Cantor Gaming Ltd v Gameaccount Global Ltd
| Jurisdiction | England & Wales |
| Judgment Date | 31 July 2007 |
| Neutral Citation | [2007] EWHC 1914 (Ch) |
| Docket Number | Case No: HC06C01333 |
| Court | Chancery Division |
| Date | 31 July 2007 |
[2007] EWHC 1914 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Daniel Alexander Q.c.
Sitting as a Deputy High Court Judge (Chancery Division)
Case No: HC06C01333
Mr Justin Turner (instructed by Hammonds) for the Claimant
Mr Piers Acland (instructed by Bircham Dyson Bell) for the Defendant
Hearing dates: 9–10*, 23rd May 2007
HTML VERSION OF JUDGMENT
INTRODUCTION
This is an action for infringement of copyright and breach of contract relating to two suites of the defendant's software known as GA_Money (GAMoney) and Golf Game (“GA Golf). The claimant (“Cantor”) claims that the defendant's (“GA”) use of these suites constitutes infringement of its copyright and breach of a written agreement which confers a limited licence to use software in which it owns the copyright. The copyright claim and the contract claim are closely related, since the central allegation is that there has been use of the software beyond the scope of the licence, thereby giving rise to infringement. The software in question is compendiously known as the “Cantor Software” and it is alleged that specific parts of it have been wrongfully used by GA.
It is convenient, before turning to the issues, to set out aspects of the history.
HISTORY AND DEVELOPMENT OF THE CANTOR SOFTWARE
The history of the development of the Cantor Software is set out in the statement of Ms Stratford-Martin, in an account which is not challenged.
She explains that BGG International (“BGC”) is the parent company of Cantor and it is a substantial undertaking involved in financial services and related activities. In or around November 2000, Mr Kevin O'Neal and Mr David McDowell, approached BGC with an idea for developing and commercialising on-line games. They wanted to create a series of skill based games which would be available on the Internet. The precise detail of their proposal does not matter for present purposes but BGC believed that the proposal had commercial promise. It therefore arranged to employ Mr O'Neal and Mr McDowell and for them to run the project as a business, to be majority owned by Cantor.
For purpose of the venture, BGC and the individuals concerned incorporated a company on 12 December 2000, known as “GameAccount Limited” as the corporate vehicle for the project. This company has now changed its name to “Cantor Gaming Limited”, the Claimant.
Mr O'Neal and Mr McDowell entered into employment contracts with Cantor on 13 March 2001 under which they were respectively appointed as joint Chief Executive Officer and Chief Financial Officer. Three consultants were also engaged.
The development of and title to the copyright in the Cantor Software
Mr O'Neal and Mr McDowell were behind the initial ideas for the software and were involved in the plans for its development and exploitation. However, they are not themselves software engineers. The software development was carried out by software engineers who were either employed by or contracted specifically by Cantor or were employed by another BGC group company and assigned to assist with the project. The four individuals particularly responsible for the development of the Cantor Software were Clive Hetherington, Sam Lawrence, Fergus Leane and David McNally, with Kevin O'Neal with David McDowell acting in a more supervisory capacity.
There is no dispute that, either as a result of express terms in the contracts of the individuals or by operation of law coupled with appropriate assignments, Cantor came to own the copyright in the Cantor Software so developed. At a certain point during the development of the software a number of the programmers were transferred to work for another company in the BGC group, known as “eSpeed” and appropriate contractual terms ensured that copyright in works developed at eSpeed also vested in Cantor. Cantor also owns the copyright in this software and some of the graphics relating to the Golf Game, which were separately developed by Vaguerant Limited (trading as PixelBrothers) from whom an assignment of copyright has been obtained.
The software in issue in outline
The Cantor Software, taken as a whole, comprises several parts. This case is concerned with two suites which form part of the Cantor Software known as, GA_Money (“GAMoney”) and Cantor Golf (“Cantor Golf).
