THJ Systems Ltd v Sheridan: a copyright case summary

Posted: 17/07/2023

In this case, the High Court considered a claim of copyright infringement involving the use and display of software in presentations, and obligations to include copyright notices.

Background

Mr Mitchell was a software engineer who owned an English company called THJ Systems Limited (THJ). He wrote and developed a software called OptionNet Explorer (ONE) to assist with options trading. Mr Sheridan is an American citizen who runs training via live programmes and webinars through his company Sheridan Options Mentoring (SOM). Mr Mitchell and Mr Sheridan set up Optionnet LLP to exploit the ONE software. 

Mr Sheridan was granted a sub-licence for SOM to use the ONE software for teaching, Webex presentations and seminars.  Mr Sheridan and THJ Systems were members of the Optionnet LLP, but Mr Sheridan was later expelled from it.

Both the LLP agreement and licence agreement required copyright notices to be displayed on ‘all educational material that relates in any way to the Software, including but not limited to website content, webinars, seminars and presentations containing images of the Software’.

This case involved the following claims:

• that Mr Sheridan and SOM misrepresented the ONE software as being their own, by failing to display copyright notices identifying THJ as the owner, and also by referring to it as ‘our’ software; and
• that Mr Sheridan infringed copyright in the ONE software and images it produced by using the software after the date of his expulsion from the LLP and expiry of the licence agreement, in a presentation and a seminar hosted on Mr Sheridan's website. 

Misrepresentation/passing off claim

The first claim was based on the fact of use of the ONE software, without accrediting it to THJ using the form of copyright notice stipulated in the LLP agreement and licence agreement. 

The claim failed.  Among other things, the software’s logo, images, typeface and user interface strongly distinguished it from the SOM materials and the name OptionNET Explorer was prominently displayed on the splash and log in windows. These factors would lead almost all users and viewers to conclude that SOM was making use of proprietary software of another company. Further, at virtually all times when the software was in use, the short form copyright notice was displayed which clearly showed that THJ held the copyright in ONE.

Breach of copyright claim

The claimant claimed that:

• the ONE software was considered a literary work within section 3 of the UK Copyright Designs and Patents Act 1988 (UK CDPA 1998);
• the ONE software images, including but not limited to risk and price charts, and each such image (the graphic interface), was an artistic work within section 4 of the UK CDPA 1988;
• the defendants infringed copyright when it used the ONE software in two presentations on 27 January 2016, after Mr Sheridan’s expulsion from the LLP and the termination of the licence agreements, contrary to section 20 of the UK CPDA 1988. 

The court held that section 3 of the UK CDPA 1988 only protects computer programs like the ONE software, but not graphic interfaces because the interface does not enable the reproduction of the computer program. Since the defendants did not seek to copy the source code of the ONE software, simply by use of the program, the judge did not find copyright infringement in relation to the source code. 

In terms of the graphic interface, the judge found that elements of the graphic interface (including the graphic displays when the software is in use, and the ONE logo) were considered artistic works in which copyright subsisted, and that Mr Mitchell was the author and THJ the owner. However, to prove an infringement under section 20 of the UK CPDA 1988, the images had to have been ‘communicated to the public’ by being ‘broadcast’ or ‘made available to the public’. 

The judge reasoned that because the claimants had not shown that the relevant communication to the public took place in the UK or was targeted to a UK audience, there was no evidence presented that the communications reached the UK so as to mean the use would constitute infringement within UK copyright law. To prove a copyright infringement under section 20 of the UK CPDA 1988, ‘proper particularisation and evidence as to what actually occurred’ was required. 

In conclusion, although the judge found that copyright subsisted in the software and graphic interface, the claim for damages on the basis of copyright infringement was dismissed. 

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