Chapter 1: An Overview of Copyright I. History I.A. The Statute of Anne I.B. Federal Copyright I.C.

The Early Statutes I.D. The Copyright Act of 1909 I.E. The Copyright Act of 1976 I.F. Later Legislation II. Current Copyright Law II.A. How Copyright Comes Into Being II.A.1. Fixation of a Work II.A.2. Types of Works II.A.3. Originality Is Required II.B. Compilations, Collections, And Derivative Works II.B.1. Reproductions or Derivative Works? II.B.2. Special Provisions II.C. Copyright Notice And Registration II.C.1. Form of the Notice II.C.2. Registration of Copyright II.D. Federal Government Works II.D.1. Exemption from Copyright II.D.2. Government Contract Works II.E. Ideas Versus Expression II.E.1. Two Key Supreme Court Cases II.E.2. Idea-Expression Merger and Scnes Faire II.F. Copyright Ownership II.F.1. Joint Works II.F.2. Works Made For Hire II.F.3. Collective Works II.G. Copyright Duration II.G.1. Why So Long? II.H. Rights In Copyright II.H.1. Reproduction II.H.2. Derivative Works II.H.3. Public Distribution and First Sale II.H.4. Public Performance or Display II.H.5. Rights In Different Types of Works II.H.6. Assignments and Licensing II.I. Fair Use II.I.1. Consider All Factors II.I.2. Fair Use as a Safety Valve II.J. Indirect Infringement II.J.1. Contributory Infringement II.J.2. Vicarious Infringement

II.K. Misuse Of Copyright II.L. Remedies For Copyright Infringement II.L.1. Time Limits For Filing Suit II.L.2. Damages II.L.3. Attorney Fees and Costs II.L.4. Criminal Infringement Chapter 2: Copyright of Computer Programs I. The History Of Software Copyright I.A. Early Software: The Piano Roll I.B. The First Software Copyrights I.C. Software Under the 1976 Act I.D. The CONTU Recommendations I.E. Congressional Action I.E.1. Adoption of the CONTU Recommendations, with an Unexplained Change I.E.2. The 1990 Software Rental Prohibition I.E.3. The 1998 Addition to Section 117 II. The Scope Of Software Copyright II.A. Copyrights or Patents? II.B. Object Code II.B.1. Williams Electronics v. Artic International II.B.2. Apple v. Franklin II.C. RAM Copies II.C.1. MAI v. Peak: Fixed Reproductions II.C.2. A Better Way to Look at RAM Copies II.D. Summary III. Beyond Mere Copying of a Computer Program III.A. Structure, Sequence, and Organization III.A.1. The Third Circuits Whelan Decision III.A.2. Criticism Of Whelan III.B. Abstraction, Filtration, Comparison III.B.1. The Second Circuits Altai Decision III.B.2. The Tenth Circuits Elaboration On Altai III.B.3. Filtration III.B.3.a. Efficiency III.B.3.b. External Factors III.B.3.c. Material in the Public Domain III.B.3.d. Facts III.B.4. Comparison III.C. Methods of Operation III.C.1. The Paperback Decision III.C.2. Borland at the District Court III.C.3. Borland at the First Circuit III.C.4. Tenth Circuit Criticism of Borland IV. Applying The AFC Test

IV.A. A Suggested Approach IV.B. A Judges Comments on the Suggested Approach V. Reverse Engineering Of Software V.A. The Federal Circuits Atari Decision V.B. The Ninth Circuits Sega Decision V.B.1. The First Fair Use Factor V.B.2. The Second Fair Use Factor V.B.3. The Third and Fourth Fair Use Factors V.B.4. Summarizing The Four Factors V.C. Revising Sega in Sony v. Connectix VI. Other Software Copyright Issues VI.A. Source Code and Derivative Works VI.B. Source Code and Object Code VI.C. Source Code and Displays VI.D. New Software from Old VI.D.1. Using a Clean Room VI.D.2. Piecewise Reimplementation VI.D.3. Section 117 Adaptations VI.D.4. Derivative Works and Compilations VII. Summary Chapter 3: Copyright of Digital Information I. Why Digital Works are Different I.A. The Ease of Copying and Distributing Digital Works I.B. Copyright Laws are a Bad Fit I.B.1. File Sharing I.B.1.a. The Public Distribution Right I.B.1.b. The Reproduction Right I.B.1.c. The Adaptation Right I.B.1.d. The Public Performance Rights I.B.1.e. The Public Display Right I.B.1.f. What Can Be Done I.B.2. Intermediate Copies I.B.2.a. A New Right to Control Access and Use? I.B.2.b. Transitory Duration? I.B.2.c. Fair Use? I.B.2.d. What Can Be Done II. Protecting Digital Information II.A. The Audio Home Recording Act II.B. The White Paper II.C. Digital Sound Recordings II.C.1. The New Exclusive Right II.C.2. Exceptions II.C.3. Webcasting III. What Not to Protect

III.A. The Court Decisions III.A.1. Netcom III.A.2. When a Service Provider Will Be Liable III.B. Congress Codifies the Decisions III.B.1. The Four Safe Harbors III.B.2. Benefits of Being in the Safe Harbor III.B.3. Notice-and-Takedown Procedures III.B.3.a. Notice III.B.3.b. Takedown III.B.3.c. Put-back III.B.4. Mere Conduits for Others Communications III.B.5. Service Provider Caching III.B.6. Stored User Information III.B.7. Directories and Links III.B.8. Other Safe Harbor Requirements III.B.9. Special Rules for Schools IV. Protection Through Technology IV.A. Why Technology, Why Laws? IV.B. Past Technological Protections IV.C. The White Paper IV.D. The WIPO Copyright Treaty IV.E. Technological Protections and the DMCA IV.E.1. The Trafficking Provisions IV.E.2. Accessing Through Circumvention IV.E.3. Distinction From Copyright IV.E.4. Fair Use IV.E.5. What Anticircumvention Isnt IV.E.6. Rights Management Information IV.E.7. Permitted Circumventions IV.E.7.a. Law Enforcement, Content Filters, and Privacy IV.E.7.b. Libraries and Educational Institutions IV.E.7.c. Reverse Engineering IV.E.7.d. Encryption Research IV.E.7.e. Code as Speech IV.E.7.f. Security Testing Chapter 4: An Overview of Patents I. History I.A. The Patent Act of 1790 I.B. The Patent Act of 1793 I.C. The Patent Act of 1836 I.D. Later Recodifications II. Why Patents? III. What Can Be Patented III.A. Basic Requirements

III.B. Exceptions To The Broad Classes III.B.1. Laws of Nature III.B.2. Abstract Ideas III.B.3. Mental Processes III.B.4. Printed Matter III.B.5. Computer Software III.B.6. Methods of Doing Business IV. Getting A Utility Patent IV.A. The Description IV.B. Claims IV.B.1. When a Claim Reads On Something IV.B.2. The Steps of a Method IV.B.3. The Preamble IV.B.4. Dependent and Independent Claims IV.B.5. Other Claim Forms IV.B.6. Means Plus Function Elements V. Novelty V.A. Prior Art V.B. Inventorship V.C. Statutory Bars V.D. Provisional Applications V.E. Interferences VI. Anticipation And Obviousness VI.A. Secondary Considerations VI.B. Rejection of a Claim VII. Nature Of A Patent VII.A. Patent Term VII.B. Presumption of Validity VIII. Infringement VIII.A. Nonliteral Infringement VIII.B. Patent Misuse VIII.C. Marking VIII.C.1. Patent Pending VIII.D. Penalties for Infringement VIII.D.1. Damages Recoverable VIII.D.2. Provisional Rights IX. What To Do If You Are Told You Are Infringing a Patent IX.A. Reviewing the Claims IX.B. Three Choices IX.C. Reexamination Chapter 5: Software-Based Inventions I. Reluctance at the Beginning I.A. Trying to Patent a Computer Algorithm I.B. The Supreme Courts Benson Decision

I.C. Trying to Make Sense of Benson I.D. The Supreme Courts Flook Decision I.E. Chakrabartys Bacteria I.F. Diehrs Rubber Molding II. Trying To Draw the Line II.A. After Diehr II.B. A New Clarity: The Alappat Decision II.C. After Alappat II.D. The Patent Offices Guidelines III. Business Methods and State Street Bank IV. Other Ways of Claiming V. Printed Matter and Computer Software V.A. Beauregards Floppy Disks V.B. Patent Office Guidelines: Stored Information V.C. The Effect on Copyright V.D. Beyond Beauregard VI. Applying for a Software Patent

Introduction to the online version Welcome to the online version of my treatise, Legal Protection of Digital Information. This online version contains all the text of the printed version, published by BNA Books, except for the appendices containing excerpts from the statutes (which are available by clicking on the link in the footnote), tables of cases and statutes, the index, and my biography. Ive updated the material to make the corrections indicated in the errata to the printed version. I have divided the material for the online version differently than the hierarchy of headings and subheadings in the printed version, to try to make the web pages for some topics be of a more reasonable size. Ive also created an active table of contents on the left side of each page. If you click on any entry in the table of contents, youll be taken there. And if there are many parts to that entry, such as the one for Software Copyrights, the table of contents expands to show you those parts when you click on the major topic entry. There is also a complete table of contents, with links to the section in this online version. You can find a link to it at the end of the abbreviated table of contents to the left of each page. Ive moved the footnote text so that it appears at the point where the little raised footnote number would be. Many footnote entries have hypertext links to the document referenced in the footnote. Eventually, all of them will. For browsers that support it, the footnotes have been grayed so they are easier to skip over when reading the text, and the hypertext links have been hidden. Youll see them change color or the cursor change whenever you position over them. The treatise quotes extensively from primary material such as court decisions. The hypertext link in the footnote following a quotation from a court decision not only takes you to the decision, but Ive highlighted the quoted passage in the decision so that you can see any citations that have been omitted to make the quote easier to read and see the quoted passage in its context. In the next few months, Ill be doing the same for quotations from congressional reports. For subscribers to BNA's online Intellectual Property Library, which contains the cases from 68 USPQ through the current volume of USPQ2d, I have included hyptertext links in the cases that will take you to the cited case or page. After you click on the link, you will be asked your user name and password. For more information about BNA's online Intellectual Property Library or to get a free trial subscription, click here. In addition to the many people who helped me with the printed treatise, some of whom are mentioned in its preface, there are two people who deserve special thanks for their help developing this online version. My good friend Steve McRea designed the graphics for the pages on this web site. Simple things add greatly. And my son, Mark Hollaar, was invaluable in helping me highlight the quotations. I hope that you enjoy this online version and find it useful. You can find out more about it in the Preface section. But before going there, take a minute to look at the copyright and other important information, by clicking on the link just below.

Chapter 1: An Overview of Copyright

I. History
The history of copyright {FN1: An excellent discussion of the history of copyright can be found in Chapter 1 of Copyright Law and Practice by William Patry (BNA Books, 1994)} is generally regarded as beginning with the invention of the printing press. That was when the copying of works, beyond what could be done by hand, became possible. Copyright law has reacted to changes in technology ever since. By the end of the 15th century, movable-type printing presses were in use in England, which permitted the rapid and inexpensive reproduction of written material (at least when compared to hand-copying or custom-engraving an entire page). This, in turn, created a new market of readers who could not previously afford books, as well as an industry to supply those readers. Initially, there was no problem with unauthorized copying, since the number of printers were few and well-known to one another. The first regulation of printing was not to prevent unauthorized copying, but to prevent works critical of the Crown from being printed. A royal charter as the exclusive printer of books was given in 1557 to the Worshipful Company of Stationers of London, a group of printers. To print a book, a printer had to register it with the Stationers Company, and registration was not allowed if another printer had previously registered the manuscript.

I.A. The Statute of Anne

The Stationers monopoly ended in 1692, and independent printers began to compete with the members of the Stationers Company. The Stationers asked Parliament for legislative help, and on April 10, 1710, the Statute of Anne became the first English copyright law. (Its full name is quite a descriptive mouthful: An act for the encouragement of learning, by vesting the copies of printed books in the authors or purchasers of such copies, during the times therein mentioned.) The Statute of Anne was not the solution the Stationers had wanted. Instead of providing perpetual rights to a work, it granted protection for new works for 14 years from the date of publication and allowed authors to renew the protection for another 14 years if they were alive at the end of the initial protection period. Existing works were protected for 21 years from the effective date of the law. More important, the Statute of Anne granted the rights to control copying to the author of a book, not the publisher. Publishers enjoyed rights to print a book only if granted to them by its author, certainly not what the Stationers Company desired from Parliament. Registration with the Stationers Company was required before publication so that printers wouldnt innocently infringe an authors copyright, and if there had not been that registration, no copyright would have existed under the law. A later amendment also required that a notice of the copyright registration be included in each printed copy. Any assignment of the copyright had to be recorded with the Stationers Company. Finally, copies of the best edition of the book had to be deposited at nine specified libraries.

I.B. Federal Copyright

As in England, the first copyright laws in the American colonies were used to control what was published. Shortly after the Revolutionary War, the Continental Congress recommended that

the states adopt copyright laws. With the new Constitution, the Congress was given the power to promote the Progress of Science and the useful Arts, by securing, for limited Times, to Authors and Inventors, the exclusive Right to their respective Writings and Discoveries. {FN2: U.S. Const., Article I, 8} the Patent and Copyright Clause. As the terms were used at that time, science referred to knowledge, and the useful arts are what we now call technology. One can see that there are two parallel themes running through the clause: science-authors-writings and useful artsinventors-discoveries. An observation here there is very little discussion of the history of the clause in the Constitution. In Federalist Paper 43, Madison states: The utility of this power [to grant patents and copyrights] will scarcely be questioned. The copy right of authors has been solemnly adjudged in Great Britain to be a right at common law. The right to useful inventions, seems with equal reason to belong to the inventors. The public good fully coincides in both cases, with the claims of individuals. The states cannot separately make effective provision for either of the cases, and most of them have anticipated the decision of this point, by laws passed at the instance of Congress. Arguably, the reason for the clause was to make clear that such protections would be national in scope, rather than a patchwork system in which each state had its own rules. A special clause was necessary to give Congress the authority to put in place such a national system. But Article I, Section 8 also gives Congress other powers. In particular, the Commerce Clause gives Congress the authority to regulate commerce with foreign nations, and among the several states. Starting at the time of the New Deal, the courts have read that clause expansively, saying that it gives Congress the authority to regulate virtually anything that affects interstate or foreign commerce. Given todays broad reading of the Commerce Clause, and the national and international scope of copyright and patents, there is little need for a separate Patent and Copyright Clause. Many commentators now treat the Patent and Copyright Clause as a limitation on Congress, not a grant of authority. Patents and copyrights must have limited durations, even though there would be no such restriction if Congress legislated them under the Commerce Clause. (Federal trademark protection gets its authority from the Commerce Clause, and trademarks are protected as long as they are being used.) Others argue that any copyright or patent law passed by Congress must be shown to promote the Progress of Science and the useful Arts when they feel that copyright or patent is limiting something that they feel is worthwhile. And the Supreme Court has said that originality is a constitutional requirement for copyright protection. {FN3: Feist v. Rural Telephone, 499 U.S. 340, 346, 18 USPQ2d 1275, 1278 (1991)} Federal copyright can be viewed as a bargain between the creator of the writing or invention and the people, as represented by the federal government. In trade for protection for a limited term (and the ability to commercially exploit the writing or invention during that time because of that protection), the creator lets the public have all rights to the writing or invention after the term of protection ends. The writing or invention enters the public domain, where anybody can do whatever he or she wishes with it. (Since Congress continues to extend the term of copyright protection, there are some that question whether this original bargain theory holds today.) This public bargain theory of copyright is in contrast to the copyright theory for most European countries (except England), where a writing is treated as the sacred child of its creator, and is protected not only from unauthorized reproduction but also from things that change its appearance or integrity or its attribution to its creator. These moral rights are recognized in United States copyright law only for works of fine art, like oil paintings, that are produced in limited numbers.

I.C. The Early Statutes

Congress initially protected the works of authors by private bills, in part because some authors believed the constitutional provision (Congress shall have the power to protect . . .) required Congress to provide the protection for each specific work. Clearly, this would be unworkable, and on May 31, 1790, President Washington signed the United States first general copyright act into law. The Copyright Act of 1790 was based on the Statute of Anne, granting initial rights in a work to its author for 14 years with a renewal term of another 14 years. Although a notice was not required, registration of the work with the clerk of the district court and publication of the registration in a newspaper for four weeks was necessary. One copy of the work also had to be deposited with the Secretary of State within six months of publication. The 1790 Act gave protection to any map, chart, or book and also protected unpublished manuscripts. But protection was limited to United States citizens, allowing the unrestricted copying of foreign (chiefly English) books. The copyright laws have been revised many times, including complete revisions in 1831, 1870, 1909, and 1976. Between those revisions, amendments were made to accommodate additional subject matter, new technologies, and a more international view of copyright. For example, in 1802 historical and other prints were included as copyrightable subject matter and a requirement of a notice of copyright on every printed copy was added. The consequence of a lack of a proper notice was not spelled out, but a court case held that protection was lost without the notice. Later revisions to the copyright statutes clarified that protection would be lost without proper notice at the time of publication. In 1846, an amendment required the deposit of copyrighted works with the Smithsonian Institution and the Library of Congress, along with the original requirement of deposit with the Secretary of State. A performance right for dramatic works was added in 1856, and photographs were given protection in 1865. In the major revision of 1870, administration of copyright registration was centralized in the Library of Congress, where it remains to this day, and many other types of works (including paintings and statues) were included within its scope. The deposit requirement of two copies to the Library of Congress provided a free copy of virtually every book published for the national library. In 1891, the United States finally recognized the copyright of foreign authors if they registered their copyright in the United States and the book included the proper notice. But copyright of foreign books written in English was conditioned on the work being printed in the United States or from plates first made in the United States. This manufacturing clause would remain in the copyright statutes until 1986.

I.D. The Copyright Act of 1909

At the start of the twentieth century, it was clear that there was a need for an omnibus revision of the copyright statutes. New media and types of works needed to be addressed. The result was the Copyright Act of 1909, {FN4: 35 Stat. 1 (1909)} which would remain the framework for copyright protection until the Copyright Act of 1976 became effective in 1978. The 1909 Act expanded the list of protected works and included a catchall indicating Congresss intent to protect all the works of an author. It also extended the copyright term to an initial period of 28 years and a onetime renewal period of 28 years, dating from the first publication with proper notice. Publication without notice still resulted in loss of copyright protection.

To solve a dispute over the protection of mechanical reproductions of musical compositions, such as phonograph records, a compulsory license was introduced. {FN5: Copyright Act of 1909, 1(e)} After the recording of a musical composition was allowed by its author, any other performer could record the work and pay a statutory royalty. Almost as an afterthought, Congress exempted from copyright the public performance of a recorded work in a jukebox. The deposit requirement, registration formalities, and manufacturing clause of the previous copyright law were continued. Along with the bifurcated term of 56 years, these formalities kept the United States from joining the oldest international copyright agreement, the Berne Convention, which had been established in 1886 by a number of countries to provide international copyright protection. Because the United States would not change its laws to meet the Berne requirements by eliminating formalities such as notice and registration, and going to a term of at least 50 years after the death of the author, the Universal Copyright Convention (UCC) was established in 1952 by the United States and other countries, and in 1954 the United States made minor amendments to the copyright statutes to accommodate the UCC. {FN6: Pub. L. No. 83-743, 61 Stat. 655} Primarily, these consisted of changing the form of the required notice, limiting the deposit requirement for foreign works, and exempting many foreign works from the manufacturing clause. In 1971, copyright protection was extended to sound recordings, which had previously been protected only by state law, if at all. {FN7: Pub. L. No. 92-140, 85 Stat. 391}However, it had again become clear that because of new technology and types of works, the Copyright Act of 1909 needed another major revision. In 1955, Congress authorized the Copyright Office to begin a study on a new copyright act. A draft bill was proposed in 1961, but legislation was not passed until 1976.

I.E. The Copyright Act of 1976

The Copyright Act of 1976 represented a dramatic change in the nature of copyright. While publication was the touchstone of the past copyright laws, the 1976 Act protected both published and unpublished works from the time of their fixation in a tangible medium of expression. It specifically preempted any state copyright law protecting unpublished works. {FN8: 17 U.S.C. 301} The 1976 Act covered all original works of authorship. Following the Berne Convention approach, the copyright term ran until 50 years after the death of the author, rather than a term measured from the date of publication. {FN9: 17 U.S.C. 302} It gave broad rights to the copyright owner, but tempered these rights with a series of exceptions for particular cases, establishing a balance between authors and users of copyrighted works. It also codified a fair use exception, permitting the use of copyrighted works to be judged for fairness on a case-by-case basis. {FN10: 17 U.S.C. 107} But while its scope and term of protection brought United States law in line with the Berne Convention, the Act retained the formalities of notice and registration and the manufacturing requirement, so the United States was still unable to join the Berne Convention. Even though the 1976 Act took more than two decades to draft, at the time of its passage there were still difficulties in deciding how to treat computer programs and computer databases. Rather than further delay the passage, Congress established the National Commission on New Technological Uses of Copyrighted Works (CONTU) to study these issues and report back to Congress. In the meantime, a placeholder Section 117, preserving the status quo, was included in

the 1976 Act. In 1978, CONTU issued its report, and in 1980 the Act was revised by adding a definition of computer programs and replacing Section 117. {FN11: 17 U.S.C. 117}

I.F. Later Legislation

In 1988, a few major changes were made to try to meet the requirements of the Berne Convention. The manufacturing clause had expired in 1986 and was no longer a hindrance. The mandatory notice requirement was eliminated, although notice could still be placed on a work. Registration was no longer necessary for foreign works, although it still is required for domestic works involved in litigation. Finally, after a century of considering it, the United States joined the Berne Convention. Other amendments were made to the copyright statute to address digital recordings, satellite distribution of television, and other new technologies. But perhaps the most dramatic amendment came in 1998, when Congress passed the Digital Millennium Copyright Act (DMCA) {FN12: Pub. L. 105-304, 112 Stat. 2860} to address aspects of copyright particular to digital information. The DMCA made clear that copyright protected works transmitted in cyberspace, but it provided special liability exceptions for service providers on the Internet. It also provided legal support for technical measures to protect copyrighted material from unauthorized access. Also in 1998, the duration of a copyright was extended by 20 years, so that it now stands at the life of the author plus 70 years. {FN13: Pub. L. 105-298, 112 Stat. 2827}This continued the trend of extending the term of copyright so that works that were still protected when the Copyright Act of 1976 was passed will not enter the public domain until 95 years after they were first published.

Chapter 1: An Overview of Copyright

II. Current Copyright Law II.A. How Copyright Comes Into Being
The current copyright law in the United States, the Copyright Act of 1976 (which became effective on January 1, 1978), represents a substantial change in the way copyright protection comes into being. Before that Act, a work had to be published with a copyright notice, and the claim to copyright registered in the U.S. Copyright Office, for the work to be fully protected. But now, according to Section 102(a) of the Copyright Act: Copyright protection subsists . . . in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. {FN14: 17 U.S.C. 102(a)} Copyright protection subsists, which means that it comes into being, whenever something original is fixed in a medium of expression in other words, at the moment of its creation. Well use the term copyrighted to mean protected by copyright, although copyrighted incorrectly implies that some action other than the fixing of the work in a medium of expression was required. Before the Copyright Act of 1976, an unpublished work was not protected by federal law. Instead, any protection would have to come from state law, either some type of state copyright or a misappropriation action. The Copyright Act of 1976 included unpublished works within its scope,

and explicitly preempted any state laws that might provide a similar protection. {FN15: 17 U.S.C. 301}
II.A.1. Fixation of a Work

Section 101 defines when something has been fixed: A work is fixed in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is fixed for purposes of this title if a fixation of the work is being made simultaneously with its transmission.{FN16: 17 U.S.C. 101} Fixation can be the writing of a work on a piece of paper, the typing of a work into a computer (assuming it is then stored on a disk or even in RAM), or any other act that will enable the work to be perceived later by somebody else. It doesnt include the speaking of a work, unless that work was previously written down or is recorded at the time it is spoken, or having the work in your head. Works that are not fixed are protected by a state statute or a common law theory, if at all. The fixed work does not have to be directly perceivable by a person but can be one that requires some machine or device for its display or performance. In a report that accompanied the passage of the Copyright Act of 1976, its drafters said: This broad language is intended to avoid the artificial and largely unjustifiable distinctions . . . under which statutory copyrightability in certain cases has been made to depend upon the form or medium in which the work is fixed. Under the bill it makes no difference what the form, manner, or medium of fixation may be whether it is in words, numbers, notes, sounds, pictures, or any other graphic or symbolic indicia, whether embodied in a physical object in written, printed, photographic, sculptural, punched, magnetic, or any other stable form, and whether it is capable of perception directly or by means of any machine or device now known or later developed. {FN17: H.R. Rep. No. 94-1476 at 52} Works can be fixed in either copies or phonorecords, which are defined in Section 101: Copies are material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term copies includes the material object, other than a phonorecord, in which the work is first fixed. Phonorecords are material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term phonorecords includes the material object in which the sounds are first fixed. {FN18: 17 U.S.C. 101} As noted by the Acts drafters, copies and phonorecords together comprise all of the material objects in which copyrightable works are capable of being fixed. {FN19: H.R. Rep. No. 94-1476 at 53} If its not a phonorecord, its a copy. While the distinction between phonorecords and copies may be important in some aspects of the copyright law, and reflects a historically different way of treating them, in most cases discussed here it will make no difference.

The drafters noted a difference between the work and the medium of expression in which it is fixed: The definitions of these terms in section 101, together with their usage in section 102 and throughout the bill, reflect a fundamental distinction between the original work which is the product of authorship and the multitude of material objects in which it can be embodied. Thus, in the sense of the bill, a book is not a work of authorship, but is a particular kind of copy. Instead, the author may write a literary work, which in turn can be embodied in a wide range of copies and phonorecords, including books, periodicals, computer punch cards, microfilm, tape recordings, and so forth. It is possible to have an original work of authorship without having a copy or phonorecord embodying it, and it is also possible to have a copy or phonorecord embodying something that does not qualify as an original work of authorship. The two essential elements original work and tangible object must merge through fixation in order to produce subject matter copyrightable under the statute. {FN20: H.R. Rep. No. 94-1476 at 53} Section 101 also discusses when a work is created: A work is created when it is fixed in a copy or phonorecord for the first time; where a work is prepared over a period of time, the portion of it that has been fixed at any particular time constitutes the work as of that time, and where the work has been prepared in different versions, each version constitutes a separate work. {FN21: 17 U.S.C. 101} So, if you are writing a book or a computer program or anything else, when you have written part of it and take a break, you have created a work protected by copyright. When you write a little more, you create another work protected by its own copyright, although it includes the first copyrighted work.
II.A.2. Types of Works

Section 102(a) goes on to illustrate the types of works that are copyrightable: Works of authorship include the following categories: (1) literary works; (2) musical works, including any accompanying words; (3) dramatic works, including any accompanying music; (4) pantomimes and choreographic works; (5) pictorial, graphic, and sculptural works; (6) motion pictures and other audiovisual works; (7) sound recordings; and (8) architectural works. {FN22: 17 U.S.C. 102(a)} Of most interest to us, as we consider copyright protection of digital information such as computer programs or Web pages, are literary works, which Section 101 defines 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. {FN23: 17 U.S.C. 101} Computer programs, for example, are literary works. But programmers shouldnt start comparing themselves to Shakespeare as authors of literary works, because the drafters of the Copyright Act noted that

The term literary works does not connote any criterion of literary merit or qualitative value: it includes catalogs, directories, and similar factual, reference, or instructional works and compilations of data. It also includes computer data bases, and computer programs to the extent that they incorporate authorship in the programmers expression of original ideas, as distinguished from the ideas themselves. {FN24: H.R. Rep. No. 94-1476 at 54} They make the same observation about other works. Section 101 also defines pictorial, graphic, and sculptural works, motion pictures, and architectural works. Of possible interest to the protection of digital information are audiovisual works and sound recordings, because digital information may fall into these definitions, rather than the general literary works: Audiovisual works are works that consist of a series of related images which are intrinsically intended to be shown by the use of machines or devices such as projectors, viewers, or electronic equipment, together with accompanying sounds, if any, regardless of the nature of the material objects, such as films or tapes, in which the works are embodied. Sound recordings are works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in which they are embodied. {FN25: 17 U.S.C. 101} If a work is both an audiovisual work and a computer program (which is a literary work), the Copyright Office will accept a single registration that covers both aspects of the work. Because of this, it is most common to consider computer programs as literary works even though they also may have aspects of an audiovisual work. While the Act specifies eight different categories for copyrighted works, with respect to copyrightability it makes no difference the category in which a work falls. All that is important for copyright protection to attach to the work is that it be original and fixed. But the classification of a work will determine which of the protections available under copyright will be available for the work. For example, the public performance right only applies to sound recordings that are in digital form. {FN26: See 17 U.S.C. 106} Furthermore, the copyright laws contain a variety of special exceptions that apply to one type of work, or use of a work, and not another. {FN27: See 17 U.S.C. 108-122} The copyright laws are a series of compromises, some general, some very specific, between the broad rights of the copyright owners and the publics use of the work. Just because something may be allowed for one category of work in a particular situation doesnt mean that it is allowed for other categories of works, or in other situations.
II.A.3. Originality Is Required

Besides fixation, the law requires originality for copyright protection. But the standard for originality is very low. The Supreme Court discussed that standard in one of its major copyright cases, Feist Publications v. Rural Telephone Service: {FN28: 499 U.S. 340, 18 USPQ2d 1275 (1991)} To qualify for copyright protection, a work must be original to the author. Original, as the term is used in copyright, means only that the work was independently created by the author (as opposed to copied from other works), and that it possesses at least some minimal degree of creativity. To be sure, the requisite

level of creativity is extremely low; even a slight amount will suffice. The vast majority of works make the grade quite easily, as they possess some creative spark, no matter how crude, humble or obvious it might be. Originality does not signify novelty; a work may be original even though it closely resembles other works so long as the similarity is fortuitous, not the result of copying. To illustrate, assume that two poets, each ignorant of the other, compose identical poems. Neither work is novel, yet both are original and, hence, copyrightable. {FN29: 499 U.S. at 345346, 18 USPQ2d at 1278 (citations omitted)}

Chapter 1: An Overview of Copyright

II.B. Compilations, Collections, And Derivative Works
Copyright can protect not only an original work but also works that are collections of other works, or works based on preexisting works. But in those cases, the scope of the new copyright is limited to the parts of the collection or derivative work that are original. Before looking at those special provisions, it is necessary to understand more terms defined in Section 101: A compilation is a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship. The term compilation includes collective works. A collective work is a work, such as a periodical issue, anthology, or encyclopedia, in which a number of contributions, constituting separate and independent works in themselves, are assembled into a collective whole. A derivative work is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a derivative work. {FN30: 17 U.S.C. 101} The drafters of the Copyright Act explained the differences between a compilation and a derivative work this way: Between them the terms compilations and derivative works which are defined in section 101, comprehend every copyrightable work that employs preexisting material or data of any kind. There is necessarily some overlapping between the two, but they basically represent different concepts. A compilation results from a process of selecting, bringing together, organizing, and arranging previously existing material of all kinds, regardless of whether the individual items in the material have been or ever could have been subject to copyright. A derivative work, on the other hand, requires a process of recasting, transforming, or adapting one or more preexisting works; the preexisting work must come within the general subject matter of copyright set forth in section 102, regardless of whether it is or was ever copyrighted. {FN31: H.R. Rep. No. 94-1476 at 57}

II.B.1. Reproductions or Derivative Works?

There is also a gray area between reproducing a work and creating a derivative work. One does not need to produce a perfect copy in order to infringe a copyright. Otherwise, a copier could simply make a minor change (an unimportant word in a book, or a pixel or two in a computer image) and avoid infringing. The test for infringement established by court cases is whether the copy is substantially similar to the original work. There is no hard-and-fast rule determining when something is a substantially similar copy, and when it is a derivative work, since both will incorporate the original work in some way and also have changed material. (There are few hardand-fast rules in intellectual property law.) But the touchstone for a derivative work is the recasting, transforming, or adapting of the original work, often to a new form.
II.B.2. Special Provisions

The special provisions for compilations and derivative works are contained in Section 103: (a) The subject matter of copyright as specified by section 102 includes compilations and derivative works, but protection for a work employing preexisting material in which copyright subsists does not extend to any part of the work in which such material has been used unlawfully. (b) The copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in such work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material. {FN32: 17 U.S.C. 103} In the legislative history, the drafters explained those provisions: The most important point here is one that is commonly misunderstood today: copyright in a new version covers only the material added by the later author, and has no effect one way or the other on the copyright or public domain status of the preexisting material. . . . The second part of the sentence that makes up section 103(a) deals with the status of a compilation or derivative work unlawfully employing preexisting copyrighted material. In providing that protection does not extend to any part of the work in which such material has been used unlawfully, the bill prevents an infringer from benefiting, through copyright protection, from committing an unlawful act, but preserves protection for those parts of the work that do not employ the preexisting work. Thus, an unauthorized translation of a novel could not be copyrighted at all, but the owner of copyright in an anthology of poetry could sue someone who infringed the whole anthology, even though the infringer proves that publication of one of the poems was unauthorized. Under this provision, copyright could be obtained as long as the use of the preexisting work was not unlawful, even though the consent of the copyright owner had not been obtained. For instance, the unauthorized reproduction of a work might be lawful under the doctrine of fair use or an applicable foreign law, and if so the work incorporating it could be copyrighted. {FN33: H.R. Rep. No. 94-1476 at 57-58} Many works are protected by a number of copyrights. For example, when a movie is made from a best-selling novel, the material that comes from that novel is protected by the novels

original copyright. The screenplay is a derivative work of the novel and has its own copyright covering its original aspects. (For example, added dialogue or the instructions for the staging of a scene.) Both are literary works. The actual movie, an audiovisual work, has its own copyright covering the things that are original to the movie and not in the screenplay, such as the directors particular arrangement for a shot. The musical score of the movie also has its own copyright. In each case, the copyright covers only what is original to that particular work.

Chapter 1: An Overview of Copyright

II.C. Copyright Notice And Registration
It used to be a requirement that a copyright notice be included with a published work for copyright protection to attach to the work. Works protected under the 1909 Act required notice at the time of first publication, or copyright would be lost forever. The 1976 Act continued to require notice, but was somewhat forgiving if the notice was omitted. Since the United States joined the Berne Convention in 1989 and amended the Copyright Act, notice is optional.
II.C.1. Form of the Notice

Section 401 gives the requirements for a proper notice: (a) General Provisions. Whenever a work protected under this title is published in the United States or elsewhere by authority of the copyright owner, a notice of copyright as provided by this section may be placed on publicly distributed copies from which the work can be visually perceived, either directly or with the aid of a machine or device. (b) Form of Notice. If a notice appears on the copies, it shall consist of the following three elements: (1) the symbol (the letter C in a circle), or the word Copyright, or the abbreviation Copr.; and (2) the year of first publication of the work; in the case of compilations, or derivative works incorporating previously published material, the year date of first publication of the compilation or derivative work is sufficient. The year date may be omitted where a pictorial, graphic, or sculptural work, with accompanying text matter, if any, is reproduced in or on greeting cards, postcards, stationery, jewelry, dolls, toys, or any useful articles; and (3) the name of the owner of copyright in the work, or an abbreviation by which the name can be recognized, or a generally known alternative designation of the owner. (c) Position of Notice. The notice shall be affixed to the copies in such manner and location as to give reasonable notice of the claim of copyright. The Register of Copyrights shall prescribe by regulation, as examples, specific methods of affixation and positions of the notice on various types of works that will satisfy this requirement, but these specifications shall not be considered exhaustive. {FN34: 17 U.S.C. 401} Sections 401 through 406, along with the Copyright Office regulations, give the various rules for copyright notices. And while notice is now optional, Section 401(e) indicates the advantage to the copyright owner of including proper notice:

If a notice of copyright in the form and position specified by this section appears on the published copy or copies to which a defendant in a copyright infringement suit had access, then no weight shall be given to such a defendants interposition of a defense based on innocent infringement in mitigation of actual or statutory damages, except as provided in the last sentence of section 504(c)(2). {FN35: 17 U.S.C. 401(e)} Section 504 has to do with statutory damages, and Section 504(c)(2) covers innocent infringement by the employee of a nonprofit educational institution, library, or public broadcasting station. But the penalties for somebody who is not an innocent infringer are much higher than those for an innocent infringer, so it is valuable to place a copyright notice on a work even though it is no longer required.
II.C.2. Registration of Copyright

As with notice, registration of a copyright is optional. Copyright protection exists from the moment of creation and fixation, regardless of notice and registration. But registration is required before any infringement suit can be filed for a domestic work, {FN36: 17 U.S.C. 411} and timely registration is required for certain remedies. {FN37: 17 U.S.C. 412}Registration is simple and inexpensive. You simply fill out a form and send it to the Copyright Office, along with two copies of the work and a $30 registration fee. Information regarding registration, and the necessary forms, can be found at the Copyright Offices Web site: http://www.loc.gov/copyright Finally, to help build the collection of the Library of Congress, Section 407 requires that copies of published works be given at no cost to the Library. If the required deposit is not made, the Library can fine the copyright owner and purchase the work. The Librarian of Congress may exempt certain works, whose donation would work a hardship on the copyright owner, or can reduce the number of copies required from two to one.

Chapter 1: An Overview of Copyright

II.D. Federal Government Works
II.D.1. Exemption from Copyright

The Copyright Act of 1976 specifically exempts works created by the federal government from copyright protection, continuing a provision from the previous copyright acts. Section 105 states: Copyright protection under this title is not available for any work of the United States Government, but the United States Government is not precluded from receiving and holding copyrights transferred to it by assignment, bequest, or otherwise. {FN38: 17 U.S.C. 105} Section 101 clarifies what this includes: A work of the United States Government is a work prepared by an officer or employee of the United States Government as part of that persons official duties. {FN39: 17 U.S.C. 101} Note that this is a special rule that federal government works are always in the public domain. Public domain works have no copyright owner, and anyone can use the work as they see

fit without infringement. Besides federal government works, public domain works include those works so old that their copyright has expired, works that fell into the public domain because of a failure to comply with a requirement like notice or registration, and works whose authors have dedicated them to the public. The 1976 Act is silent on whether the works of state or local governmental agencies can be copyrighted, but there are cases holding that works published by state or local governments are eligible for copyright protection.
II.D.2. Government Contract Works

The prohibition against copyrights for United States Government publications does not apply to the works produced under government contracts. This was discussed by the drafters of the Act: A more difficult and far-reaching problem is whether the definition should be broadened to prohibit copyright in works prepared under U.S. Government contract or grant. As the bill is written, the Government agency concerned could determine in each case whether to allow an independent contractor or grantee, to secure copyright in works prepared in whole or in part with the use of Government funds. The argument that has been made against allowing copyright in this situation is that the public should not be required to pay a double subsidy, and that it is inconsistent to prohibit copyright in works by Government employees while permitting private copyrights in a growing body of works created by persons who are paid with Government funds. Those arguing in favor of potential copyright protection have stressed the importance of copyright as an incentive to creation and dissemination in this situation, and the basically different policy considerations, applicable to works written by Government employees and those applicable to works prepared by private organizations with the use of Federal funds. The bill deliberately avoids making any sort of outright, unqualified prohibition against copyright in works prepared under Government contract or grant. There may well be cases where it would be in the public interest to deny copyright in the writings generated by Government research contracts and the like; it can be assumed that, where a Government agency commissions a work for its own use merely as an alternative to having one of its own employees prepare the work, the right to secure a private copyright would be withheld. However, there are almost certainly many other cases where the denial of copyright protection would be unfair or would hamper the production and publication of important works. Where, under the particular circumstances, Congress or the agency involved finds that the need to have a work freely available outweighs the need of the private author to secure copyright, the problem can be dealt with by specific legislation, agency regulations, or contractual restrictions. {FN40: H.R. Rep. No. 94-1476 at 59} A reasonable test of whether a government contractor should be allowed to copyright a work produced under the contract, either for its own benefit or for transfer to the government, should include whether the information is necessary in the normal functioning of government. If the government contracts to have its laws or regulations written, or for something that is incorporated by reference in a law or regulation, that work should not be protected by copyright. Although when such a law or regulation is written, it will automatically be copyrighted, the contractor should be

required to dedicate the copyright to the public, or agree to distribute it to anybody, charging only for the cost of copying.

Chapter 1: An Overview of Copyright

II.E. Ideas Versus Expression
Through both court decisions and specific language in the Copyright Act of 1976, the scope of copyright has been limited to particular expression of an idea, not the idea that underlies that expression. We will discuss this in more detail when we look at copyright protection for computer programs. The specific provision is in Section 102(b): 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. {FN41: 17 U.S.C. 102(b)} This provision was described by the drafters: Copyright does not preclude others from using the ideas or information revealed by the authors work. It pertains to the literary, musical, graphic, or artistic form in which the author expressed intellectual concepts. Section 102(b) makes clear that copyright protection does not 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. Some concern has been expressed lest copyright in computer programs should extend protection to the methodology or processes adopted by the programmer, rather than merely to the writing expressing his ideas. Section 102(b) is intended, among other things, 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 the copyright law. Section 102(b) in no way enlarges or contracts the scope of copyright protection under the present law. Its purpose is to restate, in the context of the new single Federal system of copyright, that the basic dichotomy between expression and idea remains unchanged. {FN42: H.R. Rep. No. 94-1476 at 56-57}
II.E.1. Two Key Supreme Court Cases

The law at the time of the passage of the Copyright Act of 1976 regarding copyright protection for expression but not for the underlying ideas or any functional aspects of the work, comes primarily from two Supreme Court cases. In 1879, the Supreme Court decided in Baker v. Selden {FN43: 101 U.S. 99 (1879)} that the copyright of a book that described a particular bookkeeping technique did not protect the forms necessary to use the technique. There is no doubt that a work on the subject of book-keeping, though only explanatory of well-known systems, may be the subject of a copyright; but, then, it is claimed only as a book. Such a book may be explanatory either of old systems, or of an entirely new system; and, considered as a book, as the work of an author, conveying information on the subject of book-keeping, and containing detailed explanations of the art, it may be a very valuable acquisition to the practical

knowledge of the community. But there is a clear distinction between the book, as such, and the art which it is intended to illustrate. The mere statement of the proposition is so evident, that it requires hardly any argument to support it. The same distinction may be predicated of every other art as well as that of book-keeping. A treatise on the composition and use of medicines, be they old or new; on the construction and use of ploughs, or watches, or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of drawing lines to produce the effect of perspective, would be the subject of copyright; but no one would contend that the copyright of the treatise would give the exclusive right to the art or manufacture described therein. {FN44: 101 U.S. at 101-102} In 1954, the Supreme Court restated the principle that copyright protects expression, but not function. In Mazer v. Stein, {FN45: 347 U.S. 201, 100 USPQ 325 (1954)} the Court addressed the scope of copyright protection for a sculpture that formed the base of a lamp. They found that the artistic aspects of the sculpture were protected by copyright, but not the functional aspects associated with being a lamp base: Unlike a patent, a copyright gives no exclusive right to the art disclosed; protection is given only to the expression of the idea not the idea itself. Thus, inBaker v. Selden, the Court held that a copyrighted book on a peculiar system of bookkeeping was not infringed by a similar book using a similar plan which achieved similar results where the alleged infringer made a different arrangement of the columns and used different headings. The distinction is illustrated in Fred Fisher, Inc. v. Dillingham, when the court speaks of two men, each a perfectionist, independently making maps of the same territory. Though the maps are identical, each may obtain the exclusive right to make copies of his own particular map, and yet neither will infringe the other's copyright. Likewise a copyrighted directory is not infringed by a similar directory which is the product of independent work. {FN46: 347 U.S. at 217-218, 100 USPQ at 333 (citations omitted)} The test of whether something is an unprotectable idea or protectable expression is inherently ad hoc, and bodies of law have been developed through court cases for different types of copyrighted works. But there are a number of themes that run through most idea-expression analyses.
II.E.2. Idea-Expression Merger and Scnes Faire

When there are only a limited number of ways that a concept or idea can be expressed, there is little difference between the idea and its expression, and it is therefore said that the two have merged. When this happens, the limited number of ways of expressing the idea are not entitled to copyright protection because, in essence, that would be protecting the idea, something outside the scope of copyright. The merger doctrine means that even if things are substantially similar, or even identical, there might not be a copyright infringement. Another factor is whether the expression is something that you would expect to find in a work on a particular topic or expressing a certain concept. For example, scenes of soldiers marching would be common in many war movies. Such common elements are called scnes faire, or stock incidents. In a copyright case regarding computer displays, the use of overlapping windows was found to be a stock aspect of windowed displays and therefore not protectable by copyright.

Chapter 1: An Overview of Copyright

II.F. Copyright Ownership

Not too surprisingly, since copyright automatically comes into being when an author fixes a work in a medium, the copyright is initially owned by that author. This is stated in Section 201: (a) Initial Ownership. Copyright in a work protected under this title vests initially in the author or authors of the work. The authors of a joint work are coowners of copyright in the work. {FN47: 17 U.S.C. 201}
II.F.1. Joint Works

Section 101 defines a joint work as 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. {FN48: 17 U.S.C. 101} The drafters discussed this: Two basic and well-established principles of copyright law are restated in section 201(a): that the source of copyright ownership is the author of the work, and that, in the case of a joint work, the coauthors of the work are likewise coowners of the copyright. Under the definition of section 101, a work is joint if the authors collaborated with each other, or if each of the authors prepared his or her contribution with the knowledge and intention that it would be merged with the contributions of other authors as inseparable or interdependent parts of a unitary whole. The touchstone here is the intention, at the time the writing is done, that the parts be absorbed or combined into an integrated unit, although the parts themselves may be either inseparable (as the case of a novel or painting) or interdependent (as in the case of a motion picture, opera, or the words and music of a song). The definition of joint work is to be contrasted with the definition of collective work, also in section 101, in which the elements of merger and unity are lacking; there the key elements are assemblage or gathering of separate and independent works * * * into a collective whole. {FN49: H.R. Rep. No. 94-1476 at 120} Since each coauthor of a joint work is an owner of the copyright of that work, each can license, copy, distribute, or do anything else permitted of a copyright owner with sole rights to a work, without the permission of any other co-owner, including assigning the copyright to another. But each co-owner is responsible to the other co-owners for any royalties or other payments received for the co-owned work. It is best to have an agreement regarding the ownership of a joint work, or any other copyrighted work for which there may be more than one author, before starting on the work, perhaps making one author the owner of the copyright with an agreement to pay royalties to the other authors.
II.F.2. Works Made For Hire

When the work is made as part of the creators regular employment, or under contract in certain circumstances, the work is a work made for hire, and Section 201(b) states a special rule: In the case of a work made for hire, the employer or other person for whom the work was prepared is considered the author for purposes of this title, and, unless the parties have expressly agreed otherwise in a written instrument signed by them, owns all of the rights comprised in the copyright. {FN50: 17 U.S.C. 201(b)}

Note that there is no need for a specific agreement or term in an employment contract for the employer to get the copyright to the work. Ownership of the copyright by the employer is the default, absent some other agreement, and that agreement must be in writing and must be signed by both the employer and the employee. A statement in an employment manual, saying that an employee owns the copyright on certain works that would otherwise be works made for hire is not enough. So what is a work made for hire? Section 101 defines two different types of works made for hire ones prepared by an employee, and ones specially ordered or commissioned: (1) a work prepared by an employee within the scope of his or her employment; or (2) a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a supplementary work is a work prepared for publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes, and an instructional text is a literary, pictorial, or graphic work prepared for publication and with the purpose of use in systematic instructional activities. {FN51: 17 U.S.C. 101} A number of factors must be considered in determining whether somebody is an employee, as that term is used in (1), or a contractor, in which case (2) applies. Those factors are similar to the ones used by the Internal Revenue Service in deciding whether an employer has to withhold tax and pay a portion of the Social Security tax. If you are receiving a regular paycheck, you are likely an employee. The second factor in (1) is that the work must be prepared within the scope of his or her employment. That does not mean that the work needs to be specifically requested. It is likely that any computer software written by a person employed as a programmer is a work made for hire as long as there is some relationship to the programmers job assignment. If there is some question over whether something is within the scope of your employment, you should have that clarified before starting on the creation of the work, as some companies take a broad view of what is within the scope of employment. It is important to note that in (2), only certain commissioned works are works made for hire. If somebody commissioning any other type of work wants to have the copyright to that work, the agreement that commissions the work must include a clause transferring the copyright to the person commissioning the work. Simply paying for it is not enough. For a short period of time, Congress added sound recordings to the types of commissioned works that can be works made for hire. The change had been included in a bill having to do with a number of intellectual property topics, with little discussion. When singers and musicians objected after the change became law, Congress removed sound recordings from the list of commissioned works that may be works made for hire, and included a provision saying that nothing should be read into the insertion and subsequent removal of sound recordings from the list.

