Lasercomb Am., Inc. v. Reynolds | |
---|---|
Court | United States Court of Appeals for the Fourth Circuit |
Full case name | Lasercomb America, Inc. v. Job Reynolds; Larry Holliday and Holiday Steel Rule Die Corporation |
Argued | Jan. 8 1990 |
Decided | Aug. 16 1990 |
Citation(s) | 911 F.2d 970; 15 U.S.P.Q.2d 1846; 59 USLW 2142; 1990-2 Trade Cases 69,145; 1990 Copr. L. Dec. (CCH) ¶ 26,619; 18 Fed.R.Serv.3d 130 |
Case history | |
Prior history | Lasercomb Am. v. Holiday Steel Rule Die Corp., 656 F. Supp. 612, (M.D.N.C. 1987) (awarding summary judgment in favor of Lasercomb on copyright infringement claim). |
Subsequent history | Rehearing and Rehearing En Banc denied on Sep. 27, 1990. |
Holding | |
Court found the language in Lasercomb's licensing agreement to be anticompetitive and "egregious" and therefore amounted to copyright misuse, which barred it from suing for infringement of its copyright. District court's injunction and award of damages reversed. | |
Court membership | |
Judge(s) sitting | Hiram Emory Widener Austin B. Sprouse Walter E. Hoffman |
Laws applied | |
17 U.S.C. § 102(b), 17 U.S.C. § 302(a), 17 U.S.C. § 505. |
Lasercomb America, Inc. v. Reynolds, 911 F.2d 970 (4th Cir. 1990) is an appeal filed in the United States Court of Appeals for the Fourth Circuit. Initially, Lasercomb filed an action against Holiday Steel for breach of contract, copyright infringement, misappropriation of trade secrets, fraud, unfair competition, and false designation of origin. The United States District Court ruled in favor of Lasercomb, awarding them punitive damages and actual damages for fraud, rejecting the defense of copyright misuse. On appeal, based on a recognition of the similarity to patent misuse, the holding was reversed, deeming the language contained in the license agreement unreasonable. [1]
Larry Holliday and Job Reynolds worked together at Holiday Steel Rule Die Corporation. Larry Holliday was the sole shareholder and president of Holiday Steel and Job Reynolds was a computer programmer for that company. Steel rule die is used in a number of applications including the creation of creases, perforations, slits, and to cut and score paper and cardboard to be folded into cartons or boxes.
Lasercomb America, Inc. was a competitor of Holiday Steel Rule Die Corporation and manufactured steel rule die for similar applications. The object of dispute was a software program developed solely by Lasercomb that eased the production of steel rule die.
Lasercomb developed Computer-Aided Design (CAD) and Computer-Aided Manufacturing (CAM) software known as Interact. The software allowed the user to design a template of a cardboard cutout for visualization on a computer screen. Interact effectively allowed a designer to create and coordinate the production of steel rule die.
Prior to the general release of Lasercomb's Interact program, Lasercomb licensed four pre-release copies to Holiday Steel. The contract stipulated the first licensed copy of Interact would cost $35,000, the second and third $17,500, and the fourth plus any subsequent copies $2,000. In addition, the terms of the license specified that for the ninety-nine year term of the agreement, and for one year thereafter, Holiday Steel "will not write, develop, produce or sell computer assisted die making software, directly or indirectly without Lasercomb's prior written consent." [1] [2]
Holiday Steel, after receiving the pre-release copies, circumvented the protective measures implemented by Lasercomb and made three unauthorized copies of the Interact software. Holiday Steel then proceeded to develop their own software called "PDS-1000," which was "almost entirely a direct copy of Interact, and marketed it as its own CAD/CAM die-making software." [1] [2] With the direction of Holliday, the infringing activities were accomplished by Reynolds.
