Software Protection in the United States: Copyright v. Unfair Competition

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(2) ~1i-f'. Software Protectioni in tIle United. states:. Copyright v.. Unfair Competition. Chi Shing Chen * Table of Contents 1. Introduction 2. The Difficulty to Construct the Misappropriation Doctrine. 3.. Software Cases From Unfair Competition: 4. Comments References. ight. In this article, I further examine. protection on. copyright law aspect of the soft ware. Issues. analysis cases.. on the. IS. majority of. approach. competltion laws. made in each one. these groups.. I believe these comparisons can illus. the software copyright. I agree with. and. trate. my. view that the. software. the legal scholars that the copyright. copyright disputes analyzed in this. protection for the computer software. essay can better be. excessively. In. the unfair comDetition laws in terms construction. essay, I submit copyright. based on legal rules. principles. This is especially true. for. cases where cODyrig ht protection. the computer software has essentially. In. served the function of the unfair com. are extended to the area of non-literal. petition laws in the software industry.. software infringement,. To support my thesis, I categorize software. A. the sequ. into. groups.. ence, structure and organization and IAAlr-"'nrl-fool Af 1-ho computer. between. copyr. programs.. 396.

(3) ~m~IH*~t!. J=J. : ~{'F*,v.::fJE~~ discussed. In the fonowing section, I. 1. Introduction. trace the influences that obstruct the establishment of a well constucted. Software protectioon under the. misappropriation doctrine.. I believe. copyright law regime has been estab. such obstruction led to the expansion. lished since 1980.. of the. However, other. copyright. to. the. are still contemplated and debated in. computer software. I then analyze the. the legal community. This essay does. software copyright cases by classifying. not intend to propose another legal. ,these cases into four categories. My. regime for software protection. It is. con elusion that the non-literal softw. also not an article to comment a spe. are copyright infringement should be. software. copyright. decision. made by the courts Through. the. analysis of some twenty software copyright. decisions. made. by. portions. protect. altennatives for software protection. cific. non-literal. law. of. the. approached from the perspective ot unfair competition is discussed in the end.. the. courts, this essay suggests that the. 2.. The Difficulty. to. non-literal software copyright deci sions made by the courts have essen. Construct. the. Mis. tially served the function of unfair. appropriation Doctrine. competition laws. 1 I first present the general con sensus of the legal community re garding. excessiveness. of. The majority of the legal scho. the. lars have criticized the extension of. copyright protection for the computer. copyright protection to the non-liter. software. Literatures that emphasize. al portions. the unfair competition laws as the. 2 The misapporpnatIOn doctrine has. alternative for software protection are. been considered the most favorable. 1) 2 ). the. the computer software.. See [Chen, C 1993J for the first software copyright cases analysis article. Literature agree with courts' interpretation: see [Fettennan, D 1986 J \ court should expand copyright protection for software through interpretation of idea ex pression dichotomy) and [Middleton, A 1988J (court is right to protect user in terface but is wrong not to extend the protection to command) ; disagree opinion: see [Conley Bryan 1985J (substantial similarity test in copyright is not suitable. -3W.

(4) il&*1i~~ilRi . alternative by the commentators. 3. ~E.+-M. software copyright protection for. Professor Raskind also believed that. the computer software has been ex. the court should begin the analysis. tended to the non-literal aSDect of a. by considering the competitive re. computer program to serve the task the unfair competition laws.. lationship and focused on the alleged. I be. ly "inappropriate" conduct as an ele. lieve the difficulty encountered in the. ment of behavior in a competitive. construction of the misappropriation. market context when the statutory. doctrine contributes to this deveiop. protection specified in the Copyright,. ment. In this section, I trace the de. Patent and Trademark laws is in. velopment of the misappropriation. appropriate. 4. doctrine and the factors complicated. In this essay, I am non proposing a policy scheme as an alternative to. its construction. The federal common laws of un. I. fair competition has derived almost a. am simply pointing out the fact that. century before a landmark Supreme. the software copyright protection.. 3 ). 4 ). for computer software) , [Perelman, B 1985] (program structure ought to be patentable subject matter and not copyrightable) , [Goldstein, P 1986J (copyright should only protect verbatim coyping ) , CNimmer Krauthaus 1987J ( copyright law is designed for artistic work and not incremental avanced technology like computer software) , [Menell, p 1987J (Affording full copyright protection to operating systems- the source of compatibility-can sdiscourage adoption of widespread product standards) , [Farrell, J 1989J (copyright's protection is inefficient, and its protection of part of a software program hurts standardization effort in the soft ware industry ,[Friedman, M 1989~ (trade secret and not copyright should be used to protect the machine codes of a software) , [Menell, p 1989] (the tenden cy of courts to view aplication programming as more akin to literary creativity tl:1an to scientific and engineeri'ng advancement treatens to give broad legal protec tion to basic principles of human factor analysis and software engineering without requiring the creators of the programs embodying those principles to satisfy the more exacting standards of patent law) , and ~Samuelon Glushko 1989J ( copyright's protection of look and feel of a program is not supported by user in terface community and legal scholars) . See [Samuelson, p 1984J \ suggested allow copyright to become a general mis appropriation law as a possible solution) ; [Brown, V 1988J (Congress should adopt a federal law of misappropriation, a catch-all category that would preserve a first developer's legitimate lead time and thereby provide the finishing touch to a complete scheme of software protection) . See [Raskind, L 1991]. However, Professor Raskind believed that the misapprop riation doctrine itself should be invoked sparingly.. -398.

