The claim by AOM reads like a software vendor's nightmare.
AOM is the Canadian distributor of certain software developed in
the UK. According to the allegations by AOM, Mr. Crouch copied
elements of the software and a business method when he worked for
an Australian licensee of the UK software. Mr. Crouch started a
company in Canada and then allegedly used that as a vehicle to
market a replica version of the UK software and the corresponding
method in Canada. With this (Canadian) copied version of the
(UK) software , Mr. Crouch allegedly lured customers away from AOM.
AOM filed a lawsuit alleging breach of copyright, misappropriation
of trade secrets, interference with contractual relations, unjust
enrichment and misappropriation of goodwill.
Remember, AOM was not the owner of the (UK) copyright -
it was merely a distributor. The question for the court
was whether AOM could maintain a copyright infringement lawsuit in
Canada. To complicate matters, the "software" and the
"method" were owned by two different (UK) owners. AOM
added these owners to the lawsuit, but did not make the specifics
clear in their claim.
As the court put it: "Copyright is a very specific right
attaching to a 'work'... Copyright cannot attach to an idea
such as a method. It can of course attach to the manuals or
other material in which the method is described. Similarly
with computer software, copyright can attach to source code, to a
graphic user interface, to manuals and to other material as defined
in the Act. Copyright cannot attach simply to what a computer
program does. The plaintiff must specify what it is that
is covered by copyright and what it alleges has been done that
gives rise to the statutory remedies."
The lessons for business?
Software vendors from outside Canada should know that, by
virtue of international copyright conventions and treaties,
international copyright can be enforced under Canadian
The Canadian Copyright Act permits someone other than
the copyright owner to sue for infringement of copyright - as long
as that person has appropriate rights (such as a local distributor,
as in this case). Here, AOM appeared to have rights to
maintain the copyright infringement lawsuit, but did not specify
its rights with enough clarity in the claim. Ensure that the
chain-of-title is clear in the claim itself;
Regarding the additional claims - in particular, the
trade-secret misappropriation - the court had this guidance:
"It would be ludicrous ...to compel a plaintiff to set out a
trade secret with precision in the pleading. To do so would
destroy the secret itself. A trade secret is valuable precisely
because it is secret. It may be that information will have to
be provided at the production and discovery stage but at that point
the proprietor of the secret may seek confidentiality orders and to
the extent that those details must be put into evidence may seek a
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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