In brief
- The Intellectual Property Enterprise Court has struck out claims alleging indirect copyright infringement of computer source code through copying of software functionality, confirming the boundaries of software copyright protection.
- Developers remain free to create functionally equivalent software through independent programming, provided they do not copy (whether directly or indirectly) the source code of competitors' products.
Background
Valos (UK) Limited and Edozo Limited are competing providers of property valuation software. Valos markets the Valos Platform, through which users can generate automated valuation reports using a sequence of on-screen steps to produce tailored reports. Edozo had launched its own Edozo Reports Product, offering a comparable user-led reporting process via its online platform.
Valos claimed that Edozo had copied the functionality and user experience of the Valos Platform. Following an unsuccessful mediation, Edozo issued a pre-emptive claim in April 2025 seeking declarations of non-infringement. Valos counterclaimed, alleging two forms of copyright infringement: first, direct copying of its report templates and graphical interfaces to which Edozo had access (not considered in this judgment); and second, indirect copying of Valos's underlying source code (which Valos accepted Edozo had never had access to).
On a strike-out application of parts of Valos's counterclaim by Edozo, the IPEC had to decide whether copying a software system's functionality, without accessing the underlying source code, amounted to indirect copyright infringement of that source code.
What is indirect copying?
Indirect copyright infringement occurs when an infringer has copied a work which was itself copied from an original copyright work. Information derived from the original work is expressed in an intermediate form and then copied in the infringing work. For example, an artwork might be indirectly copied where a sufficiently precise verbal description of the original artwork is given to a defendant who reproduces a substantial part of the original artwork in a new artwork. The chain may be longer than this two-link example, but it must be unbroken.
Valos alleged that Edozo had copied its source code by way of copying the on-screen steps used in the Valos Platform to generate reports. The alleged copying did not involve a textual reproduction of Valos's source code, but instead copying of the code's functionality (i.e. the resulting computer program that users would see on-screen).
The court held that, whilst indirect copying of source code is possible (for example, where a third party screenshots the original source code and another party subsequently replicates it, or a substantial part of it, using that screenshot to write their own source code), such indirect copying cannot be established merely by replicating the code's resulting functionality.
So, what does copyright protect in a computer program?
The court held that copyright protects the expression of the intellectual creation of an author (i.e. the source code), not the functionality that a computer program delivers as a result of that source code.
Central to this is the core principle that copyright does not protect ideas, but the expression of ideas. The court held that the functionality of the Valos computer program "was not an expression of the relevant intellectual creation, namely the Valos source code". This distinction proved fatal to Valos's claim of indirect copyright infringement.
The court referred to the commonly cited analogy about a pudding from Navitaire Inc v easyJet Airline Co Ltd to explain this distinction. This analogy provides that, where a chef produces a written recipe for a newly created pudding (which would attract literary copyright protection), that recipe is not infringed by a competitor emulating the same pudding through their own culinary labour and writing their own recipe.
Similarly, the functionality of a computer program falls squarely on the "ideas"/"pudding" side of the distinction, and the writing of code to emulate the functionality of a competitor's computer program does not infringe that original code.
Takeaways
The judgment makes clear that competitors may lawfully study the functional output of source code and create their own implementation provided they do not copy the source code itself to do so (or any of the graphic works that result from it which may attract artistic copyright). This supports benchmarking and prevents businesses from using copyright to create a monopoly over software functionality.
Therefore, it is sensible to focus protection strategies on elements that are genuinely protectable rather than attempting to monopolise functionality.
For example, a business looking to protect the originality of its user interfaces such as screen displays and graphics may need to turn instead to artistic copyright or design rights for protection or, where the functionality of a computer program is truly inventive, patent protection may be suitable. Technological protection measures, such as cryptographic protections or encryption embedded into hardware, also serve as a practical tool enabling software rights holders to safeguard their interests against unauthorised reproduction.
How Mishcon de Reya can help
Our Intellectual Property team has extensive experience advising businesses on the protection, exploitation, and enforcement of, amongst other things, software and computer programs. We act for dynamic clients across the innovation economy and possess a deep understanding of the opportunities and challenges presented by technological advancements.
If you have any questions, please contact our Intellectual Property team.