Module 4: The Berne Convention:

Special types of works and situations

Module 4: The Berne Convention: Special types of works and situations 1

Objectives: 3
Study Guide 3
1.0 Introduction 4
2.0 Special types of works 5
2.1 Cinematographic works 6
What is the status of pre-existing works and commissioned works? 7
Who is the owner of a cinematographic work? 7
Case Study 1: Aalmuhammed v. Lee- Coauthorship of the movie Malcom X 9
What is the term of protection for cinematographic works? 18
2.2 Computer programs 21
Case Study 2: SAS Institute Inc. v World Programming Ltd, the structure, sequence and
organisation of a computer programme can be part of the copyright protectable expression 22
Case Study 3: Computer Associates International, Inc. v. Altai, Inc. 39
Case Study 4: Lotus Development Corp. v. Borland International Inc- the command hierarchy for a
computer spreadsheet program and considered network effects in determining the functional,
unprotectable nature of the hierarchy 70
2.3 Databases 88
Case Study 5: AMERICAN DENT. ASSN. v. DELTA DEN. PLANS ASSN., 126 F.3d 977 (7th
Cir. 1997) Sweat of the brow approach in contrast to Feist Case discussed above 89
Case Study 6: Football Dataco Case- The Court of Justice of the European Union defined database
copyright 93
Who is the author of a database? 109
2.4 New technology products and online distribution of works 113
3.0 Special types of situations 116
3.1 The principle of retroactivity 116
However, what happens with existing works? 116
3.2 Enforcement of rights and dispute resolution 118
3.3 Special provisions for developing countries 119
 4.0 Licences and assignments 120
Case Study 7: Peer International Corp v Termidor Music Publishers Ltd- entitlement by reason of
assignments from the composers and, from heirs 131
Case study 8: Fisher v Brooker and another- Licences and assignments 134
Case Study 9: Gramophone Company of India Ltd. v. Shanti Film Corporation, (AIR 1997 Cal 63)
Licensing and Assignment 136
Summary of the Berne Convention: Special types of works and situations 137

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Objectives:

When you have completed this module you should be able to:

1. Describe in 50 words each of the special provisions that apply to cinematographic works,
computer programs, databases and new technology products and online distribution of works
2. Explain in 50 words the provisions of the Berne Convention in the context of retroactivity,
enforcement of rights and dispute resolution and special provisions for developing countries
3. Explain in around 100 words the key differences between copyright licences and assignments.
4. Explain in around 100 words the concepts of collective licensing and open licences.

Study Guide

This module should take about 10 hours to complete. The sections should take the following
lengths of time to study:
• Sections 1 & 2: 5 hours
• Section 3: 2 hours
• Section 4: 3 hours

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1.0 Introduction

This module contains a discussion of the special categories of works protected by the Convention,
such as cinematographic works, and a summary of certain special situations relating to their
application, including the enforcement of rights, dispute resolution and special provisions relating to
developing countries.
In the previous module we already saw the wide variety of works that are protected by copyright. Now
we will discuss how works that are of a very different or even more diverse nature are also protected
by copyright. This clearly shows the very flexible nature of copyright and its ability to embrace new
developments. There are however limits.
In the current international move towards more protection, or should one say appropriate protection,
for traditional cultural expressions the useful contribution of copyright has been very limited.
Copyright struggles to deal with the idea that there is no individual author. Rights for groups in society
are not a familiar copyright concept and the concept of ‘traditional’ cultural expression points in the
direction of a term of protection that may well have expired if there was copyright protection to start
with. Instead, copyright is more suitable for or inclined to granting copyright protection to the
individual author’s modern adaptation of elements of traditional cultural expressions, which provides a
sharp contrast with the failure to protect the underlying traditional cultural expression.

In section 4 we will look in more detail at copyright licensing and assignment, which plays a vital role
in the day to day implementation and exploitation of copyright.

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2.0 Special types of works

The special types of works covered are:

• Cinematographic
• Computer programs
• Databases
• New technology products and online distribution of works

To begin, click on each type of special work for more details.

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2.1 Cinematographic works

Audio 1 Cinematographic works

The emergence of cinematography at the end of the 19th century gave rise immediately to the need for the
effective legal protection of cinematographic works. These works are also referred to in many national laws as
audiovisual works or films. Their main characteristic is that they combine on one medium images and sound, or
images alone. The presence of text, wherever this exists, is minimal and it usually appears in the form of opening
and closing titles.

The special treatment of cinematographic works in the Berne Convention was especially due to their particular
characteristics: namely the inclusion in many cases of pre-existing works and the involvement of a large number
of contributors.

Although Article 2 of the Berne Convention provides that cinematographic works and works expressed by a
process analogous to cinematography (e.g. televisual works and videographic works) are protected as literary and
artistic works, Article 14bis provides for their special treatment.

One should of course add that whilst the inclusion of pre-existing works is a frequent phenomenon it is
not a requirement for there to be a cinematographic work. And the images or sounds that are included
in a cinematographic work are not necessarily ‘works’ in their own right under many national
copyright laws. They could e.g. cover sport or news that are excluded from the scope of copyright in
some national laws, as their protection is not a requirement of the Berne Convention.

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What is the status of pre-existing works and commissioned works?

Even in cases where a cinematographic work is simply a reproduction or an adaptation of a pre-

existing work, such as a novel or a performance of a play, it is protected as an original work in its own
right. This protection should be distinguished from the copyright protection of the original novel or
play. In other words, in the case of the filming of a work of mime, the work of mime will be protected
on its own merits as a dramatic work, whilst a separate copyright protection will be afforded to the
author of the film. The latter is justified on the grounds of judgements that have taken place in order
for the original dramatic work to be turned into a cinematographic work.
The originality that is required to turn the cinematographic work into an original work protected by
copyright will be found in the added value, i.e. that what is specific to the cinematographic work rather
than in the originality of the eventual underlying and pre-existing works. It is however fair to admit
that national laws and judges are often more readily inclined to grant a cinematographic work
copyright protection if the pre-existing works are also original copyright works. One can only assume
that the unspoken assumption is then that turning these original works that are say original ‘as
dramatic or literary work’ into a cinematographic work requires a change in nature that affects their
originality and that change must therefore in itself also involve a form of originality.

Who is the owner of a cinematographic work?

A cinematographic work usually is based on one or more pre-existing works, but also contains a
number of contributions, that is, works specifically commissioned for the particular cinematographic
work. The granting of ownership in the cinematographic work to every single contributor may not
always present a workable model of protection that will allow the effective exploitation of the work.
This reflects in the context of new technology and new works the need for compromise in relation to
the basic principle of the Berne Convention that rights are conferred to the individual author of a work.
It is interesting to examine whether the investment that goes into the creation of this work is the main
reason for taking a practical approach to the issue of ownership of this collective creative effort.
Therefore special arrangements can be made under national law.

Article 14 bis(2) leaves to the discretion of the Union countries the question of ownership. There are
essentially three ways in which the various national laws make use of this discretion:

1. All contributors are given authorship

2. Only some specific contributors are given authorship (e.g. the writer of the scenario, the writer
of the dialogues, the music composer, the principal director, etc.)
3. Only the producer or maker of the film is given authorship. This is mainly so in common law
countries. Yet, countries of the European Union are now obliged to grant authorship to the
principal director of the film, at least in addition to any other rightowner.

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Although the question of ownership is left to the discretion of the Contracting States Article
14bis(2)(b) contains a presumption of legitimation which applies to countries that have chosen to give
authorship to all or some contributors (options 1 or 2, above):

This means that authors whose works have contributed to the making of a film cannot object to the
reproduction, distribution, public performance, communication to the public by wire, broadcasting or
any other communication to the public, or to the subtitling or dubbing of texts of the work. This list of
cases is exhaustive. This presumption only applies if there is no contractual provision to the contrary,
and it does not apply to the pre-existing works.

The exception to this rule is that this presumption is not applicable to authors of scenarios, dialogues
and musical works created for the making of the cinematographic work, or to the principal director.
Their contribution is seen as a vital core contribution and their consent to any of these activities, for
example to the dubbing of the original dialogues, should therefore not simply be presumed
automatically. As regards musical works the presumption is less critical, because permission to use
such works in connection with the film can normally be obtained through the composers’ collective
management organizations.

The point mentioned just above raises the special nature of the various contributors to a
cinematographic work. But while certain ‘creators’ have no authorship rights in their contributions,
screenplays cannot be created based on third party works, such as novels, without permission. The
distinction is basically that between a contribution to a project, i.e. a contribution made for the
cinematographic work project, and the use of a (pre-existing) third party work, e.g. when a project is
based on a novel.

Let us now return in a bit more detail (and leading on to the case study) to the distinctions regarding
the ownership of the copyright in a cinematographic work. These issues will remain at the forefront of
future policy decision as nations grapple with the problem of encouraging domestic development of
creative industries by striking a balance between strong copyright protection for the finished goods
with a stronger regard for access to such works to support new models of creativity in the digital age.
The non-copyright rules that govern the operation of certain creative industries such as the movie
industry in a certain country also work in tandem with the copyright (ownership) rules. It is therefore
not possible to put forward the ideal model merely from a copyright perspective.
There are also different kinds of producers and not all of them qualify to become owners of copyright.
Under US law for example producers that are involved in the creative process of making a movie
qualify as author under the work for hire doctrine. US law even includes commissioned works for
films as a specific category that qualifies for work for hire protection, where the latter is normally
reserved for employers of actual employees. By contrast, the ‘money men’ do not qualify for
authorship even if they are often called producers. This focus on creativity and the practical reality of
film making can be best demonstrated in a case study regarding joint authorship in a film by a
consultant. In the Aalmuhammed case the court did not reach the question of joint authorship because
it held that the claimant’s acts did not qualify for creative authorship. The consultant expert had
contributed lines and other content to the script for the movie Malcolm X, as well as to the principle
actor’s performance. But that was held not to amount to a substantial creative contribution. The latter
requires one to be part of the creative team that masterminds the work or that supervises its creation.
Making every minor contributor a joint or co-author would indeed not be workable in practice.
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One should of course also not underestimate the value of the contractual arrangements that are on
these occasions almost inevitably made between the parties. Within the contours of the copyright
system these contracts set out the rights and obligations of the parties and remuneration and issue of
ownership often figure prominently in them.

Case Study 1: Aalmuhammed v. Lee- Coauthorship of the movie Malcom X

The case as made available to the public

AALMUHAMMED v. LEE, 202 F.3d 1227 (9th Cir. 2000)

Before: William C. CANBY, Jr., John T. NOONAN, and Andrew J. KLEINFELD, Circuit Judges.

KLEINFELD, Circuit Judge:

[1] This is a copyright case involving a claim of coauthorship of the movie Malcolm X. We reject the
"joint work" claim but remand for further proceedings on a quantum meruit claim.

I. FACTS

[3] In 1991, Warner Brothers contracted with Spike Lee and his production companies to make the
movie Malcolm X, to be based on the book, The Autobiography of Malcolm X. Lee co-wrote the
screenplay, directed, and co-produced the movie, which starred Denzel Washington as Malcolm X.
Washington asked Jefri Aalmuhammed to assist him in his preparation for the starring role because
Aalmuhammed knew a great deal about Malcolm X and Islam. Aalmuhammed, a devout Muslim, was
particularly knowledgeable about the life of Malcolm X, having previously written, directed, and
produced a documentary film about Malcolm X.

[4] Aalmuhammed joined Washington on the movie set. The movie was filmed in the New York
metropolitan area and Egypt. Aalmuhammed presented evidence that his involvement in making the
movie was very extensive. He reviewed the shooting script for Spike Lee and [p*1230] Denzel
Washington and suggested extensive script revisions. Some of his script revisions were included in the
released version of the film; others were filmed but not included in the released version. Most of the
revisions Aalmuhammed made were to ensure the religious and historical accuracy and authenticity of
scenes depicting Malcolm X's religious conversion and pilgrimage to Mecca.

[5] Aalmuhammed submitted evidence that he directed Denzel Washington and other actors while on
the set, created at least two entire scenes with new characters, translated Arabic into English for
subtitles, supplied his own voice for voice-overs, selected the proper prayers and religious practices

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for the characters, and edited parts of the movie during post production. Washington testified in his
deposition that Aalmuhammed's contribution to the movie was "great" because he "helped to rewrite,
to make more authentic." Once production ended, Aalmuhammed met with numerous Islamic
organizations to persuade them that the movie was an accurate depiction of Malcolm X's life.

[6] Aalmuhammed never had a written contract with Warner Brothers, Lee, or Lee's production
companies, but he expected Lee to compensate him for his work. He did not intend to work and bear
his expenses in New York and Egypt gratuitously. Aalmuhammed ultimately received a check for
$25,000 from Lee, which he cashed, and a check for $100,000 from Washington, which he did not
cash.

[7] During the summer before Malcolm X's November 1992 release, Aalmuhammed asked for a
writing credit as a cowriter of the film, but was turned down. When the film was released, it credited
Aalmuhammed only as an "Islamic Technical Consultant," far down the list. In November 1995,
Aalmuhammed applied for a copyright with the U.S. Copyright Office, claiming he was a co-creator,
co-writer, and codirector of the movie. The Copyright Office issued him a "Certificate of
Registration," but advised him in a letter that his "claims conflict with previous registrations" of the
film.

[8] On November 17, 1995, Aalmuhammed filed a complaint against Spike Lee, his production
companies, and Warner Brothers, (collectively "Lee"), as well as Largo International, N.V., and Largo
Entertainment, Inc. (collectively "Largo"), and Victor Company of Japan and JVC Entertainment, Inc.
(collectively "Victor"). The suit sought declaratory relief and an accounting under the Copyright Act.
In addition, the complaint alleged breach of implied contract, quantum meruit, and unjust enrichment,
and federal (Lanham Act) and state unfair competition claims. The district court dismissed some of the
claims under Rule 12(b)(6) and the rest on summary judgment.

II. ANALYSIS

A. Copyright claim

[9] Aalmuhammed claimed that the movie Malcolm X was a "joint work" of which he was an author,
thus making him a co-owner of the copyright.[fn2] He sought a declaratory judgment to that effect,
and an accounting for profits. He is not claiming copyright merely in what he wrote or contributed, but
rather in the whole work, as a co-author of a "joint work."[fn3] The district court granted defendants
summary judgment against Mr. Aalmuhammed's copyright claims. We review de novo.[fn4]

[10] Defendants argue that Aalmuhammed's claim that he is one of the authors of a joint work is
barred by the applicable statute of limitations. A claim of authorship of a joint work must be brought
within three years of when it accrues.[fn5] Because creation rather than infringement [p*1231] is the

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gravamen of an authorship claim, the claim accrues on account of creation, not subsequent
infringement, and is barred three years from "plain and express repudiation" of authorship.[fn6]

[11] The movie credits plainly and expressly repudiated authorship, by listing Aalmuhammed far
below the more prominent names, as an "Islamic technical consultant." That repudiation, though, was
less than three years before the lawsuit was filed. The record leaves open a genuine issue of fact as to
whether authorship was repudiated before that. Aalmuhammed testified in his deposition that he
discussed with an executive producer at Warner Brothers his claim to credit as one of the screenwriters
more than three years before he filed suit. Defendants argue that this discussion was an express
repudiation that bars the claim. It was not. Aalmuhammed testified that the producer told him "there is
nothing I can do for you," but "[h]e said we would discuss it further at some point." A trier of fact
could construe that communication as leaving the question of authorship open for further discussion.
That leaves a genuine issue of fact as to whether the claim is barred by limitations, so we must
determine whether there is a genuine issue of fact as to whether Aalmuhammed was an author of a
"joint work."

[12] Aalmuhammed argues that he established a genuine issue of fact as to whether he was an author
of a "joint work," Malcolm X. The Copyright Act does not define "author," but it does define "joint
work":

A "joint work" is a work prepared by two or more authors with the intention that their contributions be
merged into inseparable or interdependent parts of a unitary whole.[fn7]

[13] "When interpreting a statute, we look first to the language."[fn8] The statutory language
establishes that for a work to be a "joint work" there must be (1) a copyrightable work, (2) two or more
"authors," and (3) the authors must intend their contributions be merged into inseparable or
interdependent parts of a unitary whole. A "joint work" in this circuit "requires each author to make an
independently copyrightable contribution" to the disputed work.[fn9] Malcolm X is a copyrightable
work, and it is undisputed that the movie was intended by everyone involved with it to be a unitary
whole. It is also undisputed that Aalmuhammed made substantial and valuable contributions to the
movie, including technical help, such as speaking Arabic to the persons in charge of the mosque in
Egypt, scholarly and creative help, such as teaching the actors how to pray properly as Muslims, and
script changes to add verisimilitude to the religious aspects of the movie. Speaking Arabic to persons
in charge of the mosque, however, does not result in a copyrightable contribution to the motion
picture. Coaching of actors, to be copyrightable, must be turned into an expression in a form subject to
copyright.[fn10] The same may be said for many of Aalmuhammed's other activities. Aalmuhammed
has, however, submitted evidence that he rewrote several specific passages of dialogue that appeared
in Malcolm X, and that he wrote scenes relating to Malcolm X's Hajj pilgrimage that were enacted in
the movie. If Aalmuhammed's evidence is accepted, as it must be on summary judgment, these items
would have been independently copyrightable. [p*1232] Aalmuhammed, therefore, has presented a
genuine issue of fact as to whether he made a copyrightable contribution. All persons involved
intended that Aalmuhammed's contributions would be merged into interdependent parts of the movie
as a unitary whole. Aalmuhammed maintains that he has shown a genuine issue of fact for each
element of a "joint work."

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[14] But there is another element to a "joint work." A "joint work" includes "two or more
authors."[fn11] Aalmuhammed established that he contributed substantially to the film, but not that he
was one of its "authors." We hold that authorship is required under the statutory definition of a joint
work, and that authorship is not the same thing as making a valuable and copyrightable contribution.
We recognize that a contributor of an expression may be deemed to be the "author" of that expression
for purposes of determining whether it is independently copyrightable. The issue we deal with is a
different and larger one: is the contributor an author of the joint work within the meaning of 17 U.S.C.
§ 101.

[15] By statutory definition, a "joint work" requires "two or more authors."[fn12] The word "author" is
taken from the traditional activity of one person sitting at a desk with a pen and writing something for
publication. It is relatively easy to apply the word "author" to a novel. It is also easy to apply the word
to two people who work together in a fairly traditional pen-and-ink way, like, perhaps, Gilbert and
Sullivan. In the song, "I Am the Very Model of a Modern Major General," Gilbert's words and
Sullivan's tune are inseparable, and anyone who has heard the song knows that it owes its existence to
both men, Sir William Gilbert and Sir Arthur Sullivan, as its creative originator. But as the number of
contributors grows and the work itself becomes less the product of one or two individuals who create
it without much help, the word is harder to apply.

[16] Who, in the absence of contract, can be considered an author of a movie? The word is
traditionally used to mean the originator or the person who causes something to come into being, or
even the first cause, as when Chaucer refers to the "Author of Nature." For a movie, that might be the
producer who raises the money. Eisenstein thought the author of a movie was the editor. The "auteur"
theory suggests that it might be the director, at least if the director is able to impose his artistic
judgments on the film. Traditionally, by analogy to books, the author was regarded as the person who
writes the screenplay, but often a movie reflects the work of many screenwriters. Grenier suggests that
the person with creative control tends to be the person in whose name the money is raised, perhaps a
star, perhaps the director, perhaps the producer, with control gravitating to the star as the financial
investment in scenes already shot grows.[fn13] Where the visual aspect of the movie is especially
important, the chief cinematographer might be regarded as the author. And for, say, a Disney animated
movie like "The Jungle Book," it might perhaps be the animators and the composers of the music.

[17] The Supreme Court dealt with the problem of defining "author" in new media in Burrow-Giles
Lithographic Co. v. Sarony.[fn14] The question there was, who is the author of a photograph: the
person who sets it up and snaps the shutter, or the person who makes the lithograph from it. Oscar
Wilde, the person whose picture was at issue, doubtless offered some creative advice as well. The
Court decided that the photographer was the author, quoting various English authorities: "the person
who has superintended the arrangement, who has actually formed the picture by [p*1233] putting the
persons in position, and arranging the place where the people are to be - the man who is the effective
cause of that"; "`author' involves originating, making, producing, as the inventive or master mind, the
thing which is to be protected"; "the man who really represents, creates, or gives effect to the idea,
fancy, or imagination."[fn15] The Court said that an "author," in the sense that the Founding Fathers
used the term in the Constitution,[fn16] was "`he to whom anything owes its origin; originator; maker;
one who completes a work of science or literature.'"[fn17]

[18] Answering a different question, what is a copyrightable "work," as opposed to who is the "author,
"the Supreme Court held in Feist Publications that "some minimal level of creativity" or "originality"
suffices.[fn18] But that measure of a "work" would be too broad and indeterminate to be useful if

12
applied to determine who are "authors" of a movie. So many people might qualify as an "author" if the
question were limited to whether they made a substantial creative contribution that that test would not
distinguish one from another. Everyone from the producer and director to casting director, costumer,
hairstylist, and "best boy" gets listed in the movie credits because all of their creative contributions
really do matter. It is striking in Malcolm X how much the person who controlled the hue of the
lighting contributed, yet no one would use the word "author" to denote that individual's relationship to
the movie. A creative contribution does not suffice to establish authorship of the movie.

[19] Burrow-Giles, in defining "author," requires more than a minimal creative or original contribution
to the work.[fn19] Burrow-Giles is still good law, and was recently reaffirmed in Feist
Publications.[fn20] Burrow-Giles and Feist Publications answer two distinct questions; who is an
author, and what is a copyrightable work.[fn21] Burrow-Giles defines author as the person to whom
the work owes its origin and who superintended the whole work, the "master mind."[fn22] In a movie
this definition, in the absence of a contract to the contrary, would generally limit authorship to
someone at the top of the screen credits, sometimes the producer, sometimes the director, possibly the
star, or the screenwriter - someone who has artistic control. After all, in Burrow-Giles the lithographer
made a substantial copyrightable creative contribution, and so did the person who posed, Oscar Wilde,
but the Court held that the photographer was the author.[fn23]

[20] The Second and Seventh Circuits have likewise concluded that contribution of independently
copyrightable material to a work intended to be an inseparable whole will not suffice to establish
authorship of a joint work.[fn24] Although the Second and Seventh Circuits do not base their
decisions on the word "authors" in the statute, [p*1234] the practical results they reach are consistent
with ours. These circuits have held that a person claiming to be an author of a joint work must prove
that both parties intended each other to be joint authors.[fn25] In determining whether the parties have
the intent to be joint authors, the Second Circuit looks at who has decision making authority, how the
parties bill themselves, and other evidence.[fn26]

[21] In Thomson v. Larson, an off-Broadway playwright had created a modern version of La Boheme,
and had been adamant throughout its creation on being the sole author.[fn27] He hired a drama
professor for "dramaturgical assistance and research," agreeing to credit her as "dramaturg" but not
author, but saying nothing about "joint work" or copyright.[fn28] The playwright tragically died
immediately after the final dress rehearsal, just before his play became the tremendous Broadway hit,
Rent.[fn29] The dramaturg then sued his estate for a declaratory judgment that she was an author of
Rent as a "joint work," and for an accounting.[fn30] The Second Circuit noted that the dramaturg had
no decision making authority, had neither sought nor was billed as a co-author, and that the defendant
entered into contracts as the sole author.[fn31] On this reasoning, the Second Circuit held that there
was no intent to be joint authors by the putative parties and therefore it was not a joint work.[fn32]

[22] Considering Burrow-Giles, the recent cases on joint works[fn33] (especially the thoughtful
opinion in Thomson v. Larson[fn34]), and the Gilbert and Sullivan example, several factors suggest
themselves as among the criteria for joint authorship, in the absence of contract. First, an author
"superintend[s]"[fn35] the work by exercising control.[fn36] This will likely be a person "who has
actually formed the picture by putting the persons in position, and arranging the place where the
people are to be - the man who is the effective cause of that,"[fn37] or "the inventive or master mind"
who "creates, or gives effect to the idea."[fn38] Second, putative coauthors make objective
manifestations of a shared intent to be coauthors, as by denoting the authorship of The Pirates of
Penzance as "Gilbert and Sullivan."[fn39] We say objective manifestations because, were the mutual

13
intent to be determined by subjective intent, it could become an instrument of fraud, were one
coauthor to hide from the other an intention to take sole credit for the work. Third, the audience appeal
of the work turns on both contributions and "the share of each in its success cannot be
appraised."[fn40] Control in many cases will be the most important factor. [p*1235]

[23] The best objective manifestation of a shared intent, of course, is a contract saying that the parties
intend to be or not to be co-authors. In the absence of a contract, the inquiry must of necessity focus on
the facts. The factors articulated in this decision and the Second and Seventh Circuit decisions cannot
be reduced to a rigid formula, because the creative relationships to which they apply vary too much.
Different people do creative work together in different ways, and even among the same people
working together the relationship may change over time as the work proceeds.

[24] Aalmuhammed did not at any time have superintendence of the work.[fn41] Warner Brothers and
Spike Lee controlled it. Aalmuhammed was not the person "who has actually formed the picture by
putting the persons in position, and arranging the place. . . ."[fn42] Spike Lee was, so far as we can tell
from the record. Aalmuhammed, like Larson's dramaturg, could make extremely helpful
recommendations, but Spike Lee was not bound to accept any of them, and the work would not benefit
in the slightest unless Spike Lee chose to accept them. Aalmuhammed lacked control over the work,
and absence of control is strong evidence of the absence of co-authorship.

[25] Also, neither Aalmuhammed, nor Spike Lee, nor Warner Brothers, made any objective
manifestations of an intent to be coauthors. Warner Brothers required Spike Lee to sign a "work for
hire" agreement, so that even Lee would not be a co-author and co-owner with Warner Brothers. It
would be illogical to conclude that Warner Brothers, while not wanting to permit Lee to own the
copyright, intended to share ownership with individuals like Aalmuhammed who worked under Lee's
control, especially ones who at the time had made known no claim to the role of co-author. No one,
including Aalmuhammed, made any indication to anyone prior to litigation that Aalmuhammed was
intended to be a co-author and co-owner.

[26] Aalmuhammed offered no evidence that he was the "inventive or master mind" of the movie. He
was the author of another less widely known documentary about Malcolm X, but was not the master of
this one. What Aalmuhammed's evidence showed, and all it showed, was that, subject to Spike Lee's
authority to accept them, he made very valuable contributions to the movie. That is not enough for co-
authorship of a joint work.

[27] The Constitution establishes the social policy that our construction of the statutory term "authors"
carries out. The Founding Fathers gave Congress the power to give authors copyrights in order "[t]o
promote the progress of Science and useful arts."[fn43] Progress would be retarded rather than
promoted, if an author could not consult with others and adopt their useful suggestions without
sacrificing sole ownership of the work. Too open a definition of author would compel authors to
insulate themselves and maintain ignorance of the contributions others might make. Spike Lee could
not consult a scholarly Muslim to make a movie about a religious conversion to Islam, and the arts
would be the poorer for that.

[28] The broader construction that Aalmuhammed proposes would extend joint authorship to many
"overreaching contributors,"[fn44] like the dramaturg in Thomson, and deny sole authors "exclusive

14
authorship status simply because another person render[ed] some form of assistance."[fn45]
Claimjumping by research assistants, editors, and former spouses, lovers and friends would endanger
authors who talked with people about what they were [p*1236] doing, if creative copyrightable
contribution were all that authorship required.

[29] Aalmuhammed also argues that issuance of a copyright registration certificate to him establishes a
prima facie case for ownership. A prima facie case could not in any event prevent summary judgment
in the presence of all the evidence rebutting his claim of ownership. "The presumptive validity of the
certificate may be rebutted and defeated on summary judgment."[fn46] The Copyright Office stated in
its response to Aalmuhammed's application for copyright (during the pendency of this litigation) that
his claims "conflict with previous registration claims," and therefore the Copyright Office had "several
questions" for him. One of the questions dealt with the "intent" of "other authors," i.e., Warner
Brothers. The evidence discussed above establishes without genuine issue that the answers to these
questions were that Warner Brothers did not intend to share ownership with Aalmuhammed.

[30] Because the record before the district court established no genuine issue of fact as to
Aalmuhammed's co-authorship of Malcolm X as a joint work, the district court correctly granted
summary judgment dismissing his claims for declaratory judgment and an accounting resting on co-
authorship.

B. Quantum meruit

[31] Aalmuhammed alleged in his complaint that defendants accepted his services, knowing that they
were not being provided gratuitously, yet paid him neither the fair value of his services nor even his
full expenses. He wrote script material, particularly for the important Islamic religious scenes,
arranged with the Egyptians in charge of the mosque for the movie to be shot inside (Aalmuhammed is
a Muslim and was the only Arabic-speaking person in the production crew), taught the actors how to
pray as Muslims and directed the prayer scenes, and talked to Islamic authorities after the movie was
made to assure their support when it was exhibited. These services were very important. The movie
would be a dark tale of hate, but for the redemptive, uplifting Islamic religious scenes.

[32] All the services were performed in New York and in Egypt (where the Hajj scenes were shot).
Aalmuhammed's fifth, sixth and seventh claims articulated this claim variously as quasi contract,
quantum meruit, and unjust enrichment. These claims are different from Aalmuhammed's claim to
authorship of a joint work. Even though he was not an author, it is undisputed that he made a
substantial contribution to the film. It may be that the producer or director, seeing that Aalmuhammed
was performing valuable and substantial services and expending substantial amounts for travel and
lodging, in the apparent expectation of reimbursement, had a duty to sign him up as an employee or
independent contractor, obtain his acknowledgment that he was working gratuitously or perhaps for
Denzel Washington, or eject him from the set.[fn47] We need not decide that, because the question on
review is limited to which state's statute of limitations applies.

[33] The defendants moved to dismiss these claims for failure to state a claim under Rule 12(b)(6), on
the ground that the claims were barred by California's two year statute of limitations. Aalmuhammed

15
argued that New York's six year statute of limitations applied. The district court granted the motion to
dismiss, applying California's shorter statute.

[34] The parties agree that the district court correctly used law of the forum, California, [p*1237] as
the source of its rule for choice of law. The applicable rule required, in this case, that "the court must
apply the law of the state whose interest would be more impaired if its law were not applied."[fn48]

[35] Defendants argue that only California had an interest in the application of its statute of
limitations, not New York. Their theory is that the defendant corporations have their principal places
of business in California, Aalmuhammed resided in neither state (he lives in Florida, though he spent
the months of shooting time in New York and Egypt), and Aalmuhammed filed his lawsuit in
California.

[36] The defense argument is unpersuasive. The question is which state's interest would suffer more by
the application of the other's law.[fn49] The strength of the interest is also a factor, however.[fn50]
California's interest in protecting its residents from stale claims arising from work done outside the
state is a weak one: "[t]he residence of the parties is not the determining factor in a choice of law
analysis."[fn51] New York's interest in governing the remedies available to parties working in new
York is far more significant.[fn52] New York's connection with Aalmuhammed's claim is
considerably more substantial, immediate and concrete than California's. We conclude that New York
would suffer more damage to its interest if California law were applied than would California if New
York law were applied.

[37] Because New York has the stronger interest and would suffer more damage than California if its
law were not applied, New York's six year statute of limitations governs. The claims were brought
within six years of when they accrued. We therefore vacate the dismissal of Aalmuhammed's implied
contract, quantum meruit, and unjust enrichment claims and remand them for further proceedings.

C. Unfair competition

[38] Aalmuhammed claimed that defendants passed off his scriptwriting, directing and other work as
that of other persons, in violation of the Lanham Act[fn53] and the California statute prohibiting unfair
competition.[fn54] The dismissal was under Rule 12(b)(6), for failure to state a claim upon which
relief can be granted, so we review de novo,[fn55] on the basis of allegations in the complaint.[fn56]

[39] We have held that, at least in some circumstances, failure to give appropriate credit for a film is
"reverse palming off" actionable under the Lanham Act.[fn57] And we have held that "actions
pursuant to California Business and Professions Code § 17200 are substantially congruent to claims
made under the Lanham Act."[fn58] Defendants argue that not enough of Aalmuhammed's proposed
script was used verbatim to amount to a violation. But this argument goes to the evidence, not the
complaint, so it cannot sustain the 12(b)(6) dismissal. The complaint alleged that Aalmuhammed
"substantially rewrote and expanded the dialogue for various entire [p*1238] scenes" and otherwise
alleged extensive and substantial use of his work in the final movie. We need not determine whether

16
Aalmuhammed established a genuine issue of fact regarding unfair competition, because the claim
never got as far as summary judgment in the district court. We reverse the dismissal of these two
claims.

D. Conduct abroad

[40] The district court dismissed Aalmuhammed's claims against the Largo defendants under Rule
12(b)(6) for failure to state a claim. The dismissal was based on our decision in Subafilms, that acts of
copyright infringement that occur wholly outside of the United States are not actionable under the U.S.
Copyright Act.[fn59]

[41] The complaint does not say whether the Largo defendants' conduct occurred outside the United
States. Defendants argue that it does, by referring to them as "the film's foreign distributors." But it
also says that their principal place of business is in California. These allegations leave room for proof
that the conduct that the Largo defendants engaged in took place within California, even though it had
consequences abroad. We cannot tell from the complaint whether foreign distributors do their work in
foreign countries, or do it by fax, phone, and email from California. We therefore reverse the dismissal
based on extra territoriality of the claims against the Largo defendants.

[42] AFFIRMED in part, REVERSED and REMANDED in part. Each party to bear its own costs.

17
What is the term of protection for cinematographic works?

Contracting States may adopt one of the two minimum periods of protection provided for in Article
7(2).
Either 50 years from January 1st of the year following the death of the author (post mortem auctoris),
or 50 years after the work has been made available to the public with the consent of the author, and if
such event has not taken place within 50 years of the making of the work, 50 years after the making.

Audio 2 Summary on Cinematographic works

In summary, cinematographic works are protected as literary and artistic works and are given the full panoply of
economic and moral rights given to literary and artistic works.

They attract copyright protection on their own merits, i.e. that is independently of the copyright protection of the
pre-existing works or commissioned works they contain.

Ownership of cinematographic works is left to the discretion of the Contracting States with the exception of the
presumption of legitimation. According to it, the authors of certain contributions to the cinematographic work
cannot object to certain uses of their works, specifically designated in Article 14bis(2)(b).

18
SAQ 1
What does the ‘presumption of legitimation’ imply?

Type your answer here

Click here for your answer

19
SAQ 1 Ans

According to this presumption authors whose works contribute to the making of a film cannot object to the
reproduction, distribution, public performance, communication to the public by wire, broadcasting or any other
communication to the public of the work, or to its subtitling or to the dubbing of texts. This list of cases is
exhaustive. This presumption only applies if there is no special contractual provision to the contrary, and it does
not apply to pre-existing works, or to some specifically mentioned groups of contributors.

[RETURN TO BULLETED LIST]

20
2.2 Computer programs

A computer program is a characteristic case of an intellectual creation which is

not listed in Article 2 of the Berne Convention, but which nevertheless comes
within the meaning of literary and artistic works. This is also confirmed by Article
4 of the WIPO Copyright Treaty, which provides that “[c]omputer programs are
protected as literary works within the meaning of Article 2 of the Berne
Convention. Such protection applies to computer programs, whatever may be the
mode or form of their expression”. The fact that the WIPO Copyright Treaty, and
also the TRIPs Agreement, bring software into the category of literary works also limits the ability of
member states to maintain their eventual sui generis protection regimes for computer programmes.

Most legislation referring to computer programs avoid defining them. This is so because computer
programs are highly evolving products and their mode or form of expression may change rapidly. In
this case any definition of computer programs would soon be outdated.

However, one definition given to computer programs (also known as software) refers to them as “a set
of instructions the purpose of which is to cause an information processing device, a computer, to
perform its functions. The program together with the supporting and preparatory design materials
constitutes the software”. What you should note, though, is that all computer programs are protected
whatever the mode or form of their expression is, for example source code, which can be perceived by
trained programmers, or object code which is machine-readable, but normally cannot be perceived by
humans.

