of the development of the IDEA System was to create “a comprehensive integrated environment for interactive multimedia, mental health applications which will enable us [the Claimants] to develop, maintain and change any common psychological intervention and assessment and deliver it in a reliable and appealing way to the end user”. In particular, it allowed development of self-help mental health applications based on cognitive behavioural therapy (“CBT”) for conditions such as anxiety and depression.
- The IDEA System is made up of a number of components. It can be used in authoring mode to produce applications (using the IDEA authoring software, or IDEA Editor), and then in runtime mode to run applications which have been built on top of the IDEA Engine and IDEA Player, utilising those two components and the Runtime player.
- Applications which are built using the IDEA System are presented to end users using graphical elements such as buttons, tags, etc to enable them to navigate through the application. These are generic components available to anyone who writes (or ‘authors’) an application on the IDEA System, and it is the application author who chooses which graphical components to use from the options that the IDEA System makes available, depending on how he or she wants it to look to the end user and what functionality he or she wants to make available to the end user. However, the content that is presented to end users of the application, such as text, images, audio and video content, is provided by the application author and not by the IDEA System (“author-provided content”).
- To that extent, and to aid understanding, a comparison can be drawn with Microsoft’s Powerpoint: the Powerpoint program enables authors to produce a slide presentation without having any idea of programming or the underlying engineering. The user who wishes to author a Powerpoint presentation can choose from Powerpoint’s menu of options: to structure the presentation by choosing the number and flow of slides; to choose the template of the slides (layout, whether they have textboxes or graphics boxes or both etc.); and to add formatting options and effects. All of these are generic components and functions of the Powerpoint application, available to all authors, although an author will only choose a sub-set of those available options in any given presentation. However, the author chooses and inserts his own (or third party) content into the Powerpoint to create the presentation.
- The ‘Beating the Blues’ or BTB application was the first application built using the IDEA System. It is a mental health self-help tool which provides end-users with a clinical programme aimed at treating depression by means of a series of eight self-guided sessions. It was initially developed by the Second Claimant, through a single employee called Ms Svetlana Berg who was not a programmer, and not part of the IDEA System development team. There is some dispute about the authorship of some of the audio and videos clips forming part the content of the BTB application delivered to end users, but it is common ground they were not created by Ms Berg, and the Claimants do not make any claim to ownership of the IP rights in such content.
- Continuing the Powerpoint analogy, the end-user of the BTB application will choose one of the eight sessions, and progress through the slides or ‘frames’ of that session, by interacting with on-screen components, such as by choosing one of several multiple-choice answers, or clicking on buttons to view embedded videos, images and text. The way in which the slides or ‘frames’ are sequenced within a session is referred to as a ‘tree’, since there may be a number of different branching paths through the frames which are taken, depending on the user’s interactive choices. The BTB application therefore includes a number of sessions each of which comprises a series of ‘frames’ (equivalent to Powerpoint slides) and a number of ‘trees’ (which represent lists of frames/slides in a defined order). It also includes run-time software based on the IDEA System, to enable it to be run on a stand-alone basis.
- The first three versions of BTB were produced on CD ROM, and the Second Claimant was involved in the development of all three using the IDEA System:
- BTB v4 was developed as a web-based application, in order to move away from the need to distribute the application to end users by CD-Rom. The Defendants plead that it was commissioned by Ultrasis from an external company based in India, Agilisys, in 2004/2005. The Defendants asserted in their Defence that BTB v4 had been completely rewritten by Agilisys from scratch: as previously noted, they now accept that it was not.
- BTB v5 is also a web-based application and was commissioned by Ultrasis’ own internal IT team in around 2007. According to the Defence, this was led by an employee software developer called Yuval Simonov. It is now common ground that it, too, being based on BTB v4, was based on the IDEA System and includes within it the various components needed to run an IDEA application, including the IDEA Player. It is also now accepted by the Defendants that BTB v5 uses the same proprietary XML format as the earlier versions, and the XML files are all, in substance, identical to the corresponding files from the previous versions of BTB.
- The Second Claimant has gone through a number of name changes, beginning life as Ultrasis International (1993) Limited (an Israeli company), later changed to Ultrasis International Limited (“UIL“) and later still to Mindlife Solutions Limited, by which it is still known.
- The Second Claimant carried out research and development of technology and software for commercialisation by a connected UK company. This UK company has also undergone name changes: from 1992 to 2000 it was called Ultramind Ltd and then became Ultrasis UK Limited (“Ultrasis UK“). Both the Second Claimant and Ultrasis UK were owned by a holding company, Ultramind plc. Mr Tuvi Orbach was the founder of the Second Claimant, Ultrasis UK and Ultramind plc.
- In 1999 Ultramind plc was acquired by Villiers Group plc, an engineering firm listed on the London Stock Exchange, which changed its name to Ultrasis plc following completion of the acquisition (“Ultrasis“). Mr Orbach and his business partners took a 40% shareholding in Ultrasis, with Mr Orbach as the single largest shareholder. At one point the market value of Ultrasis was over £100 million.
- On 29 November 2002, a series of agreements was entered into which brought the Second Claimant outside the Ultrasis group of companies:
- I will consider the 2002 Assignment and 2002 Licence in more detail later.
- The First Claimant is the current owner of the intellectual property rights in the IDEA System, including the IDEA IPR, following an assignment of those rights from the Second Claimant dated 4 January 2005. This assignment provided for a licence-back to the Second Claimant allowing it to continue to use and sub-license the IDEA System.
- Mr John Smith joined Ultrasis as Director of Sales in May 2005. He joined the Board of Ultrasis in 2007, became CEO of Ultrasis in June 2013 and became Interim Executive Chair of Ultrasis in October 2013.
- The First Defendant was incorporated in May 2015. Documents filed at Companies House show that Mr Smith was transferred 20% of the share capital and appointed a director on 15 June 2015 (while he was still CEO and Chairman of Ultrasis). His co-director Mr Stephen Williams was an 80% majority shareholder. At this point it was apparent that Ultrasis was in financial difficulties. It appointed KPMG to advise. The Claimants had given KPMG notice of breach and termination of the 2002 Licence in June and July 2015, copied to the Second Defendant.
- Ultrasis went into administration on 9 October 2015 and KPMG became the administrators. The Claimants sought to buy the rights to BTB out of administration, but it was unsuccessful. KPMG preferred the First Defendant’s bid, and in October 2015 the First Defendant acquired the “e-health” business of Ultrasis from the administrators. The documentation included an assignment of certain intellectual property rights relating to that business (purportedly including the BTB application) dated 21 October 2015.
- The Defendants now accept that assignment was not effective to assign any licence of the IDEA IPR previously enjoyed by Ultrasis, as this terminated on the insolvency of Ultrasis, but aver that it was effective to transfer ownership of such rights that Ultrasis had in, inter alia, BTB v5 to the First Defendant. The Defendants accepts they have marketed, distributed and exploited BTB v5 after the date of that assignment.
- Finally, the Defendants admit in the Defence that since 25 June 2018 a holding company called 365 Health Group Limited is the parent of the First Defendant (although I note that the form PSC07 filed at Companies House declares that Mr Williams ceased to have significant control of the First Defendant on 25 May 2018). Companies House records show that the Second Defendant is a director of, and owns 20% of the shares in, 365 Health Group Limited.
- The Claimants rely on evidence from three witnesses of fact:
- The Defendants have not served any fact evidence. As is usual in IPEC, and as was directed by HHJ Hacon at the CMC, the pleadings stand as evidence. The Amended Defence was signed by the Second Defendant Mr John Smith. He attended court and was cross-examined and re-examined.
