Intellectual Property: Leica GeoSystems Pty Ltd v Koudstaal (No 3) [2014] FCA 1129

Leica GeoSystems Pty Ltd v Koudstaal (No 3) [2014] FCA 1129

A software engineer, Koudstaal, has been ordered to pay $50,000 in damages to his former employer, Leica Geosystems, for illegally taking their copyrighted confidential information. The employee infringed his equitable obligations to his employer, the Corporations Act and the Copyright Act when he deliberately downloaded over 380,000 company files prior to resigning. The employee subsequently ‘jumped ship’ to a competitor business, Automated Positioning Systems, and used Leica Geosystem’s confidential information to gain an advantage for himself and his new employer.

In court, Koudstaal admitted to possessing the copyrighted information of his former employer, which included certain computer programs (some password-protected), databases and source code. However. he denied that he handed the information over to his new employer and that he ever intended to profit from it. The supposed reason that he decided to take a copy of his work was as a ‘trophy’. Koudstaal stated, ‘I’ve worked really hard on this material. I feel some ownership of it even though, yes, in the strict legal sense I have no ownership’.  In court he admitted this was an ‘incredibly stupid mistake’.

The evidence showed that Koudstaal had used Leica’s code in his role with his new employer. For example, he referred to Leica Geosystems’ source code when working on an existing high precision drill guidance system. It is important to note that the Judge dismissed the application against Automated Positioning Systems.

The court held that Koudstaal had breached:

  • His equitable duty of confidence, in respect of confidential information, owed to his employer as the ‘sheer volume and complexity of the material’ went beyond an employee’s ‘stock of general knowledge and information’ and went to ‘the heart of Leica’s business’.
  • The terms of his employment contract, notably:
    • his obligation to serve his employer ‘faithfully and diligently’;
    • his obligation to keep the company’s information confidential;
    • his obligation to follow the restraint of trade provisions; and
    • his obligation to return all company property.
  • Section 183(1) of the Corporations Act 2001, as he took the material for an improper purpose: to use as a reference source in his future work, in particular with his new employer.
  • Several sections of the Copyright Act 1968.

Judge Collier made the following orders:

  • Koudstaal was ordered to pay $50,000 in damages for breach of the Copyright Act. In awarding this amount, the Judge intended it to act as a deterrent for similar copyright breaches in the future;
  • He was also ordered to pay the legal costs of his former employer;
  • Several declarations in regards to the breaches described above; and
  • An injunction restraining Koudstaal from keeping or reproducing the confidential information and ordering him to deliver up all files to Leica Geosystems within 7 days.

Lessons for Employers

Employees who infringe their employer’s copyrighted information will be subject to heavy penalties. It is in the interests of employers to have tightly-worded restrictive provisions in their employment contracts, such as confidential information clauses and restrictive covenants, to ensure that any employee who breaches their obligations will be held to account. Employers should also ensure that they have an exit-policy for employees, which includes a clause stating they agree to return all company property and delete any company electronic information from their personal computers, emails and devices. 

 

* PCC Lawyers are a team of employment practitioners based in Sydney, with many years of combined knowledge and experience in workplace law, industrial relations, workplace investigations and training.  They provide a high standard of excellence and an exceptional level of personal service to a variety of clients in the Sydney metropolitan area, Central Coast, regional NSW and interstate.