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[2020] ZASCA 30
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Bergh and Others v Agricultural Research Council (93/2019) [2020] ZASCA 30; [2020] 2 All SA 637 (SCA); 2020 BIP 455 (SCA); [2020] HIPR 119 (SCA) (1 April 2020)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
In
the matter between:
Reportable
Case
no: 93/2019
LESLIE
BERGH
FIRST APPELLANT
BULL’S
EYE
CONSULTING
SECOND APPELLANT
BENGUELASOFT
THIRD APPELLANT
TIM
PAUW
FOURTH APPELLANT
NAOMI
HAVENGA
FIFTH APPELLANT
and
THE
AGRICULTURAL RESEARCH COUNCIL
FIRST RESPONDENT
Neutral
citation:
Bergh and Others v The Agricultural Research Council
(Case no 93/2019)
[2020] ZASCA 30
(1 April 2020)
Coram:
Navsa, Wallis, Van der Merwe and Schippers JJA and Mojapelo AJA
Heard:
28 February 2020
Delivered:
1 April 2020
Summary:
Copyright – computer program – claim based on
authorship and on
s 5(2)
of the
Copyright Act 98 of 1978
–
claim not proved – court below failed to provide reasons for
order – deplorable – bringing administration
of justice
into disrepute.
ORDER
On
appeal from
: Western Cape Division of the High Court, Cape Town
(Kose AJ sitting as court of first instance):
1. The appeal is upheld
with costs, including the costs of two counsel.
2. The order of the court
below is set aside and substituted as follows: ‘The application
is dismissed with costs, including
the costs of two counsel.’
JUDGMENT
Navsa
JA (Wallis, Van der Merwe and Schippers JJA and Mojapelo AJA
concurring):
[1]
This is an appeal against an extensive order granted by the Western
Cape Division of the High Court, Cape Town (Kose AJ), in
favour of
the respondent, the Agricultural Research Council (the ARC), a
juristic person established in terms of s 2 of the Agricultural
Research Act 86 of 1990 (the Act). The order against six respondents
followed on a claim of breach of copyright and unlawful competition
in relation to BeefPro, a computer program that serves as a cattle or
herd management tool. Five of those respondents are the present
appellants. The sixth, the South African Stud Book, is an animal
improvement voluntary association (Stud Book) and also a ‘registering
authority’ in terms of the Animal Improvement Act 62 of 1998
(the ANI Act). Stud Book did not participate in the appeal.
We were
informed by counsel for the ARC that no relief had ultimately been
sought against Stud Book and that before the application
was
finalised, the case against Stud Book was withdrawn.
[2]
The order reads as follows:
‘
1. The respondents
are
1.1.
interdicted and restrained from infringing the copyright in the
BeefPro computer program, also known as BenguFarm, including
the
modules developed from and adaptations of BeefPro (“the
program”) by performing, or causing to be performed, any
of the
following acts:
1.1.1. reproducing the
computer program in any manner or form;
1.1.2. making adaptations
of the computer program;
1.1.3. letting or
offering or exposing for hire by way of trade, directly or
indirectly, a copy or an adaptation of the computer
program;
1.1.4. selling, letting,
or by way of trade offering or exposing for sale or hire, or
distributing in the Republic for the purpose
of trade, copies or
adaptations of computer program,
1.2. ordered to deliver
up to the applicant all copies and adaptations of the computer
program in their possession;
1.3. are interdicted and
restrained from competing unlawfully with the applicant by:
1.3.1 representing that
any of the respondents own or authored BeefPro or that they are
entitled to adapt, distribute or sell copies
thereof;
1.3.3 using, in relation
to BeefPro, the term BenguFarm or any other term; and
1.3.4 excluding the
applicant and the national database, INTERGIS, from the flow of data
uploaded by the users of the BeefPro program
to Logix, the database
administered by the sixth respondent.
2.1
an enquiry is to be held for purposes of determining reasonable
damages and royalties to be paid by the respondents’
infringement of the ARC’s copyright in the computer program.
2.2 The following
directions are given regarding the said enquiry:
2.1 The applicant is to
deliver a declaration within 20 days hereof.
2.2 Thereafter the
Uniform Rules of Court applicable to trial actions shall apply.
2.3 No order as to costs
is made in regard to the proceedings thus far.
3. The respondents are
ordered, jointly and severally, to pay the costs of this application,
including costs of counsel.’
[3]
The order was issued on 8 August 2018, close to two years after oral
argument had been presented by the parties. Repeated requests
for
reasons for the order were met with no response. Thus, this appeal
has to be adjudicated, more than four years after oral argument
was
finalised, without the benefit of a judgment by the court below. This
is a truly deplorable aspect to which I will revert later
in this
judgment. In the absence of a reasoned judgment it is necessary to
set out the facts in greater detail than would otherwise
be the case.
[4]
The order, it will be seen, did not exclude Stud Book. This might be
due to the lengthy passage of time before the order was
issued.
Although the relief claimed by the ARC was dependent on its claim to
ownership of the BeefPro program, this appeal is not
about the
complexities of copyright law. Rather, it turns on what the evidence
adduced in the court below reveals about the terms
under which the
BeefPro program was commissioned and whether a basis existed for the
ARC to claim ownership thereof.
[5]
The ARC operates within a legislative framework. The relevant parts
of the legislation under which it conducts operations and
the factual
background culminating in the present appeal are set out hereafter.
[6]
The objects of the ARC are set out in s 3 of the Act:
‘
The objects of the
ARC are, through research, development and technology transfer, to
promote agriculture and industry and thereby
to contribute to the
improvement of the quality of life of the people of the Republic, and
having regard to the protection of the
environment to perform such
other functions as may be assigned to the ARC by or under this Act.’
[7]
The relevant parts of s 4(1) and s 4(2) deal with the powers,
functions and duties of the ARC and read as follows:
‘
4(1) In order to
achieve its objects, the ARC may-
(o)
as an
end-product of research, development and technology transfer
undertaken or caused to be undertaken by ARC-
(i) produce and sell
reports, computer programmes and other intellectual property;
…
(iii) produce, process
and sell products;
…
(q)
do everything
which in the opinion of the Council is conducive to the achievement
of its objects or is calculated, directly or indirectly,
to enhance
or render profitable the value of the property or rights of the ARC.
