A lone Kiwi knight is set to take on multi-millionaire Sir Russell Coutts over copyright claims on animation graphics that brought America's Cup races to life for global TV audiences. Jane Phare reports on what is shaping up to be a David-and-Goliath-style battle.
Animation graphics pioneer Sir Ian Taylor is perplexed about the position he's found himself in. His choices are to walk away from a sport in which he's been involved since the early 1990s, or take on sailing legend Sir Russell Coutts, who is backed by the multi-billionaire Oracle founder Larry Ellison.
Since receiving a legal threat six months ago from the Coutts-led and Ellison-backed companies Oracle Racing and SailGP, Taylor has decided to push back for three reasons. The first is that the copyright claims hanging over his company, Animation Research Ltd (ARL), could affect his future clients and business.
"We may have to warn clients that Russell may turn up and claim copyright on sailing events. This thing is sitting out there and it has to be resolved once and for all."
The second is a matter of principle.
"Kiwis shouldn't behave this way to each other."
The third reason is that he's hopping mad after a recent SailGP press release appeared to claim that a vertical 3D "stadium" wall around the race course - developed by ARL for the Prada Cup in January - was introduced by LiveLine, the graphics animation system controlled by Coutts and Ellison.
The release quotes SailGP's chief technology officer Warren Jones as saying, "As well as enabling SailGP to brand the boundary with SailGP partners for desired exposure, LiveLine is essentially the SailGP equivalent of a digital perimeter board at a football stadium."
Taylor: "It appears there's one set of rules for us and a totally different set for them, but this time it's there for everyone to see."
The Herald asked Coutts for a response to a list of questions about this story last week but had received no response by the date of publication. At the time of the copyright challenge, Coutts issued a statement saying SailGP and Oracle Racing were seeking to safeguard intellectual property in which they had invested millions of dollars to develop over the past decade.
Taylor says he's now been forced to explore ways to protect millions of dollars worth of Kiwi ingenuity and investment in digital technology created over decades.
The letter from SailGP and Oracle Racing - which arrived the day before Christmas Eve with the Prada Challenger series starting in January - threatened legal action unless ARL stopped using specific animation graphics for its Virtual Eye graphics system, or paid a licence fee. The official AC36 production company, Circle-O, and America's Cup Event (ACE) were also named in the letter.
"What!" was Taylor's reaction. "You've got to be kidding me."
As far as he was concerned, ARL had developed and used those graphics since the 28th America's Cup in San Diego nearly 30 years ago. They were used in the 2020 pre-Christmas races leading up to the Prada series and the America's Cup in March.
Taylor argued that almost all the graphics claimed as copyright by SailGP and Oracle Racing were in use when Coutts skippered Team New Zealand's Black Magic to win the Cup in 1995 against Dennis Conner's Stars & Stripes team.
He intended not only to challenge the Oracle/SailGP copyright claim, but to counter-claim on a lengthy list of graphic components he asserts were used first by Virtual Eye and later copied by LiveLine, including the effect of wind shadow on the following boat and the vertical wall.
Over Christmas, Taylor and his staff gathered a trail of historic documents, emails and photo images he alleges prove that ARL was the first to use the graphics. He says the original code that drove the virtual graphics was written as far back as 1991 by programmers Paul Sharp and Stuart Smith, who are still ARL employees and shareholders.
With evidence in hand, Taylor wasn't too worried about the legal letter because Riedel Communications, a major German company brought on by ACE to provide on-board hardware and network capabilities, had agreed to protect ARL.
In a document the Herald has sighted, Riedel agreed to fully indemnify ARL against any intellectual property claim. Taylor assumed Riedel would take on Coutts and Ellison on ARL's behalf if need be.
Instead, he was shocked to discover a deal was done behind closed doors, an agreement he still hasn't seen. A statement released at the time by a spokeswoman for Coutts said Riedel Communications and Circle-O (half owned by Riedel) had agreed to pay "an appropriate IP licensing fee and they look forward to continuing to work with SailGP in delivering world-leading broadcast technology to sailing fans around the globe".
Taylor was told he was therefore free to use the graphics for the America's Cup. To the onlooker, that might have been the end of it.
But Taylor, a mild-mannered man by nature, saw red. In his opinion, he says, if animation graphics can be protected by copyright, he can prove ownership of graphics used in the last America's Cup.
The confidential agreement covered the America's Cup but, he says, it leaves him adrift with regard to future sailing events.
"We need to get this sorted. We would never have agreed to that licence fee."
Riedel Communications is now working on the Coutts-led SailGP (Sail Grand Prix) event, an arrangement Taylor views as a "betrayal" after ARL and Team New Zealand brought Riedel to the America's Cup in the first place. The Herald approached Riedel for a response a week before publication but received no response.
SailGP, launched in April, is a series of races in eight countries using foiling F50 catamarans. The event, in which New Zealand is competing, will reach Christchurch in January next year.
Taylor says it is ironic that the animation graphics used to cover the races on Lyttelton Harbour won't be acknowledged as New Zealand technology, nor will there be any Kiwi companies involved in the coverage.
He is now taking advice on the likely cost of defending what he alleges is ARL's intellectual property (IP). "It's a huge decision for a company as small as ours."
The Herald has sighted legal documents outlining ARL's earlier legal challenge - the one that Taylor had expected Riedel Communications would pursue on ARL's behalf. The document claims ARL's graphics have been copied across numerous events since 2013 and provides photo examples of early ARL graphics compared with LiveLine.
