Neutral Citation Number: 2015 EWHC 453 (CH)
Claim No HC 12 C00611
IN THE HIGH COURT OF JUSTICE
2nd March 2015
Mr John Baldwin QC
(sitting as a Deputy Judge of the Chancery Division)
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1. AFD SOFTWARE LIMITED
2. ZIP ADDRESS LIMITED
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Gwilym Harbottle (instructed by Mackrell Turner Garrett) appeared on behalf of the Claimants.
Terry Bergin (instructed by Reynolds Porter Chamberlain LLP) appeared on behalf of the Defendant.
Hearing date: 19th to 23rd January 2015
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I direct that no official shorthand note shall be taken of this judgment and that copies of this version as handed down may be treated as authentic.
1. In early 2006 the Defendant (DCML), a supplier of software to car dealers, was looking for some software which enabled access to the Royal Mail’s database of postcodes (PAF) to replace that which it was already using and paying about £2,500 per year for. It wanted something comparable in price and offered the functionality it required for its business. It researched the web for suitable products and found a number of possible suppliers. It reached a preliminary conclusion that the Claimants (AFD) had available such products and that AFD offered the best solution out of the several which were found in the research. It thought the approximate cost would be about £2,100 per year.
2. On 19 January 2006 DCML contacted AFD’s customer service department by telephone, explained its business and what it wanted to use AFD’s software for (or so it contended before me), and was told that the AFD product called Postcode Internet (PCI) would be suitable for its purpose. During the telephone conversation, AFD’s representative offered to send to DCML for evaluation purposes a CD containing PCI, and the software was duly sent, evaluated by DCML and found to be satisfactory. On 8 February 2006 DCML contacted AFD’s customer service department once more to confirm the price of PCI, said it wished to purchase a licence to use the software and asked for an invoice to be sent. In due course a pro forma invoice was sent and was paid and DCML started using PCI in its business.
3. DCML continued to use PCI for several years, each year paying the requested licence fee. In 2010 AFD asked DCML if it could explain the licensed use and DCML readily agreed. As a result of this, AFD concluded that DCML’s use was outside the scope of the licensing terms for PCI, calculated what it said DCML should have been paying, sent DCML an invoice for £12 million plus £2.1 million VAT and asked for payment of that sum within its standard terms (i.e. straight away).
4. Unsurprisingly, this invoice came as something of a shock to DCML. It ceased using PCI immediately and contracted with another supplier of software which permits licensed use of the PAF database for a fee of a few thousand pounds per year. In addition, it refused to pay the £14.1 million invoice, contending that it had merely been using the AFD software as recommended to it by AFD. These proceedings are the consequence of that failure to pay. They engage possible pitfalls in following a licensor’s recommendation. AFD claims damages for copyright infringement alternatively damages for breach of contract.
5. AFD puts its case in a number of ways. First, it alleges that DCML, and in particular Mr Flaherty who at the relevant time in 2006 was the Senior Manager Development of DCML, deliberately misled AFD about the use which DCML intended to make of any software supplied. It contends that Mr Johnson, the AFD representative who at the relevant time spoke with Mr Flaherty, recommended PCI because he was misled about the nature of the intended use.
6. Secondly, AFD alleges that if Mr Flaherty did not deliberately mislead Mr Johnson then nevertheless Mr Johnson misunderstood DCML’s requirements and that his recommendation to use PCI was based on a false premise. AFD contends that in these circumstances, Mr Johnson’s recommendation is of no consequence. Further, it contends that the contract which contains the licence permitting DCML’s use of PCI was not made until DCML accepted AFD’s written licensing terms. AFD contends that these licensing terms do not permit the use which DCML has made of the software and, accordingly, DCML is liable in damages for copyright infringement and/or breach of contract.
7. DCML’s answer to both ways AFD puts its case is the same. It is that Mr Flaherty truthfully described to Mr Johnson what DCML wanted to use the software for, that Mr Johnson represented to him that PCI was suitable for that use, that Mr Flaherty relied upon what Mr Johnson told him when he arranged for DCML to take a licence from AFD to use PCI, that it was reasonable in the circumstances for him so to rely, and that whatever might have been in the small print of any contract that was entered into could not and did not override that fundamental position.
