1244 714 FEDERAL REPORTER, 2d SERIES issue in this suit are operating system programs.1 Appie 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. APPLE COMPUTER, INC. v. FRANKLIN COMPUTER CORP. After expedited discovery, Apple moved for a preliminary injunction to restrain Franklin from using, copying, selling, or infringing Apple's copyrights. The district court held a three day evidentiary hearing limited to the copyright infringement claims. Apple produced evidence at the hearing in the form of affidavits and testimony that programs sold by Franklin in conjunction with its ACE 100 computer were virtually identical with those covered by the fourteen Apple copyrights. The variations that did exist were minor, consisting merely of such things as deletion of reference to Apple or its copyright notice.5 James Huston, an Apple systems programmer, concluded that the Franklin programs were "unquestionably copied from Apple and could not have been independently created." He reached this conclusion not only because it is "almost impossible for so many lines of code" to be identically written, but also because his name, which he had embedded in one program (Master Create), and the word "Applesoft", which was embedded in another (DOS 3.3), appeared on the Franklin master disk. Apple estimated the "works in suit" took 46 man-months to produce at a cost of over $740,000, not including the time or cost of creating or acquiring earlier versions of the programs or the expense of marketing the programs. Franklin did not dispute that it copied the Apple programs. Its witness admitted copying each of the works in suit from the Apple programs. Its factual defense was directed to its contention that it was not feasible for Franklin to write its own operating system programs. David McWherter, now Franklin's vice-president of engineering, testified he spent 30-40 hours in November 1981 making a study to determine if it was feasible for Franklin to write its own Autostart ROM program and concluded it was not because "there were just too many entry points in relationship to the number of instructions in the program." Entry points at specific locations in the 5. For example, 8 bytes of memory were altered in the Autostart ROM program so that when the computer is turned on "ACE 100" appears on the screen rather than "Apple II." The 1245 program can be used by programmers to mesh their application programs with the operating system program. McWherter concluded that use of the identical signals was necessary in order to ensure 100% compatibility with application programs created to run on the Apple computer. He admitted that he never attempted to rewrite Autostart ROM and conceded that some of the works in suit (i.e. Copy, Copy A, Master Create, and Hello) probably could have been rewritten by Franklin. Franklin made no attempt to rewrite any of the programs prior to the lawsuit except for Copy, although McWherter testified that Franklin was "in the process of redesigning" some of the Apple programs and that "[w]e had a fair degree of certainty that that would probably work." Apple introduced evidence that Franklin could have rewritten programs, including the Autostart ROM program, and that there are in existence operating programs written by third parties which are compatible with Apple II. Franklin's principal defense at the preliminary injunction hearing and before us is primarily a legal one, directed to its contention that the Apple operating system programs are not capable of copyright protec tion. The district court denied the motion for preliminary injunction by order and opinion dated July 30, 1982. Apple moved for reconsideration in light of this court's decision in Williams Electronics, Inc. v. Artic International, Inc., 685 F.2d 870 (3d Cir.1982), which was decided August 2, 1982, three days after the district court decision. The district court denied the motion for reconsideration. We have jurisdiction of Apple's appeal pursuant to 28 U.S.C. § 1292(a)(1). III. THE DISTRICT COURT OPINION In its opinion, the district court referred to the four factors to be considered on Franklin DOS 3.3 program also had 16 bytes (out of 9000) that allowed use of upper and lower case. 29-909 0-84-14 1246 714 FEDERAL REPORTER, 2d SERIES request for a preliminary injunction: a reasonable probability of success on the merits; irreparable injury; the improbability of harm to other interested persons; and the public interest. 545 F.Supp. at 825; see Delaware River Port Authority v. Transamerican Trailer Transport, Inc., 501 F.2d 917, 919-20 (3d Cir.1974). The court stated it based its denial of the motion on the first two factors. The court held Apple had not made the requisite showing of likelihood of success on the merits because it "concluded that there is some doubt as to the copyrightability of the programs described in this litigation." 