4(2) The ARC shall, in
addition to its functions in terms of this Act or any other law-
(a)
and
subject to its objects, undertake the investigations, research,
development and technology transfer which the Minister may assign
to
it;
(b)
advise
the Minister on research, development and technology transfer in the
field of agriculture; and
(c)
co-ordinate
on a voluntary basis information on agricultural research and
development in the Republic by implementing and keeping
a central
register of agricultural research and development projects, and
institute such measures as it may deem fit to achieve
such goal.’
[8]
Animal improvement is within the ARC’s remit under the ANI Act.
According to that Act ‘animal improvement’
means:
‘
[S]cientifically
based identification of genetically superior animals by means of the
integrated registration and genetic information
system or in a manner
approved by the registrar and the discerning use thereof to improve
the production or performance ability
of the animal population in the
interest of the Republic.’
[1]
[9]
The ARC, in terms of its statutory mandate and powers, operates an
‘integrated registration and genetic information system’
dubbed INTERGIS. It is a computer system commissioned and developed
by the State, to integrate the pedigrees and performance data
of
animals as envisaged in the ANI Act.
[10]
In fulfilling its statutory role, the ARC utilises, inter alia, a
Microsoft Windows based cattle or herd management system,
the
aforesaid BeefPro computer program, which, it is claimed,
it
developed and introduced to the market in 2005. The ARC conducts
that system on the INTERGIS platform. The ARC’s complaint,
which formed the basis of its approach to the court below for the
order set out hereinbefore, was the ‘misappropriation’
of
BeefPro by the appellants, which it alleged the appellants were
utilising for purposes of conducting a parallel system to INTERGIS,
called Logix. The appellants, so the ARC claimed, were employing
BeefPro for financial benefit and consequently undermined the
ARC in
the performance of its statutory duties. All the more so, it was
contended, because cattle farmers presently supplied data
that ought
to be destined for the INTERGIS system to the appellants, which the
appellants then use in their Logix system, rendering
INTERGIS
redundant.
[11]
In the ARC’s view, the exclusion of INTERGIS in the manner
described in the preceding paragraph detrimentally affects
the
national interest. Furthermore, since BeefPro, which the ARC is
adamant it authored and developed, qualifies as a work in terms
of
the
Copyright Act 98 of 1978
, the appellants, by misappropriating it
in the manner described above, were guilty of copyright infringement
or engaged in unlawful
competition, and the ARC was thus entitled to
seek an interdict in the terms granted by the court below.
[12]
It was contended on behalf of the ARC that the appellants had
misrepresented to the public that
they
had developed BeefPro,
thereby causing users searching for BeefPro to be diverted to
BenguFarm, a website conducted by the third
appellant, Benguela Soft
CC, a close corporation (Benguela). That, according to the ARC, was
but one instance of unlawful competition.
[13]
The professed interrelated aims of the litigation, initiated by the
ARC in the court below, were said in the founding papers
by the ARC
to be: First, to protect the intellectual property rights (including
copyright) vesting in BeefPro through an interdict
and delivery up of
the infringing works and damage; second, to restore, as far as
possible, the ability of the ARC to properly
fulfil its statutory
duties in respect of animal recording and improvement in the national
interest; third, to protect the ARC
against unlawful interference
with those duties by the appellants; and lastly, to protect the ARC
from unlawful competition by
or at the instance of the appellants.
[14]
In addressing the importance of the INTERGIS system in relation to
the ARC’s statutory obligations, more particularly
in
contributing to animal improvement by the collection and collation of
relevant data, it was explained by the ARC that genetically
superior
animals could only be identified through a process of recording their
pedigree and performance. This was essential to
the improvement of
animal management.
[15]
The ARC referred to the Animal Improvement Schemes established by the
Minister, on 5 January 2007, which imposed a system for
animal
recording and submission of the recorded data to the INTERGIS
platform. The ARC contended that the schemes made it obligatory
for
participants to submit recorded data to INTERGIS.
[16]
The applicable legislation, so it was asserted on behalf of the ARC,
sets a framework that contemplates only one national databank,
namely, INTERGIS, established with the cooperation of the Department
of Agriculture, Forestry and Fisheries. Emerging farmers who
stood to
benefit from the schemes are entitled to participate in the schemes
which, as stated above, were intended to regulate
and improve animal
breeding.
[17]
According to the ARC the scope of the Act and the associated
regulations as well as the AI Schemes dictate that only one national
databank is recognised, namely INTERGIS. Once an animal is recognised
as part of a breed, or considered suitable to be a donor
animal, or
for importation or exportation, the statutory framework makes it
obligatory for its details to be registered on INTERGIS.
[18]
There are two streams of data that feed into INTERGIS. One from herd
management programmes, such as BeefPro, and the second,
from data
submitted by registering authorities provided for in the ANI Act.
BeefPro can operate as a standalone programme but was
developed to be
compatible with and integrate with INTERGIS.
[19]
In seeking the interdictory and associated relief granted by the
court below, the ARC described what it considered to be the
infringing conduct of the appellants. The first appellant, Mr Leslie
Bergh, is an erstwhile senior employee of the ARC, having
held the
title, of amongst others, Assistant Director: National Beef Recording
and Improvement Scheme. His contract of employment
with the ARC was
terminated on 11 September 2013. Mr Bergh had been employed by the
ARC and its predecessors for approximately
32 years. He now consults
to the agricultural industry through Bull’s Eye, the second
appellant.
[20]
According to the ARC, Mr Bergh’s employment was terminated
after a disciplinary hearing at which he was found guilty
of acting
in conflict with the ARC’s interests and misappropriating ARC
property for his personal benefit. This included,
the ARC said, his
development of adaptations of Beefpro, more particularly an
adaptation referred to as SheepPro. The sanction
of dismissal was
apparently upheld by the CCMA.
[21]
According to the ARC it is clear from Mr Bergh’s website that
he:
· is registered as
a professional scientist with the South African Council for Natural
Science Professions;
· is a member of
the South African Society for Animal Science;
· has 32 years’
experience in animal recording, performance testing, genetic
evaluation, selection, breeding and related
management aspects of
beef cattle;
· has in-depth
knowledge of Stud Book as well as of the animal recording systems
Logix and INTERGIS;
· was and is the
“driving force” in the development, marketing, support
and training of BenguFarm livestock management
software since its
inception in 2005.