GA Money
GAMoney is a complete database. It was been described by Mr Lawrence of GA as a “core database”. The core function of GAMoney was to enable applications to connect to it to update and retrieve information about customers' accounts and the games which they had played. GAMoney closely interacted with other aspects of the Cantor Software. There is no dispute and Mr Lawrence accepted in cross-examination that, taken as a whole, it is a very substantial piece of software containing thousands of lines of code. It will be necessary to consider aspects of its structure and function in greater detail below. For present purposes, it is not in dispute that, taken as a whole, GAMoney is a work in which copyright subsists and that skill and labour was exercised in creating parts of it such as the stored procedures and tables considered below.
Cantor Golf
Cantor Golf is a suite of software which enables a simulated golf game to be played on-line. It has a number of different elements, including a part which calculates the trajectory of a ball, relative to the golf course, that has been notionally “hit” by a player and another part that generates particular graphics showing the golf course. In addition, it enables players to select a wager and it keeps track of play, declaring a winner at the end of the game. Software of this kind operates using a combination of “client side” code (i.e. software stored and running on a user's computer) and “server side” code (i.e. software stored and running on the server of the undertaking offering the game in question).
The issues on liability that arise as regards Cantor Golf are much more straightforward than those in relation to GAMoney and the evidence deals with Cantor Golf more briefly.
First, it has been accepted in correspondence that there has been use of the Cantor Software for GA's GAGolf game in a manner not authorized by Cantor and that such attracts liability both under the contract and as a matter of copyright infringement. Details of how that was accepted are outlined below.
Second, Mr Lawrence of GA said in his initial witness statement that, on 3 rd August 2004, a new version of the golf game (GAGolf) was released on the GA2 website. He says (para. 51):
“Some of the graphics and some of the game code from the Cantor Golf game were incorporated into GA Golf.”
GA now accepts that the parts used constitute a sufficiently substantial part to attract liability. It is therefore unnecessary to deal further in this judgment with Cantor Golf or the similarities that it bears to GA Golf further. It will be necessary to return to it in considering the question of what relief is appropriate.
The developers and Cantor part company
Returning to the chronology, Ms Stratford-Martin's evidence explains that, in mid 2002, the relationship between Cantor and Kevin O'Neal and David McDowell broke down as a result of differences over how the project should develop and (it is said) because the development was over budget. At that point, the Cantor Software had not been launched on-line and there was only one contract in place, which was for Cantor to provide and run an on-line game as a promotion in The Sun for News International Limited.
The parties therefore agreed that Mr O'Neal and Mr McDowell would leave Cantor but would be given a licence in relation to the Cantor Software so that they could (i) fulfil the contract with News International Limited and (ii) further exploit the Cantor Software through the vehicle of a new company which would be run under the name “GameAccount”. That vehicle is the defendant, GA.
At the end of September 2002, a Deed of Settlement was entered into between Cantor Gaming and a company then called “Fro-Zen” (which, renamed, is the defendant) under which Cantor Fitzgerald GameAccount Limited Holdings LLC bought all of the shares of Cantor from the shareholders, including those shares belonging to Kevin O'Neal and David McDowell, and by which Kevin O'Neal and David McDowell would enter into Deeds of Termination of their employment.
At the same time, a Collaboration and Transfer Agreement (“the Agreement”) was entered into between Cantor and Fro-Zen Limited whereby Cantor granted a limited licence of the Cantor Software to Fro-Zen. A trade mark assignment was also entered into between Cantor and Fro-Zen whereby Cantor assigned the trade mark “GAMEACCOUNT” and all other IP in the name “GAMEACCOUNT” to Fro-Zen resulting in the change of name. A copy of the Cantor Software was provided to GA on a CD ROM at completion of the Agreement.
One of the issues in this case centres on the Agreement. Under Clause 2 of the Agreement, GA was granted a perpetual, irrevocable, royalty-free, non-exclusive licence which (it is accepted by the parties) was limited in its scope in a number of ways, to use the Cantor Software. The licence was, in particular, limited by clause 10.3.6, which I consider further below.
ISSUES
There are two main issues which require determination.
(a) Whether GA has infringed Cantor's copyright and/or acted in breach of contract in its use of GAMoney. This boils down to a question of whether there has been use of the GAMoney in a manner contrary to clause 10.3.6 of the Agreement.
(b) Whether an injunction and delivery up should be granted, in the light of the undertakings offered and what has happened since.
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