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Electronic share dealing — The legal issues
T H E C O M P U T E R LAW AND S E C U R I T Y R E P O R T
Address:
1 CLSR
plus accommodation for data processing functions
P.O. BOX 300 BOND AVENUE BLETCHLEY MILTON KEYNES BUCKINGHAMSHIRE MK1 1LU
Telephone:
0908 71991
Telex:
837 225
Facilities:
40 building units Size range from 528sq.ft. to 6850sq.ft. Also data communications, air conditioning, fire protection and stand-by generators. -
-
COLVIN COMPUTER
Relocatable Centres: Yorkon mobile units based at York and Leeds, available from 600sq.ft. to 10000sq.ft. size. Plus air conditioning and mobile power generators. - -
LORNE STEWART (SERVICES) Address:
STEWART HOUSE KENTON ROAD HARROW MIDDLESEX HA3 9TU
Telephone:
01-206 1555
Telex:
8813526 IKIS G
Fax:
204 9453
LTD
Type of service: Cold start Address:
INTERFACE HOUSE 70-72 CROYDON ROAD CATERHAM SURREY CR3 6QD
Telephone:
0883 40511
Telex:
8953347
Communications: Multiple exchange lines Available space: 9000sq.ft. 3150sq.ft. computer room. Max. usage: 6 months
Cold centres: London: (7000sq.ft., incl. 2600sq.ft. computer room). Birmingham: (6500sp.ft., incl. 2600sq.ft. computer room). Cambridgeshire: (9000sq.ft., incl. 4750sq.ft. computer room) Facilities:
LTD
Type of service: Coldstart
o0o
CENTRES
o0o
including
Facilities: - Stand-by generator - Air conditioning - Water cooling - Office accommodation - PMBX switchboard
All the above sites include BT network communications, air conditioning, raised modular floor, power distribution facilities,
ELECTRONIC S H A R E D E A L I N G -
THE LEGAL ISSUES
Whereas the human speculator might ride a hunch or feel that a particular market movement was against the trend and not react, the computer applies the given rule in response to the given stimulus. This has already led to dramatic stock exchange movements in North America where a form of panic computer-inspired buying or selling has been achieved as many systems, owned by different entrepreneurs, were programmed with similar trigger prices. The existence of a growing number of such systems gives rise to an alarming number of legal issues, both civil and criminal, and it is proposed to examine these issues through a series of variations on a factual theme.
E X P E R T S Y S T E M S IN T H E S T O C K E X C H A N G E ( P A R T 1) It must be acknowledged that, at a theoretical level, there is some real controversy as to the genuiness of the expertise which can be produced by the so-called expert systems, but such concerns have not inhibited the ambitions of the Artificial Intelligence brigade which has pressed ahead with the development of a range of systems in a variety of different practical commercial contexts. Of these developments, one of the more interesting applications which has recently been commissioned is for stock exchange manipulation. It is not practical for humans to monitor closely the movement of a large number of shares in a given portfolio on a minute to minute basis throughout a trading period. However, the computerisation of the information flow concerning price movements has opened the door for the computerised share dealer. The rule section of the expert system contains information about each share and, in particular, the target buying price and selling price. These prices trigger the instruction either to buy or to sell, and the computer thereby seeks to permit its human owner to maximise a profit or to minimise a loss on an instant reaction basis. The problem with such a system is the inherent lack of judgement in a computer circuit. No matter what the speed of the machine, most of the programming for this application is still highly algorithmic.
The theme Assumption - that following Big Bang, a significant number of such systems now monitor the London market. Variation 1 If I, as a person resident in England, already hold a large block of shares in a public company whose stock exchange valuation is reaching a low point, it might suit me suddenly to sell the entire block of shares in the hope that the sale might cause the quoted share price to dip towards what I suspect may be the standard trigger sell figure held in many expert systems. At one level, I may be cutting my own losses and, objectively, my decision to sell may be commercially sensible. However, as a by-product of my sale, it only needs one expert system holding a large block of shares to pick up the 21
MAY -
THE COMPUTER L A W A N D S E C U R I T Y
JUNE
movement and to sell, for a form of domino effect to set in. I can therefore watch the price dip further, then repurchase and sell when the price recovers in response to countermanding human instruction.