It is the literal elements of the computer program that are protected under copyright law and not the
functional or utilitarian elements. The required originality etc will therefore exclusively have to be
found in the former, whilst the latter will be considered to be outside the scope of copyright. It is
interesting to illustrate that by the approach that was recently taken by the Court of Justice of the
European Union in the SAS Institute case, where the court rules that neither the functionality of a
computer program nor the programming language and the format of data files used in a computer
program in order to exploit certain of its functions constitute a form of expression of that program and,
as such, are not protected by copyright in computer programs. The same court had already held earlier
that graphical user interfaces are not protected as computer software. That does of course not stand in
the way of copyright as an artistic work if they meet the requirements for such works. This can also be
seen against the reality that in the US the screen component has been more readily protected, which is
clearly the case for videogames (the underlying computer program may of course also be protected if
it avoids the functionality hurdle).

The SAS Institute case is included underneath as a case study, as is the US case Computer Associates v
Altai. The latter shows how the structure, sequence and organisation of a computer programme can be
part of the copyright protectable expression together with the actual code of the programme and it
offers also the now famous three prong test to make sure that only the copyrightable elements get
protection.

21
Case Study 2: SAS Institute Inc. v World Programming Ltd, the structure,
sequence and organisation of a computer programme can be part of the
copyright protectable expression

(The below case applies EU– Directive 91/250/EEC – Legal protection of computer programs –
Articles 1(2) and 5(3) – Scope of protection – Creation directly or via another process – Computer
program protected by copyright – Reproduction of the functions by a second program without access
to the source code of the first program – Decompilation of the object code of the first computer
program – Directive 2001/29/EC – Copyright and related rights in the information society – Article
2(a) – User manual for a computer program – Reproduction in another computer program –
Infringement of copyright – Condition – Expression of the intellectual creation of the author of the
user manual)

In Case C‑406/10,

REFERENCE for a preliminary ruling under Article 267 TFEU from the High Court of Justice of
England and Wales, Chancery Division (United Kingdom), made by decision of 2 August 2010,
received at the Court on 11 August 2010, in the proceedings

SAS Institute Inc.v

World Programming Ltd,

THE COURT (Grand Chamber),

composed of V. Skouris, President, A. Tizzano, J.N. Cunha Rodrigues, K. Lenaerts, J.‑C. Bonichot,
A. Prechal, Presidents of Chambers, R. Silva de Lapuerta, K. Schiemann, G. Arestis (Rapporteur), A.
Ó Caoimh, L. Bay Larsen, M. Berger and E. Jarašiūnas, Judges,

Advocate General: Y. Bot,

Registrar: L. Hewlett, Principal Administrator,

having regard to the written procedure and further to the hearing on 21 September 2011,

after considering the observations submitted on behalf of:

22
– SAS Institute Inc., by H.J. Carr QC, and M. Hicks and J. Irvine, Barristers,

– World Programming Ltd, by M. Howe QC, R. Onslow and I. Jamal, Barristers, instructed by A.
Carter-Silk, Solicitor,

– the Spanish Government, by N. Díaz Abad, acting as Agent,

– the Finnish Government, by H. Leppo, acting as Agent,

– the Government of the United Kingdom, by L. Seeboruth and C. Murrell, acting as Agents, and
by S. Malynicz, Barrister,

– the European Commission, by J. Samnadda, acting as Agent,

after hearing the Opinion of the Advocate General at the sitting on 29 November 2011,

gives the following

Judgment

1 This reference for a preliminary ruling concerns the interpretation of Articles 1(2) and 5(3) of
Council Directive 91/250/EEC of 14 May 1991 on the legal protection of computer programs (OJ
1991 L 122, p. 42), and of Article 2(a) of Directive 2001/29/EC of the European Parliament and of the
Council of 22 May 2001 on the harmonisation of certain aspects of copyright and related rights in the
information society (OJ 2001 L 167, p. 10).

2 The reference has been made in proceedings between SAS Institute Inc. (‘SAS Institute’) and
World Programming Ltd (‘WPL’) concerning an action for infringement brought by SAS Institute for
infringement of copyright in computer programs and manuals relating to its computer database system.

Legal context

International legislation

3 Article 2(1) of the Convention for the Protection of Literary and Artistic Works, signed at Berne
on 9 September 1886 (Paris Act of 24 July 1971), as amended on 28 September 1979 (‘the Berne
Convention’) provides:

23
‘The expression “literary and artistic works” shall include every production in the literary … domain,
whatever may be the mode or form of its expression …’

4 Article 9 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (‘the

TRIPs Agreement’), as set out in Annex 1C to the Marrakech Agreement establishing the World Trade
Organisation, which was approved by Council Decision 94/800/EC of 22 December 1994 concerning
the conclusion on behalf of the European Community, as regards matters within its competence, of the
agreements reached in the Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p.
1), provides:

‘1. Members shall comply with Articles 1 through 21 of the [Berne Convention] and the Appendix
thereto …

2. Copyright protection shall extend to expressions and not to ideas, procedures, methods of
operation or mathematical concepts as such.’

5 Article 10(1) of the TRIPs Agreement provides:

‘Computer programs, whether in source or object code, shall be protected as literary works under the
[Berne Convention].’

6 Article 2 of the World Intellectual Property Organisation (WIPO) Copyright Treaty, adopted in
Geneva on 20 December 1996, which entered into force, as regards the European Union, on 14 March
2010 (OJ 2010 L 32, p. 1), is worded as follows:

‘Copyright protection extends to expressions and not to ideas, procedures, methods of operation or
mathematical concepts as such.’

7 Article 4 of that treaty provides as follows:

‘Computer programs are protected as literary works within the meaning of Article 2 of the Berne
Convention. Such protection applies to computer programs, whatever may be the mode or form of
their expression.’

European Union legislation

Directive 91/250

24
8 The 3rd, 7th, 8th, 14th, 15th, 17th, 18th, 21st and 23rd recitals in the preamble to Directive
91/250 provide:

‘(3) … computer programs are playing an increasingly important role in a broad range of industries
and computer program technology can accordingly be considered as being of fundamental importance
for the Community’s industrial development;

...

(7) … for the purpose of this Directive, the term “computer program” shall include programs in any
form, including those which are incorporated into hardware; … this term also includes preparatory
design work leading to the development of a computer program, provided that the nature of the
preparatory work is such that a computer program can result from it at a later stage;

(8) … in respect of the criteria to be applied in determining whether or not a computer program is
an original work, no tests as to the qualitative or aesthetic merits of the program should be applied;

(14) … in accordance with [the principle that only the expression of a computer program is protected
by copyright], to the extent that logic, algorithms and programming languages comprise ideas and
principles, those ideas and principles are not protected under this Directive;

(15) … in accordance with the legislation and jurisprudence of the Member States and the
international copyright conventions, the expression of those ideas and principles is to be protected by
copyright;

(17) … the exclusive rights of the author to prevent the unauthorised reproduction of his work have
to be subject to a limited exception in the case of a computer program to allow the reproduction
technically necessary for the use of that program by the lawful acquirer; … this means that the acts of
loading and running necessary for the use of a copy of a program which has been lawfully acquired,
and the act of correction of its errors, may not be prohibited by contract; … in the absence of specific
contractual provisions, including when a copy of the program has been sold, any other act necessary
for the use of the copy of a program may be performed in accordance with its intended purpose by a
lawful acquirer of that copy;

(18) … a person having a right to use a computer program should not be prevented from
performing acts necessary to observe, study or test the functioning of the program, provided that these
acts do not infringe the copyright in the program;

25
…

(21) … it has therefore to be considered that, in these limited circumstances only, performance of
the acts of reproduction and translation by or on behalf of a person having a right to use a copy of the
program is legitimate and compatible with fair practice and must therefore be deemed not to require
the authorisation of the rightholder;

(23) … such an exception to the author’s exclusive rights may not be used in a way which
prejudices the legitimate interests of the rightholder or which conflicts with a normal exploitation of
the program’.

9 Under the heading ‘Object of protection’, Article 1 of Directive 91/250 provides:

‘1. In accordance with the provisions of this Directive, Member States shall protect computer
programs, by copyright, as literary works within the meaning of the Berne Convention for the
Protection of Literary and Artistic Works. For the purposes of this Directive, the term “computer
programs” shall include their preparatory design material.

2. Protection in accordance with this Directive shall apply to the expression in any form of a
computer program. Ideas and principles which underlie any element of a computer program, including
those which underlie its interfaces, are not protected by copyright under this Directive.

3. A computer program shall be protected if it is original in the sense that it is the author’s own
intellectual creation. No other criteria shall be applied to determine its eligibility for protection.’

10 Paragraphs (a) and (b) of Article 4 of that directive, headed ‘Restricted Acts’, provide:

‘Subject to the provisions of Articles 5 and 6, the exclusive rights of the rightholder, within the
meaning of Article 2, shall include the right to do or to authorise:

(a) the permanent or temporary reproduction of a computer program by any means and in any
form, in part or in whole. In so far as loading, displaying, running, transmission or storage of the
computer program necessitate such reproduction, such acts shall be subject to authorisation by the
rightholder;

26
(b) the translation, adaptation, arrangement and any other alteration of a computer program and the
reproduction of the results thereof, without prejudice to the rights of the person who alters the
program’.

11 Article 5 of Directive 91/250, which provides for exceptions to the restricted acts, reads as
follows:

‘1. In the absence of specific contractual provisions, the acts referred to in Article 4(a) and (b)
shall not require authorisation by the rightholder where they are necessary for the use of the computer
program by the lawful acquirer in accordance with its intended purpose, including for error correction.

3. The person having a right to use a copy of a computer program shall be entitled, without the
authorisation of the rightholder, to observe, study or test the functioning of the program in order to
determine the ideas and principles which underlie any element of the program if he does so while
performing any of the acts of loading, displaying, running, transmitting or storing the program which
he is entitled to do.’

12 Article 6 of that directive, relating to decompilation, states:

‘1. The authorisation of the rightholder shall not be required where reproduction of the code and
translation of its form within the meaning of Article 4(a) and (b) are indispensable to obtain the
information necessary to achieve the interoperability of an independently created computer program
with other programs, provided that the following conditions are met:

(a) these acts are performed by the licensee or by another person having a right to use a copy of a
program, or on their behalf by a person authorised to do so;

(b) the information necessary to achieve interoperability has not previously been readily available
to the persons referred to in subparagraph (a);

and

(c) these acts are confined to the parts of the original program which are necessary to achieve
interoperability.

2. The provisions of paragraph 1 shall not permit the information obtained through its application:

27
(a) to be used for goals other than to achieve the interoperability of the independently created
computer program;

(b) to be given to others, except when necessary for the interoperability of the independently
created computer program; or

(c) to be used for the development, production or marketing of a computer program substantially
similar in its expression, or for any other act which infringes copyright.

3. In accordance with the provisions of the Berne Convention for the Protection of Literary and
Artistic Works, the provisions of this Article may not be interpreted in such a way as to allow its
application to be used in a manner which unreasonably prejudices the rightholder’s legitimate interests
or conflicts with a normal exploitation of the computer program.’

13 Pursuant to Article 9 of Directive 91/250, the provisions of that directive are without prejudice
to any other legal provisions such as those concerning patent rights, trade marks, unfair competition,
trade secrets, protection of semi-conductor products or the law of contract. Any contractual provisions
that are contrary to Article 6 or to the exceptions provided for in Article 5(2) and (3) of Directive
91/250 are null and void.

Directive 2001/29

14 According to recital 20 in the preamble to Directive 2001/29, that directive is based on

principles and rules already laid down in the directives currently in force in this area, inter alia
Directive 91/250. Directive 2001/29 develops those principles and rules and places them in the context
of the information society.

15 Article 1 of Directive 2001/29 provides:

‘1. This Directive concerns the legal protection of copyright and related rights in the framework of
the internal market, with particular emphasis on the information society.

2. Except in the cases referred to in Article 11, this Directive shall leave intact and shall in no way
affect existing Community provisions relating to:

(a) the legal protection of computer programs;

16 Article 2(a) of Directive 2001/29 states:

28
‘Member States shall provide for the exclusive right to authorise or prohibit direct or indirect,
temporary or permanent reproduction by any means and in any form, in whole or in part:

(a) for authors, of their works …’.

National legislation

17 Directives 91/250 and 2001/29 were transposed into national law by the Copyright, Designs and
Patents Act 1988, as amended by the Copyright (Computer Programs) Regulations 1992 and by the
Copyright and Related Rights Regulations 2003 (‘the 1988 Act’).

18 Section 1(1)(a) of the 1988 Act provides that copyright is a property right which subsists in
original literary, dramatic, musical or artistic works. According to section 3(1)(a) to (d) of the Act,
‘literary work’ means any work, other than a dramatic or musical work, which is written, spoken or
sung, and includes a table or compilation other than a database, a computer program, preparatory
design material for a computer program, and a database.

19 Section 16(1)(a) of the 1988 Act provides that the owner of the copyright in a work has the
exclusive right to copy the work.

20 According to section 16(3)(a) and (b) of the 1988 Act, restrictions imposed by copyright in
respect of acts performed on a work apply in relation to the work as a whole or any substantial part of
it, either directly or indirectly.

21 Under section 17(2) of the 1988 Act, copying in relation to a literary, dramatic, musical or
artistic work means reproducing the work in any material form. This includes storing the work in any
medium by electronic means.

22 Section 50BA(1) of the 1988 Act states that it is not an infringement of copyright for a lawful
user of a copy of a computer program to observe, study or test the functioning of the program in order
to determine the ideas and principles which underlie any element of the program if he does so while
performing any of the acts of loading, displaying, running, transmitting or storing the program which
he is entitled to do. Section 50BA(2) of the Act states that, where an act is permitted under subsection
(1), it is irrelevant whether or not there exists any term or condition in an agreement which purports to
prohibit or restrict the act in question.

The dispute in the main proceedings and the questions referred for a preliminary ruling

23 SAS Institute is a developer of analytical software. It has developed an integrated set of

computer programs over a period of 35 years which enables users to carry out a wide range of data
processing and analysis tasks, in particular, statistical analysis (‘the SAS System’). The core

29
component of the SAS System, called ‘Base SAS’, enables users to write and run their own
application programs in order to adapt the SAS System to work with their data (Scripts). Such Scripts
are written in a language which is peculiar to the SAS System (‘the SAS Language’).

24 WPL perceived that there was a market demand for alternative software capable of executing
application programs written in the SAS Language. WPL therefore produced the ‘World Programming
System’, designed to emulate the SAS components as closely as possible in that, with a few minor
exceptions, it attempted to ensure that the same inputs would produce the same outputs. This would
enable users of the SAS System to run the Scripts which they have developed for use with the SAS
System on the ‘World Programming System’.

25 The High Court of Justice of England and Wales, Chancery Division, points out that it is not
established that, in order to do so, WPL had access to the source code of the SAS components, copied
any of the text of that source code or copied any of the structural design of the source code.

26 The High Court also points out that two previous courts have held, in the context of separate
proceedings, that it is not an infringement of the copyright in the source code of a computer program
for a competitor of the copyright owner to study how the program functions and then to write its own
program to emulate that functionality.

27 SAS Institute, disputing that approach, has brought an action before the referring court. Its
principal claims are that WPL:

– copied the manuals for the SAS System published by SAS Institute when creating the ‘World
Programming System’, thereby infringing SAS Institute’s copyright in those manuals;

– in so doing, indirectly copied the computer programs comprising the SAS components, thereby
infringing its copyright in those components;

– used a version of the SAS system known as the ‘Learning Edition’, in breach of the terms of the
licence relating to that version and of the commitments made under that licence, and in breach of SAS
Institute’s copyright in that version; and

– infringed the copyright in the manuals for the SAS System by creating its own manual.

28 In those circumstances, the High Court of Justice of England and Wales, Chancery Division,
decided to stay the proceedings and to refer the following questions to the Court of Justice for a
preliminary ruling:

‘(1) Where a computer program (“the First Program”) is protected by copyright as a literary work,
is Article 1(2) [of Directive 91/250] to be interpreted as meaning that it is not an infringement of the

30
copyright in the First Program for a competitor of the rightholder without access to the source code of
the First Program, either directly or via a process such as decompilation of the object code, to create
another program (“the Second Program”) which replicates the functions of the First Program?

(2) Is the answer to Question 1 affected by any of the following factors:

(a) the nature and/or extent of the functionality of the First Program;

(b) the nature and/or extent of the skill, judgment and labour which has been expended by the
author of the First Program in devising the functionality of the First Program;

(c) the level of detail to which the functionality of the First Program has been reproduced in the
Second Program;

(d) if the source code for the Second Program reproduces aspects of the source code of the First
Program to an extent which goes beyond that which was strictly necessary in order to produce the
same functionality as the First Program?

(3) Where the First Program interprets and executes application programs written by users of the
First Program in a programming language devised by the author of the First Program which comprises
keywords devised or selected by the author of the First Program and a syntax devised by the author of
the First Program, is Article 1(2) [of Directive 91/250] to be interpreted as meaning that it is not an
infringement of the copyright in the First Program for the Second Program to be written so as to
interpret and execute such application programs using the same keywords and the same syntax?

(4) Where the First Program reads from and writes to data files in a particular format devised by the
author of the First Program, is Article 1(2) [of Directive 91/250] to be interpreted as meaning that it is
not an infringement of the copyright in the First Program for the Second Program to be written so as to
read from and write to data files in the same format?

(5) Does it make any difference to the answer to Questions 1, 3 and 4 if the author of the Second
Program created the Second Program by:

(a) observing, studying and testing the functioning of the First Program; or

(b) reading a manual created and published by the author of the First Program which describes the
functions of the First Program (“the Manual”); or

(c) both (a) and (b)?

31
(6) Where a person has the right to use a copy of the First Program under a licence, is Article 5(3)
[of Directive 91/250] to be interpreted as meaning that the licensee is entitled, without the
authorisation of the rightholder, to perform acts of loading, running and storing the program in order to
observe, test or study the functioning of the First Program so as to determine the ideas and principles
which underlie any element of the program, if the licence permits the licensee to perform acts of
loading, running and storing the First Program when using it for the particular purpose permitted by
the licence, but the acts done in order to observe, study or test the First Program extend outside the
scope of the purpose permitted by the licence?

(7) Is Article 5(3) [of Directive 91/250] to be interpreted as meaning that acts of observing, testing
or studying of the functioning of the First Program are to be regarded as being done in order to
determine the ideas or principles which underlie any element of the First Program where they are
done:

(a) to ascertain the way in which the First Program functions, in particular details which are not
described in the Manual, for the purpose of writing the Second Program in the manner referred to in
Question 1 above;

(b) to ascertain how the First Program interprets and executes statements written in the
programming language which it interprets and executes (see Question 3 above);

(c) to ascertain the formats of data files which are written to or read by the First Program (see
Question 4 above);

(d) to compare the performance of the Second Program with the First Program for the purpose of
investigating reasons why their performances differ and to improve the performance of the Second
Program;

(e) to conduct parallel tests of the First Program and the Second Program in order to compare their
outputs in the course of developing the Second Program, in particular by running the same test scripts
through both the First Program and the Second Program;

(f) to ascertain the output of the log file generated by the First Program in order to produce a log
file which is identical or similar in appearance;

(g) to cause the First Program to output data (in fact, data correlating zip codes to States of the
[United States of America] for the purpose of ascertaining whether or not it corresponds with official
databases of such data, and if it does not so correspond, to program the Second Program so that it will
respond in the same way as the First Program to the same input data.

32
(8) Where the Manual is protected by copyright as a literary work, is Article 2(a) [of Directive
2001/29] to be interpreted as meaning that it is an infringement of the copyright in the Manual for the
author of the Second Program to reproduce or substantially reproduce in the Second Program any of
the following matters described in the Manual:

(a) the selection of statistical operations which have been implemented in the First Program;

(b) the mathematical formulae used in the Manual to describe those operations;

(c) the particular commands or combinations of commands by which those operations may be
invoked;

(d) the options which the author of the First Program has provided in respect of various commands;

(e) the keywords and syntax recognised by the First Program;

(f) the defaults which the author of the First Program has chosen to implement in the event that a
particular command or option is not specified by the user;

(g) the number of iterations which the First Program will perform in certain circumstances?

(9) Is Article 2(a) [of Directive 2001/29] to be interpreted as meaning that it is an infringement of
the copyright in the Manual for the author of the Second Program to reproduce or substantially
reproduce in a manual describing the Second Program the keywords and syntax recognised by the
First Program?’

Consideration of the questions referred

Questions 1 to 5

29 By these questions, the national court asks, in essence, whether Article 1(2) of Directive 91/250
must be interpreted as meaning that the functionality of a computer program and the programming
language and the format of data files used in a computer program in order to exploit certain of its
functions constitute a form of expression of that program and may, as such, be protected by copyright
in computer programs for the purposes of that directive.

30 In accordance with Article 1(1) of Directive 91/250, computer programs are protected by
copyright as literary works within the meaning of the Berne Convention.

33
31 Article 1(2) of Directive 91/250 extends that protection to the expression in any form of a
computer program. That provision states, however, that the ideas and principles which underlie any
element of a computer program, including those which underlie its interfaces, are not protected by
copyright under that directive.

32 The 14th recital in the preamble to Directive 91/250 confirms, in this respect, that, in accordance
with the principle that only the expression of a computer program is protected by copyright, to the
extent that logic, algorithms and programming languages comprise ideas and principles, those ideas
and principles are not protected under that directive. The 15th recital in the preamble to Directive
91/250 states that, in accordance with the legislation and jurisprudence of the Member States and the
international copyright conventions, the expression of those ideas and principles is to be protected by
copyright.

33 With respect to international law, both Article 2 of the WIPO Copyright Treaty and Article 9(2)
of the TRIPs Agreement provide that copyright protection extends to expressions and not to ideas,
procedures, methods of operation or mathematical concepts as such.

34 Article 10(1) of the TRIPs Agreement provides that computer programs, whether in source or
object code, are to be protected as literary works under the Berne Convention.

35 In a judgment delivered after the reference for a preliminary ruling had been lodged in the
present case, the Court interpreted Article 1(2) of Directive 91/250 as meaning that the object of the
protection conferred by that directive is the expression in any form of a computer program, such as the
source code and the object code, which permits reproduction in different computer languages
(judgment of 22 December 2010 in Case C‑393/09 Bezpečnostní softwarová asociace [2010] ECR
I‑0000, paragraph 35).

36 In accordance with the second phrase of the seventh recital in the preamble to Directive 91/250,
the term ‘computer program’ also includes preparatory design work leading to the development of a
computer program, provided that the nature of the preparatory work is such that a computer program
can result from it at a later stage.

37 Thus, the object of protection under Directive 91/250 includes the forms of expression of a
computer program and the preparatory design work capable of leading, respectively, to the
reproduction or the subsequent creation of such a program (Bezpečnostní softwarová asociace,
paragraph 37).

38 From this the Court concluded that the source code and the object code of a computer program
are forms of expression thereof which, consequently, are entitled to be protected by copyright as
computer programs, by virtue of Article 1(2) of Directive 91/250. On the other hand, as regards the
graphic user interface, the Court held that such an interface does not enable the reproduction of the
computer program, but merely constitutes one element of that program by means of which users make
use of the features of that program (Bezpečnostní softwarová asociace, paragraphs 34 and 41).

34
39 On the basis of those considerations, it must be stated that, with regard to the elements of a
computer program which are the subject of Questions 1 to 5, neither the functionality of a computer
program nor the programming language and the format of data files used in a computer program in
order to exploit certain of its functions constitute a form of expression of that program for the purposes
of Article 1(2) of Directive 91/250.

40 As the Advocate General states in point 57 of his Opinion, to accept that the functionality of a
computer program can be protected by copyright would amount to making it possible to monopolise
ideas, to the detriment of technological progress and industrial development.

41 Moreover, point 3.7 of the explanatory memorandum to the Proposal for Directive 91/250
[COM (88) 816] states that the main advantage of protecting computer programs by copyright is that
such protection covers only the individual expression of the work and thus leaves other authors the
desired latitude to create similar or even identical programs provided that they refrain from copying.

42 With respect to the programming language and the format of data files used in a computer
program to interpret and execute application programs written by users and to read and write data in a
specific format of data files, these are elements of that program by means of which users exploit
certain functions of that program.

43 In that context, it should be made clear that, if a third party were to procure the part of the
source code or the object code relating to the programming language or to the format of data files used
in a computer program, and if that party were to create, with the aid of that code, similar elements in
its own computer program, that conduct would be liable to constitute partial reproduction within the
meaning of Article 4(a) of Directive 91/250.

44 As is, however, apparent from the order for reference, WPL did not have access to the source
code of SAS Institute’s program and did not carry out any decompilation of the object code of that
program. By means of observing, studying and testing the behaviour of SAS Institute’s program, WPL
reproduced the functionality of that program by using the same programming language and the same
format of data files.

45 The Court also points out that the finding made in paragraph 39 of the present judgment cannot
affect the possibility that the SAS language and the format of SAS Institute’s data files might be
protected, as works, by copyright under Directive 2001/29 if they are their author’s own intellectual
creation (see Bezpečnostní softwarová asociace, paragraphs 44 to 46).

46 Consequently, the answer to Questions 1 to 5 is that Article 1(2) of Directive 91/250 must be
interpreted as meaning that neither the functionality of a computer program nor the programming
language and the format of data files used in a computer program in order to exploit certain of its
functions constitute a form of expression of that program and, as such, are not protected by copyright
in computer programs for the purposes of that directive.

35
Questions 6 and 7

47 By these questions, the national court asks, in essence, whether Article 5(3) of Directive 91/250
must be interpreted as meaning that a person who has obtained a copy of a computer program under a
licence is entitled, without the authorisation of the owner of the copyright in that program, to observe,
study or test the functioning of that program in order to determine the ideas and principles which
underlie any element of the program, in the case where that person carries out acts covered by that
licence with a purpose that goes beyond the framework established by the licence.

48 In the main proceedings, it is apparent from the order for reference that WPL lawfully purchased
copies of the Learning Edition of SAS Institute’s program, which were supplied under a ‘click-
through’ licence which required the purchaser to accept the terms of the licence before being permitted
to access the software. The terms of that licence restricted the licence to non-production purposes.
According to the national court, WPL used the various copies of the Learning Edition of SAS
Institute’s program to perform acts which fall outside the scope of the licence in question.

49 Consequently, the national court raises the question as to whether the purpose of the study or
observation of the functioning of a computer program has an effect on whether the person who has
obtained the licence may invoke the exception set out in Article 5(3) of Directive 91/250.

50 The Court observes that, from the wording of that provision, it is clear, first, that a licensee is
entitled to observe, study or test the functioning of a computer program in order to determine the ideas
and principles which underlie any element of the program.

51 In this respect, Article 5(3) of Directive 91/250 seeks to ensure that the ideas and principles
which underlie any element of a computer program are not protected by the owner of the copyright by
means of a licensing agreement.

52 That provision is therefore consistent with the basic principle laid down in Article 1(2) of
Directive 91/250, pursuant to which protection in accordance with that directive applies to the
expression in any form of a computer program and ideas and principles which underlie any element of
a computer program are not protected by copyright under that directive.

53 Article 9(1) of Directive 91/250 adds, moreover, that any contractual provisions contrary to the
exceptions provided for in Article 5(2) and (3) of that directive are null and void.

54 Second, under Article 5(3) of Directive 91/250, a licensee is entitled to determine the ideas and
principles which underlie any element of the computer program if he does so while performing any of
the acts of loading, displaying, running, transmitting or storing that program which he is entitled to do.

36
55 It follows that the determination of those ideas and principles may be carried out within the
framework of the acts permitted by the licence.

56 In addition, the 18th recital in the preamble to Directive 91/250 states that a person having a
right to use a computer program should not be prevented from performing acts necessary to observe,
study or test the functioning of the program, provided that these acts do not infringe the copyright in
that program.

57 As the Advocate General states in point 95 of his Opinion, the acts in question are those referred
to in Article 4(a) and (b) of Directive 91/250, which sets out the exclusive rights of the rightholder to
do or to authorise, and those referred to in Article 5(1) thereof, relating to the acts necessary for the
use of the computer program by the lawful acquirer in accordance with its intended purpose, including
for error correction.

58 In that latter regard, the 17th recital in the preamble to Directive 91/250 states that the acts of
loading and running necessary for that use may not be prohibited by contract.

59 Consequently, the owner of the copyright in a computer program may not prevent, by relying on
the licensing agreement, the person who has obtained that licence from determining the ideas and
principles which underlie all the elements of that program in the case where that person carries out
acts which that licence permits him to perform and the acts of loading and running necessary for the
use of the computer program, and on condition that that person does not infringe the exclusive rights
of the owner in that program.

60 As regards that latter condition, Article 6(2)(c) of Directive 91/250 relating to decompilation
states that decompilation does not permit the information obtained through its application to be used
for the development, production or marketing of a computer program substantially similar in its
expression, or for any other act which infringes copyright.

61 It must therefore be held that the copyright in a computer program cannot be infringed where, as
in the present case, the lawful acquirer of the licence did not have access to the source code of the
computer program to which that licence relates, but merely studied, observed and tested that program
in order to reproduce its functionality in a second program.

62 In those circumstances, the answer to Questions 6 and 7 is that Article 5(3) of Directive 91/250
must be interpreted as meaning that a person who has obtained a copy of a computer program under a
licence is entitled, without the authorisation of the owner of the copyright, to observe, study or test the
functioning of that program so as to determine the ideas and principles which underlie any element of
the program, in the case where that person carries out acts covered by that licence and acts of loading
and running necessary for the use of the computer program, and on condition that that person does not
infringe the exclusive rights of the owner of the copyright in that program.

Questions 8 and 9

37
63 By these questions, the national court asks, in essence, whether Article 2(a) of Directive
2001/29 must be interpreted as meaning that the reproduction, in a computer program or a user manual
for that program, of certain elements described in the user manual for another computer program
protected by copyright constitutes an infringement of that right in the latter manual.

64 It is apparent from the order for reference that the user manual for SAS Institute’s computer
program is a protected literary work for the purposes of Directive 2001/29.

65 The Court has already held that the various parts of a work enjoy protection under Article 2(a)
of Directive 2001/29, provided that they contain some of the elements which are the expression of the
intellectual creation of the author of the work (Case C‑5/08 Infopaq International [2009] ECR I‑6569,
paragraph 39).

66 In the present case, the keywords, syntax, commands and combinations of commands, options,
defaults and iterations consist of words, figures or mathematical concepts which, considered in
isolation, are not, as such, an intellectual creation of the author of the computer program.

67 It is only through the choice, sequence and combination of those words, figures or mathematical
concepts that the author may express his creativity in an original manner and achieve a result, namely
the user manual for the computer program, which is an intellectual creation (see, to that effect, Infopaq
International, paragraph 45).

68 It is for the national court to ascertain whether the reproduction of those elements constitutes the
reproduction of the expression of the intellectual creation of the author of the user manual for the
computer program at issue in the main proceedings.

69 In this respect, the examination, in the light of Directive 2001/29, of the reproduction of those
elements of the user manual for a computer program must be the same with respect to the creation of
the user manual for a second program as it is with respect to the creation of that second program.

70 Consequently, in the light of the foregoing considerations, the answer to Questions 8 and 9 is
that Article 2(a) of Directive 2001/29 must be interpreted as meaning that the reproduction, in a
computer program or a user manual for that program, of certain elements described in the user manual
for another computer program protected by copyright is capable of constituting an infringement of the
copyright in the latter manual if – this being a matter for the national court to ascertain – that
reproduction constitutes the expression of the intellectual creation of the author of the user manual for
the computer program protected by copyright.

Costs

38
71 Since these proceedings are, for the parties to the main proceedings, a step in the action pending
before the national court, the decision on costs is a matter for that court. Costs incurred in submitting
observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Grand Chamber) hereby rules:

1. Article 1(2) of Council Directive 91/250/EEC of 14 May 1991 on the legal protection of
computer programs must be interpreted as meaning that neither the functionality of a computer
program nor the programming language and the format of data files used in a computer program in
order to exploit certain of its functions constitute a form of expression of that program and, as such,
are not protected by copyright in computer programs for the purposes of that directive.

2. Article 5(3) of Directive 91/250 must be interpreted as meaning that a person who has obtained a
copy of a computer program under a licence is entitled, without the authorisation of the owner of the
copyright, to observe, study or test the functioning of that program so as to determine the ideas and
principles which underlie any element of the program, in the case where that person carries out acts
covered by that licence and acts of loading and running necessary for the use of the computer program,
and on condition that that person does not infringe the exclusive rights of the owner of the copyright in
that program.

3. Article 2(a) of Directive 2001/29/EC of the European Parliament and of the Council of 22 May
2001 on the harmonisation of certain aspects of copyright and related rights in the information society
must be interpreted as meaning that the reproduction, in a computer program or a user manual for that
program, of certain elements described in the user manual for another computer program protected by
copyright is capable of constituting an infringement of the copyright in the latter manual if – this being
a matter for the national court to ascertain – that reproduction constitutes the expression of the
intellectual creation of the author of the user manual for the computer program protected by copyright.

Case Study 3: Computer Associates International, Inc. v. Altai, Inc.

U.S. Court of Appeals, Second Circuit

June 22, 1992

982 F.2d 693, 23 USPQ2d 1241

Walker, J.

39
In recent years, the growth of computer science has spawned a number of challenging legal questions,
particularly in the field of copyright law. As scientific knowledge advances, courts endeavor to keep
pace, and sometimes – as in the area of computer technology – they are required to venture into less
than familiar waters. This is not a new development, though. “From its beginning, the law of copyright
has developed in response to significant changes in technology.” Sony Corp. v. Universal City
Studios, Inc., 464 U.S. 417, 430 [220 USPQ 665] (1984).

Article I, section 8 of the Constitution authorizes Congress “[t]o promote the Progress of Science and
useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their
respective Writings and Discoveries.” The Supreme Court has stated that “[t]he economic philosophy
behind the clause . . . is the conviction that encouragement of individual effort by personal gain is the
best way to advance public welfare.” Mazer v. Stein, 347 U.S. 201, 219 [100 USPQ 325] (1954). The
author’s benefit, however, is clearly a “secondary” consideration. SeeUnited States v. Paramount
Pictures, Inc., 334 U.S. 131, 158 [77 USPQ 243] (1948). “[T]he ultimate aim is, by this incentive, to
stimulate artistic creativity for the general public good.” Twentieth Century Music Corp. v. Aiken, 422
U.S. 151, 156 [186 USPQ 65] (1975).

Thus, the copyright law seeks to establish a delicate equilibrium. On the one hand, it affords protection
to authors as an incentive to create, and, on the other, it must appropriately limit the extent of that
protection so as to avoid the effects of monopolistic stagnation. In applying the federal act to new
types of cases, courts must always keep this symmetry in mind. Id .

Among other things, this case deals with the challenging question of whether and to what extent the
“non-literal” aspects of a computer program, that is, those aspects that are not reduced to a written
code, are protected by copyright. While a few other courts have already grappled with this issue, this
case is one of first impression in this circuit. As we shall discuss, we find the results <23 USPQ2d
1245> reached by other courts to be less than satisfactory. Drawing upon long-standing doctrines of
copyright law, we take an approach that we think better addresses the practical difficulties embedded
in these types of cases. In so doing, we have kept in mind the necessary balance between creative
incentive and industrial competition.

This appeal comes to us from the United States District Court for the Eastern District of New York,
the Honorable George C. Pratt, Circuit Judge, sitting by designation. By Memorandum and Order
entered August 12, 1991, Judge Pratt found that defendant Altai, Inc.’s (“Altai”), OSCAR 3.4
computer program had infringed plaintiff Computer Associates’ (“CA”), copyrighted computer
program entitled CA-SCHEDULER. Accordingly, the district court awarded CA $364,444 in actual
damages and apportioned profits. Altai has <982 F.2d 697> abandoned its appeal from this award.
With respect to CA’s second claim for copyright infringement, Judge Pratt found that Altai’s OSCAR
3.5 program was not substantially similar to a portion of CA-SCHEDULER called ADAPTER, and
thus denied relief. Finally, the district court concluded that CA’s state law trade secret
misappropriation claim against Altai had been preempted by the federal copyright act. CA appealed
from these findings.

Because we are in full agreement with Judge Pratt’s decision and in substantial agreement with his
careful reasoning, we affirm the judgment of the district court in its entirety.

40
Background

We assume familiarity with the facts set forth in the district court’s comprehensive and scholarly
opinion. See Computer Associates Int’l, Inc. v. Altai, Inc., 775 F.Supp.544, 549-55 [20 USPQ2d 1641]
(E.D.N.Y. 1991). Thus, we summarize only those facts necessary to resolve this appeal.