· published
numerous articles, presented many lectures and talks, conducted many
training courses and served in an advisory
capacity on the boards of
several breeders’ societies.
[22]
Mr Tim Pauw is the sole and managing member of Benguela. The ARC
claimed that Bull’s Eye, Benguela and Mr Pauw were all
infringing its copyright in BeefPro by making, adapting, selling and
distributing copies thereof under the name BenguFarm. The
fifth
appellant is Ms Naomi Havenga, also a former senior employee of the
ARC. It was claimed that she assisted Bergh and Benguela
in their
infringing conduct by taking responsibility for data bureau services
and that she administers BeefPro under the name of
BenguFarm. It is
uncontested that Mr Havenga and Mr Bergh are well known to cattle
breeders.
[23]
Against the
background sketched above, the ARC was emphatic that the creation and
development of BeefPro, an original work, requiring
knowledge of
animal science, was at its instance and under its control and that it
was thus the author.
[2]
It is a
computer program, requiring technical skill to write the source code,
and it incorporated literary works in the form of
tables and
compilations of data. Thus it was a work worthy of copyright
protection. The ARC sought to pre-empt any suggestion by
Mr Pauw
and/or Mr Bergh that they had authored the program by stating that,
in the event of such an assertion, Mr Bergh could only
have done so
in the course of his employment with ARC and that Mr Pauw could only
have acted under his instructions and control,
with the result that
copyright vested in the ARC, in terms of s 21(1)
(d)
of the
Act.
[3]
[24]
Furthermore, the ARC contended that in the event of a claim of joint
ownership by Mr Bergh and Mr Pauw, its consent for the
use,
distribution and sale of BeefPro would nevertheless have been
required. That was not provided and would not be forthcoming.
[25]
The complaint by the ARC about infringement of copyright and unlawful
competition on the part of the appellants, as asserted
above,
included complaints about the use of SheepPro and an allied program
called GenePro, which the ARC claimed was developed
at its instance
and under its control.
[26]
The ARC, in applying for the interdict it obtained, also alleged that
shortly after Mr Bergh left the ARC’s employ he
and Mr Pauw
diverted the administration of BeefPro from the ARC to Stud Book and
with the co-operation of the other appellants
promoted Bull’s
Eye as a provider of consultation services in relation thereto,
including recording and performance testing,
dealing with breeding
values, selection and related management. According to the ARC,
Bull’s Eye was promoted as offering
training in relation to
BeefPro and data recording and also in relation to GenePro services.
In advertising such services it was
claimed that Ms Havenga had
joined the team and that she would be instrumental in setting up and
maintaining services such as data
capturing, the submission of data
to Stud Book and administering BeefPro. Benguela announced that
BeefPro was being rebranded and
the product offering would take place
under the BenguFarm name. Benguela offered an introductory course in
relation to the product,
formerly known as BeefPro. Mr Bergh, Ms
Havenga and Bull’s Eye offered training courses and continued
to do so.
[27]
The ARC also accused Stud Book of acting as an agent for the sale and
activation of BenguFarm software, which included the
rebranded
BeefPro adaptations. In this regard, the ARC pointed to the service
agreement it once had with Stud Book, for the latter
to administer
and operate INTERGIS. A few months after the departure of Mr Bergh
and Ms Havenga, Stud Book cut off the ARC’s
access to INTERGIS
and appropriated collected data to itself by using the benefits of
BeefPro and operating the new database under
the Logix system. By
doing so it had deprived the ARC of data that the latter contended it
was solely entitled to. Breeders could
now access Logix to gainfully
use the gathered data. Breeders began sending their info to Logix
rather than to the ARC as they
were obliged to. This meant, so the
ARC said, that it was cut off from data which it has a statutory
right to gather and hold.
Stud Book was reaping commercial benefits
by subverting the ARC’s national database.
[28]
As to its entitlement to an interdict, the ARC summarised the
position as follows:
(a) The appellants
were unlawfully and without permission, licence or authorisation,
using BeefPro to infringe the ARC’s
intellectual property
rights, in contravention of provisions of the Act and were engaging
in unlawful competition.
(b) The appellants
were undermining the ARC’s statutory role and functions,
interfering with its relationships with
its clients, more
particularly, breeders’ associations, and influenced them to
cancel their agreements with the ARC and transfer
their business to
Stud Book.
(c) That it had
provided proof of the injury suffered in relation to the loss of
business and loss of income from the sale
of BeefPro and concomitant
services as well as loss of goodwill and reputation and an interdict
was its only effective remedy.
[29]
In addition to interdictory relief the ARC had sought an order in
terms of
s 24(1B)
of the
Copyright Act, namely
, an enquiry into past
losses that it had sustained. As is apparent from the order set out
above it obtained the additional relief
sought.
[30]
As stated above, the appellants were accused of collaborating with
Stud Book in order to divert data to Logix and it was claimed
that
with Stud Book they flagrantly impinged upon the Arc’s
intellectual property rights. Notwithstanding the ARC’s
withdrawal of its claims against Stud Book, the latter’s
response to those claims provides historical as well as legislative
context and provides insight into the approach to court for
interdictory relief. As the claim against Stud Book was withdrawn
after it had filed its response it formed part of the record before
us.
[31]
Stud Book,
in resisting the relief sought by the ARC, described its own history
in relation to legislative enactments, its interaction
with the ARC
and the termination of that relationship. It explained that it was
established as a voluntary organisation in 1905
by a number of stud
breeders, with the aim of organising the breeding industry in South
Africa and that it started recording the
births and pedigrees, being
the particulars of the sires and dams of every stud or ‘pure
bred’ animals of various breeds
in so-called stud books.
Recording was done in this manner up to book 30, which was published
in 1953. A predecessor of the Act
[4]
had given some structure to the identification, breeding and
ownership particulars that were required to be recorded.