8. DCML also sought to answer AFD’s claim by contending that the contract by which PCI was licensed came into being on 8 February 2006 (when DCML confirmed it wished to purchase a licence for PCI and asked for an invoice to be sent) alternatively on 16 February 2006 (when it paid the invoice), and was complete before it had notice of or purported to accept AFD’s written licensing terms (which AFD contends do not permit the use of PCI which DCML has admittedly made). DCML also contends that, even if its contract with DCML contained AFD’s written licensing terms, those terms permit the use which it has made.
9. In order to understand the parties’ arguments more clearly, it is necessary to go into the facts in greater depth. AFD’s business is in licensing PAF and it does so pursuant to agreements with the Royal Mail. AFD has not had a particularly happy relationship with the Royal Mail and the agreements which are alleged to grant to AFD rights to license use of the PAF database are not the easiest to construe. Nevertheless AFD contends (and it is not necessary to distinguish between the Claimants for this purpose) that it is entitled to license use of the PAF database and is the owner of the copyright in its software which enables that use.
10. DCML does not admit that AFD has the right to licence the PAF database or even that it has title to sue in relation to its own rights, including copyright, in the PCI software. However, DCML did not put forward any positive case that AFD did not have title to sue and did not challenge any of the factual evidence AFD adduced. In these circumstances I would normally accept AFD had proved its case on title to sue, but because of the legal complexities of the Royal Mail/AFD/PAF licensing situation I am unable to do that without further consideration and analysis of the Royal Mail PAF licensing history.
11. In view of the conclusions I have come to on other aspects of this case it is not necessary for me to make any findings on AFD’s rights to license the use of the PAF database during the relevant period (2006 to 2011). I am prepared to accept that AFD owns copyright in the PCI software and is entitled to license the PAF database in the manner in which it has so done. I note in passing that the managing director of AFD, Mr Dorricott, was confident that AFD was properly licensed to use the PAF database, and he appeared to base some of that confidence upon the fact that it had been licensing PAF for many years without complaint from Royal Mail. If that logic were sound, it is hard to see why DCML does not have a good defence to the claim.
12. DCML, moreover, does not admit that its use of the PCI software entailed any act restricted by copyright. Like its resistance to accepting subsistence and title to sue, DCML presented no evidence or argument in favour of the point. In the end it was conceded, but not until after expert reports had been exchanged and the trial had begun.
13. In 2006 DCML’s products were accessed by two different websites. The first, and by far the most important in the context of DCML’s business was www.dcmnet2.co.uk. This is the site used by DCML’s flagship product (DCM) and is responsible for the vast majority of DCML’s income. To use the site car dealerships go online and enter the site using a username, password and dealer number. The site provides a diary for car dealerships to manage their courtesy and demonstration fleet of cars and offers a day rate insurance product. For the convenience of the dealers the site offers postcode look up software (software which presents a series of possible house numbers in response to entry of a postcode) based on the PAF database and accordingly needs a licence which permits use of that database. There is a simplified version of DCM, called DCM Lite, which allows ad hoc booking of courtesy cars but does not have the diary and reporting features of the main DCM product.
14. The second website, www.dayinsure.com, provides products called Dayinsure Dealer and Dayinsure Retail. The former allowed car dealerships to insure courtesy and demonstration cars on an ad hoc basis for periods up to 28 days, the latter allowed members of the public to insure any car for them to drive for a period up to 28 days. Both products used postcode look up software based on the PAF database and, accordingly, needed a licence which permitted use of PAF.
15. DCML also offers call centre products which are based on the same database as the DCM system and give manufacturers and dealership groups the ability to create a booking against a vehicle in a dealership from a central location.
16. All DCML’s products use a piece of software called a Dynamic Linked Library (DLL), written by DCML, to access 3rd party postcode lookup software (be it accessible via the web or installed on DCML’s server). So if a car dealership user of a DCML product inputs a postcode into an address field on the screen at his work station, the DLL calls on the 3rd party software to return addresses associated with that postcode which the dealer can choose from to complete his screen. This postcode look up feature is not essential to DCML’s products but it saves time when entering data.
