The
Court of Appeal ordered a damages hearing to determine costs incurred to
reverse-engineer source code after a joint venture partner departed refusing to
provide the code for proprietary software designed to link into a US-based
commodity trading system.
The business venture started life as the
Pork Bellies Fun Club. Founding members,
a Mr Wayne McLean and a Mr Rob Marshall, joined forces to design an automated
system for commodity trading linked to an internet trading facility: Commodity
Market Systems. Their March 2007 agreement
set out rules for operation of their joint venture and for its termination.
The court was told Mr Marshall gave
notice to end the joint venture in March 2012.
Their parting was not amicable.
The High Court was to later award Mr McLean damages of $4997 (as Mr
Marshall’s share of trading losses in testing the software) and a further
$17,900 (for identifying and deleting a malicious bug Mr Marshall was alleged
to have inserted in the joint venture software). Left unresolved was a claim of $103,000 damages
for Mr Marshall’s failure to provide the source code when their business relationship
ended, as required by their joint venture agreement. The software contained some 45,000 lines of
code. Only Mr Marshall knew how it was
constructed.
While the High Court ruled Mr Marshall
did breach the joint venture agreement by not providing the source code, there
was some confusion as to what losses could be recovered for this breach of
contract. Mr Marshall did belatedly
provide the source code, some nine months after the joint venture was
terminated. But by this time the source
code had been further developed to suit Mr Marshall’s requirements.
The Court of Appeal said the joint
venture contract required Mr Marshall to provide the source code as at the date
of termination. The code handed over did
not comply. The court ruled Mr McLean
was entitled to damages covering the cost of reverse-engineering the code
delivered to get it back to the state it was in at the date the joint venture
terminated. Further evidence was
required to establish these costs.
McLean
v. Marshall – Court of Appeal (13.08.15)
15.087