REPORT
I intentionally cause a loss to all those who subsequently sell to me. There is no necessary connection between the two parts of the scheme. The shares which I purchase need not be sold at a loss, the owners may be making a profit from the sale. This is not conclusive because the owners are deprived of their shares and so lose the opportunity to make a greater profit by keeping them and selling in the event that the price recovers. Equally, there is no guarantee that I am buying shares sold as a result of actual knowledge of my transaction. The decision to sell might have been taken coincidentally and without reference to actual market movements. This would distinguish the immediate situation from a scheme which involved the obtaining of shares through the murder of the holding relative. Although the death of my relative to activate the convenient terms of a will may be a sad by-product of the ultimate scheme, it is a necessary part and therefore intended. The problem is further exacerbated if the information acts upon an expert system. The normal effect of a deception is to act upon the mind of a human and to induce a response. An expert system is a product of research into Artificial Intelligence, but is any given system sufficiently intelligent to be deceived for these purposes? Thus, in R. v. Aston and Hadley [1970] 3 All ER 1045 at 1048, Megaw LJ said, " . . to be relevant, the deception . must at least normally be a deception which operates on the mind of the person deceived so as to influence him to do or refrain from doing s o m e t h i n g . . . " But Megaw LJ did use the word "normally" and there is nothing in the wording of the Theft Acts which overtly requires a human mind. However, to distinguish theft from the deception offences, the mischief which the deception offences are aimed at is the means to the end. It should therefore make no difference in principle whether the deception is aimed at a human or a machine 'mind' so long as it obtains results. This should be the case if the programmer of an expert system has specifically directed the machine to search for a particular situation and to react accordingly. To that extent, the machine is instructed to act in exactly the same way as a human agent. Indeed, if a shareholder gave his stock broker specific written instructions to sell if the shares fell below a particular value and these instructions were neglected and a toss was sustained, there would be a strong case for negligence against the stock broker. The only difference between the human and the machine in this case is perhaps that the machine is less prone to forget or misapply instructions. Despite this, the courts have shown themselves very reluctant to make it an offence falsely to manipulate computers and other machines. Although Davies v. Flackett (1972) 116 SoI.Jo. 526 might have been considered as authority for the proposition that a machine can be deceived, the situation of driving out of a car park without correctly paying is now included within the ambit of the statutory offence of making off without payment in s3 Theft Act 1978, an offence which does not rely upon proof of a deception. Similarly, in R. v. Clayman, The Times, July 1, 1972 the court held it not to be a deception offence to induce a false response from a parking meter by inserting a beer can ring. This must be the correct result given the existence of the specific offence of interfering with parking meters under ss 31(3), 42(4) Road Traffic Regulation Act 1967. The best view is that the court will probably not hold that a deception has taken place unless no other criminal
• Have I commited a deception offence?
To incur liability for a criminal offence, it is usually necessary to prove two elements, namely the actus reus, ie. guilty act, and the mens rea, ie. an appropriate accompanying mental state. Thus, under s15 Theft Act 1968, it is an offence by any deception to obtain dishonestly property belonging to another. For these purposes, a deception may be defined as any deliberate or reckless misstatement, whether by words or conduct, as to a fact or the present intentions of the representor. On the face of it, there is no deception in Variation 1 because the world is simply confronted by the reality of the sale of the shares. This is a simple matter of fact. That this fact may influence others and cause them to respond, does not create a deception for these purposes. It is true that, in due course, shares may be obtained from sellers, but the cause is their decision to sell based upon their independent evaluation of the state of the market. To assist in understanding the point, let us consider a fraud practised upon a bookmaker which induces the acceptance of a bet which would not otherwise have been accepted. Although this fraud may give the opportunity to win money by betting (the offence under s16(2) (c) Theft Act 1968), it cannot produce the actus reus of the s15 offence because the prospective obtaining is not the result of the deception, but the result of the horse or dog winning the given race, ie. the deception itself is not the direct cause of the obtaining of any winnings from the bookmaker. Thus, in Variation 1, the initial act of selling merely allows the opportunity to acquire a profit to arise and is not an obtaining "by" a deception. Further, it is irrelevant that there may be a conditional intention to repurchase should the share price fall. It would be nonsensical to suggest that there is an implied representation in the act of sale that the prior owner will not subsequently purchase a holding in the same company. People can