17. Prior to 2006 DCML was using a company called Alpha Meridian to provide postcode look up software but in January 2006 this company announced it was discontinuing its service. Mr Flaherty was tasked by DCML to find an alternative supplier. Mr Flaherty searched the internet and found a number of suppliers which might offer suitable products. On 19 January 2006 he produced a note of what he had found which included anticipated costings of using two AFD offerings. He concluded that the installed solution (i.e. installed on DCML’s server) would be cheaper than the hosted option (i.e. providing access to AFD software via the web). He decided to ring AFD to discuss its products and he did so and spoke to someone who put him through to a Mr Johnson as being the appropriate person to handle the call.
18. Neither Mr Flaherty nor Mr Johnson has any actual recall of the conversation between themselves which took place in January 2006. Yet what was said is critical to DCML’s defence and I must make findings about it. There is a contemporaneous file note written by Mr Johnson which is of some assistance, depending upon how good and thorough Mr Johnson was at making notes of his conversations with AFD’s potential customers.
19. It is convenient at this stage to record my assessment of the witnesses who gave oral evidence. These persons were Mr Johnson, senior customer service officer at AFD, Mr Dorricott, managing director of AFD, and Mr Hilton, director of sales at AFD on behalf of AFD and Mr Flaherty on behalf of AFD. In addition, DCML called Ms Longden as an expert witness.
20. There is a short matter to deal with before considering the witnesses and it arises out of an application made on paper by AFD on 30 January 2015, seven days after the trial had ended. The application was for the court “to consider 8 pages of short supplemental submissions on behalf of the Claimants to which are attached character references in relation to Mr Dorricott, a Stock Exchange Announcement and some authorities on admissibility of character evidence”. The submissions consist of (i) an explanation of character references in relation to Mr Dorricott and (ii) supplemental submissions as to (a) the importance of the Claimant’s software to the Defendant (including reference to a document not in the trial bundles); (b) public/private website; (c) licensing errors; (d) relevance of the ‘wash its face’ approach; and (e) the administration involved in the notional licence.
21. The Defendant, by letter, objected to the introduction of these new materials and I have not seen them. The Defendant relied upon: (i) the trial ended on 23 January 2015, (ii) on 21 January the court directed that each party serve written submissions by 10 pm on 22 January prior to final oral submissions on 23 January with each party having 2 hours each and with the Claimant having a further 30 minutes in reply, (iii) there was ample time during the period allocated for the trial for the Claimant to make whatever submissions it wished and there is no good reason why the supplemental matters could not have been dealt with when they should have been dealt with.
22. I think the Defendant is right and that I should not look at these supplemental materials. There is no reason why any of them could not have been deployed during the trial and in so far as the character references with respect to Mr Dorricott are concerned, I had ample opportunity to assess his evidence during the hearing. With regard to the Stock Exchange Announcement, I assume that if any broader public interest were engaged then I would have been told of it. Since I have not been made aware of anything special regarding this announcement, I assume that it bears on matters already the subject of the parties’ submissions.
23. I return to the assessment of the witnesses. The first witness was Mr Johnson who was called to give evidence about his conversation with Mr Flaherty in 2006. An unfortunate aspect of his witness statement was that it had been drafted for him and he had been asked to sign off on it which he did. Of course it is usual for solicitors to draft witness statements based upon their instructions. But in cases where a witness is reconstructing what he says probably happened it is particularly dangerous for that reconstruction to be done by a third party and the witness merely asked to approve it. And this is particularly so when the witness statement reads as though the witness is speaking from first hand.
24. An example of where matters may be misleading came in relation to Mr Johnson’s interpretation of the notes he made of the conversation with Mr Flaherty. He says at one point that his note suggests to him that the discussion with Mr Flaherty in 2006 was in relation to ‘public external websites’. Now, whether or not the word ‘external’ had been used may be highly material to what the parties were contemplating or discussing (as will be evident from what follows hereafter). However, Mr Johnson accepted in cross examination that this word had been put in his statement by the drafter thereof (presumably because it was thought it would help AFD’s case), that it had not come from him and that he had merely accepted what the drafter had proposed. This revelation not only undermined this part of Mr Johnson’s written evidence, it caused me to be cautious about other aspects of his written testimony.