Lasercomb, after consulting Holiday Steel, implemented "chronoguard" devices that prevented unauthorized access to Interact. Through manipulation and circumvention, Holiday Steel removed the chronoguards without authorization. In doing so, Holiday Steel misrepresented that the chronoguards were in use, even after removal. Once these actions were discovered by Lasercomb, it hastily copyrighted Interact and filed suit against Holiday Steel, Holliday, and Reynolds on March 7, 1986.
While there was no contention that Holliday and Reynolds copied Interact, they claimed that Lasercomb misused its copyright. Holliday and Reynolds asserted that the language in Lasercomb's standard license agreement "restricts licensees from creating any of their own CAD/CAM die-making software…." [1] [2] Specifically, section D of the license states "Licensee agrees during the term of this agreement that it will not permit or suffer its directors, officers and employees, directly or indirectly, to write, develop, produce or sell computer assisted die making software." [1] [2]
The "term of this Agreement," as specified by Lasercomb in the clauses of its license agreement, was ninety-nine years. Holliday and Reynolds could only be bound by the terms of Lasercomb's license agreement if they had assented to it. Lasercomb sent the applicable agreement to Holiday Steel to be signed and returned; however, Larry Holliday did not sign the license agreement. Lasercomb overlooked this fact and still issued the prereleased software to Holiday Steel. The District Court rejected the claim of copyright misuse because the contract clauses had not been explicitly agreed to, "such a clause is reasonable in light of the delicate and sensitive area of computer software," and questioned the existence of such a defense. [2] The District Court granted a permanent injunction against Holiday and awarded collective damages of $120,000 for actual and punitive damages.
The foundational patent misuse case Morton Salt Co. v. G.S. Suppinger, 314 U.S. 488 (1942), [3] involved an analogous situation involving the use of a patent in a manner that contradicted public policy. Such an exercise of contract constituted a misuse of one's patent by restraining an individual's constitutional privileges. At the time, the patent misuse analogy was not established and such a defense was limited to a single case; M. Witmark & Sons v. Jensen, 80 F. Supp. 843 (D.Minn. 1948). It was determined that "since copyright and patent law serve parallel public interests, a ‘misuse' defense should apply to infringement actions brought to vindicate either right." [1] [2] The granted monopoly power of both patent and copyright law does not extend to umbrella property not included in a patent or copyright. [4]
On appeal, the court found that Lasercomb's anticompetitive clauses within its license agreement were a misuse of copyright. Based on the patent misuse analogy, the copyright misuse defense was available to the appellants despite the fact that they had not agreed to the standard license agreement. Therefore, it was determined that Lasercomb should have been restricted from suing for copyright infringement by copyright misuse. The clauses contained in Lasercomb's standard license agreement were a misuse of copyright when suing for infringement of copyright of the Interact program. For these reasons, the appellate court reversed the injunction and reversed the award of copyright infringement damages.
The Appellate Court found that the District Court had incorrectly inferred that a copyright misuse may not be a violation of antitrust law. Of more importance, the public policy of copyright laws were being violated by the exercise of Lasercomb's standard license agreement. This Appellate Court's reversal of this case recognizes copyright misuse as an equitable defense to an infringement claim. In doing so, the patent misuse defense in Morton Salt v. G.S. Suppiger was recognized as a legitimate analogy to a misuse of copyright. [3]
A license or licence is an official permission or permit to do, use, or own something.
An end-user license agreement (E.U.L.A.) is a legal contract entered into between a software developer or vendor and the user of the software, often where the software has been purchased by the user from an intermediary such as a retailer. A EULA specifies in detail the rights and restrictions which apply to the use of the software.
The first-sale doctrine is an American legal concept that limits the rights of an intellectual property owner to control resale of products embodying its intellectual property. The doctrine enables the distribution chain of copyrighted products, library lending, giving, video rentals and secondary markets for copyrighted works. In trademark law, this same doctrine enables reselling of trademarked products after the trademark holder puts the products on the market. In the case of patented products, the doctrine allows resale of patented products without any control from the patent holder. The first sale doctrine does not apply to patented processes, which are instead governed by the patent exhaustion doctrine.