have such a variety of motives in selling that no one reason could safely be imputed as a representation for these purposes. Thus, I might sell because I am temporarily short of cash or for the very different reason that t disapprove of a company's involvement in South Africa. In both instances, I might repurchase if my cash crisis is resolved or the company withdraws from South Africa, but an outsider viewing the transactions would have no real clue as to my motive for either act. In general, the criminal taw has an ambivalent attitude towards the concept of motive. While it is clear that a person's motive may produce corroborative evidence of a mens rea, it is not generally relevant to know why a person has acted. The reality of the intentional behaviour will produce the evidence of both actus reus and mens rea. However, a bad motive will not substitute for an absent mens rea. So I might stage a demonstration against nuclear weapons which involves ceremonially cutting a wire fence around an air force base. This is a clear case of criminal damage because I intend to damage the wire, although my altruistic motive may mitigate any sentence which is imposed. However, if I sell some shares in the hope that I may gain in the future, it cannot be said that 22
THE C O M P U T E R LAW AND S E C U R I T Y REPORT
1 CLSR
Is it a theft of the shares? If the shares are offered for sale by a machine without first referring the matter to the owner for confirmation, is this a sale without the consent of the owner which might therefore amount to a theft? R. v. Alan Lawrence [1972] AC 626 holds that a theft takes place if property is acquired which belongs to another, given that there is no requirement under the Theft Act for the appropriation to be without the consent of the owner. It is therefore possible to steal property even though a voidable title to it has been obtained because it does not belong to the accused before the accused acquires the title. If I acquire property from another without that other's consent, I am usurping the rights of the owner and so appropriating it. Thus, whether the taking is without consent, or whether there is consent but it is vitiated by fraud, there is likely to be an appropriation. Of course, if there is a true consent to the transfer of title, there cannot be a theft no matter how dishonest the acquirer may be. The acid test of liability would therefore be whether there was dishonesty. The Theft Act 1968 does not define dishonesty as such; it merely gives instances of situations in which a person will not be dishonest. Thus, I would not be dishonest if I believed that I would have the other's consent to the transaction if that other knew all the circumstances of it, or if I believed that I had a right in law to deprive the other of it. These are tested subjectively, ie. the court must be satisfied that I actually believed that had the other been aware of my plan of sale with contingent repurchase, that other would still have sold to me. If neither possibility could be raised, the test laid down in R. v. Ghosh [1982] 3 WLR 110 will apply and the jury will have to decide whether my conduct would be regarded as dishonest by the ordinary standards of reasonable and honest people, and whether I realised that this would be their view. To that extent, the jury are seeking to establish norms of honesty and dishonesty in each general type of situation and it would be for the jury in the actual case to set the precedent.
offence may be said to have been committed. Overall, it is therefore unlikely on the facts of Variation 1 that an offence has been committed under s15 Theft Act 1968.
• Would false accounting be a possible alternative? The offence of false accounting is created by s17 TheftAct 1968 and is a wide ranging offence which, interalia, makes it an offence to make use of an accounting record to furnish information, knowing that it is or may be deceptive. The mens rea is more appropriate to Variation I in that it would be satisfied by dishonestly intending to gain, ie. acquire property not previously held, regardless as to whether a profit is made. The record of the sale would be an accounting record for our purposes, cf. Edwards v. Toombs (1983) Crim LR 43 where a turnstile which recorded paying customers produced a record within the meaning of the section. However, the offence is not committed because, even though it may induce a sale where none might otherwise have been made, the record itself is not false in a material particular as required by s17(2). It is a true record of an actual sale. • What about the offence of giving false documents to mislead principals? This is somewhat archaic offence contained in s1(1) Prevention of Corruption Act 1906 which makes it an offence to give any account or document to an agent, knowing that the principal is interested and intending to mislead the principal. There is no need for the agent to be deceived or guilty in any way. The only requirement is that the agent should have the responsibility of transmitting the information to the principal. It is an anticipatory offence in that it is committed as soon as the account or document is given to the agent and regardless as to whether it is actually transmitted to the principal. On the face of it, the expert system stands as the shareholder's agent in the market and so any information which is given to the expert might be taken to commit this offence. However, the term "agent" is defined in s1(2) as including "any person employed by or acting for another", and there can be little doubt that a machine cannot be a "person" for these purposes.