(5) f3. ~~!fiXRi~Hflfft. :. ~{'PflV.::;FlE~*. court decision, Erie R.R. v. Tompkins, its development.. He pointed out that. Since. judge-made rules on unfair competi. then, the state courts took over the. tion represented "ont of the most. task of construction and the unfair. striking examples of case law in the. competition law started losing its con. framework of a codified civil law.". 5. ceased. petition laws.. 7. This Change essentially. The difficulty to draw the line be. obstructed the forming of a federal. tween legitimate competition and mis. common law of unfair comptition.. appropriation is also experienced in. This development is unfortunate since. the German Law. Professor Mest. the borderline between a legitimate. macker stated that "the borderline of. business competition and the unfair. patent-like protection for unpatented. competition is very difficult to draw.. articles has proved difficult to draw.. Lacking of a jurisdiction that is con. ...The 'distance' 8 which has to be. sistence and uniform throughout the. kept from a competitor's products is. country only added further difficulty. determined by taking into account. to the building of a consistent law of. such considerations as: the individual. unfair competition.. ity of the product, the time and effort. formity.. 6. Professor Mestmacker shared the. involved in its development, its char. experience of the German unfair com. acter as technical or aesthetic, the. 5). 6). 7) 8 ). 304 U.S. 64 (1938), held that the state law where the federal court resided, and not the federal common laws, should be the binding laws of the diversity cases brought to the federal courts. The judicial administrative reform was also com pleted in 1939 with the enactment of the Administrative Office Act of 1939, 53 stat. 1223, 28 U.S.c. @332. For a general description of the development of the unfair competition law, see [Peterson, J 1965J, p. 347-363. Peterson gave an example where a federal district court in California granted an injunction against the identical copying of an ash tray except the name of the pro ducer; however, because of the differences in the state law, a federal district court in Louisiana refused to protect the maker of a cigarette lighter whose product has been identicany copied except the name of the producer, see [Peterson, J 1965], p. 356 and note 65. I believe the differences in these decisions also reflected the sub jective nature of the judicial discretion needed in judging the 'fairness' of prodcut competition and simulation. However, to rendeer subjective discretion is inventiable for the business of the courts. Furthermore, judges should be the experts in render ing these discretion, if the facts of the cases are clearly laid out. This point is furth er elaborated later when the influences of the economic analysis on unfair competi tion is discusssed. See [Mestmacker, E 1966J, p. 18. Quote is original.. 399.

(6) mE.+-M. l&*1t!¥~~. purposes of the imitating competitor. one of moral rights or wrongs, but of. and the ways and means by which he. the primacy of federallaw."lo "T0 judge Hand, the copyright. obtained his knowledge." 9 I believe more consistent and. scheme embodied in the Constitution. concrete tests for the misappropria. did not permit the recognition of. tion doctrine like those found in the. 'common-law property' 11 ... it is for. German laws may very likely to !'1ave. Congress both to prescribe the extent. been constructed in the United States. of copyright protection and to deter. if there has not been the changing of. mine what is eligible subject matter.. the jurisdiction dictated by the Erie. Subject matter left unprotected and. decision.. rights left unrecognized by Congress. As stated previously, the. first impact of changing the jurisdic. belonged to the public domain once. tion led to the difference of judicial. they were published. State law pro. discretion in deciding the unfair com. tection, whether based on 'common. petition issue, which is detrimental to. -law property' 12 or unfair competi. the forming of the competitive norm.. tion, is an intolerable invasion of the. In addition to the difference of judicial discretion, the change of the jurisdicition. of. unfair. competltIOn. rights of the public under the federal copyright scheme."13 The. effect. of. Judge. Hand's. common laws from the federal to the. reasoning is simply that if a subject. state courts added even more puzzle. matter is not on the list recognized by. to the development of the law. After. the intellectual property laws, then it. this. judge. is not protected at all. Record pirat. Learned Hand 'of the Second Circuit. ing provided the most severe chal. advanced an expansive view of feder. lenge to such reasoning. None of the. al constitutional preemption. Accord. major. ing to hand,". pirating. 9) 10) 11) 12) 13). jurisdictional. change,. he core issue is not. Id., p. 19.. See [Abrams. H 1983J, p. 518-519.. Quote is original.. Quote is originaL. Id., p. 519.. -400. decisions followed. involving Judge. record Hand's.