Software copyright is the application of copyright in law to machine-readable software. While many of the legal principles and policy debates a concerning software copyright have close parallels in other domains of copyright law, there are a number of distinctive issues that arise with software. This article primarily focuses on topics particular to software.
Copyright misuse is an equitable defence to copyright infringement in the United States based upon the doctrine of unclean hands. The misuse doctrine provides that the copyright holder engaged in abusive or improper conduct in exploiting or enforcing the copyright will be precluded from enforcing his rights against the infringer. Copyright misuse is often comparable to and draws from the older and more established doctrine of patent misuse, which bars a patentee from obtaining relief for infringement when he extends his patent rights beyond the limited monopoly conferred by the law.
A software license is a legal instrument governing the use or redistribution of software. Under United States copyright law, all software is copyright protected, in both source code and object code forms, unless that software was developed by the United States Government, in which case it cannot be copyrighted. Authors of copyrighted software can donate their software to the public domain, in which case it is also not covered by copyright and, as a result, cannot be licensed.
The SCO–Linux disputes were a series of legal and public disputes between the software company SCO Group (SCO) and various Linux vendors and users. The SCO Group alleged that its license agreements with IBM meant that source code IBM wrote and donated to be incorporated into Linux was added in violation of SCO's contractual rights. Members of the Linux community disagreed with SCO's claims; IBM, Novell and Red Hat filed claims against SCO.
In United States patent law, patent misuse is a patent holder's use of a patent to restrain trade beyond enforcing the exclusive rights that a lawfully obtained patent provides. If a court finds that a patent holder committed patent misuse, the court may rule that the patent holder has lost the right to enforce the patent. Patent misuse that restrains economic competition substantially can also violate United States antitrust law.
Vault Corporation v Quaid Software Ltd. 847 F.2d 255 is a case heard by the United States Court of Appeals for the Fifth Circuit that tested the extent of software copyright. The court held that making RAM copies as an essential step in utilizing software was permissible under §117 of the Copyright Act even if they are used for a purpose that the copyright holder did not intend. It also applied the "substantial noninfringing uses" test from Sony Corp. of America v. Universal City Studios, Inc. to hold that Quaid's software, which defeated Vault's copy protection mechanism, did not make Quaid liable for contributory infringement. It held that Quaid's software was not a derivative work of Vault's software, despite having approximately 30 characters of source code in common. Finally, it held that the Louisiana Software License Enforcement Act clause permitting a copyright holder to prohibit software decompilation or disassembly was preempted by the Copyright Act, and was therefore unenforceable.
Jacobsen v. Katzer was a lawsuit between Robert Jacobsen (plaintiff) and Matthew Katzer (defendant), filed March 13, 2006 in the United States District Court for the Northern District of California. The case addressed claims on copyright, patent invalidity, cybersquatting, and Digital Millennium Copyright Act issues arising from Jacobsen under an open source license developing control software for model trains.
Copyright infringement is the use of works protected by copyright without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the copyright holder, such as the right to reproduce, distribute, display or perform the protected work, or to make derivative works. The copyright holder is typically the work's creator, or a publisher or other business to whom copyright has been assigned. Copyright holders routinely invoke legal and technological measures to prevent and penalize copyright infringement.
Bowers v. Baystate Technologies, 320 F.3d 1317, was a U.S. Court of Appeals Federal Circuit case involving Harold L. Bowers and Baystate Technologies over patent infringement, copyright infringement, and breach of contract. In the case, the court found that Baystate had breached their contract by reverse engineering Bower's program, something expressly prohibited by a shrink wrap license that Baystate entered into upon purchasing a copy of Bower's software. This case is notable for establishing that license agreements can preempt fair use rights as well as expand the rights of copyright holders beyond those codified in US federal law.