- After he was sworn in, Mr Smith sought to correct a number of statements made in the Defence, which he had signed with a statement of truth, and which he now accepts are untrue. In fact, as he had to agree with Mr Riordan in cross-examination later, he left a number of matters uncorrected which should also have been corrected. Mr Smith sought to raise a number of matters in oral evidence which he had not mentioned in the Defence and he was unable to explain to my satisfaction why he had neither amended the Defence nor filed witness evidence in the usual way. The Defendants submit that he was an honest witness whose evidence held although his credibility was attacked. However, the Claimants have had no opportunity to investigate or properly challenge evidence which was given for the first time at trial. For that reason, I look for some corroboration from the documentary evidence, other witness evidence or the inherent probabilities before accepting Mr Smith’s evidence, and where it conflicts with the Claimants’ witnesses, I prefer their evidence.
- The only expert evidence before me is that of the Claimants’ expert, Dr Nigel John Bowes Young, who is a computer consultant. He holds an MA and PhD in Mathematics from Cambridge and has 40 years’ experience as a software engineer, systems project manager and software architect and developer in industry before becoming an independent consultant in 1997. He is a Fellow of the Academy of Experts of which he was Chairman in 2008 and 2009. He is a Member of the British Computer Society and has been a Chartered Information Technology Practitioner since 2004.
- Although both parties were permitted to, and did, obtain expert evidence from an expert in the field of computing, and although the court had pre-read the report of the Defendants’ expert Mr Jason Coyne and was expecting to hear from him at trial, on day 2 the Defendants stated that they considered that the Claimants’ expert Dr Young had clarified his written evidence sufficiently in oral testimony that they did not need to rely on Mr Coyne, and so would not be calling him. Instead they too rely on Dr Young.
- For the purposes of the issues which are left to me to determine, Dr Young was instructed to opine on whether there has been any copying of the Claimants’ source code or XML files and XML Schema or any part of them in the files contained in the Defendants’ BTB v5.0 repository. He filed a first report, and then a second short report replying to Mr Coyne’s report.
- I have no doubt that Dr Young has the experience and expertise to assist the court as CPR Part 35 expert, and that he came to Court to assist it to the best of his ability. He was a thoughtful, precise and professional witness who was very careful not to stray from the bounds of his expert role. The Defendants accepted in closing that he gave oral testimony fairly. The Defendants submit that care should be taken on reading too literally what he said in his report, but Mr Tritton had the opportunity to cross-examine him on the matters which concerned the Defendants and I have heard his answers. Beyond that, the report is unchallenged. The Court is grateful for Dr Young’s assistance.
- XML stands for Extensible Markup Language. Mr Riordan for the Claimants relies on what he describes as a ‘good working definition’ of XML provided by Mr David Stone, sitting as a Deputy Judge of the High Court, in Technomed Ltd v Bluecrest Health Screening [2018] FSR 8, 2017 EWHC 2142 (Ch) at [103]:
- I do not understand the Defendants to object to this definition. Dr Young describes an XML database as a text file which holds data in a hierarchical database. He describes the main parts of an XML file as including: (i) elements, which can have sub-elements or ‘child elements’ nested within them, in a hierarchy; (ii) attributes, which are names set to value within an element; and (iii) values, which are the application data stored or referenced within the XML file. This may be text or numerical values or may, for example, be a link or a pointer to an image, video or audio file to be played. Dr Young gives examples of an XML hierarchal database file at pages 11 and 12 of his first report.
- Dr Young draws an important distinction, as Mr Riordan notes in his submissions, between the structural elements of an XML file, which are the elements and the attributes, and the data elements which are the values. For BTB, then, the values are (or link/point to) the author-provided content of the application.
- At paragraph 36 of his first report Dr Young states that, in his opinion, each XML file can be considered a database because it contains data (i.e. the values) that are arranged in a systematic and methodical way, by means of the hierarchical elements. Each value in an XML file is individually accessible by electronic means by parsing the XML file so as to extract the values from each of their associated elements. Dr Young states that the key characteristics of systematic hierarchical design and the ability to extract data are independent of the method of storage, so that XML formatted text can be stored (for example) in individual computer files as XML files or in records in a database as XML text records. He makes clear at para 92 of his first report that within his report he refers to a distinct block of XML data as a ‘file’ whether it is, in fact, held in a text file or a database record: either can be retrieved and read by a computer program.
- Dr Young identifies different types of XML files in the IDEA System: XML frame files, XML tree files and XML logic files. However, it can be seen from paras 57 and 115 of his first report, and it became further apparent to me during his cross-examination, that what he calls XML logic files: (i) are in fact a sub-set of XML frame files; and (ii) utilise a unique and special set of elements which have a special meaning and provide special instructions to the IDEA Player. As such they can be seen almost as shortcut elements, where the IDEA Player recognises the special characters as having the specific meaning which would otherwise require additional coding to communicate, and acts on them accordingly.
- XML frame files set out how a screen appears to a user (e.g. where text is shown in what size and font; or how content such as a video is presented). XML tree files determine the order and flow of the XML frame files, which may be dependent on the interaction that the user has with the content presented to it: for example whether the user replies “yes” or “no” to a question will cause it to choose which frame to present next.
- Dr Young explains XML schemas from paragraph 38 to 41 of his first report, as follows:
- Accordingly, an XML schema, which provides the structure and verification rules for XML files, may be explicit and set out in an XSD file, or implicit and will have to be identified by use of a schema generator.
- Dr Young was instructed to compare BTB v2 (which all accept was created using the IDEA System) with BTB v5 (which the Defendant averred in the Defence was based on v4 which had been completely re-written by Agilisys so that nothing of the IDEA System remained within it), in order to determine whether the latter copied the former. It is common ground that neither of these versions of BTB utilised explicit XML Schema Definition or XSD files, and so Dr Young generated XML schemas using Microsoft Visual Studio 2017, so that he could then compare that generated for BTB v2 and that generated for BTB v5 in a text editor (para 85, para 97 first report). He presents the results of that comparison at Annex 4 to his first report.
- As is now accepted by the Defendants, Dr Young found that the generated schemas were substantially the same with only minor changes in the form of a small number of additional elements and attributes (para 99 first report). He states at paragraph 100 that although he did not include his analysis of the XML schemas for all the files in his report, his conclusion is the same for all of them: “In each case, the schema structure of the Defendants’ files is substantially the same as that of the Claimants’ files. In my opinion, the only plausible explanation for this is that the Defendants have copied the structure of the XML files from the Claimants”. I note that although there are in fact multiple schemas, the parties and Dr Young refer to “the XML Schema” in the singular, as it is common ground that it is not necessary to distinguish between them. I will do likewise.
- At paragraph 44 of his first report Dr Young explains that:
- Once again, here he is drawing a distinction between the contents (or data, or ‘values’) of an XML file and the XML Schema which provides the structural parameters for the data in the XML file.
- I remind myself that all of the evidence about the way in which the IDEA System was developed and the circumstances around the 2002 Transaction comes from the Claimants’ witnesses. Mr Smith accepted that he has no technical IT skills or knowledge, being a nurse by training before moving to Ultrasis in 2005, originally in a sales and marketing role. Accordingly there is no evidence from the Defendants to gainsay the Claimants’ evidence on these points.
