APPENDIX IV JUDICIAL DECISIONS AND LEGISLATIVE MATERIALS APPLE COMPUTER, INC., a California corporation, Appellant, V. FRANKLIN COMPUTER CORPORA- United States Court of Appeals, Argued March 17, 1983. Decided Aug. 30, 1983. Rehearing and Rehearing In Banc Denied Sept. 23, 1983. Certiorari Dismissed Jan. 4, 1984. See 104 S.Ct. 690. Copyright holder appealed from an order of the United States District Court for 4. Because of our disposition of this case, it is not necessary to reach appellant's further contentions that she was deprived of a full and fair hearing before the Administrative Law Judge the Eastern District of Pennsylvania, Clarence C. Newcomer, J., 545 F.Supp. 812, denying its motion to preliminary enjoin competitor from infringing copyrights on computer programs. The Court of Appeals, Sloviter, Circuit Judge, held that: (1) computer program, whether in object code or source code, is "literary work" and is protected from unauthorized copying, whether from its object or source code version; (2) computer program on object code embedded in ROM chip is appropriate subject of copyright; (3) computer operating system programs are not per se precluded from copyright; and (4) even without presumption of irreparable harm generally applied in copyright infringement actions, jeopardy to copyright holder's investment and competitive position caused by competitor's wholesale copying of many of copyright holder's key operating programs would satisfy requirement of irreparable harm needed to support preliminary injunction. Reversed and remanded. APPLE COMPUTER, INC. v. FRANKLIN COMPUTER CORP. 1241 Cite as 714 F.2d 1240 (1983) 10.4 in meaning of Copyright Act of 1976 and is 9. Copyrights and Intellectual Property protected from unauthorized copying, whether from its object or source code version. 17 U.S.C.A. §§ 101, 102(a). 5. Copyrights and Intellectual Property 10.4 Computer program in object code embedded in ROM chip is appropriate subject of copyright. 17 U.S.C.A. §§ 101, 102(a). 6. Evidence 265(15) Statements of nonlawyer witnesses, without experience in using statutory language as words of art, in describing computer operating system programs at preliminary injunction hearing as processes or methods of operation were not binding admissions against copyright holder in determining copyrightability of programs. 17 U.S.C.A. §§ 101, 102(a). If other programs could be written or created which performed same function as copyright holder's operating system program, program was "expression" of idea and hence copyrightable. 17 U.S.C.A. § 102(b). See publication Words and Phrases for other judicial constructions and definitions. 10. Copyrights and Intellectual Property 10.4 Computer operating system programs are not per se precluded from copyright. 17 U.S.C.A. §§ 101, 102(b). 11. Copyrights and Intellectual Property 85 Copyright plaintiff who makes out prima facie case of infringement is entitled to preliminary injunction without detailed 7. Copyrights and Intellectual Property showing of irreparable harm. 17 U.S.C.A. 10.4 Method which instructed computer to perform its operating functions would be protected, if at all, by patent law and was not subject to copyright law protection. 17 U.S.C.A. §§ 101, 102(b). 8. Copyrights and Intellectual Property 10.4 Computer operating system program was not "process," "system," or "method of operation" and hence per se precluded from copyright, even though program instructed computer to perform its operating functions, and notwithstanding fact that operating system program was etched on ROM chip, where copyright was not sought of method which instructed computer to perform its operating functions but only of instructions themselves, operating system did not have to be permanently in machine in ROM but could be on some other medium, and statutory definition of computer program as set of instructions to be used in computer in order to bring about certain result made no distinction between application programs and operating systems. 17 U.S.C.A. §§ 101, 102(b). §§ 101 et seq., 102(a). 12. Copyrights and Intellectual Property 85 Even without presumption of irreparable harm generally applied in copyright infringement actions, jeopardy to copyright holder's investment and competitive position caused by competitor's wholesale copying of many of copyright holder's key computer operating programs would satisfy requirement of irreparable harm needed to support preliminary injunction. 17 U.S. C.A. §§ 101 et seq., 102(a). 13. Copyrights and Intellectual Property 85 Inverse relationship approach to irreparable harm issue, under which strength of required showing of irreparable injury varies inversely with strength of plaintiff's showing of likelihood of success on merits, is best suited to those copyright infringement actions in which injury from copying can be fairly considered minimal, limited or conjectural; normally, public interest underlying copyright law requires presumption of irreparable harm as long as there is adequate evidence of expenditure of significant time, effort and money directed to 1242 714 FEDERAL REPORTER, 2d SERIES production of copyrighted material. 17 U.S.C.A. §§ 101 et seq., 102(a). mitted error in applying the law. Kennecott Corp. v. Smith, 637 F.2d 181, 187 (3d 14. Copyrights and Intellectual Property Cir.1980). As the Second Circuit has stated 85 Size of infringer should not be determinative of copyright holder's ability to get prompt judicial redress for alleged infringement. 