25. Another example of the difficulty I had with Mr Johnson is that, in his witness statement, he is at pains to set out his expertise, the extent of this training and the extent of his knowledge of AFD’s products. The written evidence gives the impression of a highly skilled and highly trained operative who would not make any mistakes in relation to AFD’s products and whose notes of sales telephone conversations would be comprehensive and accurate. The software product in issue in this case is PCI (it is one of only five AFD was offering) and Mr Johnson’s written evidence was that he knew all about this product and what it could and could not be licensed for.
26. Mr Johnson’s oral evidence let him down. He made a very basic error as to the functionality of PCI, indeed he made an error in relation to his written explanation of what his 2006 notes meant, an explanation written for him recently and which he had adopted without question. AFD’s counsel urged upon me that Mr Johnson had been retired for some years and that it was reasonable for him to have been confused about some of the details. I accept that but the point is that he was put forward as a witness who could support his witness statement and justify what he said was the position with regard to his knowledge of AFD’s products, how they were licensed back in 2006 and how he dealt with licensing inquiries.
27. Another example of the unsatisfactory nature of Mr Johnson’s evidence was in relation to the call with Mr Flaherty itself. In cross examination he said that the call stood out in his mind and that this was because it had been put through to him by someone else at AFD, rather than he taking the call himself, which was, he said, not normal. But later in evidence he said that he only appreciated that the call had been put through to him some months ago and he had deduced it from documents he had seen recently. Thus it cannot have stood out in his mind since 2006. Also, initially he said in cross examination that he had no actual recollection of the call at all, but later he said he did remember that the discussion included discussion of the website dayinsure.co.uk. And he said he was sure that no other website was mentioned.
28. On the whole I found Mr Johnson to be a witness who was trying to help me but who was not consistent in what he said and was not reliable with respect to what he had constructed, or with what had been constructed for him, with respect to the events in 2006. Moreover, I am not satisfied that his 2006 attendance note was a complete or comprehensive note of his conversation with Mr Flaherty and I am not satisfied that I should infer, from the fact that there is no reference in the note to a website other than dayinsure.co.uk, that no other website was mentioned in that conversation.
29. However, I am satisfied that Mr Johnson’s reconstruction of the call is correct to the extent that he says he asked Mr Flaherty what DCML wanted to use AFD’s software products for, what DCML’s website was for, in fact all those questions which a licensor would want answers to before making a recommendation to a customer as to which product might be suitable for its use. This is what Mr Johnson said was his practice, it appears to me to be a sensible practice and I have no reason to doubt that Mr Johnson carried out this practice on that occasion back in January 2006. The doubt is in relation to the value that can be attributed to the attendance note which he took at the time and how it compares with Mr Flaherty’s version of events.
30. The next witness was Mr Dorricott. His evidence mainly went to quantum although he did say that licensing of software was a very complex sphere. In giving his evidence he presented as an assertive person who believes in what he says and believes that what he says is right, whatever that might be. He was pedantic when it suited him and he used his self-confidence to avoid some difficult questions. To simple questions he often gave quite unnecessarily long answers. In the event it is not necessary for me to assess the value of his evidence.
31. The next witness was Mr Hilton. He was an excellent witness. He answered questions clearly and succinctly and without prevarication. Amongst other things he gave evidence about AFD’s approach to DCML in 2010 with regard to the use which DCML was making of PCI and he confirmed that DCML were open with respect to that use.
32. The first and only witness of fact for the Defendant was Mr Flaherty. He was a good witness who answered questions clearly and well. I am satisfied that he was telling the truth and doing his best to assist me.
33. Ms Longden gave expert evidence on behalf of the Defendant. I am satisfied that she was doing her best to assist me. Although her evidence was interesting and helpful (although some of it inadmissible), in the event I do not need to rely upon it.