- Mr Orbach’s evidence is that the Second Claimant’s software development team was led by Mr Zeev Danieli, and the head of development of the IDEA and BTB projects was Mr Uliel, who led a team of five to seven software engineers over a period spanning 1996 to 2005. It was intended that Mr Danieli give evidence for the Claimants in this trial but, sadly, he died suddenly at the end of May 2020.
- The Claimants’ fact evidence is, in summary, that the XML Schema:
- I accept these points and find accordingly, as they are supported by the both the fact and expert evidence which I accept, and set out below:
- In relation to point (i), Mr Orbach said that the Second Claimant spent a total of at least £2m between late 1996 to 2005 developing both the IDEA System and then certain applications on the IDEA System, of which BTB was the first. The financial accounts of the Second Claimant disclosed in these proceedings broadly support this level of R&D spend. He estimates that of this, only about £100,000 was attributable to building applications based on IDEA System, including BTB.
- Mr Orbach was the main funder of the Second Claimant at this time. At paragraph 22(4) of his witness statement he says, “A very significant part of the IDEA Software was the time developing the XML Schema. I remember that a huge amount of time was spent working out how data would be represented and validated, what components and properties would be supported, and how this would be displayed in the user interface. Our strategy and purpose in designing the XML Schema, is to define all type[s] of elements and attribute[s] which can [define] any complex interactive self-help applications.” (my emphasis).
- Mr Uliel’s written evidence is that he decided to save application files in XML format “as it provides a structured hierarchical model that can represent the application construct. Those XML files must follow a specific schema to describe the applications flow and content. This was a schema… that we developed with painstaking effort over a number of years to create a structured format that could represent all of the objects and data types that users might wish to include in applications.“ (my emphasis). He confirmed in cross-examination that at that point he was referring to users who were using the editor to author applications, not end-users of the application itself.
- In relation to point (ii), Mr Uliel says that the IDEA Engine “uses unique logic that we developed to decipher (or parse) the XML files and send instructions to the IDEA Player” that presents it to the user accordingly. Mr Orbach described the XML used in the IDEA System as more sophisticated than ‘normal’ XML: “XML the purpose of them is normally to define data. So if the XML define the application of car, there’s the name of the car, the colour of the car, the engine. But our IDEA XML was much more sophisticated than this because we create a new type of element that is almost like a program, but is in fact code“.
- This is what Dr Young referred to as XML logic files. A good description of what Mr Zeev Danieli describes as “unique XML format[s]” is found at pages 10 to 11 of a memorandum that he wrote for the purposes of this litigation shortly before he died, which is contained in the trial bundle. In it, he says “The structure and “terms” (elements and properties names) of the XML frames created and design[ed] for IDEA are unique and created an XML unique schema (although I think that when we started to [develop] these schema, modern Schema languages [were] not [being] used and we invented our own unique schema). And, BTB is just one implementation that was created using IDEA.”
- Mr Orbach, like Mr Uliel and Mr Danieli, also described this logic as unique, as did Mr Simonov in his proof of evidence, who described it as a unique version of XML which used unique elements and symbols that could be made sense of only with the IDEA Engine. As I have noted, the IDEA Engine instructs the IDEA Player, and so this fits with what Mr Orbach described in his written evidence:
- Finally, I have seen in evidence a report from one of the original authors of XML, Mr Liam Quinn, dated 22 June 2016 in which he acknowledges that the XML Schema developed by the Claimants uses proprietary elements and attributes developed by them, which he describes as specific to the IDEA System.
- In relation to point (iii), Mr Uliel said that “the schema does not dictate that within a certain screen you will have to have all types of objects. It provides a set of rules which dictates validity of certain objects. And whatever you use, the schema covers everything
the schema is applied on top of it.” (my emphasis). He agreed with Mr Danieli’s statement in his memorandum, and Dr Young’s observation at para 39 of his first report, that the schema is largely a set of validation rules which does not refer to the data (by which I understood him and the others to mean author-provided content specific to each application created using the IDEA System) but refers to the structure of the XML files.
- This comes back to the distinction, which I highlighted above, between the structural elements of an XML file and the data elements. As Dr Young states at para 14 of his second report, “the XML Schemas define the permissible types of data and what are valid values for each element and, therefore, the options for presentation and interaction; but the XML Schemas do not define the specific values (such as positioning or formatting choices) in a particular application”. The positioning or formatting choices are those made by the author of the application using the IDEA Editor in authoring mode, as I have previously explained.
- Mr Tritton submits that Mr Uliel, the architect of the IDEA System, has defined the three main elements of the IDEA System as the IDEA Editor, IDEA Engine and IDEA Player, and none of these descriptions can apply to the XML Schema: I agree that he has done so, but I am satisfied from all the evidence before me that this is a significant simplification of the structure of what is a complex and sophisticated system, as described in the IDEA System documentation. Mr Orbach made the point, which I accept, that there were many components to the IDEA System, and that there were no clear divisions between them – some parts of the IDEA Editor (or authoring system) are used in other parts of the IDEA System, and what is needed for authoring includes both object code and source code. Dr Young prefers to look at the IDEA Player as being part of the IDEA Engine, for example.
- Mr Tritton also asks me to take care not to equate the IDEA Player with the XML Schema. I agree it would be incorrect to do so. The XML Schema is not ‘part of’ the IDEA Player. It is the rules against which XML files are created and validated so that they can be parsed by the IDEA Engine and run by the IDEA Player.
- I have set out below Dr Young’s reasons for opining that the XML Schema is part of the IDEA System and those reasons, too, show that Mr Uliel’s description relied on by Mr Tritton is a significant simplification to aid understanding, rather than a technical treatise, in my judgment.
- In relation to point (iv), Mr Orbach’s evidence is that part of the driver for the development of the IDEA System in the way it was developed was the desire to be able to use it to quickly and cheaply to develop mental health-related applications, all using the same XML Schema:
- Mr Simonov supports this in his proof of evidence: “For us, as programmers, the distinction between the IDEA software and BTB
was clear. IDEA is an application generator, and software tool to run the application. The main purpose of IDEA was to create different mental health and behaviour multimedia e-learning applications such as the BTB app. It could have been used to create many different applications but we, as a company, concentrated on CBT [cognitive behavioural therapy]
the difference between IDEA and BTB was obvious, not only because the files were different but also because the whole purpose of the software and its functionality were very different. IDEA is an application generator, and application player, and BTB was the application that was written and run by IDEA. We considered IDEA as an engine or a platform and BTB as a content application”.
- The IDEA System documentation exhibited by Mr Uliel also makes this clear, in my view. Mr Riordan in his skeleton has pulled out some examples of documents which show that the Logic XML Schema is held within the IDEA Engine, but the XML Schema is also utilised by the IDEA Editor and communicated to its various players (e.g. the IDEA Player and the runtime player) and are applicable and operative across different platforms. Mr Uliel was clear and consistent in his oral evidence that the XML Schema imposes rules and defines the structure of XML files for all applications created on the IDEA System so that the IDEA System can validate those files and so the IDEA Player can run any such application, not just BTB. Mr Orbach says the same, as does Dr Young, and I turn to his evidence now.
- As Mr Riordan notes in his skeleton argument, and which I accept, when the Claimants prepared their evidence for trial they did not anticipate a major dispute about whether or not the XML Schema formed part of the IDEA System and so this was not a particular focus of Dr Young’s first report which was more focussed on whether BTB v5 copied the XML Schema. However, his second report particularly addresses: “The significance of the XML data files (and in particular their schema) and their relationship to the IDEA Player software”. I consider that Dr Young’s evidence is supportive of the factual evidence provided by the Claimants’ witnesses above, and I have taken it into account when making the findings that I have.
