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If a dispute is able to move past the question of whether the software at issue is eligible for copyright protection, the claimant will need to be prepared to present a prima facie claim of infringement. The Copyright Act and relevant case law do not distinguish between software and other copyrightable works for the purposes of setting forth the requirements of a claim. To establish a claim for software copyright infringement, a plaintiff must show (1) ownership of a valid copyright; (2) factual copying of the code or documentation; and (3) substantial similarity between the software applications. 

The developer of a software application acquires a common-law copyright interest at the time the software is published, unless the developer has entered into an agreement assigning the interest to another party. The filing of a certificate of registration creates a rebuttable presumption of the validity of a copyright and of the facts contained in the certificate regarding ownership. However, the fact that software is often developed through subcontractors or using a collaborative approach may complicate the analysis. In some cases, for example, the “work made for hire” doctrine may control the question of who legally owns the software.  Under this doctrine, “the employer or other person for whom the work was prepared is considered the author” of a “work made for hire” and owns the copyright, absent an agreement between the parties to the contrary. The Copyright Act defines a “work made for hire,” inter alia, as “a work prepared by an employee within the scope of his or her employment…”  The Supreme Court has held that general principles of agency law apply when deciding if a work was prepared by an employee rather than an independent contractor.  If an alleged infringer was an employee of a copyright owner when he or she developed software and/or documentation, it will be presumed that the works belonged to the employer for purposes of the Copyright Act. The alleged infringer then would have to prove the existence of a written agreement signed by both parties under which he or she retained ownership rights.    

Whether you are an employer or an employee, if you have a question about the work-for-hire doctrine, you should contact experienced counsel to assist you.

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Once the question of who owns the software is established, the copyright owner must be able to prove that the alleged infringer copied the works at issue. Factual copying may be proved by direct or circumstantial evidence, but in most cases a copyright owner must rely on circumstantial evidence. To make out a circumstantial claim, a plaintiff must prove (1) that the defendant had access to the copyrighted work before creation of the infringing work and (2) that the works contain similarities that are probative of copying. If a plaintiff is able to combine the existence of access to the copyrighted work and similarities between the two works, this establishes the presumption as a matter of law that copying in fact occurred. However, the presumption is rebuttable, and once a plaintiff circumstantially establishes factual copying, the defendant may respond with evidence that he independently created the work at issue.

Substantial Similarity: Abstraction-Filtration Method

Substantial similarity between competing software works is the third element of the copyright infringement claim. In assessing whether a computer program has been infringed, the Fifth Circuit has adopted the “abstraction-filtration” method proposed by the Tenth Circuit in Gates Rubber Company v. Bando Chemical Industries.

Under the abstraction-filtration test, the court first dissects the program according to its varying levels of generality as provided in the abstractions test. Learned Hand presented a summary of the analysis involved in the abstractions test when he wrote, in the context of alleged infringement of a theatrical script:

Upon any work, and especially upon a play, 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 be no more than the most general statement of what the play is about, and at times might only consist of its title; but there is a point in this series of abstractions where they are no longer protected, since otherwise the playwright could prevent the use of his “ideas,” to which, apart from their expression, his property is never extended.

According to the Gates court, “a computer program can often be parsed into at least six levels of generally declining abstraction: (i) the main purpose [‘a description of the program's function or what it is intended to do’], (ii) the program structure or architecture [‘a description of how the program operates in terms of its various functions, which are performed by discrete modules, and how each of these modules interact with each other’], (iii) modules [consisting of ‘operations,’ which identify a particular result or set of actions that may be performed, and ‘data types,’ which define the type of item that an operator acts upon], (iv) algorithms [‘more specific manifestations of operations…a specific series of steps that accomplish a particular operation’] and data structures [‘precise representation[s] or specification[s] of…data type[s] that [consist] of (i) basic data type groupings such as integers or characters, (ii) values, (iii) variables, (iv) arrays or groupings of the same data type, (v) records or groupings of different date types, and (vi) pointers or connections between records that set aside space to hold the record's values’], (v) source code [‘the literal text of a program's instructions written in a particular programming language’], and (vi) object code [‘the literal text of a computer program written in a binary language through which the computer directly receives its instructions’].” Expert testimony often is necessary in order to educate the court and the jury regarding the organization of a program into the appropriate levels of abstraction.

Second, poised with this framework, the court should examine each level of abstraction in order to filter out those elements of the program that are not protectable. Filtration should eliminate from comparison those aspects of the software that are not eligible for copyright protection, including ideas, processes, facts, and public domain information. Filtration also should include application of the doctrines of merger and scenes a faire to remove any additional elements that are not eligible for protection.

Finally, the court compares the remaining protectable elements of the original program with the allegedly infringing program to determine whether the defendants have misappropriated substantial elements of the plaintiff's program. The goal of the analysis should be to determine whether any copied elements constitute “matter that is significant in the plaintiff's program.” This is a qualitative, rather than quantitative analysis, the outcome of which will depend heavily on the unique facts of each case. 