Why should the recording artists be concerned that something is a work made for hire, when they routinely sign contracts agreeing that the recording is a work made for hire, or at least assign their copyright to the record company? A signed contract is necessary either to transfer the copyright to the record company or to make it a work made for hire if it is a commissioned work. The difference can be found in Section 203 {FN52: 17 U.S.C. 203} ,which allows the author of a work to terminate any assignment or license after 35 years. This allows an author to renegotiate a license or assignment if the value of the work turns out to be much greater than expected. That right is not available if the work is a work made for hire.
II.F.3. Collective Works

Section 201 also has a special ownership rule for collective works: Copyright in each separate contribution to a collective work is distinct from copyright in the collective work as a whole, and vests initially in the author of the contribution. In the absence of an express transfer of the copyright or of any rights under it, the owner of copyright in the collective work is presumed to have acquired only the privilege of reproducing and distributing the contribution as part of that particular collective work, any revision of that collective work, and any later collective work in the same series. {FN53: 17 U.S.C. 201(c)} Section 202 states an important principle regarding the ownership of a copyright and the ownership of a copy of a work: Ownership of a copyright, or of any of the exclusive rights under a copyright, is distinct from ownership of any material object in which the work is embodied. Transfer of ownership of any material object, including the copy or phonorecord in which the work is first fixed, does not of itself convey any rights in the copyrighted work embodied in the object; nor, in the absence of an agreement, does transfer of ownership of a copyright or of any exclusive rights under a copyright convey property rights in any material object. {FN54: 17 U.S.C. 202} The drafters discussed this: The principle restated in section 202 is a fundamental and important one: that copyright ownership and ownership of a material object in which the copyrighted work is embodied are entirely separate things. Thus, transfer of a material object does not of itself carry any rights under the copyright, and this includes transfer of the copy or phonorecord the original manuscript, the photographic negative, the unique painting or statue, the master tape recording, etc. in which the work was first fixed. Conversely, transfer of a copyright does not necessarily require the conveyance of any material object. {FN55: H.R. Rep. No. 94-1476 at 124}

Chapter 1: An Overview of Copyright

II.G. Copyright Duration
The term of protection has been progressively expanded from 14 years, with a 14-year renewal, to the life of the author plus 70 years (or 95 years after first publication for some works). The term for a work created on or after January 1, 1978, is given in Section 302: (a) In General. Copyright in a work created on or after January 1, 1978, subsists from its creation and, except as provided by the following subsections,

endures for a term consisting of the life of the author and 70 years after the authors death. (b) Joint Works. In the case of a joint work prepared by two or more authors who did not work for hire, the copyright endures for a term consisting of the life of the last surviving author and 70 years after such last surviving authors death. (c) Anonymous Works, Pseudonymous Works, and Works Made for Hire. In the case of an anonymous work, a pseudonymous work, or a work made for hire, the copyright endures for a term of 95 years from the year of its first publication, or a term of 120 years from the year of its creation, whichever expires first. . . . (d) Records relating to death of authors. Any person having an interest in a copyright may at any time record in the Copyright Office a statement of the date of death of the author of the copyrighted work, or a statement that the author is still living on a particular date. The statement shall identify the person filing it, the nature of that persons interest, and the source of the information recorded, and shall comply in form and content with requirements that the Register of Copyrights shall prescribe by regulation. The Register shall maintain current records of information relating to the death of authors of copyrighted works, based on such recorded statements and, to the extent the Register considers practicable, on data contained in any of the records of the Copyright Office or in other reference sources. (e) Presumption as to authors death. After a period of 95 years from the year of first publication of a work, or a period of 120 years from the year of its creation, whichever expires first, any person who obtains from the Copyright Office a certified report that the records provided by subsection (d) disclose nothing to indicate that the author of the work is living, or died less than 70 years before, is entitled to the benefit of a presumption that the author has been dead for at least 70 years. Reliance in good faith upon this presumption shall be a complete defense to any action for infringement under this title. {FN56: 17 U.S.C. 302} One way to think of all these various terms is to say that any copyright lasts until 70 years after the death of the author who lives the longest, and that an author is presumed to have died 50 years after a work is created or 25 years after it is published, whichever comes first. The Copyright Office can be informed of the actual date of death of the author, or that the author is still alive, for authors that are people, but not for authors that are companies (as is the case for a work made for hire) or for unidentified authors. So that one need not quibble about the exact date of the death of an author, Section 305 provides that All terms of copyright . . . run to the end of the calendar year in which they would otherwise expire. It doesnt indicate a particular time zone for determining when the year ends.
II.G.1. Why So Long?

How long a copyright should last is a very controversial subject. In the report that accompanied the passage of the Copyright Act of 1976, the drafters gave a number of reasons why they went from a term of 28 years, with the possibility of renewing for another 28 years, to a term of the life of the author plus 50 years: {FN57: H.R. Rep. No. 94-1476 at 134-135} 1. The present 56-year term is not long enough to insure an author and his dependents the fair economic benefits from his works. . . .

2. The tremendous growth in communications media has substantially lengthened the commercial life of a great many works. . . . 3. Although limitations on the term of copyright are obviously necessary, too short a term harms the author without giving any substantial benefit to the public. . . . 4. A system based on the life of the author would go a long way toward clearing up the confusion and uncertainty involved in the vague concept of publication, and would provide a much simpler, clearer method for computing the term. . . . 5. One of the worst features of the present copyright law is the provision for renewal of copyright. . . . 6. Under the preemption provisions of section 301 and the single Federal system they would establish, authors will be giving up perpetual, unlimited exclusive common law rights in their unpublished works, including works that have been widely disseminated by means other than publication. . . . 7. A very large majority of the worlds countries have adopted a copyright term of the life of the author and 50 years after the authors death. . . . In 1998, Congress again extended the term of copyright, this time to life plus 70 years. This was to harmonize the term with that of Europe, so that American authors would not be disadvantaged. Under the rule of the shorter term, member states need only protect the work of foreign authors to the same extent that they would be protected in their country of origin. In 1995, the European Union extended the copyright term for all of its member states from life of the author plus fifty years to life of the author plus seventy years. As the world leader in the export of intellectual property, this has profound effects for the United States if it does not extend copyright term as well. European Union countries, which are huge markets for U.S. intellectual property, would not have to provide twenty years of copyright protection to U.S. works and the U.S. would lose millions of dollars in export revenues. {FN58: H.R. Rep. No. 105-452 at 4} The copyright term extension was challenged in Eldred v. Reno, {FN59: 239 F.3d 372, 57 USPQ2d 1842 (D.C. Cir., 2001)} as against the constitutional provision that permits copyrights for only limited times. The argument was that if the term of copyright protection is extended right before it is about to expire, it effectively exceeds a limited time. In addition, it was argued that a retroactive extension of copyright term for existing works cant benefit the progress of science and the useful arts because those works are already in existence and the extension simply keeps them from entering the public domain sooner. But every copyright term extension, starting in 1831 with changing the basic term from 14 to 28 years, have been applied retroactively to works still under copyright. The Court of Appeals for the District of Columbia Circuit found that Congress acted within its authority when it extended the copyright term. The case is now on appeal to the Supreme Court, to be heard during its October 2002 term. [On January 15, 2003, the Supreme Court upheld the Copyright Term Extension Act. See Eldred v. Ashcroft.]

Chapter 1: An Overview of Copyright

II.H. Rights In Copyright

The copyright owner gets what is often termed a bundle of rights, including the right to control reproduction of the copyrighted work that we normally associate with copyright. But it is important to understand that there are rights in addition to reproduction that are given the copyright owner. And these rights can be separated out and granted to different people as the copyright owner sees fit.
II.H.1. Reproduction

Section 106 states the six exclusive rights of a copyright owner. The first is to reproduce the copyrighted work in copies or phonorecords. The difference between copies and phonorecords is primarily historical. The reproduction does not have to be exact, but in the case of a sound recording, it must be an actual copy. A sound-alike imitation of a sound recording is not an infringement of the copyright in the sound recording, although it likely infringes the separate copyright in the music. It just has to be substantially similar to the copyrighted work. Nor do you have to be looking at the original work when you make the copy. In a 1983 case, ABKCO Music v. Harrisongs Music, {FN60: 722 F.2d 988, 221 USPQ 490 (2d Cir., 1983)} the Beatles George Harrison was found to have copied the song Hes So Fine when he wrote My Sweet Lord. In the infringement suit, it was shown that he had heard Hes So Fine many years before, and that the tune of My Sweet Lord was substantially similar. The drafters of the Copyright Act of 1976 discussed the reproduction right: Read together with the relevant definitions in section 101, the right to reproduce the copyrighted work in copies or phonorecords means the right to produce a material object in which the work is duplicated, transcribed, imitated, or simulated in a fixed form from which it can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. As under the present law, a copyrighted work would be infringed by reproducing it in whole or in any substantial part, and by duplicating it exactly or by imitation or simulation. Wide departures or variations from the copyrighted work would still be an infringement as long as the authors expression rather than merely the authors ideas are taken. An exception to this general principle, applicable to the reproduction of copyrighted sound recordings, is specified in section 114. Reproduction under clause (1) of section 106 is to be distinguished from display under clause (5). For a work to be reproduced, its fixation in tangible form must be sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. Thus, the showing of images on a screen or tube would not be a violation of clause (1), although it might come within the scope of clause (5). {FN61: H.R. Rep. No. 94-1476 at 61-62} There are a variety of exceptions to the reproduction right, including a number of special privileges for libraries contained in Section 108. We will look at the reproduction right in more detail when we discuss software copyrights and Internet copyrights.

II.H.2. Derivative Works

The second exclusive right listed in Section 106 is to prepare derivative works based upon the copyrighted work. As defined in Section 101: A derivative work is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a derivative work. {FN62: 17 U.S.C. 101} The right to control the preparation of derivative works is a broadening of the adaptation right in the Copyright Act of 1909, which specified particular adaptations for different types of works (To translate the copyrighted work into other languages or dialects, . . . if it be a literary work). However, it is sometimes convenient to talk about the right to control the preparation of derivative works as the adaptation right, much like we talk about the reproduction right, the distribution right, the performance right, and the display right as shorthand for the other exclusive rights. It also reminds us that we are taking an existing work and modifying it in some way to produce a new copyrightable work, rather than just making a reproduction of an existing work. As the drafters commented: The exclusive right to prepare derivative works, specified separately in clause (2) of section 106, overlaps the exclusive right of reproduction to some extent. It is broader than that right, however, in the sense that reproduction requires fixation in copies or phonorecords, whereas the preparation of a derivative work, such as a ballet, pantomime, or improvised performance, may be an infringement even though nothing is ever fixed in tangible form. To be an infringement the derivative work must be based upon the copyrighted work, and the definition in section 101 refers to a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. Thus, to constitute a violation of section 106(2), the infringing work must incorporate a portion of the copyrighted work in some form; for example, a detailed commentary on a work or a programmatic musical composition inspired by a novel would not normally constitute infringements under this clause. {FN63: H.R. Rep. No. 94-1476 at 62}
II.H.3. Public Distribution and First Sale

The third exclusive right is to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending. It is infringed even if the infringer did not have to reproduce the work in order to make the distribution. But the distribution right is limited in many instances by Section 109, which codifies what is called the first-sale doctrine that copyright owners receive their just reward when they first sell a copyrighted work, and they should not receive an additional benefit when that purchaser disposes of the work in some way. As Section 109 says: the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the

copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord. {FN64: 17 U.S.C. 109} The drafters provided some examples: Thus, for example, the outright sale of an authorized copy of a book frees it from any copyright control over its resale price or other conditions of its future disposition. A library that has acquired ownership of a copy is entitled to lend it under any conditions it chooses to impose. This does not mean that conditions on future disposition of copies or phonorecords, imposed by a contract between their buyer and seller, would be unenforceable between the parties as a breach of contract, but it does mean that they could not be enforced by an action for infringement of copyright. Under section 202 however, the owner of the physical copy or phonorecord cannot reproduce or perform the copyrighted work publicly without the copyright owner's consent. To come within the scope of section 109(a), a copy or phonorecord must have been lawfully made under this title, though not necessarily with the copyright owners authorization. For example, any resale of an illegally pirated phonorecord would be an infringement, . . . {FN65: H.R. Rep. No. 94-1476 at79} There are two significant exceptions to the first-sale doctrine given in Section 109. You may not rent either a sound recording or a computer program unless that computer program is part of a machine that is being rented or the computer program is to be used with a video game console. There is no similar prohibition against renting movies on videotape or videodisc. It is possible to infringe one or more of these exclusive rights by a single act, as the drafters noted: The first three clauses of section 106, which cover all rights under a copyright except those of performance and display, extend to every kind of copyrighted work. The exclusive rights encompassed by these clauses, though closely related, are independent; they can generally be characterized as rights of copying, recording, adaptation, and publishing. A single act of infringement may violate all of these rights at once, as where a publisher reproduces, adapts, and sells copies of a persons copyrighted work as part of a publishing venture. Infringement takes place when any one of the rights is violated: where, for example, a printer reproduces copies without selling them or a retailer sells copies without having anything to do with their reproduction. The references to copies or phonorecords, although in the plural, are intended here and throughout the bill to include the singular. {FN66: H.R. Rep. No. 94-1476 at 61}
II.H.4. Public Performance or Display

The last three exclusive rights in Section 106 have to do with the public performance or display of certain types of works: (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; (5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly; and

(6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission. {FN67: 17 U.S.C. 106} Section 101 provides a number of important definitions: To display a work means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process or, in the case of a motion picture or other audiovisual work, to show individual images nonsequentially. To perform a work means to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible. To perform or display a work publicly means(1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times. To transmit a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent. {FN68: 17 U.S.C. 101} There are a variety of special exceptions to the public display and performance rights detailed in Sections 109-121. {FN69: 17 U.S.C. 109-121} And, if the use has few or no economic consequences on the market for the work, fair use under Section 107 {FN70: 17 U.S.C. 107} may permit a public performance or display.
II.H.5. Rights In Different Types of Works

It is important to note that the copyright laws treat different types of works differently, and there is a series of special exceptions that may apply to one type of work, or use of a work, and not another. The copyright laws are a series of compromises, some general, some very specific, between the broad rights of the copyright owners and the publics use of the work. The fact that something may be allowed for one type of work in a particular situation doesnt mean that it is allowed for other types of works, or in other situations. There are few general rules in copyright law. Another way of looking at the exclusive rights of a copyright owner is to consider the exclusive rights granted by the Copyright Act for each of the types of copyrighted works: y For literary works, musical works, dramatic works, pantomimes and choreographic works: reproduction, adaptation, distribution, public performance, and public display. y For pictorial, graphic, and sculptural works, including individual images of a motion picture or other audiovisual work: reproduction, derivative works, and public display. y For motion pictures and other audiovisual works: reproduction, derivative works, distribution, and public performance.

y For sound recordings: reproduction, derivative works, distribution, and public performance by digital audio transmission. y For architectural works: reproduction, derivative works, and distribution.
II.H.6. Assignments and Licensing

The copyright owner has a bundle of rights that can be assigned or licensed as desired. An assignment occurs when all the rights are transferred to another person, much like the sale of a house. A license is like a lease, under which the licensor retains ownership of the copyright but gives certain rights to the licensee. When a license does not permit any further licensing in a particular field of use or geographic area, it is called an exclusive license for that field of use or geographic area. An exclusive license can also be for all the rights under the copyright. But an exclusive license does not mean that it is the only license, just that there will be no more licenses in the area of exclusivity. Any licenses granted before the exclusive license remain valid, but no licenses can be granted after the exclusive license. The owner of the copyright can license or assign any or all of these rights to others, such as licensing a book publisher for a novel, permitting a playwright to adapt the novel for a play, and licensing the individual performances of the play (in cooperation with the playwright, who owns the copyright in the portions of the play that are a derivative work of the novel).

Chapter 1: An Overview of Copyright

II.I. Fair Use
Probably one of the most misunderstood concepts in copyright law is fair use. This is a doctrine that provides a defense to copyright infringement for some acts. But determination of whether or not something is a fair use is fact-intensive. No particular act is automatically fair use, and all four factors listed in Section 107 must be considered: Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. The fact that a work is unpublished shall not itself bar a finding of fair use if such a finding is made upon consideration of all the above factors. {FN71: 17 U.S.C. 107}

II.I.1. Consider All Factors

It is important to note that while the statute lists a number of purposes for fair use copying (criticism, comment, news reporting, teaching, scholarship, or research), it does not say that any of those are automatically a fair use. Instead, it says that a fair use for such purposes is not an infringement, with the four factors determining whether or not the particular use is fair. Each of the four factors listed above must be considered in determining fair use, but all four factors need not be met, nor must all four factors be weighted equally by the court. Often, the first two factors color the consideration of the others. In Harper & Row v. Nation Enterprises, {FN72: 471 U.S. 539, 225 USPQ 1073 (1985)} the Supreme Court found that the copying of about 300 words from a book as not a fair use, while in other cases the copying of an entire work was considered a fair use. Many people feel that the fourth factor is the most important, although the Supreme Court has made it clear in the 2 Live Crew case, {FN73: Campbell v. Acuff-Rose Music, 510 U.S. 569, 29 USPQ2d 1961 (1994)} which considered whether a commercial parody of a song was a fair use, that there are no shortcuts and all four factors must be considered. But the Supreme Court has stated that special consideration should be given to works that are transformative. The enquiry here may be guided by the examples given in the preamble to Section 107, looking to whether the use is for criticism, or comment, or news reporting, and the like. The central purpose of this investigation is to see, in Justice Story's words, whether the new work merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is transformative. Although such transformative use is not absolutely necessary for a finding of fair use, the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Such works thus lie at the heart of the fair use doctrine's guarantee of breathing space within the confines of copyright, and the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use. {FN74: 510 U.S. at 578-579, 29 USPQ2d at 1965 (citations omitted)}
II.I.2. Fair Use as a Safety Valve

Fair use provides a safety valve for the copyright law. As we have seen, the law gives broad exclusive rights to the copyright owner (reproduction, adaptation, distribution, and public display and performance), tempered by a number of specific exemptions. Fair use allows a court to find that there is not an infringement where there is no special exception but that the use of the copyrighted work is reasonable. Within the limits imposed by Congress, the court can balance the harm to the copyright owner with the public benefit of what would otherwise be an infringement. It is in part through the fair use doctrine that the copyright laws are not a restriction on free speech. The fair use safety valve is most important for uses that are technically infringements, but where there is little or no economic harm to the market for a work by the use. A person singing a song as he or she walks down the street may be performing it publicly, but it would be unreasonable to treat that the same as performance of the song in a concert with thousands paying

to attend. Most uses of digital works require the creation of intermediate copies, and it would be nonsensical to say that a purchaser of a digital work cant use it. But it is necessary to really understand the effect of the use upon the potential market for or value of the copyrighted work when considering whether a use is fair. A person making a copy of a CD to use in his or her car will have essentially no effect on the market for that work. A person making a copy of that same CD for a friend will have a limited effect on the market, since a potential sale for the CD is lost, But a person making a song available through a file-sharing service on the Internet may not realize that he or she has become a worldwide distributor of that song, in competition with the copyright owner, with substantial effect on the potential market for that work.

Chapter 1: An Overview of Copyright

II.J. Indirect Infringement
Even if you do not directly infringe any of the exclusive rights in copyright, you may be guilty of indirect copyright infringement as either a contributory infringer or a vicarious infringer if you help somebody else infringe. The two concepts are somewhat similar, and often someone can be both a contributory infringer and a vicarious infringer. Although these concepts are not part of the Copyright Act of 1976, the Supreme Court has borrowed contributory infringement from the patent statute and noted that vicarious liability is common in the law.
II.J.1. Contributory Infringement

Contributory infringement results when somebody knows of the direct infringement of another and substantially participates in that infringement, such as inducing, causing, or materially contributing to the infringing conduct. That substantial participation could take the form of providing a device or service that facilitates the infringement if that device or service has no substantial use other than infringement. In the classic case on contributory infringement, the Supreme Courts 1984 Betamax decision, {FN75: Sony v. Universal City Studios,464 U.S. 417, 220 USPQ 665 (1984)} the Court held that Sony was not a contributory infringer by selling VCRs because there was a number of uses for the VCR (including time-shifting of a broadcast program for personal use) that would not infringe copyright.
II.J.2. Vicarious Infringement

Vicarious infringement results when there has been a direct infringement and the vicarious infringer is in a position to control the direct infringer and benefits financially from the infringement. In a 1996 Ninth Circuit case, {FN76: Fonovisa Inc. v. Cherry Auction, 76 F.3d 259, 37 USPQ2d 1590 (9th Cir. 1996)} the operator of a flea market where counterfeit recordings were regularly sold was found to be a vicarious infringer because he could have policed the vendors who rented booths from him but didnt, and he made money from that booth rental as well as from admission fees from the people attending the flea market. The court believed that many of the people who paid those admission fees did so to gain access to the counterfeit recordings. The court also found that the flea market operator was guilty of contributory infringement. Contributory or vicarious infringement has been a major consideration in cases regarding the use of digital information on the Internet. [In addition to contributory infringement and vicarious infringement, there is another form of indirect infringement: inducement of infringement. This was more commonly seen in patent law,

because it is specifically indicated in the patent statutes (17 U.S.C. 271(b)), but as I noted in my paper "Sony Revisited: A new look at contributory copyright infringement," is also applicable to copyright. This was confirmed in the Supreme Courts unanimous opinion in MGM v. Grokster, which stated: For the same reasons that Sony took the staple-article doctrine of patent law as a model for its copyright safe-harbor rule, the inducement rule, too, is a sensible one for copyright. We adopt it here, holding that one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties. While cases in patent law provide some guidance regarding what might be inducement of infringement, the metes-and-bounds of copyright inducement wont be known until a few cases are litigated.]

Chapter 1: An Overview of Copyright

II.K. Misuse Of Copyright
The exclusive rights given to the copyright owner reproduction, adaptation, distribution, and public performance and display are quite broad, even when the special exceptions are considered. But sometimes copyright owners may try to use their exclusive rights to gain even more protection than is granted under the copyright laws. This is considered copyright misuse. The copyright misuse doctrine is similar to the better-developed patent misuse doctrine. The classic patent misuse occurs when a patent owner conditions the use of a patented item (such as a salt spreader) on the purchase of a nonpatented item (such as salt) also supplied by the patent owner. The courts have found that such an action attempts to improperly enlarge the scope of the patent, and therefore when the patent owner comes to court, it is with unclean hands and the court will refuse to enforce the patent until the misuse ends and its effects no longer exist. The misuse does not have to be against the alleged infringer any misuse can be used to defend against the infringement suit. Before 1990 there were many cases regarding patent misuse, but essentially nothing regarding copyright misuse. But in that year, the Fourth Circuit explicitly recognized copyright misuse as analogous to patent misuse inLasercomb America v. Reynolds. {FN77: 911 F.2d 970, 15 USPQ2d 1846 (4th Cir. 1990)} Lasercomb produced a computer-aided design program that Reynolds and his company licensed. Reynolds s use went far beyond the license it had from Lasercomb, since it found a way to circumvent the system that limited the number of active copies. Lasercomb sued for copyright infringement. Reynolds asserted that even though it had infringed Lasercombs copyright, it should not be found liable because Lasercomb had misused its copyright in the license agreement for the software, and the court agreed. As part of the Lasercomb agreement, a licensee had to agree not to develop a competitive computer-aided design program for 99 years, well beyond the period of protection given Lasercombs program by the copyright laws at that time, 75 years. The court found that Lasercomb was trying to effectively extend the term and scope of its copyright beyond what copyright law permitted, and that would prevent people from legitimately developing competitive software. That was a misuse by Lasercomb and the court refused to enforce their copyright against Reynolds.

An interesting aspect of the case is that Reynolds and his company had never signed the license agreement. But that made no difference Lasercomb had misused its copyright in getting others to sign the agreement, and the court said that it could not bring any infringement suits until it had purged its past misuse and its effects. The copyright misuse defense is similar to an antitrust claim, where a copyright owner has misused the limited monopoly granted by the copyright. However, the Lasercombdecision made it clear that the copyright misuse defense is available even when the misuse does not reach the level of an antitrust violation. Related to copyright misuse is fraud on the Copyright Office, where somebody has registered a copyright by providing false information or concealing important information. An example would be somebody claiming and registering the copyright in a work that is not his, such as a work prepared as an employee within the scope of that employment (a work made for hire). As with copyright misuse, the result of copyright fraud is that the courts will not enforce the copyright covered by the registration. The Lasercomb case has been cited with approval in a number of cases since it was handed down, but in most of those cases copyright misuse was not found. In Atari v. Nintendo, {FN78: 975 F.2d 832, 24 USPQ2d 1015 (Fed. Cir. 1992)} a case decided shortly after Lasercomb, the Federal Circuit used copyright misuse not to prevent the enforcement of a copyright but to refuse a fair use defense. Even though it found that the use would otherwise be fair, because the defendant had misled the Copyright Office to get a copy of the program source code and therefore came to court with unclean hands, the defendant could not use the equitable fair use defense. While the exact dimensions of the copyright misuse defense will be known only after considerably more cases are decided, its consequences should be considered by anyone who is trying to use his or her copyright to go beyond the protection of the copyright laws. The penalty for copyright misuse unenforceability of the copyright in court until the misuse has been purged and its effects no longer exist is tantamount to losing the copyright.

Chapter 1: An Overview of Copyright

II.L. Remedies For Copyright Infringement
Exercising any of the exclusive rights of the copyright owner reproduction, adaptation, distribution, public display, or public performance without the permission of the copyright owner, or not within one of the exceptions in Sections 107 through 121, infringes the copyright in the work. There are a variety of remedies provided in the Copyright Act. Under Section 502 the court can order that the infringing acts cease, and if there is sufficient evidence of copyright infringement, that order can be issued even before the trial. {FN79:17 U.S.C. 502} Under Section 503 the court can also order the impoundment of infringing works and the things used to make them, and after the trial can order them destroyed.{FN80: 17 U.S.C. 503} And under Section 509 the court can order the seizure and destruction of infringing works after the trial. {FN81: 17 U.S.C. 509}
II.L.1. Time Limits For Filing Suit

Any infringement action must be brought within three years after the infringement occurs. {FN82: 17 U.S.C. 507(b)} But in many instances, the infringement is of a continuing nature, such as distributing copies or performing the work. For example, consider the making of a

large number of infringing copies and distributing them until all the copies have been sold. If it is over three years since the copies were made, the copyright owner cant sue for infringement of the reproduction right but can sue for infringement of the distribution right if any copies were sold within the previous three years. However, if the copyright owner acts in such a way as to lead people to believe that he or she will not bring an infringement suit, such as ignoring open infringement for a long time, with no other reason preventing him from bringing suit, a legal principle called laches may prevent a later suit. The determination is very fact-intensive, based on the actions (or lack of action) of the copyright owner, the amount of delay, and the prejudice worked against the infringer by the delay.
II.L.2. Damages

The most common remedy for copyright infringement is awarding damages to the copyright owner. Section 504 indicates that owners can receive the actual damages suffered by them plus any profits that the infringer made as the result of the infringement that go beyond the actual damages to the copyright owner. {FN83: 17 U.S.C. 504} But since Congress recognized that in many instances it will be difficult to compute the actual damages, it provided an alternative called statutory damages that is available to copyright owners who have registered their copyright within three months of the publication of a work. Statutory damages allow the court to set the damages in a amount between $750 and $30,000 for each work that was infringed. If the infringement was found to be willful, then the statutory damages can go up to $150,000, while if the infringer shows that the infringement was innocent, they can be reduced to $200. A special provision applies to innocent infringers connected with educational institutions, libraries, or public broadcasters, allowing the remission of statutory damages.
II.L.3. Attorney Fees and Costs

Under Section 505, the prevailing party in a copyright infringement suit may ask the court to award him his attorney fees and other costs of the suit. {FN84: 17 U.S.C. 504}This is in contrast to the normal rule in American law, where each side is responsible for its own costs no matter who wins. For copyright owners to ask for attorney fees and costs, they must have registered their copyright within three months of the first publication of the work. This, along with statutory damages, provides a strong incentive for prompt registration, even though registration is not required until just before filing an infringement suit.
II.L.4. Criminal Infringement

While copyright infringement is normally a civil action, meaning that the copyright owner is suing the alleged infringer, it can also be a criminal act, meaning that the United States Government brings the alleged infringer into court. There is nothing that prevents an alleged infringer from being both prosecuted criminally and sued civilly for infringement, although criminal prosecution is often used in cases when the alleged infringer has few assets relative to the damages that have been caused, making civil suit an ineffective remedy for the infringement. And it is important to note that a higher burden of proof is required for criminal copyright infringement beyond a reasonable doubt, the same as in any other criminal prosecution than for civil copyright infringement. The copyright owner needs to prove infringement only by a preponderance of the evidence, essentially tipping the scale only slightly toward finding infringement in a civil action.

Section 506 makes a number of things criminal offenses, including fraudulent copyright notices, fraudulent removal of copyright notices, and making false statements in a copyright registration application. {FN85: 17 U.S.C. 506} But it primarily criminalizes copyright infringement when it is done willfully and either for purposes of commercial advantage or private financial gain or when the infringement exceeds a total retail value of $1,000 within any 180-day period. If the total retail value exceeds $2,500 and ten copies, the crime becomes a felony with the possibility of a $250,000 fine and five years in prison (ten years on a second offense), {FN86: 18 U.S.C. 2319} although the sentencing guidelines require that the retail value be substantially above $2,500 for any prison time, and in the millions to reach the maximum penalty. Although the copyright statutes do not contain a definition for willfully, the term has been given meaning in a number of past court decisions on copyright and other law. At the passage of the latest amendment to the criminal provision, Senator Orrin Hatch, the Chairman of the Senate Committee on the Judiciary, discussed the importance of the willfulness requirement: I place great store by the willfulness requirement in the bill. Although there is on-going debate about what precisely is the willfulness standard in the Copyright Act as the House Report records I submit that in the LaMacchia context willful ought to mean the intent to violate a known legal duty. The Supreme Court has given the term willful that construction in numerous cases in the past 25 years . . . As Chairman of the Judiciary Committee, that is the interpretation that I give to this term. Otherwise, I would have objected and not allowed this bill to pass by unanimous consent. Under this standard, then, an educator who in good faith believes that he or she is engaging in a fair use of copyrighted material could not be prosecuted under the bill. . . . Finally, Mr. President, I would like to point out two areas that are susceptible to interpretation mischief. First, the bill amends the term financial gain as used in the Copyright Act to include receipt, or expectation of receipt, of anything of value, including receipt of other copyrighted works. The intent of the change is to hold criminally liable those who do not receive or expect to receive money but who receive tangible value. It would be contrary to the intent of the provision, according to my understanding, if anything of value would be so broadly read as to include enhancement of reputation or value remote from the criminal act, such as a job promotion. {FN87: 143 Cong. Rec. S12689-S12690} [In 2005, Congress added another form of criminal copyright infringement to Section 506, as part of criminalizing the videotaping of a motion picture playing in a theater and then distributing it on the Internet, which had become a significant problem. {FN88: Artists' Rights and Theft Prevention Act of 2005, or the ART Act, part of Family Entertainment and Copyright Act of 2005, Pub. L. 109-9, 119 Stat. 220} Any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed-- . . . (C) by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution. {FN89: 17 U.S.C. 506(a)(1)}

There is a problem with this provision. As I discuss in Chapter 3, Section I.B.1.a, the public distribution right covers only the distribution of material objects. And making something available on a computer network accessible to members of the public, without more, most certainly doesnt distribute a material copy anywhere. It is interesting that this approach was suggested by some of us in 1997 as an alternative to the No Electronic Theft Act {FN90: Pub. L. No. 105-147, 111 Stat. 2678, among other things adding subsection (a)(2) to 17 U.S.C. 506} in response to the LaMacchia decision. {FN91: United States v. LaMacchia, 871 F.Supp. 535, 33 USPQ2d 1978 (D. Mass. 1994)} The concern was that it would be difficult to show when the required dollar amount of copies had been made before charging the crime, and it made little sense to wait until enough copies had gone out to stop the infringement. But we also wanted to amend the distribution right to include making the work available to the public, as discussed in Chapter 3, Section I.B.1.f.]

Chapter 2: Copyright of Computer Programs

I. The History Of Software Copyright
Although today it is uncontroversial that computer programs can be protected by copyright, in the early days of computer programs that was far less clear. It is largely through convenient timing and creative decisions that computer programs enjoy copyright protection today.

I.A. Early Software: The Piano Roll

Before the advent of digital computers controlled by computer programs, there was another device whose particular function was controlled by an encoded sequence of instructions the player piano. In 1908, the Supreme Court looked at the copyrightability of piano rolls in the case of White-Smith Music v. Apollo. {FN1: 209 U.S. 1 (1908)} In a unanimous decision finding that piano rolls were not copies of the musical work under the copyright law as it existed at that time, and therefore not an infringement, the Supreme Court stated: These perforated rolls are parts of a machine which, when duly applied and properly operated in connection with the mechanism to which they are adapted, produce musical tones in harmonious combination. But we cannot think that they are copies within the meaning of the copyright act. {FN2: 209 U.S. at 18} The Court concluded that if piano rolls and similar things were to be copies under the Copyright Act, it was the responsibility of Congress to amend the copyright law to cover them. Congress made such a revision in the Copyright Act of 1909, but not by directly stating that works that can be perceived only through the use of a machine are protected by copyright. That would have to wait for the Copyright Act of 1976, whose Section 102 {FN3: 17 U.S.C. 102(a)} makes it clear that original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device are copyrightable. Instead, Congress implicitly recognized the copyrightability of piano rolls and other musical recordings by giving the copyright owner for a musical work the exclusive right to make any

arrangement or record in which the thought of an author may be recorded and from which it may be read or reproduced. {FN4: 35 Stat. 1, 1(e)} To balance this new exclusive right, Congress provided a compulsory license for anyone wishing to make his or her own recording of a musical work, provided that the composer had permitted at least one recording of the work. This compulsory license was carried over to the Copyright Act of 1976 as Section 115. {FN5: 17 U.S.C. 115}

I.B. The First Software Copyrights

There was little need for copyright (or patent) protection for early computer programs. There were few computers, and most software was custom-developed for in-house applications. It wasnt until the early 1960s that computer programs were being actively marketed by a software industry besides the computer manufacturers. Before widely-marketed software, it was easy to protect by a contract or license agreement any computer program that was being marketed. While a contract restricted what people receiving the software could do with it, particularly limiting their further distribution of the software, it could not bind people who were not parties to the contract. A person finding a computer program on the street could do anything he or she wanted with it. Copyright law, on the other hand, provides protection for a computer program even when no contract exists. Under the Copyright Act of 1909, copyright protection required registration of the copyright at the time of first publication. That caused a problem for early computer programs because they werent generally published like books or other copyrightable works. (The problem went away when the publishing requirement was eliminated by the Copyright Act of 1976.) According to the Copyright Office, the first deposit of a computer program for registration was on November 30, 1961. North American Aviation submitted a tape containing a computer program. While the Copyright Office was trying to determine whether such a deposit could be registered, two short computer programs were submitted by a Columbia University law student to determine how a computer program might be registered. One computer program was submitted as a printout published in the Columbia Law School News on April 20, 1964, while the other was on magnetic tape. The copyrights for both student computer programs were registered in May 1964, and North American Aviations computer program was registered in June 1964. Surprisingly, the Copyright Office did not seem to think that the Supreme Courts WhiteSmith v. Apollo decision prevented the copyrighting of computer programs. It believed that punched cards, a primary medium for computer programs at the time, could be read by somebody familiar with the code used to represent characters on the cards, or could be printed to get a computer program listing intelligible to a person. Magnetic tapes, presumably, were just like a whole bunch of punch cards on a more convenient medium. The Copyright Office concluded that a computer program was like a how to book, and therefore protectable by copyright just like that book, if: (1) The elements of assembling, selecting, arranging, editing, and literary expression that went into the compilation of the program [meaning the creation of the program, not converting it from source code to object code] are sufficient to constitute original authorship. This is essentially a threshold question whether the de minimis maxim [that there has to be a minimum amount of originality for copyright protection] applies.

(2) The program has been published, with the required notice [which was a requirement for copyright at the time]; that is, copies (i.e. reproductions of the program in a form perceptible or capable of being made perceptible to the human eye) bearing the notice have been distributed or made available to the public. (3) The copies deposited for registration consist of or include reproductions in a language intelligible to human beings [source code, rather than object code]. If the only publication was in a form that cannot be perceived visually or read [say, on magnetic tape], something more (e.g. a print-out of the entire program) would also have to be deposited. {FN6: Copyright Office Circular No. 61, 1964 version} Since then, the copyright of computer programs has been generally accepted, and it became common for computer programs to contain a copyright notice, even if they were not formally registered. This happened more because software developers copied what others had previously done rather than because of a great understanding of copyright law and its relationship to computer software.

I.C. Software Under the 1976 Act

The Copyright Act of 1976, which became effective on January 1, 1978, made it clear that Congress intended software to be copyrightable. The definition of literary works in Section 101 states that they are: 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. {FN7: 17 U.S.C. 101} Furthermore, the House Report discussing the Act states: The term literary works does not connote any criterion of literary merit or qualitative value: it includes catalogs, directories, and similar factual, reference, or instructional works and compilations of data. It also includes computer data bases, and computer programs to the extent that they incorporate authorship in the programmers expression of original ideas, as distinguished from the ideas themselves. {FN8: H.R. Rep. No. 94-1476 at 54} Yet what was not clear was how much protection Congress intended to give computer programs, and whether there should be special exceptions to the exclusive rights of the copyright owners, as was the case for some other types of works. Because Congress didnt want to further delay the passage of the Act (which had been in the works for about two decades), it appointed the National Commission on New Technological Uses of Copyrighted Works (referred to as CONTU) to report back about computer programs and other new technologies and put a placeholder provision in the Act: 117. Scope of exclusive rights: use in conjunction with computers and similar information systems. Notwithstanding the provisions of sections 106 through 116 and 118, this title does not afford the owner of copyright in a work any greater or lesser rights with respect to the use of the work in conjunction with automatic systems capable of storing, processing, retrieving, or transferring information, or in conjunction with any similar device, machine, or process, than those afforded to works under the law, whether title 17 or the common law or statutes of a State, in

effect on December 31, 1977, as held applicable and construed by a court in an action brought under this title. {FN9: Pub. L. No. 94-553, 90 Stat. 2541, 117}

I.D. The CONTU Recommendations

CONTU held extensive hearings not only on protection of computer software but also photocopying and computer databases. On July 31, 1978, it transmitted its final report to the President and Congress. Along with other recommendations, CONTU recommended making two changes to the copyright laws to address computer programs. First, it recommended a new definition be added to Section 101: A computer program is a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result. {FN10: Final Report of the National Commission on the New Technological Uses of Copyrighted Works (CONTU Rep.), ISBN 0-8444-0312-1 (1978) at 12} It also recommended that Section 117 be replaced with: Notwithstanding the provisions of section 106, it is not an infringement for the rightful possessor of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided: (1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner, or (2) that such new copy or adaptation is for archival purposes only and that all archival copies are destroyed in the event that continued possession of the computer program should cease to be rightful. Any exact copies prepared in accordance with the provisions of this section may be leased, sold, or otherwise transferred, along with the copy from which such copies were prepared, only as part of the lease, sale, or other transfer of all rights in the program. Adaptations so prepared may be transferred only with the authorization of the copyright owner. {FN11: CONTU Rep. at 12} CONTU explained its recommendations: 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, licensers, 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. This is in accord with the intent of that portion of the law which provides that owners of authorized copies of a copyrighted work may sell those copies without leave of the copyright proprietor. Because of a lack of complete standardization among programming languages and hardware in the computer industry, one who rightfully acquires a copy of a program frequently cannot use it without adapting it to that limited extent which will allow its use in the possessors computer. The copyright law, which grants to copyright proprietors the exclusive right to prepare translations, transformations, and adaptations of their work, should no more prevent such use than it should prevent rightful possessors from loading programs into their computers. Thus, a right to make those changes necessary to enable the use for which it was both sold and purchased should be provided. The conversion of a program from one higher-level language to another to facilitate use would fall within this right, as would the right to add features to the program that were not present at the time of rightful acquisition. These rights would necessarily be more private in nature than the right to load a program by copying it and could only be exercised so long as they did not harm the interests of the copyright proprietor. Unlike the exact copies authorized as described above, this right of adaptation could not be conveyed to others along with the licensed or owned program without the express authorization of the owner of the copyright in the original work. Preparation of adaptations could not, of course, deprive the original proprietor of copyright in the underlying work. The adaptor could not vend the adapted program, under the proposed revision of the new law, nor could it be sold as the original without the authors permission. Again, it is likely that many transactions involving copies of programs are entered into with full awareness that users will modify their copies to suit their own needs, and this should be reflected in the law. The comparison of this practice to extensive marginal note-taking in a book is appropriate: note-taking is arguably the creation of a derivative work, but unless the note-taker tries to copy and vend that work, the copyright owner is unlikely to be very concerned. Should proprietors feel strongly that they do not want rightful possessors of copies of their programs to prepare such adaptations, they of course, make such desires a contractual matter. {FN12: CONTU Rep. at 13}

I.E. Congressional Action

I.E.1. Adoption of the CONTU Recommendations, with an Unexplained Change

Congress adopted these recommendations as part of a bill to amend the patent and trademark laws that became Public Law 96-517 on December 12, 1980. However, there was one change made to CONTUs proposed Section 117 the term rightful possessor of a copy was replaced by owner of a copy. 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. It would be strange if somebody were not a

copyright infringer when he or she made the copy but became one when he or she didnt take an action deleting the copy after returning the rental software.
I.E.2. The 1990 Software Rental Prohibition

In any case, such concerns were unnecessary because Congress later passed the Computer Software Rental Amendments Act of 1990, which limited the first sale provisions of Section 109 for computer software: Unless authorized by the owners of copyright in the sound recording or the owner of copyright in a computer program (including any tape, disk, or other medium embodying such program), and in the case of a sound recording in the musical works embodied therein, neither the owner of a particular phonorecord nor any person in possession of a particular copy of a computer program (including any tape, disk, or other medium embodying such program), may, for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecord or computer program (including any tape, disk, or other medium embodying such program) by rental, lease, or lending, or by any other act or practice in the nature of rental, lease, or lending. Nothing in the preceding sentence shall apply to the rental, lease, or lending of a phonorecord for nonprofit purposes by a nonprofit library or nonprofit educational institution. The transfer of possession of a lawfully made copy of a computer program by a nonprofit educational institution to another nonprofit educational institution or to faculty, staff, and students does not constitute rental, lease, or lending for direct or indirect commercial purposes under this subsection. {FN13: 17 U.S.C. 109(b)(1)(A)} Although there are few cases that discuss the implications of Congresss adopting owner of a copy rather than rightful possessor of a copy, in MAI Systems Corp. v. Peak Computer, {FN14: 991 F.2d 511, 26 USPQ2d 1458 (9th Cir. 1993)} the Ninth Circuit Court of Appeals noted that licensees of software do not qualify as owners of the software and are not eligible for protection under 117. {FN15: 991 F.2d at 518 n. 5, 26 USPQ2d at 1464 n. 5} Peak was an independent service company that had used MAIs diagnostic programs when it serviced customers computers. While the software licenses permitted the customers to run the diagnostic programs and the operating system, they did not permit third parties like Peak to load the software. It is questionable whether a license should be allowed to preempt the rights granted to software users under Section 117. In general, Section 301 of the Copyright Act preempts any state law that come[s] within the subject matter of copyright, {FN16: 17 U.S.C. 301(a)} which the copying of a computer program to use it clearly does. (Other terms of a license, such as a limit on the warranties provided, are separate from copyright considerations and clearly not preempted by Section 301.) But in ProCD v. Zeidenberg,{FN17: 86 F.3d 1447, 39 USPQ2d 1161 (7th Cir. 1996)} the Seventh Circuit found that a license injects an additional element (the license itself) into the relationship between the copyright owner and the user, and so isnt equivalent to copyright and is not preempted. This view is not universally held; it allows a copyright owner to double-dip by using copyright protection when it is desirable which negates the balances in the copyright act by claiming that the software is licensed.

I.E.3. The 1998 Addition to Section 117

In 1998, as part of the Digital Millennium Copyright Act, Congress reacted to the concerns raised by this decision by amending Section 117 to address third-party maintenance of computers (c) Machine Maintenance or Repair. Notwithstanding the provisions of section 106, it is not an infringement for the owner or lessee of a machine to make or authorize the making of a copy of a computer program if such copy is made solely by virtue of the activation of a machine that lawfully contains an authorized copy of the computer program, for purposes only of maintenance or repair of that machine, if (1) such new copy is used in no other manner and is destroyed immediately after the maintenance or repair is completed; and (2) with respect to any computer program or part thereof that is not necessary for that machine to be activated, such program or part thereof is not accessed or used other than to make such new copy by virtue of the activation of the machine. (d) Definitions. For purposes of this section: (1) the maintenance of a machine is the servicing of the machine in order to make it work in accordance with its original specifications and any changes to those specifications authorized for that machine; and (2) the repair of a machine is the restoring of the machine to the state of working in accordance with its original specifications and any changes to those specifications authorized for that machine. {FN18: 17 U.S.C. 117(c)} It is not clear whether these added provisions really solve the problem or are just a Band-Aid. It would have been far better if Congress had recognized that most software is distributed under a license generally a non-negotiable shrink-wrap license that arguably makes Section 117 a nullity if consumers are really just licensees and not owners of their copies of a computer program. Also, Section 117 addresses only computer programs, which are set[s] of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result. It does not provide special treatment for computer data, even though configuration files or sample computer programs or clip art regularly accompany computer programs and are often necessary for their operation. Finally, Section 117 still does not recognize the reality of how backups of computer data are done, particularly on machines shared by a number of users. Archival copies of particular programs are not made. Instead, a copy of the entire file system, or those files that have changed since the last backup was made, is written with little regard for what is being copied. (Most backup procedures make a copy of everything on the disk being archived, not just computer programs as permitted by Section 117, but also computer data not addressed by Section 117.) But more problematic is the requirement of Section 117 that all archival copies are destroyed in the event that continued possession of the computer program should cease to be rightful. It is difficult, if not impossible, to go to all the backup tapes and delete the specific files associated with a computer program when the license for that computer program expires.

Chapter 2: Copyright of Computer Programs

II. The Scope Of Software Copyright

II.A. Copyrights or Patents?

Although it is now clear that software can be protected by copyright, the real question is what does that copyright protect? This question is complicated by the inherently-functional nature of computer software, something that has traditionally been protected by patents. Section 102(b) of the Copyright Act of 1976 restates this principle: 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. {FN19: 17 U.S.C. 102(b)} This recognizes the complementary nature of copyright, which protects expression, and patents, which protect useful procedures or machines. The Supreme Court, in the 1879 case Baker v. Selden, {FN20: 101 U.S. 99 (1879)} stated: The difference between the two things, letters-patent and copyright, may be illustrated by reference to the subjects just enumerated. Take the case of medicines. Certain mixtures are found to be of great value in the healing art. If the discoverer writes and publishes a book on the subject (as regular physicians generally do), he gains no exclusive right to the manufacture and sale of the medicine; he gives that to the public. If he desires to acquire such exclusive right, he must obtain a patent for the mixture as a new art, manufacture, or composition of matter. He may copyright his book, if he pleases; but that only secures to him the exclusive right of printing and publishing his book. So of all other inventions or discoveries. The copyright of a book on perspective, no matter how many drawings and illustrations it may contain, gives no exclusive right to the modes of drawing described, though they may never have been known or used before. By publishing the book, without getting a patent for the art, the latter is given to the public. 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 authors 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. The very object of publishing a book on science or the useful arts is to communicate to the world the useful knowledge which it contains. But this object would be frustrated if the knowledge could not be used without incurring the guilt of piracy of the book. And where the art it teaches cannot be used without employing the methods and diagrams used to illustrate the book, or such as are similar to them, such methods and diagrams are to be considered as necessary incidents to the art, and given therewith to the public; not given for the purpose of publication in other works explanatory of the art, but for the purpose of practical application. {FN21: 101 U.S. at 102-103}

Furthermore, the Court noted that the criteria for copyright and patent protection are quite different: A treatise on the composition and use of medicines, be they old or new; on the construction and use of ploughs, or watches, or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of drawing lines to produce the effect of perspective,-would be the subject of copyright; but no one would contend that the copyright of the treatise would give the exclusive right to the art or manufacture described therein. The copyright of the book, if not pirated from other works, would be valid without regard to the novelty, or want of novelty, of its subject-matter. The novelty of the art or thing described or explained has nothing to do with the validity of the copyright. To give to the author of the book an exclusive property in the art described therein, when no examination of its novelty has ever been officially made, would be a surprise and a fraud upon the public. That is the province of letters-patent, not of copyright. The claim to an invention or discovery of an art or manufacture must be subjected to the examination of the Patent Office before an exclusive right therein can be obtained; and it can only be secured by a patent from the government. {FN22: 101 U.S. at 102} The House Committee on the Judiciary, in its report accompanying the Copyright Act of 1976, commented on the provision in Section 102(b): Copyright does not preclude others from using the ideas or information revealed by the authors work. It pertains to the literary, musical, graphic, or artistic form in which the author expressed intellectual concepts. Section 102(b) makes clear that copyright protection does not 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. Some concern has been expressed lest copyright in computer programs should extend protection to the methodology or processes adopted by the programmer, rather than merely to the writing expressing his ideas. Section 102(b) is intended, among other things, 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 the copyright law. {FN23: H.R. Rep. No. 94-1476 at 56}

Chapter 2: Copyright of Computer Programs

II.B. Object Code
Clearly the source code for a computer program, to the extent that it is original expression, is protectable by copyright. But does that also protect the object code that actually runs on the computer? Object code, especially when stored in ROM, might be regarded as just part of a machine, not protectable by copyright.