The copies have been "broadcast throughout the world to over 175 territories, including New Zealand on SKY Television," the document says, and outlines continued loss and damage to ARL.
Who did what first?
The SailGP/Oracle letter also claimed that part of LiveLine's system was protected under a US patent, a patent Taylor claims is weak because he asserts ARL was already working on similar technology before it was lodged.
He claims he showed the ideas to Coutts in 2010, just days after BMW Oracle Racing won the America's Cup in Valencia. He says he pitched a more advanced version of the Virtual Eye graphics technology to Coutts, Oracle Racing's CEO.
"We sat with Russell and talked about what the next phase was. And at that meeting we showed him all of our plans," Taylor says. The following year he discovered two systems, images from a camera on a helicopter and data coming off the boats, had been combined and patented.
But he doesn't regret those early open discussions.
"We don't do non-disclosures in sports because the conversations are more open. Our aim is to improve the coverage for viewers and some of the best things we've done have been with people we trusted. You trust somebody once and they let you down, you don't ever trust them again."
Apart from the patent, some of the copyright infringement claims alleged by Oracle and SailGP have left him bewildered, Taylor says. One was the closed border around the race course which he claims ARL introduced in 1992 in San Diego because of a nearby military base.
"The only way the [America's Cup] race was allowed was that it had to be held inside a closed border. Russell actually raced inside that fixed boundary to win the cup."
Another claim was over a flat ribbon around the border with sponsors' names inside which LiveLine had used in San Francisco in 2013. Taylor, deciding not to argue, shrugged that off and instead asked ARL's programmers to bring forward work they were doing on a new boundary around the perimeter of the course.
"It was a whole new concept. We created 3D walls that stood up, creating an on-the-water virtual stadium for sponsor branding. Everyone talked about it."
ARL had been saving the3D wall as a final flourish for the March America's Cup racing. But after the legal challenge last December, ARL rolled it out early for the Prada Cup to avoid using the flat ribbon.
It irks Taylor that SailGP is earning licensing fees from those broadcasters using graphics he claims were developed by ARL. The SailGP press release said its broadcast coverage now reached fans in 175 territories, and that the number of international broadcasters had risen, with 30 more rights holders on board than the previous season.
"This highlights the issues small, innovative companies like ours have to live with in the world of copyrights and patents."
Hitting the ground running
As Taylor sees it, the copyright argument boils down to one question: can animation graphics software be protected by copyright laws and therefore be unable to be used by competing companies?
If the answer is yes, then Taylor claims he has irrefutable documented evidence that ARL was the first to develop and use the graphics, and therefore owns the IP.
If the answer is no, they aren't protected by copyright, then Taylor says let's get on with it and either do our own thing or work together.
To him, that's the Kiwi approach. Taylor's view is that an open-source climate and competition helps to drive development.
"If you want to lift the world of sailing, the worst way you can do it is to try and lock down your ideas so no one else can use them."
Simmering in the background, Taylor suspects, is ill-will between Emirates Team New Zealand and Oracle Racing. The America's Cup organisers had originally intended to use Coutts' LiveLine system but negotiations broke down.
With the LiveLine option gone, ARL was tasked with coming up with technology that would not breach the patent - delivering the graphics without taking on-board data from the yachts.
"We designed a whole system that could do that job and not need any data from the course. It took us a year but we did it. "
The new system cost ARL $500,000 to develop, Taylor says. The deal with Riedel was that ARL would pay for the technology and provide evidence that it did not breach the patent. In return Riedel would provide ARL with indemnity should Oracle and SailGP try to stop them using it.
"We told Riedel 'you now have to indemnify us if you use it. If not, don't use it.'"
Riedel agreed to the conditions but instead came to a confidential settlement with Oracle and Sail GP.
The friction between ETNZ and Oracle goes back further, to Bermuda in 2017 where the Kiwis found themselves very much on the outer. Tensions rose when ETNZ boss Grant Dalton refused to sign a framework agreement for the next two America's Cup cycles, put forward by Coutts' Oracle Racing. The proposal was for a series of races around the world in identical foiling catamarans, culminating in an America's Cup race. All the syndicates signed except Team New Zealand.
Larry Ellison's wealth aside, there's little doubt Coutts has considerable resources behind him. Earlier this year NBR valued Coutts' financial empire at more than $100m.
A search by the Herald revealed a considerable list of properties Coutts either owns or that are owned by entities he controls, including residential, commercial and farming interests.
Five years ago he moved into his new $15 million Cape Cod-style home built across three beachfront sections at Tindalls Bay on the Whangaparāoa Peninsula, featuring five bedrooms, three living rooms, and tennis and basketball courts.
Coutts also owns Barley Station, a 41-hectare farm and large home on the Crown terrace above Arrowtown. He wants to extend his private golf course to 18 holes and is currently in a stoush with Arrowtown neighbours over water rights.
Taylor says he has little doubt that Coutts is passionate about sailing. He has established the Russell Coutts Sailing Foundation to encourage young Kiwis to sail and Taylor has spotted him at the Wanaka Yacht Club helping to train youngsters.
Some years ago, Taylor's ARL donated $10,000 towards a Coutts-led drive to buy new O'pen Bic dinghies for Otago's Ravensbourne Boating Club. So with that background in mind, Taylor is disappointed to be involved in what he describes as "this really dumb stoush".
"We should have been working together, showing the world how you really put on one of these [Cup regattas]."