I. Computer Program Design

Certain elementary facts concerning the nature of computer programs are vital to the following
discussion. The Copyright Act defines a computer program as “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. Section
101 . In writing these directions, the programmer works “from the general to the specific.” Whelan
Associates, Inc. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222, 1229 [230 USPQ 481] (3d Cir.
1986), cert. denied,479 U.S. 1031 (1987). See generally, Steven R. Englund, Note,Idea, Process, or
Protected Expression?: Determining the Scope of Copyright Protection of the Structure of Computer
Programs, 88 MICH. L. REV. 866, 867-73 (1990) (hereinafter “Englund”); Peter S. Menell, An
Analysis of the Scope of Copyright Protection for Application Programs, 41 STAN. L. REV. 1045,
1051-57 (1989) (hereinafter “Menell”); Mark T. Kretschmer, Note, Copyright Protection For Software
Architecture: Just Say No!, 1988 COLUM. BUS. L. REV. 823, 824-27 (1988) (hereinafter
“Kretschmer”); Peter G. Spivack, Comment, Does Form Follow Function? The Idea/Expression
Dichotomy In Copyright Protection of Computer Software, 35 U.C.L.A. L. REV. 723, 729-31 (1988)
(hereinafter “Spivack”).

The first step in this procedure is to identify a program’s ultimate function or purpose. An example of
such an ultimate purpose might be the creation and maintenance of a business ledger. Once this goal
has been achieved, a programmer breaks down or “decomposes” the program’s ultimate function into
“simpler constituent problems or ‘subtasks,’ “ Englund, at 870 , which are also known as subroutines
or modules. SeeSpivack, at 729 . In the context of a business ledger program, a module or subroutine
might be responsible for the task of updating a list of outstanding accounts receivable. Sometimes,
depending upon the complexity of its task, a subroutine may be broken down further into sub-
subroutines.

Having sufficiently decomposed the program’s ultimate function into its component elements, a
programmer will then arrange the subroutines or modules into what are known as organizational or
flow charts. Flow charts map the interactions between modules that achieve the program’s end goal.
See Kretschmer, at 826.

In order to accomplish these intra-program interactions, a programmer must carefully design each
module’s parameter list. A parameter list, according to the expert appointed and fully credited by the
district court, Dr. Randall Davis, is “the information sent to and received from a subroutine.” See
Report of Dr. Randall Davis, at 12 . The term “parameter list” refers to the form in which information
is passed between modules (e.g.for accounts receivable, the designated time frame and particular
customer identifying number) and the information’s actual content <982 F.2d 698> (e.g. 8/91-7/92;
customer No. 3). Id . With respect to form, interacting modules must share similar parameter lists so
that they are capable of exchanging information.<23 USPQ2d 1246>

41
“The functions of the modules in a program together with each module’s relationships to other
modules constitute the ‘structure’ of the program.” Englund, at 871 . Additionally, the term structure
may include the category of modules referred to as “macros.” A macro is a single instruction that
initiates a sequence of operations or module interactions within the program. Very often the user will
accompany a macro with an instruction from the parameter list to refine the instruction (e.g. current
total of accounts receivable (macro), but limited to those for 8/91 to 7/92 from customer No. 3
(parameters)).

In fashioning the structure, a programmer will normally attempt to maximize the program’s speed,
efficiency, as well as simplicity for user operation, while taking into consideration certain externalities
such as the memory constraints of the computer upon which the program will be run. See id.;
Kretschmer, at 826; Menell, at 1052. “This stage of program design often requires the most time and
investment.” Kretschmer, at 826 .

Once each necessary module has been identified, designed, and its relationship to the other modules
has been laid out conceptually, the resulting program structure must be embodied in a written language
that the computer can read. This process is called “coding,” and requires two steps. Whelan,797 F.2d
at 1230 . First, the programmer must transpose the program’s structural blue-print into a source code.
This step has been described as “comparable to the novelist fleshing out the broad outline of his plot
by crafting from words and sentences the paragraphs that convey the ideas.” Kretschmer, at 826 . The
source code may be written in any one of several computer languages, such as COBAL, FORTRAN,
BASIC, EDL, etc., depending upon the type of computer for which the program is intended. Whelan,
797 F.2d at 1230 . Once the source code has been completed, the second step is to translate or
“compile” it into object code. Object code is the binary language comprised of zeros and ones through
which the computer directly receives its instructions. Id.,at 1230-31 ; Englund, at 868 & n.13 .

After the coding is finished, the programmer will run the program on the computer in order to find and
correct any logical and syntactical errors. This is known as “debugging” and, once done, the program
is complete. See Kretschemer,at 826-27 .

II. Facts

CA is a Delaware corporation, with its principal place of business in Garden City, New York. Altai is
a Texas corporation, doing business primarily in Arlington, Texas. Both companies are in the
computer software industry – designing, developing and marketing various types of computer
programs.

The subject of this litigation originates with one of CA’s marketed programs entitled CA-
SCHEDULER. CA-SCHEDULER is a job scheduling program designed for IBM mainframe
computers. Its primary functions are straightforward: to create a schedule specifying when the
computer should run various tasks, and then to control the computer as it executes the schedule. CA-
SCHEDULER contains a sub-program entitled ADAPTER, also developed by CA. ADAPTER is not
an independently marketed product of CA; it is a wholly integrated component of CA-SCHEDULER
and has no capacity for independent use.

42
Nevertheless, ADAPTER plays an extremely important role. It is an “operating system compatibility
component,” which means, roughly speaking, it serves as a translator. An “operating system” is itself a
program that manages the resources of the computer, allocating those resources to other programs as
needed. The IBM’s System 370 family of computers, for which CA-SCHEDULER was created, is,
depending upon the computer’s size, designed to contain one of three operating systems: DOS/VSE,
MVS, or CMS. As the district court noted, the general rule is that “a <982 F.2d 699> program written
for one operating system, e.g., DOS/VSE, will not, without modification, run under another operating
system such as MVS.” Computer Associates, 775 F. Supp. at 550 . ADAPTER’s function is to
translate the language of a given program into the particular language that the computer’s own
operating system can understand.

The district court succinctly outlined the manner in which ADAPTER works within the context of the
larger program. In order to enable CA-SCHEDULER to function on different operating systems, CA
divided the CA-SCHEDULER into two components:

– a first component that contains only the task-specific portions of the program, independent of all
operating system issues, and

– a second component that contains all the interconnections between the first component and the
operating system.<23 USPQ2d 1247>

In a program constructed in this way, whenever the first, task-specific, component needs to ask the
operating system for some resource through a “system call”, it calls the second component instead of
calling the operating system directly.

The second component serves as an “interface” or “compatibility component” between the task-
specific portion of the program and the operating system. It receives the request from the first
component and translates it into the appropriate system call that will be recognized by whatever
operating system is installed on the computer, e.g., DOS/VSE, MVS, or CMS. Since the first, task-
specific component calls the adapter component rather than the operating system, the first component
need not be customized to use any specific operating system. The second interface component insures
that all the system calls are performed properly for the particular operating system in use. Id.at 551 .

ADAPTER serves as the second, “common system interface” component referred to above.

A program like ADAPTER, which allows a computer user to change or use multiple operating systems
while maintaining the same software, is highly desirable. It saves the user the costs, both in time and
money, that otherwise would be expended in purchasing new programs, modifying existing systems to
run them, and gaining familiarity with their operation. The benefits run both ways. The increased
compatibility afforded by an ADAPTER-like component, and its resulting popularity among
consumers, makes whatever software in which it is incorporated significantly more marketable.

43
Starting in 1982, Altai began marketing its own job scheduling program entitled ZEKE. The original
version of ZEKE was designed for use in conjunction with a VSE operating system. By late 1983, in
response to customer demand, Altai decided to rewrite ZEKE so that it could be run in conjunction
with an MVS operating system.

At that time, James P. Williams (“Williams”), then an employee of Altai and now its President,
approached Claude F. Arney, III (“Arney”), a computer programmer who worked for CA. Williams
and Arney were longstanding friends, and had in fact been co-workers at CA for some time before
Williams left CA to work for Altai’s predecessor. Williams wanted to recruit Arney to assist Altai in
designing an MVS version of ZEKE.

At the time he first spoke with Arney, Williams was aware of both the CA-SCHEDULER and
ADAPTER programs. However, Williams was not involved in their development and had never seen
the codes of either program. When he asked Arney to come work for Altai, Williams did not know that
ADAPTER was a component of CA-SCHEDULER.

Arney, on the other hand, was intimately familiar with various aspects of ADAPTER. While working
for CA, he helped improve the VSE version of ADAPTER, and was permitted to take home a copy of
ADAPTER’s source code. This apparently developed into an irresistible habit, for when Arney left CA
to work for Altai in January, 1984, he took with him copies of <982 F.2d 700> the source code for
both the VSE and MVS versions of ADAPTER. He did this in knowing violation of the CA employee
agreements that he had signed.

Once at Altai, Arney and Williams discussed design possibilities for adapting ZEKE to run on MVS
operating systems. Williams, who had created the VSE version of ZEKE, thought that approximately
30% of his original program would have to be modified in order to accommodate MVS. Arney
persuaded Williams that the best way to make the needed modifications was to introduce a “common
system interface” component into ZEKE. He did not tell Williams that his idea stemmed from his
familiarity with ADAPTER. They decided to name this new component-program OSCAR.

Arney went to work creating OSCAR. No one at Altai, including Williams, knew that he had the
ADAPTER code, and no one knew that he was using it to design OSCAR/VSE. In three months,
Arney successfully completed the OSCAR/VSE project. In an additional month he developed an
OSCAR/MVS version. When the dust finally settled, Arney had copied approximately 30% of
OSCAR’s code from CA’s ADAPTER program.

The first generation of OSCAR programs was known as OSCAR 3.4. From 1985 to August 1988,
Altai used OSCAR 3.4 in its ZEKE product, as well as in programs entitled ZACK and ZEBB. In late
July 1988, CA first learned that Altai may have appropriated parts of ADAPTER. After confirming its
suspicions, CA secured copyrights on its 2.1 and 7.0 versions of CA-SCHEDULER. CA then brought
this copyright and trade secret misappropriation action against Altai.

Apparently, it was upon receipt of the summons and complaint that Altai first learned that Arney had
copied much of the OSCAR code from ADAPTER. After Arney confirmed to Williams that CA’s
accusations of copying were true, Williams <23 USPQ2d 1248> immediately set out to survey the

44
damage. Without ever looking at the ADAPTER code himself, Williams learned from Arney exactly
which sections of code Arney had taken from ADAPTER.

Upon advice of counsel, Williams initiated OSCAR’s rewrite. The project’s goal was to save as much
of OSCAR 3.4 as legitimately could be used, and to excise those portions which had been copied from
ADAPTER. Arney was entirely excluded from the process, and his copy of the ADAPTER code was
locked away. Williams put eight other programmers on the project, none of whom had been involved
in any way in the development of OSCAR 3.4. Williams provided the programmers with a description
of the ZEKE operating system services so that they could rewrite the appropriate code. The rewrite
project took about six months to complete and was finished in mid-November 1989. The resulting
program was entitled OSCAR 3.5.

From that point on, Altai shipped only OSCAR 3.5 to its new customers. Altai also shipped OSCAR
3.5 as a “free upgrade” to all customers that had previously purchased OSCAR 3.4. While Altai and
Williams acted responsibly to correct what Arney had wrought, the damage was done. CA’s lawsuit
remained.

After CA originally instituted this action in the United States District Court for the District of New
Jersey, the parties stipulated its transfer in March, 1989, to the Eastern District of New York where it
was assigned to Judge Jacob Mishler. On October 26, 1989, Judge Mishler transferred the case to
Judge Pratt who was sitting in the district court by designation. Judge Pratt conducted a six day trial
from March 28 through April 6, 1990.He entered judgment on August 12, 1991,and this appeal
followed.<982 F.2d 701>

Discussion

While both parties originally appealed from different aspects of the district court’s judgment, Altai has
now abandoned its appellate claims. In particular, Altai has conceded liability for the copying of
ADAPTER into OSCAR 3.4 and raises no challenge to the award of $364,444 in damages on that
score. Thus, we address only CA’s appeal from the district court’s rulings that: (1) Altai was not liable
for copyright infringement in developing OSCAR 3.5; and (2) in developing both OSCAR 3.4 and 3.5,
Altai was not liable for misappropriating CA’s trade secrets.

CA makes two arguments. First, CA contends that the district court applied an erroneous method for
determining whether there exists substantial similarity between computer programs, and thus, erred in
determining that OSCAR 3.5 did not infringe the copyrights held on the different versions of its CA-
SCHEDULER program. CA asserts that the test applied by the district court failed to account
sufficiently for a computer program’s non-literal elements. Second, CA maintains that the district
court erroneously concluded that its state law trade secret claims had been preempted by the federal
copyright act, see 17 U.S.C. Section 301(a) . We shall address each argument in turn.

I. Copyright Infringement

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In any suit for copyright infringement, the plaintiff must establish its ownership of a valid copyright,
and that the defendant copied the copyrighted work. See Novelty Textile Mills, Inc. v. Joan Fabrics
Corp., 558 F.2d 1090, 1092 [195 USPQ 1] (2d Cir. 1977); see also 3 Melville B. Nimmer & David
Nimmer, Nimmer on Copyright Section 13.01, at 13-4 (1991) (hereinafter “Nimmer”). The plaintiff
may prove defendant’s copying either by direct evidence or, as is most often the case, by showing that
(1) the defendant had access to the plaintiff’s copyrighted work and (2) that defendant’s work is
substantially similar to the plaintiff’s copyrightable material. See Walker v. Time Life Films, Inc., 784
F.2d 44, 48 [228 USPQ 505] (2d Cir.), cert. denied, 476 U.S. 1159 (1986).

For the purpose of analysis, the district court assumed that Altai had access to the ADAPTER code
when creating OSCAR 3.5. See Computer Associates, 775 F. Supp. at 558 . Thus, in determining
whether Altai had unlawfully copied protected aspects of CA’s ADAPTER, the district court narrowed
its focus of inquiry to ascertaining whether Altai’s OSCAR 3.5 was substantially similar to
ADAPTER. Because we approve Judge Pratt’s conclusions regarding substantial similarity, our
analysis will proceed along the same assumption.

As a general matter, and to varying degrees, copyright protection extends beyond a literary work’s
strictly textual form to its non-literal components. As we have said, “[i]t is of course essential to any
protection of literary property . . . that the right cannot be limited literally to the text, else a plagiarist
would escape by immaterial variations.” Nichols v. Universal Pictures Co., 45 F.2d 119, 121 [7 USPQ
84] (2d Cir. 1930) (L. Hand, J.), cert. denied, 282 U.S. 902 (1931). Thus, where “the fundamental
essence or structure of one work is duplicated in an <23 USPQ2d 1249> other,” 3 Nimmer, Section
13.03 [A] [1], at 13-24 , courts have found copyright infringement. See, e.g., Horgan v. Macmillan,
789 F.2d 157, 162 [229 USPQ 684] (2d Cir. 1986) (recognizing that a book of photographs might
infringe ballet choreography); Twentieth Century-Fox Film Corp. v. MCA, Inc., 715 F.2d 1327, 1329
[217 USPQ 611] (9th Cir. 1983) (motion picture and television series); Sid & Marty Krofft Television
Productions, Inc. v. McDonald’s Corp., 562 F.2d 1157, 1167 [196 USPQ 97] (9th Cir. 1977)
(television commercial and television series); Sheldon v. Metro-Goldwyn Pictures Corp., 81 F.2d 49,
55 [28 USPQ 330] (2d Cir.), cert. denied, 298 U.S. 669 (1936) (play and motion picture); accord
Stewart v. Abend,495 U.S. 207, 238 [14 USPQ2d 1614] (1990) (recognizing that motion picture may
infringe copyright in book by using its “unique setting, characters, plot, and sequence of events”). This
black letter proposition is the springboard for our discussion. <982 F.2d 702>

A. Copyright Protection for the Non-literal Elements of Computer Programs

It is now well settled that the literal elements of computer programs, i.e., their source and object codes,
are the subject of copyright protection. See Whelan, 797 F.2d at 1233 (source and object code); CMS
Software Design Sys., Inc. v. Info Designs, Inc., 785 F.2d 1246, 1249 [229 USPQ 311] (5th Cir. 1986)
(source code); Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1249 [219 USPQ
113] (3d Cir. 1983), cert. dismissed, 464 U.S. 1033 (1984) (source and object code);Williams
Electronics, Inc. v. Artic Int’l, Inc., 685 F.2d 870, 876-77 [215 USPQ 405] (3d Cir. 1982) (object
code). Here, as noted earlier, Altai admits having copied approximately 30% of the OSCAR 3.4
program from CA’s ADAPTER source code, and does not challenge the district court’s related finding
of infringement.

In this case, the hotly contested issues surround OSCAR 3.5. As recounted above, OSCAR 3.5 is the
product of Altai’s carefully orchestrated rewrite of OSCAR 3.4. After the purge, none of the

46
ADAPTER source code remained in the 3.5 version; thus, Altai made sure that the literal elements of
its revamped OSCAR program were no longer substantially similar to the literal elements of CA’s
ADAPTER.

According to CA, the district court erroneously concluded that Altai’s OSCAR 3.5 was not
substantially similar to its own ADAPTER program. CA argues that this occurred because the district
court “committed legal error in analyzing [its] claims of copyright infringement by failing to find that
copyright protects expression contained in the non-literal elements of computer software.” We
disagree.

CA argues that, despite Altai’s rewrite of the OSCAR code, the resulting program remained
substantially similar to the structure of its ADAPTER program. As discussed above, a program’s
structure includes its non-literal components such as general flow charts as well as the more specific
organization of inter-modular relationships, parameter lists, and macros. In addition to these aspects,
CA contends that OSCAR 3.5 is also substantially similar to ADAPTER with respect to the list of
services that both ADAPTER and OSCAR obtain from their respective operating systems. We must
decide whether and to what extent these elements of computer programs are protected by copyright
law.

The statutory terrain in this area has been well explored. See Lotus Dev. Corp. v. Paperback Software
Int’l, 740 F. Supp. 37, 47-51 [15 USPQ2d 1577] (D. Mass. 1990); see also Whelan, 797 F.2d at 1240-
42 ; Englund, at 885-90 ; Spivack, at 731-37 . The Copyright Act affords protection to “original works
of authorship fixed in any tangible medium of expression.” 17 U.S.C. Section 102(a) . This broad
category of protected “works” includes “literary works,” id., which are defined by the act as

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. Section 101. While computer programs are not specifically listed as part of the above
statutory definition, the legislative history leaves no doubt that Congress intended them to be
considered literary works. See H.R.Rep. No. 1476, 94th Cong., 2d Sess. 54, reprinted in 1976 U.S. C.
C. A. N. 5659, 5667 (hereinafter “House Report”); Whelan,797 F.2d at 1234 ; Apple Computer, 714
F.2d at 1247 .

The syllogism that follows from the foregoing premises is a powerful one: if the non-literal structures
of literary works are protected by copyright; and if computer programs are literary works, as we are
told by the legislature; then the non-literal structures of computer programs are protected by copyright.
See Whelan, 797 F.2d at 1234 (“By analogy to other literary works, it would thus appear that the
copyrights of computer programs can be infringed even absent copying of the literal elements of the
<23 USPQ2d 1250> program.”). We have no reservation in joining the company of those courts that
have already ascribed to this logic. See, e.g., Johnson Controls, Inc. v. <982 F.2d 703> Phoenix
Control Sys., Inc., 886 F.2d 1173, 1175 [12 USPQ2d 1566] (9th Cir. 1989); Lotus Dev. Corp., 740 F.
Supp. at 54 ; Digital Communications Assocs., Inc. v. Softklone Distrib. Corp., 659 F. Supp. 449, 455-
56 [2 USPQ2d 1385] (N.D.Ga. 1987); Q-Co Indus., Inc. v. Hoffman, 625 F. Supp. 608, 615 [228
USPQ 554] (S.D.N.Y. 1985); SAS Institute, Inc. v. S & H Computer Sys., Inc., 605 F. Supp. 816, 829-

47
30 [225 USPQ 916] (M.D.Tenn. 1985). However, that conclusion does not end our analysis. We must
determine the scope of copyright protection that extends to a computer program’s non-literal structure.

As a caveat, we note that our decision here does not control infringement actions regarding
categorically distinct works, such as certain types of screen displays. These items represent products of
computer programs, rather than the programs themselves, and fall under the copyright rubric of
audiovisual works. If a computer audiovisual display is copyrighted separately as an audiovisual work,
apart from the literary work that generates it (i.e., the program), the display may be protectable
regardless of the underlying program’s copyright status. See Stern Electronics, Inc. v. Kaufman, 669
F.2d 852, 855 [213 USPQ 443] (2d Cir. 1982) (explaining that an audiovisual works copyright, rather
than a copyright on the underlying program, extended greater protection to the sights and sounds
generated by a computer video game because the same audiovisual display could be generated by
different programs). Of course, the copyright protection that these displays enjoy extends only so far
as their expression is protectable. Data East USA, Inc. v. Epyx, Inc., 862 F.2d 204, 209 [9 USPQ2d
1322] (9th Cir. 1988). In this case, however, we are concerned not with a program’s display, but the
program itself, and then with only its non-literal components. In considering the copyrightability of
these components, we must refer to venerable doctrines of copyright law.

1) Idea vs. Expression Dichotomy

It is a fundamental principle of copyright law that a copyright does not protect an idea, but only the
expression of the idea. See Baker v. Selden, 101 U.S. 99 (1879); Mazer v. Stein, 347U.S. 201, 217
[100 USPQ 325] (1954). This axiom of common law has been incorporated into the governing statute.
Section 102(b) of the act provides:

In no case does copyright protection for an original work of authorship extend to any idea, procedure,
process, system, method of operation, concept, principle, or discovery, regardless of the form in which
it is described, explained, illustrated, or embodied in such work.

17 U.S.C. Section 102(b) . See also House Report, at 5670 (“Copyright does not preclude others from
using ideas or information revealed by the author’s work.”).

Congress made no special exception for computer programs. To the contrary, the legislative history
explicitly states that copyright protects computer programs only “to the extent that they incorporate
authorship in programmer’s expression of original ideas, as distinguished from the ideas themselves.”
Id. at 5667; see also id. at 5670 (“Section 102(b) is intended . . . to make clear that the expression
adopted by the programmer is the copyrightable element in a computer program, and that the actual
processes or methods embodied in the program are not within the scope of copyright law.”).

Similarly, the National Commission on New Technological Uses of Copyrighted Works (“CONTU”)
established by Congress to survey the issues generated by the interrelationship of advancing
technology and copyright law, seePub.L.93-573, Section 201, 88 Stat. 1873 (1974), recommended,
inter alia, that the 1976 Copyright Act “beamended . . . to make it explicit that computer programs, to
the extent that they embody the author’s original creation, are proper subject matter for copyright.”
See National Commission on New Technological Uses of Copyrighted Works, Final Report 1 (1979)

48
(hereinafter “CONTU Report “). To that end, Congress adopted CONTU’s suggestions and amended
the Copyright Act by adding, among other things, a provision to 17 U.S.C. Section 101 which defined
the term “computer program.” SeePub.L. No. 96-517, Section 10(a), 94 Stat. <982 F.2d 704> 3028
(1980) . CONTU also “concluded that the idea-expression distinction should be used to determine
which aspects of computer programs are copyrightable.” Lotus Dev. Corp., 740 F.Supp. at 54 (citing
CONTU Report, at 44) .

Drawing the line between idea and expression is a tricky business. Judge Learned Hand noted that
“[n]obody has ever been able to fix that boundary, and nobody ever can.” Nichols, 45 F.2d at 121 .
Thirty years later his convictions remained firm. “Obviously, no principle can be stated as to when an
imitator has gone beyond copying the ‘idea,’ and has borrowed its ‘expression,’ “ Judge Hand
concluded. “Decisions must therefore inevitably be ad hoc.” Peter Pan Fabrics, Inc. v. Martin Weiner
Corp., 274 <23 USPQ2d 1251> F.2d 487, 489 [124 USPQ 154] (2d Cir. 1960).

The essentially utilitarian nature of a computer program further complicates the task of distilling its
idea from its expression. See SAS Institute, 605 F. Supp. at 829 ; cf. Englund, at 893 . In order to
describe both computational processes and abstract ideas, its content “combines creative and technical
expression.” See Spivack, at 755 . The variations of expression found in purely creative compositions,
as opposed to those contained in utilitarian works, are not directed towards practical application. For
example, a narration of Humpty Dumpty’s demise, which would clearly be a creative composition,
does not serve the same ends as, say, a recipe for scrambled eggs – which is a more process oriented
text. Thus, compared to aesthetic works, computer programs hover even more closely to the elusive
boundary line described in Section 102(b).

The doctrinal starting point in analyses of utilitarian works, is the seminal case of Baker v. Selden, 101
U.S. 99 (1879) . In Baker,the Supreme Court faced the question of “whether the exclusive property in
a system of bookkeeping can be claimed, under the law of copyright, by means of a book in which that
system is explained?” Id. at 101 . Selden had copyrighted a book that expounded a particular method
of bookkeeping. The book contained lined pages with headings intended to illustrate the manner in
which the system operated. Baker’s accounting publication included ledger sheets that employed
“substantially the same ruled lines and headings.” Id .Selden’s testator sued Baker for copyright
infringement on the theory that the ledger sheets were protected by Selden’s copyright.

The Supreme Court found nothing copyrightable in Selden’s Bookkeeping system, and rejected his
infringement claim regarding the ledger sheets. The Court held that:

The fact that the art described in the book by illustrations of lines and figures which are reproduced in
practice in the application of the art, makes no difference. Those illustrations are the mere language
employed by the author to convey his ideas more clearly. Had he used words of description instead of
diagrams (which merely stand in the place of words), there could not be the slightest doubt that others,
applying the art to practical use, might lawfully draw the lines and diagrams which were in the
author’s mind, and which he thus described by words in his book.

The copyright of a work on mathematical science cannot give to the author an exclusive right to the
methods of operation which he propounds, or to the diagrams which he employs to explain them, so as
to prevent an engineer from using them whenever occasion requires. Id. at 103 .

49
To the extent that an accounting text and a computer program are both “a set of statements or
instructions . . . to bring about a certain result,” 17 U.S.C. Section 101 , they are roughly analogous. In
the former case, the processes are ultimately conducted by human agency; in the latter, by electronic
means. In either case, as already stated, the processes themselves are not protectable. But the holding
in Baker goes farther. The Court concluded that those aspects of a work, which “must necessarily be
used as incident to” the idea, system or process that the work describes, are also not copyrightable. 101
U.S. at 104 . Selden’s ledger sheets, therefore, enjoyed <982 F.2d 705> no copyright protection
because they were “necessary incidents to” the system of accounting that he described. Id.at 103 .
From this reasoning, we conclude that those elements of a computer program that are necessarily
incidental to its function are similarly unprotectable.

While Baker v. Selden provides a sound analytical foundation, it offers scant guidance on how to
separate idea or process from expression, and moreover, on how to further distinguish protectable
expression from that expression which “must necessarily be used as incident to” the work’s underlying
concept. In the context of computer programs, the Third Circuit’s noted decision in Whelan has, thus
far, been the most thoughtful attempt to accomplish these ends.

The court in Whelan faced substantially the same problem as is presented by this case. There, the
defendant was accused of making off with the non-literal structure of the plaintiff’s copyrighted dental
lab management program, and employing it to create its own competitive version. In assessing
whether there had been an infringement, the court had to determine which aspects of the programs
involved were ideas, and which were expression. In separating the two, the court settled upon the
following conceptual approach:

[T]he line between idea and expression may be drawn with reference to the end sought to be achieved
by the work in question. In other words, the purpose or function of a utilitarian work would be the
work’s idea, and everything that is not necessary to that purpose or function would be part of the
expression of the idea . . . . Where there are various means of achieving the desired purpose, then the
<23 USPQ2d 1252> particular means chosen is not necessary to the purpose; hence, there is
expression, not idea. 797 F.2d at 1236 (citations omitted).

The “idea” of the program at issue in Whelan was identified by the court as simply “the efficient
management of a dental laboratory.” Id. at n. 28.

So far, in the courts, the Whelan rule has received a mixed reception. While some decisions have
adopted its reasoning, see, e.g., Bull HN Information Sys., Inc. v. American Express Bank, Ltd., 1990
Copyright Law Dec. (CCH) Para. 26,555 at 23,278 (S.D.N.Y. 1990) ; Dynamic Solutions, Inc. v.
Planning & Control, Inc., 1987 Copyright Law Dec. (CCH) Para. 26,062 at 20,912 (S.D.N.Y. 1987);
Broderbund Software Inc. v. Unison World, Inc., 648 F. Supp. 1127, 1133 [231 USPQ 700]
(N.D.Cal.1986), others have rejected it. See Plains Cotton Co-op v. Goodpasture Computer Service,
Inc., 807 F.2d 1256, 1262 [1 USPQ2d 1635] (5th Cir.), cert. denied, 484 U.S. 821 (1987); cf.
Synercom Technology, Inc. v. University Computing Co., 462F.Supp. 1003, 1014 [199 USPQ 537]
(N.D.Tex. 1978) (concluding that order and sequence of data on computer input formats was idea not
expression).

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Whelan has fared even more poorly in the academic community, where its standard for distinguishing
idea from expression has been widely criticized for being conceptually overbroad. See, e.g., Englund,
at 881; Menell, at 1074, 1082 ; Kretschmer, at 837-39 ; Spivack, at 747-55 ; Thomas M. Gage, Note,
Whelan Associates v. Jaslow Dental Laboratories: Copyright Protection for Computer Software
Structure – What’s the Purpose?, 1987 Wis. L. Rev. 859, 860-61 (1987). The leading commentator in
the field has stated that, “[t]he crucial flaw in [Whelan’s] reasoning is that it assumes that only one
‘idea,’ in copyright law terms, underlies any computer program, and that once a separable idea can be
identified, everything else must be expression.” 3 Nimmer Section 13.03 [F], at 13-62.34 . This
criticism focuses not upon the program’s ultimate purpose but upon the reality of its structural design.
As we have already noted, a computer program’s ultimate function or purpose is the composite result
of interacting subroutines. Since each subroutine is itself a program, and thus, may be said to have its
own “idea,” Whelan’s general formulation that a program’s overall purpose equates with the
program’s idea is descriptively inadequate.

Accordingly, we think that Judge Pratt wisely declined to follow Whelan. See <982 F.2d 706>
Computer Associates, 775 F.Supp. at 558-60 . In addition to noting the weakness in the Whelan
definition of “program-idea,” mentioned above, Judge Pratt found that Whelan’ssynonymous use of
the terms “structure, sequence, and organization,” see Whelan, 797 F.2d at 1224 n.1 , demonstrated a
flawed understanding of a computer program’s method of operation. See Computer Associates, 775
F.Supp. at 559-60 (discussing the distinction between a program’s “static structure” and “dynamic
structure”). Rightly, the district court found Whelan ‘s rationale suspect because it is so closely tied to
what can now be seen – with the passage of time – as the opinion’s somewhat outdated appreciation of
computer science.

2) Substantial Similarity Test for Computer Program Structure: Abstraction-Filtration-Comparison

We think that Whelan’s approach to separating idea from expression in computer programs relies too
heavily on metaphysical distinctions and does not place enough emphasis on practical considerations.
Cf. Apple Computer, 714 F.2d at 1253 (rejecting certain commercial constraints on programming as a
helpful means of distinguishing idea from expression because they did “not enter into the somewhat
metaphysical issue of whether particular ideas and expressions have merged”). As the cases that we
shall discuss demonstrate, a satisfactory answer to this problem cannot be reached by resorting, a
priori, to philosophical first principals.

As discussed herein, we think that district courts would be well-advised to undertake a three-step
procedure, based on the abstractions test utilized by the district court, in order to determine whether
the non-literal elements of two or more computer programs are substantially similar. This approach
breaks no new ground; rather, it draws on such familiar copyright doctrines as merger, scenes a faire,
and public domain. In taking this approach, however, we are cognizant that computer technology is a
dynamic field which can quickly outpace judicial decisionmaking. Thus, in cases where the
technology in question does not allow for a literal application of the procedure we outline below, our
opinion, should not be read to foreclose the district courts of our circuit from utilizing a modified
version.

In ascertaining substantial similarity under this approach, a court would first break down the allegedly
infringed program into its constituent structural parts. Then, by examining each of these parts for such
things as incorporated ideas, expression that is necessarily incidental to those ideas, and elements that

51
are taken from the public domain, a court would then be able to sift out <23 USPQ2d 1253> all non-
protectable material. Left with a kernel, or possibly kernels, of creative expression after following this
process of elimination, the court’s last step would be to compare this material with the structure of an
allegedly infringing program. The result of this comparison will determine whether the protectable
elements of the programs at issue are substantially similar so as to warrant a finding of infringement. It
will be helpful to elaborate a bit further.

Step One: Abstraction

As the district court appreciated, see Computer Associates, 775 F. Supp. at 560 , the theoretic
framework for analyzing substantial similarity expounded by Learned Hand in the Nichols case is
helpful in the present context. In Nichols,we enunciated what has now become known as the
“abstractions” test for separating idea from expression:

Upon any work . . . a great number of patterns of increasing generality will fit equally well, as more
and more of the incident is left out. The last may perhaps be no more than the most general statement
of what the [work] is about, and at times might consist only of its title; but there is a point in this series
of abstractions where they are no longer protected, since otherwise the [author] could prevent the use
of his “ideas,” to which, apart from their expression, his property is never extended.

Nichols, 45 F.2d at 121 .

While the abstractions test was originally applied in relation to literary works such <982 F.2d 707> as
novels and plays, it is adaptable to computer programs. In contrast to the Whelanapproach, the
abstractions test “implicitly recognizes that any given work may consist of a mixture of numerous
ideas and expressions.” 3 Nimmer Section 13.03 [F] at 13-62.34-63 .

As applied to computer programs, the abstractions test will comprise the first step in the examination
for substantial similarity. Initially, in a manner that resembles reverse engineering on a theoretical
plane, a court should dissect the allegedly copied program’s structure and isolate each level of
abstraction contained within it. This process begins with the code and ends with an articulation of the
program’s ultimate function. Along the way, it is necessary essentially to retrace and map each of the
designer’s steps – in the opposite order in which they were taken during the program’s creation. See
Background: Computer Program Design, supra.

As an anatomical guide to this procedure, the following description is helpful:

At the lowest level of abstraction, a computer program may be thought of in its entirety as a set of
individual instructions organized into a hierarchy of modules. At a higher level of abstraction, the
instructions in the lowest-level modules may be replaced conceptually by the functions of those
modules. At progressively higher levels of abstraction, the functions of higher-level modules
conceptually replace the implementations of those modules in terms of lower-level modules and
instructions, until finally, one is left with nothing but the ultimate function of the program. . . . A

52
program has structure at every level of abstraction at which it is viewed. At low levels of abstraction, a
program’s structure may be quite complex; at the highest level it is trivial.

Englund, at 897-98. Cf. Spivack, at 774.

Step Two: Filtration

Once the program’s abstraction levels have been discovered, the substantial similarity inquiry moves
from the conceptual to the concrete. Professor Nimmer suggests, and we endorse, a “successive
filtering method” for separating protectable expression from non-protectable material. See generally 3
Nimmer Section 13.03 [F] . This process entails examining the structural components at each level of
abstraction to determine whether their particular inclusion at that level was “idea” or was dictated by
considerations of efficiency, so as to be necessarily incidental to that idea; required by factors external
to the program itself; or taken from the public domain and hence is non-protectable expression. See
also Kretschmer, at 844-45 (arguing that program features dictated by market externalities or
efficiency concerns are unprotectable). The structure of any given program may reflect some, all, or
none of these considerations. Each case requires its own fact specific investigation.

Strictly speaking, this filtration serves “the purpose of defining the scope of plaintiff’s copyright.”
Brown Bag Software v. Symantec Corp., No. 89-16239, slip op. 3719, 3738 [22 USPQ2d 1429] (9th
Cir. April 7, 1992) (endorsing “analytic dissection” of computer programs in order to isolate
protectable expression). By applying well developed doctrines of copyright law, it may ultimately
leave behind a “core of protectable material.” 3 Nimmer Section 13.03 [F] [5], at 13-72 . Further
explication of this second step may be helpful.

