March 10, 2021
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In Trimble Solutions Corporation v. Quantum Dynamics, 2021 FC 63, the Federal Court granted Trimble Solutions Corporation’s (“Trimble”) motion for default judgment after Quantum Dynamics (“Quantum”) was found to infringe the copyright of one of its leading software offerings, Tekla Structures.
Background
Trimble’s software, Tekla Structures, is a program for the modelling and design of complex structures. It is used primarily in the construction industry. Trimble has registered copyright in Canada for various versions of the software. Tekla Structures is sold in Canada by BuildingPoint Canada Inc. (“Building Point”).
To protect its copyright, Trimble integrated two products into the Tekla Structures program that allows it to detect unauthorized use of its software. One of those products is an anti-piracy program from SmartFlow Compliance Solutions Ltd (“SmartFlow”).
In February 2018, Trimble and BuildingPoint became aware of a series of unlicensed use events of Tekla Structures software. An infringement report generated by SmartFlow in December 2019 showed 335 unlicensed use events over a four-year period, originating from six discrete devices. All of these devices were connected to Quantum, or Sharbel Tannus, a director and officer of Quantum.
Based on this information, BuildingPoint contacted Mr. Tannus numerous times to provide him with a quote for two perpetual licenses and two maintenance subscriptions for Tekla Structures software. When those attempts were unsuccessful, the IT Compliance Association (ITCA) wrote a letter to Quantum about the ongoing unlicensed usage of Tekla Structures software.
Mr. Tannus replied to the ITCA letter, apologizing for the unlicensed use and stating that it was done without his knowledge. He said that he was “interested to get a quotation for one licence”. While Mr. Tannus was sent a Customer Order and Software Licensing Agreement (the “Agreement”), which he signed and returned, he never paid Trimble and there was no evidence of any further communication from anyone associated with Quantum.
Trimble and BuildingPoint (the “Plaintiffs”) issued the Statement of Claim and sought a declaration of copyright infringement, an interlocutory and permanent injunction to restrain Mr. Tannus and Quantum (the “Defendants”) from continuing the breach, plus damages and an accounting of profits. As no Statement of Defence was filed by the Defendants, the Plaintiffs filed their ex parte Notice of Motion for Default Judgment.
The Court’s Decision
The only issue was whether the Plaintiffs met the test for default judgment and, if so, what relief they were entitled to receive.
The legal test for default judgment is often summarized into two questions:
Is the defendant in default?
Is there evidence to support the plaintiff’s claim?
The first question was easily dealt with. The Defendants were in default. They had been served with a Statement of Claim and did not file a Statement of Defence within the 30-day limit prescribed by Rule 204.
The Court then turned to the second element. This required consideration of two further questions, being:
Did the Plaintiffs establish that copyright subsists in Version 20.1 of the Tekla Structures software; and
Did the Plaintiffs' evidence demonstrate that the Defendants infringed the copyright?
Did copyright subsist in the software?
The Plaintiffs proposed that Tekla Structures Version 20.1 software and related materials qualified for copyright protection as original literary works pursuant to the Act. The Court agreed.
The Court also accepted the Plaintiffs’ submission that the authors of Version 20.1 are the same authors who developed Version 20.0, which had registered copyright. These people were all employees of Trimble and, pursuant to subsection 13(3) of the Act, the company owns copyright in the program developed by its employees.
The Court found that this evidence established that Trimble owns the copyright in Version 20.1 of Tekla Structures and that its copyright subsists and is enforceable.
Did the plaintiffs prove that the Defendant infringed their copyright?
The Court held that the evidence generated by the SmartFlow software and the admissions made by Mr. Tannus were sufficient to demonstrate copyright infringement. The Court held that there was more than sufficient identifying information to connect the devices to the Defendants. Each of the unauthorized use events constituted a breach of Trimble’s copyright in the program.
Remedies
The Court found that the Plaintiffs were entitled to a declaration of copyright infringement. In addition, a copyright owner is prima facie entitled to an injunction restraining further infringement in cases where copyright infringement has been established.
Turning to damages, the Court concluded that the Plaintiffs were entitled to $212,931 in damages. This was based on the $30,000 perpetual licensing fee and $3,659 annual maintenance fee quoted to the Defendants for the six devices that were used for the copyright infringement.
The Court also found that a punitive damage award of $50,000 was appropriate. It based this decision on Mr. Tannus’s admission of copyright infringement, his failure to delete the infringing programs despite promising to do so, and his failure to pay the fees quoted despite his completion and return of the Agreement.
The Court also found that the Defendants were to pay costs in the lump-sum of $5,000, as well as pre-judgment and post-judgment interest. The Defendants were held jointly and severally liable for the infringing activities.
Authors: Brennan Caldwell and Jaclyn Tilak