[32]
Stud Book explained that with the beginning of the computer era the
data referred to above was captured on servers. Initially,
the State
allowed Stud Book the use of its mainframe. The State became
concerned about this data being captured together with sensitive
State data on the mainframe and this led to then Department of
Agriculture funding a project that saw Stud Book participating in
the
development of a computer system for the recording of the relevant
information. When that did not progress as anticipated,
it led to the
purchase of a computer program developed by CR Delta in Holland to
serve as the basis of the development of a world
class recording
system. This developed into the INTERGIS system. The project was
funded on the basis that the system would be developed,
managed and
operated as a joint venture between Stud Book and the Department. To
this end a written joint venture agreement was
concluded during July
1999. As the recording system was developed it was realised that more
details than merely the pedigree had
to be recorded to evaluate an
animal’s genetic potential. This led to the recording of two
legs, namely, registration recording
(births, parentage and
ownership) and production performance recording (weight, growth rate,
milk production, etc), so that the
data could be effectively utilised
by breeders.
[33]
The Livestock Improvement Act 25 of 1977 came into operation on 1 May
1979. In that legislation Stud Book was recognised as
the entity
responsible for the registration and publication of data concerning
the pedigrees of farm livestock. The ANI Act came
into operation on
21 November 2003 and referred to ‘animal’ rather than
‘livestock’ in order to include
other species not
provided for under the latter term.
[34]
An important change brought about by the ANI Act is that Stud Book
was no longer the only entity that could register animals
for the
purposes envisaged by the ANI Act. That statute now provided that a
breeders’ society or a group of such societies
could apply to
the Registrar of Animal Improvement to become its or their own
registering authority, without making use of Stud
Book as a
registering authority. In terms of s29(3)
(a)
Stud Book is:
‘
deemed to be a
registering authority which is registered in terms of s 8(7)
(a)
(ii)
of this Act and which has the power of a registering authority with
reference to any kind of animal ’
[35]
Stud Book pointed out that, in the normal course, recording of animal
data is not compulsory in South Africa. Some breeders’
associations made it compulsory for members to record certain data
and others not. Consequently, one will find some breeders recording
production data and others not. It is correct, though, that when a
farmer makes a decision to become a breeder of registered animals
of
a specific breed he is required, in terms of the ANI Act, to become a
member of the specific breed’s breeders’ society.
The
society must then allocate him a herd designation mark, which is
unique. When an application to become a breeder is submitted
to a
registering authority that registering authority must, on behalf of
such a breeder, register a prefix or a suffix on the INTERGIS
with
the ARC. That prefix/suffix is also unique across all breeds and has
to be recorded on a central database to prevent duplication.
The
breeder can then record the birth of his or her animals with the
registering authority.
[36]
In relation to performance data the Minister has, in terms of s 20 of
the ANI Act, established schemes for various species.
There are
specifications, rules and fees connected to the State’s
established schemes, which are managed by the ARC. When
a breeder
participates in these schemes he or she is obliged to provide their
collected performance data to the manager of INTERGIS,
which
presently is the ARC. The scheme relevant to the present case is the
Beef Recording and Improvement Scheme, clause 13 of
which provides
that all beef farmers, stud breeders, commercial and emerging farmers
may participate in the scheme. Participation
is optional and not
obligatory, as suggested by the ARC.
[37]
In terms of s 8(1)(b)(vii) of the Regulations under the ANI Act, a
registering authority is authorised to operate an independent
performance and testing scheme. To enable it to do so all it was
required to prove is that the data recording and processing system
it
utilises complies with international standards. Stud Book described
how, after the development of INTERGIS as a joint venture,
its
servers were housed in the Stud Book building in Bloemfontein. The
management and operation was done by Stud Book’s IT
team, in
terms of a separate operational agreement with the ARC. It provided
for the ongoing development, data capturing and processing
of the
information provided to INTERGIS.
[38]
Since 2008, according to Stud Book, it started receiving complaints
from breeders, breeders’ societies and performance
test
advisory committees about vacancies at the ARC not being filled and
about a deterioration of production recording by the ARC.
Stud Book
requested a meeting with the ARC’s Chief Executive Officer. The
meeting took place on 1 April 2009. The CEO admitted
that the ARC was
experiencing difficulties in meeting its obligations in respect of
the recording of data, due largely to a shortage
of funds. At Stud
Book’s request a professional organisation prepared a business
plan for the ARC. After two years of interaction
no solution was
reached. There was no improvement in the services rendered by the
ARC. The ARC unilaterally terminated the operational
agreement with
Stud Book and took a decision to relocate INTERGIS to Pretoria. That
took place and Stud Book claimed monies it
said the ARC owed for
services rendered and for rent. Notwithstanding the termination of
the operational agreement, the ARC had
continued to submit data to
Stud Book. A dispute concerning the continued existence of the joint
venture referred to earlier was
referred to mediation, during 2011.
In light of what is set out above Stud Book considered the ARC as
having repudiated the joint
venture agreement and terminated the
relationship. Because the monies owing by the ARC had not been paid
Stud Book ceased all data
recording services it had previously
rendered to the ARC.
[39]
Thereafter, Stud Book obtained its own server and other technical
equipment and transferred a complete copy of the INTERGIS
system onto
its own new system, which it considered it was entitled to do as an
erstwhile party to the joint venture. It consequently
started to
render a one-stop service to breeders, including registration and
production recording from 1 January 2012. It called
its new system
Logix.
[40]
A significant number of breeders’ societies started utilising
Stud Book’s services. Stud Book recruited the staff
necessary
to provide the aforesaid services, such as animal scientists,
technical advisors and the like. In resisting the relief
sought by
the ARC, Stud Book acknowledged that Mr Pauw, a private programmer,
had been requested by the ARC to develop a modern
beef farm
management program. Stud Book played no part in the development of
such a program and does not have access to its source
code. BeefPro
was introduced to the public during 2005 by the ARC. Whenever a copy
of BeefPro was sold to a farmer all Stud Book
did was load the
program, which Mr Pauw had installed onto its system. Stud Book is
adamant that it does not market or sell BeefPro.
[41]
Stud Book was aware of the rebranding of BeefPro as BenguFarm-Beef.
According to Stud Book, farm management software is merely
a
convenience, as data can be submitted by farmers of breeders’
associations by email which can then, just as easily, be
loaded onto
Logix. BeefPro provides users with a choice to submit to any of
INTERGIS, Breedplan or Logix. The farmer has this choice.