(a) Elements Dictated by Efficiency.

<23 USPQ2d 1254> The portion of Baker v. Selden, discussed earlier, which denies copyright
protection to expression necessarily incidental to the idea being expressed, appears to be the
cornerstone for what has developed into the doctrine of merger. See Morrissey v. Procter & Gamble
Co., 379 F.2d 675, 678-79 [154 USPQ 193] (1st Cir. 1967) (relying on Baker for the proposition that
expression embodying the rules of a sweepstakes contest was inseparable from the idea of the contest
itself, and therefore were not protectable by copyright); see also Digital Communications, 659 F.
Supp. at 457 . The doctrine’s underlying principle is that “[w]hen there is essentially only one way to
express an idea, the idea and its expression are inseparable <982 F.2d 708> and copyright is no bar to
copying that expression.”Concrete Machinery Co. v. Classic Lawn Ornaments, Inc., 843 F.2d 600, 606
[6 USPQ 1357] (1st Cir. 1988). Under these circumstances, the expression is said to have “merged”
with the idea itself. In order not to confer a monopoly of the idea upon the copyright owner, such
expression should not be protected. See Herbert Rosenthal <982 F.2d 709> Jewelry Corp. v.
Kalpakian, 446 F.2d 738, 742 [170 USPQ 557] (9th Cir. 1971).

CONTU recognized the applicability of the merger doctrine to computer programs. In its report to
Congress it stated that:

53
[C]opyrighted language may be copied without infringing when there is but a limited number of ways
to express a given idea. . . . In the computer context, this means that when specific instructions, even
though previously copyrighted, are the only and essential means of accomplishing a given task, their
later use by another will not amount to infringement.

CONTU Report at 20 . While this statement directly concerns only the application of merger to
program code, that is, the textual aspect of the program, it reasonably suggests that the doctrine fits
comfortably within the general context of computer programs.

Furthermore, when one considers the fact that programmers generally strive to create programs “that
meet the user’s needs in the most efficient manner,” Menell, at 1052 , the applicability of the merger
doctrine to computer programs becomes compelling. In the context of computer program design, the
concept of efficiency is akin to deriving the most concise logical proof or formulating the most
succinct mathematical computation. Thus, the more efficient a set of modules are, the more closely
they approximate the idea or process embodied in that particular aspect of the program’s structure.

While, hypothetically, there might be a myriad of ways in which a programmer may effectuate certain
functions within a program, – i.e., express the idea embodied in a given subroutine – efficiency
concerns may so narrow the practical range of choice as to make only one or two forms of expression
workable options. See3 Nimmer Section 13.03 [F] [2], at 13-63 ; see also Whelan, 797 F.2d at 1243
n.43 (“It is true that for certain tasks there are only a very limited number of file structures available,
and in such cases the structures might not be copyrightable . . .”). Of course, not all program structure
is informed by efficiency concerns. See Menell, at 1052 (besides efficiency, simplicity related to user
accommodation has become a programming priority). It follows that in order to determine whether the
merger doctrine precludes copyright protection to an aspect of a program’s structure that is so
oriented, a court must inquire “whether the use of this particular set of modules is necessary efficiently
to implement that part of the program’s process” being implemented. Englund, at 902 . If the answer is
yes, then the expression represented by the programmer’s choice of a specific module or group of
modules has merged with their underlying idea and is unprotected. Id.at 902-03 .

Another justification for linking structural economy with the application of the merger doctrine stems
from a program’s essentially utilitarian nature and the competitive forces that exist in the software
marketplace. See Kretschmer, at 842. Working in tandem, these factors give rise to a problem of proof
which merger helps to eliminate.

Efficiency is an industry-wide goal. Since, as we have already noted, there may be only a limited
number of efficient implementations for any given program task, it is quite possible that multiple
programmers, working independently, will design the identical method employed in the allegedly
infringed work. Of course, if this is the case, there is no copyright infringement. See Roth Greeting
Cards v. United Card Co., 429 F.2d 1106, 1110 [166 USPQ 291] (9th Cir. 1970); Sheldon, 81 F.2d at
54 .

Under these circumstances, the fact that two programs contain the same efficient structure may as
likely lead to an inference of independent creation as it does to one of copying. See 3 Nimmer Section
13.03[F] [2], at 13-65 ; cf. Herbert Rosenthal Jewelry Corp., 446 F.2d at 741 (evidence of independent
creation may stem from defendant’s standing as a designer of previous similar works). Thus, since

54
evidence of similarly efficient structure is not particularly probative of copying, it should be
disregarded in the over <23 USPQ2d 1255> all substantial similarity analysis. See 3 Nimmer Section
13.03[F][2], at 13-65.

We find support for applying the merger doctrine in cases that have already addressed the question of
substantial similarity in the context of computer program structure. Most recently, in Lotus Dev.
Corp., 740 F. Supp. at 66 , the district court had before it a claim of copyright infringement relating to
the structure of a computer spreadsheet program. The court observed that “the basic spreadsheet
screen display that resembles a rotated ‘L’ . . ., if not present in every expression of such a program, is
present in most expressions.” Id . Similarly, the court found that “an essential detail present in most if
not all expressions of an electronic spreadsheet – is the designation of a particular key that, when
pressed, will invoke the menu command system.” Id . Applying the merger doctrine, the court denied
copyright protection to both program elements.

In Manufacturers Technologies, Inc. v. Cams, Inc., 706 F. Supp. 984, 995-99 [10 USPQ2d 1321] (D.
Conn. 1989), the infringement claims stemmed from various alleged program similarities “as indicated
in their screen displays.” Id. at 990 . Stressing efficiency concerns in the context of a merger analysis,
the court determined that the program’s method of allowing the user to navigate within the screen
displays was not protectable because, in part, “the process or manner of navigating internally on any
specific screen displays . . . is limited in the number of ways it may be simply achieved to facilitate
user comfort.” Id. at 995 . The court also found that expression contained in various screen displays (in
the form of alphabetical and numerical columns), was not the proper subject of copyright protection
because it was “necessarily incident to the idea [s]” embodied in the displays. Id. at 996, 998 . Cf.
Digital Communications, 659 F. Supp. at 460 (finding no merger and affording copyright protection to
program’s status screen display because “modes of expression chosen . . . are clearly not necessary to
the idea of the status screen”).

We agree with the approach taken in these decisions, and conclude that application of the merger
doctrine in this setting is an effective way to eliminate non-protectable expression contained in
computer programs.

(b) Elements Dictated By External Factors

We have stated that where “it is virtually impossible to write about a particular historical era or
fictional theme without employing certain ‘stock’ or standard literary devices,” such expression is not
copyrightable. Hoehling v. Universal City Studios, Inc., 618 F.2d 972, 979 [205 USPQ 681] (2d Cir.),
cert. denied, 449 U.S. 841 [207 USPQ 1064] (1980). For example, the Hoehling case was an
infringement suit stemming from several works on the Hindenberg disaster. There we concluded that
similarities in representations of German beer halls, scenes depicting German greetings such as “Heil
Hitler,” or the singing of certain German songs would not lead to a finding of infringement because
they were “ ‘indispensable, or at least standard, in the treatment of’ “ life in Nazi Germany. Id .
(quotingAlexander v. Haley, 460 F. Supp. 40, 45 [200 USPQ 239] (S.D.N.Y. 1978)). This is known as
the scenes a faire doctrine, and like “merger,” it has its analogous application to computer programs.
Cf. Data East USA, 862 F.2d at 208 (applying scenes a faire to a home computer video game).

55
Professor Nimmer points out that “in many instances it is virtually impossible to write a program to
perform particular functions in a specific computing environment without employing standard
techniques.” 3 Nimmer Section 13.03 [F] [3], at 13-65 . This is a result of the fact that a programmer’s
freedom of design choice is often circumscribed by extrinsic considerations such as (1) the mechanical
specifications of the computer on which a particular program <982 F.2d 710> is intended to run; (2)
compatibility requirements of other programs with which a program is designated to operate in
conjunction; (3) computer manufacturers’ design standards; (4) demands of the industry being
serviced; and (5) widely accepted programming practices within the computer industry. Id. at 13-66-
71 .

Courts have already considered some of these factors in denying copyright protection to various
elements of computer programs. In the Plains Cotton case, the Fifth Circuit refused to reverse the
district court’s denial of a preliminary injunction against an alleged program infringer because, in part,
“many of the similarities between the . . . programs [were] dictated by the externalities of the cotton
market.” 807 F.2d at 1262 .

In Manufacturers Technologies, the district court noted that the program’s method of screen
navigation “is influenced by the type of hardware that the software is designed to be used on.” 706
F.Supp. at 995 . Because, in part, “the functioning of the hardware package impact[ed]and constrain
[ed] the type of navigational tools used in plaintiff’s screen displays,” the court denied copyright
protection to that aspect of the program.Cf. Data East USA, 862 F.2d at 209 (reversing a district
court’s finding of audio-visual work infringement because, inter <23 USPQ2d 1256> alia, “the use of
the Commodore computer for a karate game intended for home consumption is subject to various
constraints inherent in the use of that computer”).

Finally, the district court in Q-Co Industries rested its holding on what, perhaps, most closely
approximates a traditional scenes a fairerationale. There, the court denied copyright protection to four
program modules employed in a teleprompter program. This decision was ultimately based upon the
court’s finding that “the same modules would be an inherent part of any prompting program.” 625
F.Supp. at 616 .

Building upon this existing case law, we conclude that a court must also examine the structural content
of an allegedly infringed program for elements that might have been dictated by external factors.

(c) Elements taken From the Public Domain

Closely related to the non-protectability of scenes a faire, is material found in the public domain. Such
material is free for the taking and cannot be appropriated by a single author even though it is included
in a copyrighted work. See E.F. Johnson Co. v. Uniden Corp. of America,623 F.Supp. 1485, 1499
[228 USPQ 891] (D. Minn. 1985); see also Sheldon,81 F.2d at 54 . We see no reason to make an
exception to this rule for elements of a computer program that have entered the public domain by
virtue of freely accessible program exchanges and the like. See 3 Nimmer Section 13.03 [F] ; see also
Brown Bag Software, slip op. at 3732 (affirming the district court’s finding that “‘[p]laintiffs may not
claim copyright protection of an . . . expression that is, if not standard, then commonplace in the
computer software industry.’“). Thus, a court must also filter out this material from the allegedly
infringed program before it makes the final inquiry in its substantial similarity analysis.

56
Step Three: Comparison

The third and final step of the test for substantial similarity that we believe appropriate for non-literal
program components entails a comparison. Once a court has sifted out all elements of the allegedly
infringed program which are “ideas” or are dictated by efficiency or external factors, or taken from the
public domain, there may remain a core of protectable expression. In terms of a work’s copyright
value, this is the golden nugget. See Brown Bag Software, slip op. at 3738 . At this point, the court’s
substantial similarity inquiry focuses on whether the defendant copied any aspect of this protected
expression, as well as an assessment of the copied portion’s relative importance with respect to the
plaintiff’s overall program. See 3 Nimmer Section 13.03 [F] ; Data East USA, 862 F.2d at 208 (“To
determine whether similarities result from unprotectable expression, analytic dissection of similarities
may be <982 F.2d 711> performed. If . . . all similarities in expression arise from use of common
ideas, then no substantial similarity can be found.”)

3) Policy Considerations

We are satisfied that the three step approach we have just outlined not only comports with, but
advances the constitutional policies underlying the copyright act. Since any method that tries to
distinguish idea from expression ultimately impacts on the scope of copyright protection afforded to a
particular type of work, “the line [it draws] must be a pragmatic one, which also keeps in
consideration ‘the preservation of the balance between competition and protection.’ “ Apple
Computer, 714 F.2d at 1253 (citation omitted).

CA and some amici argue against the type of approach that we have set forth on the grounds that it
will be a disincentive for future computer program research and development. At bottom, they claim
that if programmers are not guaranteed broad copyright protection for their work, they will not invest
the extensive time, energy and funds required to design and improve program structures. While they
have a point, their argument cannot carry the day. The interest of the copyright law is not in simply
conferring a monopoly on industrious persons, but in advancing the public welfare through rewarding
artistic creativity, in a manner that permits the free use and development of non-protectable ideas and
processes.

In this respect, our conclusion is informed by Justice Stewart’s concise discussion of the principles
that correctly govern the adaptation of the copyright law to new circumstances. In Twentieth Century
Music Corp. v. Aiken, he wrote:

The limited scope of the copyright holder’s statutory monopoly, like the limited copyright duration
required by the Constitution, reflects a balance of competing claims upon the public interest: Creative
work is to be encouraged and rewarded, but private motivation must ultimately serve the cause of
promoting broad public availability of literature, music, and the other arts.

The immediate effect of our copyright law is to secure a fair return for an “author’s <23 USPQ2d
1257> ” creative labor. But the ultimate aim is, by this incentive, to stimulate artistic creativity for the

57
general public good. . . . When technological change has rendered its literal terms ambiguous, the
Copyright Act must be construed in light of this basic purpose.

422 U.S. 151, 156 [186 USPQ 65] (1975) (citations and footnotes omitted).

Recently, the Supreme Court has emphatically reiterated that “[t]he primary objective of copyright is
not to reward the labor of authors. . . .”Feist Publications, Inc. v. Rural Telephone Service Co., Inc.,
111 S. Ct. 1282, 1290 [18 USPQ2d 1275] (1991) (emphasis added). While the Feist decision deals
primarily with the copyrightability of purely factual compilations, its underlying tenets apply to much
of the work involved in computer programming. Feist put to rest the “sweat of the brow” doctrine in
copyright law. Id. at 1295 . The rationale of that doctrine “was that copyright was a reward for the
hard work that went into compiling facts.” Id. at 1291 . The Court flatly rejected this justification for
extending copyright protection, noting that it “eschewed the most fundamental axiom of copyright law
– that no one may copyright facts or ideas.” Id .

Feist teaches that substantial effort alone cannot confer copyright status on an otherwise
uncopyrightable work. As we have discussed, despite the fact that significant labor and expense often
goes into computer program flow-charting and debugging, that process does not always result in
inherently protectable expression. Thus, Feist implicitly undercuts the Whelan rationale, “which allow
[ed] copyright protection beyond the literal computer code . . . [in order to] provide the proper
incentive for programmers by protecting their most valuable efforts.” Whelan, 797 F.2d at 1237
(footnote omitted). We note that Whelan was decided prior to Feist when the “sweat of the brow”
doctrine still had vitality. In view of the Supreme <982 F.2d 712> Court’s recent holding, however, we
must reject the legal basis of CA’s disincentive argument.

Furthermore, we are unpersuaded that the test we approve today will lead to the dire consequences for
the computer program industry that plaintiff and some amici predict. To the contrary, serious students
of the industry have been highly critical of the sweeping scope of copyright protection engendered by
the Whelan rule, in that it “enables first comers to ‘lock up’ basic programming techniques as
implemented in programs to perform particular tasks.” Menell, at 1087 ; see also Spivack, at 765
(Whelan“results in an inhibition of creation by virtue of the copyright owner’s quasi-monopoly
power”).

To be frank, the exact contours of copyright protection for non-literal program structure are not
completely clear. We trust that as future cases are decided, those limits will become better defined.
Indeed, it may well be that the Copyright Act serves as a relatively weak barrier against public access
to the theoretical interstices behind a program’s source and object codes. This results from the hybrid
nature of a computer program, which, while it is literary expression, is also a highly functional,
utilitarian component in the larger process of computing.

Generally, we think that copyright registration – with its indiscriminating availability – is not ideally
suited to deal with the highly dynamic technology of computer science. Thus far, many of the
decisions in this area reflect the courts’ attempt to fit the proverbial square peg in a round hole. The
district court, see Computer Associates, 775 F. Supp. at 560 , and at least one commentator has
suggested that patent registration, with its exacting up-front novelty and non-obviousness
requirements, might be the more appropriate rubric of protection for intellectual property of this kind.

58
SeeRandell M. Whitmeyer, Comment, A Plea for Due Processes: Defining the Proper Scope of Patent
Protection for Computer Software, 85 Nw. U. L. Rev. 1103, 1123-25 (1991) ; see also Lotus Dev.
Corp. v. Borland Int’l, Inc., 788 F. Supp. 78, ___ [22 USPQ2d 1641] (D. Mass. 1992) (discussing the
potentially supplemental relationship between patent and copyright protection in the context of
computer programs). In any event, now that more than 12 years have passed since CONTU issued its
final report, the resolution of this specific issue could benefit from further legislative investigation –
perhaps a CONTU II.

In the meantime, Congress has made clear that computer programs are literary works entitled to
copyright protection. Of course, we shall abide by these instructions, but in so doing we must not
impair the overall integrity of copyright law. While incentive based arguments in favor of broad
copyright protection are perhaps attractive from a pure policy perspective, see Lotus Dev. Corp., 740
F. Supp. at 58 , ultimately, they have a corrosive effect on certain fundamental tenets of copyright
doctrine. If the test we have outlined results in narrowing the scope of protection, as we expect it will,
that result flows from applying, in accordance with Congressional intent, long-standing principles of
copyright law to computer programs. Of course, our decision is also informed by our <23 USPQ2d
1258> concern that these fundamental principles remain undistorted.

B. The District Court Decision

We turn now to our review of the district court’s decision in this particular case. At the outset, we
must address CA’s claim that the district court erred by relying too heavily on the court appointed
expert’s “personal opinions on the factual and legal issues before the court.”

1. Use of Expert Evidence in Determining Substantial Similarity Between Computer Programs

Pursuant to Fed. R. Evid. 706, and with the consent of both Altai and CA, Judge Pratt appointed and
relied upon Dr. Randall Davis of the Massachusetts Institute of Technology as the court’s own expert
witness on the issue of substantial similarity. Dr. Davis submitted a comprehensive written report that
analyzed the various aspects of the computer programs <982 F.2d 713> at issue and evaluated the
parties’ expert evidence. At trial, Dr. Davis was extensively cross-examined by both CA and Altai.

The well-established general rule in this circuit has been to limit the use of expert opinion in
determining whether works at issue are substantially similar. As a threshold matter, expert testimony
may be used to assist the fact finder in ascertaining whether the defendant had copied any part of the
plaintiff’s work. See Arnstein v. Porter, 154 F.2d 464, 468 [68 USPQ 288] (2d Cir. 1946). To this end,
“the two works are to be compared in their entirety . . . [and] in making such comparison resort may
properly be made to expert analysis. . . .” 3 Nimmer Section 13.03 [E], at 13-62.16 .

However, once some amount of copying has been established, it remains solely for the trier-of-fact to
determine whether the copying was “illicit,” that is to say, whether the “defendant took from
plaintiff’s works so much of what is pleasing to [lay observers] who comprise the audience for whom
such [works are] composed, that defendant wrongfully appropriated something which belongs to the
plaintiff.” Arnstein, 154 F.2d at 473 . Since the test for illicit copying is based upon the response of
ordinary lay observers, expert testimony is thus “irrelevant” and not permitted. Id.at 468, 473 . We

59
have subsequently described this method of inquiry as “merely an alternative way of formulating the
issue of substantial similarity.”Ideal Toy Corp. v. Fab-Lu Ltd. (Inc.), 360 F.2d 1021, 1023 n.2 [149
USPQ 800] (2d Cir. 1966).

Historically, Arnstein’s ordinary observer standard had its roots in “an attempt to apply the
‘reasonable person’ doctrine as found in other areas of the law to copyright.” 3 Nimmer Section 13.03
[E] [2], at 13-62. 10-11 . That approach may well have served its purpose when the material under
scrutiny was limited to art forms readily comprehensible and generally familiar to the average lay
person. However, in considering the extension of the rule to the present case, we are reminded of
Holmes’ admonition that, “[t]he life of the law has not been logic: it has been experience.” O. W.
Holmes, Jr., THE COMMON LAW 1 (1881) .

Thus, in deciding the limits to which expert opinion may be employed in ascertaining the substantial
similarity of computer programs, we cannot disregard the highly complicated and technical subject
matter at the heart of these claims. Rather, we recognize the reality that computer programs are likely
to be somewhat impenetrable by lay observers – whether they be judges or juries – and, thus, seem to
fall outside the category of works contemplated by those who engineered the Arnstein test. Cf.
Dawson v. Hinshaw Music, Inc., 905 F.2d 731, 737 [15 USPQ2d 1132] (4th Cir.), cert. denied, 111
S.Ct. 511 (1990) (“departure from the lay characterization is warranted only where the intended
audience possesses ‘specialized expertise’ “). As Judge Pratt correctly observed:

In the context of computer programs, many of the familiar tests of similarity prove to be inadequate,
for they were developed historically in the context of artistic and literary, rather than utilitarian, works.

Computer Associates, 775 F.Supp. at 558 .

In making its finding on substantial similarity with respect to computer programs, we believe that the
trier of fact need not be limited by the strictures of its own lay perspective. See Dawson, 905 F.2d at
735 ; Whelan, 797 F.2d at 1233 ; Broderbund, 648 F.Supp. at 1136 (stating in dictum : “an integrated
test involving expert testimony and analytic dissection may well be the wave of the future in this
area”); Brown Bag Software, slip op. at 3743-44 (Sneed, J., concurring); see also 3 Nimmer Section
13.03 [E] [4] ; but see Brown Bag Software, slip op. at 3736-37 (applying the “ordinary reasonable
person” standard in substantial similarity test for computer programs). Rather, we leave it to the
discretion of the district court to decide to what extent, if any, expert opinion, regarding the highly
technical nature of computer programs, is warranted in a given case.<23 USPQ2d 1259>

In so holding, we do not intend to disturb the traditional role of lay observers in judging <982 F.2d
714> substantial similarity in copyright cases that involve the aesthetic arts, such as music, visual
works or literature.

In this case, Dr. Davis’ opinion was instrumental in dismantling the intricacies of computer science so
that the court could formulate and apply an appropriate rule of law. While Dr. Davis’ report and
testimony undoubtedly shed valuable light on the subject matter of the litigation, Judge Pratt remained,
in the final analysis, the trier of fact. The district court’s use of the expert’s assistance, in the context
of this case, was entirely appropriate.

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2. Evidentiary Analysis

The district court had to determine whether Altai’s OSCAR 3.5 program was substantially similar to
CA’s ADAPTER. We note that Judge Pratt’s method of analysis effectively served as a road map for
our own, with one exception – Judge Pratt filtered out the non-copyrightable aspects of OSCAR 3.5
rather than those found in ADAPTER, the allegedly infringed program. We think that our approach –
i.e., filtering out the unprotected aspects of an allegedly infringed program and then comparing the end
product to the structure of the suspect program – is preferable, and therefore believe that district courts
should proceed in this manner in future cases.

We opt for this strategy because, in some cases, the defendant’s program structure might contain
protectable expression and/or other elements that are not found in the plaintiff’s program. Since it is
extraneous to the allegedly copied work, this material would have no bearing on any potential
substantial similarity between the two programs. Thus, its filtration would be wasteful and
unnecessarily time consuming. Furthermore, by focusing the analysis on the infringing rather than on
the infringed material, a court may mistakenly place too little emphasis on a quantitatively small
misappropriation which is, in reality, a qualitatively vital aspect of the plaintiff’s protectable
expression.

The fact that the district court’s analysis proceeded in the reverse order, however, had no material
impact on the outcome of this case. Since Judge Pratt determined that OSCAR effectively contained
no protectable expression whatsoever, the most serious charge that can be levelled against him is that
he was overly thorough in his examination.

The district court took the first step in the analysis set forth in this opinion when it separated the
program by levels of abstraction. The district court stated:

As applied to computer software programs, this abstractions test would progress in order of
“increasing generality” from object code, to source code, to parameter lists, to services required, to
general outline. In discussing the particular similarities, therefore, we shall focus on these levels.

Computer Associates, 775 F. Supp. at 560 . While the facts of a different case might require that a
district court draw a more particularized blueprint of a program’s overall structure, this description is a
workable one for the case at hand.

Moving to the district court’s evaluation of OSCAR 3.5’s structural components, we agree with Judge
Pratt’s systematic exclusion of non-protectable expression. With respect to code, the district court
observed that after the rewrite of OSCAR 3.4 to OSCAR 3.5, “there remained virtually no lines of
code that were identical to ADAPTER.” Id. at 561. Accordingly, the court found that the code “present
[ed] no similarity at all.” Id. at 562.

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Next, Judge Pratt addressed the issue of similarity between the two programs’ parameter lists and
macros. He concluded that, viewing the conflicting evidence most favorably to CA, it demonstrated
that “only a few of the lists and macros were similar to protected elements in ADAPTER; the others
were either in the public domain or dictated by the functional demands of the program.” Id. As
discussed above, functional elements and elements taken from the public domain do not qualify for
copyright protection. With respect to the few remaining parameter lists and macros, the district court
could reasonably conclude that they did not warrant a <982 F.2d 715> finding of infringement given
their relative contribution to the overall program. See Warner Bros., Inc. v. American Broadcasting
Cos., Inc., 720 F.2d 231, 242 [222 USPQ 101] (2d Cir. 1983) (discussing de minimis exception which
allows for literal copying of a small and usually insignificant portion of the plaintiff’s work); 3
Nimmer Section 13.03 [F] [5], at 13-74 . In any event, the district court reasonably found that, for lack
of persuasive evidence, CA failed to meet its burden of proof on whether the macros and parameter
lists at issue were substantially similar. See Computer Associates, 775 F. Supp. at 562 .

The district court also found that the overlap exhibited between the list of services required for both
ADAPTER and OSCAR 3.5 was “determinated by the demands of the operating system and of the
applications program to which it [was] to be linked <23 USPQ2d 1260> through ADAPTER or
OSCAR.” Id . In other words, this aspect of the program’s structure was dictated by the nature of other
programs with which it was designed to interact and, thus, is not protected by copyright.

Finally, in his infringement analysis, Judge Pratt accorded no weight to the similarities between the
two programs’ organizational charts, “because [the charts were] so simple and obvious to anyone
exposed to the operation of the program [s].” Id . CA argues that the district court’s action in this
regard “is not consistent with copyright law” – that “obvious” expression is protected, and that the
district court erroneously failed to realize this. However, to say that elements of a work are “obvious,”
in the manner in which the district court used the word, is to say that they “follow naturally from the
work’s theme rather than from the author’s creativity.” 3 Nimmer Section 13.03 [F] [3], at 13-65 .
This is but one formulation of the scenes a faire doctrine, which we have already endorsed as a means
of weeding out unprotectable expression.

CA argues, at some length, that many of the district court’s factual conclusions regarding the creative
nature of its program’s components are simply wrong. Of course, we are limited in our review of
factual findings to setting aside only those that we determine are clearly erroneous. See Fed. R. Civ.P.
52 . Upon a thorough review of the voluminous record in this case, which is comprised of conflicting
testimony and other highly technical evidence, we discern no error on the part of Judge Pratt, let alone
clear error.

Since we accept Judge Pratt’s factual conclusions and the results of his legal analysis, we affirm his
dismissal of CA’s copyright infringement claim based upon OSCAR 3.5. We emphasize that, like all
copyright infringement cases, those that involve computer programs are highly fact specific. The
amount of protection due structural elements, in any given case, will vary according to the protectable
expression found to exist within the program at issue.

II. Trade Secret Preemption

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As part of its claim for relief, CA alleged that Altai had misappropriated the trade secrets contained in
its ADAPTER program. Prior to trial, while the proceedings were still before Judge Mishler, Altai
moved for summary judgment on CA’s trade secret misappropriation claim. Altai argued that section
301 of the Copyright Act had preempted CA’s state law cause of action as it applied in this case. Judge
Mishler denied Altai’s motion, reasoning that “[t]he elements of the tort of appropriation of trade
secrets through the breach of contract or confidence by an employee are not the same as the elements
of a claim of copyright infringement.” Computer Associates, 775 F. Supp. at 563. [Note: The Second
Circuit, upon rehearing, replaced the text reported in 23 USPQ2d 1241 with the text below.]

The parties addressed the preemption issue again, both in pre-and post-trial briefs. Judge Pratt then
reconsidered and reversed Judge Mishler’s earlier ruling. The district court concluded that CA’s trade
secret claims were preempted because “CA – which is the master of its own case – has pleaded and
proven facts which establish that one act constituted both copyright infringement and misappropriation
of trade secrets [namely, the] copying <982 F.2d 716> of ADAPTER into OSCAR 3.4 . . .” Computer
Assocs., 775 F. Supp. at 565.

In our original opinion, Computer Assocs. Int’l, Inc. v. Altai, Inc., 1992 U.S. App. LEXIS 14305 (2d
Cir. 1992), we affirmed Judge Pratt’s decision. CA petitioned for rehearing on this issue. In its petition
for rehearing, CA brought to our attention portions of the record below that were not included in the
appendix on appeal. CA argued that these documents, along with Judge Mishler’s disposition of
Altai’s motion to dismiss and for summary judgment, established that CA advanced non-preempted
trade secret misappropriation claims before both Judge Mishler and Judge Pratt. CA further contended
that Judge Pratt failed to consider its theory that Altai was liable for wrongful acquisition of CA’s
trade secrets through Arney. Upon reconsideration, we have granted the petition for rehearing,
withdrawn our initial opinion, and conclude in this amended opinion that the district court’s
preemption ruling on CA’s trade secret claims should be vacated. We accordingly vacate the judgment
of the district court on this point and remand CA’s trade secret claims for a determination on the
merits.

A. General Law of Copyright Preemption Regarding Trade Secrets and Computer Programs

Congress carefully designed the statutory framework of federal copyright preemption. In order to
insure that the enforcement of these rights remains solely within the federal domain, section 301(a) of
the Copyright Act expressly preempts

all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope
of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of
expression and come within the subject matter of copyright as specified by sections 102 and 103 . . .

17 U.S.C. § 301(a). This sweeping displacement of state law is, however, limited by section 301(b),
which provides, in relevant part, that

nothing in this title annuls or limits any rights or remedies under the common law or statutes of any
State with respect to . . . activities violating legal or equitable rights that are not equivalent to any of
the exclusive rights within the general scope of copyright as specified by section 106. . . .

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17 U.S.C. § 301(b)(3). Section 106, in turn, affords a copyright owner the exclusive right to: (1)
reproduce the copyrighted work; (2) prepare derivative works; (3) distribute copies of the work by sale
or otherwise; and, with respect to certain artistic works, (4) perform the work publicly; and (5) display
the work publicly. See 17 U.S.C. § 106(1)-(5).

Section 301 thus preempts only those state law rights that “may be abridged by an act which, in and of
itself, would infringe one of the exclusive rights” provided by federal copyright law. See Harper &
Row, Publishers, Inc. v. Nation Enters., 723 F.2d 195, 200 (2d Cir. 1983), rev’d on other grounds, 471
U.S. 539, 85 L. Ed. 2d 588, 105 S. Ct. 2218 (1985). But if an “extra element” is “required instead of or
in addition to the acts of reproduction, performance, distribution or display, in order to constitute a
state-created cause of action, then the right does not lie ‘within the general scope of copyright,’ and
there is no preemption.” 1 Nimmer § 1.01[B], at 1-14-15; see also Harper & Row, Publishers, Inc.,
723 F.2d at 200 (where state law right “is predicated upon an act incorporating elements beyond mere
reproduction or the like, the [federal and state] rights are not equivalent” and there is no preemption).

A state law claim is not preempted if the “extra element” changes the “nature of the action so that it is
qualitatively different from a copyright infringement claim.” Mayer v. Josiah Wedgwood & Sons,
Ltd., 601 F. Supp. 1523, 1535 (S.D.N.Y. 1985); see Harper & Row, Publishers, Inc., 723 F.2d at 201.
To determine whether a claim meets this standard, we must determine “what plaintiff seeks to protect,
the theories in which the matter is thought to be protected and the rights sought to be enforced.” 1
Roger M. Milgrim, Milgrim on Trade Secrets <982 F.2d 717> § 2.06A[3], at 2-150 (1992) (hereinafter
“Milgrim”). An action will not be saved from preemption by elements such as awareness or intent,
which alter “the action’s scope but not its nature . . .” Mayer, 601 F. Supp. at 1535.

Following this “extra element” test, we have held that unfair competition and misappropriation claims
grounded solely in the copying of a plaintiff’s protected expression are preempted by section 301. See,
e.g., Walker v. Time Life Films, Inc., 784 F.2d 44, 53 (2d Cir.), cert. denied, 476 U.S. 1159, 90 L. Ed.
2d 721, 106 S. Ct. 2278 (1986); Warner Bros. Inc. v. American Broadcasting Cos., 720 F.2d 231, 247
(2d Cir. 1983);Durham Indus., Inc. v. Tomy Corp., 630 F.2d 905, 919 & n. 15 (2d Cir. 1980). We also
have held to be preempted a tortious interference with contract claim grounded in the impairment of a
plaintiff’s right under the Copyright Act to publish derivative works. See Harper & Row, Publishers,
Inc., 723 F.2d at 201.

However, many state law rights that can arise in connection with instances of copyright infringement
satisfy the extra element test, and thus are not preempted by section 301. These include unfair
competition claims based upon breach of confidential relationship, breach of fiduciary duty and trade
secrets. Balboa Ins. Co. v. Trans Global Equities, 218 Cal. App. 3d 1327, 1339-53, 267 Cal. Rptr. 787,
793-803 (Ct. App. 3rd Dist.), cert. denied, 111 S. Ct. 347, 112 L. Ed. 2d 311 (1990).

Trade secret protection, the branch of unfair competition law at issue in this case, remains a “uniquely
valuable” weapon in the defensive arsenal of computer programmers. See 1 Milgrim § 2.06A[5][c], at
2-172.4. Precisely because trade secret doctrine protects the discovery of ideas, processes, and systems
which are explicitly precluded from coverage under copyright law, courts and commentators alike
consider it a necessary and integral part of the intellectual property protection extended to computer
programs. See id.; Integrated Cash Management Servs., Inc. v. Digital Transactions, Inc., 920 F.2d
171, 173 (2d Cir. 1990) (while plaintiff withdrew copyright infringement claim for misappropriation
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of computer program, relief for theft of trade secret sustained); Healthcare Affiliated Servs., Inc. v.
Lippany, 701 F. Supp. 1142, 1152-55 (W.D.Pa. 1988) (finding likelihood of success on trade secret
claim, but not copyright claim); Q-Co Indus., Inc., 625 F. Supp. at 616-18 (finding likelihood of
success on trade secret claim, but no merit to copyright claim); Kretschmer, at 847-49.

The legislative history of section 301 states that “the evolving common law rights of . . . trade secrets .
. . would remain unaffected as long as the causes of action contain elements, such as . . . a breach of
trust or confidentiality, that are different in kind from copyright infringement.” House Report, at 5748.
Congress did not consider the term “misappropriation” to be “necessarily synonymous with copyright
infringement,” or to serve as the talisman of preemption. Id.

Trade secret claims often are grounded upon a defendant’s breach of a duty of trust or confidence to
the plaintiff through improper disclosure of confidential material. See, e.g., Mercer v. C.A. Roberts
Co., 570 F.2d 1232, 1238 (5th Cir. 1978); Brignoli v. Balch Hardy and Scheinman, Inc., 645 F. Supp.
1201, 1205 (S.D.N.Y. 1986). The defendant’s breach of duty is the gravamen of such trade secret
claims, and supplies the “extra element” that qualitatively distinguishes such trade secret causes of
action from claims for copyright infringement that are based solely upon copying. See, e.g.,
Warrington Assoc., Inc. v. Real-Time Eng’g Sys., Inc., 522 F. Supp. 367, 369 (N.D. Ill. 1981);
Brignoli, 645 F. Supp. at 1205; see also generally Balboa Ins. Co., 218 Cal. App. 3d at 1346-50, 267
Cal. Rptr. at 798-802 (reviewing cases).

B. Preemption in this Case

The district court stated that:

Were CA’s [trade secret] allegations premised on a theory of illegal acquisition of a trade secret, a
charge that might have been alleged against Arney, who is not a defendant in this case, the <982 F.2d
718> preemption analysis might be different, for there seems to be no corresponding right guaranteed
to copyright owners by § 106 of the copyright act.

