Update on the ESS / Capita ‘pirated’ software dispute: Part I

As we explained previously, Capita is facing the threat of an injunction over their provision of the SIMS software to schools in Northern Ireland, with ESS asking the High Court to adjudicate in the dispute which could bring disruption to around 1,100 schools.

We have now had sight of the High Court documents outlining the claim being made by ESS against Capita and they make very interesting reading!

In the first place, for clarification purposes, we should explain that the claim is being brought by two claimants, Education Software Solutions Ltd. (ESS) and Tiger UK Bidco Limited (the company that was formed by Montagu in order to purchase the Capita education business, including the SIMS software).

The claim is being brought for alleged copyright infringement and breach of contract following the termination of the SIMS contract between ESS and Capita which allowed Capita to continue providing the software to schools in Northern Ireland.

According to the claim documents, ESS/Tiger allege that this contract terminated in March 2023, following previous extensions, and that the extension agreements made it clear that there could be no further extensions beyond that date. Capita, on the other hand, allege that a further extension, to March 2024, was agreed in a telephone call between the two parties and confirmed in a subsequent email.

One of the main issues of this case is the fact that the agreement allegedly states that “No variation of this Agreement shall be binding unless made in writing and signed by a duly authorised officer of each party.”

Capita asserts that ESS offered in an email to extend the contract until March 2024 and that they had accepted that offer orally during a telephone call between an Account Director at Capita and a Partners Manager from ESS. They further allege that this was “reconfirmed” by email.

However, the claim by ESS alleges that neither of these were duly authorised officers of either company and therefore the alleged extension would not be valid in any case.

Capita further alleges that this extension was was included in a presentation made by ESS to the Education Authority Northern Ireland in December 2021 and that, “ESS ought to be estopped from reneging upon its clear and repeated representations that it would provide the SIMS Services until 31 March 2024.”

KEY ISSUES: The main issues to watch in this case include:

  • Whether the court determines that the SIMS contract terminated on March 31 2023 or was extended to March 31 2024
  • Whether Capita infringed the claimants’ copyright by using the software beyond March 31 2023
  • What, if any, remedies the court issues for any proven contract breaches or copyright infringement

This looks set to be a high-profile court case which could have important repercussions on the education software industry, potentially affecting how software licences and copyright in software are interpreted and enforced, which in turn could see increased litigation across the industry.

Whilst the case is still ongoing and the final resolution is unclear, the result could have significant implications for the MIS software industry.

A final thought: What will this case mean for the schools in Northern Ireland?

There are 1,100 schools there who rely on this software to enable them to manage so much of the business of running a school. If the case is upheld and they have to immediately halt use of SIMS in their schools, how will they cope with this? How quickly could a replacement be procured and implemented?

The current procurement of Managed Services, including MIS software, for these schools has been significantly delayed for a variety of reasons, hence the need for these extensions in the first place, but surely a decision on this procurement is now needed as quickly as possible to ensure the least disruption for the schools and – more importantly – the pupils in Northern Ireland.

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