White SW Computer Law Intellectual Property, Information Technology & Telecommunications Newsletter - October 1999

If you select a business or company name or an internet domain name without conducting a trade mark search, you may find yourself a party in a trade mark dispute, particularly where there is a registered Australian trade mark similar to your chosen name.

In the matter of SAP Australia Pty Ltd and SAP Aktiengesellschaft ( "SAP Ag" ) v Sapient Australia Pty Ltd it was alleged that the company name “Sapient Australia” infringed SAP's registered trade marks SAP and Sapient College. Sapient Australia was chosen as a company name and incorporated following the American company Sapient Corporation being approached by Vanguard Investments to participate in a joint venture project in Australia.

All parties involved in the dispute where involved in the computer software industry, in particular with ERP software. SAP Australia and SAP Ag manufacture and supply such software and Sapient Australia advises clients in relation to the supply of such software, particularly Oracle ERP. Sapient Australia made submissions regarding the sophisticated nature and magnitude of a customer's purchasing decision in this area.

The Court agreed that at the point of entering into a contract, it was unlikely that the customer would be confused as to the company with whom it was dealing. The Federal Court found in favour of Sapient Australia in this matter in that it considered the company name “Sapient Australia” did not infringe the registered trade marks “SAP” and “Sapient College”; the activities of Sapient Australia were sufficiently different to those of SAP Australia and Sapient College so as not to be misleading or deceptive or amount to passing off.

The fact that SAP Australia & SAP Ag's argument focussed largely on the use of the word “Sapient” despite the fact that this word was not used in either of their names and was only used by them in a trading name in relation to a specialised activity was mentioned in the Court's judgment.

In this matter, the audience which was likely to be reached by both corporations was a different but separate sophisticated group of customers who, even if initially confused by the alleged similarities in names would be unlikely to remain confused about the parties' identities to the point of entering into a contract. We understand that the initial decision is subject to appeal. Not all businesses would have such a narrow and educated audience and so the Court cannot be expected to make a similar decision in every case where there is such a similarity between trading names and the goods or services sold by the respective parties.

On 30 September 1999, the High Court of Australia rejected Data Access Corporation Inc's appeal in their copyright infringement claim against Power Access Services Pty Ltd. Power Access Services had written a program which was functionally similar to Data Access's program in another language by copying the functionality of the reserved words.

In particular the Court found:

• That 254 “reserved words” or computer commands ( including “BOX”, “CHART”, “SAVE” ) were not a computer program within the meaning of the Copyright Act.
• The Reserved words were to be considered individually and were not an expression of a set of instructions and hence were not a computer program within the meaning of the Copyright Act.
• None of the Reserved Words were intended to express, directly or indirectly, an algorithmic or logical relationship between the function desired to be performed and the physical capabilities of the “device having digital information processing capabilities” and hence were not a computer program within the meaning of the Copyright Act..
• Reserved words used in a program would be entitled to protection in the program as a whole program.
• Individual words are not copyrightable.
• Copyright exists in both source and object code.
• The test for infringement claim, is whether or not a substantial part of the program is taken having regard to quality and not quantity.
• Reverse engineering is not copyright infringement in itself.
• Patent protection may be more appropriate for computer programs.
• Huffman “Compression” tables are entitled to copyright protection as they are fundamentally different from Reserved Words.

This decision will permit many software development projects, which were previously on hold pending the result of the appeal, to commence immediately. It assists developers to be able to use industry standard terms and expressions to develop compatible products such as those developed by Power Access Services Pty Ltd. This also expands the opportunity for look and feel type developments.

One area that may be exposed after this decision is that for databases to be entitled to copyright protection as if they were computer programs, there must be, amongst other things, “a set of instructions”. The Court left open whether or not databases would be entitled to protection under other provisions of the Copyright Act but clearly stated that taking data is “unlikely” to be a breach of the copyright in a computer program.
This is an outstanding result for the software development community and is one of the best written judgments in this area for some time. Finally the software development community is beginning to enjoy the benefits of a technologically aware High Court which has coherently clarified its earlier decisions.

Patents may also be objected to prior to sealing. Commonly the opponent will claim that the invention is not novel, does not involve an inventive step and/or is not a manner of manufacture. When filing an application for a patent, a search must be conducted for “prior art”, which are examples of similar inventions already in use or information already published. The list of prior art together with detailed specifications of the invention are filed as part of the patent application.

In the matter of Avid Marketing Inc v Microchip Identification Systems Pty Ltd, Avid was able to successfully defend claims made by Microchip as to why a patent lodged by Avid for its multi-mode transponder identification system should not be sealed. Microchip referred to previously registered US patents for similar inventions (which related to antennae), but it was considered, amongst other things, that these inventions did not contain “clear and unmistakable directions” to do what Avid had claimed to have invented.

Microchip was also unsuccessful in its claims that Avid's patent did not involve an inventive step and/or was not a manner of manufacture. However, Avid was requested to prepare some amendments to the claims made in its application. Patent protection is expensive and time consuming to obtain. The financial return expected from an invention must be considerable before patent protection is viable. An alternative to patent protection is the use of a confidential information deed, when discussing the invention, but the legal protection offered by the use of such a deed is not as strong as that offered by a patent.