- In paragraphs 30 and 31 of his second report Dr Young makes clear (my emphasis):
- Dr Young agreed in his second report and in oral evidence that the XML data files are indeed data files and not source code files but states at paragraph 37 of his second report (my emphasis):
- In paragraph 42 he reiterates that “the structure is consistent with the IDEA Player’s function being to act as a generic player for all [mental health] applications with XML consistent with the IDEA XML Schemas”, and notes that BTB v5 has the same capability “which reflects the fact that it is based on the IDEA application framework”.
- Mr Tritton explored these opinions in cross-examination.
- Mr Tritton submits that Dr Young in cross-examination on paragraphs 32 to 43 of his first report said that elements and attributes in an XML file are application-specific. He described this as “significant” because Mr Riordan at paragraph 118 of his skeleton argument distinguishes between the XML Schema and “the application-specific XML data files”, whereas, he submits, the elements and attributes plainly form part of the application (e.g. BTB) and not the IDEA System. In my judgment, this mischaracterises Dr Young’s evidence. He agreed that those elements and attributes relate to the application but not that they were specific to it, in the sense of being unique to it. He clarified that a number of times, I believe, including at page 95 of the day 1 transcript at lines 26-29, as Mr Tritton acknowledged at line 30. I am satisfied that, as Mr Uliel explained, those elements have been selected during the creation of the relevant application from generic elements and attributes made available to all authors creating any application using the IDEA Editor.
- The Defendants also rely on graphical representations at Figures 1 and 2 in Dr Young’s 2nd report, which Dr Young said set out “the Claimant’s IDEA software architecture
including both its Java source code and other elements such as configuration files, databases and XML schemes”. Mr Tritton submits for the Defendants that Figure 1 in particular, which Dr Young uses in his second report to show that the XML Schema forms part of the IDEA System do not in fact support his opinion, following answers given by Dr Young in cross-examination (at lines 31-33 of page 101 of the day 1 transcript). It is relevant to note that Figure 1 was used in the report of Mr Coyne, and Dr Young included it in his second report so that he could challenge what Mr Coyne had said it showed, as his commentary makes clear.
- Mr Tritton took Dr Young to Figure 1 in cross-examination and referred to the bottom layer labelled ‘data’ which shows three silos marked “applications content”, “media resources” and “user data”. Mr Tritton asked him: “And that being the case, as the XML Schema is about data types, it falls within data there, does it not?” to which Dr Young replied “Yes”. Mr Tritton submits that this response is contrary to Dr Young’s stated opinion that the XML Schema is part of the IDEA System. However this submission, in my judgment, fails to take account of the clarification that Dr Young provided immediately afterwards, when he said that Figure 1 was only intended to show platform independence. There followed this exchange:
- I am satisfied that Dr Young remained consistent in oral evidence that, in his opinion, the XML Schema was part of the IDEA System.
- Mr Tritton submits for the Defendants that the XML Schema is “merely a set of rules what types of data are valid for an element or attribute” and “merely lines of code in the XML files” within the BTB application or “lines of text within the XML files that define the types of data that can be used and the rules that the XML files must comply with”. What’s more, he submits, they are only a small proportion of the text within an XML file and as such can be compared to an appendix of defined terms at the back of a book (where BTB is the book).
- I do not agree that they are ‘merely lines of code’ in the XML files and consider that this amounts to a misunderstanding of the Claimants’ factual and expert evidence, which I have summarised above. Taking Mr Tritton’s analogy of the BTB application as a book, I consider a better (but still imperfect) analogy is that the XML Schema is a scheme for categorising and organising books in a library, no matter how vast like the Dewey decimal system, perhaps. Such a scheme exists to categorise all the books in a library, irrespective of author, so that librarians can shelve them and library users can find them, and is not limited to the system reference placed on the spine of any individual book in that library. Similarly, the XML Schema exists to provide a structure or format to validate and verify the contents of the XML files of any number of applications created on the IDEA System, not just BTB.
- As I have noted, it is common ground that there are no separate XML Schema ‘files’, and it is true that, as the Defendants submit, the XML Schema is implicit in and integral to, the XML files. However, as I have accepted, that is because those files were created by the IDEA Editor to conform with the pre-existing XML Schema at the heart of the IDEA System. That is why, as the Defendants accept, if I find that ownership of the XML Schema sits with the Claimants, the XML files infringe the XML Schema.
- Accordingly, the Defendants’ submission that the XML Schema can only be implicitly defined and not explicitly defined does not, I think, assist them. Mr Riordan in closing submissions suggested that the confusion in the Defendants’ case “is really between the schema as a file format, which is defined in the IDEA software and the XML data files which embody the file format. So it is [as though]
the Defendants are saying “We owned the Powerpoint presentations” and I am saying “Well, that does not mean you own the Powerpoint file format”, and there is no positive case advanced here that they did own the file format”. I think that is a fair analogy.
- Drawing all of this together, then, I am satisfied that when an application is created using the IDEA System, as Mr Uliel says, the IDEA Editor generates XML files which: (i) conform to the XML Schema; (ii) validate the data loaded onto the system (being the application-specific author-provided content); (iii) are parsed by the IDEA Engine; and (iv) are utilised by the IDEA Player or the runtime player to run the application. These XML files are plain text files and not computer programs. The XML Schema which was used to create, validate and run the BTB application and which is implicit in the BTB XML files is substantially the same XML Schema which is utilised to create, validate and run any interactive multimedia self-help application created on the IDEA System.
- True it is that the creators of BTB have selected specific combinations of generic objects and components from those offered to all author-users of the IDEA System, which may or (more likely) may not be the same as those selected by the authors of other applications created on the IDEA System, nonetheless I am satisfied that what is unique to BTB is only the author-provided content. References to both the generic objects and components and the author-provided content can be found in the BTB XML files: but the mere fact that the XML Schema is implicit in those XML files and can be generated from them does not mean that the XML Schema is nothing more than a few lines of code in the XML files.
- The IDEA 1.2 documentation dated 4 August 2002, i.e. before the 2002 Transaction, describes the XML Schema (a “set of elements that enables loading and using application trees and interfaces for the players and databases”) as being ‘held within’ the IDEA Engine, but on the evidence before me I am satisfied that it is used across the IDEA System and is an important part of the IDEA System. It does seem to me that the Claimants’ description of the XML Schema as being ‘at the heart’ of the IDEA System is as good as any. I find that it is properly to be characterised as part of the IDEA System.
- There does not seem to be any dispute that the first owner of copyright (and database right, if any subsists) in the XML Schema was the Second Claimant, then known as UIL. The question is what effect, if any, the 2002 Transaction had on ownership of the XML Schema. The Claimants say that the XML Schema forms part of the intellectual property rights which it retained pursuant to the provisions of the 2002 Assignment and licensed to Ultrasis under the 2002 Licence. The Defendants say the XML Schema does not fall within the definition of “Retained IPR” in the 2002 Assignment, and so was assigned to Ultrasis pursuant to the 2002 Assignment. If the Defendants are right, there is then a question of whether the assignment of IP rights to the First Defendant by Ultrasis’s administrators in 2015 was effective to assign the rights in the XML Schema.
- It is common ground that where there is any ambiguity in a contract, per Wood v Capita Insurance Limited [2017] AC 1173, [2017] UKSC 24 the court’s task is to construe it to arrive at the objective meaning of the language which the parties have chosen to express their agreement. The court must consider the contract as a whole, in its proper commercial context and in light of the commercial intention of the parties.
