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It was a devastating blow to Paul Lowe, who had been battling Paymaster over the use of its software for more than two decades and whose $600 million in damages had been slashed to $8 million.
In a decision handed down on Monday, the appeals court not only reduced the principal by 98%, but also ordered Lowe to return $21 million of the $30 million paid by the principal payer as a condition of obtaining a stay of execution from the appeals court.
The ruling overturns a Supreme Court decision in which Judge Lisa Palmer ordered Paymaster to pay Lowe $282 million in economic damages. The award, plus interest for the period between August 25, 2000 and June 11, 2020, totals about $600 million.
Damages were then assessed by Judge Palmer Hamilton, who found that Lowe had suffered financial loss as a result of an injunction preventing him from selling his bill payment software locally and internationally.
However, a Court of Appeal panel of Chief Justice Patrick Brooks, David Fraser and Kissock Laing found that the damages did not rise to that amount and cut the award to $3.6 million plus 6% interest from August 25, 2000 to August 25, 2020. The new award is just over $8 million.
Paymaster, a bill payment company founded by Ambassador Audrey Marks, filed suit against GraceKennedy Remittance Services Ltd. (GKRS) and Lowe’s after a computer programmer sold a bill payment software to the food and finance conglomerate to form its subsidiary, Bill Express.
Software Execution Rights
Paymaster claimed that it had exclusive rights to the software, which it had purchased from Lowe, which then sold the bill payment software to GKRS. After a lawsuit was filed in 2000, the Supreme Court issued an order barring Lowe from using the software.
Ultimately, Lowe and GKRS prevailed in the case, with the court ruling that Lowe was the owner of the software.
Paymaster appealed, and in 2015 the Court of Appeal dismissed the claim for copyright infringement but allowed it to appeal on the breach of confidentiality clause.
Paymaster and GKRS subsequently appealed to the UK Privy Council, which ruled in favour of GKRS on the Court of Appeal’s decision on breach of confidentiality.
The 2020 trial, before Justice Palmer Hamilton, began with Lowe’s application to enforce a cross-undertaking for damages made by Paymaster when it obtained an injunction in August 2000.
On Monday, Kansas attorney Maurice Manning described the appeals court’s decision as a “huge victory” for his client.
“Before taking on the role of agent for Paymaster, the courts had already ruled that Mr Lowe had been wrongfully restricted from using its software and was entitled to damages. However, this did not mean that he had suffered the substantial losses he claimed,” Manning said.
Manning was part of the Nunes, Scholefield, DeLeon & Co team that also included Paymaster representatives Mark Paul Cowan and Allyandra Thompson.
Cowan further stated: “We thank the panel for its patience in considering these issues, including some of the technical aspects of the case.
“The Court of Appeal accepted our legal submissions that there was a lack of evidentiary support relating to profitability and market conduct. It also accepted our submission that Mr. Lowe’s DOS software was obsolete because the world moved to Microsoft Windows shortly after the injunction was issued in August 2000,” he said.
According to Cowen, Lowe was free to write new code to accomplish the same functions as the software program known as the Payer Multiple Collection Program. But he said Lowe failed to mitigate his losses by writing new code because he misunderstood the injunction, thinking he was prohibited from exploiting the idea of a multiple bill payment and collection system.
Cowan said the Court of Appeal therefore ruled that it was no longer appropriate to award damages after August 2002.
Moreover, he noted, the court upheld a fundamental principle of copyright law, namely that copyright protects the expression of ideas, not the ideas themselves.
“In the field of computer programming, copyright protection lies in the ‘source code’ and ‘object code’ (the literary elements of a computer program), not in the functionality of the program,” Cowen said.
Still, he said the team was pleased with the ruling and hoped it was the end of a long and tortuous dispute between the two sides.
Meanwhile, Lowe’s attorney, Vincent Chen, said he and his client were shocked by the verdict and were considering an appeal.
“We believe the court made an error and we want to see it corrected because our courts are supposed to report the law accurately and our interest in jurisprudence ensures that those principles are accurately applied,” he said.
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