Limitations on exclusive rights: Computer programs

Last updated April 17, 2019

Limitations on exclusive rights: Computer programs is the title of the current form of section 117 of the U.S. Copyright Act (17 U.S.C. § 117). In United States copyright law, it provides users with certain adaptation rights for computer software that they own.

Background

The current form of section 117 is the result of a recommendation by CONTU, the National Commission on New Technological Uses of Copyrighted Works. The U.S. Congress established CONTU to study and make recommendations on modifying the 1976 Copyright Act to deal with new technologies, particularly computer software, that Congress had not addressed when it passed the 1976 Act. CONTU operated from 1975 to 1978, and its principal recommendation to Congress was to revise the wording of section 117. Its report stated:

CONTU, or the Commission on New Technological Uses of Copyrighted Works, was established in 1974 by United States Congress to study issues associated with copyrighted works in computers and computer-related works. It has been argued that the Commission erred in recommending the extension of copyright to machine-readable computer programs, because of the utility rule.

Because the placement of a work into a computer is the preparation of a copy, the law should provide that persons in rightful possession of copies of programs be able to use them freely without fear of exposure to copyright liability. Obviously, creators, lessors, licensors, and vendors of copies of programs intend that they be used by their customers, so that rightful users would but rarely need a legal shield against potential copyright problems. It is easy to imagine, however, a situation in which the copyright owner might desire, for good reason or none at all, to force a lawful owner or possessor of a copy to stop using a particular program. One who rightfully possesses a copy of a program, therefore, should be provided with a legal right to copy it to that extent which will permit its use by that possessor. This would include the right to load it into a computer and to prepare archival copies of it to guard against destruction or damage by mechanical or electrical failure. But this permission would not extend to other copies of the program. Thus, one could not, for example, make archival copies of a program and later sell some while retaining some for use. The sale of a copy of a program by a rightful possessor to another must be of all rights in the program, thus creating a new rightful possessor and destroying that status as regards the seller.

The revisions recommended by CONTU were approved with one important change. Instead of "rightful possessor" of a computer program Congress used the word "owner" of a computer program. It is not clear why this change was made. [1] This one change resulted in a state of affairs in which software vendors began to take the position that customers do not own their software but rather only "license" it. The courts have split on whether the assertion in software agreements that the customer does not own the software, and has only a right to use it in accordance with the license agreement, is legally enforceable. [2]

Users' rights under § 117

Section 117 is a limitation on the rights granted to holders of copyright on computer programs. The limitation allows the owner of a particular copy of a copyrighted computer program to make copies or adaptations of the program for any of several reasons:

A computer program is a collection of instructions that performs a specific task when executed by a computer. A computer requires programs to function.

Utilization of the program. The user is allowed to install the software to his hard disk and run the software in random-access memory.
Making backup and archival copies. The user is allowed to make copies of the software to protect himself from loss in the event of the original distribution media being damaged.
Making copies of software in order to repair or maintain machines, provided that the copies used in repairing the machine is destroyed after the repair or maintenance is complete.

The law allows any copies that are created for the above purposes to be transferred when the software is sold, only along with the copy made to prepare them. Adaptations made can not be transferred without permission from the copyright holder.

Reverse engineering

While it is not part of section 117, it is also lawful to reverse engineer software for compatibility purposes. Sec. 103(f) of the DMCA (17 U.S.C. § 1201 (f)) says that a person who is in legal possession of a program, is permitted to reverse-engineer and circumvent its protection against copying if this is necessary in order to achieve "interoperability" - a term broadly covering other devices and programs being able to interact with it, make use of it, and to use and transfer data to and from it, in useful ways. A limited exemption exists that allows the knowledge thus gained to be shared and used for interoperability purposes.

Reverse engineering, also called back engineering, is the process by which a man-made object is deconstructed to reveal its designs, architecture, or to extract knowledge from the object; similar to scientific research, the only difference being that scientific research is about a natural phenomenon.

The Digital Millennium Copyright Act (DMCA) is a 1998 United States copyright law that implements two 1996 treaties of the World Intellectual Property Organization (WIPO). It criminalizes production and dissemination of technology, devices, or services intended to circumvent measures that control access to copyrighted works. It also criminalizes the act of circumventing an access control, whether or not there is actual infringement of copyright itself. In addition, the DMCA heightens the penalties for copyright infringement on the Internet. Passed on October 12, 1998, by a unanimous vote in the United States Senate and signed into law by President Bill Clinton on October 28, 1998, the DMCA amended Title 17 of the United States Code to extend the reach of copyright, while limiting the liability of the providers of online services for copyright infringement by their users.