If an alleged infringer is able to establish a prima facie case of circumstantial infringement based on the apparent similarities between the defendant’s software and documentation and those used by defendants, the burden of proof then shifts to the defendant to demonstrate that no copying occurred. An expert with experience in software coding likely will be needed to rebut any expert testimony presented by the plaintiff during the abstracted analysis of the two programs. While a line-by-line comparison of the documentation may reveal many similarities between the works, experts may testify that they are merely surface similarities between the plaintiff’s and defendant’s software and documentation, many of which may be attributable to the similar functions and purposes of the systems.

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Vigilant monitoring of the BSA’s member list can help you protect your business from unneeded expense associated with a BSA-initiated software audit. The BSA member list changes as software publishers are added to and removed from the BSA’s publicly available list of member software publishers.

Most recently, the newest software publisher to join the BSA is Sheba Distribution, a division of Garmin Ltd., producer of the popular Garmin navigation and communication devices. Avid, EMC Corporation, Parametric Technology Corporation (PTC), and Synopsys have been removed from the BSA member list. Avid publishes popular video and media editing software such as Media Composer Mojo and Symphony Nitris. Avid also owns media and graphics software companies Digidesign, Pinnacle Systems, M-Audio, Sibelius, Sundance Digital, and formerly, Soft Image. EMC Corporation is a technology company offering a range of network, data recovery, and information management products and consulting services. EMC also owns virtual machine software company VMWare. PTC publishes the popular engineering design software PRO/Engineer. Synopsys publishes software and offers services used in the semiconductor industry.

A BSA audit can be a costly engagement for any business. Maintaining software license compliance will help prevent your business from exposing itself to the unneeded expense of a lawsuit or settlement with the BSA. Businesses that do not manage their licenses and installations on an ongoing basis by performing self-audits may find themselves performing an audit in the context of a BSA matter. Businesses should strongly consider deploying software audit solutions that manage both their installations and licenses and protect the information under an attorney-client privilege.

To view the current list of BSA members, click http://www.bsa.org/country/BSA%20and%20Members/Our%20Members.aspx.

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Many businesses that use software published by Autodesk are familiar with the company’s vigorous copyright enforcement program. Autodesk is one of the most active software publishers when it comes to threatening litigation over allegedly unlicensed use of its well-known computer-aided design products, such as AutoCAD, and it regularly targets businesses of all sizes demanding costly and distracting audits and settlements, often based solely on the word of unidentified informants.

In addition to such matters targeted at its past and potential customers, however, Autodesk’s enforcement program also includes efforts to eradicate what it believes to be unauthorized sale of its software. The Washington state federal lawsuit of Vernor v. Autodesk Inc. falls into this category. Here, the plaintiff, Timothy Vernor, had for some time attempted to sell used AutoCAD packages on eBay. However, when he did so, Autodesk sent notices to eBay pursuant to the Digital Millennium Copyright Act that such activity violated Autodesk’s copyrights, and in order to avoid contributory copyright liability, eBay removed the listings. After several such exchanges, eBay eventually terminated Vernor’s account. In response, Vernor filed suit against Autodesk, seeking a declaratory judgment that his sale of used software did not constitute copyright infringement.

In its first substantive opinion in the matter, the Federal Court for the Western District of Washington denied a motion to dismiss in which Autodesk had argued that the software Vernor attempted to sell on eBay had been licensed exclusively to a Seattle architecture firm, that the firm had no authority to transfer the software to any other party, and that Vernor’s activity therefore constituted a violation of its copyrights in the software. The court disagreed, holding that the first sale doctrine under U.S. copyright law protected Vernor from liability. Despite Autodesk’s characterization of the earlier transaction as the transfer of a license, the court ruled that the architectural firm merely had purchased a copy of the product, and first sale doctrine allows the lawful owner of a copy of a work to sell or give it away.

On September 30, 2009, the court essentially repeated this holding in ruling on cross-motions for summary judgment filed by each of the parties. Again relying primarily on the 9^th Circuit’s opinion in United States v. Wise (1977), the court characterized the earlier sale to the architectural firm as just a sale with a restriction as to use. After Wise, the 9^th Circuit held in other cases involving software disputes that software licensees did not “own” their copies. However, the Vernor trial court nevertheless looked to Wise as the controlling precedent, because it was the earliest case to consider the issue and because the 9^th Circuit did not expressly address it in the cases that followed.

A decision by Autodesk not to appeal these rulings by the Vernor court would be surprising, considering what is at stake. The implications of the court’s holding, if allowed to stand, would cast a shadow across the license-enforcement initiatives of not only Autodesk, but also other software publishers and their trade groups, such as the Business Software Alliance and the Software & Information Industry Association. It will be very interesting to see what happens next in this matter.

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