17 U.S.C.A. §§ 101 et seq., 102(a). Jack E. Brown (argued), Eugene D. Cohen, Joseph W. Mott, Lawrence G.D. Scarborough, Brown & Bain, P.A., Phoenix, Ariz., Edwin H. Taylor, Blakely, Sokoloff, Taylor & Zafman, Beverly Hills, Cal., Ronald L. Panitch, Jay K. Meadway, Seidel, Gonda, Goldhammer & Panitch, P.C., Philadelphia, Pa., for appellant. Jerome J. Shestack (argued), Michael J. Mangan, Sherry A. Swirsky, Schnader, Harrison, Segal & Lewis, Manny D. Pokotilow, Barry A. Stein, Caesar, Rivise, Bernstein & Cohen, Ltd., Philadelphia, Pa., for appellee. Before HUNTER, HIGGINBOTHAM and SLOVITER, Circuit Judges. OPINION OF THE COURT SLOVITER, Circuit Judge. I. INTRODUCTION Apple Computer, Inc. appeals from the district court's denial of a motion to preliminarily enjoin Franklin Computer Corp. from infringing the copyrights Apple holds on fourteen computer programs. [1, 2] The decision to grant or refuse to grant a preliminary injunction is within the discretion of the district court. See A.O. Smith Corp. v. FTC, 530 F.2d 515, 525 (3d Cir.1976). Although the scope of our review of the action of the district court in ruling on a motion for preliminary injunction is narrow, reversal is warranted if the trial court has abused its discretion or com1. Four amicus curiae briefs have been submitted; briefs from Digital Research Inc., Microsoft Corp., and Association of Data Processing Service Organizations, Inc. (a trade associa recently, "Despite oft repeated statements that the issuance of a preliminary injunction rests in the discretion of the trial judge whose decisions will be reversed only for 'abuse', a court of appeals must reverse if the district court has proceeded on the basis of an erroneous view of the applicable law." Donovan v. Bierwirth, 680 F.2d 263, 269 (2d Cir.), cert. denied, U.S. 103 S.Ct. 488, 74 L.Ed.2d 631 (1982). In this case the district court denied the had "some doubt as to the copyrightability preliminary injunction, inter alia, because it of the programs." Apple Computer, Inc. v. Franklin Computer Corp., 545 F.Supp. 812, 812 (E.D.Pa.1982). This legal ruling is fundamental to all future proceedings in this action and, as the parties and amici curiae seem to agree, has considerable significance to the computer services industry. Because we conclude that the district court proceeded under an erroneous view of the applicable law, we reverse the denial of the preliminary injunction and remand. II. FACTS AND PROCEDURAL HISTORY Apple, one of the computer industry leaders, manufactures and markets personal computers (microcomputers), related peripheral equipment such as disk drives (peripherals), and computer programs (software). It presently manufactures Apple II computers and distributes over 150 programs. Apple has sold over 400,000 Apple II computers, employs approximately 3,000 people, and had annual sales of $335,000,000 for fiscal year 1981. One of the byproducts of Apple's success is the independent development by third parties of numerous computer programs which are designed to run on the Apple II computer. tion for the computer services industry), support the position of Apple, and a brief from Pro-log Corp. supports at least part of Franklin's position. APPLE COMPUTER, INC. v. FRANKLIN COMPUTER CORP. Franklin, the defendant below, manufactures and sells the ACE 100 personal computer and at the time of the hearing employed about 75 people and had sold fewer than 1,000 computers. The ACE 100 was designed to be "Apple compatible," so that peripheral equipment and software developed for use with the Apple II computer could be used in conjunction with the ACE 100. Franklin's copying of Apple's operating system computer programs in an effort to achieve such compatibility precipitated this suit. Like all computers both the Apple II and ACE 100 have a central processing unit (CPU) which is the integrated circuit that executes programs. In lay terms, the CPU does the work it is instructed to do. Those instructions are contained on computer programs. means "add with There are three levels of computer language in which computer programs may be written. High level language, such as the commonly used BASIC or FORTRAN, uses English words and symbols, and is relatively easy to learn and understand (e.g., "GO TO 40" tells the computer to skip intervening steps and go to the step at line 40). A somewhat lower level language is assembly language, which consists of alphanumeric labels (e.g., "ADC" carry"). Statements in high level language, and apparently also statements in assembly language, are referred to as written in "source code." The third, or lowest level computer language, is machine language, a binary language using two symbols, 0 and 1, to indicate an open or closed switch (e.g., "01101001" means, to the Apple, add two numbers and save the result). Statements in machine language are referred to as written in "object code." The CPU can only follow instructions written in object code. However, programs are usually written in source code which is 2. Useful nontechnical descriptions of computer operations appear in Note, Copyright Protection for Computer Programs In Read Only Memory Chips, 11 Hofstra L.Rev. 329 (1982), and Note, Copyright Protection of Computer Program Object Code, 96 Harv.L.Rev. 1723 (1983). 1243 Programs more intelligible to humans. A computer program can be stored or fixed on a variety of memory devices, two of which are of particular relevance for this case. The ROM (Read Only Memory) is an internal permanent memory device consisting of a semi-conductor "chip" which is incorporated into the circuitry of the computer. A program in object code is embedded on a ROM before it is incorporated in the computer. Information stored on a ROM can only be read, not erased or rewritten. The ACE 100 apparently contains EPROMS (Erasable Programmable Read Only Memory) on which the stored information can be erased and the chip reprogrammed, but the district court found that for purposes of this proceeding, the difference between ROMS and EPROMS is inconsequential. 