II.B.1. Williams Electronics v. Artic International

In Williams Electronics v. Artic International, {FN24: 685 F.2d 870, 215 USPQ 405 (3d Cir. 1982)} the Third Circuit addressed this question in the context of a video game controlled by a computer program in ROM: Defendant argues that the basic question presented is whether the ROMs, which it views as part of a machine, can be considered a copy of a copyrighted work within the meaning of the Copyright Act. Defendant argues that a copyright for a computer program is not infringed when the program is loaded into electronic memory devices (ROMs) and used to control the activity of machines. That use, it claims, is a utilitarian one not within the scope of the Copyright Act. We have already rejected defendants similar argument in the context of the copyrights for the audiovisual works. Defendant makes the further point that when the issue is the copyright on a computer program, a distinction must be drawn between the source code version of a computer program, which it would hold can be afforded copyright protection, and the object code stage, which it contends cannot be so protected. Its theory is that a copy must be intelligible to human beings and must be intended as medium of communication to human beings. The answer to defendants contention is in the words of the statute itself. A copy is defined to include a material object in which a work is fixed by anymethod now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device . By this broad language, Congress opted for an expansive interpretation of the terms fixation and copy which encompass technological advances such as those represented by the electronic devices in this case. We reject any contention that this broad language should nonetheless be interpreted in a manner which would severely limit the copyrightability of computer programs which Congress clearly intended to protect. We cannot accept defendants suggestion that would afford an unlimited loophole by which infringement of a computer program is limited to copying of the computer program text but not to duplication of a computer program fixed on a silicon chip. {FN25: 685 F.2d at 876877, 215 USPQ at 410-411 (citations omitted)}
II.B.2. Apple v. Franklin

The Third Circuit expanded on this in Apple v. Franklin. {FN26: 714 F.2d 1240, 219 USPQ 113 (3d Cir. 1983)} Franklin Computer was producing a clone of the Apple II computer and had copied both the Apple ROM and a number of computer programs from Apple. It argued that it could not produce a clone of the Apple II without copying the programs, although Apple introduced evidence that Franklin could have rewritten the programs and that there were in existence operating systems written by third parties that were compatible with the Apple II. But Franklins main contention was that the Apple operating system programs were not protectable under copyright law: Franklin argues that an operating system program is either a process, system, or method of operation and hence uncopyrightable. Franklin correctly notes that underlying section 102(b) and many of the statements for which Baker v. Selden is cited is the distinction which must be made between property subject to

the patent law, which protects discoveries, and that subject to copyright law, which protects the writings describing such discoveries. However, Franklins argument misapplies that distinction in this case. Apple does not seek to copyright the method which instructs the computer to perform its operating functions but only the instructions themselves. The method would be protected, if at all, by the patent law, an issue as yet unresolved. {FN27: 714 F.2d at 1250-1251, 219 USPQ at 122 (citations omitted)} The question of the patentability of computer programs has subsequently been resolved. Methods that are truly novel can be protected by patent provided they produce a useful result. Franklin also contented that the software in question was not protectable under copyright because it was an operating system and not an applications program. Franklins attack on operating system programs as methods or processes seems inconsistent with its concession that application programs are an appropriate subject of copyright. Both types of programs instruct the computer to do something. Therefore, it should make no difference for purposes of section 102(b) whether these instructions tell the computer to help prepare an income tax return (the task of an application program) or to translate a high level language program from source code into its binary language object code form (the task of an operating system program such as Applesoft). Since it is only the instructions which are protected, a process is no more involved because the instructions in an operating system program may be used to activate the operation of the computer than it would be if instructions were written in ordinary English in a manual which described the necessary steps to activate an intricate complicated machine. There is, therefore, no reason to afford any less copyright protection to the instructions in an operating system program than to the instructions in an application program. {FN28: 714 F.2d at 1251, 219 USPQ at 122} In the alternative, Franklin contended that the Apple operating system could not be copyrighted because it was utilitarian. This argument stems from the following dictum in Baker v. Selden: The very object of publishing a book on science or the useful arts is to communicate to the world the useful knowledge which it contains. But this object would be frustrated if the knowledge could not be used without incurring the guilt of piracy of the book. And where the art it teaches cannot be used without employing the methods and diagrams used to illustrate the book, or such as are similar to them, such methods and diagrams are to be considered as necessary incidents to the art, and given therewith to the public; not given for the purpose of publication in other works explanatory of the art, but for the purpose of practical application. We cannot accept the expansive reading given to this language by some courts. Although a literal construction of this language could support Franklins reading that precludes copyrightability if the copyright work is put to a utilitarian use, that interpretation has been rejected by a later Supreme Court decision. In Mazer v. Stein, the Court stated: We find nothing in the copyright statute to support the argument that the intended use or use in industry of an article eligible for copyright bars or invalidates its registration. We do not read such a limitation

into the copyright law. The CONTU majority also rejected the expansive view some courts have given Baker v. Selden, and stated, That the words of a program are used ultimately in the implementation of a process should in no way affect their copyrightability. It referred to copyright practice past and present, which recognizes copyright protection for a work of authorship regardless of the uses to which it may be put. The Commission continued: The copyright status of the written rules for a game or a system for the operation of a machine is unaffected by the fact that those rules direct the actions of those who play the gameor carry out the process. (emphasis added). As we previously noted, we can consider the CONTU Report as accepted by Congress since Congress wrote into the law the majoritys recommendations almost verbatim. Perhaps the most convincing item leading us to reject Franklins argument is that the statutory definition of a computer program as a set of instructions to be used in a computer in order to bring about a certain result makes no distinction between application programs and operating programs. Franklin can point to no decision which adopts the distinction it seeks to make. {FN29: 714 F.2d at 12511252, 219 USPQ at 122-123 (citations omitted)} Finally, Franklin contended that operating systems were more like ideas than expression, because they could be expressed in only limited number of ways. Many of the courts which have sought to draw the line between an idea and expression have found difficulty in articulating where it falls. We believe that in the context before us, a program for an operating system, the line must be a pragmatic one, which also keeps in consideration the preservation of the balance between competition and protection reflected in the patent and copyright laws. Unlike a patent, a copyright protects originality rather than novelty or invention. In that opinion, we quoted approvingly the following passage from Dymow v. Bolton: Just as a patent affords protection only to the means of reducing an inventive idea to practice, so the copyright law protects the means of expressing an idea; and it is as near the whole truth as generalization can usually reach that, if the same idea can be expressed in a plurality of totally different manners, a plurality of copyrights may result, and no infringement will exist. We adopt the suggestion in the above language and thus focus on whether the idea is capable of various modes of expression. If other programs can be written or created which perform the same function as an Apples operating system program, then that program is an expression of the idea and hence copyrightable. In essence, this inquiry is no different than that made to determine whether the expression and idea have merged, which has been stated to occur where there are no or few other ways of expressing a particular idea. . . . Franklin claims that whether or not the programs can be rewritten, there are a limited number of ways to arrange operating systems to enable a computer to run the vast body of Apple-compatible software,. This claim has no pertinence to either the idea/expression dichotomy or merger. The idea which may merge with the expression, thus making the copyright unavailable, is the idea which is the subject of the expression. The idea of one of the operating system programs is, for example, how to translate source code into object code. If other methods of

expressing that idea are not foreclosed as a practical matter, then there is no merger. Franklin may wish to achieve total compatibility with independently developed application programs written for the Apple II, but that is a commercial and competitive objective which does not enter into the somewhat metaphysical issue of whether particular ideas and expressions have merged. {FN30: 714 F.2d at 1253, 219 USPQ at 124 (citations omitted)}

Chapter 2: Copyright of Computer Programs

II.C. RAM Copies
One remaining question is whether the copying of a program from a disk drive into RAM for its execution is the making of a reproduction of that work, the first of the exclusive rights in copyright. Although the answer seems obvious, it is complicated by the fact that the exclusive right is to reproduce the copyrighted work in copies and copies require that the work be fixed. Section 101 states: A work is fixed in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. {FN31: 17 U.S.C. 101}
II.C.1. MAI v. Peak: Fixed Reproductions

But if the contents of a RAM disappear when power is removed from the RAM, is the work fixed in the RAM so that it can be considered a copy? The Ninth Circuit considered this question in MAI v. Peak. {FN32: 991 F.2d 511, 26 USPQ2d 1458 (9th Cir. 1993)} Peak argues that this loading of copyrighted software does not constitute a copyright violation because the copy created in RAM is not fixed. However, by showing that Peak loads the software into the RAM and is then able to view the system error log and diagnose the problem with the computer, MAI has adequately shown that the representation created in the RAM is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. After reviewing the record, we find no specific facts (and Peak points to none) which indicate that the copy created in the RAM is not fixed. . . . The law also supports the conclusion that Peaks loading of copyrighted software into RAM creates a copy of that software in violation of the Copyright Act. In Apple Computer, Inc. v. Formula Intl, Inc., the district court held that the copying of copyrighted software onto silicon chips and subsequent sale of those chips is not protected by Section 117 of the Copyright Act. Section 117 allows the owner of a copy of a computer program to make or authorize the making of another copy without infringing copyright law, if it is an essential step in the utilization of the computer program or if the new copy is for archival purposes only. One of the grounds for finding that 117 did not apply was the courts conclusion that the permanent copying of the software onto the silicon chips was

not an essential step in the utilization of the software because the software could be used through RAM without making a permanent copy. The court stated: RAM can be simply defined as a computer component in which data and computer programs can be temporarily recorded. Thus, the purchaser of software desiring to utilize all of the programs on the diskette could arrange to copy the software into RAM. This would only be a temporary fixation. It is a property of RAM that when the computer is turned off, the copy of the program recorded in RAM is lost. While we recognize that this language is not dispositive, it supports the view that the copy made in RAM is fixed and qualifies as a copy under the Copyright Act. We have found no case which specifically holds that the copying of software into RAM creates a copy under the Copyright Act. However, it is generally accepted that the loading of software into a computer constitutes the creation of a copy under the Copyright Act. We recognize that these authorities are somewhat troubling since they do not specify that a copy is created regardless of whether the software is loaded into the RAM, the hard disk or the read only memory (ROM). However, since we find that the copy created in the RAM can be perceived, reproduced, or otherwise communicated, we hold that the loading of software into the RAM creates a copy under the Copyright Act. We affirm the district courts grant of summary judgment as well as the permanent injunction as it relates to this issue. {FN33: 991 F.2d at 518-519, 26 USPQ2d at 1463-1464 (citations omitted)}
II.C.2. A Better Way to Look at RAM Copies

Perhaps a better way of looking at whether something is fixed is whether it can be read or copied at some arbitrary later time, absent some external event that destroys the work. In the case of RAM, it is possible to read the work as long as it hasnt been overwritten or the power hasnt been removed. In the case of a videotape, it can be viewed unless it is erased or otherwise destroyed. In contrast, the image of a movie on a screen or a television show on a cathode ray tube or bits being transmitted on a wire fade away automatically at a predictable time, so that the image can no longer be perceived, and therefore is not fixed. (Although in a dynamic RAM the individual bits also fade away, the memory system has a refreshing component that extends their life, so when the entire memory system is considered, the bits are fixed unless there is some external event such as the removal of power that causes the refreshing to stop.) But when one considers the loading of a program into RAM from the disk making of a copy, there is a problem. The criminal infringement provision, Section 506, {FN34: 17 U.S.C. 506} was amended in 1997 by the No Electronic Theft (NET) Act {FN35: Pub. L. No. 105-147, 111 Stat. 2678} so that criminal infringement occurs not only when the infringement was willful and for purposes of commercial advantage or private financial gain, but also if there has been the reproduction or distribution during any 180-day period of copies having a total retail value of more than $1,000. So if you have a program with a retail value of $100, and you run it 11 times, you have made 11 copies of the program, with a total value of $1,100, by reproducing the disk copy to RAM. Clearly, this was not the intent of Congress, although it is the logical consequence of combining the NET Acts language with the decision in MAI v. Peak. Concerned about this

problem, the chairman of the Senate Committee on the Judiciary, Senator Orrin Hatch, made the following floor statement when the Senate was considering the NET Act: Congress has long recognized that it is necessary to make incidental copies of digital works in order to use them on computers. Programs or data must be transferred from a floppy disk to a hard disk or from a hard disk into RAM as a necessary step in their use. Modern operating systems swap data between RAM and hard disk to use the computer memory more efficiently. Given its purpose, it is not the intent of this bill to have the incidental copies made by the user of digital work be counted more than once in computing the total retail value of the infringing reproductions. {FN36: 143 Cong. Rec. at S12690} He was also concerned about the effect of the bill on making archival copies of computer programs: Because most shrink-wrap licenses purport to make the purchaser of computer software a licensee and not an owner of his or her copy of the software, the ordinary purchaser of software may not be able to take advantage of the exemption provided by sec. 117, allowing the owner of a copy to reproduce the work in order to use it in his or her computer. Many shrink-wrap licenses limit the purchaser to making only a single backup copy of his or her software. Thus, under a literal reading of the bill, the ordinary purchaser of computer software who loaded the software enough times in the 180-day period to reach the more-than-$1,000 threshold may be a criminal! This is, of course, not the intent of the bill. Clearly, this kind of copying was not intended to be criminalized. {FN37: 143 Cong. Rec. at S12690}

II.D. Summary
It is now well-accepted that copyright protects computer programs and other digital information, whether they are in readable source code form or are an executable program that is intended to be understood only by a computer. Copies are made whenever the program is transferred from floppy disk to hard disk or is read into the computers memory for execution, and those copies will infringe the copyright of the computer program if they are not permitted by the copyright owner or by copyright law. As computer programs have become more complicated, that may be sufficient in most instances. Most, if not virtually all, copyright infringement of todays operating systems or applications programs consists of the complete copying of that program onto a compact disc or other distribution medium, the preloading of the program onto the hard disk of a computer being sold, or the distributing of the program over the Internet without authorization. These acts are obviously wrong, and so there is little difficulty in finding that they are copyright infringement.

Chapter 2: Copyright of Computer Programs

III. Beyond Mere Copying of a Computer Program
Generally, when we think of copyright infringement, we think of somebody duplicating a work, either all of it or at least enough of it as to appropriate much of its value. Sometimes we even remember that a copyright can be infringed by publicly performing or displaying a work without permission, or by translating the work into another language or another form.

But it is possible to infringe a copyright without copying all, or even a major part, of a work. Sometimes a play or movie takes too much of the plot or characterization of a copyrighted work, without copying the actual dialogue. The Second Circuit, in its decision in Computer Associates v. Altai, {FN38: 982 F.2d 693, 23 USPQ2d 1241 (2d Cir. 1992)} has noted that: as a general matter, and to varying degrees, copyright protection extends beyond a literary works strictly textual form to its non-literal components. As we have said, it 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. {FN39: 982 F.2d at 701, 23 USPQ2d at 1248} Such cases are very fact-intensive, so it is difficult to draw bright lines on what is infringement and what isnt. For example, whether something is a fair use depends on many factors and how they are weighted. Judge Learned Hand, who wrote many copyright decisions during his time on the Second Circuit, noted that nobody has ever been able to fix that boundary, and nobody ever can. {FN40: Nichols v. Universal Pictures, 45 F.2d 119, 121, 7 USPQ 84, 86 (2d Cir. 1930)} Thirty years later he concluded, Obviously, no principle can be stated as to when an imitator has gone beyond copying the idea, and has borrowed its expression. Decisions must therefore inevitably be ad hoc. {FN41: Peter Pan Fabrics v. Martin Werner, 274 F.2d 487, 489, 124 USPQ 154, 155 (2d Cir. 1960)}

III.A. Structure, Sequence, and Organization

The first appeals court to confront what copyright protects for a computer program beyond direct copying was the Third Circuit, in the case of Whelan Associates v. Jaslow Dental Laboratory. {FN42: Whelan Associates v. Jaslow Dental Laboratory, 797 F.2d 1222, 230 USPQ 481 (3d Cir. 1986)} Rand Jaslow had hired Elaine Whelan to design a dental laboratory management system to handle his administrative and bookkeeping tasks on an IBM Series One minicomputer. It was agreed that Jaslow and Whelan would jointly market the program to other dental laboratories. After two years, as Jaslow had become more familiar with computers and programming, he implemented a similar program on the IBM personal computer. Unlike the software for the Series One, which was written in EDL (Event Driven Language, an IBM programming system for the Series One), Jaslows personal computer implementation was written in Basic. He continued selling both versions and advertised his as a new version for the personal computer. Whelan was not pleased and filed suit for, among other things, copyright infringement. Clearly, Jaslows program was not a mere copy of Whelans they were written in different programming languages for different machines. Moreover, differences in the programming techniques commonly used with the two languages caused significant differences in the two programs. However, the programs were structurally similar, with most of the file structures and the screen outputs virtually identical. Also, five particularly important subroutines within both programs order entry, invoicing, accounts receivable, end of day procedure, and end of month procedure performed almost identically in both programs. {FN43: 797 F.2d at 1228, 230 USPQ at 484}
III.A.1. The Third Circuits Whelan Decision

The Third Circuit began by stating:

Title 17 U.S.C. 102(a)(1) extends copyright protection to literary works, and computer programs are classified as literary works for the purposes of copyright. The copyrights of other literary works can be infringed even when there is no substantial similarity between the works literal elements. One can violate the copyright of a play or book by copying its plot or plot devices. 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 program. {FN44: 797 F.2d at 1234, 230 USPQ at 488-489 (citations omitted)} But the Third Circuit recognized that the dichotomy between idea and expression, codified in Section 102(b) of the Copyright Act of 1976, limits what might otherwise be found infringing. Jaslow argued that the structure of a computer program is, by definition, the idea and not the expression of the idea, and therefore that the structure cannot be protected by the program copyright. {FN45: 797 F.2d at 1235, 230 USPQ at 489} Not accepting that broad limitation, the Third Circuit attempted to devise a rule for distinguishing idea from expression in the context of computer programs. {FN46: 797 F.2d at 1235, 230 USPQ at 489} The Third Circuit then summarized Baker v. Selden {FN47: 101 U.S. 99 (1879)} in the context of this case: The Courts test in Baker v. Selden suggests a way to distinguish idea from expression. Just as Baker v. Selden focused on the end sought to be achieved by Seldens book, the 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 works 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 particular means chosen is not necessary to the purpose; hence, there is expression, not idea. Consideration of copyright doctrines related to scnes faire and factintensive works supports our formulation, for they reflect the same underlying principle. Scnes faire are incidents, character

Chapter 2: Copyright of Computer Programs

III.B. Abstraction, Filtration, Comparison
A few years after Whelan, the Second Circuit examined the scope of software copyrights in Computer Associates International v. Altai. {FN53: 982 F.2d 693, 23 USPQ2d 1241 (2d Cir. 1992)} Computer Associates had developed a computer program named Adapter, which it used with its other programs to handle the differences in operating system calls and services between the various IBM mainframe operating systems. A former employee of Computer Associates had gone to work for Altai, a competitor of Computer Associates. When he saw the overhead Altai had maintaining different versions of its programs for the different IBM operating systems, he thought of how Adapter simplified that for Computer Associates. Though he was supposed to have returned all program listings when he left Computer Associates, he had kept a listing of Adapter. Working from that listing, he put together a program similar to Adapter, which he called Oscar, for Altai. About 30 percent of the first version of Oscar came from Adapter.

When Computer Associates learned that Oscar was similar to Adapter and had been developed at Altai by one of its own former programmers, it registered its copyright in Adapter and filed suit for both copyright infringement and misappropriation of trade secrets. Altai conceded the copyright infringement and began an effort to reimplement Oscar using programmers who had not seen the Adapter program based on the functional specifications of Oscar. Not surprisingly, the new version had a structure quite similar to the infringing version. The issue before the Second Circuit was whether the new version of Oscar infringed the copyright for Adapter. The case was one well-situated to make new law. The Second Circuit, because it hears appeals from the New York center of publishing, music, and drama, has long been regarded (along with the Ninth Circuit, which includes Hollywood in its jurisdiction) as a copyright court, with decisions of Learned Hand and others still defining the bounds of copyright. At the district court level, the case was tried before Second Circuit Judge Pratt, sitting by designation, who had been provided with an independent expert (Randall Davis, a professor of computer science from MIT) to help him understand the technical aspects of computer software. His decision formed the basis for the Second Circuits decision.
III.B.1. The Second Circuits Altai Decision

Declining to adopt the broad Whelan test of the Third Circuit, the Second Circuit said: We think that Whelans approach to separating idea from expression in computer programs relies too heavily on metaphysical distinctions and does not place enough emphasis on practical considerations. 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 [sic.]. 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, scnes 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 are taken from the public domain, a court would then be able to sift out all non-protectable material. Left with a kernel, or possibly kernels, of creative expression after following this process of elimination, the courts 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. {FN54: 982 F.2d at 706, 23 USPQ2d at 12521253 (citations omitted)}

Well, that sounds simple enough, and it certainly doesnt have the single-idea problem of Whelan. The first step is to abstract the elements of the computer program at different levels. This idea originally came from a Second Circuit decision written by Judge Learned Hand, in which he stated: 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. {FN55: Nichols v. Universal Pictures, 45 F.2d 119, 121, 7 USPQ 84, 86 (2d Cir. 1930)} The Second Circuit felt that this provided the framework it needed for computer programs: 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 programs structure and isolate each level of abstraction contained within it. This process begins with the code and ends with an articulation of the programs ultimate function. Along the way, it is necessary essentially to retrace and map each of the designers steps in the opposite order in which they were taken during the programs creation. 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 lowerlevel modules and instructions, until finally, one is left with nothing but the ultimate function of the program. . . . A program has structure at every level of abstraction at which it is viewed. At low levels of abstraction, a programs structure may be quite complex; at the highest level it is trivial. {FN56: 982 F.2d at 707, 23 USPQ2d at 1253}
III.B.2. The Tenth Circuits Elaboration On Altai

In Gates Rubber v. Bando Chemical, {FN57: 9 F.3d 823, 28 USPQ2d 1503 (10th Cir. 1993)} a case decided following Computer Associates v. Altai, the Tenth Circuit added a little meat to the sparse description from the Second Circuit on how to abstract a computer program, taking much of its description of the possible levels of abstraction from a law review article written by a computer scientist and law student: {FN58: John W.L. Ogilvie, Defining Computer Program Parts Under Learned Hands Abstractions Test in Software Copyright Infringement Cases, 91 Mich. L. Rev. 526 (1992)} Application of the abstractions test will necessarily vary from case-to-case and program-to-program. Given the complexity and ever-changing nature of computer technology, we decline to set forth any strict methodology for the

abstraction of computer programs. Indeed, in most cases we foresee that the use of experts will provide substantial guidance to the court in applying an abstractions test. However, a computer program can often be parsed into at least six levels of generally declining abstraction: (i) the main purpose, (ii) the program structure or architecture, (iii) modules, (iv) algorithms and data structures, (v) source code, and (vi) object code. The main purpose of a program is a description of the programs function or what it is intended to do. When defining a programs main purpose, the court must take care to describe the programs function as specifically as possible without reference to the technical aspects of the program. The programs architecture or structure is 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. The architecture or structure of a program is often reduced to a flowchart, which a programmer uses visually to depict the inner workings of a program. Structure exists at nearly every level of a program and can be conceived of as including control flow, data flow, and substructure or nesting. Control flow is the sequence in which the modules perform their respective tasks. Data flow describes the movement of information through the program and the sequence with which it is operated on by the modules. Substructure or nesting describes the inner structure of a module whereby one module is subsumed within another and performs part of the second modules task. The next level of abstraction consists of the modules. A module typically consists of two components: operations and data types. An operation identifies a particular result or set of actions that may be performed. For example, operations in a calculator program might include adding or printing data. A data type defines the type of item that an operator acts upon such as a student record or a daily balance. Algorithms and data structures are more specific manifestations of operations and data types, respectively. An algorithm is a specific series of steps that accomplish a particular operation. Data structure is a precise representation or specification of a data type that consists 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 data types, and (vi) pointers or connections between records that set aside space to hold the records values. The computer program is written first in a programming language, such as Pascal or Fortran, and then in a binary language consisting of zeros and ones. Source code is the literal text of a programs instructions written in a particular programming language. Object code is the literal text of a computer program written in a binary language through which the computer directly receives its instructions. These generalized levels of abstraction will not, of course, fit all computer codes. Ordinarily, expert testimony will be helpful to organize a particular program into various levels of abstraction. In any event, as pointed out earlier, the organization of a program into abstraction levels is not an end in itself, but it is only a tool that facilitates the critical next step of filtering out unprotectable elements of the program. {FN59: 9 F.3d at 834-836, 28 USPQ2d at 1509-1510(citations omitted)}

Once the abstraction has been performed, those abstracted elements need to be filtered to separate out those things that are not protectable by copyright. Clearly, the highest level of abstraction the purpose of the program is not protectable and would be filtered out. At the lowest levels the source and object code total or even substantial copying is likely to be an infringement. It is at the mid-levels where the filtering is generally performed. An observation here: for a program of any complexity, there are going to be a lot of abstracted elements at every level. This procedure sounds good in theory but is very difficult to apply in practice. We will discuss this later.
III.B.3. Filtration

There are a number of reasons why something might be filtered, and whether something is filtered may depend on the particular level of abstraction being considered. III.B.3.a. Efficiency The first of these is that the element is dictated by efficiency considerations: 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. The doctrines underlying principle is that when there is essentially only one way to express an idea, the idea and its expression are inseparable and copyright is no bar to copying that expression. 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. . . . Furthermore, when one considers the fact that programmers generally strive to create programs that meet the users needs in the most efficient manner, 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 programs 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. Of course, not all program structure is informed by efficiency concerns. It follows that in order to determine whether the merger doctrine precludes copyright protection to an aspect of a programs 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 programs process being implemented. If the answer is yes, then the expression represented by the programmers choice of a specific module or group of modules has merged with their underlying idea and is unprotected. {FN60: 982 F.2d at 707-708, 23 USPQ2d at 1254 (citations omitted)}

III.B.3.b. External Factors Next, an element may be excluded from copyright protection because its use is 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. 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. This is known as thescnes faire doctrine, and like merger, it has its analogous application to computer programs. 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. This is a result of the fact that a programmers freedom of design choice is often circumscribed by extrinsic considerations such as (1) the mechanical specifications of the computer on which a particular program 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. Courts have already considered some of these factors in denying copyright protection to various elements of computer programs. In the Plains Cottoncase, the Fifth Circuit refused to reverse the district courts 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. {FN61: 982 F.2d at 709-710, 23 USPQ2d at 1255 (citations omitted)} An example of an element dictated by external factors is the calling sequence for a library routine or operating system function. If one is to use the routine or function, it must be called in a particular way, so that any expressive aspects of the calling sequence have essentially merged with its utilitarian function. But that does not mean that you will never look at routine or function calls when determining whether there is a substantial similarity between two programs. At the abstraction level looking at the overall organization of the programs, the selection and arrangement of library routine or operating system function calls may be precisely the expression that is being considered. So, while you can call the same routines and functions using the same calling sequences without infringing, you may not be able to copy the structure of the program as evidenced by how those routines and functions are used. III.B.3.c. Material in the Public Domain The Second Circuit also filtered out elements taken from the public domain, since they are not protectable by copyright. In Gates v. Bando, the Tenth Circuit added two filters to be used. The first was processes:

When considering utilitarian works such as computer programs one of the most important of these elements is process. Section 102(b) denies protection to procedures, processes, systems and methods of operation. The legislative history of the Copyright Act clarifies any ambiguity about the status of processes. Some concern has been expressed lest copyright in computer programs should extend protection to the methodology or processes adopted by the programmer, rather than merely to the writing expressing his ideas. Section 102(b) is intended, among other things, 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 the copyright law. The Supreme Court addressed the copyrightability of a utilitarian process in Baker v. Selden. There, the Court considered whether the author of a book describing an accounting system could obtain protection over the system itself through copyright of the book. The Court distinguished the art or process from the authors explanation thereof and found the former unprotectable. Other courts have similarly found processes unprotectable. Certain processes may be the subject of patent law protection under Title 35 of the United States Code. Although processes themselves are not copyrightable, an authors description of that process, so long as it incorporates some originality, may be protectable. Returning then to our levels of abstraction framework, we note that processes can be found at any level, except perhaps the main purpose level of abstraction. Most commonly, processes will be found as part of the system architecture, as operations within modules, or as algorithms. {FN62: 9 F.3d at 836-837, 28 USPQ2d at 1511 (citations omitted)} III.B.3.d. Facts The Tenth Circuit also added filtering out facts: The Copyright Act also denies protection to discoveries. The Supreme Court squarely addressed the issue of the protectability of facts in its recent opinion in Feist Publications, Inc. v. Rural Telephone Services Co. In Feist, the Court considered the copyrightability of a telephone directory comprised merely of names, addresses, and phone numbers organized in alphabetical order. The Court rejected the notion that copyright law was meant to reward authors for the sweat of the brow, and instead concluded that protection only extends to the original components of an authors work. As to facts, the Court found that No one may claim originality as to facts. This is because facts do not owe their origin to an act of authorship. The distinction is one between creation and discovery: the first person to find and report a particular fact has not created the fact; he or she has merely discovered its existence. . . . One who discovers a fact is not its maker or originator. The discoverer merely finds and records. Like ideas and processes, facts themselves are not protectable; however, an authors original compilation, arrangement or selection of facts can be protected by copyright. However, the copyright is limited to the particular selection or arrangement. In no event may copyright extend to the facts themselves. In

computer programs facts may be found at a number of levels of abstraction, but, will most often be found as part of data structures or literally expressed in the source or object codes. {FN63: 9 F.3d at 837, 28 USPQ2d at 1511 (citations omitted)} Of course, while it is reasonable to say that facts are not entitled to copyright protection and should be filtered out, a particular selection of facts or arrangement of facts may have sufficient originality to warrant copyright protection. But if you filter out all the facts before you look to see if there is sufficient originality in a selection or arrangement of facts, you have nothing left to consider. This is one of the problems with the abstraction-filtration-comparison test key information may be filtered before it can be considered. For that reason, it may be necessary to look at the overall similarity before considering things at the various levels of abstraction.
III.B.4. Comparison

Finally, after all the unprotectable abstracted elements have been removed by the filtering, the comparison is made to see if what is left is substantially similar: 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 works copyright value, this is the golden nugget. At this point, the courts substantial similarity inquiry focuses on whether the defendant copied any aspect of this protected expression, as well as an assessment of the copied portions relative importance with respect to the plaintiffs overall program. {FN64: 982 F.2d at 710, 23 USPQ2d at 1256 (citations omitted)} Most circuits have adopted the abstraction-filtration-comparison test for determining if there is copyright infringement when an exact copy has not been made. But for complex software, the test can be very cumbersome, as we will discuss later. Also, as mentioned above, the test may filter out important information to be considered and then find that there is little similarity because there is nothing meaningful left to compare. Fortunately, because of the complexity of todays commercial software packages compared with those in Whelan v. Jaslow and Computer Associates v. Altai, it is far more likely that an infringer will simply copy the commercial program onto a machine he is selling or a CD-ROM to sell on the black market, rather than just copy a protected portion of the copyrighted software. Those who do copy the structure of a program, or its processing techniques, most likely will have had access to the source code for that program as an employee of the software vendor or under a trade secret agreement, and will be violating their duty to that vendor in their design and implementation of a competing product. So, in many instances, the complex abstraction-filtrationcomparison test will not be necessary.

Chapter 2: Copyright of Computer Programs

III.C. Methods of Operation
The First Circuit got its chance to visit the question of the extent of copyright protection for computer software in Lotus Development v. Borland International. {FN65: 49 F.3d 807, 34

USPQ2d 1014 (1st Cir. 1995)} Before going after Borland, Lotus had sued two small companies over another spreadsheet program, VP-Planner, in the U.S. District Court in Massachusetts. {FN66: 740 F.Supp. 37, 15 USPQ2d 1577 (D. Mass. 1990)} Stephenson Software had adapted an existing spreadsheet system so that it could use 1-2-3 commands and execute 1-2-3 macros, and Paperback Software had distributed it. There was no claim by Lotus that the companies had copied any of Lotuss source code during the development of VP-Planner. Instead, Lotus claimed that the companies had copied its screen displays and menus.
III.C.1. The Paperback Decision

Lotus claimed copyright infringement because Paperback had copied the look and feel of 12-3, while Paperback said that there could be no copyright infringement because the 1-2-3 user interface was functional and outside the scope of copyright. Judge Keeton rightfully rejected both these arguments. While commentators had discussed look and feel copyrights for computer software, the judge found that it was not helpful in determining whether there was an infringement, nor was Paperbacks argument that the user interface was functional, since such an expansive defense could read all software out of the copyright laws. Instead, Judge Keeton developed a three-step process for determining whether something was protected by copyright as expression, or unprotected as idea. FIRST, in making the determination of copyrightability, the decisionmaker must focus upon alternatives that counsel may suggest, or the court may conceive, along the scale from the most generalized conception to the most particularized, and choose some formulation - some conception or definition of the idea- for the purpose of distinguishing between the idea and its expression. . . . SECOND, the decisionmaker must focus upon whether an alleged expression of the idea is limited to elements essential to expression of that idea (or is one of only a few ways of expressing the idea) or instead includes identifiable elements of expression not essential to every expression of that idea. THIRD, having identified elements of expression not essential to every expression of the idea, the decisionmaker must focus on whether those elements are a substantial part of the allegedly copyrightable work. {FN67: 740 F.Supp. at 6061, 15 USPQ2d at 1593-1594} The heart of this three-step test is whether something is essential to the computer software or not. Judge Keeton found that the labeling of rows and columns in a spreadsheet was essential, since it was present not only in 1-2-3 and VP-Planner, but in other spreadsheets with considerablydifferent user interfaces like Microsoft Excel. Similarly, he found that the use of the / character to indicate the start of a macro was not protected, because there were only a few characters on the keyboard that could be used. But he found the menu structure of 1-2-3, and the words used in those menus for the options, to be protected by copyright because there are a number of alternative structures that could have been used and, in fact, were used in Microsoft Excel.
III.C.2. Borland at the District Court

The decision against Paperback was not appealed, because by the end of the case the defendants had left the spreadsheet market. But Lotus had its sights on another company, Borland, and its Quattro spreadsheet, which provided the same capabilities as 1-2-3 but at a fraction of the price. There was a race to the courthouse, with Lotus filing an infringement suit in Massachusetts,

where it could use the Paperback decision as precedent, and Borland filing a declaratory judgment suit in California, hoping to get a finding of noninfringement. The infringement suit prevailed, and the case was assigned to Judge Keeton because of his experience with the Paperback case. As in Paperback, Lotus did not claim that Borland had copied any part of its source code; it didnt even contend that the structure of its 1-2-3 spreadsheet had been copied in Borlands Quattro. Instead, it claimed that the Borland facility that allowed Quattro to execute 1-2-3 macros contained tables that reproduced the menu hierarchy and commands of 1-2-3. While Quattro originally had its own command structure, to allow people to easily move from 1-2-3, Borland had added an emulation extension to a subsequent release of Quattro. The emulation feature allowed the users to configure the menus as they desired. Borland supplied two menus: the original Quattro menus and the 1-2-3 menus, enhanced to add commands that were in Quattro but not in 1-2-3. The screen appearance of Quattro was substantially different from that of 1-2-3; among other things, it had the menus displayed in different locations and in a different style. Applying his Paperback test, again using Microsoft as an example of a spreadsheet program that did not have an optional menu structure for emulating the 1-2-3 menus, Judge Keeton held that Borlands emulation interface infringed the copyright in Lotuss 1-2-3 menus. Borland then removed the emulation interface from Quattro but kept a feature called Key Reader, which allowed it to run 1-2-3 macros. It felt safe in doing this, since Judge Keeton, in Paperback, seemed to indicate that such a feature would not infringe Lotuss copyright when he wrote copying the menu structure was not the only way to achieve aspects of this desired compatibility. For example, defendants could have instead added a macro conversion capability as the creators of Excel have successfully done (the Microsoft Excel Macro Translation Assistant). {FN68: 740 F.Supp. at 69, 15 USPQ2d at 1600} Key Reader, and any other program that interpreted 1-2-3 macros, requires a data structure that describes the command hierarchy of 1-2-3. That is because the 1-2-3 macro language is based on the 1-2-3 command hierarchy. A macro consists of a starting / followed by the first letter of a 1-2-3 menu entry, then the first letter of an entry in the selected submenu, and so forth until a final menu entry is reached. (Macros can also contain things in addition to 1-2-3 commands, such as conditional statements.) So, if one formatted a block by first selecting the Range menu, then the Format submenu, then the Currency subsubmenu, the corresponding macro would be /RFC. The reason that a data structure describing the command hierarchy of 1-2-3 is needed by any program that interprets 1-2-3 macros is that a particular letter may have different meanings depending on what letters preceded it in the macro, since first letters mean different things in different submenus. For example, the letter F, which meant Format in the Range submenu, means File in the Print submenu. It is also necessary to know what letters are valid in each submenu to determine whether a macro is valid. The data structure used by Key Reader did not contain the full menu entry from 1-2-3 but simply the first letter of each entry required to interpret the macro. However, Judge Keeton did not seem to understand that this information was needed in some form by any program that interpreted 1-2-3 macros and felt that it was simply a different form of the same menu structure what he referred to as the phantom menus. He apparently thought information about the 1-2-3 menu hierarchy was unnecessary to interpret a macro in some instances: Borlands Key Reader does not perform one-time translation such as Excel 2.1 does. Rather, Key Reader interprets macros on-the-fly, by reference to phantom

menus that contain a copy of the Lotus menu tree. {FN69: Lotus Dev. Corp. v. Borland Intl, Inc., 831 F.Supp. 223, 230, 30 USPQ2d 1081, 1099(D. Mass. 1993)} The fact that Excel performs a one-time interpretation of a macro while it is translating it to the Excel macro language, while Key Reader interprets the macro each time it is encountered, does not affect the fact that both need some data structure that contains the first letters of each 1-2-3 command as well as information about where they occur in the menu hierarchy. Judge Keetons decision is based on a lack of understanding of how command interpreters work and what information is necessary for their operation. It is unfortunate that the two parties did not provide Judge Keeton with an independent computer science expert who could help him understand the technical aspects of the case, as was done for Judge Pratt in Computer Associates v. Altai. {FN70: Computer Associates v. Altai, , 775 F.Supp. 544, 20 USPQ2d 1641 (E.D.N.Y. 1991)}
III.C.3. Borland at the First Circuit

Unlike Paperback, Borland had the resources for an appeal. In its decision of that appeal, the First Circuit observed that this was a very different question than in past software copyright cases, and that the tests previously developed would not work here: 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 Altai test 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. 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 Altai and 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 components of a menu command hierarchy are expressive, but rather whether the menu command hierarchy as a whole can be copyrighted. {FN71: 49 F.3d at 815, 34 USPQ2d at 1020-1021} The First Circuit decided that the commands in the menu, and the hierarchy that was part of the macro commands, didnt qualify for copyright protection because they were a method of operation: 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. 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 1-2-3s functional capabilities. The Lotus menu command hierarchy does not merely explain and present Lotus 1-2-3s 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. The Lotus 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 1-2-3s method of operation. 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 Lotuss 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. {FN72: 49 F.3d at 815-816, 34 USPQ2d at 1021} It appears that the court thought that there must be some reason why the menu command hierarchy at least as used by Borlands Key Reader, where it is not displayed to the user and is stored in a very different form should not be protectable by copyright. So it looked to Section 102(b)s listing of things that are not protectable by copyright and decided that method of operation was a better fit than idea, procedure, process, system or concept, principle, or discovery. One of the judges on the panel, in a concurrence, indicated: 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 Borlands 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. {FN73: 49 F.3d at 821, 34 USPQ2d at 1026} But the difficulty is that the court gives no guidance on where to draw the line. Why are the menus a method of operation, but a computer program that directs how a computer operates is not? There is some concern that the Lotus menu contains original expression in the selection of the names for the commands and how they have been placed in the hierarchy. But the First Circuit did not think that was sufficient to give the menu copyright protection: 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. 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. {FN74: 49 F.3d at 816, 34 USPQ2d at 1022} Lotus appealed the decision of the First Circuit to the Supreme Court, which agreed to hear it. But after oral arguments, the Court deadlocked 4-4 (with one justice not voting, presumably because of a potential conflict of interest due to stock ownership). That left the First Circuits decision good law in that circuit, but did not extend it nationwide.
III.C.4. Tenth Circuit Criticism of Borland

The Tenth Circuit, which had elaborated on Computer Associates v. Altai in its decision in Gates v. Bando considered in their decision in Mitel v. Iqtel {FN75: 124 F.3d 1366, 44 USPQ2d 1172 (10th Cir. 1997)} whether it should adopt the First Circuits Lotus approach: We conclude that although an element of a work may be characterized as a method of operation, that element may nevertheless contain expression that is eligible for copyright protection. Section 102(b) does not extinguish the protection accorded a particular expression of an idea merely because that expression is embodied in a method of operation at a higher level of abstraction. Rather, sections 102(a) & (b) interact to secure ideas for public domain and to set apart an authors particular expression for further scrutiny to ensure that copyright protection will promote the . . . useful Arts. Our abstraction-filtration-comparison approach is directed to achieving this balance. Thus, we decline to adopt the Lotus courts approach to section 102(b), and continue to adhere to our abstraction-filtrationcomparison approach. We are mindful of the concern expressed by the Lotus court that, by its very nature, the abstraction-filtration-comparison approach tends to produce a core of copyrightable protectable expression that, if literally copied, would make the copier liable for infringement. Undoubtedly, the portions of a work to which a court applies abstraction analysis frequently contain a level of abstraction which reveals expression that does not fall within the excluded categories of section 102(b). Although this core of expression is eligible for copyright protection, it is subject to the rigors of filtration analysis which excludes from protection expression that is in the public domain, otherwise unoriginal, or subject to the doctrines of merger and scnes faire. Notwithstanding our endorsement of abstraction-filtration-comparison analysis, we emphasize that the approach is valuable only insofar as it aids the court in distinguishing protectable elements of a work from those that are unprotectable. Not every case requires an extensive abstraction-filtrationcomparison analysis. Rather, the appropriate test to be applied and the order in which its various components are to be applied . . . may vary depending upon the claims involved, the procedural posture of the suit, and the nature of the [works] at issue. {FN76: 124 F.3d at 1372, 44 USPQ2d at 1177-1178 (citations omitted)} When one understands that the data structure reflecting the Lotus 1-2-3 command hierarchy is something that is required by any program that interprets 1-2-3 macros, then it is clear that the data structure would be filtered during the abstraction-filtration-comparison test of the Second and

Tenth Circuits, because it is dictated by external factors. The First Circuits method of operation test, which is not clear in its application, is unnecessary.

Chapter 2: Copyright of Computer Programs

IV. Applying The AFC Test
While it seems simple to describe the abstraction-filtration-comparison analysis, the devil is in the details. The abstraction can result in the comparing of hundreds or thousands of different aspects of a computer program if one is not careful. Elements are filtered out of consideration on the basis of broad criteria, including: y The elements expression was dictated by reasons of efficiency, such as when it is the best way of performing a particular function. y The elements expression was dictated by external factors, such as using an existing file format or interoperating with another program. y The elements expression is a conventional way of writing something in the particular programming language or machine running the program. y The element, at the particular level of abstraction, is an unprotectable process and not protectable expression. y The element is taken from the public domain or is an unprotectable fact. Any protection for elements dictated by efficiency or external factors or processes must come from patents or trade secrets, if at all, and not from copyright. For most alleged copyright infringements, this filtering makes little difference. It is important to recognize that, with todays large, complex programs, most copyright infringement consists of the verbatim copying or unauthorized distribution of a computer program, and no question over whether any similarities are protected expression or unprotected function need be considered. But sometimes a program is based on another program, or takes features from another program, and at those times the abstraction-filtration-comparison test must be used to determine whether too much was taken and a copying of the non-literal elements has resulted in a copyright infringement.

IV.A. A Suggested Approach

The application of the abstraction-filtration-comparison test is complicated because the test is not described in language that is familiar to the computer scientists who would be the technical experts helping the court. Five computer scientists (including the author of this text and the court-appointed expert in Computer Associates v. Altai {FN77: 982 F.2d 693, 23 USPQ2d 1241 (2d Cir. 1992)} )discussed the complexity inherent in abstraction-filtration-comparison (AFC) test in a friend of the court brief {FN78: Amicus Brief of Computer Scientists, Harbor Software v. Applied Systems, No. 977197 (2d Cir. 1998)} to the Second Circuit in a case that settled before that court made its decision. In one portion, we suggested how the AFC test should be performed, first discussing what can be done to refine the magnitude of the task: 1. Qualified Technical Experts Should Play an Important Role in the Abstraction Process.

Given the difficulty and complexity of creating a technically accurate set of abstractions, this Court should clarify that this is properly a task for a qualified expert in the field. As U.S. Court of Appeals Judge John Walker, author of the Altai decision, has noted, Most juries, and most judges (myself included), are less than completely comfortable with the concepts and terminology of computer programs and need extensive education in order to make intelligent decisions. 2. Refining the Task Will Reduce Technical Complexity. In the interests of efficiency and manageability, the abstraction process should be carried out on a well-focused body of software. If the program is small, it may be practical to abstract the entire thing. When possible, this is advantageous because the abstraction and filtration processes can be carried out on the plaintiffs code prior to discovery of the defendants code, yielding a clear picture, early in the process, of the exact contours of the protectable expression in the plaintiffs program. Given the large size of most commercial programs, however, the effort involved in abstracting and filtering the entire program is enormous and would yield a daunting number of exhibits. The court would likely be overwhelmed with paper and with the filtration effort of determining protectability for every element of the plaintiffs program, even if only a small part of that program is at issue in the claim of infringement. Thus, the obvious subset of code for analysis is that portion of the software that the plaintiff alleges the defendant copied. 3. The Plaintiff Must have Access to the Defendants Code in Order to Focus the Inquiry. In many instances, the initial evidence of copying is a relatively insignificant incident that turns out to be only the tip of the iceberg. For example, one case that eventually involved claims of extensive code theft (both literal and non-literal) as well as a variety of other serious charges began when a software developer noticed that a competing program built by former employees of his company displayed the same misbehavior that he knew to be present in his own code. As a piece of misbehavior, the behavior could not be motivated by the task, suggesting the possibility of copying. When this initial evidence of copying is sufficient to support a complaint, the plaintiff will need access to the defendants code in order to determine the full extent if any of the problem. We recognize the difficulty this access to code presents: if the plaintiff is permitted to examine the defendants code before abstracting his own code, the plaintiff may mine the defendants code for potential foci of alleged copying, thereby distorting the inquiry. But we believe some form of difficulty is unavoidable. If plaintiff instead must perform the abstraction and filtration before seeing the defendants code, it may feel that the only way to protect the claim is to abstract the entire program, resulting in an impractical and wasteful amount of work for both the plaintiff and the court. If, in the interests of economy, the plaintiff abstracts only those parts of its code that it suspects at the outset were copied by the defendant, the plaintiffs exhibits are likely to be incomplete and require augmentation after it has had the opportunity to examine the defendants code, in which case the possibility of mining reappears. In any event, we believe that manufactured claims of copying become evident at the filtration stage, where

the courts expert can raise such observations and the court can deal appropriately with them at that time. {FN79: Amicus Brief, at 8-9 (citations omitted)} We then suggested how the AFC evaluation can be performed: Having performed a thorough examination of the defendants code to evaluate the extent of copying, if any, the plaintiffs technical expert can then prepare a well-focused set of exhibits describing the relevant portions of the plaintiffs code at multiple levels of abstraction. This set of exhibits is the plaintiffs initial contribution to the AFC process. At this point, the defendant must have access to the plaintiffs code in order to make an independent judgment as to whether the abstractions are accurate. This must include access to the plaintiffs entire program, even though the abstractions may deal with only a small part of the program, in order to test for errors of omission. The court will now have before it a set of exhibits describing a carefully selected portion of the plaintiffs code, which the plaintiff claims is both protectedand infringed. It is now in a position to evaluate the first of these claims independent of the second, and we suggest it do so, proceeding with the filtration test. This approach has several significant advantages. If the exhibits contain no protectable material, the case is over. The defendant is spared unnecessary expense, yet the plaintiff has had a full opportunity to find copying in the defendants program. As a matter of practicality, this may be a significant virtue in a world where litigation may be used as an economic weapon, particularly against smaller companies, of which there are many in the software world. An additional advantage arises from the reduced workload presented to the court: by focusing the filtration purely on the plaintiffs exhibits, there is no need for the court to examine or display the defendants code at this point. Finally, if the plaintiff understands that infringement claims will be required to pass the filtration test relatively early in the litigation process, independent of any court consideration of the defendants code, the plaintiff may perform more careful analysis before filing infringement cases. After the filtration is complete, the court should require the plaintiff to augment its exhibits with specific references to the defendants code, indicating the exact lines of the defendants code that it alleges are copied from the plaintiffs software. (Even where the plaintiff alleges non-literal copying, the plaintiff should be able to cite specific lines of the defendants program that embody the non-literal element(s) allegedly copied.) Plaintiffs specific allegations will further focus the courts task and enable the defendant better to perform the next step, having the defendants expert prepare abstraction exhibits of the defendants code. The inherent flexibility of the abstraction process, involving as it does many judgment calls, requires that the court permit each side to abstract its own code and to prepare its own abstraction exhibits embodying that analysis. The fact that the district court in the present case apparently permitted the plaintiff to prepare the abstraction exhibits for both parties, subject to defense objections, demonstrates once again a level of uncertainty as to the technical limitations of the AFC process.

