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'Commercially unimportant' copyright infringement punished

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A software developer responsible for a copyright infringement described even by the copyright owner as insignificant still broke the law, a court has ruled (pdf). An injunction has been served even though the infringer has stopped using the technology.

In a dispute between development company Gameaccount and its former parent company Cantor Gaming, the High Court ordered that an injunction and a delivery up of the offending software should be granted against Gameaccount.

Gameaccount was found to have breached a licence agreement when it made use of software it had developed while a part of Cantor in a manner prohibited by the software licence agreed when the two companies parted.

It was also found guilty of breach of contract and copyright infringement in relation to a second piece of software, but Gameaccount had admitted those errors.

"In making this finding, however, it should not be thought that I attribute any real significance either to the breach or to the infringement," said Daniel Alexander, QC, sitting as a deputy High Court judge. "It is perfectly possible (as here) for a breach of contract to be real but nonetheless of limited, if any, commercial importance."

"In my judgment this was a minor breach, committed more through laziness than through any deliberate policy. It was capable of easy remedy and was quickly remedied in 2006 under threat of litigation," he said.

Gameaccount came into being when Kevin O'Neal and David McDowell approached Cantor parent company BCG with an idea for developing online games. They created a company with Cantor in which Cantor was the majority shareholder.

After a dispute about the direction of the project and its budgeting, O'Neal and McDowell left the company. Gameaccount was set up outside of Cantor to service the one contract that the company had won.

Cantor owned the copyright in all the software that had been developed, but the company granted Gameaccount a perpetual, irrevocable, royalty-free, non-exclusive licence to use the software.

One condition of the licence was that the software must not be used as part of a deal with or in a project financed by a third party bookmaker. That condition was clause 10.3.6 of the agreement.

Gameaccount proposed going into business with UKBetting. It realised that it would need to change its software in order to avoid breaching the terms of its contract with Cantor.

"By 2003, GA knew that it would have to make changes to the software in order to avoid infringing Cantor's rights when it was proposing to enter into arrangements with UKBetting," said the judge's ruling. "[Gameaccount chief technical officer Samuel Lawrence] accepted in cross-examination that he always knew that the "database part needed to be migrated away from" in order to comply with the contractual requirements."

The court found that that 'migration' did not go far enough, and that the Cantor technology was used in Gameaccount's use of the Cantor-owned GAMoney product.

"As noted above, the central question for this part of the case is whether the use of GAMoney, after the date in 2004 when arrangements were made with UKBetting, violated clause 10.3.6 of the Agreement," said Alexander in his ruling. "The starting point is that it is common ground that such use as there may have been by GA in the course of providing services for UK Betting was not of commercial importance."

"In opening the case, Cantor's counsel candidly and helpfully said that it was not alleged that the use of GAMoney was important to the defendant's system, although it was pointed out that it was playing a role in the defendant's system and that, if it was being copied or used, that was unlicensed use," he said.

The court found that the use of GAMoney, in however limited and commercially insignificant a form, was a breach of the licence agreement and an infringement of copyright.

Gameaccount also admitted a separate breach in relation to a GAGolf game. The company had already stopped both breaches, but an injunction was granted against further breach.

The judge said he would hear further argument on the order and costs in the case.

Copyright © 2007, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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