Computer Assocs., 775 F. Supp. at 565. However, the court concluded that CA’s trade secret claims
were not grounded in a theory that Altai violated a duty of confidentiality to CA. Rather, Judge Pratt
stated that CA proceeded against Altai solely “on a theory that the misappropriation took place by
Altai’s use of ADAPTER – the same theory as the copyright infringement count.” Id. The district
court reasoned that “the right to be free from trade secret misappropriation through ‘use’, and the right
to exclusive reproduction and distribution of a copyrighted work are not distinguishable.” Id. Because
he concluded that there was no qualitative difference between the elements of CA’s state law trade
secret claims and a claim for federal copyright infringement, Judge Pratt ruled that CA’s trade secret
claims were preempted by section 301.

We agree with CA that the district court failed to address fully the factual and theoretical bases of
CA’s trade secret claims. The district court relied upon the fact that Arney – not Altai – allegedly
breached a duty to CA of confidentiality by stealing secrets from CA and incorporating those secrets
into OSCAR 3.4. However, under a wrongful acquisition theory based on Restatement (First) of Torts

65
§ 757 (1939), Williams and Altai may be liable for violating CA’s right of confidentiality. Section 757
states in relevant part:

One who discloses or uses another’s trade secret, without a privilege to do so, is liable to another if . . .
(c) he learned the secret from a third person with notice of the fact that it was a secret and that the third
person discovered it by improper means or that the third person’s disclosure of it was otherwise a
breach of his duty to the other . . .

Actual notice is not required for such a third party acquisition claim; constructive notice is sufficient.
A defendant is on constructive notice when, “from the information which he has, a reasonable man
would infer [a breach of confidence], or if, under the circumstances, a reasonable man would be put on
inquiry and an inquiry pursued with reasonable intelligence and diligence would disclose the
[breach].” Id., comment 1; Metallurgical Indus., Inc. v. Fourtek, Inc., 790 F.2d 1195, 1204 (5th Cir.
1986); Vantage Point, Inc. v. Parker Bros., Inc., 529 F. Supp. 1204, 1210 n.2 (E.D.N.Y. 1981), aff’d,
697 F.2d 301 (2d Cir. 1982); see also Rohm and Haas Co. v. Adco Chem. Co., 689 F.2d 424, 431 (3rd
Cir. 1982) (“Defendants never asked where the ‘Harvey process’ had come from. Defendants therefore
were charged ‘with whatever knowledge such inquiry would have led to.’“) (citation omitted);
Colgate-Palmolive Co. v. Carter Prods., Inc., 230 F.2d 855, 864 (4th Cir.) (per curiam) (defendant
“‘must have known by the exercise of fair business principles’“ that its employee’s work was covered
by an agreement not to disclose) (citation omitted), cert. denied, 352 U.S. 843, 1 L. Ed. 2d 59, 77 S.
Ct. 43 (1956); 1 Milgrim § 5.04[2][c].

We agree with the district court that New Jersey’s governing governmental interest choice of law
analysis directs the application of Texas law to CA’s trade secret misappropriation claim. See
Computer Assocs., 775 F. Supp. at 566. Texas law recognizes trade secret misappropriation claims
grounded in the reasoning of Restatement section 757(c), see, e.g., Fourtek, 790 F.2d at 1204, and the
facts alleged by CA may well support such a claim.

It is undisputed that, when Arney stole the ADAPTER code and incorporated it into his design of
OSCAR 3.4, he breached his confidentiality agreement with CA. The district court noted that while
such action might constitute a valid claim against Arney, CA is the named defendant in this lawsuit.
Additionally, the district court found, as a matter of fact, that “no one at Altai, other than Arney, knew
that Arney had the ADAPTER code . . .” Computer Assocs., 775 F. Supp. at 554. However, the district
court did not consider fully Altai’s potential liability for improper trade secret acquisition. It did not
consider the question of Altai’s trade secret liability <982 F.2d 719> in connection with OSCAR 3.4
under a constructive notice theory, or Altai’s potential liability under an actual notice theory in
connection with OSCAR 3.5.

The district court found that, prior to CA’s bringing suit, Altai was not on actual notice of Arney’s
theft of trade secrets, and incorporation of those secrets into OSCAR 3.4. However, by virtue of
Williams’ close relationship with Arney, Williams’ general familiarity with CA’s programs (having
once been employed by CA himself), and the fact that Arney used the ADAPTER program in an office
at Altai adjacent to Williams during a period in which he had frequent contact with Williams regarding
the OSCAR/VSE project, Williams (and through him Altai) may well have been on constructive
notice of Arney’s breach of his duty of confidentiality toward CA. The district court did not address
whether Altai was on constructive notice, thereby placing it under a duty of inquiry; rather the court’s
finding that only Arney affirmatively knew of the theft of CA’s trade secrets and incorporation of

66
those secrets into OSCAR 3.4 simply disposed of the issue of actual notice in connection with the
creation of OSCAR 3.4. CA’s claim of liability based on constructive notice, never considered in the
district court’s opinion, must be determined on remand.

With respect to actual notice, it is undisputed that CA’s first complaint, filed in August 1988, informed
Altai of Arney’s trade secret violations in connection with the creation of OSCAR 3.4. The first
complaint alleged that Arney assisted in the development of ADAPTER, thereby obtaining knowledge
of CA’s related trade secrets. It also alleged that Altai misappropriated CA’s trade secrets by
incorporating them into ZEKE.

In response to CA’s complaint, Altai rewrote OSCAR 3.4, creating OSCAR 3.5. While we agree with
the district court that OSCAR 3.5 did not contain any expression protected by copyright, it may
nevertheless still have embodied many of CA’s trade secrets that Arney brought with him to Altai.
Since Altai’s rewrite was conducted with full knowledge of Arney’s prior misappropriation, in breach
of his duty of confidentiality, it follows that OSCAR 3.5 was created with actual knowledge of trade
secret violations. Thus, with regard to OSCAR 3.5, CA has a viable trade secret claim against Altai
that must be considered by the district court on remand. This claim is grounded in Altai’s alleged use
of CA’s trade secrets in the creation of OSCAR 3.5, while on actual notice of Arney’s theft of trade
secrets and incorporation of those secrets into OSCAR 3.4. The district court correctly stated that a
state law claim based solely upon Altai’s “use”, by copying, of ADAPTER’s non-literal elements
could not satisfy the governing “extra element” test, and would be preempted by section 301.
However, where the use of copyrighted expression is simultaneously the violation of a duty of
confidentiality established by state law, that extra element renders the state right qualitatively distinct
from the federal right, thereby foreclosing preemption under section 301.

We are also convinced that CA adequately pled a wrongful acquisition claim before Judge Mishler and
Judge Pratt. In ruling that CA failed to properly plead a non-preempted claim, Judge Pratt relied
heavily upon two allegations in CA’s amended complaint. Id. at 563-64. They read as follows:

P 57. By reason of the facts stated in paragraph 39 and by copying from CA-SCHEDULER into
ZEKE, ZACK and ZEBB the various elements stated in paragraphs 39-51, 54 and 55, defendant Altai
has infringed [CA’s] copyright in CA-SCHEDULER.

P 73. Defendant’s incorporation into its ZEKE, ZACK and ZEBB programs of the various elements
contained in the ADAPTER component of [CA’s] CA-SCHEDULER program as set out in paragraphs
39-51, 54 and 55 constitutes the willful misappropriation of the proprietary property and trade secrets
of plaintiff [CA].

<982 F.2d 720> From these pleadings, Judge Pratt concluded that the very same act, i.e., Altai’s
copying of various elements of CA’s program, was the basis for both CA’s copyright infringement and
trade secret claims. See id. at 564. We agree with Judge Pratt that CA’s allegations are somewhat
inartfully stated. However, when taken together, the terms “incorporation” and “misappropriation” in
paragraph 73 above suggest to us an act of a qualitatively different nature than the infringement pled
in paragraph 57. House Report, at 5748 (“‘misappropriation’ is not necessarily synonymous with
copyright infringement”).

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In support of our reading, we note that paragraphs 65-75 of CA’s amended complaint alleged facts that
reasonably comprise the elements of a wrongful acquisition of trade secrets claim. CA averred that,
while he was employed at CA, Arney learned CA’s trade secrets regarding the ADAPTER program.
CA further alleged that after Arney went to work for Altai, Altai misappropriated those trade secrets
by incorporating CA’s ADAPTER program into its own product. Finally, CA claimed that the trade
secret misappropriation was carried out “in a willful, wanton and reckless manner in disregard of
[CA’s] rights.” In other words, Altai could have reasonably inferred from CA’s allegations that CA’s
claim, in part, rested on Williams’ “wanton and reckless” behavior in the face of constructive notice.

In addition, while responding to Altai’s preemption argument in its motion to dismiss and for
summary judgment, CA specifically argued in its brief to Judge Mishler that “it can easily be inferred
that Mr. Arney was hired by Altai to misappropriate [CA’s] confidential source code for Altai’s
benefit.” At oral argument, CA further contended that:

The circumstances of Mr. Arney’s hiring suggested that Mr. Williams wanted more than Mr. Arney’s
ability and in fact got exactly what he wanted. And that is Computer Associates’ confidential Adapter
technology.

[Arney testified that he] surreptitiously took that code home from Computer Associates after giving
notice he was going to go to work for Altai, and after being hired by Mr. Williams to come to Altai
and reconstruct Zeke, to work on the MVS operating system.

In the aftermath of Judge Mishler’s ruling in its favor on Altai’s motion to dismiss and for summary
judgment, CA reasonably believed that it had sufficiently alleged a non-preempted claim. And, in light
of CA’s arguments and Judge Mishler’s ruling, Altai clearly was on notice that the amended complaint
placed non-preempted trade secret claims in play. See 5 Charles A. Wright & Arthur R. Miller,
Federal Practice and Procedure § 1215, at 136-38 (2d ed. 1990) (federal pleading standards require
plaintiff to provide defendant with fair notice of claim and grounds it rests on).

Accordingly, we vacate the judgment of the district court and remand for reconsideration of those
aspects of CA’s trade secret claims related to Altai’s alleged constructive notice of Arney’s theft of
CA’s trade secrets and incorporation of those secrets into OSCAR 3.4. We note, however, that CA
may be unable to recover damages for its trade secrets which are embodied in OSCAR 3.4 since Altai
has conceded copyright liability and damages for its incorporation of ADAPTER into OSCAR 3.4. CA
may not obtain a double recovery where the damages for copyright infringement and trade secret
misappropriation are coextensive.

However, additional trade secret damages may well flow from CA’s creation of OSCAR 3.5. Judge
Pratt correctly acknowledged that “if CA’s claim of misappropriation of trade secrets did not fail on
preemption grounds, it would be necessary to examine in some detail the conflicting claims and
evidence relating to the process by which Altai rewrote OSCAR and ultimately produced version 3.5.”
Computer Assocs., 775 F. Supp. at 554-55; see also 1 Milgrim § 5.04[2][d], at 5-148 (“after notice, the
[innocent] second user should cease the use, and if he does not he can be enjoined and held liable for
damages arising from such use subsequent to notice”). Since we hold that CA’s trade secret claims

68
<982 F.2d 721> are not preempted, and that, in writing OSCAR 3.5, Altai had actual notice of Arney’s
earlier trade secret violations, we vacate and remand for such further inquiry anticipated by the district
court. If the district court finds that CA was injured by Altai’s unlawful use of CA’s trade secrets in
creating OSCAR 3.5, CA is entitled to an award of damages for trade secret misappropriation, as well
as consideration by the district court of CA’s request for injunctive relief on its trade secret claim.

Conclusion

In adopting the above three step analysis for substantial similarity between the non-literal elements of
computer programs, we seek to insure two things: (1) that programmers may receive appropriate
copyright protection for innovative utilitarian works containing expression; and (2) that non-
protectable technical expression remains in the public domain for others to use freely as building
blocks in their own work. At first blush, it may seem counter-intuitive that someone who has benefited
to some degree from illicitly obtained material can emerge from an infringement suit relatively
unscathed. However, so long as the appropriated material consists of non-protectable expression, “this
result is neither unfair nor unfortunate. It is the means by which copyright advances the progress of
science and art.” Feist, 111 S. Ct. at 1290.

Furthermore, we underscore that so long as trade secret law is employed in a manner that does not
encroach upon the exclusive domain of the Copyright Act, it is an appropriate means by which to
secure compensation for software espionage.

Accordingly, we affirm the judgment of the district court in part; vacate in part; and remand for further
proceedings. The parties shall bear their own costs of appeal, including the petition for rehearing.

Altimari, Circuit Judge, Concurring in part and Dissenting in part:

Because I believe that our original opinion, see Computer Assoc. Int’l v. Altai, 1992 U.S. App. LEXIS
14305, 1992 WL 139364 (2d Cir. 1992), is a reasoned analysis of the issues presented, I adhere to the
original determination and therefore concur in Part 1 and respectfully dissent from Part 2 of the
amended opinion.

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And finally there is the Borland case as a fourth case study. That case dealt with the command
hierarchy for a computer spreadsheet program and considered network effects in determining the
functional, unprotectable nature of the hierarchy.

Case Study 4: Lotus Development Corp. v. Borland International Inc- the

command hierarchy for a computer spreadsheet program and considered
network effects in determining the functional, unprotectable nature of the
hierarchy

U.S. Court of Appeals, First Circuit

March 9, 1995

49 F.3d 807, 34 USPQ2d 1014

Stahl, J.

This appeal requires us to decide whether a computer menu command hierarchy is copyrightable
subject matter. In particular, we must decide whether, as the district court <34 USPQ2d 1016> held,
plaintiff-appellee Lotus Development Corporation’s copyright in Lotus 1-2-3, a computer spreadsheet
program, was infringed by defendant-appellant Borland International, Inc., when Borland copied the
Lotus 1-2- 3 menu command hierarchy into its Quattro and Quattro Pro computer spreadsheet
programs. See Lotus Dev. Corp. v. Borland Int’l, Inc., 788 F. Supp. 78 [22 USPQ2d 1641] (D. Mass.
1992) (“Borland I”); Lotus Dev. Corp. v. Borland Int’l, Inc., 799 F. Supp. 203 (D. Mass. 1992)
(“Borland II”); Lotus Dev. Corp. v. Borland Int’l, Inc., 831 F. Supp. 202 [30 USPQ2d 1081] (D. Mass.
1993) (“Borland III”); Lotus Dev. Corp. v. Borland Int’l, Inc., 831 F. Supp. 223 [30 USPQ2d 1081]
(D. Mass. 1993) (“Borland IV”).

I. Background

Lotus 1-2-3 is a spreadsheet program that enables users to perform accounting functions electronically
on a computer. Users manipulate and control the program via a series of menu commands, such as
“Copy,” “Print,” and “Quit.” Users choose commands either by highlighting them on the screen or by
typing their first letter. In all, Lotus 1-2-3 has 469 commands arranged into more than 50 menus and
submenus.

Lotus 1-2-3,like many computer programs, allows users to write what are called “macros.” By writing
a macro, a user can designate a series of command choices with a single macro keystroke. Then, to
execute that series of commands in multiple parts of the spreadsheet, rather than typing the whole

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series each time, the user only needs to type the single pre- programmed macro keystroke, causing the
program to recall and perform the designated series of commands automatically. Thus, Lotus 1-2-3
macros shorten the time needed to set up and operate the program.

Borland released its first Quattro program to the public in 1987, after Borland’s engineers had labored
over its development for nearly three years. Borland’s objective was to develop a spreadsheet program
far superior to existing programs, including Lotus 1-2-3. In Borland’s words, “[f]rom the time of its
initial release . . . Quattro included enormous innovations over competing spreadsheet products.”

The district court found, and Borland does not now contest, that Borland included in its Quattro and
Quattro Pro version 1.0 programs “a virtually identical copy of the entire 1-2-3 menu tree.” Borland
III, 831 F. Supp. at 212 (emphasis in original). In so doing, Borland did not copy any of Lotus’s
underlying computer code; it copied only the words and structure of Lotus’s menu command
hierarchy. Borland included the Lotus menu command hierarchy in its programs to make them
compatible with Lotus1-2-3 so that spreadsheet users who were already familiar with Lotus 1-2-3
would be able to switch to the Borland programs without having to learn new commands or rewrite
their Lotus macros.

In its Quattro and Quattro Pro version 1.0 programs, Borland achieved compatibility with Lotus 1-2-3
by offering its users an alternate user interface, the “Lotus Emulation Interface.” By activating the
Emulation Interface, Borland users would see the Lotus menu commands on their screens and could
interact with Quattro or Quattro Pro as if using Lotus 1- 2-3, albeit with a slightly different looking
screen and with many Borland options not available on Lotus 1-2-3. In effect, Borland allowed users
to choose how they wanted to communicate with Borland’s spreadsheet programs: either by using
menu commands designed by Borland, or by using the commands and command structure used in
Lotus 1-2-3 augmented by Borland- added commands.

Lotus filed this action against Borland in the District of Massachusetts on July 2, 1990, four days after
a district court held that the Lotus 1-2-3 “menu structure, taken as a whole – including the choice of
command terms [and] the structure and order of those terms,” was protected expression covered by
Lotus’s copyrights. Lotus Dev. Corp. v. Paperback Software Int’l, 740 F. Supp. 37, 68, 70 [15
USPQ2d 1577] (D. Mass. 1990) (“Paperback”).1 Three days earlier, on the morning after the
Paperback decision, Borland had filed a declaratory judgment action against Lotus in the Northern
District of California, seeking a declaration of non-infringement. On September 10, 1990, the district
court in California dismissed Borland’s declaratory judgment action in favor of this action.

Lotus and Borland filed cross motions for summary judgment; the district court denied both motions
on March 20, 1992, concluding that “neither party’s motion is supported by the record.” Borland I,
788 F. Supp. at 80 . The district court invited the parties to file renewed summary judgment motions
that would “focus their arguments more precisely” in light of rulings it had made in <34 USPQ2d
1017> conjunction with its denial of their summary judgment motions. Id. at 82 . Both parties filed
renewed motions for summary judgment on April 24, 1992.In its motion, Borland contended that the
Lotus 1-2-3 menus were not copyrightable as a matter of law and that no reasonable trier of fact could
find that the similarity between its products and Lotus 1-2-3 was sufficient to sustain a determination
of infringement. Lotus contended in its motion that Borland had copied Lotus 1-2-3’s entire user
interface and had thereby infringed Lotus’s copyrights.

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On July 31, 1992,the district court denied Borland’s motion and granted Lotus’s motion in part. The
district court ruled that the Lotus menu command hierarchy was copyrightable expression because

[a] very satisfactory spreadsheet menu tree can be constructed using different commands and a
different command structure from those of Lotus 1-2-3.In fact, Borland has constructed just such an
alternate tree for use in Quattro Pro’s native mode. Even if one holds the arrangement of menu
commands constant, it is possible to generate literally millions of satisfactory menu trees by varying
the <49 F.3d 811> menu commands employed.

Borland II, 799 F. Supp. at 217 . The district court demonstrated this by offering alternate command
words for the ten commands that appear in Lotus’s main menu. Id. . For example, the district court
stated that “[t]he ‘Quit’ command could be named ‘Exit’ without any other modifications,” and that
“[t]he ‘Copy’ command could be called ‘Clone,’ ‘Ditto,’ ‘Duplicate,’ ‘Imitate,’ ‘Mimic,’ ‘Replicate,’
and ‘Reproduce,’ among others.” Id.. Because so many variations were possible, the district court
concluded that the Lotus developers’ choice and arrangement of command terms, reflected in the
Lotus menu command hierarchy, constituted copyrightable expression.

In granting partial summary judgment to Lotus, the district court held that Borland had infringed
Lotus’s copyright in Lotus 1-2-3:

[A]s a matter of law, Borland’s Quattro products infringe the Lotus 1-2-3 copyright because of (1) the
extent of copying of the “menu commands” and “menu structure” that is not genuinelydisputed in this
case, (2) the extent to which the copied elements of the “menu commands” and “menu structure”
contain expressive aspects separable from the functions of the “menu commands” and “menu
structure,” and (3) the scope of those copied expressive aspects as an integral part of Lotus 1-2-3.

Borland II, 799 F. Supp. at 223 (emphasis in original). The court nevertheless concluded that while the
Quattro and Quattro Pro programs infringed Lotus’s copyright, Borland had not copied the entire
Lotus 1-2-3 user interface, as Lotus had contended. Accordingly, the court concluded that a jury trial
was necessary to determine the scope of Borland’s infringement, including whether Borland copied
the long prompts2 of Lotus 1- 2-3, whether the long prompts contained expressive elements, and to
what extent, if any, functional constraints limited the number of possible ways that the Lotus menu
command hierarchy could have been arranged at the time of its creation. See Borland III, 831 F. Supp.
at 207 .Additionally, the district court granted Lotus summary judgment on Borland’s affirmative
defense of waiver, but not on its affirmative defenses of laches and estoppel. Borland II, 799 F. Supp.
at 222-23 .

Immediately following the district court’s summary judgment decision, Borland removed the Lotus
Emulation Interface from its products. Thereafter, Borland’s spreadsheet programs no longer
displayed the Lotus 1-2-3 menus to Borland users, and as a result Borland users could no longer
communicate with Borland’s programs as if they were using a more sophisticated version of Lotus 1-
2-3. Nonetheless, Borland’s programs continued to be partially compatible with Lotus 1-2-3,for
Borland retained what it called the “Key Reader” in its Quattro Pro programs. Once turned on, the Key
Reader allowed Borland’s programs to understand <34 USPQ2d 1018> and perform some Lotus 1-2-3
macros.3 With the Key Reader on, the Borland programs used Quattro Pro menus for display,
interaction, and macro execution, except when they encountered a slash (“/”) key in a macro (the

72
starting key for any Lotus 1-2-3 <49 F.3d 812> macro), in which case they interpreted the macro as
having been written for Lotus 1-2-3. Accordingly, people who wrote or purchased macros to shorten
the time needed to perform an operation in Lotus 1-2-3 could still use those macros in Borland’s
programs.4 The district court permitted Lotus to file a supplemental complaint alleging that the Key
Reader infringed its copyright.

The parties agreed to try the remaining liability issues without a jury. The district court held two trials,
the Phase I trial covering all remaining issues raised in the original complaint (relating to the
Emulation Interface) and the Phase II trial covering all issues raised in the supplemental complaint
(relating to the Key Reader). At the Phase I trial, there were no live witnesses, although considerable
testimony was presented in the form of affidavits and deposition excerpts. The district court ruled
upon evidentiary objections counsel interposed. At the Phase II trial, there were two live witnesses,
each of whom demonstrated the programs for the district court.

After the close of the Phase I trial, the district court permitted Borland to amend its answer to include
the affirmative defense of “fair use.” Because Borland had presented all of the evidence supporting its
fair-use defense during the Phase I trial, but Lotus had not presented any evidence on fair use (as the
defense had not been raised before the conclusion of the Phase I trial), the district court considered
Lotus’s motion for judgment on partial findings of fact. SeeFed. R.Civ. P. 52(c). The district court
held that Borland had failed to show that its use of the Lotus 1-2-3 menu command hierarchy in its
Emulation Interface was a fair use. See Borland III, 831 F. Supp. at 208 .

In its Phase I-trial decision, the district court found that “each of the Borland emulation interfaces
contains a virtually identical copy of the 1-2-3 menu tree and that the 1-2-3 menu tree is capable of a
wide variety of expression.” Borland III, 831 F. Supp. at 218 . The district court also rejected
Borland’s affirmative defenses of laches and estoppel. Id.at 218-23 .

In its Phase II-trial decision, the district court found that Borland’s Key Reader file included “a
virtually identical copy of the Lotus menu tree structure, but represented in a different form and with
first letters of menu command names in place of the full menu command names.” Borland IV, 831 F.
Supp. at 228 . In other words, Borland’s programs no longer included the Lotus command terms, but
only their first letters. The district court held that “the Lotus menu structure, organization, and first
letters of the command names . . . constitute part of the protectable expression found in [Lotus 1-2-3].”
Id. at 233 . Accordingly, the district court held that with its Key Reader, Borland had infringed Lotus’s
copyright. Id.at 245 . The district court also rejected Borland’s affirmative defenses of waiver,
laches,estoppel, and fair use. Id.at 235-45 . The district court then entered a permanent injunction
against Borland, id. at 245 , from which Borland appeals.

This appeal concerns only Borland’s copying of the Lotus menu command hierarchy into its Quattro
programs and Borland’s affirmative defenses to such copying. Lotus has not cross-appealed; in other
words, Lotus does not contend on appeal that the district court erred in finding that Borland had not
copied other elements of Lotus 1-2-3, such as its screen displays.

II. Discussion

73
On appeal, Borland does not dispute that it factually copied the words and arrangement of the Lotus
menu command hierarchy. Rather, Borland argues that it “lawfully copied the unprotectable menus of
Lotus 1-2-3.” Borland contends that the Lotus menu command hierarchy is not copyrightable because
it is a system, method of operation, process, or procedure foreclosed from protection by 17 U.S.C.
Section 102(b). Borland also raises a number of affirmative defenses. <49 F.3d 813>

A. Copyright Infringement Generally

To establish copyright infringement, a plaintiff must prove “(1) ownership of a valid copyright, and
(2) copying of constituent elements of the work that are original.” Feist Publications, Inc. v. Rural Tel.
Serv.Co., 499 U.S. 340, 361 [18 USPQ2d 1275] <34 USPQ2d 1019> (1991); see also Data Gen. Corp.
v. Grumman Sys. Support Corp., 36 F.3d 1147, 1160 n.19 [32 USPQ2d 1385] (1st Cir. 1994);
Concrete Mach. Co. v. Classic Lawn Ornaments, Inc., 843 F.2d 600, 605 [6 USPQ2d 1357] (1st Cir.
1988). To show ownership of a valid copyright and therefore satisfy Feist’s first prong, a plaintiff must
prove that the work as a whole is original and that the plaintiff complied with applicable statutory
formalities. See Engineering Dynamics, Inc. v. Structural Software, Inc., 26 F.3d 1335, 1340 [31
USPQ2d 1641] (5th Cir. 1994). “In judicial proceedings, a certificate of copyright registration
constitutes prima facie evidence of copyrightability and shifts the burden to the defendant to
demonstrate why the copyright is not valid.” Bibbero Sys., Inc. v. Colwell Sys., Inc., 893 F.2d 1104,
1106 [13 USPQ2d 1634] (9th Cir. 1990); see also 17 U.S.C. Section 410(c); Folio Impressions, Inc. v.
Byer California, 937 F.2d 759, 763 [19 USPQ2d 1418] (2d Cir. 1991) (presumption of validity may be
rebutted).

To show actionable copying and therefore satisfy Feist’ssecond prong, a plaintiff must first prove that
the alleged infringer copied plaintiff’s copyrighted work as a factual matter; to do this, he or she may
either present direct evidence of factual copying or, if that is unavailable, evidence that the alleged
infringer had access to the copyrighted work and that the offending and copyrighted works are so
similar that the court may infer that there was factual copying (i.e., probative similarity). Engineering
Dynamics, 26 F.3d at 1340 ; see also Concrete Mach., 843 F.2d at 606. The plaintiff must then prove
that the copying of copyrighted material was so extensive that it rendered the offending and
copyrighted works substantially similar. See Engineering Dynamics, 26 F.3d at 1341 .

In this appeal, we are faced only with whether the Lotus menu command hierarchy is copyrightable
subject matter in the first instance, for Borland concedes that Lotus has a valid copyright in Lotus 1-2-
3 as a whole5 and admits to factually copying the Lotus menu command hierarchy. As a result, this
appeal is in a very different posture from most copyright- infringement cases, for copyright
infringement generally turns on whether the defendant has copied protected expression as a factual
matter. Because of this different posture, most copyright-infringement cases provide only limited help
to us in deciding this appeal. This is true even with respect to those copyright-infringement cases that
deal with computers and computer software.

B. Matter of First Impression

Whether a computer menu command hierarchy constitutes copyrightable subject matter is a matter of
first impression in this court. While some other courts appear to have touched on it briefly in dicta,
see,e.g.,Autoskill, Inc. v. National Educ. Support Sys., Inc., 994 F.2d 1476, 1495 n.23 [26 USPQ2d

74
1828] (10th Cir.), cert. denied, 114 S. Ct. 307 (1993), we know of no cases that deal with the
copyrightability of a menu command hierarchy standing on its own (i.e., without other elements of the
user interface, such as screen displays, in issue). Thus we are navigating in uncharted waters.

Borland vigorously argues, however, that the Supreme Court charted our course more than 100 years
ago when it decided Baker v. Selden, 101 U.S. 99 (1879). In Baker v. Selden, the Court held that
Selden’s copyright over the textbook in which he explained <49 F.3d 814> his new way to do
accounting did not grant him a monopoly on the use of his accounting system.6 Borland argues:

The facts of Baker v.Selden, and even the arguments advanced by the parties in that case, are identical
to those in this case. The only difference is that the “user interface” of Selden’s system was
implemented by pen and paper rather than by computer.

To demonstrate that Bakerv. Selden and this appeal both involve accounting systems, Borland even
supplied this court with a video that, with special effects, shows Selden’s paper forms “melting” into a
computer screen and transforming into Lotus 1-2-3.

We do not think that Bakerv. Selden is nearly as analogous to this appeal as Borland claims. Of
course, Lotus 1-2-3 is a computer <34 USPQ2d 1020> spreadsheet, and as such its grid of horizontal
rows and vertical columns certainly resembles an accounting ledger or any other paper spreadsheet.
Those grids, however, are not at issue in this appeal for, unlike Selden, Lotus does not claim to have a
monopoly over its accounting system. Rather, this appeal involves Lotus’s monopoly over the
commands it uses to operate the computer. Accordingly, this appeal is not, as Borland contends,
“identical” to Baker v. Selden.

C. Altai

Before we analyze whether the Lotus menu command hierarchy is a system, method of operation,
process, or procedure, we first consider the applicability of the test the Second Circuit set forth in
Computer Assoc. Int’l, Inc. v. Altai, Inc., 982 F.2d 693 [23 USPQ2d 1241] (2d Cir. 1992).7 The
Second Circuit designed its Altai test to deal with the fact that computer programs, copyrighted as
“literary works,” can be infringed by what is known as “nonliteral” copying, which is copying that is
paraphrased or loosely paraphrased rather than word for word. See id. at 701 (citing nonliteral-copying
cases); see also 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright Section 13.03 [A] [1]
(1993). When faced with nonliteral-copying cases, courts must determine whether similarities are due
merely to the fact that the two works share the same underlying idea or whether they instead indicate
that the second author copied the first author’s expression. The Second Circuit designed its Altai test
to deal with this situation in the computer context, specifically with whether one computer program
copied nonliteral expression from another program’s code.

The Altai test involves three steps: abstraction, filtration, and comparison. The abstraction step
requires courts to “dissect the allegedly copied program’s structure and isolate each level of
abstraction contained within it.” Altai, 982 F.2d at 707 . This step enables courts to identify the
appropriate framework within which to separate protectable expression from unprotected ideas.
Second, courts apply a “filtration” step in which they examine “the structural components at each level

75
of abstraction to determine whether their particular inclusion at that level was ‘idea’ or was dictated by
considerations of efficiency, so as to be necessarily incidental to that idea; required by factors external
to the program itself; or taken from the public domain.” Id. . Finally, courts compare the protected
elements of the infringed work (i.e., those that survived the filtration screening) to the corresponding
elements of the allegedly infringing work to determine whether there was sufficient copying of
protected material to constitute infringement. Id.at 710 .

In the instant appeal, we are not confronted with alleged nonliteral copying of computer code. Rather,
we are faced with Borland’s deliberate, literal copying of the Lotus menu command hierarchy. Thus,
we must determine not whether nonliteral copying occurred in some amorphous sense, but rather
whether the literal copying of the Lotus <49 F.3d 815> menu command hierarchy constitutes
copyright infringement.

While the Altai test may provide a useful framework for assessing the alleged nonliteral copying of
computer code, we find it to be of little help in assessing whether the literal copying of a menu
command hierarchy constitutes copyright infringement. In fact, we think that the Altaitest in this
context may actually be misleading because, in instructing courts to abstract the various levels, it
seems to encourage them to find a base level that includes copyrightable subject matter that, if literally
copied, would make the copier liable for copyright infringement.8 While that base (or literal) level
would not be at issue in a nonliteral-copying case like Altai, it is precisely what is at issue in this
appeal. We think that abstracting menu command hierarchies down to their individual word and menu
levels and then filtering idea from expression at that stage, as both the Altaiand the district court tests
require, obscures the more fundamental question of whether a menu command hierarchy can be
copyrighted at all. The initial inquiry should not be whether individual <34 USPQ2d 1021>
components of a menu command hierarchy are expressive, but rather whether the menu command
hierarchy as a whole can be copyrighted. But see Gates Rubber Co. v. Bando Chem. Indus., Ltd., 9
F.3d 823 [28 USPQ2d 1503] (10th Cir. 1993) (endorsingAltai’sabstraction-filtration-comparison test
as a way of determining whether “menus and sorting criteria” are copyrightable).

D. The Lotus Menu Command Hierarchy: A “Method of Operation”

Borland argues that the Lotus menu command hierarchy is uncopyrightable because it is a system,
method of operation, process, or procedure foreclosed from copyright protection by 17 U.S.C. Section
102(b) .Section 102(b) states: “In no case does copyright protection for an original work of authorship
extend to any idea, procedure, process, system, method of operation, concept, principle, or discovery,
regardless of the form in which it is described, explained, illustrated, or embodied in such work.”
Because we conclude that the Lotus menu command hierarchy is a method of operation, we do not
consider whether it could also be a system, process, or procedure.

We think that “method of operation,” as that term is used in Section 102(b), refers to the means by
which a person operates something, whether it be a car, a food processor, or a computer. Thus a text
describing how to operate something would not extend copyright protection to the method of operation
itself; other people would be free to employ that method and to describe it in their own words.
Similarly, if a new method of operation is used rather than described, other people would still be free
to employ or describe that method.

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We hold that the Lotus menu command hierarchy is an uncopyrightable “method of operation.” The
Lotus menu command hierarchy provides the means by which users control and operate Lotus 1-2-3.
If users wish to copy material, for example, they use the “Copy” command. If users wish to print
material, they use the “Print” command. Users must use the command terms to tell the computer what
to do. Without the menu command hierarchy, users would not be able to access and control, or indeed
make use of, Lotus 1-2-3’s functional capabilities.

The Lotus menu command hierarchy does not merely explain and present Lotus 1-2-3’s functional
capabilities to the user; it also serves as the method by which the program is operated and controlled.
The Lotus menu command hierarchy is different from the Lotus long prompts, for the long prompts
are not necessary to the operation of the program; users could operate Lotus 1-2-3 even if there were
no long prompts.9 The Lotus <49 F.3d 816> menu command hierarchy is also different from the Lotus
screen displays, for users need not “use” any expressive aspects of the screen displays in order to
operate Lotus 1-2-3; because the way the screens look has little bearing on how users control the
program, the screen displays are not part of Lotus 1-2-3’s “method of operation.”10 The Lotus menu
command hierarchy is also different from the underlying computer code, because while code is
necessary for the program to work, its precise formulation is not. In other words, to offer the same
capabilities as Lotus 1-2-3, Borland did not have to copy Lotus’s underlying code (and indeed it did
not); to allow users to operate its programs in substantially the same way, however, Borland had to
copy the Lotus menu command hierarchy. Thus the Lotus 1-2-3 code is not a uncopyrightable
“method of operation.”11

The district court held that the Lotus menu command hierarchy, with its specific choice and
arrangement of command terms, constituted an “expression” of the “idea” of operating a computer
program with commands arranged hierarchically into menus and submenus. Borland II, 799 F. Supp.
at 216 . Under the district court’s reasoning, Lotus’s decision to employ hierarchically arranged
command terms to operate its program could not foreclose its competitors from also employing
hierarchically arranged command terms to operate their programs, <34 USPQ2d 1022> but it did
foreclose them from employing the specific command terms and arrangement that Lotus had used. In
effect, the district court limited Lotus 1-2-3’s “method of operation” to an abstraction.

Accepting the district court’s finding that the Lotus developers made some expressive choices in
choosing and arranging the Lotus command terms, we nonetheless hold that that expression is not
copyrightable because it is part of Lotus 1-2-3’s “method of operation.” We do not think that
“methods of operation” are limited to abstractions; rather, they are the means by which a user operates
something. If specific words are essential to operating something, then they are part of a “method of
operation” and, as such, are unprotectable.This is so whether they must be highlighted, typed in, or
even spoken, as computer programs no doubt will soon be controlled by spoken words.

