Settlement of the dispute between the SA Government and
Global Health suggests the Crown use provisions in the Copyright
Act apply to computer programs, but this doesn't mean
governments can use software for free.
Can the Commonwealth and State Governments use software without
a licence agreement? This question was going to be determined by
the courts, but a mediation on 2 August between the South
Australian Government and Global Health led to a settlement
reflecting what we expected - the Government will pay a licence
fee, and that's it.
When we looked at this case, we highlighted a drafting ambiguity
in the Copyright Act which Global Health appeared to be relying on.
We also predicted Global Health would lose that argument.
The settlement means the drafting ambiguity will remain for the
courts to resolve another day (unless Parliament fixes it first).
However, the terms of the settlement indicate Global Health
realised it was fighting a losing battle. According to media
reports, Global Health agreed to accept payment of a licence fee
equivalent to what the SA Government had been paying when the
licence agreement ended, which is consistent with Global Health
accepting that the Crown use provisions applied.
The Government is in a special position
The key point here is that, despite using the software without a
licence agreement, the Government only had to pay a licence fee
equivalent to what it would have paid if it had a licence
agreement. Anyone else who knowingly uses software without a
licence is likely to be ordered to pay punitive or aggravated
damages (in addition to any licence fee) or possibly an account of
profits, we well as being ordered to stop using the software. But
the Government has the benefit of the Crown use provisions, so it
only has pay a licence fee and can keep using the software.
Why bother negotiating a licence agreement?
What incentive then is there for the Government to enter licence
agreements in the first place? Why not simply use software and rely
on the Crown use provisions to pay a licence fee only if found out?
There are a few reasons why Governments don't (and can't)
the Copyright Act requires the Government to notify the
copyright owner if it uses a copyright work under the Crown use
provisions - Governments can't choose whether or not to comply
with the Copyright Act, so they have to do this;
the licence fee the Government has to pay under the Crown use
provisions will be determined by the Copyright Tribunal if it is
not agreed. A Government relying on the Crown use provisions risks
paying a higher licence fee than it might have paid under a
negotiated licence agreement; and
the Government will typically require support and other
services from the software vendor, which practically means the
Government will need to reach agreement with the software vendor at
least on those matters.
The Crown use provisions are not intended to provide a back-door
for Governments to use software without a licence agreement. They
do however provide a Government with important protection where it
needs to use software (or increase its use of existing software)
and the copyright owner is unwilling to negotiate a licence
agreement or insists on unreasonable terms.
Clayton Utz communications are intended to provide
commentary and general information. They should not be relied upon
as legal advice. Formal legal advice should be sought in particular
transactions or on matters of interest arising from this bulletin.
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