Stud Book
never doubted Mr Pauw’s authorship of the BeefPro or BenguFarm
program. It was of the firm view that he had developed
the program.
It is apparent from the description of the Stud Book’s defence
that on many issues there were fundamental disputes
between it and
the ARC, which, for present purposes, need not be dealt with.
[42]
I now turn to the defence put up by the other respondents in the
court below, the present appellants, principally through Mr
Pauw, a
software developer. During 2004 he was introduced to Mr Thinus
Viljoen, who was employed by the ARC in Stellenbosch. Mr
Viljoen knew
of Mr Pauw’s work in creating a cattle management program for
dairy farmers and informed him that the ARC was
looking to develop a
software program for beef cattle farmers and that it had approached a
number of software developers. In 2005
he was contacted by Mr Bergh
who asked him to travel to Pretoria to explore the possibility of
developing a software program for
beef cattle management. He met with
Mr Bergh and Dr Van der Westhuizen, representing ARC, and informed
them that he was eager to
develop such a program and had the
necessary expertise to do so.
[43]
The ARC was unable to finance the development of the envisaged
programme. Mr Pauw was adamant that he had made it clear to
the ARC
that a great deal of time, effort and skill would have to be expended
to develop such a program and that he was willing
to undertake it,
but only on the understanding that copyright in the program and any
adaptation would vest in him. Mr Pauw insisted
that Mr Bergh and Dr
Van der Westhuizen on behalf of the ARC agreed to this, with further
discussion to ensue on the nature and
content of the program. The
risk of failure, in attempts to develop a viable program, considering
the time and effort required,
was entirely his. This was especially
so since it was agreed that he would not be remunerated at all. The
benefit for the ARC of
such an arrangement was that the bureaucratic
constraints of seeking approvals and acquiring funding did not apply.
Furthermore,
the ARC did not have staff with the necessary skills and
experience to develop such a program.
[44]
It was agreed, so said Mr Pauw, that Mr Bergh would be the contact
person at the ARC with whom he would liaise in order to
develop the
program. It was contemplated that the program would be sold for an
annual licence fee, as this would incentivise Mr
Pauw as the
developer to continue improving the program. Mr Pauw, consequently
registered Benguela as the corporate vehicle through
which he would
conduct his relationship with the ARC. Mr Bergh was advised of this.
After Benguela was formed it would acquire
Mr Pauw’s rights and
obligations.
[45]
Mr Pauw set out the material terms of an oral agreement that he had
reached with the ARC, represented by Dr Van der Westhuizen
and Mr
Bergh, as follows:
(a) the parties undertook
to execute and complete a project for the development of a beef
cattle herd management computer program;
(b) the ARC would develop
marketing material for the program and carry the costs in relation
thereto, unless Benguela agreed to
do so;
(c) the ARC would supply
Benguela with the relevant specifications, technical detail and other
relevant information in order for
Benguela to create and develop the
program;
(d) the ARC would manage
the collection and administration of the selling price and annual
software licence fees in relation to
the program and pay the agreed
percentage of eighty five percent of those fees to Benguela;
(e) the ARC would bear
all costs for market research, the development and registration of
the name and logo of the program, the
development and printing of
marketing material, training of ARC employees (to install, train and
deliver after sales service to
clients), administration and record
keeping;
(f) Benguela would supply
the necessary hardware and software for development and maintenance
of the program;
(g) Benguela would be
responsible for the development and creation of the program;
(h) Benguela would retain
the copyright in the program and its adaptations and improvements for
the duration of Benguela;
(i) Benguela would bear
all costs for the development, alterations, enhancements,
improvements and extensions of the program and
the registration,
development and maintenance of the program’s website as
requested by the ARC.
[46]
According to Mr Pauw, there was a sense of urgency on the part of all
concerned to ensure that the program was developed as
soon as
possible so as to beat any competitor in bringing a Windows based
program for beef cattle management to the market. Thus,
the work was
carried out with some expedition. Mr Pauw was provided with an office
at the ARC’s premises in Irene, with the
only financial
contribution made by the ARC being an amount of R9 000 towards his
rental for the time he spent in Pretoria. He
did not work under
supervision and was not subject to any working conditions at all. Mr
Pauw also provided a written document in
terms of which he assigned
his rights to Benguela.
[47]
Mr Pauw described in detail the work that he had done in developing
the BeefPro program and described how the program functioned.
Mr Pauw
stated that in the last month prior to BeefPro’s release to the
public it was not uncommon for him to spend between
16 to 18 hours a
day working on it, almost every day of the week. The initial programs
and adaptations and improvements all constituted
copyright protected
works. The ARC had no interest in how he went about developing the
program. The name BeefPro was arrived at
after suggestions were
solicited from interested parties, including farmers and members of
breeders’ societies. Since its
release to the market in August
2005, BeefPro has continued to undergo further developments to enable
it to remain competitive,
which Mr Pauw was responsible for. He
expended time, energy and skill in doing this.
[48]
Mr Pauw explained that the agreement concluded in March 2005, set out
in para 44 above, regulated the relationship between
him and the ARC.
The first written record of the agreement occurred in October 2005,
when Mr Bergh sent him a document recording
the parties’
respective obligations. The document provided that the ARC would
render assistance in further development of
the program by providing
necessary information and that it would assist in the sale and
distribution of the program, collect licencing
fees and pay a
percentage to Benguela. Importantly, the document noted that
copyright in the program would be retained by Benguela.
[49]
After receiving the document from Bergh, Pauw responded by email that
he agreed with the terms set out therein, with one alteration,
which
for present purposes is immaterial. The agreement was not signed. Mr
Pauw contended that even though the agreement had not
been signed the
material terms were adhered to by Benguela and the ARC and that was
how the relationship continued to be regulated.
[50]
During March 2007 Mr Bergh sent Mr Pauw another draft agreement.