(7) [&ij~RN~1:t. f:j. :. ~fFmv.~lE.~. 14. state law may not forbid others to. However, in 1964, the Supreme Court. copy that article. To forbid copying. made another pair of landmark deci. would interfere with the federal poli. sions which had decisive impact on. cy, found in Art. 1, 8, 8, of the Con. the development of the unfair com. stitution and in the implementing. sweeping. preemption. petition laws.. doctrine.. In Sears, Roebuck &. federal. statutes,. of. allowing. free. Co. v. Stiffel Co.15 and Compco Corp.. access to copy whatever the federal. v. Day Brite Lighting Co.,16 the Sup. patent and copyright. reme Court explicitly declared that. the pubic domain."17. ~aws. leave in. state unfair competition laws were. The strong preemptive pOSItIOn. preempted by the federal intellectual. of the court was later challenged in. property laws.. the legislature during the patent re. The strong opposition expressed. form.. Opponents. of. the. strong. by Justice Black echoed Judge Hand's. preemption clause tried to amend the. expansive view of the preemption. preemption clause of the patent law. doctrine. Justice Black stated:. to explicitly state that unfair competi. hen an article IS unpro tected by a patent or a copyright,. 14). 15 16) 17 18). tion was not preempted by the feder al patent law.. 18. The amendment. Metropolitan Opera Ass'n v. Wagner-Nichols Recorder Corp., 199 Misc. 786, 101 N.Y. S.2d 483 (1950), aff'd, 279 A.D. 632, 107 N.Y.S.2D 795 (1951), is the leading state court precedent started the protection of phonorecord from illegal copying in the state courts. The preemption issue is not discussed in the decisiion, In Capito~ records, Inc. v. Mercury Records Corp., Judge Hand became the minor ity in his own Circuit, 221 F.25 657 (2d Cir. 1955) tllf',majority did not enter the discussion of the pressmption issue either. In the early 1970's, the phonorecord pro tection issue reached t:!-te Supreme Court the expansive preemption doctrine in itIated by Judge Hand was once again the minority. In Goldstein v. Califorina, 412 U.S. 546 ( 1973 ) , a five-to-four decision, the majority validated a California sta tute that made it a misdemeanor to make unauthorized duplications of sound re cordings. See discussion in [Abrams, H 1983J, p. 519-537, and l Goldstein, P 1990J , p. 770-772. 376 U.S. 225 ( 1964 376 C.S. 234 ( 1964 Id., at 237. This is the Scott Amendment no. 23. It was raised in the 1971 patent law revision hearing. See [Senate 1971J, p. 1-4.. -401.

(8) m1i+-Wj. i&jd.t~~iifi1r . effort. failed. in. Congress. 19. fact, the economic approach toward. Although the Copyright preemption. the misappropriation was used in the. dause was amended in the 1976. decision, Associated Press (AP) v. In. Copyright. termational. Act,. the. 20. the. question. News. Service. (INS),. whether misappropriation ought to. be. which initiated the doctrine of mis. explicity declared as not preempted. appropriation. 22 I believe the importance of AP v.. by the federal copyright law was the center of the debate and was not put. INS not only lies in the fact that it in. into the statutory language in the. itiates the misappropriation doctrine,. end. 21. AP v. INS is also full of thoughts and opinions. 23. In addition to the subjective na. The debate in AP v. INS. ture of the unfair competition judge. centered around the fact that the. ment and the preemptive status of the. I~S,. state unfair competition laws, I be. about the first world war on the con. lieve there is a third element that. tinental Europe, took the news pub. further complicates the unfair com. lished by AP in the East coast, trans. petition doctrine.. The element is the. being banned on news collection. mitted them to the West Coast and. effort to fuse economic analysis into. Published. the doctrine of unfair competition,. whether such practice of the. especially in the cost reduction side,. ought to be banned?. there.. The. question. is. I~S. A total of six opinions were. i.e the misappropriation c.octrine. In. 19) In a written testimony, some 40 legal scholars joined professor Donald Turner to oppose the amendment of the patent law preemption clause. It seems that the pro fessors only recognizes the sales promotion side of the state unfair competition laws by stating: "In our judgement, state courts have granted relief in this area without confining themselves to purely nonfunctional feartures, and the result is equivalent to ( indeed, in excess of) patent protection. Accordingly, we believe that Sears and Compco are correct in limiting the states to restrictions relationg to advertising, trade symbols and trade dress, and requirements of labeling. If the product origina tor wants more, he should satisfy federal standards." See [Senate 1971~ , p. 311-312. 20) 17 U.s.c. 301. 21) See discussion in section 2.2.2 Preemption Clause of 1976 Copyright Act in [Chen, C 1993]. 22) 240 ~~. 983 ( 1917) , 245 F. 244 ( 1917 ) , 248 U.S. 215 ( 1918) . 23) See also [Baird, D 1983J, [Paepke, 0 1987J, and pRaskind, L 1991J.. 402.

(9) J\+-~AJ=3. ~m.m~~~:.~.~~~. ... given on this issue throughout the case. not sown", Justice Pitney believed the. history of AP v. INS.. the district. news in dispute at least ought to be. practice. treated as a "quasi property" existed. amounted to unfair trade, but the. between AP and INS. The majority. matter is one of first impression. 24. therefore granted the injunctive relief.. Judge Hand very reluctantly refused. 28 Justice Holmes dissented with the. the granting of injunctive relief to. opinion that property should be cre. AP.25 On appeal, however, the major. ated only by the law and did not. ity of the circuit court, based on a. arise from value.. strong sense of morality, answered. legislation, what AP could obtain. the question with a definite yes. 26. from INS was at most a credit iIi. The dissent, on the other hand, be. name.29. court. believed. INS's. Lacking explicit. lieved the injunction relief for AP. Justice Brandieis also wrote a. ought to be rejected since no protec. dissenting opinion based on an econo. tion should be provided to AP when. mic reasoning. He stated:. it communicated the news outside its members.. "That competition is not unfair. The "rotation of the earth. in a legal sense, merely because the. is slower than the electric current is a. profits gained are unearned, even if. physical fact the complainant must. made at the expense of a rival, is. reckon with in doing its business."27. shown by many cases besides those. In the Supreme Court, using the well known phrase "reap where it has. referred to above.. He who follows. the pioneer into a new market, or. 24) 25). 240 F. at 996. Judge Hand stated:. 26). "... my decision cannot be regarded as sufficiently free from doubt to justify the of a preliminary injunction upon this branch of the case.", id. Judge Hough stated:. 27). "If defendant takes what some one else owns, and sells it as of right, in rivalry with the owner, such competition is more than unfair; it is patently unlawful and the wider term comprises the narrower.... the business method of selling, in com petition with plaintiff and its members, something falsely repressented as gatered by defedant otherwise than from bulletins and early editions, is unfair, because it is parasitic and untrue. It is immoral, and that is usually unfair to some one.", 245 F. at 252. 245 F. at 254.. 28) 29). 248 U.S. At 239, 240, and 242. Id., at 246 and 248.. -403.