Typefaces, fonts, and their glyphs raise intellectual property considerations in copyright, trademark, design patent, and related laws. The copyright status of a typeface—and any font file that describes it digitally—varies between jurisdictions. In the United States, the shapes of typefaces are not eligible for copyright, though the shapes may be protected by design patent. Typefaces can be protected in other countries, including the UK, Germany, and France, by industrial design protections that are similar to copyright or design patent in that they protect the abstract shapes. Additionally, in the US and in some other countries, computer fonts—the digital instantiation of the shapes as vector outlines—may be protected by copyright on the computer code that produces them. The name of a typeface may also be protected as a trademark.
Google LLC v. Oracle America, Inc., 593 U.S. ___ (2021), was a U.S. Supreme Court decision related to the nature of computer code and copyright law. The dispute centered on the use of parts of the Java programming language's application programming interfaces (APIs) and about 11,000 lines of source code, which are owned by Oracle, within early versions of the Android operating system by Google. Google has since transitioned Android to a copyright-unburdened engine without the source code, and has admitted to using the APIs but claimed this was within fair use.
Atari Games Corp. v. Nintendo of America Inc., 975 F.2d 832, is a United States Court of Appeals for the Federal Circuit case, in which the court held that Atari Games engaged in copyright infringement by copying Nintendo's lock-out system, the 10NES. The 10NES was designed to prevent Nintendo's video game console, the Nintendo Entertainment System (NES), from accepting unauthorized game cartridges. Atari, after unsuccessful attempts to reverse engineer the lock-out system, obtained an unauthorized copy of the source code from the Copyright Office and used it to create its 10NES replica, the Rabbit. The case involved copyright infringement claims by Nintendo and a defense based on fair use and copyright misuse by Atari.
Morton Salt Co. v. G.S. Suppiger Co., 314 U.S. 488 (1942), is a patent misuse decision of the United States Supreme Court. It was the first case in which the Court expressly labeled as "misuse" the Motion Picture Patent
Motion Picture Patents Co. v. Universal Film Mfg. Co., 243 U.S. 502 (1917), is United States Supreme Court decision that is notable as an early example of the patent misuse doctrine. It held that, because a patent grant is limited to the invention described in the claims of the patent, the patent law does not empower the patent owner, by notices attached to the patented article, to extend the scope of the patent monopoly by restricting the use of the patented article to materials necessary for their operation but forming no part of the patented invention, or to place downstream restrictions on the articles making them subject to conditions as to use. The decision overruled The Button-Fastener Case, and Henry v. A.B. Dick Co., which had held such restrictive notices effective and enforceable.
Princo Corp. v. ITC, 616 F.3d 1318 was a 2010 decision of the United States Court of Appeals for the Federal Circuit, that sought to narrow the defense of patent misuse to claims for patent infringement. Princo held that a party asserting the defense of patent misuse, absent a case of so-called per se misuse, must prove both "leveraging" of the patent being enforced against it and a substantial anticompetitive effect outside the legitimate scope of that patent right. In so ruling, the court emphasized that the misuse alleged must involve the patent in suit, not another patent.
National Lockwasher Co. v. George K. Garrett Co., 137 F.2d 255, is one of the earliest or the earliest federal court decision to hold that it is patent misuse for a patentee to require licensees not to use a competitive technology. Such provisions are known as "tie-outs."
Free and open source software (FOSS) is distributed under a variety of free-software licenses. These licenses differ significantly from other kinds of software licenses. Legal action against open source licenses involves questions about their validity and enforceability.
Jason Mazzone, Copyfraud , Social Science Research Network (Jun. 29, 2006).
Toshiko Takenaka, Extending the new patent misuse limitation to copyright: Lasercomb America, Inc. v. Reynolds , Center For Computer-Law (1992).
Copyright Misuse Doctrine , Copyright Law - Copyright Misuse.