Although more detailed than the first, it was in essence the
same. Mr
Pauw responded by email accepting the material terms. Once again, the
relationship continued as before. It was in their
mutual interests
that BeefPro continued to be marketed and developed on an ongoing
basis. In the latter part of 2009, the ARC sought
to renegotiate the
agreement but Mr Pauw was not receptive to the idea. In seeking a new
agreement, Dr Greyling, on behalf of the
ARC, raised the question of
the transfer of intellectual property in relation to BeefPro. I pause
to record that Dr Greyling was
employed as Research Team Manager of
the ARC’s Beef Cattle Improvement Program on 1 January 2009,
some four years after the
arrangements had been made in relation to
the development of BeefPro. An exchange of emails demonstrates, so Mr
Pauw contended,
that the ARC accepted that there was an existing
arrangement in place. Mr Pauw was emphatic that the ARC was never the
holder of
copyright in BeefPro, nor had it ever historically claimed
that right.
[51]
In its
replying affidavit the ARC relied on
s 5(2)
of the
Copyright Act
[5
]
and stated that any work made under the direction and control of the
state vested in the state. Thus, it submitted, copyright in
BeefPro
belonged to it. The ARC pointed to the draft agreement provided by Mr
Pauw, in terms of which Benguela undertook to provide
the ARC with
the source code for BeefPro. Furthermore, the ARC referred to a draft
agreement, sent by Mr Bergh and not disclosed
by Mr Pauw, in terms of
which copyright in relation to BeefPro was claimed by the ARC. The
relevant clause (referred to as para
9) of that agreement reads as
follows:
‘
Any Intellectual
property generated in terms of this agreement will vest in the ARC as
per
Section 24
Agricultural Research Act, 86 of 1990, which IP is
held on behalf of the Minister of Agriculture and will be managed by
the ARC
in terms of the guidelines provided by the national
Department of Agriculture to the ARC from time to time.’
[52]
Mr Pauw responded to that document by email, dated 26 January 2006.
The relevant parts of that email read as follows:
‘
1. Par 4.2
, p5
[Payment] en ook par 3.1, p12: Ek sien hier staan betaling aan die
LNR?
2. par 9, p13
[Intellectual Property] Ek het met jou voorheen hieroor gepraat. Dit
lyk hier of BeefPro die LNR se intellektuele
eiendom is? Ek sou dit
anders wou hȇ indien moontlik. Dit gaan hier oor as ek in die
toekoms die besigheid, nl BenguelaSoft,
of enige gedeelte (lees
BeefPro) daarvan sou wou verkoop. Ons het gesé in so ‘n
geval moet die ooreenkoms tussen BenguelaSoft
en die LNR net so na
die derde party oorgedra word. Die derde party neem dus BenguelaSoft
se pligte ten opsigte van die LNR oor
en die LNR se verpligtinge ten
opsigte van BenguelaSoft gaan oor na die derde party.
As die program die LNR se
intellektuele eiendom is, dan moet daar, en ek dring in elk geval
daarop aan, dat die LNR se verpligtinge,
nl die persentasie van
aankope en jaargelde aan BenguelaSoft betaalbaar, in die kontrak
gestippuleer word. Ek vertou jou 100% Leslie,
maar ek moet myself
beskerm in die geval wat jy weggaan of iemand hoër op sé
dinge kan nie so gebeur soos tans nie.
Met ‘n kontrak wat gelde
betaalbaar aan BenguelaSoft spesifiseer, sal ek wel die besigheid van
die hand kan sit en myself
beskerm teen moontlike toekomstige
probleme.’
[53]
The ARC relied on yet a further email by Mr Pauw, dated 9 March 2006,
in relation to a draft agreement sent to him, in which
he said the
following:
‘
Leslie, ek hoop
dit is reg. Baie van die goed waaroor ons gister gepraat het, het jy
in elk geval by die betrokke party se verpligtinge
bygesit. Die
veranderinge is in rooi. By 3.2.1.13 en 3.2.1.14 net “BeefPro”
bygesit, anders raak ek geregtig op al
die LNR se inkomste! Is
3.2.2.7 [nie] teenstrydig met 3.2.2.11 nie? Groete Tim’
It is necessary to have
regard to clauses 3.2.1.13 and then 3.2.1.14, which is referred to in
Mr Pauw’s email. They read as
follows:
‘
3.2.1.13 To manage
the collection and administration of the moneys received by the ARC
from selling BeefPro and to pay 85% (eighty
five percent) of these
moneys (VAT excluded) to BenguelaSoft within 30 days after the
applicable invoice was received and provided
that the invoiced
service has been delivered satisfactorily to the ARC.
3.2.1.14 To manage the
collection and administration of the moneys received by the ARC from
the agreed upon annual BeefPro license
fees (R500.00, VAT included)
and to pay 85% (eighty five percent) of these moneys to BenguelaSoft
within 30 days after the applicable
invoice was received and provided
that the invoiced service has been delivered satisfactorily to the
ARC.’
[54]
It was contended on behalf of the ARC that the emails by Mr Pauw,
referred to in the preceding paragraphs, gives a lie to his
assertion
of copyright vesting in him. It was submitted that if he had indeed
authored the BeefPro program free from the control
and supervision of
the ARC, he would not had been negotiating about the ownership or
transfer of copyright in the work.
[55]
Dr Greyling accused Mr Pauw of not disclosing the emails referred to
in paras 51 and 52 above. He did not, however, explain
why he or the
ARC had made no reference in their founding affidavits to the emails
by the ARC and the associated draft agreements
that Mr Pauw disclosed
in his answering affidavit. Nor did he explain why, after these two
emails were exchanged, drafts sent to
Mr Pauw on 9 March 2007 and 16
March 2007 reverted to the original terms that provided that
copyright in BeefPro vested in Benguela.
[56]
This appeal does not concern the rights of the ARC as against farmers
and breeders, in relation to data and the submission
thereof,
obligatory or otherwise. This appeal is also not about whether the
ARC is entitled to a monopoly in respect of certain
data, which it
seems to be suggesting. The parties were agreed that a finding on
entitlement to copyright is dispositive of the
appeal. The ARC sought
relief on the basis that it owned the copyright in BeefPro. The
question to be addressed is whether it discharged
the onus of proving
its ownership.