The fact that Lotus developers could have designed the Lotus menu command hierarchy differently is
immaterial to the question of whether it is a “method of operation.” In other words, our initial inquiry
is not whether the Lotus menu command hierarchy incorporates any expression.12 Rather, our initial
inquiry is whether the Lotus menu command hierarchy is a “method of operation.” Concluding, as we
do, that users operate Lotus 1-2-3 by using the Lotus menu command hierarchy, and that the entire
Lotus menu command hierarchy is essential to operating Lotus 1-2-3, we do not inquire further
whether that method of operation could have been designed differently. The “expressive” choices of
what to name the command terms and how to arrange them do not magically change the
uncopyrightable menu command hierarchy into copyrightable subject matter.

77
Our holding that “methods of operation” are not limited to mere abstractions is bolstered by Baker
v.Selden . In Baker, the Supreme Court explained that

the teachings of science and the rules and methods of useful art have their final end in application <49
F.3d 817> and use; and this application and use are what the public derive from the publication of a
book which teaches them. . . . The description of the art in a book, though entitled to the benefit of
copyright, lays no foundation for an exclusive claim to the art itself. The object of the one is
explanation; the object of the other is use. The former may be secured by copyright. The latter can
only be secured, if it can be secured at all, by letters-patent.

Baker v. Selden, 101 U.S. at 104-05 . Lotus wrote its menu command hierarchy so that people could
learn it and use it. Accordingly, it falls squarely within the prohibition on copyright protection
established in Baker v. Selden and codified by Congress in Section 102(b).

In many ways, the Lotus menu command hierarchy is like the buttons used to control, say, a video
cassette recorder (“VCR”). A VCR is a machine that enables one to watch and record video tapes.
Users operate VCRs by pressing a series of buttons that are typically labelled “Record, Play, Reverse,
Fast Forward, Pause, Stop/Eject.” That the buttons are arranged and labeled does not make them a
“literary work,” nor does it make them an “expression” of the abstract “method of operating” a VCR
via a set of labeled buttons. Instead, the buttons are themselves the “method of operating” the VCR.

When a Lotus 1-2-3 user chooses a command, either by highlighting it on the screen or by typing its
first letter, he or she effectively pushes a button. Highlighting the “Print” command on the screen, or
typing the letter “P,” is analogous to pressing a VCR button labeled “Play.”

Just as one could not operate a buttonless VCR, it would be impossible to operate Lotus 1-2-3 without
employing its menu command hierarchy. Thus the Lotus command terms are not equivalent to the
labels on the VCR’s buttons, but are instead equivalent to the buttons themselves. Unlike the labels on
a VCR’s buttons, which merely make operating a VCR easier by indicating the buttons’ functions, the
Lotus menu commands are essential to operating Lotus 1-2-3. Without the menu commands, there
would be no way to “push” the Lotus buttons, as one could push unlabeled VCR buttons. While Lotus
could probably have designed a user interface for which the command terms were mere labels, it did
not do so here. Lotus 1-2-3 depends for its operation on use of the precise command terms that make
up the Lotus menu command hierarchy.

One might argue that the buttons for operating a VCR are not analogous to the commands for
operating a computer program because VCRs are not copyrightable, whereas computer programs are.
VCRs may not be copyrighted because they do not fit within any of the Section 102(a) categories of
copyrightable works; the closest they come is “sculptural work.” Sculptural works, however, are
subject to a “useful-article” exception whereby “the design of a useful article . . . shall be considered a
pictorial, graphic, or <34 USPQ2d 1023> sculptural work only if, and only to the extent that, such
design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and
are capable of existing independently of, the utilitarian aspects of the article.” 17 U.S.C. Section 101 .
A “useful article” is “an article having an intrinsic utilitarian function that is not merely to portray the

78
appearance of the article or to convey information.” Id. . Whatever expression there may be in the
arrangement of the parts of a VCR is not capable of existing separately from the VCR itself, so an
ordinary VCR would not be copyrightable.

Computer programs, unlike VCRs, are copyrightable as “literary works.” 17 U.S.C. Section 102(a) .
Accordingly, one might argue, the “buttons” used to operate a computer program are not like the
buttons used to operate a VCR, for they are not subject to a useful-article exception. The response, of
course, is that the arrangement of buttons on a VCR would not be copyrightable even without a useful-
article exception, because the buttons are an uncopyrightable “method of operation.” Similarly, the
“buttons” of a computer program are also an uncopyrightable “method of operation.”

That the Lotus menu command hierarchy is a “method of operation” becomes clearer when one
considers program compatibility. Under Lotus’s theory, if a user uses <49 F.3d 818> several different
programs, he or she must learn how to perform the same operation in a different way for each program
used. For example, if the user wanted the computer to print material, then the user would have to learn
not just one method of operating the computer such that it prints, but many different methods. We find
this absurd. The fact that there may be many different ways to operate a computer program, or even
many different ways to operate a computer program using a set of hierarchically arranged command
terms, does not make the actual method of operation chosen copyrightable; it still functions as a
method for operating the computer and as such is uncopyrightable.

Consider also that users employ the Lotus menu command hierarchy in writing macros. Under the
district court’s holding, if the user wrote a macro to shorten the time needed to perform a certain
operation in Lotus 1-2-3, the user would be unable to use that macro to shorten the time needed to
perform that same operation in another program. Rather, the user would have to rewrite his or her
macro using that other program’s menu command hierarchy. This is despite the fact that the macro is
clearly the user’s own work product. We think that forcing the user to cause the computer to perform
the same operation in a different way ignores Congress’s direction in Section 102(b) that “methods of
operation” are not copyrightable. That programs can offer users the ability to write macros in many
different ways does not change the fact that, once written, the macro allows the user to perform an
operation automatically. As the Lotus menu command hierarchy serves as the basis for Lotus 1-2-3
macros, the Lotus menu command hierarchy is a “method of operation.”

In holding that expression that is part of a “method of operation” cannot be copyrighted, we do not
understand ourselves to go against the Supreme Court’s holding in Feist . In Feist, the Court
explained:

The primary objective of copyright is not to reward the labor of authors, but to promote the Progress
of Science and useful Arts. To this end, copyright assures authors the right to their original expression,
but encourages others to build freely upon the ideas and information conveyed by a work.

Feist, 499 U.S. at 349-50 (quotations and citations omitted). We do not think that the Court’s
statement that “copyright assures authors the right to their original expression” indicates that all
expression is necessarily copyrightable; while original expression is necessary for copyright
protection, we do not think that it is alone sufficient. Courts must still inquire whether original

79
expression falls within one of the categories foreclosed from copyright protection by Section 102(b),
such as being a “method of operation.”

We also note that in most contexts, there is no need to “build” upon other people’s expression, for the
ideas conveyed by that expression can be conveyed by someone else without copying the first author’s
expression.13 In the context of methods of operation, however, “building” requires the use of the
precise method of operation already employed; otherwise, “building” would require dismantling, too.
Original developers are not the only people entitled to build on the methods of operation they create;
anyone can. Thus, Borland may build on the method of operation that Lotus designed and may use the
Lotus menu command hierarchy in doing so.

Our holding that methods of operation are not limited to abstractions goes against Autoskill, 994 F.2d
at 1495 n.23 , in which the <34 USPQ2d 1024> Tenth Circuit rejected the defendant’s argument that
the keying procedure used in a computer program was an uncopyrightable “procedure” or “method of
operation” under Section 102(b). The program at issue, which was designed to test and train students
with reading deficiencies,id. at 1481 , required students to select responses to the program’s queries
“by pressing the 1, 2, or 3 keys.” Id. at 1495 n.23 . The Tenth Circuit held that, “for purposes of the
preliminary injunction, . . . the record showed that [this] keying procedure reflected at least a minimal
degree <49 F.3d 819> of creativity,” as required by Feist for copyright protection. Id..As an initial
matter, we question whether a programmer’s decision to have users select a response by pressing the
1, 2, or 3 keys is original. More importantly, however, we fail to see how “a student select [ing]a
response by pressing the 1, 2, or 3 keys,” id., can be anything but an unprotectable method of
operation.14

III. Conclusion

Because we hold that the Lotus menu command hierarchy is uncopyrightable subject matter, we
further hold that Borland did not infringe Lotus’s copyright by copying it. Accordingly, we need not
consider any of Borland’s affirmative defenses. The judgment of the district court is Reversed.

Boudin,J., concurring.

The importance of this case, and a slightly different emphasis in my view of the underlying problem,
prompt me to add a few words to the majority’s tightly focused discussion.

I.

Most of the law of copyright and the “tools” of analysis have developed in the context of literary
works such as novels, plays, and films. In this milieu, the principal problem – simply stated, if difficult
to resolve – is to stimulate creative expression without unduly limiting access by others to the broader
themes and concepts deployed by the author. The middle of the spectrum presents close cases; but a
“mistake” in providing too much protection involves a small cost: subsequent authors treating the
same themes must take a few more steps away from the original expression.

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The problem presented by computer programs is fundamentally different in one respect. The computer
program is a means for causing something to happen; it has a mechanical utility, an instrumental role,
in accomplishing the world’s work. Granting protection, in other words, can have some of the
consequences of patent protection in limiting other people’s ability to perform a task in the most
efficient manner. Utility does not bar copyright (dictionaries may be copyrighted), but it alters the
calculus.

Of course, the argument forprotection is undiminished, perhaps even enhanced, by utility: if we want
more of an intellectual product, a temporary monopoly for the creator provides incentives for others to
create other, different items in this class. But the “cost” side of the equation may be different where
one places a very high value on public access to a useful innovation that may be the most efficient
means of performing a given task. Thus, the argument for extending protection may be the same; but
the stakes on the other side are much higher.

It is no accident that patent protection has preconditions that copyright protection does not – notably,
the requirements of novelty and non-obviousness – and that patents are granted for a shorter period
than copyrights. This problem of utility has sometimes manifested itself in copyright cases, such as
Baker v. Selden, 101 U.S. 99 (1879), and been dealt with through various formulations that limit
copyright or create limited rights to copy. But the case law and doctrine addressed to utility in
copyright have been brief detours in the general march of copyright law.

Requests for the protection of computer menus present the concern with fencing off access to the
commons in an acute form. A new menu may be a creative work, but over time its importance may
come to reside more in the investment that has been made by users in learning the menu and in
building their own mini-programs – macros – in reliance upon the menu. Better typewriter keyboard
<49 F.3d 820> layouts may exist, but the familiar QWERTY keyboard dominates the market because
that is what everyone has learned to use. See P. David, CLIO and the Economics of QWERTY, 75
Am. Econ. Rev. 332 <34 USPQ2d 1025> (1985). The QWERTY keyboard is nothing other than a
menu of letters.

Thus, to assume that computer programs are just one more new means of expression, like a filmed
play, may be quite wrong. The “form” – the written source code or the menu structure depicted on the
screen – look hauntingly like the familiar stuff of copyright; but the “substance” probably has more to
do with problems presented in patent law or, as already noted, in those rare cases where copyright law
has confronted industrially useful expressions. Applying copyright law to computer programs is like
assembling a jigsaw puzzle whose pieces do not quite fit.

All of this would make no difference if Congress had squarely confronted the issue, and given explicit
directions as to what should be done. The Copyright Act of 1976 took a different course. While
Congress said that computer programs might be subject to copyright protection, it said this in very
general terms; and, especially in Section 102(b), Congress adopted a string of exclusions that if taken
literally might easily seem to exclude most computer programs from protection. The only detailed
prescriptions for computers involve narrow issues (like back-up copies) of no relevance here.

81
Of course, one could still read the statute as a congressional command that the familiar doctrines of
copyright law be taken and applied to computer programs, in cookie cutter fashion, as if the programs
were novels or play scripts. Some of the cases involving computer programs embody this approach. It
seems to me mistaken on two different grounds: the tradition of copyright law, and the likely intent of
Congress.

The broad-brush conception of copyright protection, the time limits, and the formalities have long
been prescribed by statute. But the heart of copyright doctrine – what may be protected and with what
limitations and exceptions – has been developed by the courts through experience with individual
cases. B. Kaplan, An Unhurried View of Copyright 40 (1967). Occasionally Congress addresses a
problem in detail. For the most part the interstitial development of copyright through the courts is our
tradition.

Nothing in the language or legislative history of the 1976 Act, or at least nothing brought to our
attention, suggests that Congress meant the courts to abandon this case-by-case approach. Indeed, by
setting up Section 102(b) as a counterpoint theme, Congress has arguably recognized the tension and
left it for the courts to resolve through the development of case law. And case law development is
adaptive: it allows new problems to be solved with help of earlier doctrine, but it does not preclude
new doctrines to meet new situations.

II.

In this case, the raw facts are mostly, if not entirely, undisputed. Although the inferences to be drawn
may be more debatable, it is very hard to see that Borland has shown any interest in the Lotus menu
except as a fall-back option for those users already committed to it by prior experience or in order to
run their own macros using 1-2-3 commands. At least for the amateur, accessing the Lotus menu in the
Borland Quattro or Quattro Pro program takes some effort.

Put differently, it is unlikely that users who value the Lotus menu for its own sake – independent of
any investment they have made themselves in learning Lotus’ commands or creating macros
dependent upon them – would choose the Borland program in order to secure access to the Lotus
menu. Borland’s success is due primarily to other features. Its rationale for deploying the Lotus menu
bears the ring of truth.

Now, any use of the Lotus menu by Borland is a commercial use and deprives Lotus of a portion of its
“reward,” in the sense that an infringement claim if allowed would increase Lotus’ profits. But this is
circular reasoning: broadly speaking, every limitation on copyright or privileged use diminishes the
reward of the original creator. Yet not every writing is copyrightable or every use an infringement.
The provision of reward <49 F.3d 821> is one concern of copyright law, but it is not the only one. If it
were, copyrights would be perpetual and there would be no exceptions.

The present case is an unattractive one for copyright protection of the menu. The menu commands
(e.g., “print,” “quit”) are largely for standard procedures that Lotus did not invent and are common
words that Lotus cannot monopolize. What is left is the particular combination and sub-grouping of

82
commands in a pattern devised by Lotus. This arrangement may have a more appealing logic and ease
of use than some other configurations; but there is a certain arbitrariness to many of the choices.

If Lotus is granted a monopoly on this pattern, users who have learned the command structure of Lotus
1-2-3 or devised their own macros are locked into Lotus, just as a typist who has learned the
QWERTY keyboard would be the captive of anyone who had a monopoly on the production of such a
keyboard. Apparently, for a period Lotus 1-2-3 has had such sway in the market that it has represented
the de facto standard <34 USPQ2d 1026> for electronic spreadsheet commands. So long as Lotus is
the superior spreadsheet – either in quality or in price – there may be nothing wrong with this
advantage.

But if a better spreadsheet comes along, it is hard to see why customers who have learned the Lotus
menu and devised macros for it should remain captives of Lotus because of an investment in learning
made by the users and not by Lotus. Lotus has already reaped a substantial reward for being first;
assuming that the Borland program is now better, good reasons exist for freeing it to attract old Lotus
customers: to enable the old customers to take advantage of a new advance, and to reward Borland in
turn for making a better product. If Borland has not made a better product, then customers will remain
with Lotus anyway.

Thus, for me the question is not whether Borland should prevail but on what basis. Various avenues
might be traveled, but the main choices are between holding that the menu is not protectable by
copyright and devising a new doctrine that Borland’s use is privileged. No solution is perfect and no
intermediate appellate court can make the final choice.

To call the menu a “method of operation” is, in the common use of those words, a defensible position.
After all, the purpose of the menu is not to be admired as a work of literary or pictorial art. It is to
transmit directions from the user to the computer, i.e.,to operate the computer. The menu is also a
“method” in the dictionary sense because it is a “planned way of doing something,” an “order or
system,” and (aptly here) an “orderly or systematic arrangement, sequence or the like.” Random
House Webster’s College Dictionary 853 (1991).

A different approach would be to say that Borland’s use is privileged because, in the context already
described, it is not seeking to appropriate the advances made by Lotus’ menu; rather, having provided
an arguably more attractive menu of its own, Borland is merely trying to give former Lotus users an
option to exploit their own prior investment in learning or in macros. The difference is that such a
privileged use approach would not automatically protect Borland if it had simply copied the Lotus
menu (using different codes), contributed nothing of its own, and resold Lotus under the Borland label.

The closest analogue in conventional copyright is the fair use doctrine. E.g., Harper & Row,
Publishers, Inc. v. Nation Enters., 471 U.S. 539 [225 USPQ 1073] (1985). Although invoked by
Borland, it has largely been brushed aside in this case because the Supreme Court has said that it is
“presumptively” unavailable where the use is a “commercial” one. See id. at 562 . But see Campbell v.
Acuff-Rose Music, Inc., 114 S.Ct.1164, 1174 (1994). In my view, this is something less than a
definitive answer; “presumptively” does not mean “always” and, in any event, the doctrine of fair use
was created by the courts and can be adapted to new purposes.

83
But a privileged use doctrine would certainly involve problems of its own. It might more closely tailor
the limits on copyright protection to the reasons for limiting that protection; but it would entail a host
of administrative problems that would cause <49 F.3d 822> cost and delay, and would also reduce the
ability of the industry to predict outcomes. Indeed, to the extent that Lotus’ menu is an important
standard in the industry, it might be argued that any use ought to be deemed privileged.

In sum, the majority’s result persuades me and its formulation is as good, if not better, than any other
that occurs to me now as within the reach of courts. Some solutions (e.g., a very short copyright period
for menus) are not options at all for courts but might be for Congress. In all events, the choices are
important ones of policy, not linguistics, and they should be made with the underlying considerations
in view.

84
Audio 3 What is so different about computer programs
compared to say literary works?
Computer programs form a special case of literary works since they share very little with the traditional, analogue
literary works, such as books or other writings. They can also be very functional and utilitarian in nature and this is
especially so because their main aim is to work more as a tool and less as an independent intellectual and
creative work. This is also the reason why national case law has set particular standards in order to assess their
originality. In the European Union the criterion of originality for computer programs is a uniform one: they have to
constitute their author’s own intellectual creation.

The particularities of computer programs, as well as the fact that their inclusion into the scope of literary works
was not immediately apparent, urged many countries to provide for a copyright regime of protection that is tailored
to the particular needs of computer programs. This regime of protection contains special rules specifically in areas
such as ownership and moral rights as well as particular exceptions relating to the right of reproduction, e.g.
reverse engineering, the right to make back-up copies, slight adaptations, correct errors, etc.

85
SAQ 2
Must a computer program be written down on paper to obtain copyright protection?

Type your answer here

Click here for your answer

86
SAQ 2 Ans
No it is not necessary. All computer programs are protected whatever the form of their expression. The program
could for example be ‘written’ in a Read only Memory (ROM) or stored on the hard disc of a computer

[RETURN TO BULLETED LIST]

87
2.3 Databases

Databases form another case of new technology works that are not expressly referred to in Article 2 of
the Berne Convention. The closest that the Berne Convention comes in this respect is when it refers in
Article 2(5) to
“collections of literary and artistic works such as encyclopaedias and anthologies which, by reason of the
selection and arrangement of their contents, constitute intellectual creations”.

However, this provision was introduced in Berne when electronic compilations had not yet appeared.

An updated version of this provision is now found in Article 5 of the WIPO Copyright Treaty (WCT)
which will be discussed in more detail in the next module. In this Article of the WCT databases are
defined as
“[c]ompilations of data or other material, in any form, which by reason of the selection or arrangement of
their contents constitute intellectual creations”.

Article 5 of the WCT provides, consistently with Article 2(5) of the Berne Convention, that
“[t]his protection does not extend to data or the other material itself and is without prejudice to any
copyright subsisting in the data or material contained in the compilation”.

In other words, a database, either in an analogue or digital format, may contain both copyrightable and
non-copyrightable materials. In case it contains copyright works, the rights in these works exist
independently of the right of the author of the database. For example, in a compilation of articles and
pictures concerning the life and work of the painter Gauguin, there is copyright in each of the works
contained in the collection, and copyright in the collection of the articles and pictures itself. These two
copyrights are separate, distinguishable and one should not affect the other.

This is of course an area where the required level of originality or intellectual creation becomes very
relevant. In the US there is the Feist case that was already discussed as a casestudy before and which
rejects any mere sweat of the brow approach in establishing copyrightable selection and arrangements.
This remains however a difficult debate and by way of contrast you find below as a case study the
American Dental case, also from the US courts. A final case study is taken from Europe. The Court of
Justice of the European Union defined database copyright in the Football Dataco case.

88
Case Study 5: AMERICAN DENT. ASSN. v. DELTA DEN. PLANS ASSN., 126
F.3d 977 (7th Cir. 1997) Sweat of the brow approach in contrast to Feist Case
discussed above

Before EASTERBROOK, RIPPLE, and MANION, Circuit Judges.

EASTERBROOK, Circuit Judge.

[1] This case presents the question whether a taxonomy is copyrightable. The American Dental
Association has created the Code on Dental Procedures and Nomenclature. The first edition was
published in 1969; the Code has been revised frequently since, in response to changes in dental
knowledge and technology. All dental procedures are classified into groups; each procedure receives a
number, a short description, and a long description. For example, number 04267 has been assigned to
the short description "guided tissue regeneration - nonresorbable barrier, per site, per tooth (includes
membrane removal)", which is classified with other surgical periodontic services. The Code made its
first appearance in the Journal of the American Dental Association, covered by a general copyright
notice; the 1991 and 1994 versions were submitted for copyright registration, which was granted by
the Register of Copyrights. Delta Dental Association has published a work entitled Universal Coding
and Nomenclature that includes most of the numbering system and short descriptions from the ADA's
Code. In this suit for copyright infringement, Delta contends that it is entitled to reprint modified
versions of the Code under an express or implied license, as a joint author (Delta participated in the
groups that drafted the Code), and as fair use. It contends that by distributing pamphlets containing
some of the Code's older versions without copyright notices the ADA has forfeited its copyright. Delta
also argues that the Code is not copyrightable subject matter, and the district court granted summary
judgment in its favor on this ground without reaching Delta's other arguments.

[2] The district court held that the Code cannot be copyrighted because it catalogs a field of
knowledge - in other words, that no taxonomy may be copyrighted. A comprehensive treatment cannot
be selective in scope or arrangement, the judge believed, and therefore cannot be original either.
Taxonomies are designed to be useful. The judge wrote that if "nothing remains after the 'useful' is
taken away - if the primary function is removed from the form - the work is devoid of even that
modicum of creativity required for protection, and hence is uncopyrightable." 39 U.S.P.Q.2d 1715,
1721, Copyright L. Rep. ¶ 27,582 at 29,440 (1996) (footnote omitted). No one would read the ADA's
Code for pleasure; it was designed and is used for business (for records of patients' dental history or
making insurance claims) rather than aesthetic purposes. The district court added that, as the work of a
committee, the Code could not be thought original. Creation by committee is an oxymoron, the judge
wrote.

[3] The sweep of the district court's reasoning attracted the attention of many other suppliers of
taxonomies. The American Medical Association, the American National Standards Institute,
Underwriters Laboratories, and several other groups have filed a brief as amici curiae to observe that
they, too, produce catalogs of some field of knowledge and depend on the copyright laws to enable

89
them to recover the costs of the endeavor. Other groups or firms might say the same. The manuals
issued by the Financial Accounting Standards Board to specify generally accepted accounting
practices could not be copyrighted. Nor could the tests and answers devised by the Educational
Testing Service. The district court's reasoning logically removes copyright protection from the West
Key Number System, which is designed as a comprehensive index to legal topics, and A Uniform
System of Citation (the Bluebook), a taxonomy of legal sources. Very little computer software could
receive a copyright if the district judge is correct: no one reads, for pleasure, the source or object code
of the word processing program on which this opinion was written, or of the operating system that
runs the computer: take away the "useful" elements and these endeavors are worthless. Worse, most
commercial software these days is written by committee, and authors receive less public credit than
the gaffers on a movie set, whose names at least scroll by at the end after the audience has turned its
collective back to head up the aisles. Blueprints for large buildings (more committee work), instruction
manuals for repairing automobiles, used car value guides, dictionaries, encyclopedias, maps - all these,
and many more, would flunk the district court's test of originality. Yet these items are routinely
copyrighted, and challenges to the validity of these copyrights are routinely rejected. E.g., Educational
Testing Service v. Katzman, 793 F.2d 533 (3d Cir. 1986) (Scholastic Aptitude Test); CCC Information
Services, Inc. v. Maclean Hunter Market Reports, Inc., 44 F.3d 61 (2d Cir. 1994) (list of used-car
prices); Lipton v. Nature Co., 71 F.3d 464 (2d Cir. 1995) (terms describing groups of animals). See
also 17 U.S.C. § 101 (including "architectural plans" within the definition of "pictoral, graphic and
sculptural works" that are copyrightable); Paul Goldstein, Copyright: Principles, Law and Practice §
2.15.2 (1989) (discussing copyright protection for computer programs). The American Medical
Association's copyright in the Physician's Current Procedural Terminology, its catalog of medical
procedures, was recently sustained, although against a challenge different from the district court's
rationale. Practice Management Information Corp. v. American Medical Association, No. 94-56774
(9th Cir. Aug. 6, 1997), slip op. 9323-27. Maps and globes are not only copyrightable, see Rockford
Map Publishers, Inc. v. Directory Service Co., 768 F.2d 145 (7th Cir. 1985), but also constituted two-
thirds of the original scope of copyright. The Copyright Act of 1790 specified three protectable items:
maps, charts, and books. Act of May 31, 1790, 1 Stat. 124. Like taxonomies, maps are valued to the
extent they offer useful organizations of facts; like the Code, maps are produced by committees. (As
are opinions of appellate courts, which despite this handicap, and the judges' effort to produce
something useful, might occasionally have a modicum of originality.)

[4] Any original literary work may be copyrighted. The necessary degree of "originality" is low, and
the work need not be aesthetically pleasing to be "literary." Feist Publications, Inc v. Rural Telephone
Service Co., 499 U.S. 340, 345-46 (1991). Term papers by college sophomores are as much within the
domain of copyright as Saul Bellow's latest novel. See Bleistein v. Donaldson Lithographing Co., 188
U.S. 239 (1903). Scholarship that explicates important facts about the universe likewise is well within
this domain. Einstein's articles laying out the special and general theories of relativity were original
works even though many of the core equations, such as the famous E = mc2, express "facts" and
therefore are not copyrightable. Einstein could have explained relativity in any of a hundred different
ways; another physicist could expound the same principles differently.

[5] So too with a taxonomy - of butterflies, legal citations, or dental procedures. Facts do not supply
their own principles of organization. Classification is a creative endeavor. Butterflies may be grouped
by their color, or the shape of their wings, or their feeding or breeding habits, or their habitats, or the
attributes of their caterpillars, or the sequence of their DNA; each scheme of classification could be
expressed in multiple ways. Dental procedures could be classified by complexity, or by the tools
necessary to perform them, or by the parts of the mouth involved, or by the anesthesia employed, or in
any of a dozen different ways. The Code's descriptions don't "merge with the facts" any more than a
scientific description of butterfly attributes is part of a butterfly. Cf. Nash v. CBS, Inc., 899 F.2d 1537
(7th Cir. 1990) (discussing the fact-expression dichotomy). There can be multiple, and equally

90
original, biographies of the same person's life, and multiple original taxonomies of a field of
knowledge. Creativity marks the expression even after the fundamental scheme has been devised. This
is clear enough for the long description of each procedure in the ADA's Code. The long description is
part of the copyrighted work, and original long descriptions make the work as a whole copyrightable.
But we think that even the short description and the number are original works of authorship.

[6] Number 04267 reads "guided tissue regeneration - nonresorbable barrier, per site, per tooth" but
could have read "regeneration of tissue, guided by nonresorbable barrier, one site and tooth per entry".
Or "use of barrier to guide regeneration of tissue, without regard to the number of sites per tooth and
whether or not the barrier is resorbable". The first variation is linguistic, the second substantive; in
each case the decision to use the actual description is original to the ADA, not knuckling under to an
order imposed on language by some "fact" about dental procedures. Blood is shed in the ADA's
committees about which description is preferable. The number assigned to any one of the three
descriptions could have had four or six digits rather than five; guided tissue regeneration could have
been placed in the 2500 series rather than the 4200 series; again any of these choices is original to the
author of a taxonomy, and another author could do things differently. Every number in the ADA's
Code begins with zero, assuring a large supply of unused numbers for procedures to be devised or
reclassified in the future; an author could have elected instead to leave wide gaps inside the sequence.
A catalog that initially assigns 04266, 04267, 04268 to three procedures will over time depart
substantively from one that initially assigns 42660, 42670, and 42680 to the same three procedures. So
all three elements of the Code - numbers, short descriptions, and long descriptions, are copyrightable
subject matter under 17 U.S.C. § 102(a). The Maroon Book and the Bluebook offer different
taxonomies of legal citations; Wotquenne and Helm devised distinct catalogs of C.P.E. Bach's oeuvre;
Delta Dental Association could have written its own classification of dental procedures.

[7] Note that we do not conclude that the Code is a compilation covered by 17 U.S.C. § 103. It could
be a compilation only if its elements existed independently and the ADA merely put them in order. A
taxonomy is a way of describing items in a body of knowledge or practice; it is not a collection or
compilation of bits and pieces of "reality". The 1991 and 1994 versions of the Code may be
recompilations of earlier editions, but the original Code is covered by § 102(a) as an "original work of
authorship", and its amendments by § 106(2) as derivative works.

[8] The district court's contrary conclusion instantiates the adage that where you come out depends on
where you go in. The court asked whether the Code would be copyrightable if it were a lamp. This is
not quite as foolish as it sounds. Congress permits works of art, including sculptures, to be
copyrighted, but does not extend the copyright to industrial design, which in the main falls into the
province of patent, trademark, or trade dress law. See 17 U.S.C. secs. 101, 102(a)(5), 113; W.T.
Rogers Co. v. Keene, 778 F.2d 334 (7th Cir. 1985). When the maker of a lamp - or any other three-
dimensional article that serves some utilitarian office - seeks to obtain a copyright for the item as a
sculpture, it becomes necessary to determine whether its artistic and utilitarian aspects are separable. If
yes, the artistic elements of the design may be copyrighted; if no, the designer must look outside
copyright law for protection from imitation. Compare Hart v. Dan Chase Taxidermy Supply Co., 86
F.3d 320 (2d Cir. 1996), which holds that fish mannequins may be copyrighted if they possess artistic
features separable from their utilitarian aspects, with Carol Barnhart Inc. v. Economy Cover Corp.,
773 F.2d 411 (2d Cir. 1985), which holds that mannequins of human torsos may not be copyrighted.
Judge Zagel applied to the ADA's Code the same approach courts use for three-dimensional articles,
found that the Code has no expression separable from its utilitarian aspects, and held that it therefore
may not be copyrighted.

91
[9] Such an inquiry mixes two distinct issues: originality and functionality. A lamp may be entirely
original, but if the novel elements are also functional the lamp cannot be copyrighted. This is not a line
between intellectual property and the public domain; it is a line among bodies of intellectual-property
law. An article with intertwined artistic and utilitarian ingredients may be eligible for a design patent,
or the artistic elements may be trade dress protected by the Lanham Act or state law. Yet the district
court did not set out to mark the boundaries among copyright, patent, trademark, and state law.
Anyway, to restate the obvious, the Code is not a sculpture. The ADA does not make any claim to its
protection as a "pictorial, graphic, [or] sculptural" work under § 102(a)(5), and the unique limitations
on the protection of that category of works do not extend to the written word. Not only are the issues
different - original is not an antonym for utilitarian - but the special question under § 102(a)(5) and §
113 is not one that should be extended. "Of the many fine lines that run through the Copyright Act,
none is more troublesome than the line between protectible pictorial, graphic and sculptural works and
unprotectible utilitarian elements of industrial design." Goldstein, § 2.5.3 at 99 (footnote omitted).
Whether a literary work is original ought to be a question easy to pose and easy to answer, so that
people know the status of their intellectual property; it ought not be complicated with a test designed
for a completely different problem.

[10] Delta asks us to affirm the judgment on a ground that the district judge did not reach: that the
Code is not copyrightable because it is a "system." Section 102(b) tells us that copyright protection
even of an original work does not cover "any idea, procedure, process, system, method of operation,
concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated,
or embodied in such work." But what could it mean to call the Code a "system"? This taxonomy does
not come with instructions for use, as if the Code were a recipe for a new dish. Cf. Publications
International, Ltd. v. Meredith Corp., 88 F.3d 473 (7th Cir. 1996) (holding that recipes are not
copyrightable). A dictionary cannot be called a "system" just because new novels are written using
words, all of which appear in the dictionary. Nor is word-processing software a "system" just because
it has a command structure for producing paragraphs. The Code is a taxonomy, which may be put to
many uses. These uses may be or include systems; the Code is not.

[11] Section 102(b) codifies the fact-expression dichotomy, which we have already considered, as well
as the holding of Baker v. Selden, 101 U.S. 99 (1879), that blank forms are not copyrightable, even if
the structure of the forms captures the essence of an original work of literature. The book was
protected as original literary expression, the Court held, but the form was a means of putting the
book's ideas into practice - and copyright law, unlike patent law, covers only expression. Someone
who buys a book full of ideas for new machines may build and sell one of the machines without
infringing the author's copyright; Baker thought that the use of an accounting system described in a
book is pretty much the same thing, even if practice of the system entails use of the author's forms.
Baker rearranged Selden's forms, but if the original forms were copyrightable then the rearrangements
were derivative works, which the original author had an exclusive right to produce. Protecting
variations on the forms could have permitted the author of an influential accounting treatise to
monopolize the practice of double-entry bookkeeping. Yet copyright law does not permit the author to
monopolize the revenues to be derived from an improved system of accounting - or of reporting dental
procedures. See William M. Landes & Richard A. Posner, An Economic Analysis of Copyright Law,
17 J. Legal Studies 325, 350-53 (1989).

[12] Few "how-to" works are "systems" in Baker's sense. If they were, architectural blueprints could
be freely copied, although the Berne Convention Implementation Act of 1988, Pub. L. 100-567, 102
Stat. 2854, adds protection for "architectural plans" to the statute. Descriptions of how to build or do
something do not facilitate monopoly of the subject-matter being described, so the concern of Baker is
not activated. Again consider blueprints: other architects can imitate the style of the completed

92
building; they just can't copy the plans. What is more, a form that contains instructions for its
completion is copyrightable in part (the instructions) and in the public domain in part (the lines and
boxes). Edwin K. Williams & Co. v. Edwin K. Williams & Co. East, 542 F.2d 1053, 1061 (9th Cir.
1976); Goldstein at § 2.15.1.b. So far as the ADA is concerned, any dentist, any insurer, anyone at all,
may devise and use forms into which the Code's descriptions may be entered. The ADA encourages
this use; standardization of language promotes interchange among professionals. (The fact that Delta
used most of the Code but made modifications is the reason ADA objects, for variations salted through
a convention impede communication.) Section 102(b) precludes the ADA from suing, for copyright
infringement, a dentist whose office files record treatments using the Code's nomenclature. No field of
practice has been or can be monopolized, given this constraint. Section 102(b) permits Delta Dental to
disseminate forms inviting dentists to use the ADA's Code when submitting bills to insurers. But it
does not permit Delta to copy the Code itself, or make and distribute a derivative work based on the
Code, any more than Baker could copy Selden's book.

[13] Whether there are other obstacles to the relief the ADA seeks is a subject best left to the district
court in the first instance. The judgment is vacated, and the case is remanded for further proceedings
consistent with this opinion. Any award of attorneys' fees, the second subject of the ADA's appeal,
must abide the final decision in the litigation.

Case Study 6: Football Dataco Case- The Court of Justice of the

European Union defined database copyright

(Directive 96/9/EC – Legal protection of databases – Copyright – Football league fixture lists)

In Case C‑604/10,

REFERENCE for a preliminary ruling under Article 267 TFEU from the Court of Appeal (England &
Wales) (Civil Division) (United Kingdom), made by decision of 10 December 2010, received at the
Court on 21 December 2010, in the proceedings

Football Dataco Ltd,

Football Association Premier League Ltd,

Football League Ltd,

Scottish Premier League Ltd,

Scottish Football League,

93
PA Sport UK Ltd

Yahoo! UK Ltd,

Stan James (Abingdon) Ltd,

Stan James plc,

Enetpulse ApS,

THE COURT (Third Chamber),

composed of K. Lenaerts (Rapporteur), President of the Chamber, J. Malenovský, E. Juhász, G.