David V. Marshall Report Correspondent
US FOCUS LOTUS suit update: 'visual arts' copyright denied Since my last column things have been heating up with the suits filed by Lotus Development Corporation against Paperback Software International 1 (maker of VP-Planner) and Mosaic Software2 (maker of The Twin). The suits filed in the U.S. District Court in Boston charge copyright infringement, false advertising and unfair trade practices against the two software manufacturers, Last January, the U.S. Copyright Office denied Lotus Development Corp. both a 'visual arts' and 'audiovisual' copyright for its 1-2-3 user interface. The Copyright Office said the screen displays generated by the program were "covered
Software, (a Vancouver, British Columbia firm), was an indispensible party to the suit because it had a allegedly "conceived and created" VP-Planner which Paperback distributed under licence, (b) the audio/visual copyright was rejected, and (c) that there was no legal basis for the $10 million punitive damage claim. However, according to Paperback's attorney James Garrent, Paperback withdrew its motion after Lotus amended its suit. Everyone is now watching Mosaic. According to Garrent... "Mosaic is where the action
is at'; On 3 March 1987, Mosaic filed a motion to dismiss3 in the U.S. District Court in Boston. The motion moves to have Lotus' copyright infringement claim dismissed because: (a) "The
by the registration for the program without either the need or justification for the displays.'" Lotus can petition the decision
complaint fails to allege that Lotus has registered the screen images of 1-2-3"; (b) "Lotus has not stated a claim for infringement of the program it has registered because Lotus has failed adequately to allege either substantial similarity of, or access to, the program code..."; (c), "Lotus has failed to apply for registration of its remaining copyright claims."
but this does not now seem likely as Lotus appear to accept the view of the Copyright Office that their existing registration covers all copyrightable elements. Paperback software recently filed a motion moves to dismiss the suit against them on the grounds (a) that Stephenson
23
Address:
1 CLSR
plus accommodation for data processing functions
P.O. BOX 300 BOND AVENUE BLETCHLEY MILTON KEYNES BUCKINGHAMSHIRE MK1 1LU
Telephone:
0908 71991
Telex:
837 225
Facilities:
40 building units Size range from 528sq.ft. to 6850sq.ft. Also data communications, air conditioning, fire protection and stand-by generators. -
-
COLVIN COMPUTER
Relocatable Centres: Yorkon mobile units based at York and Leeds, available from 600sq.ft. to 10000sq.ft. size. Plus air conditioning and mobile power generators. - -
LORNE STEWART (SERVICES) Address:
STEWART HOUSE KENTON ROAD HARROW MIDDLESEX HA3 9TU
Telephone:
01-206 1555
Telex:
8813526 IKIS G
Fax:
204 9453
LTD
Type of service: Cold start Address:
INTERFACE HOUSE 70-72 CROYDON ROAD CATERHAM SURREY CR3 6QD
Telephone:
0883 40511
Telex:
8953347
Communications: Multiple exchange lines Available space: 9000sq.ft. 3150sq.ft. computer room. Max. usage: 6 months
Cold centres: London: (7000sq.ft., incl. 2600sq.ft. computer room). Birmingham: (6500sp.ft., incl. 2600sq.ft. computer room). Cambridgeshire: (9000sq.ft., incl. 4750sq.ft. computer room) Facilities:
LTD
Type of service: Coldstart
o0o
CENTRES
o0o
including
Facilities: - Stand-by generator - Air conditioning - Water cooling - Office accommodation - PMBX switchboard
All the above sites include BT network communications, air conditioning, raised modular floor, power distribution facilities,
ELECTRONIC S H A R E D E A L I N G -
THE LEGAL ISSUES
Whereas the human speculator might ride a hunch or feel that a particular market movement was against the trend and not react, the computer applies the given rule in response to the given stimulus. This has already led to dramatic stock exchange movements in North America where a form of panic computer-inspired buying or selling has been achieved as many systems, owned by different entrepreneurs, were programmed with similar trigger prices. The existence of a growing number of such systems gives rise to an alarming number of legal issues, both civil and criminal, and it is proposed to examine these issues through a series of variations on a factual theme.