- It is the Claimants’ case, which Mr Tritton also accepted for the Defendants in closing, that the 2002 Assignment and 2002 Licence must be read and construed together, as they form part of a single set agreements entered into to give effect to the 2002 Transaction.
- A summary of the relevant provisions of the 2002 Assignment and 2002 Licence follows.
- Clause 1 sets out a number of definitions including the following:
- Part 1 of Schedule 2, which defines the “IDEA Software”, reads as follows:
Her Honour Judge Melissa Clarke:
A. INTRODUCTION
i) the IDEA Editor, or authoring software, which allows the author-user creating an application to define the ‘frames’ and ‘trees’ of the application and creates XML files which conform with the XML data formats developed as part of the development of the IDEA System and referred to in the pleadings and the evidence collectively as the “XML Schema”;
ii) the IDEA Engine, which deciphers XML files which have been encoded according to the XML Schema, renders the results for the user, and handles the data flow between different parts of the system; and
iii) the IDEA Player, which processes the XML files and ‘plays’ them according to the sequence of IDEA commands encoded within them.
B. MATTERS CONCEDED AND WHAT REMAINS IN DISPUTE
i) Copyright subsists in the IDEA System, each of its components and its source code;
ii) Copyright also subsists in the XML Schema as a literary work;
iii) The First Claimant is and has been since 2005 the owner of all copyright subsisting in the IDEA System and each of its components, (but not the XML Schema which the Defendants deny is part of the IDEA System or owned by the First Claimant):
iv) BTB v4, and BTB v5 as marketed by the Defendants, reproduces the IDEA System source code materials and XML Schema;
v) A licence granted by the Claimants to Ultrasis plc in 2002 terminated upon the insolvency of Ultrasis plc in June 2015, and was ineffective to convey any rights to the Defendants to use the IDEA System source code;
vi) It follows that all of the First Defendant’s dealings in BTB v5 infringe the copyright of the Claimants in the IDEA System source code;
vii) The Second Defendant is jointly liable with the First Defendant for the admitted copyright infringement (and any further copyright or database infringement which the court may find).
i) What is the XML Schema? Is it properly to be characterised as part of the IDEA System or part of the BTB application developed using the IDEA System?
ii) Who owns the rights in the XML Schema? If the answer is the Claimants, the Defendants admit that BTB v5 infringes the copyright and any database rights that the court finds to exist in the XML Schema;
iii) It being accepted by the Defendants that copyright subsists in the XML Schema, whether database rights also subsist in it;
iv) What factual findings the Court is able to make which may be relevant to the consideration of additional damages under section 97(2) of the Copyright, Designs and Patents Act 1988 (“CDPA“) and/or Article 13(1) of Directive 2004/48/EC (“Enforcement Directive“).
C. THE IDEA SYSTEM AND BTB
i) BTB v1 was developed between late 1996 to 2003;
ii) BTB v2 (for computers running Windows ’95 and ’98 OS) was developed during a time period that is not entirely clear, but is probably predominantly between 1999 and 2002 and;
iii) BTB v3 was a desktop version of BTB to be run on Windows 2000/XP which was developed by the Second Claimant for Ultrasis plc pursuant to a 2004 agreement (“the 2004 Agreement“). This contained similar provisions to those contained in the 2002 Assignment in relation to what was assigned to Ultrasis plc and what was retained by the Second Claimant but licensed to Ultrasis.
D. THE PARTIES
The Second Claimant (Mindlife Solutions Limited)
i) Mindlife Limited, a company owned by Mr Orbach, purchased the shares of the Second Claimant, being the Israeli R&D company, pursuant to a share purchase agreement (the “SPA“);
ii) Various mental health applications including BTB (at this time BTB v1 and v2 existed) were assigned by the Second Claimant (then called UIL) to Ultrasis (the “2002 Assignment“), but this expressly did not include the IDEA software required to run it, which remained the property of the Second Claimant (“IDEA IPR“);
iii) The Second Claimant/UIL granted Ultrasis a licence to use the IDEA IPR as it was not possible to run BTB without it (the “2002 Licence“). Under the 2002 Licence, Ultrasis would have no right to use the source code of the IDEA software unless the Second Claimant became insolvent.
The First Claimant (Software Solutions Limited)
The First Defendant (356 Health and Wellbeing Limited) and the Second Defendant (Mr John Smith)
E. WITNESSES
Witnesses of fact
i) Mr Tuvi Orbach, the founder of the Claimants and a director of the Third Claimant. He gives evidence about the history of Claimants and the Ultrasis group, the development of the IDEA System, the development of BTB, and the factual matrix relevant to the transactions entered into in 2002. He attended court and was cross-examined and re-examined. The Defendants submit he was intensely argumentative and that he provided “pre-rehearsed answers to many things”. I accept he was prolix, providing long explanations seeking to explain the history or thinking behind certain decisions or to explain the complexity of the software in answer to focussed questions and sometimes seeking to advocate his case in a way which caused me to intervene on several occasions. However I do not accept that those answers were pre-rehearsed or not honestly given. The subject matter of this claim is rights in an application development framework which I accept Mr Orbach has spent years and many millions of pounds of his own money developing; the Defendants have late in this lengthy litigation conceded that they have infringed the Claimants’ rights, so he has some reason to feel aggrieved. He is very intimately acquainted with the matters about which he gave evidence. I think he came to court to have his say, and he did so passionately but honestly, intending to assist the Court. I found him to be consistent and unshakeable in his evidence, which was supported in large part by the other factual witnesses for the Claimant, the documentary evidence and the Claimants’ expert. I found him to be both credible and reliable.
ii) Mr Yochai Uliel. Mr Uliel can be considered as the ‘architect’ of the IDEA System. He worked for the Second Claimant from 2001 to 2005 as a lead programmer and Engineering Team Leader and developed, with colleagues, the early versions of the IDEA System and BTB. One developer who reported to him was Mr Yuval Simonov. Mr Uliel attended court and was cross-examined. Mr Uliel gave evidence about the development and components of the IDEA System. He wrote extensive documentation for the IDEA System which is in the trial bundle, and which predates the 2002 Transaction. These documents cover the IDEA System and its various sub-components including the XML Schema. As Mr Riordan pointed out in closing submissions, Mr Uliel was not taken to or challenged on this documentation in cross-examination. The Defendants accept that he is a straightforward and honest witness who gave measured answers. I am satisfied that he is both credible and reliable.
iii) Mr Yuval Simonov. Mr Simonov is a software developer previously employed by the Second Claimant (and later by Ultrasis) who confirms that BTB v5.0 was based on the IDEA System. Mr Simonov did not sign a witness statement but was interviewed by the Claimants who have filed a proof of evidence. He did not attend court and a Civil Evidence Act notice has been filed explaining that he did not want to be involved in the proceedings. Both sides rely on his evidence; Mr Smith described him as an honest person; Mr Orbach and Mr Uliel described him as honest, decent and truthful, and so I do take his proof of evidence into account, although I give it less weight than if Mr Simonov had attended court to be questioned.
Expert evidence
F. ISSUE 1 WHAT IS THE XML SCHEMA AND IS IT A PART OF THE IDEA SYSTEM OR BTB?
What is the XML Schema?
“XML is a standard computer language for defining/representing structured data in a way which is partly self-describing using natural language terminology. It is not a data format, but a standardised abstraction which allows flexibility in the kinds of data structure which can be represented, and in the choice of terminology and layout. Because of its flexibility, it is likely that independently designed XML schemata will differ markedly, even when describing essentially the same data”.