(10) a*?,!!lJ!1ff~. who engages in the manufacture of. The market approach focusing on the. an. cost saving and market entrance of. article. newly. introduced. by. another, seeks profits due largely to expense. the competitive rivalry. the . courts. to. enabled. provide. a re-. In-. deed encourages, the pursuit.. He. the courts from rendering "sub. who makes a city known through his. jective assessments of the ethical na. product, must submit to sharing the. ture of certain competitive behavior.". resultant trade with who, perhaps for. 32. that reason, locate. The reason why competition. later." 30. Professor Raskind believed Jus tice Brandeis. might better. IS. viewed in quite a different way under is not. an economIC. to. been the majority opinion for the case from a competitive market. two basic meanings of competition in. point of view. In other words, under. economic sense. Competition is first a. an economic approach, the conduct of. basic. INS should be examined more as a. efficency through equating prices and. business competitive behavior. Like-. marginal costs. In fact, the force is so. the solution. such dispute. be bulletin, or enhance. secure its enforcement. to. assure. allocative. fundamental, it is analogous to the force in. AP. copyright its. force. ence.. SCI. second meaning of com. petition is a descriptive one, denoting. of its by-laws. AP could also prevent. an ideal status, i.e. perfect competi. INS. by. tion. It is not an ordering force, but a. time of. state of affairs. This perfect situation. form. taking. AP's. arranging the news the two coasts.. 31. news. None of these re. sponse required any legal solution.. may be unrealistic, but it still serves as a good analvtical device. 33. 30) ld., at 259. Justice Brandeis also thought that the of exclusion for property was absolute, but if the property was affected with a public interest, its right of exclusion should he qualified. The fact that it costed AP to gather those news itself was not sufficient for property protection. The Court was really ill-e quipped to investigate the public interests and property status of the subject matter involved in this case, see id., at 250 and 267. 31) See ~Raskind, L 1991~ ,at 905. 32) ld., at 906. 33) See fMcNultv. P 19681, p. 643.. -404.

(11) /\+.=:if:1\f]. ~~~IHWJJ1.t:. : If{'f*lv.::fIEft~. The difference of opmIOn be. unfair competition laws discussed in. tween legal and economic community. the previous section has a direct. regarding. is. effect on the software protection, i.e.. No one ought to be. govern software unfair competition. allowed to reap where it is not sown. under the name of software copyright. is a legal principle for the mainte. protection. My analysis of the soft. nance of market as well as social. ware Copyright cases in this section. order. To interpret the meaning of. is intended to illustrate this view.. business. thus evident.. competition. unfair competition based on this prin. I categorize software copyright. ciple is destined to be different from. cases into four groups. The first. one based on the economic approach. group of cases contains the literal. where competition is seemed as the. copying cases. I believe this group of. driving force to a perfect market. cases is well placed in the copyright. structrue. The derivation of the com mon law of unfair competition is in. regime. Actually, these cases can be tried either by copyright infringement. evitably further complicated by the. or unfair competition,' which is what. different level of acceptance of the. the parties of these caese essentiany. law economic approach by the judges. did. The group one' cases includes. throughout the courts of the United. SAS, 34 EFJ 35 and Broderbund. 36. States.. In each one of these cases, there exists evidences of direct copying. In. 3.Viewing. Software. SAS, plaintiff's company name 'SAS' was shown 145 times in the early ver. Copyright Cases From. sion of the defendant's product. In EFJ, the defendant took the express. Unfair Competition. ions of plaintiff's software program including some errors during the re. I believe the uncertainty of the. 34). verse engineering process. And in. SAS Institute Inc. v. S&:H Computer Systems, Inc., 605 F. Supp. 816, 225 U.S.P.Q. ( BNA ) 916, March 6, 1985. 35) E.F. Johnson Co., v. Uniden Corporation of America, 623 f. Supp. 1485; 228 U.S.P.Q. (BNA) 891, December 13, 1985. 36) Broderbund Software, Inc. and Pixe1,lite Software, v. Unison WmId, Inc., 648 F. Supp. 1127, 231 U.S.Q. B~A) 700, October 8, 1986.. -405.