34. I return now to the telephone call made by Mr Flaherty to AFD on 19 January 2006 which was dealt with by Mr Johnson on AFD’s behalf. As I have said, neither Mr Flaherty nor Mr Johnson had any specific recollection of the content of that call. Mr Johnson relied entirely on the content of his contemporaneous note and upon what he said was his invariable practice in presenting what he said would have been the content of the call. Mr Flaherty relied upon the fact that the object of his exercise in making the call was to find a substitute for the software DCML was already using and which was licensed from Alpha Meridian, that he understood the importance of explaining to AFD what DCML wanted AFD’s software for and how it would use it so that AFD could advise whether and if so which of its products were appropriate.
35. AFD submitted that Mr Flaherty deliberately misled Mr Johnson and that he purposely misdescribed the use DCML would make of the AFD software by making reference only to the use of the software in connection with the dayinsure.co.uk product, the purpose being to get a licence for a lower price than should be paid. I reject that allegation. Dayinsure was a relatively small part of DCML’s business and Mr Flaherty wanted the software for use with the DCM product which generated the most value for his company. Moreover, even Mr Johnson’s attendance note makes reference to 30,000 look ups in a month and the context of that could only be the DCM product. My clear impression of Mr Flaherty was that he was an honest and responsible person and I find that it is much more likely than not that he described to Mr Johnson fully and clearly what use DCML would make of the AFD software if it took a licence to use the same.
36. Following the call on 19th January 2006 Mr Johnson arranged for the supply of an evaluation copy of PCI to DCML. That was duly received and evaluated and DCML decided to purchase the product (in fact a licence to use the product). On 8th February 2006 Mr Flaherty telephoned AFD again and this time spoke to a Ms Angy Inglesfield. Ms Inglesfield has provided a witness statement and her evidence was accepted without challenge. She infers from the contemporary documents that Mr Flaherty phoned to say DCML wished to purchase PCI and after the call she sent an email to DCML stating:
Further to our phone conversation, please find attached a Proforma Invoice with a total of AFD Postcode Internet Program (sic). Once payment has been received I will process your order and despatch the product to you.
The Pro-Forma Invoice began with “Thank you for your order for AFD products. In order that we can process your request, please remit the sum below.” Set out below was the sum for the product and various means to pay.
37. DCML argued that the licensing contract in relation to PCI was concluded on 8 February 2006. It argues that since no restrictions were placed by AFD on the use to which DCML could put the software, DCML’s use which followed was properly licensed.
38. AFD argued that there was no contract on 8 February 2006, that there was no intention to create legal relations on that date.
39. It seems to me that this matter can be tested very easily. Was DCML obliged to pay for the software by reason of AFD sending the email and ProForma invoice? In my judgment it is clear that it was not. So I reject DCML’s case that a binding contract and licence were in place on 8 February 2006.
40. DCML’s alternative case is that the licensing contract was concluded on 16 February 2006, being the date upon which and at the time when DCML paid the sum specified in the ProForma Invoice. Again, I reject DCML’s case. It is inconsistent with the content of the ProForma invoice and in particular the statement that the order would be processed after payment was received.
41. AFD received DCML’s payment on 16 February and immediately thereafter issued to DCML an invoice, a document entitled AFD Postcode Internet License Certificate and a copy of the PCI product. The License Certificate provides detailed instructions on how to install the PCI product and how to register it and get it ready for use. It starts with these two paragraphs:
This License Certificate confirms your License to use [PCI] on the Number of Licensed Computers set out below. The License, granted to you from the Effective Date below, is subject to [AFD’s] Terms and Conditions and the Post Office End User License (“EULA”) which are part of [PCI] and are available on the Company’s website ...
You are hereby specifically permitted to install, access or use [PCI] on your public Internet Website(s) running on the Number of Licensed Computers set out below, for the checking of address information. This license does NOT permit the use or display of [PCI] on Intranet sites, private websites, websites not your own, nor for access to [PCI] from your computers.
42. AFD contends that this License Certificate is part of the contract under which it supplied PCI to DCML and I think that must be right. Mr Flaherty accepted that he anticipated that the software would be accompanied by licence conditions and it was the acceptance of the money by AFD and the supply of the product together with the licensing terms which completed the contract.
43. AFD’s case on copyright infringement is that this licence permits use of PCI only on “public Internet Websites” and that the website used by DCML for its business with car dealerships was not a public Internet Website. Its reason for so contending was that although the website’s home page could be accessed by anyone with an internet connection, its content could only be accessed by car dealerships via a log in page and password.