More generally, it has been held that reverse engineering is a fair use. [3] In Sega v. Accolade , the Ninth Circuit held that making copies in the course of reverse engineering is a fair use, when it is the only way to get access to the "ideas and functional elements" in the copyrighted code, and when "there is a legitimate reason for seeking such access." [4]

Sega Enterprises Ltd. v. Accolade, Inc., 977 F.2d 1510, is a case in which the United States Court of Appeals for the Ninth Circuit applied American intellectual property law to the reverse engineering of computer software. Stemming from the publishing of several Sega Genesis games by video game publisher Accolade, which had disassembled Genesis software in order to publish games without being licensed by Sega, the case involved several overlapping issues, including the scope of copyright, permissible uses for trademarks, and the scope of the fair use doctrine for computer code.

Related Research Articles

In computing, source code is any collection of code, possibly with comments, written using a human-readable programming language, usually as plain text. The source code of a program is specially designed to facilitate the work of computer programmers, who specify the actions to be performed by a computer mostly by writing source code. The source code is often transformed by an assembler or compiler into binary machine code understood by the computer. The machine code might then be stored for execution at a later time. Alternatively, source code may be interpreted and thus immediately executed.

In proprietary software, an end-user license agreement (EULA) or software license agreement is the contract between the licensor and purchaser, establishing the purchaser's right to use the software. The license may define ways under which the copy can be used, in addition to the automatic rights of the buyer including the first sale doctrine and 17 U.S.C. § 117.

MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, was a case heard by the United States Court of Appeals for the Ninth Circuit which addressed the issue of whether the loading of software programs into random-access memory (RAM) by a computer repair technician during maintenance constituted an unauthorized software copy and therefore a copyright violation. The court held that it did, although the United States Congress subsequently enacted an amendment to 17 U.S.C. § 117 to specifically overrule this holding in the circumstances of computer repair.

The first-sale doctrine is a legal concept playing an important role in U.S. copyright and trademark law by limiting certain rights of a copyright or trademark owner. 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 put the products on the market. The doctrine is also referred to as the "right of first sale," "first sale rule," or "exhaustion rule."

Software copyright is the extension of copyright law to machine-readable software. While many of the legal principles and policy debates 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 will primarily focus on topics particular to software.

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. The only exception is software in the public domain. A typical software license grants the licensee, typically an end-user, permission to use one or more copies of software in ways where such a use would otherwise potentially constitute copyright infringement of the software owner's exclusive rights under copyright.

Anti-circumvention refers to laws which prohibit the circumvention of technological barriers for using a digital good in certain ways which the rightsholders do not wish to allow. The requirement for anti-circumvention laws was globalized in 1996 with the creation of the World Intellectual Property Organization's Copyright Treaty.

A No-disc crack, No-CD crack or No-DVD crack is an executable file or a special "byte patcher" program which allows a user to circumvent certain Compact Disc and DVD copy protection schemes. They allow the user to run computer software without having to insert their required CD-ROM or DVD-ROM. This act is a form of software cracking. No-CD cracks specific to a variety of games and other software distributed on CD-ROM or DVD-ROM can be found on the Internet from various reverse engineering websites or file sharing networks. No-CD cracks have legal uses, such as creating backups of legally owned software or avoiding the inconvenience of placing a CD or DVD-ROM in the drive every time the software is being used, although they can also be used to circumvent laws in many countries by allowing the execution of full versions of non-legally owned applications or time-limited trials of the applications without the original disc.

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.

Proprietary software, also known as "closed-source software", is a non-free computer software for which the software's publisher or another person retains intellectual property rights—usually copyright of the source code, but sometimes patent rights.

The WIPO Copyright and Performances and Phonograms Treaties Implementation Act, is a part of the Digital Millennium Copyright Act (DMCA), a 1998 U.S. law. It has two major portions, Section 102, which implements the requirements of the WIPO Copyright Treaty, and Section 103, which arguably provides additional protection against the circumvention of copy prevention systems and prohibits the removal of copyright management information.

A decompiler is a computer program that takes an executable file as input, and attempts to create a high level source file which can be recompiled successfully. It is therefore the opposite of a compiler, which takes a source file and makes an executable. Decompilers are usually unable to perfectly reconstruct the original source code, and as such, will frequently produce obfuscated code. Nonetheless, decompilers remain an important tool in the reverse engineering of computer software.

MDY Industries, LLC v. Blizzard Entertainment, Inc and Vivendi Games, Inc., 629 F.3d 928, is a case decided by the United States Court of Appeals for the Ninth Circuit. At the district court level, MDY had been found liable under theories of copyright and tort law for selling software that contributed to the breach of Blizzard's End User License Agreement (EULA) and Terms of Use (TOU) governing the World of Warcraft software.
The court's ruling was appealed to the United States Court of Appeals for the Ninth Circuit, which reversed the district court in part, upheld in part, and remanded for further proceedings. The Court of Appeals ruled that for a software licensee's violation of a contract to constitute copyright infringement, there must be a nexus between the license condition and the licensor’s exclusive rights of copyright. However, the court also ruled, contrary to Chamberlain v. Skylink, that a finding of circumvention under the Digital Millennium Copyright Act does not require a nexus between circumvention and actual copyright infringement.