(12) 1I&7d*~ ifP ~. Broderbund, the defendant's prog. 37 Synercom2, 38 Digital, 39 Manufac. rammer Hughes copied the screens of. turer,40 Telemark 41 and Lotus. 42. several functions of plaintiff's soft. I believe Manufacturer is right in. ware product "Print Shop". Hughes. holding. even had an idea for a totally diffe. under section 43(a) of the Lanham. rent user interface in one of the func. Act. In this case, the court also fo. tions, but he still copied the "Print. cused on whether there exists a likeli. Shop" interface.. hood that a substantial number of. All the claims of these cases in. the. defendant's. liability. consumers would be misled or con. cluded both copyright infringement. fused as to the source of defendants'. and unfair competition, only that the. screen. unfair competition claim was either. affirmative on this issue. Actually, I. not discussed or severed by the court. believe the Manufacturer court could. because clear evidence of expression. well settle the case on the unfair com. copying were found in each of these. petition ground alone without delving. three cases.. into the chore of deciding the coop. The second group of software. displays.. The. court. held. rightability and idea v. expression of. copyright cases are reviewed under. various features. the section 43(a) of the Lanham Act.. program. 43. The group two cases are Synercoml,. in this group did not take the same. 37) 38) 39). of the infringing. I wonder why other cases. Synercom Technology, Inc. v. University Computing Co. and Engineering Dyna. mics, Inc., 462 F. Supp. 1003; 199 U. S. P. Q. (RNA) 537, August 24, 1978.. Synercom Techno~ogy, Inc., v. University Computing Co. and Engineering Dyna. mics, Inc., 474 F. Supp. 37; 204 U.S.P.Q. (RNA) 29, Feburary 7, 1979. Digital Communications Associates, Inc. v. Softklone Distributing Co. and Foretec Development Corporation, 659 F. Supp. 449, 2 U.S.Q.2D ( RNA) 1385, March 31, 1987.. Maunfacturers Technologies, Inc. v. Cams, Inc., Edward D. Cormier, Kenneth J. Laviana, and Norman St. Martin, 706 F. Supp. 984, 10 u.S.P.Q.2D ( RNA) 1321, January 30, 1989. 41) Telemarketing Resources v. Symanted Co., John L. Friend, and dba Softworks DE velopment, 12 u.S.P.Q.29 ( RNA) 1991, September 6, 1989, Decided. 42) Lotus Development Co. v. Paperback Software International and Stephenson Soft ware, Ltd, 740 F. Supp. 37, 15 u.S.P.Q.2!) (RNA) 1577, June 28, 1990. 43) Court's copyrightablity and idea v. expression analysis were commented in [Chen, C 1993J, 3. Software Copyright Cases Review. 40). -406.

(13) ~.~.~.~:*~.v~~. J1. preSSIOn. only explanation is that. route.. complication. vious section make it the. a program's menu struc. ture.. the unfair competi. tion doctrine discussed in. ... Likewise, the. pre. of all. cases in this group all center around. favor-. the screen display or user interface of. cause of action compared to copyright protection. Other legal pro. a software program. They are all de. tection means, especially copyright is. cided under. sought. copyright law regime. Synercom2. Synercom2 did try. insteac". In Lotus, the defendant realized. the unfair competition route. Unfortu. the only chance to succeed in. nately, instead of choosing the sec. spreadsheet software business is to be. tion 43(a). compatible with Lotus 1-2-3. Accor. sing off, plaintiff of Synercom2 sued. cjngly, defendant changed. the Lanham Act or pas. the common law misappropria. design. tion claim and. of its spreadsheet program to "ensure. claim was preemp. ted by the federal Copyright law. 45. the arrangement and names of. The. commands and menus in VP-Planner. group. cases are the. conformed to that of Lotus. ones that I believe a better inquiry. It seems really questionable whether. should be the unfair competition with. an inquiry into the possibility of the. confidential relationship. rr:'he group. designation of origin is more. three cases includes Whelan,46 Q-Co, 47 Plain,48 Health49 and Johnson. 50 All. proper than a finding of idea v. ex 44 45). 46) 47) 48) . 49) . 50). See supra note 41, 740 F. supp 69. "Strictlv speaking, the tort of unfair requires the additiional element of y meaning, or" passint off. "As there is no claim that ET)I or UCC off their product as that of Synercom, the analysis here will focus upon the doc· trine of misappropriation", see note 1 of Synercom2. Whelan Associates. Inc. v. Jaslow Dental Laboratory, Inc., Dentcom, Inc., Edward and .\1. Cerra., 797 F. 2d 1222, Aug. 4, 1986. Q-Co Industries, Inc. v. Sidney Hoffman, Dillip Som and Prompting 625 F.'Supp. 608; 228 U.S.P.Q. ( BNA) 554, DEcember 24, 1985. Plains Cotton Cooperative Association v. Goodpasture Computer Service, Inc., Wil liam James Godlove, Richard R. Peter H. Cushman, and Clarence l'Iichael 21, 1987. Smith, 807 F.2d 1256, 1 U.S.P.Q.2D (BNA) 1635, Healthcare Affiliated Services, Inc., and Blue Cross of Western Pennstlvania v. Leslie V. Lippany, indiidually and doing business as Hospital Mycrosystems, Inc., 701 F. Supp. 1142, August 11, 1988. Johnson Controls, v. Phoenix Control Inc., Rodney Larsen and Irene JohnSchratz and Martha Schratz, 886 F. 2d 1173, 12 u.S.P.Q.2D ( BNA 1566, October 3, 1989.. 407.