Arestis and D. Šváby, Judges,

Advocate General: P. Mengozzi,

Registrar: L. Hewlett, Principal Administrator,

having regard to the written procedure and further to the hearing on 27 October 2011,

after considering the observations submitted on behalf of:

– Football Dataco Ltd, Football Association Premier League Ltd, Football League Ltd, Scottish
Premier League Ltd, Scottish Football League and PA Sport UK Ltd, by J. Mellor QC, S. Levine and
L. Lane and R. Hoy, Barristers,

– Yahoo! UK Ltd, Stan James (Abingdon) Ltd, Stan James plc and Enetpulse ApS, by D.
Alexander and R. Meade QC, P. Roberts and P. Nagpal, Barristers,

– the United Kingdom Government, by L. Seeboruth, acting as Agent, assisted by S. Malynicz,

Barrister,

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– the Italian Government, by G. Palmieri, acting as Agent, assisted by S. Fiorentino, avvocato
dello Stato,

– the Maltese Government, by A. Buhagiar and G. Kimberley, acting as Agents,

– the Portuguese Government, by A.P. Barros and by L. Inez Fernandes and P. Mateus Calado,
acting as Agents,

– the Finnish Government, by J. Heliskoski, acting as Agent,

– the European Commission, by J. Samnadda and T. van Rijn, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 15 December 2011,

gives the following

Judgment

1 This reference for a preliminary ruling relates to the interpretation of Directive 96/9/EC of the
European Parliament and of the Council of 11 March 1996 on the legal protection of databases (OJ
1996 L 77, p. 20).

2 The reference has been made in proceedings between Football Dataco Ltd, Football Association
Premier League Ltd, Football League Ltd, Scottish Premier League Ltd, Scottish Football League et
PA Sport UK Ltd (collectively, ‘Football Dataco and Others’), on the one hand, and Yahoo! UK Ltd,
Stan James (Abingdon) Ltd, Stan James plc and Enetpulse ApS (collectively, ‘Yahoo and Others’), on
the other, concerning intellectual property rights claimed by Football Dataco and Others over the
English and Scottish football league fixture lists.

Legal context

International law

3 Under a section on copyright and connected rights, Article 10(2) of the Agreement on Trade-
Related Aspects of Intellectual Property Rights, which constitutes Annex 1C to the Agreement
establishing the World Trade Organisation, signed in Marrakech on 15 April 1994 and approved by
Council Decision 94/800/EC of 22 December 1994 concerning the conclusion on behalf of the

95
European Community, as regards matters within its competence, of the agreements reached in the
Uruguay Round multilateral negotiations (1986-1994) (OJ 1994 L 336, p. 1) provides:

‘Compilations of data or other material, whether in machine readable or other form, which by reason
of the selection or arrangement of their contents constitute intellectual creations shall be protected as
such. Such protection, which shall not extend to the data or material itself, shall be without prejudice
to any copyright subsisting in the data or material itself.’

4 Article 5 of the World Intellectual Property Organization (WIPO) Copyright Treaty, adopted in
Geneva on 20 December 1996, which relates to ‘Compilations of Data (Databases)’, states:

‘Compilations of data or other material, in any form, which by reason of the selection or arrangement
of their contents constitute intellectual creations, are protected as such. This protection does not extend
to the data or the material itself and is without prejudice to any copyright subsisting in the data or
material contained in the compilation.’

European Union law

5 Recitals 1 to 4, 9, 10, 12, 15, 16, 18, 26, 27, 39 and 60 to Directive 96/9 state that:

‘(1) Whereas databases are at present not sufficiently protected in all Member States by existing
legislation; whereas such protection, where it exists, has different attributes;

(2) Whereas such differences in the legal protection of databases offered by the legislation of the
Member States have direct negative effects on the functioning of the internal market as regards
databases and in particular on the freedom of natural and legal persons to provide on-line database
goods and services on the basis of harmonized legal arrangements throughout the Community;
whereas such differences could well become more pronounced as Member States introduce new
legislation in this field, which is now taking on an increasingly international dimension;

(3) Whereas existing differences distorting the functioning of the internal market need to be
removed and new ones prevented from arising, while differences not adversely affecting the
functioning of the internal market or the development of an information market within the Community
need not be removed or prevented from arising;

(4) Whereas copyright protection for databases exists in varying forms in the Member States
according to legislation or case-law, and whereas, if differences in legislation in the scope and
conditions of protection remain between the Member States, such unharmonized intellectual property
rights can have the effect of preventing the free movement of goods or services within the
Community;

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…

(9) Whereas databases are a vital tool in the development of an information market within the
Community; whereas this tool will also be of use in many other fields;

(10) Whereas the exponential growth, in the Community and worldwide, in the amount of
information generated and processed annually in all sectors of commerce and industry calls for
investment in all the Member States in advanced information processing systems;

(12) Whereas such an investment in modern information storage and processing systems will not
take place within the Community unless a stable and uniform legal protection regime is introduced for
the protection of the rights of makers of databases;

(15) Whereas the criteria used to determine whether a database should be protected by copyright
should be defined to the fact that the selection or the arrangement of the contents of the database is the
author’s own intellectual creation; whereas such protection should cover the structure of the database;

(16) Whereas no criterion other than originality in the sense of the author’s intellectual creation
should be applied to determine the eligibility of the database for copyright protection, and in particular
no aesthetic or qualitative criteria should be applied;

(18) Whereas this Directive is without prejudice to the freedom of authors to decide whether, or in
what manner, they will allow their works to be included in a database, in particular whether or not the
authorization given is exclusive; …

(26) Whereas works protected by copyright and subject matter protected by related rights, which
are incorporated into a database, remain nevertheless protected by the respective exclusive rights and
may not be incorporated into, or extracted from, the database without the permission of the rightholder
or his successors in title;

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(27) Whereas copyright in such works and related rights in subject matter thus incorporated into a
database are in no way affected by the existence of a separate right in the selection or arrangement of
these works and subject matter in a database;

(39) Whereas, in addition to aiming to protect the copyright in the original selection or arrangement
of the contents of a database, this Directive seeks to safeguard the position of makers of databases
against misappropriation of the results of the financial and professional investment made in obtaining
and [collecting] the contents by protecting the whole or substantial parts of a database against certain
acts by a user or competitor;

(60) Whereas some Member States currently protect under copyright arrangements databases which
do not meet the criteria for eligibility for copyright protection laid down in this Directive; whereas,
even if the databases concerned are eligible for protection under the right laid down in this Directive to
prevent unauthorized extraction and/or re-utilization of their contents, the term of protection under that
right is considerably shorter than that which they enjoy under the national arrangements currently in
force; whereas harmonization of the criteria for determining whether a database is to be protected by
copyright may not have the effect of reducing the term of protection currently enjoyed by the
rightholders concerned; whereas a derogation should be laid down to that effect; whereas the effects of
such derogation must be confined to the territories of the Member States concerned’.

6 Article 1(2) of Directive 96/9 states that:

‘For the purposes of this Directive, “database” shall mean a collection of independent works, data or
other materials arranged in a systematic or methodical way and individually accessible by electronic or
other means.’

7 Under chapter II, entitled ‘Copyright’, Article 3 of Directive 96/9, which defines the ‘[o]bject of
protection’, states that:

‘1. In accordance with this Directive, databases which, by reason of the selection or arrangement of
their contents, constitute the author’s own intellectual creation shall be protected as such by copyright.
No other criteria shall be applied to determine their eligibility for that protection.

2. The copyright protection of databases provided for by this Directive shall not extend to their
contents and shall be without prejudice to any rights subsisting in those contents themselves.’

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8 Under chapter III, entitled ‘Sui generis right’, Article 7 of Directive 96/9, relating to the
‘[o]bject of protection’, states in paragraphs 1 and 4:

‘1. Member States shall provide for a right for the maker of a database which shows that there has
been qualitatively and/or quantitatively a substantial investment in either the obtaining, verification or
presentation of the contents to prevent extraction and/or re-utilization of the whole or of a substantial
part, evaluated qualitatively and/or quantitatively, of the contents of that database.

4. The right provided for in paragraph 1 shall apply irrespective of the eligibility of that database for
protection by copyright or by other rights. …’

9 Under chapter IV, entitled ‘Common provisions’, Article 14 of Directive 96/9 states:

‘1. Protection pursuant to this Directive as regards copyright shall also be available in respect of
databases created prior to the date referred to [in] Article 16(1) which on that date fulfil the
requirements laid down in this Directive as regards copyright protection of databases.

2. Notwithstanding paragraph 1, where a database protected under copyright arrangements in a

Member State on the date of publication of this Directive does not fulfil the eligibility criteria for
copyright protection laid down in Article 3(1), this Directive shall not result in any curtailing in that
Member State of the remaining term of protection afforded under those arrangements.

…’

10 The date of the publication of Directive 96/9 in the Official Journal of the European
Communities is 27 March 1996.

11 That directive was implemented in the United Kingdom by the adoption of the Copyright and
Rights in Databases Regulations 1997 (SI 1997, No 3032), which came into force on 1 January 1998.
The wording of the provisions of those Regulations which are relevant in the present case is identical
to that of the relevant provisions of the directive.

The facts which gave rise to the dispute in the main proceedings and the questions referred for a
preliminary ruling

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Creation of the fixture lists of the English and Scottish football leagues

12 According to the order for reference, the creation of the annual fixture lists of the football
leagues in England and Scotland follows, on the whole, comparable rules and procedure.

13 It involves having regard to several rules, which are called ‘the golden rules’, the most
important of which are:

– no club shall have three consecutive home or away matches;

– in any five consecutive matches no club shall have four home matches or four away matches;

– as far as possible, each club should have played an equal number of home and away matches at
all times during the season, and

– all clubs should have as near as possible an equal number of home and away matches for mid-
week matches.

14 The procedure for drawing up a fixture list such as those in question in the main proceedings
consists of several stages. The first stage, which begins during the previous season, is the preparation
by employees of the leagues concerned of the Premier League fixture schedule and an outline fixture
list for other leagues. That stage consists of establishing a list of possible dates for the fixtures on the
basis of a series of basic parameters (the dates of the start and the end of the season, the number of
fixtures which must be played, the dates reserved to other national, European or international
competitions).

15 The second stage is the sending out, to the clubs concerned, of questionnaires prior to the fixing
of the schedule and the analysis of the responses to these questionnaires, in particular ‘specific date’
requests (a request by a club to play its fixture against another club at home or away on a particular
date), ‘non-specific date’ requests (a request by a club to play a certain match on a certain day of the
week at a certain time, for example, Saturday after 1.30 pm), and ‘pairing’ requests (a request that two
or more clubs not play at home on the same day). Around 200 requests are made per season.

16 The third stage, which, in the case of the English football leagues, is undertaken by Mr
Thompson of Atos Origin IT Services UK Ltd, comprises two tasks, ‘sequencing’ and ‘pairing’.

17 Sequencing aims to achieve the perfect home-away sequence for every club, having regard to
the golden rules, a series of organisational constraints and, as far as possible, the requests made by the
clubs. Mr Thompson then produces a pairing grid on the basis of the requests made by the teams. He

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gradually inserts the names of the teams into that grid and attempts to resolve a maximum amount of
problem cases until a satisfactory draft fixture list is completed. For that purpose, he uses a computer
program, to which he transfers information from the sequencing sheet and the pairing grid to produce
a readable version of the fixture list.

18 The final stage involves Mr Thompson working with employees of the professional leagues
concerned to review the content of the fixture lists. That review is carried out manually with the
assistance of computer software to find solutions to outstanding problems. Two meetings then take
place, one with a fixtures working party and the other with police representatives, in order to finalise
the fixture list. In the 2008/2009 season, 56 changes were made during that final stage.

19 According to the findings of fact made by the judge at first instance reproduced in the order for
reference, the process of preparing the football fixture lists in question in the main proceedings is not
purely mechanistic or deterministic; on the contrary, it requires very significant labour and skill in
order to satisfy the multitude of competing requirements while respecting the applicable rules as far as
possible. The work needed is not mere application of rigid criteria, and is unlike, for instance, the
compilation of a telephone directory, in that it requires judgment and skill at each stage, in particular
where the computer program finds no solution for a given set of constraints. With regard to the partial
computerisation of the process, Mr Thompson states that it does not eliminate the need for judgment
and discretion.

The facts in the main proceedings and the questions referred for a preliminary ruling

20 Football Dataco and Others claim that they own, in respect of the English and Scottish football
league fixture lists, a ‘sui generis’ right pursuant to Article 7 of Directive 96/9, a copyright pursuant to
Article 3 of that directive, and a copyright under United Kingdom intellectual property legislation.

21 Yahoo and Others do not accept that such rights exist in law, arguing that they are entitled to use
the lists in the conduct of their business without having to pay financial compensation.

22 The judge at first instance held that those lists are eligible for protection by copyright under
Article 3 of Directive 96/9, on the ground that their preparation requires a substantial quantum of
creative work. However, he refused to recognise either of the two other rights claimed.

23 The referring court confirmed the judgment at first instance as regards the ineligibility of the
lists in question in the main proceedings for protection by the ‘sui generis’ right under Article 7 of
Directive 96/9. By contrast, the referring court raises the question of whether the lists are eligible for
protection by copyright under Article 3 of that directive. The referring court also has doubts regarding
the possibility of the lists being protected by the copyright pursuant to United Kingdom legislation
prior to that directive under conditions which are different to those which are set out in Article 3 of
Directive 96/9.

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24 In those circumstances, the Court of Appeal (England and Wales) (Civil Division) decided to
stay the proceedings and refer the following questions to the Court for a preliminary ruling:

‘1. In Article 3(1) of Directive 96/9 … what is meant by “databases which, by reason of the
selection or arrangement of their contents, constitute the author’s own intellectual creation” and in
particular:

(a) should the intellectual effort and skill of creating data be excluded;

(b) does “selection or arrangement” include adding important significance to a pre-existing item of
data (as in fixing the date of a football match), and

(c) does “author’s own intellectual creation” require more than significant labour and skill from the
author, if so what?

2. Does the Directive preclude national rights in the nature of copyright in databases other than
those provided for by [Directive 96/9]?’

The first question submitted for a preliminary ruling

25 By its first question, the referring court is essentially seeking an interpretation of Article 3(1) of
Directive 96/9. In particular, it is asking:

– firstly, whether the intellectual effort and skill of creating data should be excluded in connection
with the application of that provision;

– secondly, whether the ‘selection or arrangement’ of the contents, within the meaning of that
provision, includes adding important significance to a pre‑existing item of data, and

– thirdly, whether the notion of ‘author’s own intellectual creation’ within the meaning of that
provision requires more than significant labour and skill from the author and, if so, what that
additional requirement is.

26 First of all, it is to be noted that, on the one hand, the Court has already held that a football
league fixture list constitutes a ‘database’ within the meaning of Article 1(2) of Directive 96/9. The
Court essentially held that the combination of the date, the time and the identity of the two teams
playing in both home and away matches has autonomous informative value which renders them
‘independent materials’ within the meaning of Article 1(2) of Directive 96/9, and that the arrangement,
in the form of a fixture list, of the dates, times and names of teams in the various fixtures of a football
league meets the conditions set out in Article 1(2) of Directive 96/9 as to the systematic or methodical

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arrangement and individual accessibility of the data contained in the database (see Case C‑444/02
Fixtures Marketing [2004] ECR I‑10549, paragraphs 33 to 36).

27 On the other hand, it is apparent from both a comparison of the terms of Article 3(1) and Article
7(1) of Directive 96/9 and from other provisions or recitals of Directive 96/9, in particular Article 7(4)
and recital 39 to that directive, that the copyright and the ‘sui generis’ right amount to two independent
rights whose object and conditions of application are different.

28 Consequently, the fact that a ‘database’ within the meaning of Article 1(2) of Directive 96/9
does not satisfy the conditions of eligibility for protection by the ‘sui generis’ right under Article 7 of
Directive 96/9, as the Court held in relation to football fixture lists (Case C‑46/02 Fixtures Marketing
[2004] ECR I‑10365, paragraphs 43 to 47; Case C‑338/02 Fixtures Marketing [2004] ECR I‑10497,
paragraphs 32 to 36; and Case C‑444/02 Fixtures Marketing, cited above, paragraphs 48 to 52), does
not automatically mean that that same database is also not eligible for copyright protection under
Article 3 of that directive.

29 Under Article 3(1) of Directive 96/9, ‘databases’ within the meaning of Article 1(2) of that
directive are protected by copyright if, by reason of the selection or arrangement of their contents, they
constitute the author’s own intellectual creation.

30 Firstly, it is apparent from reading Article 3(2) in conjunction with recital 15 of Directive 96/9
that the copyright protection provided for by that directive concerns the ‘structure’ of the database, and
not its ‘contents’ nor, therefore, the elements constituting its contents.

31 Similarly, as is apparent from Article 10(2) of the Agreement on Trade-Related Aspects of

Intellectual Property Rights and from Article 5 of the WIPO Copyright Treaty, compilations of data
which by reason of the selection or arrangement of their contents constitute intellectual creations are
protected as such by copyright. On the other hand, that protection does not extend to the data itself and
is without prejudice to any copyright subsisting for that data.

32 In that context, the concepts of ‘selection’ and of ‘arrangement’ within the meaning of Article
3(1) of Directive 96/9 refer respectively to the selection and the arrangement of data, through which
the author of the database gives the database its structure. By contrast, those concepts do not extend to
the creation of the data contained in that database.

33 Consequently, as Yahoo and Others, the Italian, Portuguese and Finnish governments as well as
the European Commission have argued, the materials mentioned in section (a) of the referring court’s
first question that concern the intellectual effort and skill of creating data are not relevant in order to
assess the eligibility of the database that contains them for the copyright protection provided for by
Directive 96/9.

34 That analysis is confirmed by the purpose of that directive. As is apparent from recitals 9, 10
and 12 of that directive, its purpose is to stimulate the creation of data storage and processing systems

103
in order to contribute to the development of an information market against a background of
exponential growth in the amount of information generated and processed annually in all sectors of
activity (see Case C‑46/02 Fixtures Marketing, cited above, paragraph 33; Case C‑203/02 The British
Horseracing Board and Others [2004] ECR I‑10415, paragraph 30; Case C‑338/02 Fixtures
Marketing, cited above, paragraph 23; and Case C‑444/02 Fixtures Marketing, cited above, paragraph
39) and not to protect the creation of materials capable of being collected in a database.

35 In the case in the main proceedings, it must be observed that the resources, in particular
intellectual resources, described by the referring court and referred to in paragraphs 14 to 18 of this
judgment, are deployed for the purpose of determining, in the course of arranging the leagues
concerned, the date, the time and the identity of teams corresponding to each fixture of those leagues,
in accordance with a set of rules, parameters and organisational constraints as well as the specific
requests of the clubs concerned (see Case C‑46/02 Fixtures Marketing, cited above, paragraph 41;
Case C‑338/02 Fixtures Marketing, cited above, paragraph 31; and Case C‑444/02 Fixtures
Marketing, cited above, paragraph 47).

36 As Yahoo and Others and the Portuguese government have pointed out, those resources relate to
the creation of the same data which is contained in the database in question, as already noted in
paragraph 26 of the present judgment (see Case C‑46/02 Fixtures Marketing, cited above, paragraph
42; Case C‑338/02 Fixtures Marketing, cited above, paragraph 31; and Case C‑444/02 Fixtures
Marketing, cited above, paragraph 47). As a consequence, and having regard to what is stated in
paragraph 32 of the present judgment, they are, in any case, of no relevance in order to assess the
eligibility of the football fixture lists in question in the main proceedings for the copyright protection
provided for by Directive 96/9.

37 Secondly, as is apparent from recital 16 of Directive 96/9, the notion of the author’s own
intellectual creation refers to the criterion of originality (see, to that effect, Case C‑5/08 Infopaq
International [2009] ECR I‑6569, paragraphs 35, 37 and 38; Case C‑393/09 Bezpečnostní softwarová
asociace [2010] ECR I‑0000 paragraph 45; Joined Cases C‑403/08 and C‑429/08 Football
Association Premier League and Others [2011] ECR I‑0000, paragraph 97; and Case C‑145/10 Painer
[2011] ECR I‑0000, paragraph 87).

38 As regards the setting up of a database, that criterion of originality is satisfied when, through the
selection or arrangement of the data which it contains, its author expresses his creative ability in an
original manner by making free and creative choices (see, by analogy, Infopaq International,
paragraph 45; Bezpečnostní softwarová asociace, paragraph 50; and Painer, paragraph 89) and thus
stamps his ‘personal touch’ (Painer, paragraph 92).

39 By contrast, that criterion is not satisfied when the setting up of the database is dictated by
technical considerations, rules or constraints which leave no room for creative freedom (see, by
analogy, Bezpečnostní softwarová asociace, paragraphs 48 and 49, and Football Association Premier
League and Others, paragraph 98).

40 As is apparent from both Article 3(1) and recital 16 of Directive 96/9, no other criteria than that
of originality is to be applied to determine the eligibility of a database for the copyright protection
provided for by that directive.

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41 Therefore, on the one hand, provided that the selection or arrangement of the data ­– namely, in
a case such as the one in the main proceedings, data corresponding to the date, the time and the
identity of teams relating to the different fixtures of the league concerned (see paragraph 26 of the
present judgment) ­– is an original expression of the creativity of the author of the database, it is
irrelevant for the purpose of assessing the eligibility of the database for the copyright protection
provided for by Directive 96/9 whether or not that selection or arrangement includes ‘adding important
significance’ to that data, as mentioned in section (b) of the referring court’s first question.

42 On the other hand, the fact that the setting up of the database required, irrespective of the
creation of the data which it contains, significant labour and skill of its author, as mentioned in section
(c) of that same question, cannot as such justify the protection of it by copyright under Directive 96/9,
if that labour and that skill do not express any originality in the selection or arrangement of that data.

43 In the present case, it is for the referring court to assess, in the light of the factors set out above,
whether the football fixture lists in question in the main proceedings are databases which satisfy the
conditions of eligibility for the copyright protection set out in Article 3(1) of Directive 96/9.

44 In that respect, the procedures for creating those lists, as described by the referring court, if they
are not supplemented by elements reflecting originality in the selection or arrangement of the data
contained in those lists, do not suffice for the database in question to be protected by the copyright
provided for in Article 3(1) of Directive 96/9.

45 In light of the considerations above, the answer to the first question is that Article 3(1) of
Directive 96/9 must be interpreted as meaning that a ‘database’ within the meaning of Article 1(2) of
that directive is protected by the copyright laid down by that directive provided that the selection or
arrangement of the data which it contains amounts to an original expression of the creative freedom of
its author, which is a matter for the national court to determine.

46 As a consequence:

– the intellectual effort and skill of creating that data are not relevant in order to assess the
eligibility of that database for protection by that right;

– it is irrelevant, for that purpose, whether or not the selection or arrangement of that data includes
the addition of important significance to that data, and

– the significant labour and skill required for setting up that database cannot as such justify such a
protection if they do not express any originality in the selection or arrangement of the data which that
database contains.

The second question submitted for a preliminary ruling

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47 By its second question, the referring court is essentially asking whether Directive 96/9 must be
interpreted as precluding national legislation which grants databases, as defined in Article 1(2) of that
directive, copyright protection under conditions which are different to those set out in Article 3(1) of
the directive.

48 In that respect, it must be pointed out that Directive 96/9 aims, according to recitals 1 to 4 of the
directive, to remove the differences which existed between national legislation on the legal protection
of databases, particularly as regards the scope and conditions of copyright protection, and which
adversely affected the functioning of the internal market, the free movement of goods or services
within the European Union and the development of an information market within the European Union.

49 In that context, as is apparent from recital 60 of Directive 96/9, Article 3 of that directive carries
out a ‘harmonization of the criteria for determining whether a database is to be protected by
copyright’.

50 It is true that, as regards databases which were protected on 27 March 1996 by national
copyright arrangements under different eligibility criteria than those set out in Article 3(1) of Directive
96/9, Article 14(2) of the directive preserves the duration of the protection granted by such
arrangements in the Member State concerned. However, subject only to that transitional provision,
Article 3(1) of the directive precludes national legislation which grants databases as defined in Article
1(2) of that directive copyright protection under conditions which are different to that of originality
laid down in Article 3(1) of the directive.

51 As for recitals 18, 26 and 27 of Directive 96/9, highlighted by Football Dataco and Others, those
recitals note the freedom which authors of works have to decide whether to include their works in a
database and the absence of effect which the incorporation of a protected piece of work in a protected
database has on the rights protecting the work thus incorporated. However, they do not support an
interpretation contrary to that set out in the previous paragraph of this judgment.

52 In light of the above considerations, the answer to the second question is that Directive 96/9
must be interpreted as meaning that, subject to the transitional provision contained in Article 14(2) of
that directive, it precludes national legislation which grants databases, as defined in Article 1(2) of the
directive, copyright protection under conditions which are different to those set out in Article 3(1) of
the directive.

Costs

53 Since these proceedings are, for the parties to the main proceedings, a step in the action pending
before the national court, the decision on costs is a matter for that court. Costs incurred in submitting
observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Third Chamber) hereby rules:

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1. Article 3(1) of Directive 96/9/EC of the European Parliament and of the Council of 11 March
1996 on the legal protection of databases must be interpreted as meaning that a ‘database’ within the
meaning of Article 1(2) of that directive is protected by the copyright laid down by that directive
provided that the selection or arrangement of the data which it contains amounts to an original
expression of the creative freedom of its author, which is a matter for the national court to determine.

As a consequence:

– the intellectual effort and skill of creating that data are not relevant in order to assess the
eligibility of that database for protection by that right;

– it is irrelevant, for that purpose, whether or not the selection or arrangement of that data includes
the addition of important significance to that data, and

– the significant labour and skill required for setting up that database cannot as such justify such a
protection if they do not express any originality in the selection or arrangement of the data which that
database contains.

2. Directive 96/9 must be interpreted as meaning that, subject to the transitional provision
contained in Article 14(2) of that directive, it precludes national legislation which grants databases, as
defined in Article 1(2) of the directive, copyright protection under conditions which are different to
those set out in Article 3(1) of the directive.

107
Audio 4 Does the content of the database have to be
original?
The originality of a database is not assessed in relation to its content, as is traditionally the case with
conventional copyright works, such as writings, musical works or works of art. The originality of a database is
assessed through the selection or arrangement of the contents of the database. In other words, if the database
presents a commonplace, self evident and unoriginal selection and arrangement of materials it will not attract
copyright protection. In the European Union the criterion of originality for databases has been harmonized. The
selection and/or arrangement of the materials of a database has to be the author’s own intellectual creation. It is
interesting to note here that the European Union provides for the same originality criterion for databases,
computer programs and photographs.

108
Who is the author of a database?

It goes without saying that the author of a database is the person who makes the selection and/or
arrangement of the materials of a database. In many countries databases are protected as literary
works. The author is afforded the same rights as in relation to any other literary and artistic work.

In the European Union databases are afforded a two-fold regime of protection. They are afforded
copyright protection as any other literary and artistic work and they are also afforded sui generis
protection.

The sui generis protection is afforded to the maker of a database where it can be shown that s/he has
made a qualitatively and/or quantitatively substantial investment in the obtaining, verification or
presentation of the contents of the database. This right relates to the contents of a database and it is the
right to prevent extraction and/or re-utilization of the whole or a substantial part, evaluated
qualitatively and/or quantitatively, of the database. This right is given by reason of the investment put
into the making of the database and it is a right vested in the producer. This right will be examined in
more detail later (see the case study on the Innoweb case in module 7). The only thing that should be
mentioned here is that it is a controversial issue whether one should move towards the adoption of
such a two-fold system of protection for databases by means of an international Convention.

Such an extraction and re-utilisation right can when applied unduly broadly lead to a situation where
the maker of a database de facto has a rights over the access and use of the facts contained within the
database. That contrasts with the fact that the mere data in the database are not protected and on top of
that there is the freedom of access to information. This is therefore a controversial issue and a delicate
line to thread in order to respect the respective legitimate interests of each of the parties without
stepping on the interests of the other party.

Let’s consider an example that shows how the various rights in a database interact. In a compilation
consisting of pictures of representative works of art during the last century the following rights
emerge:

a) the copyright in the paintings and sculptures that have been photographed
b) the copyright in the photographs taken of the paintings and sculptures
c) the copyright in the selection and/or arrangement of these photographs in order for them to be
included in the database
d) a sui generis right vested in the maker of the database that has invested the money, time and
personnel to produce this database. (This right exists in the Member States of the European Union
and a limited number of other countries)

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The two latter rights represent the two-fold regime of protection for databases. The first one refers to
the selection and/or arrangement of the various materials included, whilst the second refers to the
investment in the compilation and the prohibition of the extraction and/or re-utilization of the
compiled data.

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SAQ 3
How many rights are found in an electronic compilation containing the names of all villages in the appellation of
origin Bordeaux that produce red wine?

Type your answer here

Click here for your answer

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SAQ 3 Ans
a) There is no right in the information contained in the database because pure information and other data do not
attract copyright protection.
b) There is copyright vested in the person that has made the selection and arrangement of the contents of the
database, if the selection or arrangement are found to be original. If all villages that produce red wine are
included in an alphabetical order, it is very likely that the database will be commonplace and not original.
c) There is a sui generis right vested in the maker of the database, who is the person or company that has put
in place the investment for the compilation of this database. (This right applies mainly in a European Union
context).

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2.4 New technology products and online distribution of works

Audio 5 New technology products and online distribution

of works
The rapid development of technology has given rise to many new forms of intellectual creations. These forms
either refer to the development of an entirely new product, possessing unique or qualitatively new characteristics
when compared to conventional copyright works, or to a new method of fixation and/or distribution.

Some examples of such products are video games, multimedia products, virtual reality works and so on.

Since the works I have just mentioned are considered to be intellectual creations, they come within the scope of
Article 2 of the Berne Convention and should be afforded the same protection as any other literary and artistic
works. Yet, certain works, such as for example, cinematographic works, computer programs or databases have
been given a tailor-made regime of protection. Therefore in order for new technology products to be protected
effectively, they either have to be fitted within one of the existing categories of copyright works, which seems to be
close to their nature and characteristics or they have to be granted a new tailor-made regime of protection.

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Some of the works mentioned in the audio can be protected as cinematographic works, computer
programs or databases.

The rapid development of technology and the explosion of the use of the Internet have enabled new
forms of production and exploitation of intellectual creations which have brought into question the
forms of remuneration of authors, the concept of exceptions to copyright, moral rights and so on. A
few of these issues are dealt with under the WIPO Copyright Treaty, which is the most recent update
to copyright at an international level, and will be analyzed later.

The previous paragraph already alludes to the fact that the evolution does not simply consist of new
products and new technological ways of producing new copyright works. A lot has changed in terms
of exploitation of works too. Gone are the days in which we merely acquired hard copies of the works
(books, CDs, etc.). More and more digital works are exploited on-line over networks and the Internet.
Music and increasingly also movies are not even any more downloaded over the Internet. They are
streamed to the user over the Internet and no copy is made on the user’s media, device or computer.
We read newspapers and magazines on-line on our laptop or via an app on our smartphone or tablet.
This is not the time to look at the detailed copyright implications of each of these phenomena, but it is
clear that in terms of exploitation the role of the right of reproduction has been much reduced and its
dominant role has now been taken on by the right of communication to the public. In the absence of a
copy on the user’s device or computer, repeat access has become the norms. Works are repeatedly
communicated to the public.

But the free option to read and to watch from the analogue world is also disappearing easily in the
digital era. Digital works are locked away on servers and commercial operators control access via
technical protection measures, with copyright law even offering protection for the latter. Access and
repeated access are now firmly within the copyright sphere. This sets up a potential conflict with the
right to information and the right to access. Fair uses and other authorised uses of copyright works by
users that may want to create their own (derivative) works also become less obvious.

As digital access to and use of works become the norm, mass digitisation projects, such as the Google
Book Project, have seen the light of day. Existing analogue works need to be digitised to join the on-
line era. But that also means to works in the public domain risk being locked away in digital chests,
access to which is controlled and no longer free. And there is the issue of orphan works. Works that
are still in copyright, but whose owner is no longer traceable. Who will be able to authorise their use
and who will be able to do what with them.

And then there is the issue of Cloud computing. Where-ever we are we use software stored in the
Cloud, essentially a series of networked servers whose location is not necessarily known to us. And
when we store files in the Cloud these are effectively moved around a series of servers, depending on
where storage space is available. The fact that we can access the software and the files from
everywhere cannot hide the fact that they have a physical location. In other words one or more
national copyright laws will be applicable, with (slightly) different rights and exceptions and
limitations. Complex issues of choice of law will therefore arise and it is not sure that operators are
capable or even willing to cope with the intricate details of all this when they see a profitable business
model within reach.

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In conclusion, there are lots of new opportunities and lots of technological and legal challenges. Not
all of these answers have yet received clear (copyright) answers.

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3.0 Special types of situations

The Berne Convention contains certain provisions which cover the following special types of
situation:

• The principle of retroactivity

• Enforcement of rights and dispute resolution
• Special provisions for developing countries.

Now examine the special situations by clicking on each of them

3.1 The principle of retroactivity

When a country adheres to the Berne Convention it is clear that the works that originate from it or
from any other Union country and which are created or published after that date, will be protected
under the Convention.

However, what happens with existing works?

Article 18 of the Berne Convention gives the Convention effect also for some existing works. The
Berne Convention applies to all works, which have not fallen into the public domain by reason of the
expiration of their term of protection, at the moment when the Convention came into force for the
newly adhering country. In other words, the new Contracting State is obliged to grant protection to all
works that have not yet fallen into the public domain in their respective countries of origin, even if that
involves the removal of works from the public domain. The same obligation applies to existing
Contracting States for works that originate in the new Contracting State. If, however, the term of
protection of these works has expired at that stage, it will not be extended and these works will not
attract a fresh term of protection either. (Article 18(1)-(2))

Paragraph 3 of the same article gives Contracting States flexibility as to how they implement the
principle of retroactivity. Special conventions can be concluded to this effect. The principle cannot be
excluded altogether, but transitional agreements or provisions in national law that affect the way in
which effect is given to it are possible. Such provisions may, for example, permit that copies, which
were produced without authorization before the Convention entered into force for the country,
continue to be sold in a reasonable transition period. Paragraph 4 extends this to cases of new
accessions to the Berne Union. (Article 18(3)-(4)) This appears to address the practical problem of
those printers in the countries already distributing copies without authorisation since there was no

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protection for such works. The economic interests of these publishers are taken care of while
extending protection for its future exploitation.

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3.2 Enforcement of rights and dispute resolution

The Berne Convention does not contain detailed rules regarding the
enforcement of rights, but a few relevant provisions should be
mentioned. Article 15 establishes a presumption that the protected
author or film producer who can institute infringement proceedings is
the one whose name appear on the work in the usual manner. This rule prevents infringers from
protracting court proceedings by unfounded claims that the author has to prove his or her authorship.
Article 16 of the Berne Convention deals with infringing copies which shall be liable to seizure in any
country of the Union where the work enjoys legal protection. This also applies to copies coming from
a country where the work is not protected, or has ceased to be protected. Thereby a certain right of
importation is established in relation to copies which are infringing or which were legally made in the
country of manufacture, but would have been illegal if they had been produced in the country of
importation.

Finally, Article 36(1) provides that any Union country undertakes to adopt, in accordance with its
constitution, the measures necessary to ensure the application of the Convention. While this provision
leaves flexibility for the implementation in national law, it clearly presupposes that appropriate
enforcement provisions are included in national law.

Any dispute between Contracting States concerning the interpretation or application of the Berne
Convention can be brought before the International Court of Justice, unless the countries concerned
agree on some other form of settlement (Article 33). However, this provision has never been used in
practice, and countries may also declare that they will not apply that provision. In fact in the areas of
dispute resolution and enforcement the Berne Convention has been superseded by the much more
detailed provisions in the TRIPS Agreement.

