20 July 2016


In TICA Default Tenancy Control Pty Ltd v Datakatch Pty Ltd [2016] FCA 815 the Federal Court of Australia has dismissed TICA's copyright infringement claim against its former employees for copying system code related to a website service. The FCA however held that the respondents were liable for the use of confidential information they acquired from working with the applicant.

Perram J states
For many years now Mr Philip Nounnis has conducted a business providing information to interested persons about tenants, such as whether they have defaulted on prior leases and what applications for previous tenancies they have made. This business has been conducted by him through various corporate entities, the most recent of which is, and has been since 1999, the present applicant (‘TICA’).
TICA’s business is conducted online via a website, and is provided to members who pay a yearly fee. Most of these members are real estate agencies. The service is also provided to members of the public who pay a one-off fee.
This case is chiefly about the software and databases which together underpin and constitute TICA’s website service. The claim is one of industrial theft. In the period between 26 March 2014 and 21 August 2014, three of TICA’s staff departed its employ. The first of these was Mr Anthony Nounnis, the son of Mr Philip Nounnis. Mr Nounnis Jnr was, at most material times, a director of TICA and was, on his evidence, ‘involved in all aspects of its business’. He departed TICA on or around 26 March 2014 following an irretrievable breakdown in the relationship with his father.
The second was Mr Nathan Portelli, who commenced working for TICA in September 2011 as a sales manager. He resigned on 11 August 2014. The third former employee is Mr Reginald Joshua. He had two periods of engagement at TICA. The first was between around mid-1998 and 2003 (although for an early part of this period he was employed by one of TICA’s corporate predecessors, Tenancy Information Centre Australasia Holdings Pty Ltd). Mr Nounnis Snr says that Mr Joshua was hired at this time as the general manager of the business. In 2003, Mr Joshua left TICA, but he returned to it in 2009 although not, this time, as its employed general manager but instead as a contractor with a similar function on a full time basis. One issue which arises later in these reasons concerns Mr Joshua’s level of expertise as a computer programmer. For that purpose, it is useful to know that he studied for a Bachelor of Commerce for five years at the University of Western Sydney, majoring in Computer Information Systems but did not complete the degree because he left in his final year to set up his own business. Also relevant in that regard is his evidence that in the interregnum between 2003 and 2009, when he was not employed in Mr Nounnis Snr’s businesses, he acquired a detailed understanding of software programming, including code such as PHP (which features later in these reasons). Mr Joshua’s engagement as general manager was terminated by Mr Nounnis Snr on 21 August 2014 because Mr Nounnis Snr no longer trusted him.
Not long after, on 18 September 2014, a company called Datakatch Pty Ltd (‘Datakatch’) was incorporated. The shareholders were Mrs Elesha Nounnis (Mr Nounnis Jnr’s wife), Mr Joshua and Mr Portelli. Mr Joshua was the sole director and secretary.
Each of Datakatch, Mr Nounnis Jnr, Mr Joshua and Mr Portelli is a respondent to the current suit. The role of the fifth respondent, Datakatch International Pty Ltd, was not substantially explained in the evidence.
It is not in dispute that after September 2014, Datakatch took steps to develop a tenancy information business of its own under the name Datakatch. According to Mr Nounnis Jnr, he and Mr Joshua worked closely together to design the ‘look and feel’ of the Datakatch system in the period between September and November 2014, working apparently every day for three months. Mr Joshua was said to have done the computer programming, whilst Mr Nounnis Jnr had assisted with the design of the user interface.
The primary dispute between the parties is this: TICA alleges that Datakatch’s ‘system’ has been copied by it from TICA’s own system. Datakatch says this is not so and that the Datakatch system was written by Mr Joshua. The way the case is put, each of Mr Joshua, Mr Nounnis Jnr, Mr Portelli and Datakatch itself are said either to have done the copying or to have been involved in it.
This alleged copying by Datakatch is alleged to have involved both an infringement of the copyright owned by TICA in the TICA system, and also a misuse of its confidential information. In final address, it was accepted by Mr Smark SC, who appeared for TICA, that the confidential information claim was a subset of the copyright infringement case, at least at a factual level. The respondents’ primary defence was that there had been no copying by Datakatch or any other respondent of the TICA system, which had been written by Mr Joshua with Mr Nounnis Jnr. There was thus no infringement of copyright, and no taking of confidential information. Alternatively, the respondents denied that TICA owned the copyright in the TICA system. This contention turned largely on the identity of the employer of the author of the TICA system, an independent computer programmer, Mr Michael McCoy. This issue was complicated by the fact that the TICA system had been written over an extended period of time, and was subject to frequent revision. It was further complicated because the business being conducted by Mr Nounnis Snr was manifested through several corporate entities, because Mr Nounnis Snr was bankrupt for some of the time, and because some effort seems to have been made to keep the TICA system, qua asset, away from potential claims by creditors.
So far as the confidential information case was concerned the respondents did not accept that each element of the information relied upon was in fact ‘owned’ by TICA. In relation to some of it, the respondents submitted that it had been obtained by them quite legitimately, and certainly not from TICA.
A final part of the case turned upon allegations that Mr Joshua and Mr Nounnis Jnr had breached various duties owed to TICA, arising from their positions at it, by copying the TICA system. Essentially, this was a rehearsal of the arguments just described. There was, however, a distinct variant of it. This variant turned upon a letter signed on TICA’s behalf by Mr Nounnis Jnr which granted Mr Joshua permission to work for other clients apart from TICA. The letter was dated 10 May 2012. It had been apparently prepared by Mr Joshua for Mr Nounnis Jnr’s signature. This was alleged by TICA to have involved a breach of fiduciary duty to the extent that it authorised Mr Joshua to set up Datakatch. The respondents denied that this was the effect of the letter.