545 F.Supp. at 813 n. 3. The other device used for storing the programs at issue is a diskette or "floppy disk", an auxiliary memory device consisting of a flexible magnetic disk resembling a phonograph record, which can be inserted into the computer and from which data or instruc tions can be read. Computer programs can be categorized by function as either application programs or operating system programs. Application programs usually perform a specific task for the computer user, such as word processing, checkbook balancing, or playing a game. In contrast, operating system programs generally manage the internal functions of the computer or facilitate use of application programs. The parties agree that the fourteen computer programs at 3. In contrast to the permanent memory devices a RAM (Random Access Memory) is a chip on which volatile internal memory is stored which is erased when the computer's power is turned off. 1244 714 FEDERAL REPORTER, 2d SERIES issue in this suit are operating system programs. Apple filed suit in the United States District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1338 on May 12, 1982, alleging that Franklin was liable for copyright infringement of the fourteen computer programs, patent infringement, unfair competition, and misappropriation. Franklin's answer in respect to the copyright counts included the affirm 4. The fourteen programs at issue, briefly described, are: (1) Autostart ROM is sold as part of the Apple Computer and is embedded on a ROM chip. The program has also been published in source code as part of a copyrighted book, the Apple II manual. When the computer's power is turned on, Autostart ROM performs internal routines that turn on the circuits in the computer and make its physical parts (e.g. input/output devices, screen, and memory) ready for use. (2) Applesoft is Apple's version of the Beginner's All-purpose Symbolic Instruction Code (BASIC) language. The program is stored in ROM and is sold as part of the computer. Applesoft translates instructions written in the higher-level BASIC language into the lower-level machine code that the computer understands. (3) Floating-Point BASIC is the same program as Applesoft but is stored on disks rather than on ROMs. It is used in earlier versions of the Apple II computer that did not have the Applesoft program in ROM. (4) Apple Integer BASIC, another translator program, is stored on the DOS 3.3 Master Disk. This program used Apple's first version of BASIC for the Apple II computer. It implements a simpler version of the Applesoft program. (5) DOS 3.3, the disk operating system program, provides the instructions necessary to control the operation between the disk system (disk drive) and the computer itself. It controls the reading and writing functions of the disks and includes other routines which put all the data transfers in sequence. The DOS 3.3 Master Disk is sold separately from the computer, and includes several of the other operating programs referred to in this note. (6) Master Create is stored on a disk. When a disk is prepared for use the DOS 3.3 program is placed on that disk in a form that is dependent on the amount of Random Access Memory (RAM) available. The Master Create program replaces the DOS 3.3 on the disk with a version that is independent of the amount of RAM available. ative defense that the programs contained no copyrightable subject matter. Franklin counterclaimed for declaratory judgment that the copyright registrations were invalid and unenforceable, and sought affirmative relief on the basis of Apple's alleged misuse. Franklin also moved to dismiss eleven of the fourteen copyright infringement counts on the ground that Apple failed to comply with the procedural requirements for suit under 17 U.S.C. §§ 410, 411. (7) Copy, which is stored on a disk, enables the user to copy programs written in Apple Integer BASIC from one disk to anoth er. (8) Copy A, also stored on a disk, enables the user to copy programs written in Applesoft from one disk to another. (9) Copy OBJO contains a file of subroutines used by the Copy and Copy A programs. (10) Chain, another disk stored program, allows data to be passed between different parts of a program when only one part of the program is in RAM at a given time. Thus, Chain preserves data already stored in RAM while another part of the program is being loaded into RAM. (11) Hello, also disk stored, is the first program executed after the power is turned on and a disk is ready for use. It determines how much RAM is in the computer and which version of BASIC needs to be loaded into the computer. (12) Boot 13 is stored on disk and sold on a Master Disk. It allows the user having a disk controller card that contains the Apple 16Sector Boot ROM to use older versions of the Apple disk operating system. (13) Apple 13-Sector Boot ROM is stored in a ROM located on the disk controller card plugged into the Mother Board. By turning on numerous circuits on the card and in the Apple II computer, this program causes other parts of the disk operating system used for 13-Sector format disks to load. (14) Apple 16-Sector Boot ROM, stored in a ROM located on the disk controller card, turns on numerous circuits on the card and in the Apple II computer and causes other parts of the disk operating system used for 16-Sector format disks to load. It therefore enables the user to start or permit the running of another program or to prepare the computer to receive a program. The above descriptions represent an effort to translate the language used by computer experts into language reasonably intelligible to lay persons. They differ in some respects from the descriptions in the district court's opinion, 545 F.Supp. at 815-16, which were taken from the complaint. |