IMPLICATIONS FOR HUMAN LIFE The implications of treating information as a resource are enormous, for lifestyles and workways, for human community and inhuman conflict. The implications, I believe, are especially great for changes in the way we think about life, work, community, and conflict. The theories (assumptions, preconceptions, ideologies, call them what you will) we develop will arrange "the facts" and determine how we resolve, for our time and place, the historic social dilemmas— freedom vs. organization, autonomy vs. authority, participation vs. action, growth vs. equity, war vs. peace. If our dominant resource is now expandable, compressible, substitutable, highly transportable, diffusive, and shareable, what are the implications for some of our favorite and predominant theories and assumptions? In political economy, won't the concept of market "exchange" have to take account of the fact that more and more of our economic activity now consists of what are by nature "sharing" transactions? In economics, why are we still focusing on the allocation of scarcities when there is a chronic surplus of information resources? In law, how should we adapt the concept of property in facts and ideas when the widespread violation of copyrights and the shortened life of patent rights have become the unenforceable Prohibition of our time? Aren't we going to have to invent different ways to reward intellectual labor that are compatible with a resource that is both diffusive and shareable? Aren't the laws governing privacy and the regulations governing telecommunications already outmoded by technology, which does not wait around for legislative hearings or court calendars? In accounting, what are we to do with a concept called "depreciation" in a society where a large fraction of its resources does not depreciate with use? In education, doesn't the information environment place a much greater premium on integrative thought? Won't we have to take a new look at a system that awards the highest credentials for wisdom to people with the narrowest slices of knowledge? And as the education required to be functionally literate in an information society keeps growing in depth and breadth, what is to become of those who, because they lack basic education or the opportunity for continued learning, become the peasants of the knowledge society? In the new information environment, we will have to rethink the very nature of rule, power, and authority because the information revolution is producing a revolution in the technology of organization. Information has always been the basis of human organization, of course. People with better or more recent information-generals with fast couriers, kings with spies and ambassadors, etc.-held sway over the rest of mankind. But once information could be rapidly collected and analyzed, instantly communicated, and readily understood by millions, the power monopolies that closely held information made possible were subject to accelerating erosion. Leadership of uninformed people was likely to be organized in vertical structures of command and control. Leadership of the informed is more likely to result in effective action if it is exercised mainly by persuasion, with wider participation and more collective thought. With nobody completely in charge but everybody partly in charge, collegial rather than command structures are the more natural basis for organization. "Planning" cannot be done by a few leaders, advised in secret by experts with detailed blueprints; "planning" has to be a dynamic improvisation by the many according to a general sense of direction that is announced by "leaders" only after genuine consultation with those who will have to improvise on it. Participatory decision-making implies a need for much feedback information, widely available and seriously attended. That means more openness and less secrecy-not as an ideological preference but as a technological imperative. In the Information Society, maybe that's the updated definition of democracy. 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. Although scope of Court of Appeals' review of action of district court in ruling on motion for preliminary injunction is narrow, reversal is warranted if trial court has abused its discretion or committed error in applying the law. 3. Copyrights and Intellectual Property 10.4 Computer programs are copyrightable and are otherwise afforded copyright protection. 17 U.S.C.A. §§ 101 et seq., 102(a), 117. 4. Copyrights and Intellectual Property 5 Computer program, whether in object code or source code, is "literary work" with and that even under the standard advocated by the Secretary the finding of no disability is not supported by substantial evidence. 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). 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 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 mitted error in applying the law. Kennecott Corp. v. Smith, 637 F.2d 181, 187 (3d Cir.1980). As the Second Circuit has stated 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 preliminary injunction, inter alia, because it had "some doubt as to the copyrightability 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.1 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. 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” means "add with 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 an sequential. 545 F.Supp. at 813 n. 3. The other device used for storing the programs at issue is a diskette or "floppy disk", 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. |