[57]
Insofar as the ARC’s claim to copyright based on an employment
contract with Mr Bergh is concerned, the problem is that
it is clear
that Mr Bergh did not develop the program. He was emphatic in his
support of Mr Pauw’s assertion of how the latter
had developed
the program, based on his skill and experience, as was Dr Van der
Westhuizen. No proof was provided by the ARC of
any employment
relationship with Mr Pauw. No evidence was adduced by the ARC in
relation to any remuneration paid to Mr Pauw. He,
on the other hand,
was emphatic that he had received no remuneration and that only R 9
000 was paid in respect of certain rental
because, in developing the
program, he was required to be present in Pretoria.
[58]
In relation to the ARC’s claim of copyright based on s 5(2) of
the Act, Dr Greyling stated, in general terms, that BeefPro
was
‘created for and at the instance of ARC’ and that the
knowledge of the employees of ARC was essential to its creation.
Later, Dr Greyling said the following:
‘
The computer code
for BeefPro was written by Pauw, acting on instructions and according
to detailed specifications provided by Bergh
who, in turn, was acting
in his capacity as employee of ARC and as directed by it.’
Dr
Greyling also stated that Mr Bergh was a ‘project leader’
in relation to the development of BeefPro.
[59]
As stated
earlier, the
Copyright Act defines
the ‘author’ of a
computer programme as: ‘the person who exercised control over
the making of the computer program’
[6]
.
The onus to prove that it exercised control over the making of
BeefPro rested on ARC. Roux de Villiers, in an article entitled
‘Computer programs and copyright: The South African
Perspective,
[7]
identified three
situations in relation to a computer program:
‘
Three possible
situations can be identified: a programmer writes a program while not
being under any obligation to a third party
to do so; a programmer
writes a program in fulfilment of his or her obligations under an
employment contract (locatio conductio
operarum); or a programmer
writes a program in fulfilment of his or her obligations to do so
under a commission or contract for
work (locatio conductio operis).’
[60]
The author of the aforesaid article then goes on to deal with each
situation in turn:
‘
In the first
situation, where the programmer is under no obligation to write the
program, the programmer is apparently in control
of the making of the
program and will be the author thereof as well as the first copyright
owner. In the second situation, where
the programmer is employed, it
is generally not decisive who the author of the program is, because
the first ownership of copyright
in the work will tend to vest in the
employer of the programmer irrespective of who the author is. It is
extremely likely that
in most cases the employer will, in any event,
be the author of the program, since it would be exercising “control”
over the employee’s actions as part of the employment
relationship. The real problem arises in the third situation, where
the programmer is commissioned to write the program, which also
happens to be the situation that occurs most often in practice.’
[8]
[61]
In the
present case, it is common cause that Mr Pauw was commissioned by the
ARC to write the BeefPro program. What has to be determined
is
whether the ARC proved that it exercised control over the development
of BeefPro. In
Haupt
t/a Soft Copy v Brewers Marketing Intelligence (Pty) Ltd and Others
[2006]
ZASCA 40
;
2006 (4) SA 458
(SCA) this court had occasion to consider
the meaning of ‘control’ in relation to the definition of
author of a computer
program as provided for in
s 1
of the
Copyright
Act. Streicher
JA said the following:
[9]
‘“
Control”
in the definition must therefore have been intended to have a wider
meaning than “control” in the employment
situation, that
is, a person may, because of his control over the making of a
computer program, be the author of that program even
if the creator
of the program is an independent contractor. According to
The
Shorter Oxford English Dictionary
“to control” means
“to exercise restraint or direction upon the free action of”
and “control”
means “the fact of controlling, or of
checking and directing action”. In this case Haupt instructed
Coetzee as to the
end result that was to be achieved, Coetzee then
did the technical work required to achieve that end result and, from
time to time,
effected improvements. However, Coetzee was, all along,
in constant contact with Haupt and he accepted and executed detailed
instructions
from Haupt. As he progressed, he submitted his work to
Haupt for it to be checked and approved by him. In the properties
section
of the Data Explorer program, Coetzee indicated that the
copyright was owned by Soft Copy, the name under which Haupt was
trading.
The allegation by Haupt in his founding affidavit that it
was always agreed between the parties that Haupt was the owner of the
program was not disputed. This being the understanding between the
parties, Haupt could, at any time, direct in which direction
the
development of the program should proceed, or could terminate further
development if he wished to do so. Haupt was, therefore,
in a
position of authority over Coetzee insofar as the development of the
program was concerned. He was in command and Coetzee
subjected
himself to such command. It is true that Haupt was in no position to
instruct Coetzee as to how, technically, to achieve
his requirements,
but I agree with the High Court that one does not need to be a
computer programmer to be able to control the
writing of a computer
program. For these reasons I am of the view that Haupt controlled the
writing of the computer programs written
after 31 July 1998.’
[62]
The fundamental problem for the ARC is that the principal actors in
relation to the commissioning of BeefPro, namely Mr Van
der
Westhuizen, Mr Bergh and Mr Pauw provided first-hand evidence as to
how it came about and as to its terms. They all stated
that Mr Pauw
had developed the program, working independently and bringing his own
skills and experience to bear, only seeking
certain information from
the ARC in order to ensure that the program served its purpose. He
did not follow instructions from, or
work under the supervision of Mr
Bergh, or anyone else at the ARC. As the independent developer of the
program he did not have
to obtain, on an ongoing basis, the approval
of anyone at the ARC. The technical aspects of his work did not have
to be checked
by someone in authority at the ARC.
[63]
The present case is markedly different from
Haupt
. Mr Pauw did
not take detailed instructions from Mr Bergh or anyone else at the
ARC. His work was not subject to checking and approval
and he was not
being paid for his efforts. The program reflected Benguela as the
copyright owner, in line with what was asserted
by Mr Bergh, Mr Pauw
and Dr Van der Westhuizen. I agree, in general, with the view
expressed in the De Villiers article, that the
mere provision of
functional requirements and a periodic review of progress being made
in the development of the program and testing
it finally to see if it
met its purpose, without more, does not establish control over the
making of it or vest authorship therein.
[64]
Furthermore, Mr Pauw was adamant that an oral agreement had been
concluded in terms of which he reserved ownership of the program.
