Australia: Lesson for creating a competitive start-up

Managing IP is part of Legal Benchmarking Limited, 1-2 Paris Gardens, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2026

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Cookies Settings

Australia: Lesson for creating a competitive start-up

The recent case of IPC Global Pty Ltd v Pavetest Pty Ltd (No 3) [2017] FCA 82, provides a textbook example of how not to create a competitive start-up.

A group of senior employees left IPC and started up Pavetest in competition. IPC was the dominant player in marketing software to determine the material strength of concrete pavements and the new start up Pavetest produced a similar software product.

In leaving, they took a copy of the source code for the software product and gave it to a programmer to recreate a competitive product. The programmer referred extensively to the IPC software when producing version 1 of the Pavetest product.

IPC sued the new start up under both copyright and breach of confidence.

Under copyright, the core issue was one of whether a "substantial part" of the software had been reproduced. Although IPC's software contained about 250,000 lines of source code, a large amount of this had been replicated in internal libraries, and it was found that there were only about 15,000 unique lines of code. Of this, about 800 lines were found to have been directly copied. The judge held that this amount to copying a substantial part. This was due to the originality of the expression in the IPC code, the belief that the emphasis should be qualitative rather than quantitative, and that the parts copied were deeply functionally significant.

The judge also found that the ex-employees had breached their duty of confidence in taking the confidential source code and misusing confidential information of IPC.

The case provides an exemplary illustration of how not to go about establishing a competitive entity, in competition with an ex-employer. It was evident that relying on the previous employer's source code was likely to result in the judge taking a dim view of any software from which it had been subsequently derived.

Peter Treloar

Shelston IP

Level 21, 60 Margaret Street

Sydney NSW 2000, Australia

Tel: +61 2 9777 1111

Fax: +61 2 9241 4666

email@shelstonip.com

www.shelstonip.com

more from across site and SHARED ros bottom lb

More from across our site

New Asia-Pacific IP head Jonathan Chu is eyeing opportunities arising from Chinese technology licensing, overseas enforcement and increasingly IP-heavy cross-border deals
Europe’s largest intellectual property convention and trade fair is back: IP Service World 2026 takes place in Munich from November 23–25 – the 16th edition, with 1,400-plus attendees from 55-plus nations, 100-plus speakers, and 100-plus exhibitors. Three days. Two focused areas. One IP marketplace.
Mehmet Gün and Uğur Aktekin discuss four decades of change in Türkiye’s legal market, the firm’s commitment to independence and the challenge of building an institution that can outlast its founders
Boehringer Ingelheim has instructed a team from Kirkland, while Teva is being represented by Pinsent Masons
The Delhi High Court’s latest directions offer an opportunity to move beyond remedies against bad-faith registrations and address how suspicious applications are identified in the first place, says Fatima Baig at Lexlinc
Camilla Hamrin describes how the acquisition by Acapo Onsagers will impact Bergenstråhle’s trademark practice – and reflects on changes she has seen over 30 years in IP
On a recent trip to the French capital, we learned that the UPC is squeezing domestic litigation while firms are chasing senior talent, experimenting with AI and considering new ways of organising their practices
Daniel Law says a string of lateral hires and broader expansion plans will strengthen its position to capitalise on Brazil’s burgeoning IP and patent litigation market
Jason Raeburn’s arrival will expand the firm’s London footprint in AI, copyright and tech disputes
The firm is shaping its AI strategy around partnerships with Harvey and Legora alongside internally developed tools from its legal technology company, Eltemate
Gift this article