44. DCML contended that the website www.dcmnet2.co.uk was a “public Internet Website” within the meaning of the License Certificate. It presented two arguments: (i) AFD’s software was not resident on this site but instead was resident on DCML’s server where a public web site (on any showing) also resided and (ii) the home page of the dcmnet2.co.uk website was accessible to the public via the web and it was irrelevant that entry to other pages on the site was password protected or restricted to car dealerships with whom it had a contractual relationship.
45. I do not think DCML’s first argument can be right. The licence is concerned with the use which is made of the software rather than with where the software is physically located.
46. The second argument is more difficult. It depends upon the meaning of the term “public Internet Website” as that term is used in the PCI License Certificate. The question is what meaning would a reasonable third party in the position of the parties attribute to the term.
47. At the outset it is clear that the term is to be contrasted with Intranet sites and private websites since these are specifically excluded from the scope of the Licence. But the evidence did not establish that the term “public Internet Website” has any industry wide recognised meaning. Indeed, AFD’s witnesses commonly used the expressions “public facing website” and “public external website” to refer to websites whose content could be accessed by the general public. It will be noted from paragraph 24 above that the drafter of Mr Johnson’s statement inserted the word ‘external’ into the term ‘public website’, and I infer that he/she did so because it was thought necessary or, at least, helpful to AFD.
48. Moreover, there was no evidence to suggest that dcmnet2.co.uk would be understood by those in the industry to be a private website and it seems to me that as a matter of ordinary language it is not a private website.
49. It is, however, relevant to assess whether or not the expression “public Internet Website” would alert a potential licensee as to the scope of the licence.
50. Mr Flaherty thought that the term “public Internet site” meant any Website accessible to the public and therefore it included the ones DCML were using. But he professed no particular knowledge of the subject and accepted he had not thought about it at the time. Indeed, he accepted that he probably did not read the detail of the PCI License Certificate at all.
51. Where do these findings leave us? Mr Johnson said that he would have asked Mr Flaherty if DCML’s website was a public facing website and that he would have explained what public facing meant but his evidence was not persuasive and I do not accept it. Moreover, I am satisfied that neither Mr Johnson nor anyone else at AFD explained to Mr Flaherty that PCI could only be used on “public Internet Websites” and what that term meant in the context of AFD’s software licensing conditions.
52. Mr Flaherty accepted that he knew that the commercial supply of software such as PCI was always accompanied by detailed licence terms but I gained the impression that he, like many software users, was not in the habit of reading them in detail. He said that he assumed DCML could use the PCI software in the way that it did use it because he had explained that use to Mr Johnson and Mr Johnson had recommended PCI to him. He said that he thought that was enough and I consider that the real question in this case is whether or not he was right.
53. Thus DCML contend that even if the contract between the parties did incorporate the terms in the License Certificate, not only was its use covered by that Certificate but AFD, through Mr Johnson, granted the permission which DCML required, alternatively AFD is estopped from contending that DCML was not properly licensed to do what it has done.
54. The first question in relation to the estoppel argument is whether or not DCML relied upon what Mr Flaherty had been told by Mr Johnson and this includes, as a sub issue, the question of whether or not Mr Flaherty properly explained to Mr Johnson what use DCML intended to make of AFD’s software. Having heard the evidence and seen the witnesses, I am satisfied that Mr Flaherty properly explained what DCML wanted AFD’s software for and that he and, through him, DCML relied upon the recommendations made by Mr Johnson.
55. The next question is whether or not it was reasonable for Mr Flaherty to rely on Mr Johnson’s recommendations. In my judgment it was reasonable. Mr Flaherty was going to AFD because it advertised itself as a reputable supplier of postcode look up software. He was going for guidance as to the appropriate product to use and obviously so. Mr Johnson must have known that Mr Flaherty would follow his recommendations, for that was the purpose of him making them, and must have known that if the software which he sent for evaluation proved suitable then DCML might well purchase it (or a licence to use it).