E X P E R T S Y S T E M S IN T H E S T O C K E X C H A N G E ( P A R T 1) It must be acknowledged that, at a theoretical level, there is some real controversy as to the genuiness of the expertise which can be produced by the so-called expert systems, but such concerns have not inhibited the ambitions of the Artificial Intelligence brigade which has pressed ahead with the development of a range of systems in a variety of different practical commercial contexts. Of these developments, one of the more interesting applications which has recently been commissioned is for stock exchange manipulation. It is not practical for humans to monitor closely the movement of a large number of shares in a given portfolio on a minute to minute basis throughout a trading period. However, the computerisation of the information flow concerning price movements has opened the door for the computerised share dealer. The rule section of the expert system contains information about each share and, in particular, the target buying price and selling price. These prices trigger the instruction either to buy or to sell, and the computer thereby seeks to permit its human owner to maximise a profit or to minimise a loss on an instant reaction basis. The problem with such a system is the inherent lack of judgement in a computer circuit. No matter what the speed of the machine, most of the programming for this application is still highly algorithmic.
The theme Assumption - that following Big Bang, a significant number of such systems now monitor the London market. Variation 1 If I, as a person resident in England, already hold a large block of shares in a public company whose stock exchange valuation is reaching a low point, it might suit me suddenly to sell the entire block of shares in the hope that the sale might cause the quoted share price to dip towards what I suspect may be the standard trigger sell figure held in many expert systems. At one level, I may be cutting my own losses and, objectively, my decision to sell may be commercially sensible. However, as a by-product of my sale, it only needs one expert system holding a large block of shares to pick up the 21
MAY -
THE COMPUTER L A W A N D S E C U R I T Y
JUNE
movement and to sell, for a form of domino effect to set in. I can therefore watch the price dip further, then repurchase and sell when the price recovers in response to countermanding human instruction.
REPORT
I intentionally cause a loss to all those who subsequently sell to me. There is no necessary connection between the two parts of the scheme. The shares which I purchase need not be sold at a loss, the owners may be making a profit from the sale. This is not conclusive because the owners are deprived of their shares and so lose the opportunity to make a greater profit by keeping them and selling in the event that the price recovers. Equally, there is no guarantee that I am buying shares sold as a result of actual knowledge of my transaction. The decision to sell might have been taken coincidentally and without reference to actual market movements. This would distinguish the immediate situation from a scheme which involved the obtaining of shares through the murder of the holding relative. Although the death of my relative to activate the convenient terms of a will may be a sad by-product of the ultimate scheme, it is a necessary part and therefore intended. The problem is further exacerbated if the information acts upon an expert system. The normal effect of a deception is to act upon the mind of a human and to induce a response. An expert system is a product of research into Artificial Intelligence, but is any given system sufficiently intelligent to be deceived for these purposes? Thus, in R. v. Aston and Hadley [1970] 3 All ER 1045 at 1048, Megaw LJ said, " . . to be relevant, the deception . must at least normally be a deception which operates on the mind of the person deceived so as to influence him to do or refrain from doing s o m e t h i n g . . . " But Megaw LJ did use the word "normally" and there is nothing in the wording of the Theft Acts which overtly requires a human mind. However, to distinguish theft from the deception offences, the mischief which the deception offences are aimed at is the means to the end. It should therefore make no difference in principle whether the deception is aimed at a human or a machine 'mind' so long as it obtains results. This should be the case if the programmer of an expert system has specifically directed the machine to search for a particular situation and to react accordingly. To that extent, the machine is instructed to act in exactly the same way as a human agent. Indeed, if a shareholder gave his stock broker specific written instructions to sell if the shares fell below a particular value and these instructions were neglected and a toss was sustained, there would be a strong case for negligence against the stock broker. The only difference between the human and the machine in this case is perhaps that the machine is less prone to forget or misapply instructions. Despite this, the courts have shown themselves very reluctant to make it an offence falsely to manipulate computers and other machines. Although Davies v. Flackett (1972) 116 SoI.Jo. 526 might have been considered as authority for the proposition that a machine can be deceived, the situation of driving out of a car park without correctly paying is now included within the ambit of the statutory offence of making off without payment in s3 Theft Act 1978, an offence which does not rely upon proof of a deception. Similarly, in R. v. Clayman, The Times, July 1, 1972 the court held it not to be a deception offence to induce a false response from a parking meter by inserting a beer can ring. This must be the correct result given the existence of the specific offence of interfering with parking meters under ss 31(3), 42(4) Road Traffic Regulation Act 1967. The best view is that the court will probably not hold that a deception has taken place unless no other criminal
• Have I commited a deception offence?