(14) competing software in dispute.. of these cases involve competition. It is therefore reasonable to ques. from former employees, except that Whelan is a dispute derived from a. tion the ruling of the Whelan court,. dissolved joint venture.. which extended the copyright protec. I believe Q-Co and Health are. tion for the software program to the. the right approach in this category. sequence, structure and organization. since unfair competition and copyr. of the program. This is especially. ight claims were at least treated. true when the facts of the case clear. equally. Since the defendants of both. ly stated that the defendant illegally. of these two cases lawfully gained. took a copy of the source codes of. the idea for the disputed program. the disputed program. 41 A stronger. through their employment and the. emphasis on the inquiry of trade sec. copyright infringement occurred only. ret misappropriation in this case may. at the idea level, the copyright claims. have led to the same result without. of both of these cases were not sus. commiting the court to extend such a. tained. On the other hand, the plain. broad copyright doctrine for software. tiffs of these two cases were success. protection. Similarly, through the coypright. fully protected through the unfair competition cause because the defen. infringement test,. the. Plain court. dants misappropiated the trade sec. found no infringement since the simi. rets of their former employers.. larity of programs is dictated by the. Based on the same reasoning, I. externalities of the cotton market. In. tend not to agree with the approach. fact, however, the idea of the two. of the other three cases. Defendants. competing programs came from the. of all. same source, the former employer of. these. three. cases. lawfully. obtained the idea of the disputed soft. the defendants. One of the defendant. ware either through their former em. also took a complete copy of the. p~oyment. source codes be:ore he resigned from. or joint venture relation. ship. It seems natural to have similar. the plaintiff. 52 Again, I believe a bet. ity on the idea level between the. ter rule may be obtained if the main. 51) In footnote 22, Whelan court quoted the finding of the district court that defendant "had surreptitiously and without consent" of the plaintiff obtained a copy of the source code of the disputed program and that the had "utilized the source de in his attempt to develop the IBM-PC Dentcom program," see Whelan, 797 F.2d at 1232. 52) See Plains, 807 F. 2d at 1258.. 408.

(15) Pi. :¥: X. inquiry of the case is unfair competi. complicates. tion, i.e. misappropriation of trade. doctrine, namely the highly subjective. secret in this case. However, the. nature of the judical discretion re. Plain court dismissed the copyright. garding how and to what extent a. infringement claim because the court. product can be lawfully simulated,. no copying occurred on any. the law economic influence on the. level.53. concept fourth group. viewed based on. of. unfair competltIOn. competition,. and. cases are re. preemption issue, are all very likely. unfair competi. to create hardship during the de. tion without confidential relationship.. velopment of the legal rules and. The group four cases include Data. ciples for the cases of this group.. 54 Franklinl,55 Franklin2,56 For. However, Datacash is the rare. mula, 57 and NEe. 59 I believe the. exception. The Datacash court ruled. group deal right with the. that the Read Only Memory (ROM). me misappropriation doctrine. is not a copy of the computer prog. and thus are the most difficult ones in. ram and rejected the copyright in. terms of resolving through a well. fringement claim. On the other hand,. cases m core. 01. reasoned and established legal princi. Datacash. court. sustained. ple, since the construction of. plaintiff's unfair competition claim. msiappropriation doctrine is compli. and held the claim was not preemp the federal copyright law.. cated by the factors discussed in the. Using copyright law to decide. previous section. I believe. 53 54) G5 56) 57) 58 59). the three factors. the issue of unfair competition did. Id., at 1263. Data Cash Systems, Inc. v. JS8z::A Group, Inc., at aI., 480 F. 1063; 203 US.P.Q. (BNA) 735 September 26,1979. AnnIe Comnuter. Inc. v. Franklin Co., 545 F. Supp. 812, 215 U.S.P.Q. 30, 1983. 30, 1982 Reversed and Remanded AnnIe Computer, Inc., v. Franklin Computer Co., 714 F.2d 1240, 219 US.P.Q. 113, August 30, 1983. Allple Computer, Inc., v. Formula International Inc., 725 F.2d 521, 221 B~A) 1520, July 15, 1988. Pearl Inc., v. Competition Electronics, Inc., 8 U.S.P.Q.2D (BNA) 1520, July 15, 198B. NEC Corporation, and ~EC Electronics, Inc. v. Intel Corporation, 10 u.S.P.Q.2D 1177, February 6, 1989.. 409.

(16) not really simplify any other cases in this category. After a leng. product simulation is in need of a cooperative. from the legal. thy and scholarly opinion, the Frank. and economic community. And the. lin. court decided that it was still. research of this. subject can only help. questionable whether the binary ver. the court to a certain extent. I believe. sion of an operating system of the. the. personal computer resided in Rom is. judges. copyrightable subject matter. This de. strictly the result of the software. cision. was. Franklin2,. are. inevitable.. Examining. overruled. by. copyright cases, I don't believe any. ascertained. the. one can seriously challenge the result. soon which. subjective assessments of the. copyrightability of the disputed sub-. decisions of the court. 60. of. matter.. The concern I have is really over. I believe the question whether. building of legal rules and princi over eXpa]nSlOn. ROM is cODvriflhtable is reallv an. ples.. open. ware. court to. answer.. may a. if the court consi. principles for soft. that the plaintiff and the been placed in a different. ware UnIatr competition, which are. comptitive ;lOrizon since the defen. really needed. This is the view point. dant does not have to bear a substan. this section is intended to illustrate.. dant. tial cost to develop the operating sys tem residing in the ROM, the deci. 4.Comments. sion could be made easier and the The copyright law has been over. legal rules set by the courts can also be better comprehended.. expanded to provide protection for. It is not my opinion that cases in this cided. can be litigated and de. 61). opinions found in. if they are tried as a case. of unfair competition.. 60. the computer software is the majority 61. fairness. In this essay, I. legal literature. the view. that such expansion is due to the. case I have doubt about whether the disputed product has been sirnulated, since no trade secret was misappropriated like NEe. should not be so seriously challenged. Howpvpr am even more without exposing to t~e facts of the case as the court did. See supra note 1.. 410.