The AFC process is not a magic wand that will eliminate disagreement; it is instead a framework within which the parties may carry out a discussion. As experts in the field, we anticipate that there will, in fact, be disagreement over the abstraction exhibits. Indeed, these arguments may hold the key to the remainder of the case. For this reason, the court should require the parties to offer technical grounds both in defense of their choices and when challenging the choices made by the opposing party. Even so, if the parties cannot reach agreement on the challenged exhibits, this Court should advise the district courts to consider seriously the appointment of a neutral expert of its own in order to assist in arriving at a consensus as to what constitutes an accurate, specific, and complete description of the code in question. With these agreed-upon exhibits in place, the court is now ready to begin the comparison process. The trier of fact will now have before it a set of exhibits characterizing specific elements from plaintiffs program that are subject to copyright protection, along with corresponding elements from the defendants program that the plaintiff alleges are infringing. We suggest some form of early technical evaluation of the plaintiffs initial copyright infringement claims; that is, the plaintiff should be required to establish at this early stage of litigation some minimal technical evidence of infringement in order to proceed with its claim. We believe that our approach is consistent with federal procedure for the evaluation of cases before trial, particularly in the form of motions for summary judgment. We further suggest that this Court encourage trial courts to have the plaintiff meet this minimal burden through the independent evaluation of the plaintiffs claim by a court-appointed expert or by support from disinterested third parties, concerning the technical substance of the initial evidence for infringement. Such a barrier, even if relatively modest, would set some threshold level of technical substance to deter the filing of cases for little more than economic reasons (i.e., to interrupt the business of a competitor). We believe that, given the extensive time, effort, and expense of fighting a lawsuit, this process is a worthwhile way of minimizing the undesirable economic costs of unnecessary litigation. {FN80: Amicus Brief, at 9-10 (citations omitted)} Finally, we suggested some guidelines for the production of the abstractions: 1. Routine Abstractions Include Control Structure, Data Structure, Data Flow, Information Architecture and Textual Organization of the Code. The programs control structure is the sequence of operations that it carries out, often indicated with a well-established graphical language of boxes and arrows called a flowchart . . . Control is frequently the most complex aspect of a program; a complete set of control abstractions may have many levels of detail. The data structures indicate the way in which individual elements of information are stored in the program; in the earlier checkbook hypothetical, for example, data structures are used to store the sorts of information found in a check register (e.g., check number, date, payee, amount). The data flow is a description of how information flows through a program; that is, how the information for a check flows from the register where it is entered, to the check itself. The information architecture of a

program indicates the overall organization of the data used by the program, often in the form of the organization of databases. All of these abstractions concern the behavior of the program. Because programs can be viewed in terms of both their behavior and their text (treating the source code as a body of text), we can also describe the organization of the textual code itself at several levels of abstraction, ranging for example, from individual routines, to files containing multiple routines, to directories containing multiple files. 2. Abstractions Should be Specific and Precise. As one indicator of such precision, there should be no ambiguity about what behavior is being described and what body of literal code is being abstracted. This enables evaluation of the accuracy and completeness of the abstractions. Courts should thus require: (a) that labels on abstraction exhibits clearly specify the program behavior at issue; and (b) that each component of an abstraction exhibit refer clearly either to more detailed exhibits or to literal code. . . . 3. Abstractions at Any Given Level Should Be Complete. Such completeness will ensure that the exhibits present an entire and accurate picture of the program at any chosen level of detail. The abstraction effort can be focused on the code relevant to the case at hand by cutting off the abstraction process below a certain level for the irrelevant parts of the code. 4. Parties Should Adopt Explicit and Consistent Graphical Conventions for All Exhibits. The adoption of consistent graphical conventions will permit the trier of fact to make sensible comparisons of the exhibits. . . . To a trained eye, some of the graphical organization of the abstraction exhibits is informative, while other elements are accidental (e.g., the left-to-right order of certain of the boxes). If the parties cannot agree on a set of conventions, the courts expert should assist the parties and the court in reaching a uniform set of standards for the exhibits.{FN81: Amicus Brief, at 12-13}

IV.B. A Judges Comments on the Suggested Approach

In a subsequent law review article, {FN82: Jon O. Newman, New Lyrics For An Old Melody: The Idea/Expression Dichotomy In The Computer Age, 17 Cardozo Arts & Ent L.J. 691 (1999)} one of the judges on the panel that received the amicus brief commented on it favorably and then suggested that we should move away from the general language of copyright law and describe things in terms more appropriate to the subject being considered: In the area of computer programs, I think we might be better off to recognize that, although we need to separate protectable expression from unprotectable ideas, a somewhat different vocabulary might assist us in properly balancing the ultimate values we seek to advance. Thus, I do not consider it helpful, in considering the protection accorded source code, to ask whether it is the written expression of an idea embodied at some higher level of abstraction within the computer program. I would rather begin the process of labeling the protectable and unprotectable elements of computer programs with terms peculiar to the realm of software. For example, I might move away from referring to source code as the

expression of an idea, a phrasing that all too readily enlists the doctrines and case law developed in cases involving written texts, and instead call these arcane writings what they are called in cyberspace namely, source code. Then, I could consider which source codes or which portions of source codes were protectable. Also, I might not call the unprotectable aspects of a computer program ideas, which again evokes the written text cases, but instead call them something like program purposes or program objectives. After all, you dont see many cases involving copyrights in musical works talking about the expression of some musical idea. Why should we force upon copyright cases involving computer programs the same vocabulary we use for cases involving written texts? . . . By using terms appropriate to the subject matter, I might begin to realize that what is relevant in applying the idea-expression dichotomy to computer programs is not necessarily the same as what is relevant in other areas. Judge Hand observed that with plays, characters and the sequence of incidents were especially important. Well, there are no characters in software, at least not literary characters. There are, I suppose, what might be called incidents, but we ought not blithely equate the sequence of incidents that combine to form the plot of a play with the sequence of steps that the computer program instructs the computer to perform on data. {FN83: Newman, at 699-700} He then indicates what he needs from expert witnesses in a trial or in the briefs on appeal: These professionals would be well advised not to tell me simply that the source code is or is not protectable expression. Their opinions are relevant, but, as with all opinions, what renders them persuasive is not the vehemence of their assertion and not even the credentials of those asserting them; it is the cogency and persuasive force of the reasons they give for their respective positions. These reasons had better relate to the specifics of the computer software field. For example, as Altai indicates, even with its overly structured mode of analysis, it will be very important for me to know whether the essential function being performed by the copyrighted program is a function that can be accomplished with a wide variety of source codes, which will strengthen the case for protection, or, on the other hand, is a function capable of execution with very few variations in source code, or variations of such triviality as to be disregarded, in which event protection will be unlikely. For me, this mode of analysis is essentially what in other contexts we call the merger doctrine the expression is said to have merged with the idea because the idea can be expressed in such limited ways that protection of the plaintiffs expression unduly risks protecting the idea itself. {FN84: Newman, at 702}

Chapter 2: Copyright of Computer Programs

V. Reverse Engineering Of Software
In Whelan v. Jaslow {FN85: 797 F.2d 1222, 230 USPQ 481 (3d Cir. 1986)} and Computer Associates v. Altai, {FN86: 982 F.2d 693, 23 USPQ2d 1241 (2d Cir. 1992)} both of the alleged infringers had access to the original source code through a prior business relationship, and used that as the basis of a competing product. But the holdings in those cases also provide guidance on what

can be copied from an existing computer program without infringing its copyright, something very important when you are trying to write a program similar to one already in the market. In most instances, the creators of a competing product have not had access to the source code for the original product. Instead, they have studied how the original product operates in order to develop their product. This is particularly true when the competing product must duplicate the file formats or other external features of the original product, and information about those file formats or features is not provided by the developer of the original product. The key decisions on the legality of reverse engineering have dealt with disassembly: taking the publicly-available object code and attempting to reconstruct the original source code to learn how the program works. They also involved the interface between a video game console and the game cartridges that run on it. This is not surprising, since video game console manufacturers attempt to lock out games from suppliers not paying them licensee fees.

V.A. The Federal Circuits Atari Decision

In Atari Games v. Nintendo, {FN87: 975 F.2d 832, 24 USPQ2d 1015 (Fed. Cir. 1992)} the Court of Appeals for the Federal Circuit heard the appeal because a portion of Ataris suit alleged patent infringement, and the Federal Circuit hears all appeals of cases involving patent infringement. But when hearing a case with aspects outside its normal subject matter jurisdiction, the Federal Circuit tries to follow the law of the appeals court in which the district court is located. That court, the Ninth Circuit, had not yet ruled on copyright infringement and reverse engineering. The Federal Circuit looked to the purpose of copyright protection, and how that would be frustrated if others could not somehow examine the protected expression to aid them in producing new works. In this regard, computer programs are different from all other copyrighted works, because even though a program may be published and widely distributed, looking at the program or even running it does not reveal the expression protected by copyright. The Federal Circuit, in a decision by Circuit Judge Rader, found: The author does not acquire exclusive rights to a literary work in its entirety. Under the Act, society is free to exploit facts, ideas, processes, or methods of operation in a copyrighted work. To protect processes or methods of operation, a creator must look to patent laws. An author cannot acquire patent-like protection by putting an idea, process, or method of operation in an unintelligible format and asserting copyright infringement against those who try to understand that idea, process, or method of operation. The Copyright Act permits an individual in rightful possession of a copy of a work to undertake necessary efforts to understand the works ideas, processes, and methods of operation. This permission appears in the fair use exception to copyright exclusivity. Section 107 of the Copyright Act states that fair use of a copyrighted work, including such use by reproduction in copies . . . for purposes such as criticism, comment, news reporting, teaching . . . scholarship or research is not infringement. The legislative history of section 107 suggests that courts should adapt the fair use exception to accommodate new technological innovations. Thus, the Act exempts from copyright protection reproductions for criticism, comment . . . or research. These activities permit public understanding and dissemination of the ideas, processes, and methods of operation in a work:

The copyright holder has a property interest in preventing others from reaping the fruits of his labor, not in preventing the authors and thinkers of the future from making use of, or building upon, his advances. The process of creation is often an incremental one, and advances building on past developments are far more common than radical new concepts. Where the infringement is small in relation to the new work created, the fair user is profiting largely from his own creative efforts rather than free-riding on anothers work. A prohibition on all copying whatsoever would stifle the free flow of ideas without serving any legitimate interest of the copyright holder. Section 107 also requires examination of the nature of the work when determining if a reproduction is a fair use. When the nature of a work requires intermediate copying to understand the ideas and processes in a copyrighted work, that nature supports a fair use for intermediate copying. Thus, reverse engineering object code to discern the unprotectable ideas in a computer program is a fair use. {FN88: 975 F.2d at 842-843, 24 USPQ2d at 1022 (citations omitted)}

V.B. The Ninth Circuits Sega Decision

A little more than a month after the Federal Circuit issued its decision, the Ninth Circuit ruled in an almost-identical case, Sega v. Accolade. {FN89: 977 F.2d 1510, 24 USPQ2d 1561 (9th Cir. 1992)} Like the Federal Circuit, the Ninth Circuit found that the intermediate copying of the object code of a copyrighted computer program as necessary to disassemble the program to view its expression was a fair use under Section 107 of the copyright laws.
V.B.1. The First Fair Use Factor

Section 107 lists the four factors that must be considered in determining whether a particular use is a fair one: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. The Ninth Circuit started by considering the first factor: With respect to the first statutory factor, we observe initially that the fact that copying is for a commercial purpose weighs against a finding of fair use. However, the presumption of unfairness that arises in such cases can be rebutted by the characteristics of a particular commercial use. Further the commercial nature of a use is a matter of degree, not an absolute. . . . Sega argues that because Accolade copied its object code in order to produce a competing product, the Harper & Row presumption applies and precludes a finding of fair use. That analysis is far too simple and ignores a number of important considerations. We must consider other aspects of the purpose and character of the use as well. As we have noted, the use at issue was an intermediate one only and thus any commercial exploitation was indirect or derivative. The declarations of Accolades employees indicate, and the district court found, that Accolade copied Segas software solely in order to discover the functional requirements for compatibility with the Genesis console aspects of

Segas programs that are not protected by copyright. With respect to the video game programs contained in Accolades game cartridges, there is no evidence in the record that Accolade sought to avoid performing its own creative work. Indeed, most of the games that Accolade released for use with the Genesis console were originally developed for other hardware systems. Moreover, with respect to the interface procedures for the Genesis console, Accolade did not seek to avoid paying a customarily charged fee for use of those procedures, nor did it simply copy Segas code; rather, it wrote its own procedures based on what it had learned through disassembly. Taken together, these facts indicate that although Accolades ultimate purpose was the release of Genesis-compatible games for sale, its direct purpose in copying Segas code, and thus its direct use of the copyrighted material, was simply to study the functional requirements for Genesis compatibility so that it could modify existing games and make them usable with the Genesis console. Moreover, as we discuss below, no other method of studying those requirements was available to Accolade. On these facts, we conclude that Accolade copied Segas code for a legitimate, essentially non-exploitative purpose, and that the commercial aspect of its use can best be described as of minimal significance. We further note that we are free to consider the public benefit resulting from a particular use notwithstanding the fact that the alleged infringer may gain commercially. Public benefit need not be direct or tangible, but may arise because the challenged use serves a public interest. In the case before us, Accolades identification of the functional requirements for Genesis compatibility has led to an increase in the number of independently designed video game programs offered for use with the Genesis console. It is precisely this growth in creative expression, based on the dissemination of other creative works and the unprotected ideas contained in those works, that the Copyright Act was intended to promote . The fact that Genesis-compatible video games are not scholarly works, but works offered for sale on the market, does not alter our judgment in this regard. We conclude that given the purpose and character of Accolades use of Segas video game programs, the presumption of unfairness has been overcome and the first statutory factor weighs in favor of Accolade. {FN90: 977 F.2d at 1522-1523, 24 USPQ2d at 1569-1570 (citations omitted)}
V.B.2. The Second Fair Use Factor

Although the court next considered the fourth factor, because it felt that it was closely related to the first, well consider the factors here in order: The second statutory factor, the nature of the copyrighted work, reflects the fact that not all copyrighted works are entitled to the same level of protection. The protection established by the Copyright Act for original works of authorship does not extend to the ideas underlying a work or to the functional or factual aspects of the work. To the extent that a work is functional or factual, it may be copied, as may those expressive elements of the work that must necessarily be used as incident to expression of the underlying ideas, functional concepts, or facts. Works of fiction receive greater protection than works that have strong factual elements, such as historical or biographical works, or works that have strong

functional elements, such as accounting textbooks. Works that are merely compilations of fact are copyrightable, but the copyright in such a work is thin. Computer programs pose unique problems for the application of the idea/expression distinction that determines the extent of copyright protection. To the extent that there are many possible ways of accomplishing a given task or fulfilling a particular market demand, the programmers choice of program structure and design may be highly creative and idiosyncratic. However, computer programs are, in essence, utilitarian articles articles that accomplish tasks. As such, they contain many logical, structural, and visual display elements that are dictated by the function to be performed, by considerations of efficiency, or by external factors such as compatibility requirements and industry demands. In some circumstances, even the exact set of commands used by the programmer is deemed functional rather than creative for purposes of copyright. 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. Because of the hybrid nature of computer programs, there is no settled standard for identifying what is protected expression and what is unprotected idea in a case involving the alleged infringement of a copyright in computer software. We are in wholehearted agreement with the Second Circuits recent observation that thus far, many of the decisions in this area reflect the courts attempt to fit the proverbial square peg in a round hole. In 1986, the Third Circuit attempted to resolve the dilemma by suggesting that the idea or function of a computer program is the idea of the program as a whole, and everything that is not necessary to that purpose or function is part of the expression of that idea. The Whelan rule, however, has been widely and soundly criticized as simplistic and overbroad. In reality, a computer programs 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, Whelans general formulation . . . is descriptively inadequate. For example, the computer program at issue in the case before us, a video game program, contains at least two such subroutines the subroutine that allows the user to interact with the video game and the subroutine that allows the game cartridge to interact with the console. Under a test that breaks down a computer program into its component subroutines and sub-subroutines and then identifies the idea or core functional element of each, such as the test recently adopted by the Second Circuit in Altai, many aspects of the program are not protected by copyright. In our view, in light of the essentially utilitarian nature of computer programs, the Second Circuits approach is an appropriate one. Sega argues that even if many elements of its video game programs are properly characterized as functional and therefore not protected by copyright, Accolade copied protected expression. Sega is correct. The record makes clear that disassembly is wholesale copying. Because computer programs are also unique among copyrighted works in the form in which they are distributed for public use, however, Segas observation does not bring us much closer to a resolution of the dispute.

The unprotected aspects of most functional works are readily accessible to the human eye. The systems described in accounting textbooks or the basic structural concepts embodied in architectural plans, to give two examples, can be easily copied without also copying any of the protected, expressive aspects of the original works. Computer programs, however, are typically distributed for public use in object code form, embedded in a silicon chip or on a floppy disk. For that reason, humans often cannot gain access to the unprotected ideas and functional concepts contained in object code without disassembling that code i.e., making copies. {FN91: 977 F.2d at 1524-1525, 24 USPQ2d at 1571-1572 (citations omitted)}
V.B.3. The Third and Fourth Fair Use Factors

The court had this to say about the third factor: Accolade disassembled entire programs written by Sega. Accordingly, the third factor weighs against Accolade. The fact that an entire work was copied does not, however, preclude a finding of fair use. In fact, where the ultimate (as opposed to direct) use is as limited as it was here, the factor is of very little weight.{FN92: 977 F.2d at 1526-1527, 24 USPQ2d at 1573 (citations omitted)} And finally, the fourth factor: As applied, the fourth statutory factor, effect on the potential market for the copyrighted work, bears a close relationship to the purpose and character inquiry in that it, too, accommodates the distinction between the copying of works in order to make independent creative expression possible and the simple exploitation of anothers creative efforts. We must, of course, inquire whether, if the challenged use should become widespread, it would adversely affect the potential market for the copyrighted work, by diminishing potential sales, interfering with marketability, or usurping the market. If the copying resulted in the latter effect, all other considerations might be irrelevant. The Harper & Row Court found a use that effectively usurped the market for the copyrighted work by supplanting that work to be dispositive. However, the same consequences do not and could not attach to a use which simply enables the copier to enter the market for works of the same type as the copied work. Unlike the defendant in Harper & Row, which printed excerpts from President Fords memoirs verbatim with the stated purpose of scooping a Timemagazine review of the book, Accolade did not attempt to scoop Segas release of any particular game or games, but sought only to become a legitimate competitor in the field of Genesis-compatible video games. Within that market, it is the characteristics of the game program as experienced by the user that determine the programs commercial success. As we have noted, there is nothing in the record that suggests that Accolade copied any of those elements. By facilitating the entry of a new competitor, the first lawful one that is not a Sega licensee, Accolades disassembly of Segas software undoubtedly affected the market for Genesis-compatible games in an indirect fashion. We note, however, that while no consumer except the most avid devotee of President Fords regime might be expected to buy more than one version of the Presidents memoirs, video game users typically purchase more than one game. There is no basis for assuming

that Accolades Ishido has significantly affected the market for Segas Altered Beast, since a consumer might easily purchase both; nor does it seem unlikely that a consumer particularly interested in sports might purchase both Accolades Mike Ditka Power Football and Segas Joe Montana Football, particularly if the games are, as Accolade contends, not substantially similar. In any event, an attempt to monopolize the market by making it impossible for others to compete runs counter to the statutory purpose of promoting creative expression and cannot constitute a strong equitable basis for resisting the invocation of the fair use doctrine. Thus, we conclude that the fourth statutory factor weighs in Accolades, not Segas, favor, notwithstanding the minor economic loss Sega may suffer. {FN93: 977 F.2d at 1523-1524, 24 USPQ2d at 1570-1571 (citations omitted)}
V.B.4. Summarizing The Four Factors

The Ninth Circuit summarized its analysis of the four factors and found that they weighed in Accolades favor: In summary, careful analysis of the purpose and characteristics of Accolades use of Segas video game programs, the nature of the computer programs involved, and the nature of the market for video game cartridges yields the conclusion that the first, second, and fourth statutory fair use factors weigh in favor of Accolade, while only the third weighs in favor of Sega, and even then only slightly. Accordingly, Accolade clearly has by far the better case on the fair use issue.{FN94: 977 F.2d at 1527, 24 USPQ2d at 1573} The court concluded: The record clearly establishes that disassembly of the object code in Segas video game cartridges was necessary in order to understand the functional requirements for Genesis compatibility. The interface procedures for the Genesis console are distributed for public use only in object code form, and are not visible to the user during operation of the video game program. Because object code cannot be read by humans, it must be disassembled, either by hand or by machine. Disassembly of object code necessarily entails copying. Those facts dictate our analysis of the second statutory fair use factor. If disassembly of copyrighted object code is per se an unfair use, the owner of the copyright gains a de facto monopoly over the functional aspects of his work: aspects that were expressly denied copyright protection by Congress. In order to enjoy a lawful monopoly over the idea or functional principle underlying a work, the creator of the work must satisfy the more stringent standards imposed by the patent laws. Sega does not hold a patent on the Genesis console. Because Segas video game programs contain unprotected aspects that cannot be examined without copying, we afford them a lower degree of protection than more traditional literary works. In light of all the considerations discussed above, we conclude that the second statutory factor also weighs in favor of Accolade. . . . We conclude that where disassembly is the only way to gain access to the ideas and functional elements embodied in a copyrighted computer program and where there is a legitimate reason for seeking such access, disassembly is a fair use

of the copyrighted work, as a matter of law. Our conclusion does not, of course, insulate Accolade from a claim of copyright infringement with respect to its finished products. Sega has reserved the right to raise such a claim, and it may do so on remand. {FN95: 977 F.2d at 1526-1528, 24 USPQ2d at 1572-1574 (citations omitted)}

V.C. Revising Sega in Sony v. Connectix

The Ninth Circuit had a chance to revisit reverse engineering in Sony v. Connectix, {FN96: 203 F.3d 596, 53 USPQ2d 1705 (9th Cir. 2000)} where again the issue was whether intermediate copying was infringement or fair use, even if many intermediate copies are made. Sony contends that Connectixs reverse engineering of the Sony BIOS should be considered unnecessary on the rationale that Connectixs decision to observe the Sony BIOS in an emulated environment required Connectix to make more intermediate copies of the Sony BIOS than if Connectix had performed a complete disassembly of the program. Under this logic, at least some of the intermediate copies were not necessary within the meaning of Sega. This construction stretches Sega too far. The necessity we addressed in Sega was the necessity of the method, i.e., disassembly, not the necessity of the number of times that method was applied. In any event, the interpretation advanced by Sony would be a poor criterion for fair use. Most of the intermediate copies of the Sony BIOS were made by Connectix engineers when they booted up their computers and the Sony BIOS was copied into RAM. But if Connectix engineers had left their computers turned on throughout the period during which they were observing the Sony BIOS in an emulated environment, they would have made far fewer intermediate copies of the Sony BIOS (perhaps as few as one per computer). Even if we were inclined to supervise the engineering solutions of software companies in minute detail, and we are not, our application of the copyright law would not turn on such a distinction. Such a rule could be easily manipulated. More important, the rule urged by Sony would require that a software engineer, faced with two engineering solutions that each require intermediate copying of protected and unprotected material, often follow the least efficient solution. (In cases in which the solution that required the fewest number of intermediate copies was also the most efficient, an engineer would pursue it, presumably, without our urging.) This is precisely the kind of wasted effort that the proscription against the copyright of ideas and facts . . . [is] designed to prevent. Such an approach would erect an artificial hurdle in the way of the publics access to the ideas contained within copyrighted software programs. These are aspects that were expressly denied copyright protection by Congress. We decline to erect such a barrier in this case. If Sony wishes to obtain a lawful monopoly on the functional concepts in its software, it must satisfy the more stringent standards of the patent laws. {FN97: 203 F.3d at 605, 53 USPQ2d at 1711-1712 (citations omitted)} It is clear that, at least in the Ninth Circuit, legitimate reverse engineering to learn how to interoperate with another computer program is a fair use. Congress appears to agree. In the Digital

Millennium Copyright Act, as part of the anticircumvention provisions added as Section 1201 of the Copyright Act, Congress specifically recognized reverse engineering needed for interoperability as an exception to the anticircumvention rules: A person who has lawfully obtained the right to use a copy of a computer program may circumvent a technological measure that effectively controls access to a particular portion of that program for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability of an independently created computer program with other programs, and that have not previously been readily available to the person engaging in the circumvention, to the extent any such acts of identification and analysis do not constitute infringement under this title. {FN98: 17 U.S.C. 1201(f)} In its Committee Report explaining the Digital Millennium Copyright Act, the Senate Committee on the Judiciary specifically cited Sega v. Accolade and indicated: The purpose of this section is to foster competition and innovation in the computer and software industry. {FN99: Sen. Rep. No. 105-190 at 12}

Chapter 2: Copyright of Computer Programs

VI. Other Software Copyright Issues
There are a number of aspects of software copyright that have not been considered by the courts but may play a role in future litigation.

VI.A. Source Code and Derivative Works

Copyright for a computer program, under the Copyright Act of 1976, comes into being as the source code for the computer program is being written by the programmer. As Section 102(a) states, Copyright protection subsists . . . in original works of authorship fixed in any tangible medium of expression, {FN100: 17 U.S.C. 102(a)} such as keypunch cards, magnetic tape, hard or floppy disks, or even the RAM of the computer. The program does not need to be complete or even functional for copyright protection to come into being. When additional source statements are added to the computer program, or corrections are made to the computer program, those additions or corrections are a derivative work based on the original computer program. Section 101 {FN101: 17 U.S.C. 101} defines a derivative work as a work based upon one or more preexisting works and states that editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship are derivative works. Just as a copyright came into being when the original lines of source code were written by the programmer, so another copyright comes into being for each addition or modification to the source code that shows sufficient originality. Because of this, a computer program generally is protected not by a single copyright but by a series of copyrights starting when it is first written and continuing through the last modification. However, there is little practical significance in viewing the source code copyrights as a series of separate copyrights rather than a single copyright. If the computer program is not a work made for hire, then all the copyrights will expire at the same time 70 years after the death of the last surviving author. For works made for hire, the copyrights will expire in the order in which they came into being. The copyright on the original program will expire first, allowing it (but not its

later modifications) to enter the public domain, where it can be copied freely. The copyright on each modification will expire at some later time, until all the copyrights have expired and the complete computer program enters the public domain. However, because the copyright for the original source code will not expire for 95 years after it is first published (and 120 years after it is first written, if it remains unpublished), it is unlikely that the fact that part of an outdated, 95-yearold computer program has entered the public domain while a part remains copyrighted will be of any significance. One situation in which this series of copyrights may be significant when the copyright in the computer program is registered. It is common to register the copyright whenever a major release of the computer program occurs, but not when there has been only a minor change. While the copyright owner can sue for infringement of the copyright only on the material that has been registered, if there have been only minor changes since registration, the copied version will be substantially similar to the registered one sufficient for a finding of copyright infringement. It may also be important to look at a computer program as a series of derivative works is when the original author has not written the modifications. For a program written by company employees, it makes no difference because the author under the law for such a work made for hire is the employer. But if there are different authors, then the copyright owner in any work has to authorize the making of any further derivative works and must approve of any distribution of the work that contains his material. Unless ownership and distribution rules are resolved at the time the work is being developed, there could be problems at a later time.

VI.B. Source Code and Object Code

Although copyright comes into being with the writing of the source code, it is the object code the actual instructions that control the computer when the program is being executed that copyright generally protects. In most instances, the source code is never revealed to the public, and thus remains protected as a trade secret even though millions and millions of copies of the program are distributed as object code. Every computer program copyright case treats the copyright in the source code and the object code as equivalent. That is likely because they were decided at a time when there was essentially a one-to-one correspondence between the source code and the object code. The source code was written in assembly language, with each line of the source code corresponding to a single machine instruction (or, if a macro facility existed as part of the assembler, a small predefined series of machine instructions). The source code contained information that made it easier for a programmer to write or understand the program mnemonics like ADD instead of a bit pattern of 01000011 for the addition instruction, the use of symbolic labels for storage or program locations, and the inclusion of comments to annotate the program which the assembly process removed or replaced as it produced the object code. With the advent of higher-level programming languages, that is less the case. The compiler for the higher-level language performs a much more complicated translation than was the case for an assembler. It not only produces complex series of object code instructions for each source line but may actually rearrange the statements of the program to produce a more efficient program. There is no longer the one-to-one correspondence between the source code and the object code. This, along with their size, makes it more difficult to reverse engineer (for example, to learn how the program works either by testing or by trying to convert the object code back to source code) a

modern computer program, which in turn makes it more likely that any copying will be a literal copying of the entire program. Even though source code and object code are distinct, it is still useful to maintain the concept that the source code and the object code are just different forms of the same copyrighted work. The Copyright Office regards the source code and object code as equivalent for purposes of registration. In fact, it generally requires a deposit of at least a portion of the source code (generally the first and last 25 pages see their Circular 61) and questionsany registration that includes only object code. Where an applicant is unable or unwilling to deposit source code, he/she must state in writing that the work as deposited in object code contains copyrightable authorship. The Office will send a letter stating that registration has been made under its rule of doubt and warning that it has not determined the existence of copyrightable authorship. {FN102: Copyright Office Circular 61: Copyright Registration for Computer Programs, at 2}

VI.C. Source Code and Displays

The source code copyright that protects the object code may also cover any screen displays produced by the computer program. These would be considered audiovisual works under the Copyright Act, defined in Section 101 as works that consist of a series of related images which are intrinsically intended to be shown by the use of machines or devices such as projectors, viewers, or electronic equipment, together with accompanying sounds, if any, regardless of the nature of the material objects, such as films or tapes, in which the works are embodied. {FN103: 17 U.S.C. 101} Video games, consisting of a series of displays controlled by the computer program, are particularly suitable to regard as audiovisual works. But because Section 106 grants no exclusive right to copyright owners of audiovisual works that it does not also grant to copyright owners of literary works like computer programs and audiovisual works, there is little reason to treat the two aspects of some programs separately. The Copyright Office has recognized that computer programs may be both literary works and audiovisual works, and it requires only a single registration for both aspects. Copyright protection for computer screen displays, including videogames, has been an issue in the courts for some time. Courts have differed in their opinions regarding whether screen displays may be registered separately. The Copyright Office has consistently believed that a single registration is sufficient to protect the copyright in a computer program and related screen displays, including videogames, without a separate registration for the screen displays or a specific reference to them on the application for the computer program. An application may give a general description in the nature of authorship space, such as entire work or computer program. This description will cover any copyrightable authorship contained in the computer program and screen displays, regardless of whether identifying material for the screen is deposited. {FN104: Copyright Office Circular 61 at 3}

Chapter 2: Copyright of Computer Programs

VI.D. New Software from Old

Most computer programs are based to some degree on other computer programs. They could be new implementations of existing programs (for instance, Linux reimplementing Unix) or new programs influenced by an existing program (the first spreadsheet program, VisiCalc, influenced Lotus 1-2-3, which influenced Microsoft Excel), or they could use a preexisting library as part of the final computer program. Obviously, there are a number of copyright considerations when creating a new computer program based on an existing one.
VI.D.1. Using a Clean Room

It is not necessary to be looking at an existing program while writing a new program for the new program to infringe the reproduction right in the existing program. The copying could be unconscious. In ABKCO Music v. Harrisongs Music, {FN105: 722 F.2d 988, 221 USPQ 490 (2d Cir. 1983)} George Harrison was found to have infringed the copyright of Hes So Fine, a song that he had heard years before, when he wrote My Sweet Lord. If you have had access to the source of a computer program, you need to be particularly concerned that you arent unconsciously copying the original program when you write a similar program. One way to avoid infringement when writing a program that is similar to another program is through the use of a clean room procedure. This is what was done when companies cloned the BIOS of the IBM personal computer to produce compatible systems. In a clean room procedure, there are two separate teams working on the development of the new program. The first team determines how the original program works, by examining its source code if it is available (IBM published the source code for its BIOS in a technical manual), by reverse engineering the program (by converting its object code back to source code and attempting to understand it or by testing it to see how it behaves), or by studying available user manuals and other descriptions of the programs function. This first team puts together a complete technical specification that describes the functioning of the original program. Such a specification is not an infringement, since the copyright in the original program doesnt protect its functionality, only the expression in the program that creates that functionality. Generally, an intellectual property attorney will review the functional specification to assure that it does not contain any protected expression from the original program. Given the functional specification, a second team of programmers, metaphorically in a clean room uncontaminated by the original program, implements the new program. These programmers have not seen the source code of the original program. In fact, it is best if they have never seen any aspect of the original program, getting all their knowledge of it from the functional specification. Because they havent seen the original program, they cannot be copying it, even unconsciously. A limited clean room was used by programmers at Altai when they discovered that one of their employees had written a program that included portions of a program he had worked on at a competitor. Although Computer Associates v. Altai {FN106: 982 F.2d 693, 23 USPQ2d 1241 (2d Cir. 1992)} does not spend much time on the clean room aspects of Altais new implementation, it does suggest that such a procedure results in a program that does not infringe as long as the portions that are similar are dictated by function.

VI.D.2. Piecewise Reimplementation

Many people have reimplemented computer programs by rewriting them to replace the source code with code of their own writing. There is no reason to believe that this would not be a copyright infringement, particularly if the reimplementer had access to the source code of the original program, even if none of the original source code remains. When the first segment of code is rewritten, the new code will be an infringing work if it is substantially similar to the original code, or may be an infringing derivative work if it is a reimplementation in a different programming language. That reimplemented first segment is combined with the remaining parts of the original program to form an intermediate version. Subsequent modifications produce another work. So when you have completed the piecewise reimplementation, you have a set of works, each of whose creation infringes the exclusive rights of the owner of the copyright of the original program. As an analogy, consider the translation of a novel to a different language, something that would clearly be a derivative work. It makes little difference that none of the original words remain, or that the translation was done a little at a time. The resulting translation is still an infringing derivative work. Even if you completely replace the program with new code, nonliteral elements also protected by the original programs copyright are likely to remain and infringe elements like the overall program structure or architecture and data structures that are not dictated by external or efficiency considerations. Although there is no case law on this point, it would seem that the only way to break the chain of infringing works is by some extraordinary act, such as a clean room implementation.
VI.D.3. Section 117 Adaptations

Most computer programs are covered by a series of copyrights, each coming into being when a portion of the program is written or modified. The copyright on each nontrivial modification is as a derivative work of some preexistent program. One of the exclusive rights of a copyright owner is the right to control the preparation of any derivative works, so generally only somebody with the permission of the copyright owner can modify a computer program. There is a special exception in Section 117 that permits the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner. {FN107: 17 U.S.C. 117} This exception recognizes that it is sometimes necessary to configure or otherwise modify a computer program as part of its installation or to run it. While in theory this adaptation exception would allow somebody to redo Microsoft Access to run on a Macintosh, in reality such an adaptation even with access to the source code would be impractical for an individual user. Note that Section 117 also requires the permission of the computer programs copyright owner to transfer the adaptations you have made. So Section 117s adaptation right is personal to each owner of a copy of a computer program and does not allow the sharing of such adaptations.
VI.D.4. Derivative Works and Compilations

Until now, we have been discussing computer programs as if they were a single work, or an original program and a series of derivative works comprising each modification to that program.

While that was the case for early computer programs, now it is more common for a program to include preexisting libraries, themselves copyrighted computer programs, and similar components. When two or more preexisting works are combined to form a new work, in copyright law that work is called a compilation a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship. The copyright in the resulting overall computer program comprises the copyrights in the preexisting component computer programs and a new copyright in the compilation. But that compilation copyright is very limited. The copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in such work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material. {FN108: 17 U.S.C. 103(b)} This means that to distribute the overall computer program, there must be permission from the copyright owners of all the component computer programs. It is important before distributing a program using a library that the license that accompanied that library allow the redistribution of the library in the way intended, or else the distribution right for that library will be infringed. An interesting situation arises when an application program is distributed without the libraries it needs, and those libraries are supplied at a later time by the user of the application program. While this may initially seem like a strange procedure, it actually is common for todays software. Most programs do not run stand-alone on a machine but use the services of an operating system a special type of preexisting library. Most operating systems also provide dynamic linking to a library, so that the library can be shared by all the programs that are using it. In this discussion, library indicates a preexisting program used by a new applications program, because that is one of the most common instances of what is being discussed. However, the discussion is just as applicable to libraries that work with a preexisting operating system, or plug-ins that work with a preexisting browser. With dynamically-linked libraries, the application program being distributed is no longer a compilation that includes the library. Because the library is not being distributed with the application program, no permission is needed from the copyright owner of the library for the distribution to users. Users must, of course, be authorized to use the library, but if they are owners of a copy of the library, under Section 117 they can make any adaptations of the library necessary to use it with the application program. Some have claimed that an application program that needs a library for its operation is a derivative work of that library. They take that position because the application program is based on the library because it was written to use the subroutines and other aspects of the library. Such a position is misplaced. Even though the definition of a derivative work contained in Section 101 seems to support such a reading when it talks about a derivative works being based upon one or more preexisting works, the examples all illustrate derivative works where the original work is somehow incorporated or recast in the derivative work: A derivative work is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications

which, as a whole, represent an original work of authorship, is a derivative work. {FN109: 17 U.S.C. 101} This need to use a portion of the original work in the derivative work is stated in the legislative history of the Copyright Act of 1976, where the drafters discussed when the derivative work exclusive right is infringed: To be an infringement the derivative work must be based upon the copyrighted work, and the definition in section 101 refers to a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. Thus, to constitute a violation of section 106(2), the infringing work must incorporate a portion of the copyrighted work in some form; for example, a detailed commentary on a work or a programmatic musical composition inspired by a novel would not normally constitute infringements under this clause. {FN110: H.R. Rep. No. 94-1476 at 62} It could be argued that the component program really does include portions of the library that it uses data structures that are passed as parameters, or even the parameter lists themselves. But elements dictated by external considerations are filtered out when trying to determine whether there is copyright infringement. No other conclusion makes sense. If it were not the case, then any program using the applications program interfaces (APIs) of an operating system could be considered a derivative work of that operating system. And, under the exclusive right to prepare derivative works, the copyright owner of an operating system such as Microsoft Windows could control who was allowed to write programs for that operating system.

Chapter 2: Copyright of Computer Programs

VII. Summary
It is now well-accepted that copyright protects computer programs and other digital information, whether they are in human-readable source code or are an executable program that is intended to be understood only by a computer. Copyright provides protection for computer programs that is both easy to obtain (it occurs automatically as the computer program is written) and effective against someone who is making or distributing copies of the program, as would be the case with bootleg copies of commercial software packages such as Microsoft Windows or WordPerfect. Beyond the verbatim copying of a computer program, the scope of copyright protection is quite limited. It does not protect the functional aspects of the program, just its expression. But as computer programs have become more complicated, that protection may be sufficient in most instances. Most, if not virtually all, copyright infringement of todays operating systems or applications programs consists of the complete copying of that program onto a compact disc or other distribution medium, the preloading of the program onto the hard disk of a computer being sold, or the distributing of the program over the Internet without authorization. There is little difficulty in finding that such acts are copyright infringements. It also does not protect the functional aspects of the program, just its expression. But it is much easier to state that rule than determine how to apply it, since a computer program combines expression and functionality much, much more than any other copyrighted work. The most-

accepted way of determining whether something is unprotectable function or protectable expression is the abstraction-filtration-comparison test, which, after determining a number of parts of the program to consider (abstraction), filters out elements not protectable by copyright, and then compares the remaining elements to determine if they are similar. Elements are filtered because: y The elements expression was dictated by reasons of efficiency, such as when it is the best way of performing a particular function. y The elements expression was dictated by external factors, such as using an existing file format or interoperating with another program. y The elements expression is a conventional way of writing something in the particular programming language or machine running the program. y The element, at the particular level of abstraction, is an unprotectable process and not protectable expression. y The element is taken from the public domain, or is an unprotectable fact. When writing a program similar to an existing program, you can copy any element of that program that would be filtered without infringing the copyright of the existing program. But you have to worry if you are using too many of the filtered elements. It could be that the selection or arrangement of a large number of filtered elements could itself have sufficient originality to warrant copyright protection. Remember, in the abstraction-filtration-comparison test, abstraction is done before any filtration of elements at a particular level of abstraction, and elements that may be filtered out at one level may be of primary importance at another. And you must always remember that if you have had access to the source code of the existing program under a confidentiality agreement, such copying would likely be trade secret misappropriation even if it is not copyright infringement. Because it may be difficult to determine whether something should be filtered or not, and because unconscious copying can constitute infringement just as if you were looking at the program when you wrote yours, the more exposure you have to an existing computer program, the more care you need to take when writing a similar program. In the three major cases that have considered reverse engineering of computer programs, Atari v. Nintendo, {FN111: 975 F.2d 832, 24 USPQ2d 1015 (Fed. Cir. 1992)}Sega v. Accolade, {FN112: 977 F.2d 1510, 24 USPQ2d 1561 (9th Cir. 1992)} and Sony v. Connectix, {FN113: 203 F.3d 596, 53 USPQ2d 1705 (9th Cir. 2000)} the appellate courts found that the intermediate copies produced during reverse engineering were a fair use and therefore did not infringe the copyright of the computer program being disassembled. The intermediate copies were necessary to see and understand the unprotected functional aspects of the computer program, and even though the entire program was copied, that was necessary to locate those unprotected expressions. However, the fact that it is not copyright infringement to produce the intermediate copies necessary in reverse engineering doesnt mean that it will not be a copyright infringement to use protected expression that was learned through reverse engineering in the final computer program.

Chapter 3: Copyright of Digital Information

I. Why Digital Works are Different

In many instances, there is no difference with respect to copyright law between digital information (including music, videos, and computer software) and traditional works. However, there are some instances where digital works present substantial new problems for copyright.

I.A. The Ease of Copying and Distributing Digital Works

Until digital works, the economic harm done by a copyright infringement was dependent on the cost of carrying out the infringement. To substantially affect the market for a popular novel, the infringement had to involve a large number of copies and a distribution network to deliver and sell the works. A few hand-made copies of a book would have little effect on the worldwide sale of a printed book. Even using a modern photocopier, it takes time and money to make duplicates of a book, and the result is a lower quality than the printed-and-bound original. An infringer puts that time and money at risk. If the infringement is stopped by a court, the money spent printing the infringing copies is lost because those copies will be destroyed. If the infringer invested in duplicating facilities or for a distribution network, that investment would also likely be lost. In contrast, a perfect copy of a digital work can be made and sent anywhere in the world with a few mouse-clicks or keystrokes on a personal computer and an Internet account provided by a school or costing only a few dollars a month. In United States v. LaMacchia, {FN1: 871 F.Supp. 535, 33 USPQ2d 1978 (D. Mass. 1994)} a college student set up a system for distributing popular software programs such as WordPerfect and Excel on a college machine available to him at no cost. It was alleged that his scheme caused losses of more than one million dollars to software copyright holders. {FN2: 871 F.Supp. at 536-537, 33 USPQ2d at 1979} The economic harm to a copyright owner that can be caused by an infringer in todays digital world is not limited by the cost of creating and distributing duplicates of the original work nor by the quality of the duplicates since they are identical to the original work. As Napster and other file-sharing systems (and Prohibition and the 55 mph speed limit) have shown, it is difficult for the law to deter behavior that doesnt seem illegal, especially when you cant go after the millions and millions of people who are breaking the law. (File-sharing using Napster was stopped only because it had a central directory that could be shut down by court order.) File-sharing system users dont think of themselves as copyright infringers, and certainly not as worldwide distributors of illegal copies. The users feel that they were just sharing music that they liked with others who also like the songs. And the ease of doing it (and the many people involved) makes it seem acceptable. The market for copyrighted works is a substantial part of our economy, and millions of people who just infringe a little can have a definite effect. As noted by the Senate Judiciary Committee: The copyright industries are one of Americas largest and fastest growing economic assets. According to International Intellectual Property Alliance statistics, in 1996 (when the last full set of figures was available), the U.S. creative industries accounted for 3.65 percent of the U.S. gross domestic product (GDP) $278.4 billion. In the last 20 years (1977-1996), the U.S. copyright industries share of GDP grew more than twice as fast as the remainder of the economy 5.5 percent vs. 2.6 percent. Between 1977 and 1996, employment in the U.S. copyright industries more than doubled to 3.5 million workers 2.8 percent of total U.S. employment. Between 1977 and 1996 U.S. copyright industry employment grew nearly three times as fast as the annual rate of the economy as a whole 4.6 percent

vs. 1.6 percent. In fact, the copyright industries contribute more to the U.S. economy and employ more workers than any single manufacturing sector, including chemicals, industrial equipment, electronics, food processing, textiles and apparel, and aircraft. More significantly for the WIPO treaties, in 1996 U.S. copyright industries achieved foreign sales and exports of $60.18 billion, for the first time leading all major industry sectors, including agriculture, automobiles and auto parts, and the aircraft industry. {FN3: Sen. Rep. No. 105-190 at 10}

Chapter 3: Copyright of Digital Information

I.B. Copyright Laws are a Bad Fit
The copyright laws work as well for digital works like compact discs (CDs) and digital video discs (DVDs) as they do for phonograph records and movie films or videocassettes. This is not surprising, since when Congress drafted the Copyright Act of 1976, it intended to end the different treatment for works depending on the form or medium in which the work was fixed. Instead, Congress treated any work of authorship fixed in a tangible medium of expression as protected by copyright, stating: Under the bill it makes no difference what the form, manner, or medium of fixation may be whether it is in words, numbers, notes, sounds, pictures, or any other graphic or symbolic indicia, whether embodied in a physical object in written, printed, photographic, sculptural, punched, magnetic, or any other stable form, and whether it is capable of perception directly or by means of any machine or device now known or later developed. {FN4: H.R. Rep. No. 94-1476 at 52} But there are times when the copyright laws are a bad fit for digital works. It is not clear which, if any, of the exclusive rights is infringed when a person makes information available to the world using a file-sharing system like Napster. On the other hand, the copyright laws may overprotect digital works by effectively giving the copyright owners the right to control any access or use of the digital work by controlling the intermediate copies that are made as a work is accessed.
I.B.1. File Sharing

Consider the case where somebody places a digital work on a computer so that the public can access it. This could be done by putting it in a file transfer directory, including it as a Web page, or having it in a location that can be accessed by a file-sharing program like Napster. And assume that the digital work is something like a new movie or popular song and the number of downloads is affecting the market value for the original copyrighted work, so it is reasonable for copyright law to give some protection. Now consider whether he infringed any of the copyright owners six exclusive rights: (1) to reproduce the copyrighted work in copies or phonorecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending; (4) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and motion pictures and other audiovisual works, to perform the copyrighted work publicly; and

(5) in the case of literary, musical, dramatic, and choreographic works, pantomimes, and pictorial, graphic, or sculptural works, including the individual images of a motion picture or other audiovisual work, to display the copyrighted work publicly and (6) in the case of sound recordings, to perform the copyrighted work publicly by means of a digital audio transmission. {FN5: 17 U.S.C. 106} I.B.1.a. The Public Distribution Right Since he is essentially distributing the work to anybody accessing his computer system, its logical to first look at the distribution right. The Copyright Act of 1976, like its predecessors, is strongly tied to copies that are fixed in some medium of expression. Copyright comes into being the instant that the first copy of an original expression is made. The definitions in Section 101 makes this tie to physical objects clear: Copies are material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term copies includes the material object, other than a phonorecord, in which the work is first fixed. Phonorecords are material objects in which sounds, other than those accompanying a motion picture or other audiovisual work, are fixed by any method now known or later developed, and from which the sounds can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term phonorecords includes the material object in which the sounds are first fixed. {FN6: 17 U.S.C. 101} For this discussion, there is no significant difference between copies and phonorecords and well refer to them both as copies. Its also useful to note that the term copy refers not only to reproductions of an original, but also to the original itself, so copy doesnt mean a duplication of an existing copy but instead a physical object containing the copyrighted work. Considering our example, according to the definitions in Section 101, copies are material objects and he certainly didnt give any material objects to the public, or anyone else for that matter. While this strong tie to physical objects works well for traditional distributions, it doesnt encompass digital works that are electronically transmitted from place to place. Another problem with looking to the distribution right for any finding of infringement is that it appears to require that somebody else actually get the work off the server before there is any infringement. But in one case, Hotaling v. Church of Jesus Christ of Latter-Day Saints, {FN7: 118 F.3d 199, 43 USPQ2d 1299 (4th Cir. 1997)} the court held that actual distribution of work was not necessary: When a public library adds a work to its collection, lists the work in its index or catalog system, and makes the work available to the borrowing or browsing public, it has completed all the steps necessary for distribution to the public. At that point, members of the public can visit the library and use the work. Were this not to be considered distribution within the meaning of Section 106(3), a copyright holder would be prejudiced by a library that does not keep records of public use, and the library would unjustly profit by its own omission. {FN8: 118 F.3d at 203, 43 USPQ2d at 1302}

I.B.1.b. The Reproduction Right Perhaps the reproduction right is the one being infringed in the example. He clearly made a copy of the work when he put it on his hard disk for others to access. And it is likely that a copy was made by the person receiving the copyrighted work. But the act we are really trying to proscribe is his making the work available to the world, not making the single copy when he put it on his hard disk. And that copy might not even be an infringement if he was authorized to install the digital work on his computer and simply allowed the world to access that installed copy. There is an appeal to finding infringement of either the reproduction or the distribution rights, because those are the rights that would have been infringed if he had made physical copies for everybody receiving the work from him, and then distributed them to anybody wanting them. But he has not distributed a physical copy to anybody, and any reproductions beyond the one he put in the file-sharing directory were made by others. He may, of course, be a contributory infringer if he was aware of the infringing copies being made by others through his making the software accessible to the world. Contributory infringement results when somebody knows of the direct infringement of another and substantially participates in that infringement, such as inducing, causing, or materially contributing to the infringing conduct. But while courts have used this approach to find liability, it would be far better if any liability for infringement came from something he did directly, rather than for the act of another. I.B.1.c. The Adaptation Right It would clearly be a stretch to say that he has infringed the adaptation right by preparing a derivative work. As defined in Section 101: A derivative work is a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications which, as a whole, represent an original work of authorship, is a derivative work. {FN9: 17 U.S.C. 101} In this case, any copies made were exact copies of the copyrighted work, rather than works based on the copyrighted work, and so they are not derivative works. I.B.1.d. The Public Performance Rights It would also be a stretch to consider his action as infringing the right to perform the copyrighted work publicly. Section 101 says: To perform a work means to recite, render, play, dance, or act it, either directly or by means of any device or process or, in the case of a motion picture or other audiovisual work, to show its images in any sequence or to make the sounds accompanying it audible. {FN10: 17 U.S.C. 101} He didnt recite, render, play, dance, or act the digital work. He just put it on his hard disk and allowed other people access to it. Again, he might be a contributory infringer if somehow the person who accesses the work on the server later recites, renders, plays, dances, or acts out the work, but it is always unappealing to have to resort to an indirect infringement theory.

I.B.1.e. The Public Display Right With a little creative reading what he may have infringed is the right to display the copyrighted work publicly. Section 101 says: To display a work means to show a copy of it, either directly or by means of a film, slide, television image, or any other device or process or, in the case of a motion picture or other audiovisual work, to show individual images nonsequentially. {FN11: 17 U.S.C. 101} The display right doesnt seem to have been infringed by placing a digital work on a machine where it is available to the public, but Section 101 also provides two other important definitions: To perform or display a work publicly means (1) to perform or display it at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered; or (2) to transmit or otherwise communicate a performance or display of the work to a place specified by clause (1) or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times. {FN12: 17 U.S.C. 101} and: To transmit a performance or display is to communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent. {FN13: 17 U.S.C. 101} Clearly, the work can be transmitted to the public, or at least to members of the public one at a time, after the work has been placed in a publicly-accessible directory on a computer. And if the principle that a distribution takes place when all steps necessary for a distribution have been completed is also applied to the display of a work, then there is an argument that the person displayed the work when he put a copy of it in a place where anybody could look at it by accessing it. The problem with that argument is that what has been transmitted is the work itself, not an image of the work. The provisions were really intended to cover the display of a work of art to the public by showing an image of it on a telecast or similar transmission. And any transmission is likely the result of the actions of the user receiving the work, not the one who made the work available on the file-sharing system. One also has to be careful using a creative argument to try to find infringement of one of the six exclusive rights because there may be an equally-creative argument that there is not infringement found in the special exceptions in the copyright laws. In this case, he may not have infringed the display right because of an exception found in Section 110: Notwithstanding the provisions of section 106, the following are not infringements of copyright: . . . (5)(A) . . . communication of a transmission embodying a performance or display of a work by the public reception of the transmission on a single receiving apparatus of a kind commonly used in private homes, unless (i) a direct charge is made to see or hear the transmission; or (ii) the transmission thus received is further transmitted to the public. {FN14: 17 U.S.C. 110(5)(A)}

The personal computer used to received the digital work using the file-sharing system is certainly a single receiving apparatus of a kind commonly used in private homes. Many, if not most, file-sharing system users download the digital works to their home computers. And its not much more of a stretch to say that what he is doing is a communication of a transmission as it is that he is showing a copy of the work as required to infringe the display right. I.B.1.f. What Can Be Done For the file-sharing example, none of the six exclusive rights really fit the situation and most likely a contributory infringement argument would have to be made. Yet it seems that there should be a direct copyright infringement, since there is little difference in the effect to the copyright owner between distributing a work worldwide through a file-sharing system and distributing the same work by making and distributing physical copies. It would be best if Congress amended the copyright laws to directly address infringement by those placing copyrighted works on file-sharing systems. A possible approach for such an amendment is suggested by the WIPO Copyright Treatys new Right of Communication to the Public: . . . authors of literary and artistic works shall enjoy the exclusive right of authorizing any communication to the public of their works, by wire or wireless means, including the making available to the public of their works in such a way that members of the public may access these works from a place and at a time individually chosen by them. {FN15: WIPO Copyright Treaty, Art. 8} Congress could either add a seventh exclusive right to Section 106, or could enhance one of the existing exclusive rights such as public distribution. The latter may be preferable, since then any existing licenses permitting the distribution of a work would cover both physical and electronic distributions.
I.B.2. Intermediate Copies

There are reproductions of a digital work being made when that work is used on a computer or when it is transmitted through a network. Intermediate copies are made when the work is read from a disk into the computers memory so that it can be executed or be used as data by an executing program. Other intermediate copies are made in buffers as the work is being sent and received on a network, and in the memory of the routers that are used to pass the information along the network. The world of digital works encompasses countless intermediate copies as the works are being seen, heard, or used. This can be particularly troublesome for Internet service providers that operate servers and routers where copies are being made, since copyright infringement is generally a strict liability civil offense. The intent or knowledge of the infringer is considered only in determining whether an infringement is also a criminal violation (under Section 506, {FN16:17 U.S.C. 506} all criminal infringements must be willful) or in determining damages (under Section 504, {FN17: 17 U.S.C. 504} statutory damages are increased for willful infringement and reduced if the infringer was not aware and had no reason to believe that his or her acts constituted an infringement of copyright). While this may make sense for publishers or distributors of recordings or paper copies, where they can see what is passing through their control as it was being distributed, it is essentially impossible for a service provider to monitor all the bits that are being copied at its installation and to know whether a copy is infringing or was permitted by the copyright owner or by law.