It is not that remarkable that the Berne Convention contains very few measures on the enforcement of
copyright. Its main objective was to implement national treatment as a way to grant the foreign author
access to the national copyright systems of the member states. Starting from non-discrimination (and
no formalities) Article 5(2) then seems to draw the consequence that many issues, including the scope
of the exclusive rights and their enforcement, are governed exclusively on a country by country basis
by the local copyright law, the lex loci protectionis. That fills the potential gaps left open by the non-
discrimination rule and it fits in with the historical reality that copyright works were exploited on a
country by country basis. These matters could be left to national law, even if that created an ongoing
diversity in the enforcement area between the various member states. Now copyright works are of
course exploited on a cross-border model and enforcement and a streamlined approach to it in the
various countries becomes vital. Hence the much stronger emphasis on enforcement in the TYRIPs
Agreement and its list of basic remedies and procedures that must be in place and to which we return
later in this course.

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3.3 Special provisions for developing countries

The Berne Convention recognizes that developing countries, by reason of their economic situation and
their social and cultural needs may not be in a condition to accept straightaway all the obligations
under the Convention. For that reason an Appendix is attached to the Convention, which forms an
integral part of it, and which allows developing countries to take advantage of certain special
provisions provided for in the Appendix for a renewable limited period of time. After the expiration of
this period developing countries undertake to conform with all the requirements provided for in the
Convention and grant authors full protection in relation to their works.

In practical terms the Appendix allows developing countries under certain conditions to introduce non-
voluntary licenses in relation to the translation and reproduction of works for purposes of training,
scholarship or research. These special rules are aimed at making sure that works are made available in
the developing countries under reasonable conditions. The provisions of the Appendix have in practice
not given rise to great difficulties. It may be noted that the benefit of these provisions can be enjoyed
only by countries having a reasonably well-developed printing and publishing industrial base. Even if
those industries have not applied for non-voluntary licences, the existence of the Appendix proved to
facilitate liberal voluntary licences to the production and distribution at low cost of copyright works.
That may even be the most important effect of the Appendix as the effective implication of its non-
voluntary licences remains a lengthy and cumbersome process.

All this needs to be seen against the backdrop of the increasing engagement of developing countries
with international copyright policies. Even before the digital era they felt the need for greater and
easier access to copyright works, often imported at a high cost from the developed world. The effects
of digitisation that were highlighted above only increased these concerns. Apart from access,
translations into local languages are also involved. This backdrop also explains why these countries
are pressing for international instruments that allow more liberal use of exceptions and limitations.
The Marrakesh Treaty, which is discussed later on can be seen as fitting in with these developments.

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4.0 Licences and assignments

Preliminary thoughts

The rightholder does not need to exploit the copyright him- or herself on an exclusive basis. Rights to
exploit can be granted to third parties. Assignment of copyright and copyright licences are the two
forms of contract involved in the exploitation of a copyright work by a third party. Each has its own
distinct characteristics.

Copyright, as a form of intellectual property, has the same kind of commercial value as any other
property right. Its contractual exploitation can take various forms, such as a sale or a more restricted
right to do something in relation to the subject matter of the right. Authors can exploit their works
themselves and in the digital age such exploitation via a website has become easier, but they may not
be interested in doing so. Often they do not have the financial, material, and organizational means to
exploit their works, or at least to do so efficiently. They can then leave the exploitation to a third party.
This normally involves the transfer of some, or all, of the rights in the work to that third party.

Some aspects of copyright are, however, slightly peculiar: firstly, exploitation of copyright takes place
through a material item in which the work is recorded. This implies that, if one acquires that material
item, one does not normally acquire the intellectual property right as well. If I buy a book, as a
recording of a literary work, for example, I buy the paper and the ink, but not the copyright in the book
or any right in relation to the copyright, such as the right to reproduce the work. This separation
between the copyright and the right in the carrier is a special characteristic of intellectual property
rights. One needs to add however that the end user does not necessarily gets access to the material
item. Music is streamed to the end user, meaning that whilst the on-line radio station or music service
may still acquire a material hard copy from the author (or his or her commercial partners), the end user
does not receive any such material copy. Similar business models are being developed for movies and
increasingly software is accessed remotely, i.e. also without the end user receiving a material copy.
That does not mean that the separation between the IP and the carrier disappears. It simply means that
not all involved get access to or receive a copy of a carrier.

Secondly, copyright works are normally still created by an individual author or by a couple of
individuals. These individuals will normally rely on a third party to exploit their work and that third
party is often a corporate body. This results in the fact that the balance of bargaining and negotiating
powers tilts almost necessarily in favour of the party exploiting the work, while the author is left
behind as the weaker party. In some countries safeguard provisions are included in the copyright law
to protect the interests of authors while transferring rights. The fact that the author is increasingly
digitally empowered to exploit his or her IP themselves on the Internet reduces the weak position of
the author, but this model does not work effectively for all. The public finds the websites of famous
authors and musicians, but not those of beginning artists, who may still need intermediaries to
publicise their works.

Thirdly, copyright offers only a weak form of protection, because only the reproduction of expression
is protected. This leaves the idea of the work unprotected and leaves the author powerless to act

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against various things that can be done to his or her work, such as the production of a satirical work
that clearly, through the borrowing of the idea, refers to the author’s work. This reinforces the view
that the author is in a weak position.

Some national copyright acts also contain legal presumptions of transfer or assignment of rights. In
Brazilian law for example there is a presumption that the exclusive rights in a collective (not the moral
rights or the authorship) are transferred by operation of law to the organizer of the collective work,
who can even be a legal entity.

Assignment

An assignment involves the disposal of the copyright: the author (the assignor) assigns the copyright
to another person (the assignee). National copyright laws often require that an assignment is in writing
and is signed by, or on behalf of, the assignor. The standard type of assignment involves the transfer of
the complete copyright, but this need not be the case. (see the Peer International case study below)1
Where there is a register assignments can normally be noted on them. Such a registration is not a
formality in the sense of the Berne Convention, but makes the transfer of rights clear to interested third
parties and users.

Two forms of partial assignment are possible: it is possible to assign only certain aspects of the
copyright or certain rights, and not the whole copyright, and it is also possible to restrict the
assignment to a certain period. This makes it possible to assign, for example, the copyright in the
novel, to assign only the public performance right or the translation right, or to assign all or any of
these rights only for a period of ten years. Some countries, such as the US, do not allow partial
assignments (that resemble licences) and operate a strict separation between licences and assignments.
In that logic an assignment is necessarily the transfer of the entirety of a particular right under
copyright and such assignments are then subject being terminated by law after a certain number of
years. Anything less is a licence. The assignor will normally receive a lump sum in return for the
assignment of the copyright in the work.

In most national copyright laws, but not all, an assignment can also take place in relation to a work
that has yet to be created. This is called the assignment of ‘future copyright’—that is, of copyright that
will come into existence once the potential author decides to create the work and the work is
effectively created. The author will then become the first owner of the copyright and the assignment
will take effect immediately.

Difficult questions arise when the parties have not complied with the need to register the assignment
or to sign a written contract. Courts are often reluctant to hold that nothing took place and that the user
is a mere infringer. Some national laws provide the option to the courts to hold that an implied licence
must have been concluded and in common law jurisdictions the idea of an equitable assignment or
licence has appeared.

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Let us explain this by means of an example. In the UK case Warner v. Gestetner, the court
held that there had been an assignment of copyright in equity only. Warner had produced drawings of
cats for Gestetner. These drawings were to be used to produce a new product at a fair and Warner
would remain the owner of the copyright in the drawings. Gestetner later used them in promotional
literature. The court decided that Gestetner was entitled to use the drawings and implied a clause
assigning beneficial ownership of the copyright to Gestetner. In this construction, there is a legal
owner of the copyright and an owner at equity who is free to use the work. In countries with a work
for hire doctrine such a problem does not arise, because the creator of such works will never acquire a
right that can be assigned. The employer will immediately acquire all rights.

Licences

A licence does not involve a transfer of the copyright in the work: the owner of the copyright (the
licensor) simply grants permission to a third party (the licensee) to do certain acts in relation to the
copyright work that would otherwise constitute an infringement. An obvious example is a licence to
perform a play: without the licence being granted, the performance would have constituted an
infringement of the copyright in the play. A licence can be granted in return for the payment of a lump
sum or royalties, which involve the payment of a fixed sum or a percentage of the return each time that
the act allowed by the licence takes place.

In the same way as an assignment, the licence can be restricted in relation to its scope—that is, in
relation to the acts that are allowed or in relation to its term. It is indeed quite common to grant various
licences—eventually in combination with a partial assignment—to various persons in relation to the
exploitation of a work. Let us consider a novel as an example: the owner of the copyright in the novel
can assign the publication rights in the UK to a publisher, can license the performing rights, can
license another publisher to produce a translation in French, can license a German producer to make a
sound recording, and can assign the film rights to MGM in the USA, etc.

A licence can be exclusive or non-exclusive. An exclusive licence is often subject to certain additional
provisions, such as the requirement of a written format, which has to be signed by, or on behalf of, the
copyright owner-licensor. It allows the exclusive licensee to exercise certain rights in relation to the
copyright work on an exclusive basis. This means that all other persons, including the licensor, will be
excluded from exercising that right. The exclusive licensee can often also bring an independent
infringement action (in some countries after joining the owner or by leave of the court), as can the
assignee; whereas a non-exclusive licensee needs the assistance of the licensor to do so, because, in
that case only the owner can sue.

In many jurisdictions a prospective owner can license future copyright, in the same way as it can be
assigned.

It is clear that it is extremely difficult to distinguish certain copyright licences from certain assignments
of copyright: it is a matter of construction and the actual words used by the parties are not conclusive.
The payment of royalties points towards a licence and the difference regarding the right to sue
independently is also an important factor in this respect. National copyright laws also usually admit
informal copyright licensing and this is far less the case for assignments.

Up to now we have been dealing with the ‘traditional’ copyright licence. In a slightly broader sense one
could take the licence an on-line radio station needs to broadcast music as an example of such a
‘traditional’ licence, which therefore also applies in the digital age and advanced forms of exploitation of

1
See Peer International Corp., Southern Music Publishing Co. Inc. & Peermusic (UK) Ltd v.
Termidor Music Publishers Ltd, Termidor Musikverlag GmbH & Co. KG & Editora Musical de Cuba
[2004] RPC 455, which also raises interesting points of private international law.
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copyright works. Licences in the less traditional sense of the word are now also the norm in the
exploitation of software. We do not buy a copy of a programme. It is licenced to us, irrespective of
whether we acquire it on a CD Rom or increasingly download it from the Internet (or even use it on a
Cloud based server). Whilst we acquire almost what we would have acquired in a sale, i.e. a complete
right to use the software, without a limitation in time, the emphasis is on the ongoing relationship with
the maker of the software. Security updates and other upgrades of the software that have become part of
the package symbolize that aspect of the ‘licence’. Similarly, we do not buy a database. Instead what we
acquire is a licence to access a database stored on a remote server. In the age of Cloud computing a
similar business model can be applied to software.

SAQ 4
What is in theory the fundamental difference between an assignment and a licence?

Type your answer here

Click here for your answer

123
SAQ 4 Ans

An assignment is an outright transfer of the right, whereas a licence is a mere authorization to perform an act
restricted by copyright. In practice though there are assignments that have restrictions on them and that come
close to certain types of licences.

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Collecting societies

The normal way of exploiting copyright by way of licences involves the grant of a licence for every
use that is made of the copyright work. In cases in which the work is a recording, to do so would
involve the creation of a licence every time that the recording is played. It is probably not very
convenient for the copyright owner to collect a minimum fee on every occasion. The overhead costs
would be tremendous; it would take up all of his or her time and he or she would, in practice, only be
able to collect a fraction of royalties owed to him or her. The user of these records is in a similar
position. If a restaurant owner wants to play background music in the restaurant, to so do requires a
separate licence for every work that is played: how is the restaurant owner going to find all of the right
owners in the first place?

This problem is addressed by the creation of collecting societies, also called collective management
organisations, such as the Performing Right Society (PRS) the United Kingdom and Sacem in France.
There is normally one collecting society per type of work and per country. Owners of the copyright
become members of this body, which will license the use of their works and collect the royalties for
them. The PRS for example takes an assignment of the copyright in the performance and broadcasting
of musical works, grants licences, collects royalties, and distributes these among its members after the
deduction of administration costs. This presents a tremendous advantage to copyright owners, but it is
also advantageous for the users of the works. They now have to deal only with one body and they will
be able to get a blanket licence that will allow them to use any work that is among the repertoire of the
society.

Some countries, such as the US, have non-exclusive collective rights management organisations that
are private non-governmental entities. That means that in practice that there is more than one
collective rights management organization for a single type of copyright work. Authors can then
choose which of them they join, based on the performance of the respective organisations.

Certain members of the collecting society may also bring infringement proceedings against those who
do not have a licence or who are in breach of its terms if they are, for example, exclusive licensees of
the copyright in various sound recordings. Despite not having actual authority from the members of
the collective society, it is generally accepted that they can sue as a representative claimant in a
representative capacity if they, and the other members, have a common interest and a common
grievance, and if the relief sought would, in its nature, be beneficial to the relevant members of the
collecting society.

But the fact that a society has a double monopoly creates some problems. Copyright owners are
obliged to deal with the one existing society if they want to exploit their works effectively. This
situation can give rise to discrimination by the society against certain of its members by imposing
different membership rules, for example, for foreign owners of copyright, or by the adoption of
discriminatory royalty distribution rules for certain types of work or certain classes of member. The
society is also an unavoidable partner for the users of copyright works and abuse could consist in this
area, for example, in charging exorbitant royalties. Admittedly, there are also other cases against
collective management organisations. Some have at times only charged users negligible fees or have
failed to distribute compensation to foreign authors.

Traditionally, collective right management organisations have operated on a country by country basis.
They had concluded mutual representation agreements amongst them. In other words, if I want to clear
right to play music on my radio station in Poland I seek a licence from the Polish collective rights
management organization. They can licence me their own authors/musicians and their own repertoire,
but I also get a licence for the foreign repertoire, because they are allowed to represent the foreign
collective management organisation’s repertoire in Poland. The part of the licence fee covering the
latter part will then be transferred to the foreign collective management organization. That model
becomes cumbersome however if I want a licence to stream music over the Internet to clients all over

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Europe. Because my activity is now not restricted to one country I need a licence in all countries in
Europe. Hence the tendency to move towards a one stop shop solution, where I can get the whole
licence from one supplier. That could mean collective management organisations that compete with
each other and each time provide pan-European licences or enhanced and streamlined cooperation
between collective management organisations. That debate and evolution are still wide open, but there
is clearly a demand from the users in the copyright industries for such new single licence business
models, not merely in Europe, but at a global level.

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SAQ 5

Why is there a need for collective licensing?

Type your answer here

Click here for your answer

127
SAQ 5 Ans

For example the right to play a record during a radioshow is a low value transaction and there would be enormous
overheads if each record had to be applied for separately and the rightholder had to grant case by case
permissions. The costs of the licensing operation would outstrip the income generated. Granting licences in a
collect way avoids these problems.

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Licensing schemes

The owner of the copyright in a work may be willing to set standard conditions on which licences to do
certain acts are available. This is, for example, the case in relation to the photocopying of literary
works. Every owner knows that this is happening and that it is unrealistic to expect every person who
engages in the photocopying of the work to apply for a separate licence for each work of which he or
she wishes to copy a part. It is also unrealistic to assume that the copyright owner could act effectively
against this form of infringement in cases in which no licence is applied for. The solution is to pool
resources and to arrive at standard conditions on which licences are available, and to do so with a large
group of copyright owners. More copiers will be prepared to take a licence and the body administering
the licence will be more effective in acting against infringement.

In this context a licensing scheme could be defined as:

a scheme setting out the classes of case in which the operator of the scheme, or the person on
whose behalf he acts, is willing to grant copyright licences, and the terms on which licences
would be granted in those classes of case.

A licensing body, meanwhile, could be defined as:

a society or other organisation which has as its main object, or one of its main objects, the
negotiation or granting, either as owner or prospective owner of copyright or as agent for him, of
copyright licences, and whose objects include the granting of licences covering works of more
than one author.

Open Licences

Traditionally copyright works were exploited for profit, but increasingly and not only in an
academic environment, rightholders are prepared to share their works and even to allow other to
produce derivative works on the basis of their works.

Open licences serve this purpose. They are normally for free and they are available to anyone who
wants one. The user recognises not only the copyright of the original creator, but also accepts any
restrictions (such as no commercial use or even no changes altogether) which the rightholder
imposes. Acknowledgment of the author is a standard feature.

This movement started in circles of software developers. Open software meant that anyone could
use the software and develop it further. There was an expectation that all these further developments
would also be shared on the same basis. Linux has its roots in this movement.

On a broader scale this has now been taken forward by Creative Commons who offer a range of
licences which people can use. You will find one such example under further reading. The least
restrictive licence allows users to copy the work etc, as long as the name of the author is mentioned.
Other licences add restrictions such as the obligation to make derivative works that use the original
work available on the same terms (the same licence), or a ban on commercial use, or a ban on
changes to the work and on the creation of derivative works (or a combination of the final two
restrictions). Wikipedia is another example of the open licence approach.

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One crucial point that is to be made is that open source is not an alternative to copyright. Any open
source obligations that are imposed on subsequent users/author can only be enforced and become
workable because the author has copyright. Copyright makes the open source licence enforceable
and is the condition sine qua non for its effective existence.

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Case Study 7: Peer International Corp v Termidor Music Publishers
Ltd- entitlement by reason of assignments from the composers and,
from heirs

Peer International Corp v Termidor Music Publishers Ltd

Court of Appeal (UK)
30 July 2003
[2003] EWCA Civ. 1156
( Aldous , Mance and Latham L.JJ. )

This was an appeal arising out of the hearing of three preliminary issues in a copyright action
involving the question of ownership in a number of Cuban musical compositions. The
claimants sought declarations that they were the owners, alternatively exclusive licensees of
the UK copyrights in respect of certain musical works composed by Cuban nationals. They
claimed entitlement by reason of assignments from the composers and, in some instances,
from their heirs.

The claimants were a group of companies (“Peer”) carrying on business as musical publishers
whose parent company was the first claimant and which was incorporated in New Jersey.
Between 1930 and 1945, two Cuban composers, Ignacio Pineiro and Antonio Fernandez,
entered into three separate agreements (the initial agreements) in relation to the worldwide
copyright of one or more of their musical compositions. These agreements were all apparently
with a Peer company. Some related to a single composition but at least two entered into by
Mr Pineiro related to all existing works and all works composed within a specific future period.
At the time of these agreements, the relevant law in force in Cuba was the Spanish
Intellectual Property Law of 1879 which, together with r.9 of the 1880 Regulations made
thereunder, laid down certain formalities to be complied with in order for transfers of
intellectual property to be effective. It was common ground that those formalities had not
been complied with.

The defendants were part of a German publishing group who claimed to be exclusive licensees
of the copyrights in the works pursuant to a licence granted by Editora Musical de Cuba (EMC)
which was a Cuban entity claiming to be the copyright owner. EMC had been added as a Part
20 defendant. EMC's title depended on the operation of the Cuban Law 860 of 1960. The
effect of this law was to deprive assignees of any rights if the contract of assignment had not
been presented for approval to the Cuban Musical Rights Institute within 60 days of the law
coming into force or if approval had not been granted. It was common ground that none of
the initial agreements had been presented to the Institute for approval. Thereafter, Mr Pineiro
entered into agreements with a Cuban government agency, EGREM, whereby he purported to
transfer title in all his works to it. EMC was the successor to EGREM. Mr Pineiro died in 1969
and Mr Fernandez in 1982.

In 1998, the person claiming to be the heir of Mr Fernandez executed a confirmatory

assignment in favour of Peer and in August 2002 an Addendum to the 1998 assignment. In
April 2001, certain alleged heirs of Mr Pineiro executed a confirmatory assignment to Peer and
an Addendum in April 2002. The wording of the Addenda was to the effect that the heir
confirmed that the confirmatory assignment was intended to confer on Peer the exclusive
licence and assignment of all rights vested in the heir with respect to the UK reversionary
rights. These heirs also entered into an agreement with EMC relating to the copyrights in his
works.

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The preliminary issues were: (i) whether certain purported transfers or assignments of title in
the respective copyrights of a number of works by two composers, in the 1930s and 1940s
were effective to transfer title; (ii) the consequence of Law 860 of 1960 , passed shortly after
the Cuban revolution of 1959, and the proper approach of an English court to foreign
legislation said to have the effect of transferring title to UK copyright; and (iii) the effect of
certain “confirmatory” agreements entered into over the past five years whereby the heirs of
the composers were said to have transferred their reversionary rights to the title to the
respective copyrights.

At first instance, the judge held that the initial agreements were effective to transfer title to
Peer; that Peer was not divested of that title by the operation of Law 860 of 1960 because it
offended against the lex situs rule as stated in r.120 of Dicey & Morris ; and that the
combined effect of the confirmatory assignments and their associated Addenda was to
transfer the reversionary rights to Peer. EMC, the Part 20 defendant, appealed against the
latter two findings.

EMC argued that r.120 could be split into two facets: first, UK courts would recognise as valid
and effective governmental acts relating to property situated outside that jurisdiction if the
law of the state where the property was sited did so; second, UK courts would not recognise a
governmental act affecting property situated in the United Kingdom. It then contended that
each of those facets was subject to qualification particularly where considerations of comity
and public policy so required. It referred to Kuwait Airways Corp v Iraqi Airways Corp (Nos 4
and 5 as an example of where the courts had refused to give effect to foreign law because of
considerations of public policy and as being an exception to the first facet of r.120. It argued
that it was not, therefore, surprising that the second facet also was not absolute where the
act of the foreign state was benevolent, as was Law 860. EMC relied on Lorentzen v Lydden &
C. Ltd and O/Y Wasa SS Co Ltd v Newspaper Pulp & Wood Export Ltd as examples of
exceptions to the second facet. It submitted that an English court could give effect to the
legislation of a foreign state affecting property in the United Kingdom where that foreign state
was regularising a matter of legitimate interest and the legislation accorded with UK law and
public policy widely accepted internationally; and that Law 860 was passed to regulate
contractual relations between composers and publishers so as to ensure that the music
industry did not take unfair advantage of unsophisticated composers.

The claimants argued that any exception based on public policy was wrong in principle
because it would subordinate English property law to that of a foreign state; the rule would be
founded and would operate by reference to public policy which could change from time to
time; it would require English courts to assess the merits of the foreign legislation; it would
lead to intractable problems when the property was situated in a third state; it would require
the court to balance one public policy against the public policy that states do not interfere
with property situated abroad; and it would lead to great uncertainty.

Held, dismissing the appeal:

(1) The judge's conclusion that Law 1860 of 1960 was wholly ineffective to divest Peer of the
UK copyrights because it offended against the lex situs rule as enunciated in r.120 of Dicey &
Morris was correct as was his rejection of EMC's submissions that the rule should be qualified
on the grounds that public policy and comity indicated that the applicable law was that of
Cuba.

(2) The decision in the Kuwait Airways case was an exception to the first facet of Rule 120
and it was clear that exceptions to that facet did exist. But it did not follow from that, that
there were also exceptions to the second facet.

(3) The Lorentzen case was wrongly decided. It was contrary to the overwhelming statement
of judicial and academic opinion and was contrary to public policy.

(4) Law 860 had the effect of regulating property rights. The evidence did not establish that
there was an internationally accepted view on public policy as to assignments of copyright.

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The submission that there should be an exception to the lex situs rule based on public policy
was misguided. It would be wholly unclear what would be the test for determining whether a
foreign law should displace property rights otherwise existing under English law, in
circumstances where Parliament had not effected any legislation regarding such rights or
reflecting such foreign law.

(5) In any event, Law 860 was confiscatory. It took their copyrights away from Peer without
compensation. The provision for presentation and possible approval could not affect that
conclusion. That split agreements into two types, namely *458 those that were presented
and approved and those that were presented and not approved or not presented resulting in
the copyright being confiscated without compensation. The latter types meant that copyright
was confiscated.

(6) The judge was correct in concluding that the Addenda made it clear that the intention of
the parties was to assign the relevant copyright to Peer. As they were in writing and signed by
the heirs, the confirmatory assignments and the Addenda when read together were sufficient
to assign the copyrights vested in the heirs.

Full text at: http://www.bailii.org/cgi-

bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2003/1156.html&query=%22peer+international%
22&method=boolean

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Case study 8: Fisher v Brooker and another- Licences and
assignments

Fisher v Brooker and another

House of Lords

30 July 2009

[2009] UKHL 41
http://www.bailii.org/cgi-
bin/markup.cgi?doc=/uk/cases/UKHL/2009/41.html&query=title+(+fisher+)&method
=boolean

The claimant and the first defendant were members of a band which in 1967 released a single
record containing a song that was an instant hit, achieving sales in the millions and being
regarded as one of the greatest songs ever written. The original music of the song had been
composed by the first defendant who had then executed a written assignment of the musical
copyright in the song to E, the recording company which was the second defendant's
predecessor, in return for 50% of the publishing royalties, performance fees etc. The claimant
had then composed a distinctive eight-bar introductory melody and a variation of it on its
repetition, which he played as an organ solo on the recording of the song which appeared on
the single. Four days after the single's release the members of the band entered into a further
recording contract with E, the effect of which was to enable E to exploit any recording made
by the band over the period of a year, subject to renewal by E. The claimant left the band in
1969, and was released from the band's substantial debts and generally released from his
entitlement to royalties relating to various of the band's works. The first defendant continued
thereafter to exploit the band's works including the song. In 1991 the copyright in the song
became vested in the second defendant. In 2005 the claimant issued proceedings against
both defendants seeking declarations that he was a joint author of the work and a joint owner
of the musical copyright. He accepted that the defendants had not infringed his copyright
between 1967 and 2005 as there had been an implied licence for them to exploit the work.
The judge held that the claimant was entitled to declarations (i) that he was a joint author of
the work, (ii) that he was a joint owner of the copyright to the extent of 40%, and (iii) that
the defendants' implied licence had been revoked from the date of issue of proceedings. On
the defendants' appeal the Court of Appeal affirmed the first declaration but, by a majority,
set aside the second and third declarations on the grounds, inter alia, that the claimant had
acted unconscionably and inexcusably in waiting 38 years, with knowledge and without
reasonable excuse, while the defendants exploited the work, before notifying them of his
claim to co-ownership of the copyright; that although the defendants had not suffered any
detriment from reliance on the claimant's acquiescence so as to entitle them to proprietary
estoppel, they were entitled to the defences of acquiescence and laches which did not require
detrimental reliance; and that, therefore, the claimant was not entitled to a declaration that
he was the joint owner of the copyright, and the defendants' implied licence had become
irrevocable by acquiescence. The court left open the questions whether the claimant had in
1967 impliedly assigned to E any interest he had in the musical copyright in the song and
whether the claimant had lost his right to claim an interest in the musical copyright in the
song by virtue of the 1967 recording contract.

On appeal by the claimant and cross-appeal by the defendants—

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Held , allowing the appeal and dismissing the cross-appeal, (1) that in order to make good
their contention that a contract had arisen by implication whereby the claimant assigned his
interest in the musical copyright to E in 1967 the defendants had to show that at the time of
the alleged assignment it had been obvious to the claimant as well as to E that the claimant's
interest in the musical copyright was being assigned to E, or that the commercial relationship
between the parties could not sensibly have functioned without such an assignment; that
although the question whether there was an implied contract was one of inference rather than
primary fact, it turned to a significant extent on the precise factual circumstances which were
very much for the trial judge to evaluate; that there had been no warrant for the appellate
tribunal to interfere with the judge's conclusion that no such implied contract had arisen; and
that, on the true construction of the terms of the 1967 recording contract, the claimant had
not assigned his interest in the copyright in the song to E but had, in his capacity as part
owner of the copyright, granted a licence to E to exploit the recording of the song which
appeared on the single

(2) That in order to succeed on proprietary estoppel the defendants had to show that they
had reasonably relied on the claimant's failure to raise or enforce his entitlement to a share of
the musical copyright in the song and that it would be unfairly to their detriment if the
claimant were now permitted to raise or enforce such a claim; that there was no evidence
that either E or the defendants would have acted any differently if the claimant had asserted
his claim earlier and by his long delay in doing so the claimant had lost a great deal of money
in royalties which had been received by the defendants; that, therefore, any disadvantage
resulting to the defendants from the claimant's delay had been outweighed by the
considerable financial benefit they had obtained from the delay; and that, accordingly, it
would be unjust to deprive the claimant of his interest in the song's musical copyright on the
basis of the estoppels pleaded by the defendants.

That, under the equitable doctrine of laches, delay could bar a claim to equitable relief where
it would be practically unjust to give a remedy; that the length of the delay and the nature of
the acts done during that time were relevant considerations and some sort of detriment was
usually an essential ingredient; that since laches could only bar equitable relief it could not
bar the claimant's claim for a declaration as to the existence of a long-term property right,
recognised as such by statute, which was not equitable relief; that, further, since any
prejudice that the defendants had suffered as a result of the delay was outweighed by the
benefit they obtained, they could not demonstrate that the acts of the claimant during the
period of delay had resulted in a balance of justice justifying the refusal of the relief to which
the claimant would otherwise be entitled; and that, accordingly, the defence based on laches
also failed.

That, in a case such as the present, acquiescence added nothing to the defences of
proprietary estoppel and laches, both of which could be characterised as acquiescence; that
save in a very unusual case it would be inconsistent to conclude that a claimant was not
estopped from asserting his copyright interest but then to refuse, on equitable grounds, to
declare that the right existed; and that, accordingly, the claimant should not be denied the
opportunity of exercising his right of property in his own share of the copyright and he was
entitled to all three declarations.

Decision of the Court of Appeal.

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Case Study 9: Gramophone Company of India Ltd. v. Shanti Film
Corporation, (AIR 1997 Cal 63) Licensing and Assignment
Gramophone Company of India Ltd. v. Shanti Film Corporation, (AIR 1997 Cal 63)

Executive Summary: The Calcutta High Court differentiated between exclusive license and
assignment.

There was an agreement between the plaintiff and defendant whereby the defendant had
assigned and transferred to the plaintiff all the copyright in its cinematograph film including
the literary, dramatic and musical works, the performing right, all the rights of publication,
sound and television broadcasting, public performance and mechanical reproduction of the
works. The sole and exclusive right to make or authorize the making of any record embodying
the contract record either alone or together with other recordings was also transferred to the
plaintiff by the said agreement. The rights transferred to the plaintiff were irrevocable in
nature. The plaintiff contended that through this assignment, it had become the owner of the
literary, dramatic and musical works of all nature contained in the cinematograph film. It
came to the notice of the plaintiff that cassettes containing the literary, dramatic and musical
works of the said film were released in the market by another company with the consent of
the defendant. The defendant’s version was that the said agreement was in reality not an
assignment and cannot be construed more than a license granted to the plaintiff to
manufacture and sell records containing the musical works of the said film the copyright of
which is at all times vested with the defendant. The defendant also averred that he had never
intended for an assignment without consideration and that he has not received any royalty in
lieu of the said agreement. It was also stated by the defendant that it has signed only a blank
document and the terms so harsh to the defendant were later filled in by the plaintiff. Against
this, the plaintiff contented that by the agreement, the defendant had divested all its rights
pursuant to assignment of copyright in relation to the literary, dramatic and musical works of
the film, the copyright in the original plate and copyright in records, cassettes, disc and like
manufactured and sold by the plaintiff. It submitted that the defendant is entitled only to
monetary claims against the plaintiff and that the assignment of copyright was absolute. On
finding that royalty payment is not made to the defendant, the plaintiff had made
arrangements for the same after filing the suit, but the cheque was returned by the
defendant.

While deciding the case, the court observed that the agreement contains the term assignment
and that though the terms of the agreement calls for payment of royalty, it does not provide
that for non-payment of royalty, the rights transferred will revert back to the defendant. The
court held that under the Indian Copyright Act, assignment and license should be made in
writing and signed by the copyright holder or his agent. The court explained that “The
intention of the parties whether it was an assignment or a grant of permission to use should,
in the normal course, be gathered from the writing itself and the words used therein. If the
word ‘assignment’ is used, then the assignment, in the normal course, be readily accepted.....
In the event, the writing contains covenants which indicate that the assignor retains some
right in spite of the writing in relation to the copyright then the same may either be a partial
assignment or a license...... The most important thing, it appears to me, is the right the
recipient has to deal with the copyright as owner thereof, i.e. the right of user or the right to
destroy the copyright at his own volition; any of which if can be gathered, assignment can be
readily accepted.” The court came to the conclusion that “the plaintiff has made out a prima
facie case of assignment of copyright of the sound track in its favour. There is neither any
restriction nor any compulsion on the part of the plaintiff to use the copyright. The grant itself
is not conditional nor does the grant cease to have effect on the happening of anything.
.......Therefore publication of the sound track of the film .......from the records produced by
the plaintiff without it authority will be infringement of the copyright...”

Held: Prevented the defendants from selling the cassettes.

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Summary of the Berne Convention: Special types of
works and situations

Cinematographic works and works expressed by a procedure similar to cinematography (for example,
televisual and videographic works) are protected as literary and artistic works under the Berne
Convention. As regards the special features which normally lead to the creation and subsequent
exploitation of this type of work, as well as the differences in the systems of ownership and authorship
which exist between various countries, Article 14bis stipulates certain special rules for these works
which affect the presumption of authorship, the law applicable to establishing ownership, a
presumption of legitimacy and Article 7(2) allows a special term of protection.

Computer programs represent a case characteristic of intellectual creations not listed in Article 2 of the
Berne Convention but which form part of what are known as literary and artistic works. The status of
literary and artistic works is confirmed in Article 4 of the WIPO Copyright Treaty. All computer
programs are protected, whatever may be the mode or form of their expression. Nonetheless, the
particular features of computer programs have obliged countries to put in place a system of copyright
protection specifically adapted to this type of work.

Although Article 2 of the Berne Convention already referred to “collections of literary or artistic
works” as part of the list of protected works, databases – as they are currently known – are defined in
Article 5 of the WIPO Copyright Treaty (WCT) as “compilations of data or other material, in any
form, which by reason of the selection or arrangement of their contents, constitute intellectual
creations.” Databases may be in both analogue and digital form, and may contain material able to be
protected by copyright (i.e. works) as well as material not able to be protected by copyright (i.e.
information, data and so on). The originality of the database depends on the selection or arrangement
of its content, rather than on the content itself. In the European Union, databases enjoy (in addition to
protection as works), a sui generis protection, granted to the producer of the database (taking into
account the investment made in producing the database) so as to prevent the extraction and/or re-use
of the whole or substantial part of the database, from a qualitative and/or quantitative point of view.

Digital technology has promoted the appearance of new forms of intellectual creation and exploitation
of works. This relates to the creation of totally new products which possess exclusive features, such as
videogames, multimedia products, virtual reality products and so on. Such works, insofar as they are
original creations, must be subject to the same protection as literary and artistic works. In fact, some
of these works, or part thereof, may be protected as cinematographic works, computer programs or
databases.

There are three special situations which relate to the application of the Berne Convention. In addition
to the fact that it applies to all the works created since the ratification of the Convention (by Member
States), the Convention also applies retroactively to all those foreign works created prior to its
ratification but which, at the time the Convention is ratified, have not yet fallen into the public domain
in the respective countries of origin. Furthermore, while there are no detailed rules regarding

137
enforcement in the Convention, it presupposes such rules and establishes a presumption of authorship.
It also requires provisions in national law regarding seizure of infringing copies. Disputes between
contracting countries as regards the interpretation or application of the Berne Convention may be
heard by the International Court of Justice; although currently, the TRIPS Agreement generates more
effective regulation of the settlement of disputes between States. Finally, the Berne Convention
allows developing countries to benefit from specific provisions for a period of time, taking into
account that, owing to their economic situation and social and cultural needs, they may not be able to
fulfil immediately all the obligations stemming from the Convention.

Copyright is often not exploited exclusively by the rightholder. Third parties can be given (limited)
exploitation rights and this can by done by means of licences or assignments. Individual licences or
assignment are quite common, but licences are often available on standard terms and via collective
licensing. Open licences are available to anyone too, but here the remuneration aspects is normally
replaced by the idea of sharing resources.

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Further Reading:

Copyright licensing and assignment:

A case study on the use of the Copyright Clearance Centre

http://www.copyright.com/media/pdfs/Temple_University_Case_Study.pdf

The open licensing idea: Creative Commons

http://mirrors.creativecommons.org/international/uk/translated-license-2.0.pdf

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