(17) A+~1f:I\Fl. ~~m1*l~fU!. :. ~{'f;flV.~ IEft~. complication of the unfair competi. usee as the primary means for the. tion laws. Such confustion demands. protection of a series of technological. more thoughts be given to the legal. innovation, such as the radio, motion. regime especially when an emerging. pricture,. industry is created through technolo. -copying and now the computer soft. gical innovation.. ware technology. I bdieve the rulings. The. sound recording industry. phono-record,. photo. extending copyright protection to the. and the computer software industry. non-1itera~. are the two prime examples. All lead. software have an undesirable effect. ing. of complicating the overall copyright. cases. involving. phonorecord. aspect of the computer. pirating ran against the principle re. law regime. This development should. quired that the state misappropriation. not be encouraged especially when. protection be preempted by the feder. there does exist another approach to. al intellectual property laws. 62 The. derive the competitive norm for the. reason seems to be quite straight .. software industry.. There simply is a need in the sound. Over expansion of the software. recording industry to have the com. copyright. petitive norm. Likewise, in the soft. another drawback to the development. ware industry, the cases examined in. doctrine. may. lead. to. the software industry, which is. the previous section seem to suggest. shared by. that software copyright. cases reviewed. From an economic. protection. four categories of the. has been expanded to serve as. point of view, Farrell pointed out. unfair competition laws for the indus. strong intellectual property protection. try.. To have a federal unfair com. tends to obstruct the derivation of a. petition legal regime is really what is. de facto standard, destroy network. needed. 63. benefit and fragment the market. 64. Expanding copyright protection. The fact that the Open Software. for the non-literal aspects of the. Foundation. computer software tends to over-bur. membership organization established. den the copyright law regime. In this. in 1988 to promote a standardized. century, the copyright law has been. UNIX operating system, tried as its. 62) 63) 64). (OSF),. a. See supra note 13 for a discussion of the 3 main phonorecord pirate cases.. See [Peterson, J 19652 and [Srown, V. 19882.. See [Farrell, J 1989J.. -411. nonprofit.

(18) 11& :}dft ~ if¥ ffifQ . ~1i+-;W3. first task to standarc!ize the user inter. duction side, are aiming at the crea. face portion of the operating system. tion. is therefore noteworthy.65 Even such. businesses. effort of the OSF is not inspired by. other. Therefore the preemption dis. the courts' decisions to grant copyr. cretion ought to be restrained in its. ight protection to screen display and. exercise in cases claiming the viola. user interface of a program in the. tion of the state laws of unfair com. personal. petition.. computer. world,. OSF's. of. a. fair to. environment. compete. with. for each. I also believed copyright protec. emphasis on a standardized user in terface environment at least suggests. tion for the computer software has. a strong need for such a standard. As. been very effective in the sense of en. suggested in this section, the expan. forcing software owners' right to pre. sion of the copyright protection is. vent unauthorized duplication by the. really not necessary if the unfair com. software users. Such protection is. petition laws are placed at the center. especially useful with the help from. of the software litigation.. the software trade association, like. I believe some conceptual clar. Software. Publishers. Association. ification will help the derivation of a '. (SPA), to carry out the enforcement,. consistent legal regime of unfair com. 67 However, as the software copyr. petition law. First, I believe the law. ight cases indicated, the copyright. of misappropriation and the federal. law may be over burdened in guiding. intellectual property laws really pro. the competition among software com. tect different legal interests and are. petitors. The unfair competition laws. serving quite different goals. The in. should be the better candidate.. tellectual property laws are instituted. I believe the seocnd conceptual. to promote the progress of science and useful arts. 66 On the other hand,. help needed· is a better understanding and application of the laws of econo. the unfair competition laws, no mat. mics to the unfair competition field.. ter in the sales promotion or cost re. As discussed in section 1, economIC. 65) See "OSF faces challenge of choosing Unix interface; Open software Foundation", PC Week, October 10, 198, Vol. 5; No. 41; Pg. 13, Sussman, Ann. 66) See Article one, section 8, clause 8 of the Constitution of the United States. 67) See "SPA finds 41 percent decrease in software piracy since 1990", PC Week, November 16, 1992, Vol. 9: No. 46; Pg. 224.. 412.

(19) A+-=1f:7'\R. ~.~n~.~:.~.v~~. ... sense of competition really describes. tors requires extreme caution if not. an weal status of affairs. It is also a. dangerous. Factors lead to the ideal. fundamental factor lead to. ideal. model of economists is still vaguely. competition.. known. ~he legal purpose to derive. However, competition alone does not. norms of fair competition should. situation,. i.e.. perfect. provide any norms for the order. 01. a. market.. therefore. based. primarily. on. the. method and tradition that are long. As McNulty pointed out, com. familiar to the legal community.. petition is by far the most fund mental. economic analysis should. and pervasive yet least developed. mainly for reference only. A. concept in economics. 68 Applying. tive assessment of the fairness Issue. such concept to determine the fair. the judges is always inevitable.. ness between two disputed competi. 68). See McNultv. P 19681 p. 639.. 413. used.