“38. XML files are flexible as to the manner in which their data is structured and presented. In practice it is useful to be able to define what types of data and combinations of data are valid in a particular file. This can be done explicitly or implicitly.
39. One explicit method is to use an XSD (XML Schema Definition) file. Such a file is itself an XML file. Its contents are not the data of the original XML file but the structure and validation rules or ‘schema’ permitted to be used in that database.
40. If an XSD file is available for a project then it can be used to validate XML files for that project, test files from other sources, or be compared with an XSD file from another source.
41. A collection of XML files may in practice adopt the same schema even if it is not made explicit by means of an XSD file. If an XSD file is not available it may be possible to generate such a file, which will allow the implicit schema to be determined. Certain programs can act as schema generators. They are able to examine an XML file, and apply rules of induction to extract validation rules in the form of a schema file”.
“44. An XSD file (whether explicitly defined or automatically generated from one or more XML files) contains a definition of:
(i) What elements and attributes are valid in the data schema (and therefore in the XML);
(ii) What number and sequence of child elements are valid; and
(iii) What types of data are valid in each element.
It therefore provides a means for defining the schema or structural design of an XML file. It is important to note that the schema does not contain the contents of any XML file; rather it provides a format for validating and verifying what may be the contents, and for defining the arrangement and presentation of contents”.
Is the XML Schema part of the IDEA System or BTB?
i) was painstakingly developed with great effort, time and expense;
ii) is special and unique;
iii) is part of, and lies at the heart of the IDEA System, being utilised in a number of components including the IDEA Editor, IDEA Engine, IDEA Player, and Runtime player; and
iv) is utilised in the creation and running of any application created using the IDEA System, not just BTB.
Developed with great effort, time and expense
Special and unique
“The team used, also, specific characters and code for specific functions such as “@fieldname(serial)” which was a database retrieve command to return the field value from a data base. Or “$fieldname(serial,temp,trim,data)” which is a database store command, to store the field, and if necessary to trim (truncate) the field, and indicate what data that should be stored in the field. Only the IDEA Player Java code could read, understand and execute such parameters with these special characters and structure. An XML file which was encoded with these special characters and structure cannot be executed to perform its function by any XML reader but only by the IDEA Player.” (my emphasis).
Part of, and at the heart of the IDEA System
Utilised in the creation and running of any application created using the IDEA System
“ I believe it was very clear what was part of the IDEA and what belonged to the BTB project. All the software which was developed and used to generate and run the interactive sessions with the users was part of the IDEA software. The content, which the user could see and hear to improve his mental health (videos, audio files, psychological explanations, etc) were part of the application (BTB or [another series of applications called] the Relief Series). When the development team designed the IDEA even the general graphic components, such as buttons, multi-select radio buttons, which were useful for many applications, were defined as a component of the IDEA to allow us to reuse them. Only the content itself, which was different for each application, belonged to the application (e.g. BTB) rather than to the IDEA.
For example, all the logic components which can be used in many applications during the runtime of the application were part of the Player, i.e. part of the IDEA side of the equation
Svetlana Berg used the authoring tool of the IDEA to create the XML files for the BTB application. These were generated according to the IDEA XML Schema. The elements of these IDEA XML were defined by the development team to describe any interactive multi-media mental health applications. However, the parameters of attributes within the XML defined the specific content of the application (e.g. which video to play when, which text to present where on the screen, what will be the next frame to show to the user, etc). There were many hundreds of such XML files, and it was only possible with the help of the IDEA Authoring System [otherwise known as the IDEA Editor] to create and maintain so many XML files; and only the IDEA Engine and the IDEA Player were able to “understand” these XML files and to execute them.” (my emphasis).
The expert evidence about the XML Schema
“[30] For the avoidance of doubt, when I refer to the terms “IDEA System” or “IDEA Software” (both in this report and in my First Report), I am intended to refer to the Claimant’s IDEA software architecture as set out in Figures 1 and 2 above, including both its Java source code and other elements such as configuration files, databases and XML schemas.
[31] In particular, the system enables the same IDEA Player software to play various [mental health] applications provided that the application XML data files conform to the correct schemas. In this sense Mr Coyne is correct when he says that I refer to the IDEA System as encompassing both the IDEA Player and the XML data schemas (rather than the data of a particular application)“.
“Nevertheless, in my opinion the schemas (structures and permitted data types) of the XML data files are part of the IDEA software design because:
i) The schemas defined the allowable XML data for use with the IDEA Player. The IDEA Player is then a player for any self-consistent set of files which conform to the schemas; BTB v5.0 will similarly play any XML data files which conform to its schemas;
ii) The IDEA Player and BTB v5.0 will not play XML files which do not conform to those schemas;
iii) This means that the schemas for the IDEA XML files are understood by the IDEA software. Similarly, the schemas for the BTB XML files (substantially the same as the IDEA schemas) are understood by the BTB software ”
“Q. (Mr Tritton) So would you accept from me that the bottom line, what is called data, is not part of the IDEA system as you know it? Applications, content, media resources, user data, that is not part of the IDEA system.
A. (Dr Young) No, I would not because I don’t think that that diagram is separating out what is and isn’t in the IDEA system. I’m I in my opinion, what that diagram is laying out is how the IDEA system can work on different hardware configurations, different —
Q. OK, well let us rephrase the question. Look at the the [word] data, do you see that?
A. Yes.
Q. None of that relates to what you understand or what you call in your report as the IDEA system. Or are you saying that user data is part of the IDEA system?
A. What I think the what I think that’s referring to is the ability to hold data on different sorts of in different sorts of ways. So, for example, the XML files can be held in the file system, or they can be held in databases.
Q. Yes
A. So, for example, in in the IDEA system which I investigated, XML files were held in an access database, whereas in the BTB system they were held as as files in the file system. And the concept that I believe figure 1 is presenting here is that is that is one of platform independence, so that the
Q. Yes
A. And it’s really nothing to do with saying that the IDEA nothing to do with saying this is or isn’t part of IDEA, it’s saying how the IDEA system can be supported.”
Defendants’ further submissions
G. ISSUE 2 – WHO OWNS THE RIGHTS IN THE XML SCHEMA?
2002 Assignment
i) “Assigned IPR” means all of the Intellectual Property Rights (other than the Retained IPR) owned, used, developed or enjoyed by UIL as at the date of this Agreement, in connection with the activities of the Business (including without limiting the generality of the foregoing words those specified in Schedule 1).
ii) “the Business” means the business of developing and exploiting interactive products and services in the area of healthcare and wellbeing and such other businesses as are carried on by any member of the Ultrasis Group as at the date of this Agreement.
iii) “IDEA Software” means the Software identified in Part 1 of Schedule 2.
iv) “Intellectual Property Rights means copyright database rights and other similar intellectual property rights (whether registered or not) and applications for those rights as may exist anywhere in the world”.
v) “Retained IPR” means the IDEA Software.
“Part 1
IDEA Software
A set of software programs to accelerate and improve the process of development and maintain interactive multimedia applications.
The IDEA contains all the development tools and sub-components which have been used to develop and maintain Ultrasis interactive applications, and contains:
1. IDEA 1.0
2. IDEA 1.1
3. IDEA 1.2
4. IDEA_Net
IDEA 1.0 through 1.2 also called IDEA CORE and include:
- Player
- Tree Editor
- Tree Engine
- Diary
- Components
- Env
- Storage
- External tools and interface with external tools (Browser connection, QuickTime, Flash Control, External Runner, External components)
- Umutil
- Questionnaire generator
The IDEA includes also the design and all the code that has been written for IDEA 2 (this project has been started but has not been completed).”
