Intellectual Property, Copyright, and the "Commonwealth
Use" defence
Angela Summersby and Michael Will, Partners, HWL Ebsworth Lawyers
Background
A number of software vendors have made claims against customers (including Australian
Government agencies) for damages for alleged breach of software licence terms such as
exceeding number of licensed users. More generally software vendors have become more
active in undertaking audits of customer use of software.
Part One
The first part of our presentation will look at what is a software audit and what risks these
audits pose for Australian Government agencies. We will look at how the risks can be
mitigated with considered software licence drafting and active contract management.
The drafting and negotiation phase
We will consider how to draft and negotiate IP provisions in software licences to:

first, minimise dispute over what the license use terms mean;

second, lay clear foundations for the conduct of software use audits; and

third, require the vendor to notify the agency if the vendor reasonably suspects a
licence breach has occurred and to mitigate their losses.
We will look at:

Australian Government Intellectual Property Rules and how these drive IP licensing
and management arrangements;

common Australian Government templates such as SourceIT and identify specific
tailoring that can reduce the risk of uncontrolled vendor audits;

risks in commercial off-the-shelf (COTS) license terms (including shrink wrap, click
wrap, and web-wrap licenses);
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
practical issues to consider when drafting contracts such as system re-imaging and potential
loss of data, ability to allow the vendor to audit sensitive information;

common vendor contract negotiation licensing and audit positions; and

minimising exposure to a Copyright Tribunal order to pay high "equitable remuneration".
The contract management phase
We will look at the need to establish IP registers and protocols to prevent licence breach and achieve
a clean bill of audit.
Part Two
The Comcover policy
The second part of our presentation will look briefly at the Comcover policy and explain what may be
covered, and what not, if an allegation of infringement of copyright or a breach of a licence agreement is
made as a result of a software vendor audit.
Section 183 of the Copyright Act 1968
If an allegation of infringement or breach is made, what would be the likely jurisdiction: the Federal Court
or the Copyright Tribunal, or both? We will consider this issue with reference to section 183 of the
Copyright Act 1968 ("Use of copyright material for the services of the Crown").
Quantum of claims
A software vendor may be seeking to maximise its claim by demanding additional licence fees, back
maintenance, and interest. What is a reasonable licence fee, what is not, and what may be double dipping?