I.B.2.a. A New Right to Control Access and Use? Since in most instances, intermediate copies need to be made to use a digital work, a strict reading of the reproduction right can turn into a right to control the access to, or use of, a digital work. United States copyright has never given the copyright owner the right to control the personal use an owner of a copyrighted work, such as requiring the payment of a fee for each time a book is read or a painting is viewed. Yet, that could be the result if you require permission of the copyright owner for every reproduction of a digital work. What, then, gives the person who lawfully has a digital work the right to make the intermediate copies necessary to use the work? Generally, there is an exhaustion doctrine in intellectual property law that says that once there has been an authorized sale without restriction, the patent or copyright owners further rights are exhausted with respect to the item sold, and that item can be used or resold by its purchaser without permission of the patent or copyright owner. For copyright, this doctrine is codified in as Section 109, the so-called first sale provision: Notwithstanding the provisions of section 106(3) [the distribution right], the owner of a particular copy or phonorecord lawfully made under this title, or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord. {FN18: 17 U.S.C. 109(a)} Unfortunately for permitting the making of intermediate digital copies, the language is tied to physical copies and affects only the distribution right. And none of the other statutory exceptions to the exclusive rights of a copyright owner are applicable, either, except for a limited one for computer programs in Section 117. {FN19: 17 U.S.C. 117} . I.B.2.b. Transitory Duration? Perhaps a solution would be to consider the intermediate copies created during the use of a digital work as of transitory duration. Then, according to Section 101, they would not be considered fixed and would not come under the reproduction right. A work is fixed in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. {FN20: 17 U.S.C. 101} This seems particularly reasonable for the copies made in data communications routers as a message is passed from network to network and for the memory copy made when a computer program is loaded from disk. But copyright owners are concerned that if you say that works stored in computer memory arent fixed, then people can download songs from a pirate music site and no copies have been made and therefore there is no infringement unless they are later written to a disk. (Of course, if the distribution right is extended to cover transmissions or making a work available to the public, then there would be a direct infringement by the pirate music site.) But the leading case addressing whether intermediate copies are of transitory duration found that they werent. In MAI v. Peak, {FN21: 991 F.2d 511, 26 USPQ2d 1458(9th Cir. 1993)} the Ninth Circuit ruled that the copying of a computer program, or other digital work, from a disk drive into the computers memory met the fixation requirement of the reproduction right. There was some question whether the computers memory, because its contents are lost when the computer is turned off, was sufficiently permanent to be considered fixed, but the Ninth Circuit found that

computer programs, when read into memory, are fixed for purposes of copyright. And because there was nothing particular to computer programs in their reasoning, it applies equally to all digital works. Although the transitory duration argument may have been a way to allow the intermediate copies created when digital works are accessed, the decision in MAI v. Peakmeans that some other approach must be found. I.B.2.c. Fair Use? It appears that we are left with that old standby that allows a court to find that something that appears to be an infringement should be allowed anyway to benefit society: fair use. But not every use that somebody would like to make is a fair use. The Supreme Court, in Campbell v. Acuff-Rose Music, {FN22: 510 U.S. 569, 29 USPQ2d 1961 (1994)}said: The enquiry here may be guided by the examples given in the preamble to Section 107, looking to whether the use is for criticism, or comment, or news reporting, and the like. The central purpose of this investigation is to see, in Justice Storys words, whether the new work merely supersedes the objects of the original creation, or instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message; it asks, in other words, whether and to what extent the new work is transformative. Although such transformative use is not absolutely necessary for a finding of fair use, the goal of copyright, to promote science and the arts, is generally furthered by the creation of transformative works. Such works thus lie at the heart of the fair use doctrines guarantee of breathing space within the confines of copyright, and the more transformative the new work, the less will be the significance of other factors, like commercialism, that may weigh against a finding of fair use. {FN23: 510 U.S. at 578-579, 29 USPQ2d at 1965} But the Supreme Court also found, in its five-to-four Betamax decision, {FN24: Sony v. Universal City Studios, 464 U.S. 417, 220 USPQ 665 (1984)} that recording a broadcast television program on a video cassette recorder (VCR) for playback at a later time (time-shifting) is a fair use because of its noncommercial nature and lack of real harm to the market of something that is essentially provided to viewers for free. Although the Court mentioned that the VCR could also be used for building a library of past television shows, it didnt rule on whether that went beyond simple time-shifting or was a fair use in its own right. Its not clear whether the idea that time-shifting is a fair use is based on the users simply viewing the broadcast show at some later time, commercials and all, or whether a timeshifting device that removes the commercials or otherwise alters the show as broadcast is still a fair use. And if the television show were available on demand from the copyright owner, would the argument finding time-shifting a fair use still hold, or would time-shifting merely be a way of superseding the copyright owners on-demand service? Fair use, as codified in Section 107, {FN25: 17 U.S.C. 107} requires us to consider four separate factors in determining whether a use is not an infringement. When we look at the four factors for intermediate copies, we get: 1. Purpose and character of the use: The use is generally not transformative in any way, being an exact copy. But for intermediate copies, the use is necessary for the expected use of the work.

Nature of the work: Many digital works, and in particular songs and movies, are primarily expressive rather than factual, so this factor likely goes against the user. 3. Amount of the work copied: Generally, the whole work or a substantial part of the work is being copied, so this goes against the user. 4. Effect on the market: There is little, and perhaps no, effect if the use is necessary for the personal use of something that the user already legally has, as is the case with intermediate copies. If more weight is given to the effect on the market and the purpose of the use, which is often what is done, then intermediate copies might be a fair use. But relying on fair use may cause other problems. The Copyright Office noted, in their report on first sale, {FN26: United States Copyright Office, Digital Millennium Copyright Act Section 104 Report, http://www.copyright.gov/reports/studies/dmca/dmca_study.html} that there is an unanticipated interaction between first sale and fair use. If I record a TV movie for time-shifting, the Betamax decision holds that such recording is a fair use. But now, Im the owner of a particular lawful copy, and under Section 109 {FN27: 17 U.S.C. 109} get to sell it. This is clearly not the result intended, but it shows the problem of relying on fair use to justify acceptable behavior, rather than having a specific exception. I.B.2.d. What Can Be Done Congress has already provided an example of what should be done to address intermediate copies. For computer programs, Section 117 provides special permissions: It is not an infringement for the owner of a copy of a computer program to make or authorize the making of another copy or adaptation of that computer program provided: (1) that such a new copy or adaptation is created as an essential step in the utilization of the computer program in conjunction with a machine and that it is used in no other manner, or (2) that such new copy or adaptation is for archival purposes only and that all archival copies are destroyed in the event that continued possession of the computer program should cease to be rightful. {FN28: 17 U.S.C. 117} There is some question about whether a person who gets a packaged computer program from a store is the owner of a copy (which is what one expects to be after buying a program) or just a licensee of the program (as the software vendor generally claims in a shrink-wrap license). However, Section 117 indicates Congresss recognition that intermediate copies need to be made to use a computer program, and that such reproductions are not infringing copies. But Section 117 is limited to computer programs, which are defined in Section 101 as a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result. {FN29: 17 U.S.C. 101} While an argument can be made that any digital information (data, music, document) can be considered instructions that bring about a certain result in a computer, such as showing a picture or playing a song, such an expansive reading would read out any limitation in the definition and so isnt reasonable. It would be far better for Congress to provide a specific exception to the copyright owners exclusive rights for uses of digital works that virtually everybody believe are legitimate (except for those copyright owners trying to bootstrap a level of control because the access and use of digital works require the making of intermediate copies). In addition to the special treatment for

2.

intermediate copies of computer programs in Section 117, Congress has provided special treatment for noncommercial copying of musical recordings{FN30: 17 U.S.C. 1008} as well as a variety of other uses of copyrighted works. {FN31: See 17 U.S.C. 108-122} Having clear rules for digital works would help conscientious users avoid copyright infringement, allow teaching people what they should or shouldnt do, allow fair use to return to its original purpose of protecting productive and transformational uses, and avoid unintended consequences caused by the interaction of fair use determinations with other provisions of the copyright laws.

Chapter 3: Copyright of Digital Information

II. Protecting Digital Information II.A. The Audio Home Recording Act
Congress first addressed copyright and digital information in the 1992 Audio Home Recording Act (AHRA). {FN32: 17 U.S.C. 1001 et seq.} The AHRA was the result of years of discussions and hearings on how to address digital copies of sound recordings, which could provide the perfect copies feared by the record companies. As with most copyright legislation, the result was a grand compromise, with Congress trying to address the legitimate concerns of every party in the negotiations. What the copyright owners got was a mandatory copy management system that had to be included on every digital audio recording device or digital audio interface device.{FN33: 17 U.S.C. 1002} The Serial Copy Management System allows the making of unlimited copies from an original digital recording but prevents any copies being made from those copies. To compensate copyright owners and featured performers, a royalty is required for every digital audio recording device and digital audio recording medium sold.{FN34: 17 U.S.C. 1003} The computer industry got left alone. The definition of a digital audio recording device requires that it be designed and marketed for the primary purpose of . . . making a digital audio copied recording for private use, {FN35: 17 U.S.C. 1001(3)} and digital audio recording medium excluded any medium primarily marketed or used for the purpose of making copies of nonmusical literary works, including computer programs and databases. {FN36: 17 U.S.C. 1001(4)} Consumers got a statement regarding their rights to make copies of musical recordings, although the user provision of Section 1008 certainly isnt a model of clarity: No action may be brought under this title alleging infringement of copyright based on the manufacture, importation, or distribution of a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium, or based on the noncommercial use by a consumer of such a device or medium for making digital musical recordings or analog musical recordings. {FN37: 17 U.S.C. 1008} Because of the exceptions given the computer industry, Section 1008 does not apply to most copying on a personal computer (PC) of a music compact disc (CD). The user provision applies only to copying using such a device or medium, which limits the provision to an act where a digital audio recording device, a digital audio recording medium, an analog recording device, or an analog recording medium is employed. In the CD copying neither an analog recording device nor an analog recording medium is used.

Section 1001 gives some non-intuitive definitions, but it is clear that a digital audio recording device is not a PC, since a PC is not designed or marketed for the primary purpose of . . . making a digital audio copied recording for private use. {FN38: See Recording Industry Association of America v. Diamond Multimedia, 180 F.3d 1072, 51 USPQ2d 1115 (9th Cir. 1999)} The original CD is not a digital audio recording medium because it embodies a sound recording at the time it is first distributed by the importer or manufacturer. Neither is the output CD, if it is one of the normal ones you buy at a computer or office supply store because it is primarily marketed and most commonly used by consumers . . . for the purpose of making copies of nonmusical literary works, including computer programs or data bases. There are blank CD media sold for making digital audio recordings, where the required royalty has been paid, and their use would bring a user within the protection against an infringement suit if the copy that is made is for noncommercial use. The Serial Copy Management System is a part of every digital audio tape (DAT) drive, and also any CD writer that is not part of a computer system. But because neither of those devices achieved any consumer popularity, the Audio Home Recording Act didnt meet the expectations of the copyright owners, although it did clarify that analog copies of musical recordings made for a noncommercial use were not copyright infringements.

II.B. The White Paper

While the Audio Home Recording Act addressed physical devices and media for making copies of musical works, the advent of the Internet required a new look at the copyright laws to determine whether changes were necessary. Early in his administration, President Clinton formed the Information Infrastructure Task Force to determine what a National Information Infrastructure should look like. (In reality, the privatization of the National Science Foundations NSFnet to become the Internet had a far greater influence than any government direction.) One of the components of the Task Force was the Working Group on Intellectual Property, chaired by Bruce Lehman, the Assistant Secretary of Commerce and Commissioner of Patents and Trademarks and a key adviser to President Clinton on intellectual property. Lehman had worked on the Copyright Act of 1976 as the principal legal adviser to the House Committee on the Judiciary. In September 1995, the Working Group released a white paper, Intellectual Property and the National Information Infrastructure, {FN39: Intellectual Property and the National Information Infrastructure (NII White Paper), http://www.uspto.gov/web/offices/com/doc/ipnii/ (Sept. 1995)} that expressed concerned that the current copyright law did not adequately protect valuable digital works from infringement over computer networks and that more works would become available in digital form if proper protection existed. They suggested amendments to the copyright law to accommodate digital works. In particular, they proposed amending the distribution right, Section 106(3), {FN40: 17 U.S.C. 106(3)} to read: to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, by rental, lease, or lending, or by transmission. {FN41: NII White Paper, Appendix 2 at 1} and to add to the definition of transmission in Section 101: {FN42: 17 U.S.C. 101} To transmit a reproduction is to distribute it by any device or process whereby a copy or phonorecord of the work is fixed beyond the place from which it was sent. {FN43: NII White Paper, Appendix 2 at 1}

There was a fundamental difficulty with this proposal. While the act that causes the transmission clearly occurs at the sending machine, whether it is a transmission or not depends on what occurs at the receiving machine. If the bits are written to a disk or otherwise fixed in some medium for more than a transitory duration, then, according to the proposed amendment, there is a transmission and the proposed distribution right is infringed. However, if the bits are not fixed at the receiving end but are instead converted to an audio or video signal without storing them for more than a transitory duration, as would be the case with streaming audio or video, then there is no fixation, no transmission, and no infringement of the proposed distribution right. And for digital information that can be either stored or immediately reproduced without storage, that means that whether a particular sending is an infringement depends not on what the sender does but on what the receiver does something that is generally beyond the control of the sender. Although the White Papers proposed amendments were introduced as a bill in Congress, they were never passed into law. Internet service providers, which routinely transmitted information from one machine to another for their users, were concerned that they would end up being the defendant of last resort for any infringing transmissions made by their users, since copyright infringement is a strict liability offense that does not require willfulness, or even knowledge, of the infringement. Internet backbone carriers were particularly concerned, since they transmit packets from one router to another but do not have the ability to determine whether the packets contain infringing information. Early in the negotiations for an amendment to the copyright laws to address digital material, the service providers made it clear that they would fight any change that could make them liable for copyright infringement that is without their direct knowledge. The White Papers proposal also did not address the problem of the intermediate copies made by a user as a necessary part of using a work.

II.C. Digital Sound Recordings

In 1995, at the same time the White Paper was being developed, Congress took a small step toward addressing digital copyrights when it extended the public performance right to digital audio transmissions of sound recordings by adding a new exclusive right to Section 106. {FN44: 17 U.S.C. 106} Prior to that time, the public performance right did not apply to sound recordings, although it did apply to any underlying musical composition or lyrics.
II.C.1. The New Exclusive Right

It is important to note that the new right pertains only to sound recordings, which are defined in Section 101 as: works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in which they are embodied. {FN45: 17 U.S.C. 101} So even if there is music in a movie on a DVD, that DVD is not a sound recording. And the new right pertains only to public performances by means of digital transmissions. No other type of public performance of a sound recording, such as playing a record to crowd, is covered, although it could be an infringement of the copyright in the musical work being performed. Congress concern was about services that would transmit sound recordings to a user on demand.

Even more recently, a small number of services have begun to make digital transmissions of recordings to subscribers. Trends within the music industry, as well as the telecommunications and information services industries, suggest that digital transmission of sound recordings is likely to become a very important outlet for the performance of recorded music in the near future. Some digital transmission services, such as so-called celestial jukebox, pay-per-listen or audio-ondemand services, will be interactive services that enable a member of the public to receive, on request, a digital transmission of the particular recording that person wants to hear. {FN46: Sen. Rep. No. 104-128 at 14} This certainly hasnt happened as Congress expected. In place of subscription services providing a rich inventory of recorded music to consumers at their request, file-sharing systems like Napster, where individuals converted analog or digital recordings to the standard MP3 format and made them available to anyone in the world, became immensely popular. With such systems, the work is being reproduced on users machines through an electronic distribution but is not being publicly performed, so the new digital sound recording public performance right does not address this problem. Congress expressed further concerns: However, in the absence of appropriate copyright protection in the digital environment, the creation of new sound recordings and musical works could be discouraged, ultimately denying the public some of the potential benefits of the new digital transmission technologies. The Committee believes that current copyright law is inadequate to address all of the issues raised by these new technologies dealing with the digital transmission of sound recordings and musical works and, thus, to protect the livelihoods of the recording artists, songwriters, record companies, music publishers and others who depend upon revenues derived from traditional record sales. {FN47: Sen. Rep. No. 104-128 at 14} Although many had wanted Congress to adopt a general transmission right, such as proposed in the White Paper, Congress was much more cautious. Notwithstanding the views of the Copyright Office and the Patent and Trademark Office that it is appropriate to create a comprehensive performance right for sound recordings, the Committee has sought to address the concerns of record producers and performers regarding the effects that new digital technology and distribution systems might have on their core business without upsetting the longstanding business and contractual relationships among record producers and performers, music composers and publishers and broadcasters that have served all of these industries well for decades. Accordingly, the Committee has chosen to create a carefully crafted and narrow performance right, applicable only to certain digital transmissions of sound recordings. {FN48: Sen. Rep. No. 104-128 at 13}
II.C.2. Exceptions

At the same time that it added the sixth exclusive right of public performance by digital transmission of sound recordings, Congress amended Section 114 {FN49: See Pub. L. 104-39, 109 Stat. 336} in a way that excluded virtually every digital transmission of a sound recording at that time. These exclusions were tightened, restructured, and changed by an amendment included in the Digital Millennium Copyright Act. {FN50: Pub. L. 105-304, 112 Stat. 2860}

As presently constituted, Section 114 {FN51: 17 U.S.C. 114} differentiates public performances by digital transmission primarily by whether they are subscription and whether they are interactive. A subscription service is one in which the users pay for the privilege of receiving the performance, as would be the case for digital cable television or satellite. In an interactive service the user requests that a particular sound record be performed, although Congress specifically excepted the playing of requests made by individuals if they are performed for the public at large, such as requests made to a radio station to play a favorite song. In the language of the statute, an interactive service is one that enables a member of the public to receive a transmission of a program specially created for the recipient. {FN52: 17 U.S.C. 114(j)(7)} In Section 114(d)(1), a number of transmissions are exempted from the exclusive public performance by digital transmission right, including nonsubscription broadcast transmissions and broadcast retransmissions within 150 miles of the broadcast transmitter. In Section 114(d)(2), a statutory licensing scheme is established for non-interactive services that are not otherwise exempt. That means that the owner of a copyright in a sound recording cannot stop the public performance of that sound recording by the non-interactive service, but a royalty must be paid through a system administered by the Copyright Office. Finally, Section 114(d)(3) sets requirements for any licenses for interactive services, including limitations on exclusive licenses. As with most recent additions to the copyright laws, there are particular tests that must be met for each of these rules to apply, set forth in the same mind-numbing detail that one expects in the tax code.
II.C.3. Webcasting

Webcasting is the delivery of programming via the Internet that is similar to what would be found on a broadcast radio station. In most instances, the material being webcast consists of recordings of musical works, so the public performance involves the copyrights in both the sound recording of the performance and the musical work being performed. Although it appears to listeners as if they are tuning into a broadcast, for technical reasons having to do with how the Internet actually transfers digital information, there is generally a separate digital pathway from the webcaster to each listener. The Librarian of Congress, under his authority under Sections 112 {FN53: 17 U.S.C. 112} and 114, {FN54: 17 U.S.C. 114} has recently set the royalties for a statutory license for webcasting and other uses. {FN55: 37 C.F.R. 261} In particular, a webcaster must pay 7/100 of a cent for each song sent to each listener, so if 10 songs are sent to 100 listeners, a royalty of 70 cents is due. In addition, there is a minimum yearly royalty of $500. {FN56: See http://www.copyright.gov/carp/webcasting_rates.html} While this is a reduction by half from the royalty that was proposed by a Copyright Arbitration Royalty Panel (CARP), many webcasters claim that they will not be able to continue operation if they have to pay the royalty, because they dont have sufficient income. Not surprisingly, many content providers feel that the royalty is too low. Radio stations were not overly concerned when the Digital Performance Rights in Sound Recordings Act {FN57: Pub. L. 104-39, 109 Stat. 336} was being drafted because they were using analog transmissions (AM or FM) and felt that if they did go digital, they would be exempted under 114(d)(1)(A) {FN58: 17 U.S.C. 114(d)(1)(A)} as a nonsubscription broadcast transmission. However, much to their chagrin, the Copyright Office determined {FN59: 65 Fed. Reg. 77292 (Dec. 11, 2000)} that the simultaneous streaming of a radio stations programming over the Internet

was not a broadcast transmission and was subject to royalty payments to the performers and copyright owners of the sound recording, something the radio stations never had to pay before. The authority of the Copyright Office to make this determination was confirmed in Bonneville International v. Peters. {FN60: 153 F.Supp.2d 763, 59 USPQ2d 1622 (E.D. Penn. 2001)}

Chapter 3: Copyright of Digital Information

III. What Not to Protect
As important as what is protected by copyright is what isnt protected. Since the use of a digital work generally involves the making of many intermediate copies, such as from disk to computer memory or from router to router, an all-encompassing reproduction right could effectively give the copyright owner the right to control all uses of the digital work. It could also make a network service provider an infringer when there is no practical way for that service provider to know of the infringement or control it.

III.A. The Court Decisions

In a number of cases, copyright owners sued not only people who were clear copyright infringers, through making unauthorized copies, but also the operators of the server computers or network communications used by those infringers. These cases led to an understanding of when a service provider might be liable for a copyright infringement caused by a user, later codified by Congress in the Digital Millennium Copyright Act.
III.A.1. Netcom

Probably the most notable of these cases is Religious Technology Center v. Netcom {FN61: 907 F.Supp. 1361, 37 USPQ2d 1545 (N.D. Cal. 1995)} This decision by the United Stated District Court for the Northern District of California ruled on a request by the plaintiffs, publishing arms of the Scientology religion, for a preliminary injunction against Netcom, a major Internet service provider, and Tom Klemesrud, who ran a small bulletin board service connected to the Internet through Netcom. A former minister and now vocal critic of Scientology, Dennis Erlich, had posted copies of works used by Scientologists in their religion to the Usenet discussion group alt.religion.scientology using Klemesruds bulletin board service. These were then relayed to the world through Netcoms system. Scientology, through its Religious Technology Center and Bridge Publication, claimed that it held copyrights to the material Erlich posted and that its copyrights were being infringed. When Erlich would not remove his postings, Scientology wrote to Netcom, who had relayed Erlichs postings to the Internet. It refused to act on Scientologys request, claiming that would result in disconnecting all of Klemesruds users, not just Erlich. (Klemesrud clearly could have blocked Erlichs postings by terminating his account. Netcoms argument that it would have to disconnect all of Klemesruds users is a stretch, since it could have developed a filter program that blocked the retransmission of any posting by Erlich. But either of those actions would have blocked all of his postings, not just those infringing Scientologys copyrights.) Scientology then went to court and received a preliminary injunction against Erlich. The question before the court was whether Netcom should be enjoined because its actions might also infringe Scientologys copyrights. Netcom countered by asking for summary judgment (in which

the judge decides the case on the basis of the law because there are no material facts in dispute) that it was not liable for copyright infringement. The district court denied both the request for the preliminary injunction and the motions for summary judgment. But in doing so, it set forth a framework for determining whether a service provider has infringed a copyright through the actions of its users. The court noted that the roles of Erlich, who has posted the material, and Netcom, who had clearly made copies of the material as it was being relayed to the Internet, were clearly different. Netcom, unlike some large online service providers, did not create or control the content available to its subscribers. Instead, it provided a connection to content on other machines and stored and forwarded Usenet discussion group postings as required by the protocol for internet news. Netcom took no action regarding particular messages other than to forward them as specified by their originator. The court first addressed the question of direct infringement by Netcom. Citing the Ninth Circuit decision in MAI v. Peak, {FN62: 991 F.2d 511, 26 USPQ2d 1458 (9th Cir. 1993)} the court noted that the process created fixed copies, either on disk or in RAM, on Netcoms machines. The question was whether Netcom should be liable for any copyright infringement from those copies fixed on Netcoms computers. The court found that it was not. The court is not persuaded by plaintiffs argument that Netcom is directly liable for the copies that are made and stored on its computer. Where the infringing subscriber is clearly directly liable for the same act, it does not make sense to adopt a rule that could lead to the liability of countless parties whose role in the infringement is nothing more than setting up and operating a system that is necessary for the functioning of the Internet. Such a result is unnecessary as there is already a party directly liable for causing the copies to be made. Plaintiffs occasionally claim that they only seek to hold liable a party that refuses to delete infringing files after they have been warned. However, such liability cannot be based on a theory of direct infringement, where knowledge is irrelevant. The court does not find workable a theory of infringement that would hold the entire Internet liable for activities that cannot reasonably be deterred. Billions of bits of data flow through the Internet and are necessarily stored on servers throughout the network and it is thus practically impossible to screen out infringing bits from noninfringing bits. Because the court cannot see any meaningful distinction (without regard to knowledge) between what Netcom did and what every other Usenet server does, the court finds that Netcom cannot be held liable for direct infringement. {FN63: 907 F.Supp. at 1372-1373, 37 USPQ2d at 1553} In essence, the court found that the entire Usenet system was like a copy machine being controlled by the user making the posting. The operators of the individual servers are not liable because there are so many of them involved in the infringement, it is difficult for them to police their systems, and there is always a user who can be held liable. But while this is a good public policy decision (and one later made by Congress), it is not clear whether such reasoning is legally sound. But that did not end the discussion. The court had found that it was likely that Erlich infringed Scientologys copyrights. (This was at the preliminary injunction state, where the evidentiary requirement is a demonstration that the party asking for the injunction will likely prevail on its infringement claim.) And because Netcom had played a role in Erlichs infringement, while not a direct infringer, it might be a contributory or vicarious infringer.

Vicarious infringement results when there has been a direct infringement and the vicarious infringer is in a position to control the direct infringer and benefits financially from the infringement. The court found that there was evidence either way regarding whether Netcom could have controlled Erlichs infringement. On one hand, given the vast number of messages processed by Netcom, it would be clearly difficult for Netcom to selectively block Erlichs postings. However, Scientology showed that Netcom did have the right to block Erlich under its acceptable use policy had it wanted to, and that it had blocked users over a thousand times in the past. But had Netcom benefited financially from Erlichs infringement, the second prong of the test for vicarious infringement? Netcom certainly received fees for connecting its subscriber (Klemesrud) to the Internet, but those fees remained the same whether infringing or noninfringing material passed through Netcom. There was no evidence that Netcom benefited in any way because of the infringing material it received no new subscribers attributable to the material, nor was it able to charge a higher price because the material was there. That should not be surprising, since Netcom just forwarded the material to thousands of other machines on the Internet, where the subscriber of any service provider that carried alt.religion.scientology could read it without having to subscribe to Netcom or pay the company an access fee. While the court found that there was clearly not vicarious infringement by Netcom, it was less certain regarding contributory infringement. Contributory infringement results when somebody knows of the direct infringement of another and substantially participates in that infringement, such as inducing, causing, or materially contributing to the infringing conduct. The court found that there was a genuine issue whether Netcom had substantially participated in Erlichs infringement. Providing a service that allows for the automatic distribution of all Usenet postings, infringing and noninfringing, goes well beyond renting a premises to an infringer. It is more akin to the radio stations that were found liable for rebroadcasting an infringing broadcast. Netcom allows Erlichs infringing messages to remain on its system and be further distributed to other Usenet servers worldwide. It does not completely relinquish control over how its system is used, unlike a landlord. Thus, it is fair, assuming Netcom is able to take simple measures to prevent further damage to plaintiffs copyrighted works, to hold Netcom liable for contributory infringement where Netcom has knowledge of Erlichs infringing postings yet continues to aid in the accomplishment of Erlichs purpose of publicly distributing the postings. {FN64: 907 F.Supp. at 1375, 37 USPQ2d at 15551556 (citations omitted)} As for knowledge of the infringing activity, the court considered two different time spans before Netcom was notified of the infringement by Scientology and after it had received the notice. It was undisputed that Netcom did not know of the infringement before it received the notice from Scientology. Netcom argued that it did not have sufficient knowledge even after receiving the notice, since Scientology had not included copies of valid copyright registrations along with its notice. It also said that it could not determine whether Erlichs postings were a fair use of the works and therefore noninfringing. Since Netcom was given notice of an infringement claim before Erlich had completed his infringing activity, there may be a question of fact as to whether Netcom knew or should have known that such activities were infringing. Given the context of a dispute between a former minister and a church he is criticizing, Netcom may be able to show that its lack of knowledge that Erlich was infringing was reasonable. However, Netcom admits that it did not even look at the postings

once given notice and that had it looked at the copyright notice and statements regarding authorship, it would have triggered an investigation into whether there was infringement. These facts are sufficient to raise a question as to Netcoms knowledge once it received a letter from plaintiffs on December 29, 1994.{FN65: 907 F.Supp. at 1374-1375, 37 USPQ2d at 1555 (citations omitted)} The holding in the Netcom case didnt fully address the issues because it was deciding motions on preliminary matters summary judgment and a preliminary injunction. It never went to a full trial on the merits, and it was never reviewed by an appellate court. But it did make two important points. First, there is no direct infringement if a service provider cant reasonably determine whether such infringement is taking place on its systems. Second, once a service provider is made aware of the infringement, it may be a contributory or vicarious infringer if it does nothing to stop the infringement. One way to stop the infringement is to remove the material from the system until it can be determined whether it infringes. This is often referred to as a notice and takedown procedure.
III.A.2. When a Service Provider Will Be Liable

Sometimes the participation of the service provider does cross the line, and contributory infringement or vicarious infringement is appropriately found. In Sega v. Maphia,{FN66: 948 F.Supp. 923, 41 USPQ2d 1705 (N.D. Cal. 1996)} the defendant, Sherman, the operator of the Maphia bulletin board system, encouraged users to upload Sega games to the bulletin board and provided free downloads to people who had purchased a game copier from him. The court first addressed the issue of direct infringement, noting that copies of Segas games had been made by someone, and also considered contributory or vicarious infringement. After finding that there was direct copyright infringement by the bulletin board users, the court addressed the bulletin board operators knowledge of his users activities: The standard for the knowledge requirement is objective, and is satisfied where the defendant knows or has reason to know of the infringing activity. Here, it is undisputed that Sherman had knowledge that his users were copying the games. Sherman admits that users were allowed to upload and download Sega games from his MAPHIA BBS. Moreover, evidence of a screen printout of user uploading and downloading statistics from the MAPHIA BBS shows that Sherman tracked, or at least had the ability to track, user uploads and downloads. Thus, Sega has established that Sherman knew of the infringing conduct by MAPHIA BBS users. {FN67: 948 F.Supp. at 933, 41 USPQ2d at 1712-1713 (citations omitted)} Finally, the court considered the extent of Shermans participation in his users activities: The Ninth Circuit has recently stated that providing the site and facilities for known infringing activity is sufficient to establish contributory liability, at least in a swap meet context. In this case, Sherman provided the BBS as a central depository site for the unauthorized copies of games, and allowed subsequent distribution of the games by user downloads. He provided the facilities for copying the games by providing, monitoring, and operating the BBS software, hardware, and phone lines necessary for the users to upload and download games. However, even under an alternative and higher standard of substantial participation, Sherman is liable. Under this standard, Sherman is only liable if he knew of the users infringing actions, and yet substantially participated by inducing, causing or materially contributing to the users infringing conduct. In this

case, Sherman did more than provide the site and facilities for the known infringing conduct. He actively solicited users to upload unauthorized games, and provided a road map on his BBS for easy identification of Sega games available for downloading. Additionally, through the same MAPHIA BBS medium, he offered copiers for sale to facilitate playing the downloaded games. . . . Moreover, Shermans business, Parsec Trading, had a policy of providing limited free downloading of games and hereafter selling downloading privileges to customers who had purchased copiers. Thus, Shermans role in the copying, including providing facilities, direction, knowledge, encouragement, and seeking profit, amounts to a prima facie case of contributory copyright infringement. {FN68: 948 F.Supp. at 933, 41 USPQ2d at 1713 (citations omitted)} The court found that Sega had established a case of contributory copyright infringement, and furthermore that the defendants defense of fair use did not apply in this case. The court also found that the defendants infringement was willful and granted Sega an injunction against further infringement and awarded statutory damages.

Chapter 3: Copyright of Digital Information

III.B. Congress Codifies the Decisions
In 1998, Congress updated the copyright laws by passing the Digital Millennium Copyright Act (DMCA). {FN69: Pub. L. 105-304, 112 Stat. 2860} In the report that accompanied the Senate version of the bill, the Committee on the Judiciary stated the reasons why Congress needed to act: Due to the ease with which digital works can be copied and distributed worldwide virtually instantaneously, copyright owners will hesitate to make their works readily available on the Internet without reasonable assurance that they will be protected against massive piracy. Legislation implementing the treaties provides this protection and creates the legal platform for launching the global digital on-line marketplace for copyrighted works. It will facilitate making available quickly and conveniently via the Internet the movies, music, software, and literary works that are the fruit of American creative genius. It will also encourage the continued growth of the existing off-line global marketplace for copyrighted works in digital format by setting strong international copyright standards. At the same time, without clarification of their liability, service providers may hesitate to make the necessary investment in the expansion of the speed and capacity of the Internet. In the ordinary course of their operations service providers must engage in all kinds of acts that expose them to potential copyright infringement liability. For example, service providers must make innumerable electronic copies by simply transmitting information over the Internet. Certain electronic copies are made to speed up the delivery of information to users. Other electronic copies are made in order to host World Wide Web sites. Many service providers engage in directing users to sites in response to inquiries by users or they volunteer sites that users may find attractive. Some of these sites might contain infringing material. In short, by limiting the liability of service providers, the DMCA ensures that the efficiency of the Internet will continue to improve and that

the variety and quality of services on the Internet will continue to expand. {FN70: Sen. Rep. No. 105-190 at 8} Content providers had pushed for a bill to better protect their copyrights in the digital world, along the lines of the recommendations of the White Paper. But there were many substantial objections from users and service providers that the White Paper proposals tipped the balance too much in favor of the content providers, since the White Paper proposed strong measures protecting the technology that prevents copying of digital information while not providing exceptions for normal and necessary copying. When the bills implementing the White Paper recommendations went nowhere after they were introduced in Congress, the Clinton Administration and the content providers worked hard for the adoption of a new treaty extending the Berne Convention to address digital works. But because that treaty required changes to the copyright act before it could be ratified, particularly in the areas of rights management information (digital copyright notices) and technological protection measures, the ball was back in Congresss court. Because the general acceptance of the Netcom {FN71: 907 F.Supp. 1361, 37 USPQ2d 1545 (N.D. Cal. 1995)} decision made it clear that service providers should not be the deep pockets to compensate the copyright owners when one of their users infringed a copyright, the content providers were willing to discuss a compromise. That would eventually lead to the codification of a number of safe harbors and the ratification of the WIPO Copyright Treaty.
III.B.1. The Four Safe Harbors

In the DMCA, Congress provided a series of safe harbors for network service providers. The term safe harbor is a nautical metaphor, indicating a place where a ship will be safe from stormy weather. But as in the case of a ship, being outside a safe harbor does not mean that you are in danger. It just means that your safety is not assured. Each DMCA safe harbor substantially limits the liability for copyright infringement. Each is separate, and if you fall within any one, your liability is limited. And even if you dont meet the requirements of one of the safe harbors, that is not an indication that you are infringing a copyright. Other defenses, such as fair use, still remain available. The four safe harbors provided by Congress, in the following subsections of Section 512, {FN72: 17 U.S.C. 512} are: (a) Transitory digital network communications (b) System caching (c) Information residing on systems or networks at the direction of users (d) Information location tools Each of these safe harbors represent a particular aspect of the normal operation of the Internet that Congress wanted to protect and promote, albeit with some limitations. Each has a set of particular conditions, all of which must be met to enjoy the protection of that safe harbor. You dont get to pick and choose from the different safe harbors to create a new one. Each safe harbor addresses a different aspect of potential copyright liability, and meeting the conditions of any one is sufficient to receive protection for the acts included in that safe harbor, even if the same act would not meet the requirements of another safe harbor. Just because a service provider does not qualify for any of the safe harbors does not mean that it might not have a defense to a charge of copyright infringement. Subsection (l) makes it clear that the safe harbors are not intended to list all defenses, nor is conduct outside the safe harbors an indication that the service provider must be infringing.

The failure of a service providers conduct to qualify for limitation of liability under this section shall not bear adversely upon the consideration of a defense by the service provider that the service providers conduct is not infringing under this title or any other defense. {FN73: 17 U.S.C. 512(l)} Even though the DMCA became law in 1998, there have been very few court cases that interpret its language. Until there are more cases, the best guidance can be found in the congressional reports that accompanied its passage.
III.B.2. Benefits of Being in the Safe Harbor

Each of the safe harbors begins the same way: A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of [the particular act covered by the safe harbor]. The safe harbors dont say that an act by a service provider is not an infringement, like the many exceptions to the exclusive rights of a copyright owner that are detailed starting with Section 107 {FN74: 17 U.S.C. 107-122} in Chapter 1 of the Copyright Act. Instead, they go to the penalties against a service provider for any infringement. A service provider can still be found to have infringed a copyright, even within the safe harbor. Congress was concerned that it might be difficult to get an injunction against a service provider when that service provider was not an infringer. Congress felt that it was important for a court to be able to order a service provider to help in stopping an ongoing infringement. But the scope of such an injunction is limited by subsection (j). When a service provider is acting as a mere conduit carrying the communications of others, and meets all the conditions of Subsection (a), {FN75: 17 U.S.C. 512(a)} a court can grant injunctions only in one or both of the following forms: (i) An order restraining the service provider from providing access to a subscriber or account holder of the service providers system or network who is using the providers service to engage in infringing activity and is identified in the order, by terminating the accounts of the subscriber or account holder that are specified in the order. (ii) An order restraining the service provider from providing access, by taking reasonable steps specified in the order to block access, to a specific, identified, online location outside the United States. {FN76: 17 U.S.C. 512(j)(1)(B)} For all the other safe harbors, the following injunctive relief is available: (i) An order restraining the service provider from providing access to infringing material or activity residing at a particular online site on the providers system or network. (ii) An order restraining the service provider from providing access to a subscriber or account holder of the service providers system or network who is engaging in infringing activity and is identified in the order, by terminating the accounts of the subscriber or account holder that are specified in the order. (iii) Such other injunctive relief as the court may consider necessary to prevent or restrain infringement of copyrighted material specified in the order of the court at a particular online location, if such relief is the least burdensome to the service provider among the forms of relief comparably effective for that purpose.{FN77: 17 U.S.C. 512(j)(1)(A)}

Congress was concerned that injunctions not become burdensome for service providers, and it indicated a number of factors to be considered by a court when deciding whether to grant an injunction and in determining its scope: (A) whether such an injunction, either alone or in combination with other such injunctions issued against the same service provider under this subsection, would significantly burden either the provider or the operation of the providers system or network; (B) the magnitude of the harm likely to be suffered by the copyright owner in the digital network environment if steps are not taken to prevent or restrain the infringement; (C) whether implementation of such an injunction would be technically feasible and effective, and would not interfere with access to noninfringing material at other online locations; and (D) whether other less burdensome and comparably effective means of preventing or restraining access to the infringing material are available. {FN78: 17 U.S.C. 512(j)(2)} Finally, Congress made it clear that injunctions were not to be granted without proper notice to a service provider, so that the service provider can determine the true nature of any alleged infringement and contest the issuance of an injunction, except under very exceptional circumstances. Injunctive relief under this subsection shall be available only after notice to the service provider and an opportunity for the service provider to appear are provided, except for orders ensuring the preservation of evidence or other orders having no material adverse effect on the operation of the service providers communications network.

Chapter 3: Copyright of Digital Information

III.B.3. Notice-and-Takedown Procedures

III.B.3.a. Notice To balance the safe harbor protections given service providers, Congress developed noticeand-takedown procedures, detailed in Subsections 512(c)(3), {FN79: 17 U.S.C. 512(c)(3)} 512(f), {FN80: 17 U.S.C. 512(f)} and 512(g). {FN81: 17 U.S.C. 512(g)} These procedures provide an alternative to a copyright owner going to court to get a temporary order requiring a service provider to remove allegedly-infringing material from that service providers system. When an infringing digital work is available on the Internet, time is of the essence in blocking public access to it. If it is not blocked quickly, additional copies can be made at Internet sites all over the world. Even an expedited request for a temporary order blocking the work may take far too long. One thing discussed during the formulation of Section 512 was the idea of a specialized tribunal cyber magistrates that could quickly determine if material on the Internet was infringing and order its removal. While that could be done by having administrative law judges in the Copyright Office, since the Copyright Office is under the Library of Congress (which is part of the legislative branch), it was felt that it would be too much of a distortion of the Constitutions

separation of powers to have a judicial function performed by an administrative agency within the legislature. Instead, Congress instituted a voluntary notice-and-takedown system (perhaps less than voluntary, because a service provider has to participate in it in order to take advantage of all the safe harbors except for mere conduit) so that allegedly-infringing material is removed quickly, and then any infringement can be adjudicated in a copyright infringement suit. The notice-and-takedown system starts with a service provider designating an agent to receive notices. The limitations on liability established in this subsection apply to a service provider only if the service provider has designated an agent to receive notifications of claimed infringement described in paragraph (3), by making available through its service, including on its Web site in a location accessible to the public, and by providing to the Copyright Office, substantially the following information: (A) the name, address, phone number, and electronic mail address of the agent. (B) other contact information which the Register of Copyrights may deem appropriate. The Register of Copyrights shall maintain a current directory of agents available to the public for inspection, including through the Internet, in both electronic and hard copy formats, and may require payment of a fee by service providers to cover the costs of maintaining the directory. {FN82: 17 U.S.C. 512(c)(2)} This is done by filing a simple form with the Copyright Office. Once that is done, copyright owners who believe that their works are available on a service providers system can send a notice to that service provider at the address available in an online database on the Copyright Offices Web site. Not just any allegation of infringement is a proper notice. Congress spelled out particular information that the notice must contain. To be effective under this subsection, a notification of claimed infringement must be a written communication provided to the designated agent of a service provider that includes substantially the following: (i) A physical or electronic signature of a person authorized to act on behalf of the owner of an exclusive right that is allegedly infringed. (ii) Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site. (iii) Identification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material. (iv) Information reasonably sufficient to permit the service provider to contact the complaining party, such as an address, telephone number, and, if available, an electronic mail address at which the complaining party may be contacted. (v) A statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.

(vi) A statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed. {FN83: 17 U.S.C. 512(c)(3)} It is important that the copyright owner clearly identify the copyrighted work that is alleged to be infringing, so that the service providers subscriber can determine whether it is infringing or not, as required in clause (ii). It is equally important that the copyright owner particularly point out where the service provider can find the alleged infringing material. General allegations of infringement are not sufficient, nor does the service provider have to hunt for the material if it has not been properly identified. Congress specified that the notice has to substantially comply with the notice requirements above. Minor errors or omissions do not make the notice defective. The important question is whether the notice is sufficient so that the service provider can locate the information to be taken down without undue effort and without taking down substantially more than is alleged to infringe. The Fourth Circuit, in ALS Scan v. RemarQ Communities, {FN84: 239 F.3d 619, 57 USPQ2d 1996 (4th Cir. 2001)} considered the adequacy of a notice that simply indicated that two newsgroups consisting of many different articles infringed ALS Scans copyrights. In this case, ALS Scan provided RemarQ with information that (1) identified two sites created for the sole purpose of publishing ALS Scans copyrighted works, (2) asserted that virtually all the images at the two sites were its copyrighted material, and (3) referred RemarQ to two web addresses where RemarQ could find pictures of ALS Scans models and obtain ALS Scans copyright information. In addition, it noted that material at the site could be identified as ALS Scans material because the material included ALS Scans name and/or copyright symbol next to it. We believe that with this information, ALS Scan substantially complied with the notification requirement of providing a representative list of infringing material as well as information reasonably sufficient to enable RemarQ to locate the infringing material. {FN85: 239 F.3d at 625, 57 USPQ2d at 2002} The notice provided by ALS Scan is most likely at the outer limits of meeting the substantial notice requirements, meeting them only because of the particular circumstances of the alleged infringement. The allegedly-infringing material was in two newsgroups alt.als and alt.binaries.pictures.erotica.als whose names themselves indicate that they were related to ALS Scans works. Had a copyright owner made an allegation of infringing material in a more general newsgroup say, misc.int-property the substantial identification of the allegedly-infringing works would have to specify the particular postings in the newsgroup. Also, because ALS Scan indicated that the allegedly-infringing images contained its name and copyright notice and furnished the service provider with a way to confirm that an image was one of ALS Scans, the Fourth Circuit felt that the spirit of the requirement of clause (ii) to identify a particular work or give a list of representative works was substantially met. That would not be the case, for example, if the allegedly-infringing works, such as MP3 files on a music-sharing system, had not contained a copyright notice. Clause (v) requires the person giving notice to have a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law and to state that in the notice. Included within not authorized by . . . the law includes uses that are permitted by the various sections of the Copyright Act, including fair use.

Finally, clause (vi) requires that a statement must be included that the information in the notification is accurate and that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed. The second part of the statement must be made under penalty of perjury. {FN86: See 18 U.S.C. 1008} In addition, Section 512(f) establishes a civil liability when there is any misrepresentation in a notice. Any person who knowingly materially misrepresents under this section (1) that material or activity is infringing, or (2) that material or activity was removed or disabled by mistake or misidentification, shall be liable for any damages, including costs and attorneys fees, incurred by the alleged infringer, by any copyright owner or copyright owners authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it. {FN87: 17 U.S.C. 512(f)} The subscriber and the service provider can both sue the content owner making the notice that misrepresents that the material was infringing, and recover not only their damages but also all costs of their suit including their attorneys fees. Congress made it clear why this provision was included in Section 512: This subsection is intended to deter knowingly false allegations to service providers in recognition that such misrepresentations are detrimental to rights holders, service providers, and Internet users. {FN88: Sen. Rep. No. 105-190 at 49} III.B.3.b. Takedown Once a service provider wanting to avail itself of the safe harbors of 512(b) (system caching), 512(c) (information residing on systems or networks at the direction of users), or 512(d) (information location tools) knows that its system has infringing material, that service provider must expeditiously remove or block access to the allegedly-infringing material. That knowledge can come from a proper notice from the copyright owner, or when the service provider is aware of facts or circumstances from which infringing activity is apparent. It is not necessary for a service provider to police its users, or guess that something may be an infringement. Sometimes, a notice from a copyright owner falls short of the requirements for a proper notice. That notice does not give the service provider either actual knowledge of the infringement or awareness of facts or circumstances that suggest infringement. A notification from a copyright owner or from a person authorized to act on behalf of the copyright owner that fails to comply substantially with the provisions of subparagraph (A) shall not be considered under paragraph (1)(A) in determining whether a service provider has actual knowledge or is aware of facts or circumstances from which infringing activity is apparent. {FN89: 17 U.S.C. 512(c)(3)(B)(i)} If that were not the rule, then it could be argued that any notification, no matter how insubstantial, would provide knowledge to the service provider of the alleged infringement and require takedown to remain in the safe harbor, thereby gutting the notice requirements. However, a service provider cannot just ignore a faulty notice.