To incur liability for a criminal offence, it is usually necessary to prove two elements, namely the actus reus, ie. guilty act, and the mens rea, ie. an appropriate accompanying mental state. Thus, under s15 Theft Act 1968, it is an offence by any deception to obtain dishonestly property belonging to another. For these purposes, a deception may be defined as any deliberate or reckless misstatement, whether by words or conduct, as to a fact or the present intentions of the representor. On the face of it, there is no deception in Variation 1 because the world is simply confronted by the reality of the sale of the shares. This is a simple matter of fact. That this fact may influence others and cause them to respond, does not create a deception for these purposes. It is true that, in due course, shares may be obtained from sellers, but the cause is their decision to sell based upon their independent evaluation of the state of the market. To assist in understanding the point, let us consider a fraud practised upon a bookmaker which induces the acceptance of a bet which would not otherwise have been accepted. Although this fraud may give the opportunity to win money by betting (the offence under s16(2) (c) Theft Act 1968), it cannot produce the actus reus of the s15 offence because the prospective obtaining is not the result of the deception, but the result of the horse or dog winning the given race, ie. the deception itself is not the direct cause of the obtaining of any winnings from the bookmaker. Thus, in Variation 1, the initial act of selling merely allows the opportunity to acquire a profit to arise and is not an obtaining "by" a deception. Further, it is irrelevant that there may be a conditional intention to repurchase should the share price fall. It would be nonsensical to suggest that there is an implied representation in the act of sale that the prior owner will not subsequently purchase a holding in the same company. People can have such a variety of motives in selling that no one reason could safely be imputed as a representation for these purposes. Thus, I might sell because I am temporarily short of cash or for the very different reason that t disapprove of a company's involvement in South Africa. In both instances, I might repurchase if my cash crisis is resolved or the company withdraws from South Africa, but an outsider viewing the transactions would have no real clue as to my motive for either act. In general, the criminal taw has an ambivalent attitude towards the concept of motive. While it is clear that a person's motive may produce corroborative evidence of a mens rea, it is not generally relevant to know why a person has acted. The reality of the intentional behaviour will produce the evidence of both actus reus and mens rea. However, a bad motive will not substitute for an absent mens rea. So I might stage a demonstration against nuclear weapons which involves ceremonially cutting a wire fence around an air force base. This is a clear case of criminal damage because I intend to damage the wire, although my altruistic motive may mitigate any sentence which is imposed. However, if I sell some shares in the hope that I may gain in the future, it cannot be said that 22
THE C O M P U T E R LAW AND S E C U R I T Y REPORT
1 CLSR
Is it a theft of the shares? If the shares are offered for sale by a machine without first referring the matter to the owner for confirmation, is this a sale without the consent of the owner which might therefore amount to a theft? R. v. Alan Lawrence [1972] AC 626 holds that a theft takes place if property is acquired which belongs to another, given that there is no requirement under the Theft Act for the appropriation to be without the consent of the owner. It is therefore possible to steal property even though a voidable title to it has been obtained because it does not belong to the accused before the accused acquires the title. If I acquire property from another without that other's consent, I am usurping the rights of the owner and so appropriating it. Thus, whether the taking is without consent, or whether there is consent but it is vitiated by fraud, there is likely to be an appropriation. Of course, if there is a true consent to the transfer of title, there cannot be a theft no matter how dishonest the acquirer may be. The acid test of liability would therefore be whether there was dishonesty. The Theft Act 1968 does not define dishonesty as such; it merely gives instances of situations in which a person will not be dishonest. Thus, I would not be dishonest if I believed that I would have the other's consent to the transaction if that other knew all the circumstances of it, or if I believed that I had a right in law to deprive the other of it. These are tested subjectively, ie. the court must be satisfied that I actually believed that had the other been aware of my plan of sale with contingent repurchase, that other would still have sold to me. If neither possibility could be raised, the test laid down in R. v. Ghosh [1982] 3 WLR 110 will apply and the jury will have to decide whether my conduct would be regarded as dishonest by the ordinary standards of reasonable and honest people, and whether I realised that this would be their view. To that extent, the jury are seeking to establish norms of honesty and dishonesty in each general type of situation and it would be for the jury in the actual case to set the precedent.