545 F.Supp. at 812. It also stated that "Apple is better suited to withstand whatever injury it might sustain during litigation than is Franklin to withstand the effects of a preliminary injunction” because an injunction would have a "devastating effect" on Franklin's business, id. at 825, apparently concluding on that basis that Apple had failed to show irreparable harm. It is difficult to discern precisely why the district court questioned the copyrightabil ity of the programs at issue since there is no finding, statement, or holding on which we can focus which clearly sets forth the district court's view. Throughout the opin ion the district court referred to the "complexity of the question presented by the present case", 545 F.Supp. at 824, and the "baffling" problem at issue. Id. at 822. The opinion expresses a series of generalized concerns which may have led the court to its ultimate conclusion, and which the parties and amici treat as holdings. The district court referred to the requirement under the Copyright Act of finding "original works of authorship", 17 U.S.C. § 102(a), and seems to have found that there was a sufficient "modicum of creativity" to satisfy the statutory requirement of an "original work". 545 F.Supp. at 820-21. The court was less clear as to whether the creation of a computer program by a programmer satisfied the requirement of "works of authorship", id., and whether an operating system program in "binary code or one represented either in a ROM or by micro-switches" was an "expression" which could be copyrighted as distinguished from an "idea" which could not be. Id. at 821. Again, although we cannot point to a specific holding, running throughout the district court opinion is the suggestion that programs in object code and ROMs may not be copyrightable. Thus, for example, in a series of discursive footnotes, the district court stated that it found "persuasive" a code in ROM is not copyright protected", district court opinion "holding that object 545 F.Supp. at 818 n. 8 (referring to Data Cash Systems, Inc. v. JS & A Group, Inc., 480 F.Supp. 1063 (N.D.Ill.1979), aff'd on other grounds, 628 F.2d 1038 (7th Cir.1980)); described an opinion reaching a contrary conclusion as containing "rather terse analysis [which] provides little guidance”, 545 F.Supp. at 818 n. 8 (referring to GCA Corp. v. Chance, 217 U.S.P.Q. 718 (N.D.Cal.1982), which followed the reasoning of Tandy Corp. v. Personal Micro Computers, Inc., 524 F.Supp. 171 (N.D.Cal.1981)), and stated that "Congressional intent regarding the is not clear", 545 F.Supp. at 819, n. 9, and copyrightability of object codes and ROMs that even among members of the industry it was not clear that the copyright law protects works "like those in suit that are ROM-based," id. at 819 n. 10. We read the district court opinion as presenting the following legal issues: (1) whether copyright can exist in a computer program expressed in object code, (2) whether copyright can exist in a computer program embedded on a ROM, (3) whether copyright can exist in an operating system program, and (4) whether independent irreparable harm must be shown for a preliminary injunction in copyright infringement actions. IV. DISCUSSION A. Copyrightability of a Computer Program Expressed in Object Code Certain statements by the district court suggest that programs expressed in object APPLE COMPUTER, INC. v. FRANKLIN COMPUTER CORP. code, as distinguished from source code, In 1976, after considerable study, Congress enacted a new copyright law to replace that which had governed since 1909. Act of October 19, 1976, Pub.L. No. 94–553, 90 Stat. 2541 (codified at 17 U.S.C. §§ 101 et seq.). Under the law, two primary requirements must be satisfied in order for a work to constitute copyrightable subject matter-it must be an "original wor[k] of authorship" and must be "fixed in [a] tangible medium of expression." 17 U.S.C. § 102(a). The statute provides: (a) Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. Id. The statute enumerates seven categories under "works of authorship" including "literary works", defined as follows: "Literary works" are works, other than audiovisual works, expressed in words, numbers, or other verbal or numerical symbols or indicia, regardless of the nature of the material objects, such as books, periodicals, manuscripts, phonorecords, film, tapes, disks, or cards, in which they are embodied. 17 U.S.C. § 101. A work is "fixed" in a tangible medium of expression when: its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is "fixed" for pur6. Section 117 applied only to the scope of protection to be accorded copyrighted works when used in conjunction with a computer and not to Id. 1247 poses of this title if a fixation of the work is being made simultaneously with its transmission. ... Although section 102(a) does not expressly list computer programs as works of authorship, the legislative history suggests that programs were considered copyrightable as literary works. See H.R.Rep. No. 1476, 94th Cong., 2d Sess. 54, reprinted in 1976 U.S.Code Cong. & Ad.News 5659, 5667 ("literary works' includes... computer programs"). Because a Commission on New Technological Uses ("CONTU") had been created by Congress to study, inter alia, computer uses of copyrighted works, Pub. L. No. 93-573, § 201, 88 Stat. 1873 (1974), Congress enacted a status quo provision, section 