56. The next question is whether or not DCML changed its position in reliance on Mr Johnson’s recommendations. Having heard the evidence I am satisfied that it did. Mr Flaherty had found a number of alternative suppliers of postcode look up software and had he not been satisfied that AFD was offering to supply DCML with software which it could use for its business at price which was broadly commensurate with what DCML was already paying then he would have turned to those alternative suppliers. DCML plainly changed its position to its detriment if it turns out that its use of AFD software has been an infringement of copyright or breach of contract.
57. Counsel for AFD submitted that there was no duty or obligation upon Mr Johnson to make accurate recommendations and that it was the responsibility of any licensee to make sure he was properly licensed. He submitted that even if Mr Johnson had made a mistake or did not properly understand what DCML wanted to do with the software, that did not permit DCML to use the software otherwise than in accordance with the terms of the License Certificate or to infringe AFD’s copyright.
58. Counsel for DCML put the matter differently. He submitted, in effect, that, in the context of software licence agreements of the kind in issue, if a supplier in precontractual discussions tells a customer that he can use a piece of software for a certain application then, if the written software licence does not extend to that application, there is a duty or obligation upon the supplier to draw attention to that fact. For otherwise the customer is likely to follow what he has been told by the supplier and it would be wholly unreasonable for him subsequently to be found guilty of infringement of copyright.
59. Counsel for DCML also contended that there was a duty on AFD to find out what any potential licensee wanted to use AFD’s software for and that if AFD made a mistake in understanding a licensee’s requirements or was not sufficiently comprehensive in its inquiries then AFD could not complain that any subsequent use by a licensee was unlicensed use. These submissions, however, seem to me to place too onerous a burden on a licensor. In my judgment, in the normal course of events, if a licensee wants a licence to use software, it is incumbent upon him to describe to the licensor the sort of use he intends to make, for only then can the licensor make an informed choice as to whether or not to grant a licence. But the point does not matter for present purposes since I have concluded that DCML did properly inform AFD of the use to which it wished to put AFD’s software.
60. The matter can, perhaps, be expressed this way. It is an infringement of copyright to use software without the consent of the copyright owner. In this case Mr Flaherty telephoned AFD and was put through to a senior Customer Service Officer, Mr Johnson, a person who would be expected to know what he was talking about (since that was his job – indeed, he said that a major part of his job was to ensure that customers were correctly licensed). Mr Flaherty explained DCML’s application and what he wanted postcode look up software for and Mr Johnson suggested PCI was the appropriate product and sent him a copy to evaluate, the intention being that if Mr Flaherty found PCI suitable, DCML would make a purchase. Mr Flaherty evaluated it and decided that DCML would go ahead and use it in place of his existing software. He called AFD to tell them of his decision and paid the sum requested of DCML (less than £2,000). I think on those facts, Mr Johnson has given the consent of AFD to the use of the software which he, Mr Johnson, has proposed for the applications Mr Flaherty inquired about. I do not think that consent is withdrawn by the what is now established practice of clicking acceptance to (usually) long form terms and conditions whenever software is downloaded or similar unless there is some unambiguous statement to that effect to which attention is properly drawn. There was no such statement made in this case.
61. In this case, on the evidence the term “public Internet Website” does not have an unambiguous meaning. If Mr Flaherty had read the License Certificate (which he did not) it would not have been unreasonable for him to conclude that DCML’s intended use was licensed by it.
62. Moreover, and for the reasons already set out, in my judgment DCML establishes its estoppel defence.
63. In these circumstances AFD fails to establish liability for infringement of copyright. The case of breach of contract is based on the same facts and fails for essentially the same reasons. It also fails because there does not seem to me to be any clause in the contract which forbids the use which DCML has made of the software in circumstances where AFD has recommended that use, and none was drawn to my attention (although it is fair to say that the breach of contract case was scarcely referred to in argument). Thus and in any event the breach of contract case could not succeed.
64. In view of the conclusions which I have drawn it is not necessary to make any findings on the quantum of damages and I do not do so. However, I will observe that had I to make any such findings, the figures would, I believe, have been in line with what third parties would have charged DCML for the use which was made and would have been very much less than the sums sought by AFD. I consider that those sums were grossly inflated and would be likely to have severely hampered efforts to settle these proceedings without recourse to the courts. These remarks, however, are merely observations and do not constitute findings which are binding on the parties.