“The Assigned IPR includes (but is not limited to) the following:
1. All the components of the Beating the Blues Application that have been developed or are owned by UIL ”
“3.1 In consideration of the sum of one hundred thousand pounds (£100,000) UIL shall with effect from Completion assign with full title guarantee, or procure the assignment of, and Ultrasis (relying on the warranties, representations and undertakings in this agreement) shall acquire the Assigned IP free from all liens, claims, equities, charges and encumbrances.
3.2 Where the assignment of any Intellectual Property Rights comprised within the Assigned IPR (“the Relevant IPR”) would preclude UIL from providing its core services to any current and future client, then Ultrasis shall grant back to UIL with effect from Completion a non-exclusive, perpetual, irrevocable, royalty-free worldwide licence to use the Relevant IPR for such core services.”
2002 Licence
“Player (or IDEA Player)” means all the components of the Software which are required by Users to run applications.
“Software” means
(i) the computer programs listed in the Schedule relating to the IDEA Software; and
(ii) any Improvement or Modification which is acquired by Ultrasis during the subsistence of this Agreement.
“Source Code Materials” means all computer code written by the Licensor in connection with the Software, which shall be sufficient to enable the Software to perform the functions set out in its specification, including a full source language statement of the Software, with all related flow charts, schematics and annotations which comprise the specification (including design documents) sufficient to allow a reasonably skilled third party analyst or programmer to complete, maintain or enhance the Software without the help of any other person or reference to any other material.
“User” means any end user of the Software.
3.1 Grant of Software Licence
In exchange for Ultrasis assigning to the Licensor (which is hereby assigned) any legal and beneficial interest it holds in the Software and Related Materials, the Licensor hereby grants to Ultrasis a perpetual, irrevocable, royalty-free licence on [a] worldwide non-exclusive basis:
3.1.1 to use the Software and Related Materials in order to develop and maintain applications; and
3.1.2 to grant to any User a sub-licence to use the Player and any relevant Related Materials for the purpose of a runtime licence.
3.2 Scope of use
3.2.1 For the purposes of sub-clauses 3.1.1 and 3.1.2 above, use of the Software should be restricted to use of the Software in object code form (and, after the occurrence of a Trigger Event, in the source code form through the provision of the Source Code Materials) for the purpose of processing data for the normal business purposes of Ultrasis (which shall include any act which is reasonably incidental to such use, including (without limitation) the maintenance of a reasonable number of backup or test copies of the Software.
3.2.2 The rights granted by sub-Clause 3.1.2 shall apply in the event of the occurrence of a Trigger Event
3.2.3 Save as stated in sub-Clause 3.1, Ultrasis shall have no right to copy, adapt, reverse engineer, decompile, disassemble or modify the Software in whole or in part except:
a) as permitted by law; and/or
b) to the extent that such action is legitimately required for the purposes of integrating the operation of the Software with the operation of other software or systems used by Ultrasis in circumstances where the Licensor is not prepared to carry out such action at a reasonable commercial fee; and/or
c) on the occurrence of a Trigger Event.
3.3 Assignment and Sub-licensing
3.3.1 Ultrasis shall have no right to grant sub-licences or assign or otherwise transfer or permit any third party to use this Licence without UIL’s consent except as expressly permitted under sub-Clause 3.1.3 and 3.3.2
3.3.2 Ultrasis shall be permitted to assign the benefit and burden of this Licence as a whole to any company which at the time in question is a subsidiary of Ultrasis, subject to that company’s first undertaking in writing to the Licensor that it will henceforth perform all the obligations of Ultrasis under this Licence. All references in this Licence to Ultrasis shall be construed as including any company to which such burden and benefit is assigned.
The Claimants’ case
i) it is computer code written by it in connection with the [IDEA] Software (per the definition of “Source Code Materials” in the 2002 Licence);
ii) it is a “schematic” for the Software (per the definition of “Source Code Materials” in the 2002 Licence);
iii) it is part of the specification of the Software in the IDEA ICD and IDEA Design Document contained in the trial bundles, which design documents also come within the definition of Source Code Materials in the 2002 Licence; and
iv) it is necessary to enable a skilled person to complete, maintain or enhance the Software.
i) when it has taken pains to retain all code, components and related materials to itself;
ii) when the XML Schema lies at the heart of the IDEA System;
iii) when so much time, effort and expense has gone into developing the XML Schema; and
iv) when without the XML Schema, it cannot use the IDEA System to develop other applications, which was the very purpose for which it was developed.
i) both agreements were drawn up by solicitors although the schedules are likely to have been provided by the Second Claimant;
ii) both parties were legally represented;
iii) the consideration for the assignment was £100,000, which was plainly meant to buy something of real value;
iv) Mr Orbach’s evidence is that a great deal of time and effort was spent, and a significant investment incurred in creating and developing the XML Schema, and so their absence from the list of retained IPR suggests they were intended to be transferred; and
v) Mr Orbach’s evidence is also that he was concerned to ensure that despite the split of R&D, Ultrasis would not seek to get rid of the Second Claimant after the transaction. This suggests that real care would have been taken when drafting Schedule 2 to the 2002 Assignment to ensure that every aspect of the IDEA software that was to be retained was expressly set out.
“it should be clear that something has gone wrong with the language and it should be clear what a reasonable person would have understood the parties to have meant.” (para 25).
In my judgment, this is a case where it is clear that something has gone wrong with the language, as I have set out. Accordingly, it is necessary to interpret these definitions to give effect to what a reasonable person would have understood the parties to have meant. I will return to that.
i) to fall within the description of the IDEA Software as including (a) “all the development tools and subcomponents used to develop and maintain Ultrasis applications” and (b) “the design and all the code that has been written for IDEA 2”; and
ii) to fall within the definition of Source Code Materials contained in the 2002 Licence, as (a) a schematic for the IDEA Software, and (b) described in the pre-2002 Transaction design documents,
and accordingly would understand that language to bring the XML Schema within the definition of Retained IPR for the purposes of the 2002 Assignment.
H. ISSUE 3 – IS THE XML SCHEMA PROTECTED BY DATABASE RIGHTS?
Subsistence of Database Right
“Article 1(2)
For the purposes of this Directive ‘database’ shall mean a collection of independent works, data or other materials arranged in a systematic or methodical way and individually accessible by electronic or other means.”
“[25] For the purposes of determining whether there is a database within the meaning of the directive, it is irrelevant whether the collection is made up of materials from a source or sources other than the person who constitutes that collection, materials created by that person himself or materials falling within both those categories.
[28] A reading of the recitals of the preamble to the directive reveals that, given the ‘exponential growth, in the Community and worldwide, in the amount of information generated and processed annually in all sectors of commerce and industry’ as the 10th recital states, the legal protection provided by the directive is intended to encourage the development of systems performing a function of ‘storage’ and ‘processing’ of information, according to the 10th and 12th recitals.
[29] Thus, classification as a database is dependant, first of all, on the existence of a collection of ‘independent’ materials, that is to say, materials which are separable from one another without their informative, literary, artistic, musical or other value being affected. On that basis, a recording of an audio-visual, cinematographic, literary or musical work as such does not fall within the scope of the directive, according to the 17th recital of the preamble to the directive.