(20) i&*1:!~Wf~ vice V. Associated 50 U. Chi. L. Rev. 411, Spring, 198:3, Douglas G. Baird [Samuelson, P Article: CONTU Revisited: The Case Against Copyright Protection for Computer Programs in Machine-Readable Form, Duke Law [Conley Bryan A Unifying for the Litigation of Computer Software Copyright Cases, 63 N.C.L.Rev. 563, Notrh Carolina Law Re view, 1985, John M. Conley ar\(\ Robert M. Bryan [Perelman, B Proving Copyright Infringement of An Software: 18 Loy.L.A. Law Rev. 919, Loyola of Los Angeles School of Law, 1985, Bruce Perelman [Fetterman, D 1986J The scope 0 copyright iprotection for computer software: exploring the ideal expression dichotomy. (1st prize Nathan Burkan Memorial ( 1986 Competition ,Copyright T~aw Symopsium ASCAP ) , Vol 36, pp January 10, 1991, -Winter, Fetterman, Daniel J [Goldstein, P Symposium: 'T'he Future of Software Infringement of Copyright in Computer Programs, of Pitt sburgh School of Law, Summer, 1986, Paul Goldstein, 47 U. Pitt.L.Rev. 1119 ~H£'~U~U, P 1987J Tailoring Protection for vVllll-'U ter Software, STandford Law Review, 1987, 39 Satn. L. Rev. 1329, Peter S. MeneII CNimmer Krauthaus 1987~ Copyright and Software Technology Infringement: Defiring Third Party De Rights, 62 Ind, L.]. 13, Indiana. References [Peterson, J The Legislative Mandatte of Sears and A Plea for a Federal Law of Un fair Competition, John R Peterson, Dickin son Law Review, Vol. 69, Summer 1965, No.4, p. 347-378 [Mestmacker, E 1966J The Relation of the Law of Unfair Competition to t~e Law on REstraint of in Dr. E. J. Mest macker, p. 17-27 in [Thompson, 0 1966]. ~Thompson, D 1966J Unfair Competition, Some Comparative Aspects of the Laws of the United States, Germany, France and the United Kingdom, A Reoort of a Symposium held on May 20, the Britisl:1 Institute of International and Comparative Law at the Law Society Chancery Lane, London, W.C.2, Ed. by De nnis Thompson, 1966 P 1968~ Economic Theory and the Meaning of 82 Quarterly Journal of Eco nomic 639-656, 1968 ~Senate. Hearing before the Subcommittee on Patents, trademarks, and Copyrights of the Committee on the Judiciary United States 92nd Congress, 1st session, to S. Res. 32 on S. 643, S. 1253 and S. 1255 [McClure, D Trademark & Unfair Acritical history of legal 69 Trademark Reporter 305, 1979. H 1983J Misappropriation, and Preemption: Constitutional and Limits of State Law Protection, ~oward B. Abrams, The Supreme Court Review, 1983, p.509-58!. D 1983J Common Law of Intellectual Property and the Legacy of International News Ser. School of 1986/1987, Raymond T.. Patricia A. Krauthaus [Paepke,O An Economic Interpretation of the Mis. -414.

(21) /\+::-::-. ~.~m~.~:~~.~~E. appropriation Doctrine: Common Law Pro tection for Investments in Innovati,)n, 2 High Tech. L 1. 55, Boalt Hall School of Law, University of California, Berkele, Spring, 1987, Paepke, owen [Brown, V 1988J The Incompatibility of Copyright and Computer Software: An Economic Evalua tion anc. a Proposal for a Markeplace Solu tion, Vance Franklin Brown, The Northe Carolina Law Review, Volume 66, June 1988, No.5, p. 977-1016 [Middletion, A 1988J Note: A Thousand Clones: The Scope of Copyright Protection in the 'Look and Feel' of Computer Programs-Digital Com munications Associates, Inc. v. Softklone, Distributing Corp., 659 F. supp. 449 (N.D. Ga. 1987 ) . 63 Wash.LRev. 195, University of Washington School of Law, January, 1988, Alan S. Middleton [Fariedman, M 1989J Sandardization and Intellectual Proper ty, 30-0CT Jurimeetrics J 35, October, 1989, [Friedman, M 1989J Copyrighting machine language compu ter software-the case against, v9 Computer/Law Journal pl-36 Winter '89, Friedman, Mark. ... P 1989J An Analysis of the Scope of Copyright Protection for Application Programs, Stan ford Law Review, May, 1989, 41 Stan. L Rev. 1045, Peter, S, Menell CSamuelson Glushko 1989J Last Frontier Conference of Copyright Protection of Computer Software: Other Presentations, Comparing the Views of Lawyers and User Interface Designers on the Software Copyright "Look and Feel" Lawsuits, Section of Science & Technology of the American Bar Association, Fall, 1989, Pamela Samuelson, Robert 1. Glushko [Goldstein, P 1990] Cases and :vraterials on IP law Copyr ight, Patent, Trademark and Related State Doctrines, Cases and Materials on the law of Intellectual Property, 3rd. Ed., 1990, Uni versity Casebooks Series, The Foundation Press, 982 P. [Raskind, L 1991J The Misappropiation Doctrine as a Competitive Norm of Intellectual Property, 75 Minn. L Rev. 875, February, 1991, Leo 1. Raskind C 1993J United States Computer Software Copyright Cases Analysis, Chengchi Law Review, June 1993, Chishing Chen. 415":'".

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