THJ Systems Ltd v Sheridan – Software Licence Damages

Damages for breach of a Software Licence Agreement but Nothing for Management Time

In 2009, Andrew Mitchell, a software engineer with a sideline in options trading, built a piece of software to help him track his trades. He called it ONE Software and it displayed live market data as tables of “call” and “put” positions, alongside a graph showing the risk profile of a trade. 

That same year, Mitchell signed up for a mentoring package with an American trading coach named Daniel Sheridan, who ran a training and mentoring business in Illinois called Sheridan Options Mentoring Corporation, or SOM. Sheridan had been trading options for two decades and had built a following teaching others how to do it, using software made by a third party. 

The two men hit it off as Mitchell had built something useful and Sheridan had an audience who might want to use it. So, in 2010 and 2011, they went into business together. They set up a joint venture vehicle;  OptionNET LLP, and signed a number of licensing and partnership agreements. The plan was that Mitchell and his company, THJ Systems, would let Sheridan and SOM use ONE Software in his mentoring courses. In return, Sheridan would advertise and promote the software to his students, helping it find new subscribers. 

For a while, this seemed to work reasonably well but by 2014 and 2015, the partnership had soured. 

For more information, please read the full case on THJ Systems Ltd and another company v Sheridan and another company [2024] EWHC 3195 (Ch) 

The Breach and The Separation

Mitchell believed that Sheridan simply wasn’t holding up his end of the bargain and that he wasn’t advertising ONE Software to his students in the way their agreement required and wasn’t displaying the proper copyright notices on training materials and videos that featured the software’s distinctive charts. 

Mitchell tried to expel Sheridan from their joint venture, accusing him of serious and repeated breaches of their agreements. The relationship collapsed entirely and the licence allowing Sheridan and SOM to use ONE software was terminated.  

Who Sued Whom, and For What?

Mitchell, THJ Systems Limited and OptionNET LLP brought an action against Sheridan and his company; SOM. The claim was filed in the High Court in 2019, four years after the relationship broke down, and it covered several distinct issues.

The first and biggest complaint was what the court called the Advertising Breaches. Mitchell argued that from 2010 to 2016, Sheridan and SOM persistently failed to advertise ONE Software in the way the contracts required, specifically, failing to display the software’s logo prominently on training materials, and failing to include a dedicated slide in course presentations directing students to where they could learn about and buy the software.

The second complaint was about copyright. Mitchell claimed that Sheridan and SOM had continued to use visual outputs from ONE Software in their training videos and online content even after the licence was terminated in January 2016.

On top of those two core claims, Mitchell also sought damages for his own lost management time. The hours he said he’d spent dealing with the dispute and investigating the breaches instead of running and developing the business.

The case eventually came before Mr John Kimbell KC, sitting as a deputy High Court judge, who in 2023 ruled on the core dispute. He found that Sheridan had indeed failed to advertise the software properly, a breach serious and persistent enough to justify expelling him from the partnership, with effect from January 2016. Kimbell though dismissed the claim that the defendants had infringed THJ’s copyright by continuing to use the software’s charts in training videos after the split. 

Neither side was satisfied. Both appealed.

The Appeal, and a Partial Win On Copyright

The Court of Appeal upheld the finding on the advertising failures, so that part of the case was settled. But on copyright, the appellate judges took a different view to Kimbell, at least partially. They found that THJ did own copyright in one specific element of the software’s output: the distinctive risk and price charts it generated as a graphical display. That was a win for Mitchell, but a qualified one.

The Court of Appeal noted that the charts showed only a modest degree of visual creativity, which meant the copyright protection they attracted was correspondingly narrow. It covered the charts themselves as graphic works, nothing more.

This meant the copyright claim was now back in play, but within tight limits. The court directed that a further hearing be held to assess damages for both the advertising failures and the copyright infringement, and ordered Sheridan to disclose financial information that would help THJ decide how best to pursue the copyright claim.

Refusing to Engage with The Court

Sheridan, representing himself by this point after parting ways with his lawyers, was ordered to hand over financial information that would let THJ work out roughly how big its claim should be. He was also told to pay various costs orders that had built up along the way, including a £50,000 interim payment ordered by the Court of Appeal. 

He did none of it on time. Despite repeated warnings, extensions and at least two “unless orders”, judicial shorthand for “do this or face the consequences”, Sheridan failed to pay the costs, failed to file a proper defence, and failed to comply with the disclosure order.  

When he eventually produced a witness statement, the judge, Master Kaye, described it as “wholly inadequate”, amounting to little more than “we don’t know” and “we haven’t looked”. 

Sheridan and SOM were formally debarred from defending the issue of the level of damages. That meant they could not challenge the claimants’ evidence, cross-examine witnesses, or make substantive arguments about how much they owed, even at the hearing to decide on the damages bill.  

The Damages Asked For

Mitchell argued that proper advertising would have brought ONE Software to thousands more potential customers, and relying on an old market report and comparisons with rival trading platforms, claimed lost profits running as high as £7 million, later revised down to about £3.36 million.  

He also sought roughly £82,000 for time he said he’d lost to the dispute instead of growing the business, and a more modest sum, ultimately framed as around £58,000–£60,000, for the copyright infringement, based on an estimate of how much of Sheridan’s US revenue was attributable to UK viewers watching videos containing the charts. 

For more information, please read our full article on Understanding How Damages for Breach of Contract Are Calculated.

What The Judge Decided 

Master Kaye accepted that Sheridan’s failure to advertise the software had genuinely cost THJ money, and after picking apart Mitchell’s assumptions she settled on lost-profit damages of £3,358,079.86. She rejected the claim for Mitchell’s lost management time outright, finding no real evidence that the hours he’d logged had disrupted the business, and went on to throw out the copyright infringement claim entirely, ruling that the figures put forward simply weren’t built on a credible argument.  

A request for additional damages was refused too, since the judge found this was fundamentally a soured business partnership rather than the kind of calculated piracy that provision is designed to punish. 