117, in the 1976 Act concerning such computer uses pending the CONTU report and recommendations." The CONTU Final Report recommended that the copyright law be amended, inter alia, “to make it explicit that computer programs, to the extent that they embody an author's original creation, are proper subject matter of copyright." National Commission on New Technological Uses of Copyrighted Works, Final Report 1 (1979) [hereinafter CONTU Report]. CONTU recommended two changes relevant here: that section 117, the status quo provision, be repealed and replaced with a section limiting exclusive rights in computer programs so as “to ensure that rightful possessors of copies of computer programs may use or adapt these copies for their use," id.; and that a definition of computer program be added to section 101. Id. at 12. Congress adopted both changes. Act of Dec. 12, 1980, Pub. L. No. 96-517, § 10, 94 Stat. 3015, 3028. The revisions embodied CONTU's recommendations to clarify the law of copyright of computer software. H.R. Rep. No. 1307, 96th Cong., 2d Sess. 23, reprinted in 1980 U.S.Code Cong. & Ad.News 6460, 6482. [3] The 1980 amendments added a definition of a computer program: the copyrightability of programs. H.R.Rep. No. 1476, at 116, reprinted in 1976 U.S.Code Cong. & Ad.News at 5731. 1248 714 FEDERAL REPORTER, 2d SERIES A "computer program" is a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result. 17 U.S.C. § 101. The amendments also substituted a new section 117 which provides that "it is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program" when necessary to "the utilization of the computer program" or "for archival purposes only." 17 U.S.C. § 117. The parties agree that this section is not implicated in the instant lawsuit. The language of the provision, however, by carving out an exception to the normal proscriptions against copying, clearly indicates that programs are copyrightable and are otherwise afforded copyright protection. We considered the issue of copyright protection for a computer program in Williams Electronics, Inc. v. Artic International, Inc., and concluded that "the copyrightability of computer programs is firmly established after the 1980 amendment to the Copyright Act." 685 F.2d at 875. At issue in Williams were not only two audiovisual copyrights to the "attract" and "play" modes of a video game, but also the computer program which was expressed in object code embodied in ROM and which controlled the sights and sounds of the game. Defendant there had argued "that when the issue is the copyright on a computer program, a distinction must be drawn between the 'source code' version of a computer program, which ... can be afforded copyright protection, and the 'object code' stage, which... cannot be so protected," an argument we rejected. Id. at 876. The district court here questioned whether copyright was to be limited to works "designed to be 'read' by a human reader [as distinguished from] read by an expert with a microscope and patience", 545 F.Supp. at 821. The suggestion that copyrightability depends on a communicative function to individuals stems from the early decision of White-Smith Music Publishing Co. v. Apollo Co., 209 U.S. 1, 28 S.Ct. 319, 52 L.Ed. 655 (1908), which held a piano roll was not a copy of the musical composition because it was not in a form others, except perhaps for a very expert few, could perceive. See 1 Nimmer on Copyright § 2.03[B][1] (1983). However, it is clear from the language of the 1976 Act and its legislative history that it was intended to obliterate distinctions engendered by White-Smith. H.R.Rep. No. 1476, supra, at 52, reprinted in 1976 U.S.Code Cong. & Ad. News at 5665. works in any tangible means of expression Under the statute, copyright extends to "from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device." 17 U.S.C. § 102(a) (emphasis added). Further, the definition of "computer program" adopted by Congress in the 1980 amendments is "sets of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result." 17 U.S.C. § 101 (emphasis be translated into object code before the added). As source code instructions must computer can act upon them, only instructions expressed in object code can be used "directly" by the computer. See Midway Manufacturing Co. v. Strohon, 564 F.Supp. 741 at 750-751 (N.D.Ill.1983). This definition was adopted following the CONTU Report in which the majority clearly took the position that object codes are proper subjects of copyright. See CONTU Report at 21. The majority's conclusion was reached although confronted by a dissent based upon the theory that the "machine-control phase" of a program is not directed at a human audience. See CONTU Report at 28-30 (dissent of Commissioner Hersey). The defendant in Williams had also argued that a copyrightable work "must be intelligible to human beings and must be intended as a medium of communication to human beings," id. at 876-77. We reiterate the statement we made in Williams when we rejected that argument: "[t]he answer to defendant's contention is in the words of the statute itself." 685 F.2d at 877. |