In a case in which the notification that is provided to the service providers designated agent fails to comply substantially with all the provisions of subparagraph (A) but substantially complies with clauses (ii), (iii), and (iv) of subparagraph (A), clause (i) of this subparagraph applies only if the service provider promptly attempts to contact the person making the notification or takes other reasonable steps to assist in the receipt of notification that substantially complies with all the provisions of subparagraph (A). {FN90: 17 U.S.C. 512(c)(3)(B)(ii)} III.B.3.c. Put-back In general, a service provider is not liable to its subscribers because of the removal or accessblocking when it is done in good faith because it has received a proper notice or knows on its own that the material is infringing. A service provider shall not be liable to any person for any claim based on the service providers good faith disabling of access to, or removal of, material or activity claimed to be infringing or based on facts or circumstances from which infringing activity is apparent, regardless of whether the material or activity is ultimately determined to be infringing. {FN91: 17 U.S.C. 512(g)(1)} Note that the liability exclusion covers only the disability of access to, or removal of, material or activity claimed to be infringing. It does not sanction a wholesale removal of a subscribers material, particularly material that does not infringe, unless that is necessary to disable access to, or remove, the allegedly-infringing material. For a service provider to benefit from that provision, it is necessary that it takes reasonable steps promptly to notify the subscriber that it has removed or disabled access to the material and respond to a counter notification from the subscriber whose material was taken down by sending the copyright owner who originally filed the notice a copy of the counter notification, informing him that the service provider will replace the removed material or cease disabling access to it in 10 business days. Then the service provider replaces the removed material and ceases disabling access to it not less than 10, nor more than 14, business days following receipt of the counter notice, unless its designated agent first receives notice from the person who submitted the notification under subsection (c)(1)(C) that such person has filed an action seeking a court order to restrain the subscriber from engaging in infringing activity relating to the material on the service providers system or network. {FN92: 17 U.S.C. 512(g)(2)(C)} In other words, the service provider must notify the subscriber of any takedown, and if the subscriber contests the takedown, must restore the material within 14 business days. That provides the copyright owner time to file an infringement suit and get a temporary injunction ordering the continued removal of, or blockage of access to, the alleged infringing material. The put back procedures were added as an amendment to this title in order to address the concerns of several members of the Committee that other provisions of this title established strong incentives for service providers to take down material, but insufficient protections for third parties whose material would be taken down. {FN93: Sen. Rep. No. 105-190 at 50}

While the service provider has to make a reasonable effort to notify the user of any material taken down, extraordinary effort is not required. The Committee intends that reasonable steps include, for example, sending an e-mail notice to an e-mail address associated with a posting, or if only the subscribers name is identified in the posting, sending an e-mail to an e-mail address that the subscriber submitted with its subscription. The Committee does not intend that this subsection impose any obligation on service providers to search beyond the four corners of a subscribers posting or their own records for that subscriber in order to obtain contact information. Nor does the Committee intend to create any right on the part of subscribers who submit falsified information in their postings or subscriptions to complain if a service provider relies upon the information submitted by the subscriber. {FN94: Sen. Rep. No. 105-190 at 50} Similar to the specific requirements for a copyright owners notice, there are specific requirements for the counter notification: To be effective under this subsection, a counter notification must be a written communication provided to the service providers designated agent that includes substantially the following: (A) A physical or electronic signature of the subscriber. (B) Identification of the material that has been removed or to which access has been disabled and the location at which the material appeared before it was removed or access to it was disabled. (C) A statement under penalty of perjury that the subscriber has a good faith belief that the material was removed or disabled as a result of mistake or misidentification of the material to be removed or disabled. (D) The subscribers name, address, and telephone number, and a statement that the subscriber consents to the jurisdiction of Federal District Court for the judicial district in which the address is located, or if the subscribers address is outside of the United States, for any judicial district in which the service provider may be found, and that the subscriber will accept service of process from the person who provided notification under subsection (c)(1)(C) or an agent of such person. {FN95: 17 U.S.C. 512(g)(3)} Again, Section 512(f) establishes a civil liability when there is any misrepresentation in a notice: Any person who knowingly materially misrepresents under this section (1) that material or activity is infringing, or (2) that material or activity was removed or disabled by mistake or misidentification, shall be liable for any damages, including costs and attorneys fees, incurred by the alleged infringer, by any copyright owner or copyright owners authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it. {FN96: 17 U.S.C. 512(f)}

Chapter 3: Copyright of Digital Information

III.B.4. Mere Conduits for Others Communications

Subsection (a), the mere conduit provision, covers copies that must necessarily be made during digital communications, and covers only intermediate carriers of the communications, not the originators or recipients of the communications. They must not select, alter, or save the material in the communications. They are simply serving as conduits for carrying the communications of others. Congress provided a restricted definition for mere conduit service providers: an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the users choosing, without modification to the content of the material as sent or received. {FN97: 17 U.S.C. 512(k)(1)(A)} In contrast, service providers for all the other safe harbor provisions include not only the mere conduit service providers, but also providers of of online services or network access, or the operator of facilities therefore. {FN98: 17 U.S.C. 512(k)(1)(B)} As the Senate Judiciary Committee explained, this safe harbor applies to service providers transmitting, routing, or providing connections for material, and some forms of intermediate and transient storage of material in the course of performing these functions. For example, in the course of moving packets of information across digital online networks, many intermediate and transient copies of the information may be made in routers and servers along the way. Such copies are created as an automatic consequence of the transmission process. In this context, intermediate and transient refers to such a copy made and/or stored in the course of a transmission, not a copy made or stored at the points where the transmission is initiated or received. {FN99: Sen. Rep. No. 105-190 at 41} This safe harbor applies when a service provider is transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections and when five specific requirements that describe the nature of a mere conduit are met. These requirements make it clear that the service provider is simply carrying material for another and is not exercising any control over the material other than trying to get it to its final destination. (1) the transmission of the material was initiated by or at the direction of a person other than the service provider; (2) the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider; (3) the service provider does not select the recipients of the material except as an automatic response to the request of another person; (4) no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, or provision of connections; and (5) the material is transmitted through the system or network without modification of its content. {FN100: 17 U.S.C. 512(a)}

The Senate Judiciary Committee elaborated on these provisions: The Committee intends the term selection of the material in subsection (a)(2) to reflect an editorial function of determining what material to send, or the specific sources of material to place online (e.g., a radio station), rather than an automatic technical process of responding to a command or request, such as one from a user, an Internet location tool, or another network. The term automatic response to the request of another is intended to encompass a service providers actions in responding to requests by a user or other networks, such as requests to forward e-mail traffic or to route messages to a mailing list agent (such as a Listserv) or other discussion group. The Committee intends subsection (a)(4) to cover copies made of material while it is en route to its destination, such as copies made on a router or mail server, storage of a web page in the course of transmission to a specific user, store and forward functions, and other transient copies that occur en route. The term ordinarily accessible is intended to encompass stored material that is routinely accessible to third parties. For example, the fact that an illegal intruder might be able to obtain access to the material would not make it ordinarily accessible to third parties. Neither, for example, would occasional access in the course of maintenance by service provider personnel, nor access by law enforcement officials pursuant to subpoena make the material ordinarily accessible. However, the term does not include copies made by a service provider for the purpose of making the material available to other users. Such copying is addressed in subsection (b). {FN101: Sen. Rep. No. 105-190 at 42} Unlike the other safe harbors, this subsection contains no provision for giving notice to the communications provider that leads to the removal of allegedly-infringing material, recognizing the requirement of the safe harbor that any copies not be available for a longer period than is reasonably necessary for the transmission, routing, or provision of connections. In addition, any injunction directed at a mere conduit service provider is limited by subsection (j) to one or both of the following forms: (i) An order restraining the service provider from providing access to a subscriber or account holder of the service providers system or network who is using the providers service to engage in infringing activity and is identified in the order, by terminating the accounts of the subscriber or account holder that are specified in the order. (ii) An order restraining the service provider from providing access, by taking reasonable steps specified in the order to block access, to a specific, identified, online location outside the United States. {FN102: 17 U.S.C. 512(j)(1)(B)} Again, this represents Congresss understanding that the infringing material passing along the conduit remains only for a limited time and is not generally accessible by others, so the only reasonable relief is the blocking of future transmissions by the actual infringer.

Chapter 3: Copyright of Digital Information

III.B.5. Service Provider Caching

Subsection (b), service provider caching, exempts service providers making local copies of Web pages so that the pages dont have to be fetched repeatedly over the Internet. Instead the

cached copy is sent to their users. Service providers must honor any cache control requests provided by the communications protocol being used so that pages are not cached longer than desired by their creators, must not prevent the returning of information to the page creator about page usage, must honor password or other access controls, and must remove allegedly-infringing material if the material has been removed from its originating site. It is important to note that this safe harbor applies only to the caching done by a service provider and not to that done by an end user. Any cached Web pages or pictures on a users machine would be addressed by fair use, if at all. Section 512 provides safe harbors only to service providers, and then only when the alleged infringing material is not supplied or used by the service provider or its employees. The safe harbor applies when a service provider is providing intermediate and temporary storage of material on a system or network controlled or operated by or for the service provider and: (A) the material is made available online by a person other than the service provider; (B) the material is transmitted from the person described in subparagraph (A) through the system or network to a person other than the person described in subparagraph (A) at the direction of that other person; and (C) the storage is carried out through an automatic technical process for the purpose of making the material available to users of the system or network who, after the material is transmitted as described in subparagraph (B), request access to the material from the person described in subparagraph (A), if the conditions set forth in paragraph (2) are met. {FN103: 17 U.S.C. 512(b)(1)} Again, that is a straightforward description of how a cache operated by a service provider functions. But the caching safe harbor imposes some conditions on the caching system: The material described in paragraph (1) is transmitted to the subsequent users described in paragraph (1)(C) without modification to its content from the manner in which the material was transmitted from the person described in paragraph (1)(A) {FN104: 17 U.S.C. 512(b)(2)(A)} Congress recognized that a true cache holds just a temporary copy of the material so that it can be supplied to a user requesting it without having to fetch a new copy over the network. The Committee intends that this restriction apply, for example, so that a service provider who caches material from another site does not change the advertising associated with the cached material on the originating site without authorization from the originating site. {FN105: Sen. Rep. No. 105-190 at 43} The second requirement under the system caching safe harbor is that the service provider described in paragraph (1) complies with rules concerning the refreshing, reloading, or other updating of the material when specified by the person making the material available online in accordance with a generally accepted industry standard data communications protocol for the system or network through which that person makes the material available, except that this subparagraph applies only if those rules are not used by the person described in paragraph (1)(A) to prevent or unreasonably impair the intermediate storage to which this subsection applies {FN106: 17 U.S.C. 512(b)(2)(B)} This means that a service provider must comply with any standard cache control protocols, such as those specified in the HyperText Transfer Protocol (HTTP) that handles Web pages.

Content providers use these rules to assure that outdated versions of a Web page are not supplied to a user from a cache, or to say that information should not be cached. But a content provider cant use the cache controls in an unreasonable fashion. The third safe harbor requirement is that: the service provider does not interfere with the ability of technology associated with the material to return to the person described in paragraph (1)(A) the information that would have been available to that person if the material had been obtained by the subsequent users described in paragraph (1)(C) directly from that person, except that this subparagraph applies only if that technology (i) does not significantly interfere with the performance of the providers system or network or with the intermediate storage of the material; (ii) is consistent with generally accepted industry standard communications protocols; and (iii) does not extract information from the providers system or network other than the information that would have been available to the person described in paragraph (1)(A) if the subsequent users had gained access to the material directly from that person; . . . {FN107: 17 U.S.C. 512(b)(2)(C)} This requirement recognizes that some Web pages may contain advertising and the content provider is reimbursed by the advertiser based on the number of hits (accesses by users) to the page. If the cache simply returned the page to the user, the only hits that would be recorded would be those that read the page in a service providers cache. The provision encourages groups that set the standards for the Internet to come up with some way of accurately returning information about the usage of cached information to the content provider. The Senate Judiciary Committee indicated that this requirement provides that the service provider shall not interfere with the ability of certain technology that is associated with the work by the operator of the originating site to return to the originating site information, such as user hit counts, that would have been available to the site had it not been cached. The technology must: (i) not significantly interfere with the performance of the storing providers system or network or with intermediate storage of the material; (ii) be consistent with generally accepted industry standard communications protocols applicable to Internet and online communications, such as those approved by the Internet Engineering Task Force and the World Wide Web Consortium; and (iii) not extract information beyond that which would have been obtained had the subsequent users obtained access to the material directly on the originating site. {FN108: Sen. Rep. No. 105-190 at 43} The fourth requirement for the safe harbor is that the person receiving the cached information must be entitled to receive it directly. A cache should not provide a way of bypassing an access control system for the material. If the person described in paragraph (1)(A) has in effect a condition that a person must meet prior to having access to the material, such as a condition based on payment of a fee or provision of a password or other information, the service provider permits access to the stored material in significant part only to users of its system or network that have met those conditions and only in accordance with those conditions. {FN109: 17 U.S.C. 512(b)(2)(D)} Finally, the safe harbor imposes its own notice-and-takedown requirement.

If the person described in paragraph (1)(A) makes that material available online without the authorization of the copyright owner of the material, the service provider responds expeditiously to remove, or disable access to, the material that is claimed to be infringing upon notification of claimed infringement as described in subsection (c)(3), except that this subparagraph applies only if (i) the material has previously been removed from the originating site or access to it has been disabled, or a court has ordered that the material be removed from the originating site or that access to the material on the originating site be disabled; and (ii) the party giving the notification includes in the notification a statement confirming that the material has been removed from the originating site or access to it has been disabled or that a court has ordered that the material be removed from the originating site or that access to the material on the originating site be disabled. {FN110: 17 U.S.C. 512(b)(2)(E)} Congress recognized that the notice-and-takedown for a cached copy should be tied to the notice-and-takedown of the copy that was cached. However, this take down obligation does not apply unless the material has previously been removed from the originating site, or the party submitting the notification has obtained a court order for it to be removed from the originating site and notifies the service providers designated agent of that order. This proviso has been added to subsection (b)(5) because storage under subsection (b) occurs automatically and unless infringing material has been removed from the originating site, the infringing material would ordinarily simply be re-cached. {FN111: Sen. Rep. No. 105-190 at 43}

Chapter 3: Copyright of Digital Information

III.B.7. Directories and Links

Subsection (d) covers directories and other ways of locating information on the World Wide Web. This safe harbor is not available to vicarious infringers. And you cant remain in the safe harbor if you link to information that you know or reasonably suspect is infringing. If a court has told you to remove information from your Web site because it likely infringes somebodys copyright, you cant replace it with a pointer to the information stored on another Web site and expect to remain in this safe harbor. Congress noted the importance to the operation of the Internet of information locating tools: Information location tools are essential to the operation of the Internet; without them, users would not be able to find the information they need. Directories are particularly helpful in conducting effective searches by filtering out irrelevant and offensive material. The Yahoo! directory, for example, currently categorizes over 800,000 online locations and serves as a card catalogue to the World Wide Web, which over 35,000,000 different users visit each month. Directories such as Yahoo!s usually are created by people visiting sites to categorize them. It is precisely the human judgment and editorial discretion exercised by these cataloguers which makes directories valuable. This provision is intended to promote the development of information location tools generally, and Internet directories such as Yahoo!s in particular, by

establishing a safe-harbor from copyright infringement liability for information location tool providers if they comply with the notice and takedown procedures and other requirements of subsection (d). The knowledge or awareness standard should not be applied in a manner which would create a disincentive to the development of directories which involve human intervention. Absent actual knowledge, awareness of infringement as provided in subsection (d) should typically be imputed to a directory provider only with respect to pirate sites or in similarly obvious and conspicuous circumstances, and not simply because the provider viewed an infringing site during the course of assembling the directory. {FN115: Sen. Rep. No. 105-190 at 49} The requirements for the safe harbor are met if the service provider: (1)(A) does not have actual knowledge that the material or activity is infringing; (B) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or (C) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (2) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and (3) upon notification of claimed infringement as described in subsection (c)(3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity, except that, for purposes of this paragraph, the information described in subsection (c)(3)(A)(iii) shall be identification of the reference or link, to material or activity claimed to be infringing, that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate that reference or link. {FN116: 17 U.S.C. 512(d)} The Senate Judiciary Committee discussed these requirements: Subsection (d) applies to referring or linking users to an online location containing infringing material or infringing activity using information location tools. The reference to infringing activity is intended to refer to wrongful activity that is occurring at the location to which the link or reference refers, without regard to whether copyright infringement is technically deemed to occur at that location or at the location where the material is received. The term information location tools includes, for example: a directory or index of online sites or material such as a search engine that identifies pages by specified criteria, a reference to other online material such as a list of recommended sites, a pointer that stands for an Internet location or address, or a hypertext link which allows users to access material without entering its address. Subsection (d) incorporates the notification and take down structure of subsection (c) and applies it to the provision of references and links to infringing sites. A service provider is entitled to the liability limitations of subsection (d) if it: (1) lacks actual knowledge of infringement on the other site, and is not aware of facts or circumstances from which infringing activity in that location is apparent; (2) does not receive a financial benefit directly attributable to the infringing activity

on the site, where the service provider has the right and ability to control the infringing activity; and (3) responds expeditiously to remove or disable the reference or link upon receiving a notification of claimed infringement as described in subsection (c)(3). The notification procedures under subsection (d) follow those set forth in subsection (c). However, the information submitted by the complaining party under subsection (c)(3)(A)(iii) is identification of the reference or link to infringing material or activity, and information reasonably sufficient to permit the service provider to locate that reference or link. Section 512(d) provides a safe harbor that would limit the liability of a service provider that refers or links users to an online location containing infringing material or activity by using information location tools, such as hyperlink directories and indexes. A question has been raised as to whether a service provider would be disqualified from the safe harbor based solely on evidence that it had viewed the infringing Internet site. If so, there is concern that online directories prepared by human editors and reviewers, who view and classify various Internet sites, would be denied eligibility to the information location tools safe harbor, in an unintended number of cases and circumstances. This is an important concern because such online directories play a valuable role in assisting Internet users to identify and locate the information they seek on the decentralized and dynamic networks of the Internet. Like the information storage safe harbor in section 512(c), a service provider would qualify for this safe harbor if, among other requirements, it does not have actual knowledge that the material or activity is infringing or, in the absence of such actual knowledge, it is not aware of facts or circumstances from which infringing activity is apparent. Under this standard, a service provider would have no obligation to seek out copyright infringement, but it would not qualify for the safe harbor if it had turned a blind eye to red flags of obvious infringement. For instance, the copyright owner could show that the provider was aware of facts from which infringing activity was apparent if the copyright owner could prove that the location was clearly, at the time the directory provider viewed it, a pirate site of the type described below, where sound recordings, software, movies or books ere available for unauthorized downloading, public performance or public display. Absent such red flags or actual knowledge, a directory provider would not be similarly aware merely because it saw one or more well known photographs of a celebrity at a site devoted to that person. The provider could not be expected, during the course of its brief cataloguing visit, to determine whether the photograph was still protected by copyright or was in the public domain; if the photograph was still protected by copyright, whether the use was licensed; and if the use was not licensed, whether it was permitted under the fair use doctrine. The important intended objective of this standard is to exclude sophisticated pirate directories which refer Internet users to other selected Internet sites where pirate software, books, movies, and music can be downloaded or transmitted--from the safe harbor. Such pirate directories refer Internet users to sites that are obviously infringing because they typically use words such as pirate, bootleg, or slang terms in their uniform resource locator (URL) and header information to make their illegal purpose obvious to the pirate directories

and other Internet users. Because the infringing nature of such sites would be apparent from even a brief and casual viewing, safe harbor status for a provider that views such a site and then establishes a link to it would not be appropriate. Pirate directories do not follow the routine business practices of legitimate service providers preparing directories, and thus evidence that they have viewed the infringing site may be all that is available for copyright owners to rebut their claim to a safe harbor. In this way, the red flag test in section 512(d) strikes the right balance. The common-sense result of this red flag test is that on-line editors and catalogers would not be required to make discriminating judgments about potential copyright infringement. If, however, an Internet site is obviously pirate, then seeing it may be all that is needed for the service provider to encounter a red flag. A provider proceeding in the face of such a red flag must do so without the benefit of a safe harbor. {FN117: Sen. Rep. No. 105-190 at 47-49}

Chapter 3: Copyright of Digital Information

III.B.8. Other Safe Harbor Requirements

In addition to the specific requirements of each safe harbor, there are some general requirements that a service provider must meet to qualify for any of the safe harbors. These are detailed in subsection (i). First, a service provider must have adopted and reasonably implemented, and informs subscribers and account holders of the service providers system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service providers system or network who are repeat infringers. {FN118:17 U.S.C. 512(i)(1)(A)} As explained by the Senate Judiciary Committee: First, the service provider is expected to adopt and reasonably implement a policy for the termination in appropriate circumstances of the accounts of subscribers of the providers service who are repeat online infringers of copyright. The Committee recognizes that there are different degrees of online copyright infringement, from the inadvertent to the noncommercial, to the willful and commercial. In addition, the Committee does not intend this provision to undermine the principles of [the protection of privacy of subsection (m)] or the knowledge standard of [notice-and-takedown] subsection (c) by suggesting that a provider must investigate possible infringements, monitor its service, or make difficult judgments as to whether conduct is or is not infringing. However, those who repeatedly or flagrantly abuse their access to the Internet through disrespect for the intellectual property rights of others should know that there is a realistic threat of losing that access. {FN119: Sen. Rep. No. 105-190 at 52} By subscribers, the Committee intends to include account holders who are parties with a business relationship to the service provider that justifies treating them as subscribers, for the purposes of section 512, even if no formal subscription agreement exists. Examples include students who are granted access to a universitys system or network for digital online communications; employees who

have access to their employers system or network; or household members with access to a consumer online service by virtue of a subscription agreement between the service provider and another member of that household. {FN120: Sen. Rep. No. 105-190 at 52 n. 24} The privacy requirements of Subsection (m) are as follows: Nothing in this section shall be construed to condition the applicability of subsections (a) through (d) on (1) a service provider monitoring its service or affirmatively seeking facts indicating infringing activity, except to the extent consistent with a standard technical measure complying with the provisions of subsection (i); or (2) a service provider gaining access to, removing, or disabling access to material in cases in which such conduct is prohibited by law. {FN121: 17 U.S.C. 512(m)} The second requirement is that the service provider accommodates and does not interfere with standard technical measures. {FN122: 17 U.S.C. 512(i)(1)(B)} A standard technical measure means technical measures that are used by copyright owners to identify or protect copyrighted works and (A) have been developed pursuant to a broad consensus of copyright owners and service providers in an open, fair, voluntary, multi-industry standards process; (B) are available to any person on reasonable and nondiscriminatory terms; and (C) do not impose substantial costs on service providers or substantial burdens on their systems or networks. Congress was aware of the efforts toward the development of effective access control and rights management systems, and supported them legislatively in another portion of the DMCA. It would seem paradoxical to support technological measures for copyright infringement control in one section of the law while allowing service providers who interfere with the same technological measures to benefit from the safe harbor provisions. The Committee believes that technology is likely to be the solution to many of the issues facing copyright owners and service providers in this digital age. For that reason, we have included [the subsection], which is intended to encourage appropriate technological solutions to protect copyrighted works. The Committee strongly urges all of the affected parties expeditiously to commence voluntary, interindustry discussions to agree upon and implement the best technological solutions available to achieve these goals. [The subsection] is explicitly limited to standard technical measures that have been developed pursuant to a broad consensus of both copyright owners and service providers in an open, fair, voluntary, multi-industry standards process. The Committee anticipates that these provisions could be developed both in recognized open standards bodies or in ad hoc groups, as long as the process used is open, fair, voluntary, and multi-industry and the measures developed otherwise conform to the requirements of the definition of standard technical measures. A number of recognized open standards bodies have substantial experience with Internet issues. {FN123: Sen. Rep. No. 105-190 at 52}

Chapter 3: Copyright of Digital Information

III.B.9. Special Rules for Schools

Subsection (e) provides special protection for schools if their faculty or student employees are infringing, by not attributing that infringement to the school in many instances. When a public or other nonprofit institution of higher education is a service provider, and when a faculty member or graduate student who is an employee of such institution is performing a teaching or research function, for the purposes of subsections (a) and (b) such faculty member or graduate student shall be considered to be a person other than the institution, and for the purposes of subsections (c) and (d) such faculty members or graduate students knowledge or awareness of his or her infringing activities shall not be attributed to the institution, if (A) such faculty members or graduate students infringing activities do not involve the provision of online access to instructional materials that are or were required or recommended, within the preceding 3-year period, for a course taught at the institution by such faculty member or graduate student; (B) the institution has not, within the preceding 3-year period, received more than 2 notifications described in subsection (c)(3) of claimed infringement by such faculty member or graduate student, and such notifications of claimed infringement were not actionable under subsection (f); and (C) the institution provides to all users of its system or network informational materials that accurately describe, and promote compliance with, the laws of the United States relating to copyright. (2) For the purposes of this subsection, the limitations on injunctive relief contained in subsections (j)(2) and (j)(3), but not those in (j)(1), shall apply.{FN124: 17 U.S.C. 512(e)} This provision was not part of the DMCA as passed by either the House or the Senate but was added by the conference committee as it was considering the final form of the bill. However, the conferees recognize that the university environment is unique. Ordinarily, a service provider may fail to qualify for the liability limitations in Title II simply because the knowledge or actions of one of its employees may be imputed to it under basic principles of respondeat superior and agency law. The special relationship which exists between universities and their faculty members (and their graduate student employees) when they are engaged in teaching or research is different from the ordinary employer-employee relationship. Since independencefreedom of thought, word and actionis at the core of academic freedom, the actions of university faculty and graduate student teachers and researchers warrant special consideration in the context of this legislation. This special consideration is embodied in new subsection (e), which provides special rules for determining whether universities, in their capacity as a service provider, may or may not be liable for acts of copyright infringement by faculty members or graduate students in certain circumstances. Subsection (e)(1) provides that the online infringing actions of faculty members or graduate student employees, which occur when they are performing a teaching or research function, will not be attributed to an institution of higher education in its capacity as their employer for purposes of section 512, if certain conditions are met. For the purposes of subsections (a) and (b) of section 512, such

faculty member or graduate student shall be considered to be a person other than the institution, and for the purposes of subsections (c) and (d) of section 512 the faculty members or graduate students knowledge or awareness of his or her infringing activities will not be attributed to the institution, when they are performing a teaching or research function and the conditions in paragraphs (A) (C) are met. When the faculty member or the graduate student employee is performing a function other than teaching or research, this subsection provides no protection against liability for the institution if infringement occurs. For example, a faculty member or graduate student is performing a function other than teaching or research when the faculty member or graduate student is exercising institutional administrative responsibilities, or is carrying out operational responsibilities that relate to the institutions function as a service provider. Further, for the exemption to apply on the basis of research activity, the research must be a genuine academic exercisei.e. a legitimate scholarly or scientific investigation or inquiryrather than an activity which is claimed to be research but is undertaken as a pretext for engaging in infringing activity. In addition to the teaching or research function test, the additional liability protections contained in subsection (e)(1) do not apply unless the conditions in paragraphs (A) through (C) are satisfied. First, paragraph (A) requires that the infringing activities must not involve providing online access to instructional materials that are required or recommended for a course taught by the infringing faculty member and/or the infringing graduate student within the last three years. The reference to providing online access to instructional materials includes the use of e-mail for that purpose. The phrase required or recommended is intended to refer to instructional materials that have been formally and specifically identified in a list of course materials that is provided to all students enrolled in the course for credit; it is not intended, however, to refer to the other materials which, from time to time, the faculty member or graduate student may incidentally and informally bring to the attention of students for their consideration during the course of instruction. Second, under paragraph (B) the institution must not have received more than two notifications of claimed infringement with respect to the particular faculty member or particular graduate student within the last three years. If more than two such notifications have been received, the institution may be considered to be on notice of a pattern of infringing conduct by the faculty member or graduate student, and the limitation of subsection (e) does not apply with respect to the subsequent infringing actions of that faculty member or that graduate student. Where more than two notifications have previously been received with regard to a particular faculty member or graduate student, the institution will only become potentially liable for the infringing actions of that faculty member or that graduate student. Any notification of infringement that gives rise to a cause of action for misrepresentation under subsection (f) does not count for purposes of paragraph (B). Third, paragraph (C) states that the institution must provide to the users of its system or network whether they are administrative employees, faculty, or

students materials that accurately describe and promote compliance with copyright law. The legislation allows, but does not require, the institutions to use relevant informational materials published by the U.S. Copyright Office in satisfying the condition imposed by paragraph (C). {FN125: H.R. Rep. No. 105796 at 74-75}

Chapter 3: Copyright of Digital Information

IV. Protection Through Technology IV.A. Why Technology, Why Laws?
Since it is impossible to sue every copyright infringer because of the cost of such suits (and the resentment and backlash they can generate), the dream of entertainment content owners is for the device that can stop any possible infringement using a technology-based access or copy control mechanism. This would also avoid messy questions like whether a copy would be permitted as a fair use or not since, if such a technology-based mechanism could work properly, anything permitted by the copy control mechanism would be permissible, and anything not permissible would be blocked by the copy control mechanism. Such a device will always remain a dream because permissible copying under fair use cant possibly be determined by a machine, no matter how sophisticated. The Supreme Court, in Harper & Row v. Nation Enterprises, {FN126: 471 U.S. 539, 225 USPQ 1073 (1985)} found that the copying of approximately 300 words from a full-length book was not a fair use; the Ninth Circuit, in Sega v. Accolade, {FN127: 977 F.2d 1510, 24 USPQ2d 1561 (9th Cir. 1992)} found that the copying of an entire computer program was. The seeming inconsistency between these two decisions stems from how the copy was eventually used, something that cannot be determined by a mechanism that allows or disallows copying or access. But copy and access controls can successfully stop some illegal copying and make other copying appear just shady enough so that most people will avoid doing it. In the absence of clear rules in the copyright laws as to what is permissible and what is not for digital works, whether copying can be done easily with standard hardware and software will seem to many as reasonable guidance. Though the perfect technology-based protection mechanism would be able to protect any work without the need for copyright or other laws, the addition of a limited law to keep people from distributing devices that circumvent the protection means that the protection mechanism can be simpler, less expensive, and less intrusive.

IV.B. Past Technological Protections

The idea that Congress can protect copyrighted works through technology is not new. In 1984, concerned about the theft of cable television services, Congress enacted a general ban on equipment to intercept cable communications: (1) No person shall intercept or receive or assist in intercepting or receiving any communications service offered over a cable system, unless specifically authorized to do so by a cable operator or as may otherwise be specifically authorized by law.

(2) For the purpose of this section, the term assist in intercepting or receiving shall include the manufacture or distribution of equipment intended by the manufacturer or distributor (as the case may be) for unauthorized reception of any communications service offered over a cable system in violation of subparagraph (1). {FN128: 47 U.S.C. 553(a)} At about the same time, Congress provided similar protection for satellite systems: Any person who manufactures, assembles, modifies, imports, exports, sells, or distributes any electronic, mechanical, or other device or equipment, knowing or having reason to know that the device or equipment is primarily of assistance in the unauthorized decryption of satellite cable programming, or direct-to-home satellite services, or is intended for any other activity prohibited by subsection (a) of this section, shall be fined not more than $500,000 for each violation, or imprisoned for not more than 5 years for each violation, or both. For purposes of all penalties and remedies established for violations of this paragraph, the prohibited activity established herein as it applies to each such device shall be deemed a separate violation. {FN129: 47 U.S.C. 605(e)(4)} Though one can find illegal cable and satellite boxes advertised on the Internet and other places, the provisions have been substantially effective. Because the boxes are not available through mainstream electronics stores but must be purchased in a way that seems shady, people are generally aware that purchasing and using them is wrong, and most people dont do it. Moreover, the amount of damage a box manufacturer can do is limited, because if it becomes too large, it also becomes visible to law enforcement and will likely be shut down. In 1992, Congress mandated for digital recorders: No person shall import, manufacture, or distribute any digital audio recording device or digital audio interface device that does not conform to (1) the Serial Copy Management System; (2) a system that has the same functional characteristics as the Serial Copy Management System and requires that copyright and generation status information be accurately sent, received, and acted upon between devices using the systems method of serial copying regulation and devices using the Serial Copy Management System; or (3) any other system certified by the Secretary of Commerce as prohibiting unauthorized serial copying. {FN130: 17 U.S.C. 1002(a)} Congress also prohibited tampering with the mandated copy control mechanism: No person shall import, manufacture, or distribute any device, or offer or perform any service, the primary purpose or effect of which is to avoid, bypass, remove, deactivate, or otherwise circumvent any program or circuit which implements, in whole or in part, a system described in subsection (a). {FN131: 17 U.S.C. 1002(c)} Again, while there will undoubtedly be people who produce devices that circumvent the mandated copy control mechanism (or would have if digital audio tapes, the technology that was driving the Audio Home Recording Act, {FN132: Pub. L. 102-563, 106 Stat. 4237} had been successful), the prohibitions keep such circumvention devices or services out of the mainstream, and therefore from wide usage by the public.

IV.C. The White Paper

In addition to suggesting that the distribution right be extended to include transmissions, the White Paper {FN133: Intellectual Property and the National Information Infrastructure (NII White Paper), http://www.uspto.gov/web/offices/com/doc/ipnii/ (September 1995)} proposed legislation to address the circumvention of technology protection measures on personal computers and other digital devices: No person shall import, manufacture or distribute any device, product, or component incorporated into a device or product, or offer or perform any service, the primary purpose or effect of which is to avoid, bypass, remove, deactivate, or otherwise circumvent, without the authority of the copyright owner or the law, any process, treatment, mechanism or system which prevents or inhibits the violation of any of the exclusive rights of the copyright owner under section 106.{FN134: NII White Paper, Appendix 2 at 3} There were no exceptions provided in the White Papers recommendation, and there was immediate criticism that the anticircumvention provision would allow a content provider to lock up works that were not protected by copyright and prevent fair use. The provision didnt prevent a content provider from putting other, non-copyrighted material within the envelope protected by the access control mechanism, and since there would be no tools legally available to penetrate that envelope, the non-copyrighted material would be protected by the technology, along with any copyrighted material attached to it to justify the use of the access control mechanism. But the proposed language also has a conceptual flaw. It assumes that a particular access control mechanism is being used only by content providers working together to protect a particular type of content. For example, the movie studios protect their works using the Content Scrambling System (CSS) of the Digital Video (or, as later renamed, Versatile) Disk (DVD). As long as the movie studios are the only ones using CSS, there is no problem. But if a person who feels that movies should not have access controls produces a DVD of his own copyrighted material (say, home movies of a demonstration against copy controls) and protects it using CSS, there is a problem. If he also distributes a tool that allows the reading of a CSS-protected DVD with his DVD, he is arguably not violating the provision. The tool allows its user to avoid, bypass, remove, deactivate, or otherwise circumvent CSS, but it is with the authority of the copyright owner, at least when it is being used to view the home movie. But after users have the tool, they can also use it to circumvent CSSs protection of movies from the studios. The obvious fix to the proposal, having it forbid the distribution of any device that circumvents the access control to anothers work, would actually make the provision worse. Then our hypothetical home movie creator who is using CSS could block the distribution of all DVD players, saying that he permits the access to his copyrighted content by using his circumvention program, and any DVD player that decodes CSS is an unauthorized circumventor of his access control. The White Paper also proposed protection for rights management systems: (a) False Copyright Management Information. No person shall knowingly provide copyright management information that is false, or knowingly publicly distribute or import for public distribution copyright management information that is false. (b) Removal or Alteration of Copyright Management Information. No person shall, without authority of the copyright owner or the law, (i) knowingly remove or alter any copyright management information, (ii) knowingly distribute or import for

distribution copyright management information that has been altered without authority of the copyright owner or the law, or (iii) knowingly distribute or import for distribution copies or phonorecords from which copyright management information has been removed without authority of the copyright owner or the law. (c) Definition. As used in this chapter, copyright management information means the name and other identifying information of the author of a work, the name and other identifying information of the copyright owner, terms and conditions for uses of the work, and such other information as the Register of Copyrights may prescribe by regulation. {FN135: NII White Paper, Appendix 2 at 3} A rights management system is essentially an electronic notice that the work is protected by copyright. But rights management systems can go beyond a simple notice function. Because they can be understood by computer programs, they can be used as part of an access control system, treating works with different notice information differently and thereby allowing a copyright owner to permit copying of the work in certain circumstances. A simple form of rights management information is the copyrighted bit in the Audio Home Recording Acts Serial Copy Management System, which indicates whether any copy can be made, or only copies from an original copy. (A first-generation bit tells the system whether this is an original or a duplicate.) While the proposed language seems reasonable, there is a problem regarding the prohibition against the removal of the management information. Consider a text document that has associated with it rights management information, such as this treatise. You bring the document into a word processor or Web browser or whatever is necessary to view it. There is one particular paragraph that you think is exceptionally well written and you want to quote it in something you are writing. (Or there is something that is exceedingly dumb, and you want to include it in a criticism of the work.) So you highlight, copy, and paste it into your writing. Have you removed the rights management information? Its not as if you went to the rights management information and deleted that information from the original work. But is there any real difference between deleting the rights management information from a digital work, and copying all of a digital work except for the rights management information into a new information file? Should any copying from a work with rights management information have to drag along that rights management information, no matter how short the quotation? The proposed language doesnt recognize that cutting and pasting to quote information is a common thing that writers using word processors do. Though the legislation proposed by the White Paper was introduced in Congress, it was not adopted, primarily because of the lack of exceptions for legitimate behavior.

IV.D. The WIPO Copyright Treaty

To help pressure Congress to enact legislation protecting access control and rights management systems, the Clinton Administration and the content industry worked for an extension to the Berne Convention. The resulting WIPO Copyright Treaty was adopted by the Diplomatic Conference responsible for its development on December 20, 1996. Article 11 of that treaty, Obligations concerning Technological Measures, required: Contracting Parties shall provide adequate legal protection and effective legal remedies against the circumvention of effective technological measures that are used by authors in connection with the exercise of their rights under this Treaty or

the Berne Convention and that restrict acts, in respect of their works, which are not authorized by the authors concerned or permitted by law. {FN136: WIPO Copyright Treaty, Art. 11} Clearly, United States copyright law does not meet the requirements of Article 11 because it provides no protection against circumvention of a technological measure except for any copyright infringement that results during the circumvention. The language of the WIPO Copyright Treaty does not require that any implementing language go beyond providing remedies against those who actually circumvent protection mechanisms. It does not require the banning of circumvention technology or having the distribution of such technology be a violation. The language also does not require that the implementing language address circumvention to access a work when such circumvention is not an infringement, since control of access to a work is not one of the exclusive rights of a copyright owner under Section 106 {FN137: 17 U.S.C. 106} and therefore is permitted by law because there is no prohibition against it. A minimal change to the copyright laws to address Article 11 would have been to simply treat any circumvention of a copy control mechanism as if a copy had been made. That would cover instances where there might be a question if a fixed intermediate copy has been made, such as when the information is decrypted on the fly and shown on the users television. Then the developed law of the reproduction right, and all its exceptions including fair use, could be applied to see if the circumvention should be treated as an infringement. To bring circumvention better within criminal copyright infringement, that act could create a rebuttable presumption of willfulness. Then the criminal provisions of Section 506 would apply if the acts were for purposes of commercial advantage or private financial gain or exceeded the value threshold of $1,000 over 180 days. The WIPO Copyright Treaty also contains Article 12, Obligations concerning Rights Management Information, which requires: (1) Contracting Parties shall provide adequate and effective legal remedies against any person knowingly performing any of the following acts knowing, or with respect to civil remedies having reasonable grounds to know, that it will induce, enable, facilitate or conceal an infringement of any right covered by this Treaty or the Berne Convention: (i) to remove or alter any electronic rights management information without authority; (ii) to distribute, import for distribution, broadcast or communicate to the public, without authority, works or copies of works knowing that electronic rights management information has been removed or altered without authority. (2) As used in this Article, rights management information means information which identifies the work, the author of the work, the owner of any right in the work, or information about the terms and conditions of use of the work, and any numbers or codes that represent such information, when any of these items of information is attached to a copy of a work or appears in connection with the communication of a work to the public. {FN138: WIPO Copyright Treaty, Art. 12} Again, the United States copyright laws had to be revised to comply with the WIPO Copyright Treaty. The only provision of the Copyright Act that was at all related to rights management were two subsections of Section 506, the criminal infringement provision: (c) Fraudulent Copyright Notice. Any person who, with fraudulent intent, places on any article a notice of copyright or words of the same purport that such

person knows to be false, or who, with fraudulent intent, publicly distributes or imports for public distribution any article bearing such notice or words that such person knows to be false, shall be fined not more than $2,500. (d) Fraudulent Removal of Copyright Notice. Any person who, with fraudulent intent, removes or alters any notice of copyright appearing on a copy of a copyrighted work shall be fined not more than $2,500. {FN139: 17 U.S.C. 506} One approach would be to expand the copyright notice provisions to better address the removal or alteration of rights management information. It would be simple to indicate that any rights management information is a notice of copyright appearing on a copy of a copyrighted work. The penalties for removing such a notice could be expanded to better match the penalties for criminal copyright infringement. But the Clinton Administration and the content owners, who proposed the language in the White Paper, also developed the proposed language for implementing the treaty and did not favor such a minimalist approach.

Chapter 3: Copyright of Digital Information

IV.E. Technological Protections and the DMCA
After the adoption of the WIPO Copyright Treaty, the focus again shifted to having Congress pass legislation to protect copy control and rights management systems. But this time, it was under the banner of having to ratify and implement the WIPO Copyright Treaty, to provide an example to the other countries in the world. The Internet service providers were also in a better position, because the content providers really wanted the WIPO Copyright Treaty. While the Clinton Administration and the content providers proposed anticircumvention and rights management provisions without exceptions for conduct that should not be violations, Congress added a number of specific exceptions to the DMCA addressing important aspects of the Internet. The result was the safe harbor limitations to copyright infringement suits against service providers, codified in Section 512. {FN140: 17 U.S.C. 512} The anticircumvention and rights management provisions are an attempt to support in law reasonable techniques for protecting a copyrighted work. They outlaw the use and distribution of tools that can get around such protection techniques. It is not necessary for the technique to be invulnerable to all attacks, because the vast majority of people will not have easy access to the tools that could circumvent the protection. These provisions are related to, but separate from, copyright. Even the name for the improper act is different you infringe a copyright, but you violate the anticircumvention or rights management provisions. Therefore, if you circumvent a protection system, you violate the anticircumvention provisions even if your eventual use of the copyrighted work is not an infringement because it is a fair use or falls within another exception. The penalties for circumventing a protection measure are much like copyright infringement: civil actions yielding injunctions and monetary damages (either actual or statutory) and criminal penalties with fines up to $1,000,000 and imprisonment of up to ten years for repeat offenses. But while that seems draconian, in reality the federal sentencing guidelines limit the penalties, with the maximum only for the most egregious violations causing millions of dollars in damages.

While the DMCA was being considered by Congress, beginning in 1997 and ending with it becoming law in October 1998, many opponents predicted that it would have dire consequences. But in the over-three-years since its enactment, there have been only a few cases brought under it, and most of those in instances of high-profile anticircumvention activities. While future cases will give a clearer interpretation of the DMCAs provisions, right now the best guidance to understanding them comes from the congressional reports that accompanied the DMCAs passage.

Chapter 3: Copyright of Digital Information

IV.E.1. The Trafficking Provisions

Perhaps the most important of the anticircumvention provisions in terms of their actual effect are those outlawing trafficking in circumvention technology. While not required by the WIPO Copyright Treaty, which addresses only actual circumventions, these provisions may be more effective at stopping most unlawful circumventions by limiting the tools available to people than suing a large number of circumventors. Section 1201(a)(2) deals with trafficking in things that circumvent any technological measure that effectively controls access to a work protected by copyright. No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that: (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title; (B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or (C) is marketed by that person or another acting in concert with that person with that persons knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title. {FN141: 17 U.S.C. 1201(a)(2)} There are a number of terms with special meanings: (A) to circumvent a technological measure means to descramble a scrambled work, to decrypt an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a technological measure, without the authority of the copyright owner; and (B) a technological measure effectively controls access to a work if the measure, in the ordinary course of its operation, requires the application of information, or a process or a treatment, with the authority of the copyright owner, to gain access to the work. {FN142: 17 U.S.C. 1201(a)(3)} Subsection (b) provides prohibition similar to that of Section 1201(a)(2), except for circumvention of a measure that effectively protects a right of a copyright owner, rather than effectively controls access to a work. No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that

(A) is primarily designed or produced for the purpose of circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof; (B) has only limited commercially significant purpose or use other than to circumvent protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof; or (C) is marketed by that person or another acting in concert with that person with that persons knowledge for use in circumventing protection afforded by a technological measure that effectively protects a right of a copyright owner under this title in a work or a portion thereof. {FN143: 17 U.S.C. 1201(b)(1)} And again, similar definitions for the special terms: (A) to circumvent protection afforded by a technological measure means avoiding, bypassing, removing, deactivating, or otherwise impairing a technological measure; and (B) a technological measure effectively protects a right of a copyright owner under this title if the measure, in the ordinary course of its operation, prevents, restricts, or otherwise limits the exercise of a right of a copyright owner under this title. {FN144: 17 U.S.C. 1201(b)(2)} The technological measure does not need to be flawless in its protection in order to be protected. Instead, the provisions are intended to protect mechanisms that are simple, like the Audio Home Recording Acts Serial Copy Management System, which uses only two bits of control information (one to indicate it is a work to be protected, the other indicating that it is an original copy) but is effective since there are no legal digital audio recording devices that dont honor the system. The practical, common-sense approach taken by H.R. 2281 is that if, in the ordinary course of its operation, a technology actually works in the defined ways to control access to a work, or to control copying, distribution, public performance, or the exercise of other exclusive rights in a work, then the effectiveness test is met, and the prohibitions of the statute are applicable. This test, which focuses on the function performed by the technology, provides a sufficient basis for clear interpretation. It applies equally to technologies used to protect access to works whether in analog or digital formats. {FN145: H.R. Judiciary Comm. Print 105-6 at 10} Congress indicated that even a simple password control could be an effective technological measure. For example, if unauthorized access to a copyrighted work is effectively prevented through use of a password, it would be a violation of this section to defeat or bypass the password and to make the means to do so, as long as the primary purpose of the means was to perform this kind of act. {FN146: Sen. Rep. No. 105-190 at 11} In fact, there is no need to protect a technological measure that is so good that it cannot be circumvented. Instead, you want to use the law to allow technological measures that are simple and inexpensive. As an analogy, imagine what your home doors would look like if there were no laws against burglary and you had to use only technology to protect your new, big-screen television. Instead, because there is a law against circumventing a locked door, most people get by with an inexpensive lock, even though an expert could open it with little difficulty.

Not requiring perfect access controls also eliminates a problem that could hurt the adoption of new technologies such as DVDs. Assume that the original DVDs used a protection mechanism that was uncrackable at the time they were introduced. Then, at some later time, a way to crack the protection mechanism is discovered. If there is no law against trafficking in the circumvention method, the only way for content producers to continue to protect their works is to go to a new protection mechanism for the works sold in the future. But that means that people who bought original DVD players will not be able to play the new works, since they are protected with a different mechanism. They would have to purchase a new player (or pay for an upgrade to their existing player) to play the new works. Although this continual obsolescence might seem wonderful for DVD player manufacturers, it is more likely that people would simply not buy a DVD player if they thought that it would play only past releases and not new movies. Just because somebody constructs or distributes something that could circumvent a protection method does not mean that he or she has violated the trafficking provisions. The technology, product, service, device, component, or part thereof must fall into one of three categories before there is a violation. (A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title; (B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or (C) is marketed by that person or another acting in concert with that person with that persons knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title. {FN147: 17 U.S.C. 1201(a)(2)} This mean that, for example, a disk block editor that can change any bits stored on a hard disk would not normally be a circumvention device because it was written to help with disk administration and repair and not primarily for circumvention. But if somebody starts selling the disk block editor by saying how it can be used to circumvent a protection mechanism, that would run afoul of (C). The primarily designed or produced and only limited commercially significant purpose or use tests are different from the substantial noninfringing use that the Supreme Court stated in its 1984 Sony v. Universal City Studios decision. {FN148: 464 U.S. 417, 220 USPQ 665 (1984)} In that case, because there were no statutory contributory or vicarious infringement provisions in the Copyright Act, the Supreme Court imported the ones from the patent statute. If vicarious liability is to be imposed on petitioners in this case, it must rest on the fact that they have sold equipment with constructive knowledge of the fact that their customers may use that equipment to make authorized copies of copyrighted material. There is no precedent in the law of the copyright for the imposition of vicarious liability on such a theory. The closest analogy is provided by the patent law cases to which it is appropriate to refer because of the historic kinship between patent law and copyright law. {FN149: 464 U.S. at 439, 220 USPQ at 677} The patent act specifically recognizes inducement of infringement {FN150: 35 U.S.C. 271(b)} and contributory infringement. {FN151: 35 U.S.C. 271(c)} For contributory infringement, all that is necessary is the selling of a component of the patented invention that is not a staple article or commodity of commerce suitable for substantial noninfringing use. This

would include, for example, the standard electronic parts that might be used to construct a patented device. We recognize there are substantial differences between the patent and copyright laws. But in both areas the contributory infringement doctrine is grounded on the recognition that adequate protection of a monopoly may require the courts to look beyond actual duplication of a device or publication to the products or activities that make such duplication possible. The staple article of commerce doctrine must strike a balance between a copyright holders legitimate demand for effective not merely symbolic protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses. {FN152: 464 U.S. at 442, 220 USPQ at 678} The problem with using this standard for the trafficking provisions is that there is almost always a substantial noninfringing use because fair use generally permits the quotation of limited portions of a copyrighted work in a new work. Patent law does not have a comparable fair use provision, so its criteria for contributory infringement dont have the loophole that exists when the same criteria is applied to copyrighted works. Instead, Congress explicitly stated the criteria to be considered when deciding whether a person is trafficking in a circumvention device or is promoting a legitimate product, so it is not necessary to import tests from the patent laws that may be questionable for determining whether something that can be used to circumvent a protection measure has other uses that should allow its distribution.

Chapter 3: Copyright of Digital Information

IV.E.2. Accessing Through Circumvention

Unlike Section 1201(b), {FN153: 17 U.S.C. 1201(b)} which forbids trafficking in devices used to infringe one of the copyright owners exclusive rights, Section 1201(a)(2){FN154: 17 U.S.C. 1201(a)(2)} is directed at trafficking in devices used to access a work protected by a technological measure. But since there was no prohibition against such access, and it would be strange to prohibit the distribution of a device that doesnt perform an illegal activity, Congress created a new violation as Section 1201(a)(1): No person shall circumvent a technological measure that effectively controls access to a work protected under this title. {FN155: 17 U.S.C. 1201(a)(1)(A)} Until then, it had not been illegal to access a copyrighted work as long as there was not an infringement associated with that access. One could access the information in a book by reading it without infringing the copyright on that book. The prohibition against trafficking in a device to circumvent an access control seemed to Congress necessary to prevent a huge loophole in the anticircumvention provisions that would allow the distribution of circumvention devices that contained a warning against using them for copyright infringement, even though that would be the likely result. Any effectiveness of the anticircumvention provisions comes from preventing circumvention devices or programs from

being readily available to non-technical people in a way that seems to legitimize them, not from stopping every circumvention device. The creation of what is essentially a new right of copyright owners to control access to technology-protected works is not completely divorced from existing copyright law. Digital works are different from traditional copyrighted works in that intermediate copies are often required to see or hear the work. If a work is encrypted as part of a technological protection mechanism, then it is likely that an intermediate plain-text copy of the protected work will be created. And that intermediate copy stored in the memory of the computer used to access the work infringes the reproduction right {FN156: See MAI v. Peak, 991 F.2d 511, 26 USPQ2d 1458 (9th Cir. 1993)} if it is without the authorization of the copyright owner and not permitted by law. But Congress was also concerned that people might take advantage of the inability to access material that is protected by a technological measure to improperly protect material. For example, a content provider might add a small copyrighted portion to a work in the public domain, such as a capsule description to a court decision, and protect the whole thing with an access control system. Any access would be a violation of Section 1201[a][1](A), {FN157: 17 U.S.C. 1201(a)(1)(A)} and would also be technologically impossible for most people because the trafficking provision of Section 1201(a)(2) {FN158: 17 U.S.C. 1201(a)(2)} means that there would be no ready source of tools to get around such a technological measure. Congress addressed this in two ways. First, it provided a number of exceptions to the provisions against access and trafficking to address particular circumstances where it felt that the public good would be served. Second, it provided for a procedure, detailed in Section 1201(a), by which the Librarian of Congress could exempt certain classes of works from the circumvention ban. Given the threat of a diminution of otherwise lawful access to works and information, the Committee on Commerce believes that a fail-safe mechanism is required. This mechanism would monitor developments in the marketplace for copyrighted materials, and allow the enforceability of the prohibition against the act of circumvention to be selectively waived, for limited time periods, if necessary to prevent a diminution in the availability to individual users of a particular category of copyrighted materials. {FN159: H.R. Rep. No. 105-551 part 2 at 36} The factors to be considered by the Register of Copyrights, who makes a recommendation to the Librarian of Congress after consultation with the Assistant Secretary for Communications and Information of the Department of Commerce, are (i) the availability for use of copyrighted works; (ii) the availability for use of works for nonprofit archival, preservation, and educational purposes; (iii) the impact that the prohibition on the circumvention of technological measures applied to copyrighted works has on criticism, comment, news reporting, teaching, scholarship, or research; (iv) the effect of circumvention of technological measures on the market for or value of copyrighted works; and (v) such other factors as the Librarian considers appropriate. {FN160: 17 U.S.C. 1201(a)(1)(C)} Classes of works are exempted by the Librarian of Congress for a three-year period, and there is a new review every three years. The ban on using circumvention devices (but not their distribution) was delayed for two years (until October 28, 2000), to allow for the first review.