Mr
Pauw’s assertion that the ARC could not finance the development
of the program, is not in contestation. Mr Pauw’s
claim to
copyright is substantiated by the fact that the draft agreements,
latterly disclosed by the ARC in the replying affidavits,
provide for
Benguela, to receive 85% of the income from the sale of each BeefPro
program and the ARC undertook to pay the annual
licence fee to
Beguela in relation to paid up registrations of BeefPro software. The
agreements also provided expressly that the
copyright in BeefPro
vested in Benguela. The agreements also made provision for the source
code to be made available to the ARC.
The latter’s reliance on
the source code to BeefPro being provided to it does not, in the
circumstances set out above, assist
it in its claim to copyright.
[65]
Dr Greyling, the principal deponent on behalf of the ARC, was unable
to provide first-hand countervailing evidence. Nowhere
in his
affidavit does he state that he has personal knowledge of material
events in relation to the development of BeefPro. The
ARC’s
reliance on the emails by Mr Pauw, referred to in its replying
affidavit, in terms of which he sought to negotiate
terms in relation
to the transfer of intellectual property, is of no assistance. He was
not writing as a lawyer, but as a software
developer seeking to
ensure that he retained his source of income derived from the sale of
the program he had developed. If anything,
the exchange of emails and
the contents of the draft agreement prepared by the ARC, referred to
in paras 51 to 53, give a lie to
the ARC’s contention that it
is the owner of BeefPro. In light of what is set out above, it is
clear that the ARC failed
to discharge the onus in relation to its
claim of copyright. It failed to show that in developing the program,
Mr Pauw acted under
its control. In the circumstances set out above
there can be no question of joint ownership as contended for, in the
alternative,
by the ARC.
[66]
The ARC’s reliance on
s 5(2)
of the
Copyright Act is
misplaced.
The ARC is a juristic person established in terms of the Act. It is
controlled by a ‘Council’, constituted
in terms of s 9 of
the Act. It is not the state. Even if it could be contended that it
is the state because of the funding it receives
and because of the
powers of the relevant Minister in relation to its activities, the
problem for the ARC is that it is clear from
what is set out above
that it failed to discharge the onus of showing that Mr Pauw acted
under the control of the ARC or under
the direction of any other
entity. The appeal must thus succeed.
[67]
Finally, it
is necessary to return to an aspect referred to briefly at the
commencement of this judgment, namely, the failure by
Kose AJ to
provide reasons for the order. In
A
A Maake v Director of Public Prosecutions
[10]
this court said the following:
‘
It
is not only a salutary practice but obligatory for judicial officers
to provide reasons to substantiate conclusions. The magistrate
did
not do so in respect of the maximum sentence imposed by him. In an
article in
The South African Law Journal
entitled “Writing
a Judgment” former Chief Justice M M Corbett pointed out that
this general rule applies to both civil
and criminal cases. In civil
cases it is not a statutory rule but one of practice. In
Botes and
Another v Nedbank Ltd
1983 (3) SA 27
(A) at 27H-28A, this court
held that in an opposed matter where the issues have been argued
litigants are entitled to be informed
of the reasons for the judge’s
decision. See also in regard to the obligation to provide reasons
Road Accident Fund v Marunga
2003 (5) SA 164
(SCA) at
171E-172C.’
[68]
In the article by the late Chief Justice referred to in the preceding
paragraph, the following is stated:
‘
In addition,
should the matter be taken on appeal, the court of appeal has a
similar interest in knowing why the judge who heard
the matter made
the order which he did. But there are broader considerations as well.
In my view, it is in the interests of the
open and proper
administration of justice that the courts state publicly the reasons
for their decisions. Whether or not members
of the general public are
interested in a particular case – and quite often they are –
a statement of reasons gives
some assurance that the court gave due
consideration to the matter and did not act arbitrarily. This is
important in the maintenance
of public confidence in the
administration of justice.’
[11]
[69]
In the present case it cannot be emphasised enough that it is indeed
deplorable that the litigants were made to wait for approximately
two
years for an order to issue, at which point no reasons were supplied
and requests for reasons were met with no response. This
can only
bring the administration of justice into disrepute. It is hoped that
this court will in the future not have to deal with
circumstances
such as these.
[70]
The following order is made:
1. The appeal is upheld
with costs, including the costs of two counsel.
2. The order of the court
below is set aside and substituted as follows:
‘
The
application is dismissed with costs, including the costs of two
counsel.’
______________________
M
S Navsa
Judge
of Appeal
APPEARANCES
For
Appellants: A R Sholto-Douglas SC, with C Bester
Instructed
by: ENSafrica, Sandton Webbers, Bloemfontein
For
Respondent: L J van Tonder SC, with A M Heystek
Instructed
by: DMK Kirsch Inc, Sandton Phatshoane Henney Attorneys
[1]
Definition of ‘animal improvement’ in s 1 of the ANI
Act.
[2]
Author’ is defined in the
Copyright Act, in
relation to a
computer program, as ‘the person who exercised control over
the making of the computer program’.
Section 2(1)(i)
of that
Act makes computer programmes eligible for copyright.
[3]
Section 21(1)(a), under the heading ‘Ownership of copyright’,
provides that ‘ownership of any copyright conferred
by section
3 or 4 on any work shall vest in the author or, in the case of a
work of joint authorship, in the co-authors of the
work’.
Section 21(1)(d), on the other hand, provides that in the case of a
work that is made ‘in the course of the
author’s
employment by another person under a contract of service or
apprenticeship, that other person shall be the owner
of any
copyright subsisting in the work by virtue of section 3 or 4’.
[4]
The Registration of Pedigree Livestock Act 22 of 1920.
[5]
Section 5(2) provides:
‘
Copyright shall
be conferred by this section on every work which is eligible for
copyright and which is made by or under the direction
or control of
the state or such international organisations as may be prescribed.’
[6]
See
s 1
of the
Copyright Act.
[7
]
R de Villiers ‘Computer programs and copyright: The South
African Perspective’
(2006) 123 SALJ 315-317
at 320.
[8]
At 320. (Citations omitted).
[9]
At para 41. (Citations omitted.)
[10]
A A Maake v Director of Public Prosecutions
[2010] ZASCA 51
; 2011
(1) 263 (SCA) para 19. (Footnotes omitted).
[11]
M M Corbett ‘Writing a judgment’
(1998) 115 SALJ 116
at
117.