offence may be said to have been committed. Overall, it is therefore unlikely on the facts of Variation 1 that an offence has been committed under s15 Theft Act 1968.
• Would false accounting be a possible alternative? The offence of false accounting is created by s17 TheftAct 1968 and is a wide ranging offence which, interalia, makes it an offence to make use of an accounting record to furnish information, knowing that it is or may be deceptive. The mens rea is more appropriate to Variation I in that it would be satisfied by dishonestly intending to gain, ie. acquire property not previously held, regardless as to whether a profit is made. The record of the sale would be an accounting record for our purposes, cf. Edwards v. Toombs (1983) Crim LR 43 where a turnstile which recorded paying customers produced a record within the meaning of the section. However, the offence is not committed because, even though it may induce a sale where none might otherwise have been made, the record itself is not false in a material particular as required by s17(2). It is a true record of an actual sale. • What about the offence of giving false documents to mislead principals? This is somewhat archaic offence contained in s1(1) Prevention of Corruption Act 1906 which makes it an offence to give any account or document to an agent, knowing that the principal is interested and intending to mislead the principal. There is no need for the agent to be deceived or guilty in any way. The only requirement is that the agent should have the responsibility of transmitting the information to the principal. It is an anticipatory offence in that it is committed as soon as the account or document is given to the agent and regardless as to whether it is actually transmitted to the principal. On the face of it, the expert system stands as the shareholder's agent in the market and so any information which is given to the expert might be taken to commit this offence. However, the term "agent" is defined in s1(2) as including "any person employed by or acting for another", and there can be little doubt that a machine cannot be a "person" for these purposes.
David V. Marshall Report Correspondent
US FOCUS LOTUS suit update: 'visual arts' copyright denied Since my last column things have been heating up with the suits filed by Lotus Development Corporation against Paperback Software International 1 (maker of VP-Planner) and Mosaic Software2 (maker of The Twin). The suits filed in the U.S. District Court in Boston charge copyright infringement, false advertising and unfair trade practices against the two software manufacturers, Last January, the U.S. Copyright Office denied Lotus Development Corp. both a 'visual arts' and 'audiovisual' copyright for its 1-2-3 user interface. The Copyright Office said the screen displays generated by the program were "covered
Software, (a Vancouver, British Columbia firm), was an indispensible party to the suit because it had a allegedly "conceived and created" VP-Planner which Paperback distributed under licence, (b) the audio/visual copyright was rejected, and (c) that there was no legal basis for the $10 million punitive damage claim. However, according to Paperback's attorney James Garrent, Paperback withdrew its motion after Lotus amended its suit. Everyone is now watching Mosaic. According to Garrent... "Mosaic is where the action
is at'; On 3 March 1987, Mosaic filed a motion to dismiss3 in the U.S. District Court in Boston. The motion moves to have Lotus' copyright infringement claim dismissed because: (a) "The
by the registration for the program without either the need or justification for the displays.'" Lotus can petition the decision
complaint fails to allege that Lotus has registered the screen images of 1-2-3"; (b) "Lotus has not stated a claim for infringement of the program it has registered because Lotus has failed adequately to allege either substantial similarity of, or access to, the program code..."; (c), "Lotus has failed to apply for registration of its remaining copyright claims."
but this does not now seem likely as Lotus appear to accept the view of the Copyright Office that their existing registration covers all copyrightable elements. Paperback software recently filed a motion moves to dismiss the suit against them on the grounds (a) that Stephenson
23