Vernor v. Autodesk, Inc. was a case in the United States District Court for the Western District of Washington regarding the applicability of the first-sale doctrine to software sold under the terms of so-called "shrinkwrap licensing." The court held that when the transfer of software to the purchaser materially resembled a sale it was, in fact, a "sale with restrictions on use" giving rise to a right to resell the copy under the first-sale doctrine. As such, Autodesk could not pursue an action for copyright infringement against Vernor, who sought to resell used versions of its software on eBay. The decision was appealed to the United States Court of Appeals for the Ninth Circuit, which issued a decision on September 10, 2010, reversing the first-sale doctrine ruling and remanding for further proceedings on the misuse of copyright claim. The Ninth Circuit's decision asserted that its ruling was compelled by Ninth Circuit precedent, but observed that the policy considerations involved in the case might affect motion pictures and libraries as well as sales of used software.

Cartoon Network, LP v. CSC Holdings, Inc., 536 F.3d 121, was a United States Court of Appeals for the Second Circuit decision regarding copyright infringement in the context of digital video recorders. Among other reasons, it is notable for disagreeing with the Ninth Circuit's holding in MAI Systems Corp. v. Peak Computer, Inc., regarding whether a momentary data stream is a "copy."

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.

The Louisiana Software License Enforcement Act refers to the Software License Enforcement Act (SLEA) adopted by the state of Louisiana. The bill was voted into law in September 1984 under Title 51 of the Louisiana Revised Statutes by the Louisiana State Legislature. Sponsored and mostly written by Vault Corporation, the SLEA defines the permissible terms and conditions of a software license agreement and the requirements for enforceability. The reverse engineering, decompiling or disassembling provision of the Louisiana SLEA was invalidated by the United States Court of Appeals for the Fifth Circuit ruling in Vault Corp. v. Quaid Software, Ltd., 847 F.2d 255 .

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.

References

↑ According to Professor Holaar, Digital Law Online: History.§ I.E.1: "There is nothing in the legislative history of the bill that indicates why this change was made. Perhaps the best explanation is that Congress was concerned that people would make copies of software they had rented or borrowed from a public library, where they were rightful possessors during the time they had the software, and then not delete the copies when they return the software to the rental place or library."
↑ For example, in Krause v. Titleserv, Inc., 402 F.3d 119 (2d Cir. 2005), the Second Circuit held that “Congress’s decision to reject ‘rightful possessor’ in favor of ‘owner’ [did] not indicate an intention to limit the protection of the statute to those possessing formal title.” Id. at 123. Rather, “formal title in a program copy is not an absolute prerequisite to qualifying for [shelter under § 117]. Instead, courts should inquire into whether the party exercises sufficient incidents of ownership over a copy of the program to be sensibly considered the owner of the copy for purposes of § 117(a).” Id. at 124. On the other hand, in MAI Systems Corp. v. Peak Computer, Inc., the Ninth Circuit held § 117 inapplicable to a customer because “MAI software licenses [did] not allow for the use or copying of MAI software by third parties such as [repair and maintenance persons].” The court also said: “Since MAI licensed its software, the [] customers [were licensees of MAI and] do not qualify as ‘owners’ of the software and are not eligible for protection under § 117.” Id. at 518 n.5.
↑ The Federal Circuit so held in Atari Games Corp. v. Nintendo of America Inc. (interoperability case).
↑ See also Sony Computer Entertainment, Inc. v. Connectix Corp. (reverse engineering to make emulator).

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[1] According to Professor Holaar, Digital Law Online: History.§ I.E.1: "There is nothing in the legislative history of the bill that indicates why this change was made. Perhaps the best explanation is that Congress was concerned that people would make copies of software they had rented or borrowed from a public library, where they were rightful possessors during the time they had the software, and then not delete the copies when they return the software to the rental place or library."

[2] For example, in Krause v. Titleserv, Inc., 402 F.3d 119 (2d Cir. 2005), the Second Circuit held that “Congress’s decision to reject ‘rightful possessor’ in favor of ‘owner’ [did] not indicate an intention to limit the protection of the statute to those possessing formal title.” Id. at 123. Rather, “formal title in a program copy is not an absolute prerequisite to qualifying for [shelter under § 117]. Instead, courts should inquire into whether the party exercises sufficient incidents of ownership over a copy of the program to be sensibly considered the owner of the copy for purposes of § 117(a).” Id. at 124. On the other hand, in MAI Systems Corp. v. Peak Computer, Inc., the Ninth Circuit held § 117 inapplicable to a customer because “MAI software licenses [did] not allow for the use or copying of MAI software by third parties such as [repair and maintenance persons].” The court also said: “Since MAI licensed its software, the [] customers [were licensees of MAI and] do not qualify as ‘owners’ of the software and are not eligible for protection under § 117.” Id. at 518 n.5.

[3] The Federal Circuit so held in Atari Games Corp. v. Nintendo of America Inc. (interoperability case).

[4] See also Sony Computer Entertainment, Inc. v. Connectix Corp. (reverse engineering to make emulator).