In July 2010, the fourth cycle completed with the following exemptions: (1) Motion pictures on DVDs that are lawfully made and acquired and that are protected by the Content Scrambling System when circumvention is accomplished solely in order to accomplish the incorporation of short portions of motion pictures into new works for the purpose of criticism or comment, and where the person engaging in circumvention believes and has reasonable grounds for believing that circumvention is necessary to fulfill the purpose of the use in the following instances: (i) Educational uses by college and university professors and by college and university film and media studies students; (ii) Documentary filmmaking; (iii) Noncommercial videos. (2) Computer programs that enable wireless telephone handsets to execute software applications, where circumvention is accomplished for the sole purpose of enabling interoperability of such applications, when they have been lawfully obtained, with computer programs on the telephone handset. (3) Computer programs, in the form of firmware or software, that enable used wireless telephone handsets to connect to a wireless telecommunications network, when circumvention is initiated by the owner of the copy of the computer program solely in order to connect to a wireless telecommunications network and access to the network is authorized by the operator of the network. (4) Video games accessible on personal computers and protected by technological protection measures that control access to lawfully obtained works, when circumvention is accomplished solely for the purpose of good faith testing for, investigating, or correcting security flaws or vulnerabilities, if: (i) The information derived from the security testing is used primarily to promote the security of the owner or operator of a computer, computer system, or computer network; and (ii) The information derived from the security testing is used or maintained in a manner that does not facilitate copyright infringement or a violation of applicable law. (5) Computer programs protected by dongles that prevent access due to malfunction or damage and which are obsolete. A dongle shall be considered obsolete if it is no longer manufactured or if a replacement or repair is no longer reasonably available in the commercial marketplace; and (6) Literary works distributed in ebook format when all existing ebook editions of the work (including digital text editions made available by authorized entities) contain access controls that prevent the enabling either of the books read-aloud function or of screen readers that render the text into a specialized format. It must be remembered that the exemptions are only for the circumvention of an access control mechanism covered by section 1201(a)(1). It does not provide an exemption for the provision of a tool used for such circumvention, which could be a violation of section 1201(a)(2), nor for circumvention that results in infringement, which would be a violation of section 1201(b). For more information about these exemptions, and the proceedings leading up to them, see: http://www.copyright.gov/1201/

Chapter 3: Copyright of Digital Information

IV.E.3. Distinction From Copyright

It is important to understand that although the anticircumvention and rights management provisions of the DMCA are closely related to copyright, in that they apply to works protected by copyright, but they are separate from copyright law (except for being codified in the same title of the United States Code). Even the words used to characterize the unlawful acts are different you infringe a copyright, but violate the anticircumvention or rights management provisions. Congress made it clear that it didnt intend these provisions, and the case law that develops from them, to affect the copyright statutes and their case law. (1) Nothing in this section shall affect rights, remedies, limitations, or defenses to copyright infringement, including fair use, under this title. (2) Nothing in this section shall enlarge or diminish vicarious or contributory liability for copyright infringement in connection with any technology, product, service, device, component, or part thereof. {FN162: 17 U.S.C. 1201(c)}
IV.E.4. Fair Use

At the time the anticircumvention provisions were being debated, there was concern that they would negate fair use of a copyrighted work, because if you cannot access the underlying copyrighted work without violating the anticircumvention provisions, you cant make a fair use of the work. But if you allow circumvention when the use is fair, there is no way to block the distribution of circumvention devices, since everybody selling them would say that they are to be used only for noninfringing activities (and wink when they say it). The anticircumvention provision does not negate fair use of material that is protected by an access control mechanism. While it may stop a creator of a new work from copying from the protected work with a couple of clicks of a mouse, it cant stop that creator from retyping the passage. The Second Circuit, in Universal City Studios v. Corley, {FN163:273 F.3d 429, 60 USPQ2d 1953 (2d Cir. 2001)} stated: The Appellants have provided no support for their premise that fair use of DVD movies is constitutionally required to be made by copying the original work in its original format. Their examples of the fair uses that they believe others will be prevented from making all involve copying in a digital format those portions of a DVD movie amenable to fair use, a copying that would enable the fair user to manipulate the digitally copied portions. One example is that of a school child who wishes to copy images from a DVD movie to insert into the students documentary film. We know of no authority for the proposition that fair use, as protected by the Copyright Act, much less the Constitution, guarantees copying by the optimum method or in the identical format of the original. Although the Appellants insisted at oral argument that they should not be relegated to a horse and buggy technique in making fair use of DVD movies, the DMCA does not impose even an arguable limitation on the opportunity to make a variety of traditional fair uses of DVD movies, such as commenting on their content, quoting excerpts from their screenplays, and even recording portions of the video images and sounds on film or tape by pointing a camera, a camcorder, or a microphone at a monitor as it displays

the DVD movie. The fact that the resulting copy will not be as perfect or as manipulable as a digital copy obtained by having direct access to the DVD movie in its digital form, provides no basis for a claim of unconstitutional limitation of fair use. A film critic making fair use of a movie by quoting selected lines of dialogue has no constitutionally valid claim that the review (in print or on television) would be technologically superior if the reviewer had not been prevented from using a movie camera in the theater, nor has an art student a valid constitutional claim to fair use of a painting by photographing it in a museum. Fair use has never been held to be a guarantee of access to copyrighted material in order to copy it by the fair users preferred technique or in the format of the original. {FN164:273 F.3d at 459, 60 USPQ2d at 1973-1974} In United States. v. Elcom, {FN165: 203 F.Supp.2d 1111, 62 USPQ2d 1736 (N.D. Cal. 2002)} a recent district court decision regarding the criminal liability of a Russian company that was distributing a program for circumventing the protection mechanism for Adobe electronic books, the trial judge (who had also written the decision in the landmarkNetcom case {FN166: 907 F.Supp. 1361, 37 USPQ2d 1545 (N.D. Cal. 1995)} as well as a number of other computertechnology-related cases) reached the same conclusion as the Second Circuit: that the DMCA does not eliminate fair use, although it might make it less convenient. He also upheld the DMCA against a number of constitutional and other challenges. Any restrictions imposed by technological measures supported by the DMCA are unlikely to prevent the creation of works for criticism, comment, news reporting, teaching, scholarship, or research {FN167: See 17 U.S.C. 107} that are transformative rather than simply copies, held to be a touchstone for fair use by the Supreme Court in Campbell v. Acuff-Rose Music. {FN168: 510 U.S. 569, 29 USPQ2d 1961 (1994)} The creation of a transformative work that is truly a fair use is not an infringement of copyright, and therefore does not run afoul of Section 1201(b) {FN169: 17 U.S.C. 1201(b)} even if a protection mechanism is circumvented. And, since to invoke the fair use exception, an individual must possess an authorized copy of a literary work, {FN170: Atari v. Nintendo, 975 F.2d 832, 843, 24 USPQ2d 1015, 1024 (Fed. Cir. 1992)} the creator of the transformative work can simply look at that copy while creating his transformative work, which should not require circumvention in violation of Section 1201(a)(1). {FN171: 17 U.S.C. 1201(a)(1)}
IV.E.5. What Anticircumvention Isnt

Congress also added two other subsections saying what the anticircumvention provisions were not, just for good measure. (3) Nothing in this section shall require that the design of, or design and selection of parts and components for, a consumer electronics, telecommunications, or computing product provide for a response to any particular technological measure, so long as such part or component, or the product in which such part or component is integrated, does not otherwise fall within the prohibitions of subsection (a)(2) or (b)(1). (4) Nothing in this section shall enlarge or diminish any rights of free speech or the press for activities using consumer electronics, telecommunications, or computing products. {FN172: 17 U.S.C. 1201(c)} Paragraph (3) is particularly important, since it makes it clear that there is no design mandate in the anticircumvention provisions except not to produce a circumvention device. The mere fact

that a technological measure has been developed does not require manufacturers of existing equipment or developers of new equipment to include that technological measure in their product, as long as they avoid acts that would be considered trafficking in a circumvention device. Some content providers, unhappy with the compromises made in the DMCA, are now supporting legislation that would mandate a protection mechanism for every digital device that can reproduce copyrighted works (which is just about every device that contains a microprocessor that can load a program or data into its memory). {FN173: See, for example, the Consumer Broadband and Digital Television Promotion Act, S. 2048, introduced in the 107th Congress} It is unlikely that such a protection mechanism would be any more effective than the anticircumvention provisions of the DMCA as long as there were still computers that did not have the mandated protection mechanism. And it is economically unfeasible to replace each of the hundreds of millions of personal computers in the world. Paragraph (4) is just window dressing, since Congress cant pass a law that diminishes the rights of free speech or a free press and have it upheld in court, much as it sometimes may want to.

Chapter 3: Copyright of Digital Information

IV.E.6. Rights Management Information

The second aspect of the WIPO Copyright Treaty addressed in the DMCA is the protection of rights management information. The corresponding provision in the DMCA is codified as Section 1202: No person shall knowingly and with the intent to induce, enable, facilitate, or conceal infringement: (1) provide copyright management information that is false, or (2) distribute or import for distribution copyright management information that is false. (b) Removal or Alteration of Copyright Management Information. No person shall, without the authority of the copyright owner or the law: (1) intentionally remove or alter any copyright management information, (2) distribute or import for distribution copyright management information knowing that the copyright management information has been removed or altered without authority of the copyright owner or the law, or (3) distribute, import for distribution, or publicly perform works, copies of works, or phonorecords, knowing that copyright management information has been removed or altered without authority of the copyright owner or the law, knowing, or, with respect to civil remedies under section 1203, having reasonable grounds to know, that it will induce, enable, facilitate, or conceal an infringement of any right under this title. {FN174: 17 U.S.C. 1202(a)} It defines copyright management information as any of the following information conveyed in connection with copies or phonorecords of a work or performances or displays of a work, including in digital form, except that such term does not include any personally identifying information about a user of a work or of a copy, phonorecord, performance, or display of a work: (1) The title and other information identifying the work, including the information set forth on a notice of copyright.

(2) The name of, and other identifying information about, the author of a work. (3) The name of, and other identifying information about, the copyright owner of the work, including the information set forth in a notice of copyright. (4) With the exception of public performances of works by radio and television broadcast stations, the name of, and other identifying information about, a performer whose performance is fixed in a work other than an audiovisual work. (5) With the exception of public performances of works by radio and television broadcast stations, in the case of an audiovisual work, the name of, and other identifying information about, a writer, performer, or director who is credited in the audiovisual work. (6) Terms and conditions for use of the work. (7) Identifying numbers or symbols referring to such information or links to such information. (8) Such other information as the Register of Copyrights may prescribe by regulation, except that the Register of Copyrights may not require the provision of any information concerning the user of a copyrighted work. {FN175: 17 U.S.C. 1202(c)} At the present time, there are few, if any, rights management systems. Perhaps the most interesting use for rights management information today is as a trigger for an access control mechanism, such that the copyright owner can specify the types of accesses that are to be allowed or blocked. As such, rights management is closely related to access control.

Chapter 3: Copyright of Digital Information

IV.E.7. Permitted Circumventions

A number of specific exceptions to the anticircumvention provisions are given in Subsections (d) through (j), including exceptions for libraries and educational institutions, law enforcement, reverse engineering, encryption research, and security testing. As with the DMCA safe harbor provisions, these are very specific exceptions and to fall within that exception, a work must meet all of its requirements. IV.E.7.a. Law Enforcement, Content Filters, and Privacy When the Administration first proposed the anticircumvention and rights management provisions, there were no exceptions. Opponents to the legislation seized on this, pointing out that the provisions would cripple law enforcement, since it would become illegal, for example, to access digital information kept by organized crime or a terrorist if it were protected by an access control mechanism. The opponents likely felt that this would cause the proponents to drop the legislation, propose a substantially different approach, or change the legislation to allow any lawful access. Instead, the Administration simply added an exception, both to anticircumvention (Section 1201(e)) and to rights management (Section 1202(d)), directed specifically at law enforcement: This section does not prohibit any lawfully authorized investigative, protective, information security, or intelligence activity of an officer, agent, or employee of the United States, a State, or a political subdivision of a State, or a person acting

pursuant to a contract with the United States, a State, or a political subdivision of a State. For purposes of this subsection, the term information security means activities carried out in order to identify and address the vulnerabilities of a government computer, computer system, or computer network. {FN176: 17 U.S.C. 1201(e), 1202(d)} Another fear that was raised by the opponents is that the anticircumvention provision would somehow prevent blocking of harmful information to minors. That was then addressed by Section 1201(h): In applying subsection (a) to a component or part, the court may consider the necessity for its intended and actual incorporation in a technology, product, service, or device, which (1) does not itself violate the provisions of this title; and (2) has the sole purpose to prevent the access of minors to material on the Internet. {FN177: 17 U.S.C. 1201(h)} Yet another horror raised by the opponents was that the anticircumvention provision would make it impossible to protect personal information. And again, an exemption addressing the problem was added, in this case Section 1201(i): (1) Circumvention Permitted. Notwithstanding the provisions of subsection (a)(1)(A), it is not a violation of that subsection for a person to circumvent a technological measure that effectively controls access to a work protected under this title, if (A) the technological measure, or the work it protects, contains the capability of collecting or disseminating personally identifying information reflecting the online activities of a natural person who seeks to gain access to the work protected; (B) in the normal course of its operation, the technological measure, or the work it protects, collects or disseminates personally identifying information about the person who seeks to gain access to the work protected, without providing conspicuous notice of such collection or dissemination to such person, and without providing such person with the capability to prevent or restrict such collection or dissemination; (C) the act of circumvention has the sole effect of identifying and disabling the capability described in subparagraph (A), and has no other effect on the ability of any person to gain access to any work; and (D) the act of circumvention is carried out solely for the purpose of preventing the collection or dissemination of personally identifying information about a natural person who seeks to gain access to the work protected, and is not in violation of any other law. (2) Inapplicability to Certain Technological Measures. This subsection does not apply to a technological measure, or a work it protects, that does not collect or disseminate personally identifying information and that is disclosed to a user as not having or using such capability. {FN178: 17 U.S.C. 1201(i)}

IV.E.7.b. Libraries and Educational Institutions Perhaps the least useful exception to the anticircumvention provisions is the one provided to nonprofit libraries, archives, and educational institutions in Section 1201(d). (1) A nonprofit library, archives, or educational institution which gains access to a commercially exploited copyrighted work solely in order to make a good faith determination of whether to acquire a copy of that work for the sole purpose of engaging in conduct permitted under this title shall not be in violation of subsection (a)(1)(A). A copy of a work to which access has been gained under this paragraph (A) may not be retained longer than necessary to make such good faith determination; and (B) may not be used for any other purpose. (2) The exemption made available under paragraph (1) shall only apply with respect to a work when an identical copy of that work is not reasonably available in another form. (3) A nonprofit library, archives, or educational institution that willfully for the purpose of commercial advantage or financial gain violates paragraph (1) (A) shall, for the first offense, be subject to the civil remedies under section 1203; and (B) shall, for repeated or subsequent offenses, in addition to the civil remedies under section 1203, forfeit the exemption provided under paragraph (1). (4) This subsection may not be used as a defense to a claim under subsection (a)(2) or (b), nor may this subsection permit a nonprofit library, archives, or educational institution to manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, component, or part thereof, which circumvents a technological measure. (5) In order for a library or archives to qualify for the exemption under this subsection, the collections of that library or archives shall be (A) open to the public; or (B) available not only to researchers affiliated with the library or archives or with the institution of which it is a part, but also to other persons doing research in a specialized field. {FN179: 17 U.S.C. 1201(d)} It is hard to imagine a narrower provision, and one less useful to libraries. It allows them to circumvent an access control mechanism only to determine whether they want to acquire the protected work. They can circumvent the control mechanism only to get access to the work and not to infringe any of the exclusive rights of the copyright owner, since the exception applies only to Section 1201(a)(1)(A). They have to do the circumvention all on their own, because there are no legal circumvention devices under Sections 1201(a)(2) and 1201(b). And they cant help another library do a similar circumvention. All-in-all, a pretty useless exception. This is probably because the library community concentrated on opposing the passage of the DMCA, rather than working to improve it with provisions that would overcome, or at least limit, the problems that they perceived, as well as suggesting approaches that would help libraries so that the overall effect of the DMCA on libraries would be positive. For example, they could have worked for a provision that an unprotected copy of any work protected by an access control mechanism had to be deposited in the Library of Congress, so that

the information would not be lost in the future if there were no longer devices that supported the access control mechanism. While such a deposit cannot be required for copyright protection under the non-formalities Berne Convention, Congress made it clear that the anticircumvention and rights management provisions of the DMCA were only related to copyright, and not to copyright protection itself.

Chapter 3: Copyright of Digital Information

IV.E.7.c. Reverse Engineering A group that did know what they wanted as an exception, and got it, was the people who were concerned that technological controls could block access to a computer program that was being reverse engineered to find out how it worked, and allow it to interoperate with other computer programs. In Sega v. Accolade, {FN180: 977 F.2d 1510, 24 USPQ2d 1561 (9th Cir. 1992)} the Ninth Circuit had found that such reverse engineering was a fair use, even though verbatim copies of the entire code for a game or game console were made as intermediate steps in the reverse engineering. There had been some controversy over whether Sega v. Accolade and a similar decision from the Federal Circuit, Atari v. Nintendo, {FN181: 975 F.2d 832, 24 USPQ2d 1015 (Fed. Cir. 1992)} were correctly decided, but Congress endorsed their holdings in the DMCAs legislative history.{FN182: Sen. Rep. No. 105-190 at 32} (1) Notwithstanding the provisions of subsection (a)(1)(A), a person who has lawfully obtained the right to use a copy of a computer program may circumvent a technological measure that effectively controls access to a particular portion of that program for the sole purpose of identifying and analyzing those elements of the program that are necessary to achieve interoperability of an independently created computer program with other programs, and that have not previously been readily available to the person engaging in the circumvention, to the extent any such acts of identification and analysis do not constitute infringement under this title. (4) For purposes of this subsection, the term interoperability means the ability of computer programs to exchange information, and of such programs mutually to use the information which has been exchanged. {FN183: 17 U.S.C. 1201(f)} While this provision applies only to circumventing an access control, and not circumventing a protection system to infringe one of the exclusive rights, that is all that was needed by the reverse engineers. They already had their court decisions that, if properly done, reverse engineering was a fair use and so wouldnt violate any rights protected by a control mechanism under 1201(b). And because a rights management system on its own, and not working in conjunction with an access control mechanism, still allowed the viewing of the program being reverse engineered, they didnt need an exception to Section 1202. They also got an exception to the trafficking provisions, and the right to share the information they learned: (2) Notwithstanding the provisions of subsections (a)(2) and (b), a person may develop and employ technological means to circumvent a technological measure, or to circumvent protection afforded by a technological measure, in order to enable the identification and analysis under paragraph (1), or for the purpose of enabling interoperability of an independently created computer program with other

programs, if such means are necessary to achieve such interoperability, to the extent that doing so does not constitute infringement under this title. (3) The information acquired through the acts permitted under paragraph (1), and the means permitted under paragraph (2), may be made available to others if the person referred to in paragraph (1) or (2), as the case may be, provides such information or means solely for the purpose of enabling interoperability of an independently created computer program with other programs, and to the extent that doing so does not constitute infringement under this title or violate applicable law other than this section. {FN184: 17 U.S.C. 1201(f)}

Chapter 3: Copyright of Digital Information

IV.E.7.d. Encryption Research The Senate Judiciary Committee felt strongly that the provisions of the DMCA should not be used to stifle the very encryption research that led to the technological measures the DMCA would now protect. The purpose of the Committee in proposing enactment of section 1201 is to improve the ability of copyright owners to prevent the theft of their works, including by applying technological protection measures. The effectiveness of such measures depends in large part on the rapid and dynamic development of better technologies, including encryption-based technological protection measures. The development of encryption sciences requires, in part, ongoing research and testing activities by scientists of existing encryption methods, in order to build on those advances, thus promoting and advancing encryption technology generally. The goals of section 1201 would be poorly served if these provisions had the undesirable and unintended consequence of chilling legitimate research activities in the area of encryption. It is the view of the Committee, after having conducted extensive consultations, and having examined a number of hypothetical situations, that Section 1201 should not have such an unintended negative effect. It is the view of the Committee that generally available encryption testing tools would not be made illegal by this Act. Each of those tools has a legitimate and substantial commercial purpose testing security and effectiveness and are not prohibited by Section 1201. In addition, the testing of specific encryption algorithms would not fall within the scope of 1201, since mathematical formulas as such are not protected by copyright. Thus, testing of an encryption algorithm or program that has multiple uses, including a use as a technical protection measure for copyrighted works, would not fall within the prohibition of section 1201(a) when that testing is performed on the encryption when it is in a form not implemented as a technical protection measure. Similarly, the testing of encryption technologies developed by or on behalf of the government of the United States, would not violate section 1201 since copyright does not subsist in such subject matter. Finally, there are many situations in which encryption research will be undertaken with the consent or at the direction of the copyright owner and therefore will not give rise to any action under section 1201. {FN185: Sen. Rep. No. 105190 at 15}

While the Senate Judiciary Committee goes on to provide illustrations of encryption research that it believes would not be violations, and the reasons why, as discussions progressed on the DMCA it was felt that a specific exception for encryption research should be included. (1) Definitions.-For purposes of this subsection (A) the term encryption research means activities necessary to identify and analyze flaws and vulnerabilities of encryption technologies applied to copyrighted works, if these activities are conducted to advance the state of knowledge in the field of encryption technology or to assist in the development of encryption products; and (B) the term encryption technology means the scrambling and descrambling of information using mathematical formulas or algorithms. (2) Permissible Acts of Encryption Research. Notwithstanding the provisions of subsection (a)(1)(A), it is not a violation of that subsection for a person to circumvent a technological measure as applied to a copy, phonorecord, performance, or display of a published work in the course of an act of good faith encryption research if (A) the person lawfully obtained the encrypted copy, phonorecord, performance, or display of the published work; (B) such act is necessary to conduct such encryption research; (C) the person made a good faith effort to obtain authorization before the circumvention; and (D) such act does not constitute infringement under this title or a violation of applicable law other than this section, including section 1030 of title 18 and those provisions of title 18 amended by the Computer Fraud and Abuse Act of 1986. (3) Factors in Determining Exemption. In determining whether a person qualifies for the exemption under paragraph (2), the factors to be considered shall include (A) whether the information derived from the encryption research was disseminated, and if so, whether it was disseminated in a manner reasonably calculated to advance the state of knowledge or development of encryption technology, versus whether it was disseminated in a manner that facilitates infringement under this title or a violation of applicable law other than this section, including a violation of privacy or breach of security; (B) whether the person is engaged in a legitimate course of study, is employed, or is appropriately trained or experienced, in the field of encryption technology; and (C) whether the person provides the copyright owner of the work to which the technological measure is applied with notice of the findings and documentation of the research, and the time when such notice is provided. (4) Use of Technological Means for Research Activities.- Notwithstanding the provisions of subsection (a)(2), it is not a violation of that subsection for a person to (A) develop and employ technological means to circumvent a technological measure for the sole purpose of that person performing the acts of good faith encryption research described in paragraph (2); and

(B) provide the technological means to another person with whom he or she is working collaboratively for the purpose of conducting the acts of good faith encryption research described in paragraph (2) or for the purpose of having that other person verify his or her acts of good faith encryption research described in paragraph (2). {FN186: 17 U.S.C. 1201(g)} The test attempts to differentiate between people performing legitimate encryption research and those claiming that they are promoting encryption research when they are simply distributing a circumvention program. It is impossible to draw a bright line here, and any attempt may simply provide a road map for those wanting to distribute circumvention technology to find a loophole they can exploit. However, in most cases it will not be difficult for a court, viewing all the evidence, to determine whether the activity is legitimate. At one end of the spectrum is the scientific paper that indicates that a particular mechanism has been cracked and indicates the general approach used such that another encryption researcher can understand the technique. At the other end is a circumvention program distributed with little or no commentary on how it works. The easier it is for non-technical person to take the distributed result and use it for circumvention, the less it falls within the encryption research exception. Note that the encryption research exception applies only to circumventing an access control mechanism in violation of Section 1201(a)(1)(A), as is the case for the reverse engineering exception. However, unlike the reverse engineering exception, the encryption research exception does not provide an exception to the trafficking provisions of Sections 1201(a)(2) or 1201(b), which can be a problem when a computer program resulting from the research is distributed, or Section 1202, which could be violated by encryption research aimed at removing a digital watermark used for rights management. One hopes that the courts will look at Congress stated desire to protect legitimate encryption research and not find a violation of any of the DMCA provisions when such research clearly meets the encryption research test. Just to be on the safe side, Congress also asked the Copyright Office and the Commerce Department to determine whether these provisions were adequate to protect encryption research. Not later than 1 year after the date of the enactment of this chapter, the Register of Copyrights and the Assistant Secretary for Communications and Information of the Department of Commerce shall jointly report to the Congress on the effect this subsection has had on (A) encryption research and the development of encryption technology; (B) the adequacy and effectiveness of technological measures designed to protect copyrighted works; and (C) protection of copyright owners against the unauthorized access to their encrypted copyrighted works. The report shall include legislative recommendations, if any. {FN187: 17 U.S.C. 1201(g)(5)} The results of this joint study can be found at: http://www.loc.gov/copyright/reports/studies/ The studys conclusions were as follows: Of the 13 comments received in response to the Copyright Offices and NTIAs solicitation, not one identified a current, discernable impact on encryption research and the development of encryption technology; the adequacy and effectiveness of technological protection for copyrighted works; or protection of copyright owners against the unauthorized access to their encrypted copyrighted

works, engendered by Section 1201(g). Every concern expressed, or measure of support articulated, was prospective in nature, primarily because the prohibition and its attendant exceptions will not become operative until October 28, 2000. Given the forward-looking nature of the comments and the anticipated effective date of the section at issue, any conclusion would be entirely speculative. As such, we conclude that it is premature to suggest alternative language or legislative recommendations with regard to Section 1201(g) of the DMCA at this time. {FN188: United States Copyright Office, Report to Congress: Joint Study of Section 1201(g) of The Digital Millennium Copyright Act,http://www.copyright.gov/reports/studies/dmca_report.html (May 2000)} It is likely that there were no actual problems that could be identified in the one-year time frame for the report that Congress established, because there were few access control mechanisms in use and too little time for problems to surface. Already, the Recording Industry Association of America (RIAA) has sent a threatening letter {FN189: Letter from Matthew Oppenheim, dated April 9, 2001, http://www.eff.org/Legal/Cases/Felten_v_RIAA/20010409_riaa_sdmi_letter.html} to a university professor who was about to publish a paper discussing his cryptographic research in removing digital watermarks from musical recordings, causing him to withdraw his paper from the conference. The RIAA later said that it didnt mean to threaten him, and the paper was presented at another conference, but such acts can certainly chill legitimate encryption research. {FN190: An archive of information about the case can be found at http://www.eff.org/Legal/Cases/Felten_v_RIAA/} There was no acknowledgment in the RIAAs letter of the special exception provided by Congress for encryption researchers. In fact, it was more concerned about the perceived violation of the agreement for the contest to remove the digital watermarks than for a specific violation of the DMCA, although the possibility of a DMCA violation is also mentioned. A paper to be presented at a scientific conference that doesnt give step-by-step instructions on how to circumvent an access control mechanism is just what Congress intended to protect by the encryption research exception. Of course, the fact that somebody claims to be an encryption researcher doesnt necessarily mean that the exception applies. A paper that basically says, Heres a program that you can run to circumvent this access control mechanism should fall outside the encryption research exception. It will be up to the courts to determine where particular activities fall, but in many cases, it will be clear from the context of the activity. Congress needs to monitor whether legitimate encryption research is being chilled, and make it clear that there will be remedial legislation, both to clarify and extend the encryption research exception and to provide sanctions against those who misuse the DMCA to scare legitimate researchers who will withdraw a paper or stop their research rather than face legal expenses in defending their activities. Though Congress provided in Section 1203(b) for the award of attorneys fees and costs to a prevailing party, that is limited to suits brought claiming a violation of the anticircumvention or rights management provisions, and might not be available in a declaratory judgment action where a researcher who has received a threatening letter seeks to clarify that his work is not a violation. With traditional intellectual property, like patents and copyrights, an owner places his intellectual property at risk when he litigates an alleged infringement, or even when he writes a threatening letter that leads to a declaratory judgment action, because the patent might be found invalid or the copyright unenforceable in the litigation. There is no similar risk to somebody who

misrepresents that a legal act is a violation of the DMCA. Perhaps there should be, to discourage misuse of the DMCA in threatening letters.

Chapter 3: Copyright of Digital Information

IV.E.7.e. Code as Speech Restrictions on the dissemination of encryption research results raise the question of whether a computer program is protected speech, and what protection it deserves. The question is complicated because the same code conveys valuable information to those familiar with computer programming and controls the function of a machine. In the first appellate decision interpreting provisions of the DMCA, Universal City Studios v. Corley, {FN191: 273 F.3d 429, 60 USPQ2d 1953 (2nd Cir. 2001)} the Second Circuit addressed the code as speech question: Communication does not lose constitutional protection as speech simply because it is expressed in the language of computer code. Mathematical formulae and musical scores are written in code, i.e.,symbolic notations not comprehensible to the uninitiated, and yet both are covered by the First Amendment. If someone chose to write a novel entirely in computer object code by using strings of 1s and 0s for each letter of each word, the resulting work would be no different for constitutional purposes than if it had been written in English. The object code version would be incomprehensible to readers outside the programming community (and tedious to read even for most within the community), but it would be no more incomprehensible than a work written in Sanskrit for those unversed in that language. The undisputed evidence reveals that even pure object code can be, and often is, read and understood by experienced programmers. And source code (in any of its various levels of complexity) can be read by many more. Ultimately, however, the ease with which a work is comprehended is irrelevant to the constitutional inquiry. If computer code is distinguishable from conventional speech for First Amendment purposes, it is not because it is written in an obscure language. Of course, computer code is not likely to be the language in which a work of literature is written. Instead, it is primarily the language for programs executable by a computer. These programs are essentially instructions to a computer. In general, programs may give instructions either to perform a task or series of tasks when initiated by a single (or double) click of a mouse or, once a program is operational (launched), to manipulate data that the user enters into the computer. Whether computer code that gives a computer instructions is speech within the meaning of the First Amendment requires consideration of the scope of the Constitutions protection of speech. {FN192: 273 F.3d at 445-446, 60 USPQ2d at 19631964 (citations omitted)} The court, after discussing the scope of the First Amendments protection for speech, particularly for scientific writings, goes on: Computer programs are not exempted from the category of First Amendment speech simply because their instructions require use of a computer. A recipe is no less speech because it calls for the use of an oven, and a musical score is no less speech because it specifies performance on an electric guitar. Arguably

distinguishing computer programs from conventional language instructions is the fact that programs are executable on a computer. But the fact that a program has the capacity to direct the functioning of a computer does not mean that it lacks the additional capacity to convey information, and it is the conveying of information that renders instructions speech for purposes of the First Amendment. The information conveyed by most instructions is how to perform a task. Instructions such as computer code, which are intended to be executable by a computer, will often convey information capable of comprehension and assessment by a human being. A programmer reading a program learns information about instructing a computer, and might use this information to improve personal programming skills and perhaps the craft of programming. Moreover, programmers communicating ideas to one another almost inevitably communicate in code, much as musicians use notes. Limiting First Amendment protection of programmers to descriptions of computer code (but not the code itself) would impede discourse among computer scholars, just as limiting protection for musicians to descriptions of musical scores (but not sequences of notes) would impede their exchange of ideas and expression. Instructions that communicate information comprehensible to a human qualify as speech whether the instructions are designed for execution by a computer or a human (or both). {FN193: 273 F.3d at 447-448, 60 USPQ2d at 19641965} But having determined that code is speech does not answer the question of what protection it enjoys. Even though the First Amendment to the Constitution says that Congress shall make no law . . . abridging the freedom of speech, the reality is not so absolute. Congress has passed many laws that restrict speech, such as forbidding a company from providing fraudulent financial information to prospective investors. As the court noted: the scope of protection for speech generally depends on whether the restriction is imposed because of the content of the speech. Content-based restrictions are permissible only if they serve compelling state interests and do so by the least restrictive means available. A content-neutral restriction is permissible if it serves a substantial governmental interest, the interest is unrelated to the suppression of free expression, and the regulation is narrowly tailored, which in this context requires that the means chosen do not burden substantially more speech than is necessary to further the governments legitimate interests. {FN194: 273 F.3d at 450, 60 USPQ2d at 1966 (citations omitted)} In the case before the Second Circuit, the operator of a Web site had posted a copy of a program called DeCSS that circumvented the Content Scrambling System (CSS) used to protect movies on a DVD: The initial issue is whether the posting prohibition is content-neutral, since, as we have explained, this classification determines the applicable constitutional standard. The Appellants contend that the anti-trafficking provisions of the DMCA and their application by means of the posting prohibition of the injunction are content-based. They argue that the provisions specifically target . . . scientific expression based on the particular topic addressed by that expression namely, techniques for circumventing CSS. We disagree. The Appellants argument fails to recognize that the target of the posting provisions of the injunction DeCSS

has both a nonspeech and a speech component, and that the DMCA, as applied to the Appellants, and the posting prohibition of the injunction target only the nonspeech component. Neither the DMCA nor the posting prohibition is concerned with whatever capacity DeCSS might have for conveying information to a human being, and that capacity, as previously explained, is what arguably creates a speech component of the decryption code. The DMCA and the posting prohibition are applied to DeCSS solely because of its capacity to instruct a computer to decrypt CSS. That functional capability is not speech within the meaning of the First Amendment. The Government seeks to justify both the application of the DMCA and the posting prohibition to the Appellants solely on the basis of the functional capability of DeCSS to instruct a computer to decrypt CSS, i.e.,without reference to the content of the regulated speech. This type of regulation is therefore contentneutral, just as would be a restriction on trafficking in skeleton keys identified because of their capacity to unlock jail cells, even though some of the keys happened to bear a slogan or other legend that qualified as a speech component. As a content-neutral regulation with an incidental effect on a speech component, the regulation must serve a substantial governmental interest, the interest must be unrelated to the suppression of free expression, and the incidental restriction on speech must not burden substantially more speech than is necessary to further that interest. The Governments interest in preventing unauthorized access to encrypted copyrighted material is unquestionably substantial, and the regulation of DeCSS by the posting prohibition plainly serves that interest. Moreover, that interest is unrelated to the suppression of free expression. The injunction regulates the posting of DeCSS, regardless of whether DeCSS code contains any information comprehensible by human beings that would qualify as speech. Whether the incidental regulation on speech burdens substantially more speech than is necessary to further the interest in preventing unauthorized access to copyrighted materials requires some elaboration. Posting DeCSS on the Appellants web site makes it instantly available at the click of a mouse to any person in the world with access to the Internet, and such person can then instantly transmit DeCSS to anyone else with Internet access. Although the prohibition on posting prevents the Appellants from conveying to others the speech component of DeCSS, the Appellants have not suggested, much less shown, any technique for barring them from making this instantaneous worldwide distribution of a decryption code that makes a lesser restriction on the codes speech component. It is true that the Government has alternative means of prohibiting unauthorized access to copyrighted materials. For example, it can create criminal and civil liability for those who gain unauthorized access, and thus it can be argued that the restriction on posting DeCSS is not absolutely necessary to preventing unauthorized access to copyrighted materials. But a content-neutral regulation need not employ the least restrictive means of accomplishing the governmental objective. It need only avoid burdening substantially more speech than is necessary to further the governments legitimate interests. The prohibition on the Defendants posting of DeCSS satisfies that standard. {FN195: 273 F.3d at 453-455, 60 USPQ2d at 1969-1970 (citations omitted)}

A similar finding that the DMCA did not unconstitutionally restrict free speech was reached in a preliminary ruling in U.S. v. Elcom, {FN196: 203 F.Supp.2d 1111, 62 USPQ2d 1736 (N.D. Cal. 2002)} the criminal trial of a Russian software company that distributed a program capable of circumventing the protection for Adobe electronic books.

Chapter 3: Copyright of Digital Information

IV.E.7.f. Security Testing The final exception addresses security testing of computer systems, and is much like the reverse engineering and encryption research exceptions in that it applies only to the circumvention of an access control mechanism. The provision was added in the conference between the Senate and House that developed the final language for the DMCA, after they saw that the encryption research exception might be too narrow to allow some legitimate security testing: The conferees recognize that technological measures may also be used to protect the integrity and security of computers, computer systems or computer networks. It is not the intent of this act to prevent persons utilizing technological measures in respect of computers, computer systems or networks from testing the security value and effectiveness of the technological measures they employ, or from contracting with companies that specialize in such security testing. Thus, in addition to the exception for good faith encryption research contained in Section 1201(g), the conferees have adopted Section 1201(j) to resolve additional issues related to the effect of the anti-circumvention provision on legitimate information security activities. First, the conferees were concerned that Section 1201(g)s exclusive focus on encryption-related research does not encompass the entire range of legitimate information security activities. Not every technological means that is used to provide security relies on encryption technology, or does so to the exclusion of other methods. Moreover, an individual who is legitimately testing a security technology may be doing so not to advance the state of encryption research or to develop encryption products, but rather to ascertain the effectiveness of that particular security technology. The conferees were also concerned that the anti-circumvention provision of Section 1201(a) could be construed to inhibit legitimate forms of security testing. It is not unlawful to test the effectiveness of a security measure before it is implemented to protect the work covered under title 17. Nor is it unlawful for a person who has implemented a security measure to test its effectiveness. In this respect, the scope of permissible security testing under the Act should be the same as permissible testing of a simple door lock: a prospective buyer may test the lock at the store with the stores consent, or may purchase the lock and test it at home in any manner that he or she sees fitfor example, by installing the lock on the front door and seeing if it can be picked. What that person may not do, however, is test the lock once it has been installed on someone elses door, without the consent of the person whose property is protected by the lock. {FN197:H.R. Rep. No. 105796 at 66-67} The provision is limited to authorized testing, and the results of the testing should be conveyed to the system operator to assist in making the system more secure. It is not an excuse to post the results, or the techniques used to crack a system, to the public.

(1) Definition. For purposes of this subsection, the term security testing means accessing a computer, computer system, or computer network, solely for the purpose of good faith testing, investigating, or correcting, a security flaw or vulnerability, with the authorization of the owner or operator of such computer, computer system, or computer network. (2) Permissible Acts of Security Testing. Notwithstanding the provisions of subsection (a)(1)(A), it is not a violation of that subsection for a person to engage in an act of security testing, if such act does not constitute infringement under this title or a violation of applicable law other than this section, including section 1030 of title 18 and those provisions of title 18 amended by the Computer Fraud and Abuse Act of 1986. (3) Factors in Determining Exemption. In determining whether a person qualifies for the exemption under paragraph (2), the factors to be considered shall include (A) whether the information derived from the security testing was used solely to promote the security of the owner or operator of such computer, computer system or computer network, or shared directly with the developer of such computer, computer system, or computer network; and (B) whether the information derived from the security testing was used or maintained in a manner that does not facilitate infringement under this title or a violation of applicable law other than this section, including a violation of privacy or breach of security. (4) Use of Technological Means for Security Testing. Notwithstanding the provisions of subsection (a)(2), it is not a violation of that subsection for a person to develop, produce, distribute or employ technological means for the sole purpose of performing the acts of security testing described in subsection (2), provided such technological means does not otherwise violate section (a)(2). {FN198: 17 U.S.C. 1201(j)}

Chapter 4: An Overview of Patents

I. History
Patents as a way for government to promote innovation by rewarding an inventor with a monopoly on his or her invention for a limited term predate the founding of the United States. The English Statute of Monopolies of 1623 provided an exception to its general condemnation of monopolies by providing the true and first inventor of a new manufacture up to fourteen years of exclusivity as long as they be not contrary to the law nor mischievous to the state by raising prices of commodities at home, or hurt of trade, or generally inconvenient. With the new Constitution, the Congress was given the power to promote the Progress of Science and the useful Arts, by securing, for limited Times, to Authors and Inventors, the exclusive Right to their respective Writings and Discoveries. {FN1: U.S. Const., Article I, 8} the Patent and Copyright Clause. As the terms were used at that time, science referred to knowledge, and the useful arts are what we now call technology. One can see that there are two parallel themes running through the clause: science-authors-writings and useful arts-inventors-discoveries.

I.A. The Patent Act of 1790

The First Congress passed the first United States patent law during its second session, and President Washington signed it into law on April 10, 1790 (49 days before Rhode Island ratified the Constitution and became the thirteenth state). It authorized the granting of a patent for any useful art, manufacture, engine, machine, or device, or any improvement therein not before known or used. The invention also had to be sufficiently useful and important. The term for a patent was fourteen years, following the lead of the English Statute of Monopolies. The decision to grant a patent resided with three cabinet members: the Secretary of State (Thomas Jefferson), the Secretary of War (Henry Knox), and the Attorney General (Edmund Randolph), collectively referred to as the Commissioners for the Promotion of the Useful Arts. The first patent, for a method for producing potash, was issued on July 31, 1790.

I.B. The Patent Act of 1793

It was difficult for the three cabinet members to find time in their busy schedules to decide whether a patent should be issued. In 1793, Congress passed a new patent law that went to the other extreme no examination of an application was performed before a patent was issued. That does not mean that all requirements for a patent were abolished. Patents were limited to any new and useful art, machine, manufacture or composition of matter, or any new and useful improvement on any art, machine, manufacture or composition of matter. (The same language continues today as Section 101, {FN2: 35 U.S.C. 101} with the more contemporary term process replacing art in a 1952 recodification.) While the requirement that the patented invention had to be useful continued, it was no longer necessary that it be important, a difficult thing to decide at the time when something has just been invented. Instead of examining a patent application to determine whether the invention met the requirements of the Act, it was up to the courts to declare a patent invalid if it lacked novelty or was not properly described in the application. As more patents were issued, this became a burden on the courts.

I.C. The Patent Act of 1836

The Patent Act of 1836 restored examination of applications before a patent was granted, but this time placed the responsibility with a Patent Office that was not charged with other responsibilities. It required that the applicant not only describe his or her invention, but include claim language to determine the scope of the patent. It required that the invention not be on sale or in public use at the time of the application, although in 1839 Congress amended the law to provide a two-year grace period before filing an application (shortened to the current one year in 1939). The patent term of fourteen years could also be extended up to seven more years upon application to the Commissioner of the Patent Office. If there were objections to an extension, a board consisting of the Secretary of State, the Commissioner of the Patent Office, and the Solicitor of the Treasury would decide if an extension would be granted and the length of any extension. This was changed in 1861 to a fixed term of seventeen years.

I.D. Later Recodifications

In 1870 and again in 1952, Congress recodified the patent laws. These recodifications did not make major changes to the patent system established by the Patent Act of 1836 but clarified many of the Patent Office procedures (such as establishing a formal interference procedure when two applications attempt to claim the same invention) and incorporated (or, in some cases, altered) the various court decisions regarding the patentability of an invention and the requirements for receiving a patent. In 1995, the patent term was changed from seventeen years from the issuance of the patent to twenty years from the filing date of the first application leading to the patent. Since the average pendency of a patent application at that time was under two years, this generally provided for an increased patent term. However, delays caused by the Patent Office could increase the pendency of an application to more than three years, resulting in a patent term of less than seventeen years. In 1999, Congress enacted the American Inventors Protection Act {FN3: Pub. L. 106-113, 113 Stat. 1501A-552} which guaranteed a patent term of seventeen years for diligent applicants.

Chapter 4: An Overview of Patents

II. Why Patents?
A patent is a way to get an inventor of a new device or method to reveal that device or method to the public, so that people can learn how to make and use it and possibly develop improvements. In trade for describing the invention in a publicly-available document, the patentee is given the exclusive right to make and use the invention for a period of time. But after the patent expires, anybody can practice (make, use, or sell) the invention. Unlike trade secrets, which are protected because information is kept private, information about how to make and use a patented invention is made available to the public in trade for legal protection. Even the word patent means open to the public, readily visible or intelligible, and what we call a patent is really short for letters patent an open government letter granting a privilege. Besides patents protecting inventions, there are also, for example, patents that convey land from the government to an individual or group. Perhaps the best illustration of how a patent benefits the public by encouraging disclosure in return for a period of exclusivity is the plain-paper copier (the Xerox machine). Before the invention of that copier, copies had to be made using expensive and messy systems like photography, heat-sensitive paper, or mimeographs and ditto machines. That changed when a patent attorney came up with an electrostatic copying method. Because the patent attorney was the first to invent the technique, he received a patent giving him the exclusive right to practice the invention for 17 years. (The duration of a patent has changed somewhat since; it is now 20 years from the date the patent application is filed, extended if there are delays caused by the patent office.) During the patents term, the Xerox company was formed to build and market the patented copier, and if you wanted such a copier you could get it only from Xerox. By the time the patent expired, Xerox was an established company, and companies like IBM and Canon joined Xerox in building and marketing plain-paper copiers. There are really three types of patents utility, plant, and design. Our discussion will be limited to utility patents, which are the most common type. Design patents protect the ornamental design of an article and not its functions, and are therefore sort of a super-copyright for designs that are truly new and nonobvious, rather than just not copied, the requirement for copyright. Plant patents cover asexually-reproduced plants.

Unlike copyright, where legal protection comes into being when original expression is fixed in a tangible medium of expression, or trade secrets, which exist as long as they are kept secrets, patent protection requires the submission of an application to the United States Patent and Trademark Office (USPTO, also called the PTO or Patent Office), an agency in the Department of Commerce. The Patent Office examines the application and, if it is satisfactory, grants the patent.

Chapter 4: An Overview of Patents

III. What Can Be Patented III.A. Basic Requirements
The requirements for a patent are given in Section 101 of the Patent Act: Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title. {FN4: 35 U.S.C. 101} This language remains essentially unchanged from the Patent Act of 1793, except for replacing the word art with the more up-to-date term process. (In Section 100, a process is defined as a process, art or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material. {FN5: 35 U.S.C. 100(b)}) Whoever invents means that patents are granted to inventors, not to the companies that employ them, although the invention is generally assigned by the inventor to the employer. There is no automatic work for hire provision in the Patent Act, in contrast to the Copyright Act, although under common law the employer may have a shop right to use an invention that was developed using its resources. And in cases where it is clear that a person was employed specifically to invent the invention claimed in the patent, a court may find that there is an implied contract to assign the rights to the invention to the employer. Invents or discovers requires that the patentee be the actual creator and not just the first person to come upon something that already exists, even though discovers makes it seem as though a person can get a patent on some naturally-occurring substance if he or she was the first person to find it. But courts have consistently held that one cannot get a patent on laws of nature or natural phenomena, even if nobody else has identified them before. Of course, one can get a patent on a new use for a law of nature or natural phenomenon, since any new invention has to follow the laws of nature. The invention must also be useful. Usefulness, or utility, is not a hard test, but simply means that the invention does something desirable. The Patent Office invariably rejects applications for inventions that appear to be perpetual motion machines. A perpetual motion machine is one of the few inventions for which the Patent Office requires an operative model for the examiner to review. (Presumably, if the model does in fact run forever without additional energy, a patent would be granted.) A more common example of an application that is rejected because the invention lacks utility is an application for a composition of matter with no known use other than the investigation of the properties of the composition. The same reason was used recently in rejecting an application filed by the National Institutes of Health for a collection of DNA sequences that had been isolated and identified by its investigators. Because the genetic meaning of the sequences was not known at the

time of the application, there was no utility shown for the invention and the application was rejected. (The question of whether these naturally-occurring sequences were an invention was not addressed.) Section 101 requires that the invention also be new. The concept of a new invention has two different aspects. First, the invention must be novel, which means that it has never existed before. But beyond that, it must not be obvious in light of what is known at the time of its invention. These concepts are key to determining whether a patent will be issued or is valid and will be discussed in detail later. Patents can be granted for a machine, or mechanical device; a composition of matter, or chemical composition or other substance; a process, or method of doing something; or a manufacture, which is a catch-all category described in the congressional report that accompanied the passage of the Patent Act in 1952 as anything under the sun that is made by man. {FN6: Sen. Rep. No. 82-1979 at 5, H.R. Rep. No. 82-1923 at 6 (1952)} Patents can also be granted on an improvement to something in one of these categories. Essentially, anything technological is patentable subject matter. It is not necessary to state what category the invention falls into, although it is generally obvious. Statutory subject matter must, of necessity, be expressed in broad terms. Because patents are granted for new technology, it is not possible for Congress to enumerate specific categories (such as software-based inventions) in the patent statutes. Such enumeration would necessarily mean that truly pioneering inventions that define a new field could not be patented, since their field would be added by Congress only after it was recognized. This would clearly be an unfair and undesirable result, and is prevented by the broad sweep of the statute. The same language has served for over 200 years, despite dramatic changes in technology.