[30] Classification of a collection as a database then requires that the independent materials making up that collection be systematically or methodically arranged and individually accessible in one way or another. While it is not necessary for the systematic or methodical arrangement to be physically apparent, according to the 21st recital, that condition implies that the collection should be contained in a fixed base, of some sort, and include technical means such as electronic, electromagnetic or electro-optical processes, in the terms of the 13th Recital of the preamble to the directive, or other means, such as an index, a table of contents, or a particular plan or method of classification, to allow the retrieval of any independent material contained within it.
[31] That second condition makes it possible to distinguish a database within the meaning of the directive, characterised by a means of retrieving each of its constituent materials, from a collection of materials providing information without any means of processing the individual materials which make it up.
[32] It follows from the above analysis that the term database is defined in Article 1(2) of the directive refers to any collection of works, data or other materials, separable from one another without the value of their contents being affected, including a method or system of some sort the retrieval of each of its constituent materials.”
Submissions
i) As is Mr Orbach’s evidence, the Claimants invested more than £2,000,000 in developing the IDEA System of which only about £100,000 was attributable to developing BTB and other applications on the IDEA System. A significant proportion of this was spent in developing the XML Schema;
ii) Further financial investment was made in version 2.0 of the IDEA System, completed on or around 22 March 2005;
iii) Relevant investment in verification included the development of the XML Schema to validate and enforce attribute types, mandatory fields and hierarchical data relationships, the use of a standardised logic block and validation of the content of XML files against the XML Schema;
iv) Relevant investment in presentation included the creation of graphical user interface elements, the tree navigation structure, development of code to parse and display the contents of the IDEA XML Frame files and code to render and display user interface elements from the IDEA XML Frame files.
v) Relevant investment in included the obtaining of the contents included, inter alia, the development of the unique logic of the XML Schema through the encoding of special characters.
“[26] Put briefly, the process of using ECG Cloud starts with a mobile ECG machine which takes a reading from a patient. The patient data are inputted into ECG Cloud through a web-based processing system. The patient data are reviewed by a qualified cardiac physiologist who selects from a range of options from menus. The menus correspond to each ECG variable in a database.
[27] Technomed relies on its rights in that underlying database. Unhelpfully, for the purposes of these proceedings, Technomed defined its database as “the Database’. The Database comprises a set of classifications of relevant physical characteristics shown by ECGs (“the Classifications”), such as ventricular rate or PR interval… For each Classification, the database contains a number of options for how the characteristic tends to manifest in ECG readings (“the Options”)…
[28] To enable the patient to access the results of the ECG screening, using software (“the Software”) ECG Cloud outputs an extensible mark-up language (“XML”) file with a standardised format (“the XML Format”). The XML file is then used to generate a report for distribution to the patient or general practitioner by inserting the information held in the XML Format into a template…”.
I. ISSUE 4 – FACTUAL FINDINGS RELEVANT TO ADDITIONAL DAMAGES
(2) The court may in an action for infringement of copyright having regards to all the circumstances, and in particular to
(a) the flagrancy of the infringement, and
(b) any benefit accruing to the defendant by reason of the infringement,
award such additional damages as the justice of the case may require.
i) The award is discretionary, and there must normally be some special circumstances to justify them, such as profit: Pro Sieben Media AG v Carlton UK Television Ltd [1998] FSR 43 at [61] (Laddie J);
ii) Flagrancy normally involves a calculated infringement. It need not be dishonest, but should be outside the norm: Ravenscroft v Herbert [1980] RPC 193 at 206, and New English Library Limited [1980] RPC 192 at [206] (Brightman J);
iii) For this purpose, the infringement can either be reckless or deliberate, and a “couldn’t care less” attitude will suffice: Nottinghamshire Healthcare National Service Trust v News Group Newspapers Ltd [2002] RPC 49, at [52] and [54] (Pumphrey J);
iv) Given the breadth of the discretion, all the circumstances should be considered: the court is also permitted to take into account other factors, such as injury to pride and dignity, distress, etc: Nottinghamshire v NGN at [33];
v) Where the defendant has been pursuing a profit, additional damages can take account of any benefit by the defendant: Nottinghamshire v NGN;
vi) Another relevant factor is whether a defendant has attempted to destroy evidence of infringement: Nottinghamshire v NGN;
vii) Also relevant are any attempts by the defendant to conceal the infringement through disingenuous correspondence: Peninsular Business Services Ltd v Citation plc [2004] FSR 17.
i) Mr Smith knew that the Claimants had objected to the sale of BTB to the First Defendant on the basis that BTB v5 was still based on the IDEA System, and so he should have properly investigated whether this was the case or not. The Defendants’ decision to exploit BTB v5 in the light of this information was at the very least reckless (“Allegation (i)“);
ii) Mr Smith admitted in cross-examination that he knew that the 2002 Licence to Ultrasis terminated on its insolvency and did not permit assignment of rights, and therefore he must have known those rights could not validly be assigned to the First Defendant by the administrators of Ultrasis. The Defendants’ decision to exploit BTB v5 in the light of this information was either knowing or at the very least reckless (“Allegation (ii)“).
iii) The Defendants attempted to conceal the infringement through disingenuous correspondence, alternatively they adopted a deliberate strategy to obfuscate and delay, by refusing to provide disclosure of the BTB XML files, Java source code and other documents mentioned in the Defence when the Claimants requested them, until the Claimants made an application for specific disclosure (“Allegation (iii)“);
iv) The Defendants adopted a deliberate strategy to obfuscate and delay, by objecting to the Claimants showing the BTB source code materials to Mr Simonov, who was the one person who seemed to know about the copying which actually occurred (“Allegation (iv)“).
Allegation (i)
Dr Martin
“Firstly I’ll try to demonstrate that the copyright to the content of program now belongs to Ultrasis – there is no question of that. Further – agreements in 2002 assigned all other aspects of BtB from [Mr Orbach’s] company to Ultrasis, apart from the IDEA platform. Ultrasis (with minor exceptions) no longer uses this. …The Beating the Blues programme was first developed as a CD using the IDEA software as the platform. This software platform was developed specifically to enable running complex components like graphics, video and audio. The 2002 agreement licences Ultrasis to use the IDEA software to enable ‘running’ Beating the Blues. Subsequently (not sure of the date – but probably about 2006), Ultrasis wished to develop a web version of beating the Blues and chose a different route that didn’t use IDEA. A company called Agilisys was contracted to build this version. Ultrasis wished to be independent of [Mr Orbach’s] company because of failure to provide adequate support and costs. (As an example he quoted £90K to put the programme into escrow – an activity which would have cost much less than £1000.) Subsequently, Ultrasis redeveloped BtB again on a commercially available software platform (can’t remember which – probably Java), and again developed a further US version using ‘Articulate Storyline’ as the platform. If Ultrasis still has CDs of Beating the Blues in the field (probably within the prison service) then these operate on IDEA but they will be few in number”
Tom Turrell-Croft
Mr Simonov
Allegation (ii)
Allegation (iii)
Allegation (iv)
Benefit
J. SUMMARY
i) the XML Schema is properly to be characterised as part of the IDEA System;
ii) the First Claimant owns the rights in the XML Schema, and it follows that BTB v5 infringes the literary copyright in the XML Schema;
iii) the Claimants have not satisfied me that the XML Schema is a database, and so I do not find database rights subsist in it; and
iv) the Defendants’ infringements are flagrant in the manner set out in Section I above, the Defendants have accrued benefits from the infringements, and the infringements and this litigation have caused distress to Mr Orbach and Mr Uliel.
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