III.B. Exceptions To The Broad Classes

Though the broad language of Section 101 does seem to cover anything under the sun that is made by man, there are a number of exceptions that are created by other statutes or by court decisions interpreting the language. A statutory exception prohibits patenting any invention, or discovery which is used solely in the utilization of special nuclear material or atomic energy in an atomic weapon. {FN7: 42 U.S.C. 2181(a)}
III.B.1. Laws of Nature

Laws of nature, natural phenomena, and naturally-occurring products are not patentable. Newton could not have received a patent on gravity nor Einstein on E=MC2. That is because neither was the inventor of the law or product of nature. Even though the Patent Act uses the phrase invents or discovers, many court decisions have held that a naturally-occurring product cannot be patented, even by the person who first discovers it. To allow such a patent would allow the discoverer to control the making of the product, even though it happens naturally. It would remove the product from the public domain, contrary to the principles of patent law. An alternative explanation of why first discoverers of naturally-occurring products, laws of nature, or natural phenomena cannot receive a patent on their discoveries is that the discoveries are not new processes, machines, manufactures, or compositions of matter. They may not have been known, but they existed before their first discovery. One can receive a patent on a machine, manufacture, or composition of matter that is based on a law of nature. All machines must obey the laws of physics in their operation; compositions of

matter must follow the laws of chemistry. One might even receive a patent on a naturally-occurring product that is changed to a substantially-different form, such as a biologically-pure strain of a microorganism. One can certainly receive a patent on a new use for a naturally-occurring product, although that patent would protect only the use and not the product itself.
III.B.2. Abstract Ideas

Abstract ideas, such mathematical formulas, are not patentable. They are neither a process, machine, manufacture, nor composition of matter. They lack utility, since they have no particular use, much like a composition of matter whose uses are unknown. The application of an abstract idea toward the solution of a problem results in something that is no longer an abstract idea. It could be a product (machine, manufacture, or composition of matter) based on the abstract idea or a process that employs the abstract idea to achieve a desired result, such as transforming a composition of matter to another form. Such applications of abstract ideas can be patentable if they are novel and nonobvious.
III.B.3. Mental Processes

A number of cases, such as In re Abrams, {FN8: 188 F.2d 165, 89 USPQ 266 (1951)} have raised the question of whether a mental process is statutory subject matter. At first reading of Section 101, it would seem that the answer is clearly yes because the four categories of statutory subject matter specifically include processes. The matter is not so simple. In the classic case of Cochrane v. Deener, {FN9: 94 U.S. 780 (1876)} decided in 1876, the Supreme Court stated: A process is a mode of treatment of certain materials to produce a given result. It is an act, or series of acts, performed upon the subject matter to be transformed and reduced to a different state or thing. {FN10: 94 U.S. at 788} The question is whether this is an exclusive definition of a process, saying that only acts that transform something are processes, or an inclusive definition, saying that there may be other types of processes in addition to those that transform something. This question has not been completely resolved, although AT&T v. Excel Communications {FN11: 172 F.3d 1352, 50 USPQ2d 1447 (Fed. Cir. 1999)} indicates that the definition is inclusive: The notion of physical transformation can be misunderstood. In the first place, it is not an invariable requirement, but merely one example of how a mathematical algorithm may bring about a useful application. As the Supreme Court itself noted, when [a claimed invention] is performing a function which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of Section 101. The e.g. signal denotes an example, not an exclusive requirement. {FN12: 172 F.3d at 1358-1359, 50 USPQ2d at 1452 (citations omitted)} A better way of viewing mental steps is that a process that involves steps that require a subjective or aesthetic judgment on the part of the person performing the process is not patentable. This is not because the process is somehow any less of a process as that term is used in Section 101, but because the disclosure requirement of Section 112 {FN13: 35 U.S.C. 112, 1} has not been met. All patent applications must teach how to make and use the claimed invention. If judgments, rather than procedures that can be taught, are necessary to carry out the process, then there hasn t been the required disclosure and the application is faulty.

III.B.4. Printed Matter

In re Miller {FN14: 418 F.2d 1392, 164 USPQ 46 (CCPA 1969)} and In re Gulack {FN15: 703 F.2d 1381, 217 USPQ 401 (Fed. Cir. 1983)} held that printed matter is not patentable because it is not a proper manufacture. The results of this rule are good, since it prevents patents from protecting writings more properly within the scope of copyright. A better approach is to recognize that something that includes stored information, such as printed matter, is a manufacture, but to consider only the differences of the substrate carrying the printed matter and the prior art substrates when determining whether the invention is novel and nonobvious, unless there is some interplay between the substrate and the printed matter. But as we will later see, this approach is complicated by the requirement of Section 103 that claims be considered as a whole when determining whether an invention is obvious. For example, consider Mark Twains invention of Tom Sawyer. While the book is a manufacture, that manufacture differs from prior art books only in the writing in the book. The book would be statutory subject matter but would not be novel or nonobvious in light of other books.
III.B.5. Computer Software

There is quite a history regarding the patentability of computer software, discussed in the next chapter. Though a computer program per se is generally not considered patentable, today virtually any technique that can be embodied in a computer program that produces a useful result is patentable if properly described and claimed.
III.B.6. Methods of Doing Business

A number of older cases have held that methods of doing business are not patentable. What constitutes a method of doing business is a fuzzy concept, and most of the cases where it is discussed could have reached the same conclusion on patentability by using clearer concepts such as obviousness in light of the prior art. Judge Newman, in her dissent in In re Schrader, {FN16: 22 F.3d 290, 30 USPQ2d 1455 (Fed. Cir. 1994)} described a method-of-doing-business exception as an unwarranted encumbrance to the definition of statutory subject matter that should be discarded as error-prone, redundant, and obsolete. It merits retirement from the glossary of Section 101. {FN17: 22 F.3d at 298, 30 USPQ2d at 1461-1462 (Newman, J., dissenting)} But while Judge Newmans remarks were in dissent to the opinion of the court, the Federal Circuits 1998 decision in State Street Bank {FN18: State Street Bank v. Signature Financial, 149 F.3d 1368, 47 USPQ2d 1596 (Fed. Cir. 1998)} cites her remarks with strong approval: We take this opportunity to lay this ill-conceived exception to rest. Since its inception, the business method exception has merely represented the application of some general, but no longer applicable legal principle, perhaps arising out of the requirement for invention which was eliminated by 103. Since the 1952 Patent Act, business methods have been, and should have been, subject to the same legal requirements for patentability as applied to any other process or method. {FN19: 149 F.3d at 1375, 47 USPQ2d at 1602} Business method patents are generally just a particular type of software patent, since the business method often relies on involved calculations that require the use of a computer in any

practical application of the method, or involves doing something that enhances electronic commerce on the Internet.

Chapter 4: An Overview of Patents

IV. Getting A Utility Patent
Unlike copyright or trade secrets, patent protection exists only after the filing of an application, its examination to determine compliance with the statutory requirements, and the issuance of a patent. Section 111 requires that the patent application consist of three parts a specification, drawings (unless there is no meaningful drawing possible for the invention, which is unlikely in most cases), and an oath by the applicant stating that he believes that he is the original and first inventor of the invention. {FN20: 35 U.S.C. 111} Although a written application must be submitted, it is generally not necessary to submit a working model. At one time, the submission of a model was required, but space considerations and the desirability of publishing the granted patents led to the dropping of the model requirement. Now, about the only time a model is required is when there is some question whether the invention will actually work, such as when it appears to be a perpetual motion machine. As stated in Section 114: The Commissioner may require the applicant to furnish a model of convenient size to exhibit advantageously the several parts of his invention. When the invention relates to a composition of matter, the Commissioner may require the applicant to furnish specimens or ingredients for the purpose of inspection or experiment. {FN21: 35 U.S.C. 114} In fact, it is not even necessary to have a working model for the invention if the invention can be described in the application in such full and complete terms that somebody skilled in the art of the invention can make and use it from the application description. While this is seldom the case for a mechanical or chemical invention, for software-based inventions it is often possible to determine that the invention will function properly and describe it in detail without doing a complete implementation of the software. This is referred to as a constructive reduction to practice, as opposed to the actual reduction to practice that occurs when a prototype of the invention is constructed and tested to determine that it works as intended. Section 112, first and second paragraphs, states the requirements for the specification: The specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and shall set forth the best mode contemplated by the inventor of carrying out his invention. The specification shall conclude with one or more claims particularly pointing out and distinctly claiming the subject matter which the applicant regards as his invention. {FN22: 35 U.S.C. 112}

IV.A. The Description

The first paragraph is the description requirement. The description of the invention teaches how to make and use it and includes a brief abstract of the invention. The bargain in the granting of the patent is that the public receive a complete description of how to make and use the invention, so

they can practice the invention without undo experimentation after the patent expires, or can understand it so they can develop improvements. The description must detail the best way that the inventor knows at the time of the application for making and using the invention (often called the best mode or preferred embodiment of the invention). Sometimes an applicant includes only a description of the preferred embodiment in the specification, perhaps believing that other ways of practicing the invention are inferior and that their description should be unnecessary as long as the best mode has been described. This can cause a problem if the patent is litigated, because the court may see the patent covering only the single embodiment that was described, rather than a more general invention. To avoid this, an applicant should indicate alternative embodiments for components of the invention, even if these embodiments are not as good as the primary one being described. Because patents are often the first description of a new technology, and there may not be accepted terms for key aspects of an invention, an applicant is allowed to use his or her own terms for aspects of the invention as long as they are defined in the specification. This is often stated as A patentee can act as his own lexicographer. These definitions should be clearly stated, especially if the term has a generally-accepted meaning that differs from the usage in the patent. It is important that the same name be used for something throughout the patent, and particularly in both the description and the claims. This is not the place for using synonyms or shortened descriptions, lest there be confusion about the meaning of a term in the claims when they are being interpreted in litigation. If you call something a left-handed framus in the claims, make sure that wherever it is mentioned in the description it is also called a left-handed framus, not just a framus or a similar term like a sinister framus, even though most people in the art of the invention use the terms interchangeably.

IV.B. Claims
The claims define those aspects of the invention that are protected by the patent. It is not possible to determine what is protected by the patent from the title, abstract, or description. You must read the claims. But to properly interpret the claims, you must read them in light of the description and any statements made during the prosecution or examination of the patent application. Almost without exception, a claim starts with a preamble that introduces the nature of the claimed invention and its environment, a transitional term, and one or more or limitations or claim elements. A claim is always in a form that completes a sentence starting with I claim or We claim or What is claimed is or some similar phrase. It is never proper for a claim to be more than one sentence. A special word that is commonly used in claims is said. Proper claim drafting requires that each aspect of a claim, such as a part of the claimed device, must be clearly recited before it can be used in a following claim limitation. For example, you must recite a pencil comprising an eraser at one end before you can talk about the pencils eraser. After introducing an eraser, you refer to it as the eraser or, more traditionally, said eraser. If there are two different erasers that are aspects of the claim, then you must always make it clear which one you are discussing, by using language such as said eraser at said large end of said pencil, if you have previously indicated that the pencil has a large end, or said second eraser, if you have designated each eraser by an ordinal. Another special word in a claim is plurality. It means two or more and is used when it is necessary to differentiate the invention in the claim from prior art that has only a single instance of

something. For example, if you claim a plurality of computer processors, the claim will cover systems with two or more processors, but not those with a single processor. One could achieve the same coverage by claiming a system with two computer processors, since a system with three or more processors clearly contains a system with two processors, but it is possible that the claim could be misconstrued in litigation as covering only two-processor systems, so a plurality or at least two is a better choice.
IV.B.1. When a Claim Reads On Something

The most important concept in understanding a claim is whether the claim reads on something. A claim reads on a physical object or a process when all the elements of the claim are components of that object or process. A claim also reads on a description of an object or process when all elements of the claim are described in the publication. (For simplicity, well talk about a claim reading on a thing, where the thing can be a physical object, process, or description of an object or process, as appropriate.) Because the presence of an element in a claim limits the scope of that claim to things having that element as a component, claim elements are often also called claim limitations. If a thing has components in addition to those of the claim limitations, it is necessary to consider the transitional term to determine if the claim reads on the thing. The most common transition term, comprising, means that the claim reads on the thing if all the elements of the claim are components of the thing, regardless of what other components may be present in the thing. (Sometimes including or having is used instead of comprising.) That means that the claim limitation comprising A, B, and C reads on every thing that has A, B, and C, even if the thing also has D through Z. A claim to a new type of screw using comprising as its transition term would read on a complete automobile if that screw were present anywhere as part of the car. If a claim contains elements A and B, that claim does not read on a thing with just an A, an A combined with anything that is not a B, just a B, or a B combined with anything that is not an A. In other words, when the transition term comprising is used, a claim reads on any thing whose components are a superset (or are identical) to the elements of the claim. One has to be careful when using the conjunction or with two claim elements. If a claim were written as comprising A, B, and C or D it would read on either a thing with A, B, and C or a thing with A, B, or D. That would make the claim invalid if there were something with A, B, or C in the prior art even if something with A, B, or D was novel. And unless there is a strong relationship between C and D, the patent office frowns on such claims. Similarly, a claim like A, B, but not C might raise questions if C were not something that is a part of A and B, so that its exclusion (presumably because the only prior art with A and B also always includes C). The claim must still distinctly describe what is claimed, not what is not claimed. There are two more restrictive transitional terms. The claim consists of A and B reads on things that have only A and B as their components, and absolutely nothing else. The claim consisting essentially of A and B reads on things that have A, B, and some other inconsequential components, such as noncritical impurities in a composition of matter. Because transition terms severely limit the scope of their claims, they are uncommon except in chemical claims where it is necessary to limit the claim to a particular compound. It is important that you fully understand the concept of a claim reading on something. It is perhaps the most important concept in all of patent law. As we will see, a claim must not read on

the prior art or that claim is invalid. And if a claim reads on something that is not prior art, that something infringes the patent.
IV.B.2. The Steps of a Method

It is not necessary to include every step of the method in the claims, since claims are not a description of how to implement the method. But the claims should include all the steps necessary to describe the claimed method. Generally, there is no requirement that the steps of the claimed method be executed in the order specified in the claim for infringement to occur. All that is required is that, at some time, the infringing act must perform every step in the claim. However, where an order is specified, either explicitly (by using a connective like and then between two steps) or implicitly (as when one step requires information produced by another step), then those steps must be executed in the specified order. Similarly, if there is no particular ordering of the steps of a method desired, saying comprising the following steps, in any order, rather than simply comprising, will make that intention clear. If only one embodiment of the claimed invention is described, or if all the embodiments show particular steps always being performed in a certain order, there is the possibility that the claim may be construed as requiring that particular order. If other orders are possible, examples should be briefly mentioned in the description.
IV.B.3. The Preamble

There has been a great deal of debate on whether the preamble of a claim adds limitations to a claim or simply provides the background for the claim. Does the claim a widget, comprising A, B, and C read on a non-widget that nevertheless has A, B, and C? It depends on whether the preamble is necessary to give meaning to the claim, and whether it was treated as a limitation during the examination of the patent application. The best thing to do when writing a claim is to include in a preamble only what is necessary to provide an antecedent basis for a term used later in the claim, but which is not a part of the invention as being formally claimed. For example, if you are claiming a computer method for manipulating a data structure on a disk, you can introduce the disk in the preamble (a method operating on a disk) so that you can use it later when describing a step of the method (storing information on said disk). Many claim drafters include in the preamble a short description of the purpose of the invention (a method for secure communications) or the name of what is being patented (a widget). This is not a good idea, since it might be read as a limitation. Instead, just say a method or an article of manufacture or some similar phrase that cannot possibly be interpreted as a limitation.
IV.B.4. Dependent and Independent Claims

There are two types of claims independent claims and dependent claims. These are described in the third and fourth paragraphs of Section 112: A claim may be written in independent or, if the nature of the case admits, in dependent or multiple dependent form. Subject to the following paragraph, a claim in dependent form shall contain a reference to a claim previously set forth and then specify a further limitation of the

subject matter claimed. A claim in dependent form shall be construed to incorporate by reference all the limitations of the claim to which it refers. {FN23: 35 U.S.C. 112} A dependent claim can be recognized because it starts with something like a widget as in claim 1, further comprising D. If claim 1 were for a widget, comprising A, B, and C, then that dependent claim would be identical to an independent claim reading a widget, comprising A, B, C, and D. (Think of a dependent claim as a macro, which replaces the introductory phrase with all the text of the claim on which it depends.) The Patent Office likes dependent claims because they do not have to be separately examined for validity if the claim on which they are based is valid. That is because they always contain more limitations than their parent claim and cant read on prior art if their parent claim doesnt. (In the example above, if the prior art does not have widgets with A, B, and C, it certainly doesnt have widgets with A, B, C, and D.) All the examiner needs to do is make sure they are in the proper form. Because of this, the Patent Office charges considerably less for examining a dependent claim. Dependent claims provide a fallback position in case a claim is later found invalid by a court. For example, consider the independent and dependent claims above. If the independent claim reads on prior art, but the dependent claim doesnt, then the dependent claim survives and is treated as if it were written in full independent form. (It doesnt depend on the parent claim for its validity, just for the limitation to be included.) Sometimes claim drafters will use dependent claims to indicate particular species of a general term. For example, if the parent claim has as an element a computer network, then a dependent claim may state where said computer network is an Ethernet and another dependent claim may state where said computer network is a token ring. Such dependent claims are often worthless as a backup position, however, if it would be obvious how to take a prior art teaching showing one species and implement the other species. For example, if a patent had claims like those described in this paragraph and prior art was discovered showing a token ring network (along with all the other elements of the claim), then the parent claim for a network in general, and the dependent claim for a token ring network, would both be invalid. But so would the dependent claim of an Ethernet, if it were obvious how to apply the teaching of a token ring network to an Ethernet. A multiple dependent claim is something like a widget as in claim 5 or claim 10, further comprising X. Because of the difficulty in checking that a multiple dependent claim, the Patent Office charges a surcharge for examining such a claim. For that reason, they are not commonly used. The fifth paragraph of Section 112 describes the special rules for multiple dependent claims.
IV.B.5. Other Claim Forms

It is generally improper to have a claim limitation that states alternatives. An exception to this is a Markush claim, named after the applicant who first received approval to use such a claim. A Markush claim contains a limitation like an R, wherein R is selected from the group consisting of A, B, C, and D or similar language. There must be some property that unites the alternatives in a Markush claim. Not surprisingly, this type of claim is used primarily in chemical patents, where the alternatives are chemical elements or compounds that share a necessary property, such as being metals or rare earths. Another special claim form is the Jepson claim, where the preamble describes the old parts of the invention, and the limitations are drawn only to the improvement over the prior art. It is generally written like a widget having A, B, and C, the improvement comprising D and E. The Patent Office prefers all claims to be written in Jepson format, because it makes it clear what the

applicant feels is novel about the invention, but it is seldom used in practice. That is because if A, B, and C of the example are not really in the prior art, they will still be treated as prior art because the claim stated that they were.
IV.B.6. Means Plus Function Elements

Sometimes there is not a collective term for describing a particular limitation. This is addressed by the sixth, and last, paragraph of Section 112: An element in a claim for a combination may be expressed as a means or step for performing a specified function without the recital of structure, material, or acts in support thereof, and such claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof. {FN24: 35 U.S.C. 112} This was added to the patent laws to overturn a Supreme Court decision {FN25: Halliburton Oil Well Cementing v. Walker, 329 U.S. 1, 71 USPQ 175 (1946)} that said that elements couldnt be described by the function they perform. Because such claim elements are generally written as means for <some function>, they are generally referred to as means-plus-function or meansfor claim elements. It is important to note that the sixth paragraph makes it clear that the claim element does not cover all ways of performing the function, but only those described in the specification and their equivalents. For example, if the limitation is means for fastening A to B and the specification discloses that it is important that the fastening occur when the side of B opposite A is inaccessible and discloses nails and screws, then a bolt-and-nut combination would not be a means for fastening A to B, but a contact adhesive might be if it performs the same function as a nail or a screw. Many people mistakenly think that a means-for claim element is very broad, but that may not be the case. It may be, instead, very narrow, depending on what was disclosed in the specification. The specification, for example, may disclose only one structure for performing the function, in which case the claim element covers only that disclosed structure and its equivalents. More important, the specification may not disclose sufficient structure, in which case the claim is invalid because it does not provide a definite indication of what is being claimed. Because the sixth paragraph talks about an element in a claim for a combination, it is improper to have a single-element claim with that element written in means-for form. Such a claim attempts to claim all ways of doing the specified operation, although it would be limited to the means described in the specification. During claim interpretation during litigation of a patent, one of the jobs for the court will be to determine the structure that corresponds to the means for in a claim. Sometimes this is not easy, since the description of the means is spread throughout the description and is not clearly indicated. To aid the court (and to make sure its determination matches your intentions), clearly indicate in the description what you consider the means for performing a particular function, including any alternative means that you have briefly described. During the examination of a patent application, the Patent Office used to consider the element as covering all reasonable means for performing the function rather than just those disclosed in the specification. This saved it from locating the descriptions in the specification, which could be a problem if it wasnt clear where something was being described (for example, if it was described in multiple places). That practice came to an end when the Court of Appeals for the Federal Circuit made it clear, in In re Donaldson, {FN26: 16 F.3d 1189, 29 USPQ2d 1845 (Fed. Cir. 1994)} that the sixth paragraphs requirement for the scope of the means-plus-function claim element had to be

followed even during patent examination. There is still a tendency, however, for examiners to read the means-plus-function limitation as covering all reasonable means, but to limit its scope when the applicant points out that a particular implementation isnt within the scope of the means-plusfunction claim element. That way, the fact that the claim doesnt cover that particular implementation is on the record and the applicant cant later say that it is within the scope of the claim. Means-plus-function claim elements are frequently used with claims for software-based inventions, since the claim covers the hardware that implements a particular function, whether it is special-purpose logic or a general-purpose digital computer programmed to perform the specified function. But again, it covers only the means described in the specification and their equivalents. A less-clear concept also found in the sixth paragraph of Section 112 is that of a functional step, although such claim language is common in process patents and particularly in patents on software-based processes. There are few court decisions regarding step-plus-function claim elements; Judge Raders concurrence in Seal-Flex Inc. v. Athletic Track and Court Construction {FN27: 172 F.3d 836, 50 USPQ2d 1225 (Fed. Cir. 1999)} provides the best discussion. There, he draws the distinction between a claim element that recites an act, which would not be in step-plus-function form, and one that recited a function to be performed, which would be in step-plus-function form. The distinction is subtle. An example of such a functional step limitation might be computing a checksum for the packet, which would cover the ways of computing a checksum for a packet detailed in the description and their equivalents. In contrast, the step computing a checksum for the packet using a table-lookup technique specifies the act to be performed and therefore isnt in step-plus-function form.

Chapter 4: An Overview of Patents

V. Novelty
The Patent Act requires that an invention be new in order for a patent to be granted. To be new, the invention must be both novel and non-obvious when compared with the prior art at the time of its invention. Section 102 states the requirement for novelty and defines what constitutes prior art. Its seven subsections include definitions both for prior art and for other things that will bar getting a patent.

V.A. Prior Art

Subsections (a) and (e) define true prior art, in that they are based on what was done or known by others before the invention by the applicant: A person shall be entitled to a patent unless (a) the invention was known or used by others in this country, or patented or described in a printed publication in this or a foreign country, before the invention thereof by the applicant for patent, or . . . (e) the invention was described in a patent granted on an application for patent by another filed in the United States before the invention thereof by the applicant for patent, or on an international application by another who has fulfilled the requirements of paragraphs (1), (2), and (4) of section 371(c) of this title before the invention thereof by the applicant for patent. {FN28: 35 U.S.C. 102}

Printed publication has been interpreted to mean any written information that is accessible to the people who are most involved with the technology of the invention. It can include a typed manuscript that is cataloged and available in a library. It does not include information that is distributed on a confidential basis, such as a paper under review by a scientific journal or a proposal to the National Science Foundation. There is no requirement that prior art be something that is still in use. Once something is prior art, it remains prior art forever. For example, an operating system technique may seem new because it is not used in current operating systems, but may actually be something that was implemented in an operating system no longer used, such as Multics. This prior art is often unknown to the applicant or the examiner, who may not be familiar with such historical systems, but is likely to be discovered by somebody being sued for patent infringement and wanting to invalidate the patent. Such searches are by their nature much more exhaustive than the one performed by the patent examiner, because the examiners search time is limited because he or she has to handle a number of applications in a timely fashion, and because doing a worldwide, in-depth search for prior art may be a small expense when the cost of patent litigation or having to abandon a product alleged to infringe a patent is considered. There is no requirement that an applicant conduct any search of the prior art before filing a patent application. An applicant must bring to the attention of the examiner any prior art that is material to patentability. {FN29: 37 C.F.R. 1.56} Because any search cannot include patent applications that are pending but have not been published, nor consider every printed publication in the whole world, such a search can never determine with finality whether there is prior art out there. But it will prevent writing claims that read on the prior art that is discovered, allowing one to develop claims that have a better chance of being allowed with little or no amendment.

V.B. Inventorship
Note that while a printed publication anywhere in the world (and in any language) that occurs before the invention by the applicant is a bar to patentability, knowledge or use of a previouslyinvented version is a bar only when it occurs in the United States. But that does not mean that if you find something in a foreign country that is unknown in the United States, you can get a patent on it yourself. Subsection (f) limits patents to the true inventors: A person shall be entitled to a patent unless (f) he did not himself invent the subject matter sought to be patented. {FN30: 35 U.S.C. 102} Because of Subsection (f), patents can be issued only to natural persons, not businesses, so there is no work-for-hire doctrine as in copyright law. However, employers generally require that employees who may invent something as part of their employment sign an agreement assigning any inventions to the employer. In the absence of such an agreement, an employer may own the invention if the employee was specifically employed to invent the particular invention, or was generally hired to develop patentable things. If the invention was developed using the resources of an employer, but not as a specific job assignment, the employer may have a shop right to use the invention in its business. It is important that only the true inventors be named on the patent application. Supervisors should be named only if they contributed to the invention, and not as a courtesy as is often the case with papers in scientific journals. Section 116 gives the special rules when there are more than one inventor:

When an invention is made by two or more persons jointly, they shall apply for patent jointly and each make the required oath, except as otherwise provided in this title. Inventors may apply for a patent jointly even though (1) they did not physically work together or at the same time, (2) each did not make the same type or amount of contribution, or (3) each did not make a contribution to the subject matter of every claim of the patent. If a joint inventor refuses to join in an application for patent or cannot be found or reached after diligent effort, the application may be made by the other inventor on behalf of himself and the omitted inventor. The Commissioner, on proof of the pertinent facts and after such notice to the omitted inventor as he prescribes, may grant a patent to the inventor making the application, subject to the same rights which the omitted inventor would have had if he had been joined. The omitted inventor may subsequently join in the application. Whenever through error a person is named in an application for patent as the inventor, or through error an inventor is not named in an application, and such error arose without any deceptive intention on his part, the Commissioner may permit the application to be amended accordingly, under such terms as he prescribes. {FN31: 35 U.S.C. 116} Note that the last paragraph provides that inventorship can be corrected only if there was no deceptive intent. If the intent was to include a supervisor so that it seemed that he contributed when he really didnt, that may constitute deceptive intent and it may be impossible to remove the supervisors name when it is discovered in litigation. And that may lead to the patent being declared invalid and unenforceable. The lesson is that only true inventors should be named in the application. It may be that an inventor has assigned his inventions to his employer but then refuses to cooperate in applying for a patent, perhaps because he has left his job and is now working for a competitor. Section 118 addresses that situation: Whenever an inventor refuses to execute an application for patent, or cannot be found or reached after diligent effort, a person to whom the inventor has assigned or agreed in writing to assign the invention or who otherwise shows sufficient proprietary interest in the matter justifying such action, may make application for patent on behalf of and as agent for the inventor on proof of the pertinent facts and a showing that such action is necessary to preserve the rights of the parties or to prevent irreparable damage; and the Commissioner may grant a patent to such inventor upon such notice to him as the Commissioner deems sufficient, and on compliance with such regulations as he prescribes. {FN32: 35 U.S.C. 118}

V.C. Statutory Bars

There are a number of subsections of Section 102 that are statutory bars to receiving a patent, even if the invention was not known or obvious before it was invented. Subsection (b) is a composite of prior art and statutory bar, in that it addresses art that may exist after the date of invention, but before filing a patent application: A person shall be entitled to a patent unless

(b) the invention was patented or described in a printed publication in this or a foreign country or in public use or on sale in this country, more than one year prior to the date of the application for patent in the United States. {FN33: 35 U.S.C. 102} The purpose of Subsection (b) is to force the timely filing of a patent application after the completion of an invention. If an inventor were allowed to postpone filing an application indefinitely, he could wait until someone else was producing the invention and then file the application, effectively extending the time until the patent expired. Most other countries do not provide this one-year grace period before filing an application, so it is important if you want foreign patents to file an application before publishing an enabling description (one that is sufficiently detailed to allow somebody to re-create the invention) or offering the invention for sale. It is sometimes difficult to determine whether an invention is in public use. Court decisions have equated public use with commercial use, or use without an obligation of secrecy to the inventor. So, for example, in a classic case the Supreme Court found that the paving of a road with a new surfacing was not a public use, even though the public was driving over the road every day, because the paving was part of a test of the surfacing during a testing period controlled by the inventor. {FN34: City of Elizabeth v. American Nicholson Paving, 97 U.S. 126 (1877)} On the other hand, at about the same time the Supreme Court found that the wearing of a corset designed for a woman by her boyfriend was a public use, because he placed no special restrictions on her use, even though the corset was not on public display. {FN35: Egbert v. Lippmann, 104 U.S. 333 (1881)} Also note that the one-year clock is started when the invention is on sale, not when it is first sold. That means that an offer to sell the invention starts the clock. An interesting question is whether the clock starts if the offer is for an invention that has not yet been completed. In 1998, the Supreme Court held in Pfaff v. Wells Electronics Inc {FN36: 525 U.S. 55, 48 USPQ2d 1641 (1998)} that the on-sale bar applies when (1) the product of the invention is the subject of a commercial offer for sale, and (2) the invention must be so complete that it is ready for patenting, either because the invention has been completed or because there are drawings or other descriptions of the invention that [are] sufficiently specific to enable a person skilled in the art to practice the invention. {FN37: 525 U.S. at 67-68, 48 USPQ2d at 1647} Even if an invention is not in its final form, it still may be ready for patenting if a prototype works and the prototype contains all the claimed elements, or portions of the invention have been tested and it is clear that there will be no difficulty combining them to produce a complete working embodiment. For example, a proof-of-concept prototype of a software method would be ready for patenting, even if it is written to handle only one or two users at a time and may crash occasionally because it does not contain code to handle exceptional situations. Along with Subsection (f), Subsections (c) and (d) are statutory bars to getting a patent if the inventor has abandoned the invention before applying for a patent, has applied for a patent in a foreign country more than a year before filing an application in the United States, or did not actually invent the claimed invention: A person shall be entitled to a patent unless (c) he has abandoned the invention, or (d) the invention was first patented or caused to be patented, or was the subject of an inventor's certificate, by the applicant or his legal representatives or assigns in a foreign country prior to the date of the application for patent in this country on an

application for patent or inventor's certificate filed more than twelve months before the filing of the application in the United States. {FN38: 35 U.S.C. 102} Applicants filing both in the United States and in foreign countries must be careful if they file first in the United States. Section 184 states: Except when authorized by a license obtained from the Commissioner a person shall not file or cause or authorize to be filed in any foreign country prior to six months after filing in the United States an application for patent or for the registration of a utility model, industrial design, or model in respect of an invention made in this country. {FN39: 35 U.S.C. 184} The penalty for premature filing in a foreign country, given in Section 185, {FN40: 35 U.S.C. 185} is refusing to grant a United States patent on the invention or, if a patent issues before the premature filing has been determined, the invalidation of that patent.

V.D. Provisional Applications

Even though the United States provides a one-year grace period from the time an invention is described in a printed publication or offered for sale until a patent application is filed, it seems as though every patent agent or attorney has had a client who didnt realize that he or she needed to file a patent application until eleven months after the clock started running with a publication or offer for sale. A recent revision in the patent statute, providing for a provisional application, offers a way to get another year to file the actual patent application. The rules for provisional applications are found in Section 111(b). {FN41: 35 U.S.C. 111(b)} A provisional application consists of a description of the invention (a specification), accompanied by any necessary drawings. There is no requirement that the provisional application contain any claims. The provisional application gives the applicant a right of priority with respect to prior art as of its filing date. In other words, the clock is stopped with respect to prior art as of the time of the filing of the provisional application for those aspects of the invention that are described in the provisional application. Generally, there is little to be gained by filing a provisional application rather than a regular application. You still have to have a proper disclosure of the invention, such that a person can make and use the invention. And while you dont have to file claims with the provisional application, if you dont know what you are going to claim, it is very hard to know what to describe. There are, however, two special circumstances where filing a provisional application may provide a substantial benefit. If you have published a paper and the one-year clock is about to expire, you can file that paper itself as a provisional application. (Remember, no claims are necessary.) To the extent that the paper would be prior art in its description of the invention, it is also an enabling disclosure of the invention. Filing the paper removes it from the prior art that can be considered against the actual application, which must be filed within a year of the provisional application. A similar trick can be used when a software invention has been offered for sale and the oneyear clock is about to expire. A copy of the source code can be filed, along with a brief description of the invention. The source code, obviously, completely describes how the software invention works, albeit in a less-than-convenient form. An actual application, filed within a year, can provide a more understandable description of the invention and how to use it. A difficulty with filing such a source-code provisional application is that it discloses not only the invention that may later be claimed but any trade secrets unrelated to the claimed invention that are also in the source code.

But that may be a reasonable price for getting patent protection when it would otherwise be lost because of the statutory time bar.

V.E. Interferences
Finally, Subsection (g) is an exception to the United States rule that the patent goes to the first person to invent: A person shall be entitled to a patent unless (g) before the applicant's invention thereof the invention was made in this country by another who had not abandoned, suppressed, or concealed it. In determining priority of invention there shall be considered not only the respective dates of conception and reduction to practice of the invention, but also the reasonable diligence of one who was first to conceive and last to reduce to practice, from a time prior to conception by the other. {FN42: 35 U.S.C. 102} There are two important times during the creation of an invention: when it is conceived and when it is reduced to practice. Conception marks the beginning of the inventive process, and occurs when the complete invention, such as the specific method for solving a problem or the overall structure of the device, is clear in the inventors mind. It must be so complete that it is clear that it can be brought into existence and will work. Obviously, because conception is in the mind of the inventor, it is difficult to prove precisely when it occurs. Because an inventors testimony is likely to be self-serving, objective evidence of the date of conception is generally necessary. The best evidence is an inventors notebook describing the invention, dated and witnessed by somebody who understands the invention. An invention is not completed until it is reduced topractice, either by having a working prototype or by filing a patent application that enables the invention by describing how to make and use it so completely that a person with ordinary skills can reproduce the invention without undo experimentation. Reduction to practice by means of filing an enabling patent application is called constructive reduction to practice, as opposed to an actual reduction to practice when a prototype is constructed. Under Subsection (g), if a person who isnt the first applicant for an invention can show that he conceived the invention before the first applicant and has been diligent in completing the invention, then he is entitled to the patent for the invention. This is determined in an interference proceeding in the Patent Office, a hearing where both applicants present their evidence of their dates of conception and reduction to practice to administrative patent judges who determine which one should get the patent. If an inventor has not been diligent in reducing the invention to practice, his date in the interference will be the date when he started his diligent reduction to practice, rather than his date of conception. All other countries give the patent to the first inventor to apply for it, which simplifies determining who is entitled to the patent and promotes the prompt filing of a patent application. Although the United States has considered going to a true first-to-file system, rather than its current first-to-invent system, strong opposition from small inventors has blocked the change. But because documentation proving the date of conception is necessary to prevail in an interference, and many inventors do not keep the detailed notebooks required to prove their date of conception and continuing progress, most interferences result in the first applicant receiving the patent.

Chapter 4: An Overview of Patents

VI. Anticipation And Obviousness
If a claim reads on a single item of prior art a printed publication or a product then that item of prior art anticipates the claim must be rejected under Section 102. Sometimes, however, a claim does not read on a single item of prior art, but instead reads on a combination of two or more items. In that case, the claim may be obvious under Section 103: A patent may not be obtained though the invention is not identically disclosed or described as set forth in section 102 of this title, if the differences between the subject matter sought to be patented and the prior art are such that the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains. {FN43: 35 U.S.C. 103(a)} Section 103 bars a claim if it is obvious based on a combination of two or more items of prior art, or differs in an obvious way from an item of prior art. To prevent the hindsight combination of prior art, using the claim as a roadmap of what to combine, there must be some teaching or other motivation in the prior art that would direct someone to combine the references to get the claimed invention if he or she were aware of them. An examiner, who generally has a degree in science or engineering (and in some cases, even a Ph.D. in the area he or she is examining), can also take notice that something is generally known in the field, although it is preferable to cite to one or more references. The references that the examiner has considered are listed on the first page of the patent.

VI.A. Secondary Considerations

Sometimes an examiner feels something is obvious from the references when it really isnt. The Supreme Court, in Graham v. John Deere, {FN44: 383 U.S. 1, 148 USPQ 459 (1966)} has stated a number of things that can be considered when determining whether something was obvious at the time of its invention. These include: y Commercial success caused by the invention, or lack of commercial success of prior art references. y Long-felt need for something to solve the problem addressed by the invention. y Unexpected results, such as an efficiency beyond what was felt possible. y Failure of others to develop a similar invention. y Copying of the invention by competitors. There must be a connection between the success of the product using the invention and the invention itself; the success cant be due to superior marketing or similar considerations. And the independent development of the invention by others is an indication that the invention is obvious to those in its area, particularly when many people come up with the same invention.

VI.B. Rejection of a Claim

If the examiner finds that a claim is obvious or anticipated, the examiner will reject the claim, stating the particular prior art references that anticipate the claim or the multiple references that make the claim obvious, as well as a reason why those references would be combined by somebody

with ordinary skills in the art of the invention. If the applicant does not agree with the examiner, he or she can respond with an explanation of why the examiner is mistaken and ask the examiner to reconsider the rejection. If the applicant agrees with the examiners rejection but can claim the invention in a way that does not read on the prior art, such as by adding additional elements to the claim, the applicant can amend the claims and ask the examiner to consider the amended claims. Admissions made during the prosecution of a patent application will be held against the applicant when interpreting the claims during infringement litigation, or when determining whether a claim that is not infringed literally is infringed under the doctrine of equivalents. Generally, an examiner will consider the application twice before making the rejection final. After a final rejection, the applicant can pay an additional fee to have the examiner consider further amendments or arguments for patentability, or can appeal the final rejection by the examiner to the Board of Patent Appeals and Interferences, an administrative review body within the Patent Office. If the decision of the Board is unfavorable to the applicant, he can appeal to the Court of Appeals for the Federal Circuit or can sue in the District of Columbia federal court to order the Patent Office to grant the patent.

Chapter 4: An Overview of Patents

VII. Nature Of A Patent
The rights granted by the United States government to a patentee are: a grant to the patentee, his heirs or assigns, of the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States, and, if the invention is a process, of the right to exclude others from using, offering for sale or selling throughout the United States, or importing into the United States, products made by that process, referring to the specification for the particulars thereof. {FN45:35 U.S.C. 154(a)(1)} Originally, the rights granted were to exclude others from making, using, or selling the invention. Offering for sale and importing the invention were added to comply with an international trade treaty, although there was considerable support for their addition. It is important to note that the rights are stated in a negative fashion the patent owner can exclude others.. It does not say that the patent owner can himself practice the invention. That is because his practicing of the invention may infringe on the rights to exclude held by another patent owner. As an example, if I hold the patent on television in general, and you later get a patent on color television, you cant practice color television (or television in general) as long as my patent hasnt expired, but I cant practice color television as long as your patent is in force. When my patent expires, you can practice color television (and anybody else can also practice television), but I still cant practice color television. Sometimes one patent blocks practicing (making or using) a second patent, while that second patent blocks practicing the first patent. In that case, neither patent owner can practice his invention until the other patent expires, and so it is likely that the two patent owners will cross-license their patents, giving each the ability to practice their patents.

VII.A. Patent Term

The term of a patent used to be 17 years from the time the patent issued. That was recently changed to 20 years from the date of the first application leading to the patent, to prevent people from keeping a patent pending by delaying tactics until the technology had matured and people were using the invention, then having the patent issue and collecting royalties from those who had independently developed the invention. These are referred to as submarine patents, and some applications were kept pending for two decades or more. There are a number of instances where delays in the prosecution of the patent application dont count against the 20-year term. These are detailed in Section 154. {FN46: 35 U.S.C. 154} Most important, if an applicant does not delay the examination of the application, he or she will receive a full 17-year patent term. {FN47: 35 U.S.C. 154(b)(1)(B)}

VII.B. Presumption of Validity

One of the benefits of a patent is the deference given by the courts to the judgment of the examiner: A patent shall be presumed valid. Each claim of a patent (whether in independent, dependent, or multiple dependent form) shall be presumed valid independently of the validity of other claims; dependent or multiple dependent claims shall be presumed valid even though dependent upon an invalid claim.{FN48: 35 U.S.C. 282} The presumption of validity means that courts will not substitute their judgment for the examiners unless there is clear and convincing evidence that the examiner was wrong. That means that it is difficult to find a patent invalid on the basis of prior art that was considered by the examiner, but less difficult when there is newly-discovered prior art. Because of that, it is to the benefit of a patent applicant to supply the examiner with all prior art that will have a bearing on the patentability of the invention. It is also a Patent Office rule.{FN49: 37 C.F.R. 1.56} And if it is found that an applicant hasnt been forthcoming with prior art, or has misled the examiner, the patent can be declared invalid for fraud on the Patent Office (the old term) or inequitable conduct (the term in current favor). Note that claims are individually valid, and the invalidity of a parent claim does not make its dependent claims invalid. That is because the dependent claims dont depend on the parent claim for their validity but simply for some of their language.

Chapter 4: An Overview of Patents

VIII. Infringement
A claim is infringed when it reads on the alleged-infringing article or process. A claim reads on something when all the elements of the claim are present in that something. It is only necessary to infringe one claim of a patent for the patent to be infringed. Section 271(a) indicates that infringement occurs when one of the rights to exclude is violated: Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent. {FN50: 35 U.S.C. 271(a)} Subsection (b) also extends infringement beyond direct infringement:

Whoever actively induces infringement of a patent shall be liable as an infringer. {FN51: 35 U.S.C. 271(b)} Subsection (c) covers contributory infringement: Whoever offers to sell or sells within the United States or imports into the United States a component of a patented machine, manufacture, combination or composition, or a material or apparatus for use in practicing a patented process, constituting a material part of the invention, knowing the same to be especially made or especially adapted for use in an infringement of such patent, and not a staple article or commodity of commerce suitable for substantial noninfringing use, shall be liable as a contributory infringer. {FN52: 35 U.S.C. 271(c)} In patent litigation, it is common to make a claims chart that shows each element of each claim that is being infringed, and then indicate which aspect of the infringing device or method corresponds to each element in the claims chart. If there is any element that does not have a corresponding aspect in the alleged-infringing device or method, then the claim with that element is not literally infringed.

VIII.A. Nonliteral Infringement

A claim may be under the doctrine of equivalents infringed even if it does not literally read on a thing. For example, if the claim is to A, B, and C, and the alleged-infringing thing has A, B, and D, there is no literal infringement. However, if D performs substantially the same function in substantially the same way to get substantially the same result as C, then there may be infringement under the doctrine of equivalents. The extension of a claim under the doctrine of equivalents is limited by prosecution history estoppel (sometimes called file wrapper estoppel) if during the prosecution of the patent application the applicant has limited a claim to avoid prior art, it cannot be extended to what was previously disclaimed. Two recent decisions dramatically limit the scope of the doctrine of equivalents. It may not be possible to assert the doctrine of equivalents to cover disclosed but unclaimed embodiments. {FN53: Johnson & Johnston v. R.E. Service, 285 F.3d 1046, 62 USPQ2d 1225 (Fed. Cir. 2002)} And in light of the Supreme Courts decision in Festo, {FN54: Festo v. Shoketsu Kinzoku Kogyo Kabushiki Co., __ U.S. __, 62 USPQ2d 1705 (2002)} the doctrine of equivalents likely does not capture subject matter that the patent drafter reasonably could have foreseen during the application process and could have been included in the claims. For example, if an application originally claimed a container with a slot and then, to avoid prior art, the claim was modified to a slot at the top of the container, the doctrine of equivalents would not reach a container with its slot on the side near the top, even though it performed the equivalent function. {FN55: Sage Products v. Devon Industries, 126 F.3d 1420, 44 USPQ2d 1103 (Fed. Cir. 1997)} That is because it was foreseeable that the amended claim limitation did not include slots in positions other than the top of the container. However, if an application filed before the invention of the transistor had its claims amended to include the terms used to describe parts of vacuum tubes (such as cathode, grid, and plate), then a circuit that performs the same function in the same way to get the same result but is implemented using transistors might be covered by the doctrine of equivalents, since it would have been impossible at the time the claims were written or amended to use the corresponding terms that describe the parts of a transistor. The applicant could not have foreseen a limitation as to after-

invented technology, was not disclaiming that technology, and should not be held to such a disclaimer under prosecution history estoppel.

VIII.B. Patent Misuse

Subsection (d) indicates that a number of acts that might otherwise be an antitrust violation are not when a patent is involved: No patent owner otherwise entitled to relief for infringement or contributory infringement of a patent shall be denied relief or deemed guilty of misuse or illegal extension of the patent right by reason of his having done one or more of the following: (1) derived revenue from acts which if performed by another without his consent would constitute contributory infringement of the patent; (2) licensed or authorized another to perform acts which if performed without his consent would constitute contributory infringement of the patent; (3) sought to enforce his patent rights against infringement or contributory infringement; (4) refused to license or use any rights to the patent; or (5) conditioned the license of any rights to the patent or the sale of the patented product on the acquisition of a license to rights in another patent or purchase of a separate product, unless, in view of the circumstances, the patent owner has market power in the relevant market for the patent or patented product on which the license or sale is conditioned. {FN56: 35 U.S.C. 271(d)} But that is not to say that a patent owner can do anything he wants without concern for violating the antitrust law. Use of the rights under the patent to extend it to cover things not within the scope of a patent, such as licensing a patent only if you will buy the raw materials needed to practice the invention, can be an antitrust violation and make the patent unenforceable until the antitrust violation ends.

VIII.C. Marking
Even though patents are publicly available, it is not reasonable for a person to know what is covered by every patent. Section 287(a) provides that an infringer will not be liable for damages unless he has received notification of the patent. But that notice can come with the filing of an infringement suit, so that it will cover future infringements only, by a letter informing you of the patent, or by seeing a product covered by the patent marked as patented. Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word ''patent'' or the abbreviation ''pat.'', together with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice. {FN57: 35 U.S.C. 287(a)}

VIII.C.1. Patent Pending

Often you see a product marked patent pending instead of being marked with a patent number. This means that a patent application has been filed and is being examined by the Patent Office, but no patent has issued. The patent pending marking is simply a warning that a patent may issue that covers some aspect of the product, and that at that time people who are making unauthorized copies of the product can be forced to stop. Because patent applications used to be kept secret by the Patent Office, and still may be if the applicant requests and has not filed a foreign patent application, it was impossible to know what the pending application claimed, and so a patent pending mark would create sufficient uncertainty to discourage the investment in producing unauthorized copies of the product. The Patent Act provides penalties for falsely marking a product as patented or as having a patent pending. Section 292 covers false marking: (a) Whoever, without the consent of the patentee, marks upon, or affixes to, or uses in advertising in connection with anything made, used, offered for sale, or sold by such person within the United States, or imported by the person into the United States, the name or any imitation of the name of the patentee, the patent number, or the words ''patent,'' ''patentee,'' or the like, with the intent of counterfeiting or imitating the mark of the patentee, or of deceiving the public and inducing them to believe that the thing was made, offered for sale, sold, or imported into the United States by or with the consent of the patentee; or Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word ''patent'' or any word or number importing that the same is patented for the purpose of deceiving the public; or Whoever marks upon, or affixes to, or uses in advertising in connection with any article, the words ''patent applied for,'' ''patent pending,'' or any word importing that an application for patent has been made, when no application for patent has been made, or if made, is not pending, for the purpose of deceiving the public Shall be fined not more than $500 for every such offense. {FN58: 35 U.S.C. 292} Any person, not just the patent owner, can sue for false marking, in which case half the penalty goes to the person suing and half goes to the federal government.

VIII.D. Penalties for Infringement

VIII.D.1. Damages Recoverable

As with copyright infringement, there are a variety of penalties for infringing a patent. The recoverable damages are described in Section 284: Upon finding for the claimant the court shall award the claimant damages adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer, together with interest and costs as fixed by the court. When the damages are not found by a jury, the court shall assess them. In either event the court may increase the damages up to three times the amount found or assessed. The court may receive expert testimony as an aid to the determination of damages or of what royalty would be reasonable under the circumstances. {FN59: 35 U.S.C. 284}

The reason for the treble damages is to prevent people from infringing when they dont want to pay royalties and then when they are found to have infringed, having to pay only the royalties that they were avoiding. Damages are generally tripled when the infringement is found to be willful the infringer was aware of the patent but infringed it anyway. Note that there is no equivalent to the Copyright Acts statutory damages in the Patent Act. A troubling aspect of the tripling of damages for willful infringement is that it seems to punish a person who tries to be aware of the patents that are being issued and reward those who ignore patents until they receive actual notice that they may be infringing a particular patent. But it is hard to see a court punishing an infringer for making a good-faith effort to avoid infringing patents, including studying patents as they are issued, when there would be no punishment if they had made no effort at all. Other penalties for infringing a patent include injunctions to stop future infringement {FN60: 35 U.S.C. 283} and attorney fees in exceptional cases. {FN61: 35 U.S.C. 285} Note that unlike willful copyright infringement, patent infringement carries no criminal penalties.
VIII.D.2. Provisional Rights

There can be no infringement until a patent is issued, which often takes two years or more after an application is filed. But a recent change in the Patent Act, as part of the early publication of patent applications, allows a patent owner to collect a royalty for acts that would infringe the patent when it has issued. These provisional rights are detailed in Section 154(d), {FN62: 35 U.S.C. 154(d)} and are available between the time of the early publication of the patent application, as provided for in Section 122(b), {FN63: 35 U.S.C. 122(b)} and the issuance of the patent. In order to collect those royalties, the person who is violating the provisional right must have actual notice of the published patent application. That generally means that the patent applicant must send a copy of the published patent application to the person violating the provisional right, to simplify proving that the violator has actual notice. The early-publication provision calls for the publication after 18 months of any application, unless an applicant requests that the application not be published and that application is not filed in a foreign county. But it also allows for publication earlier than 18 months at the request of the applicant. This can be useful when there is no concern about the early disclosure of a patent application, such as when the invention is being sold, marked as patent pending, and it is reasonably clear what such a patent might claim. In that case, an applicant should request publication as soon as the patent application is filed, so that provisional rights will be immediately available. But even though the provisional rights begin at the time the application is published, they are not available to an applicant until the patent based on the application is issued. If, for some reason, no patent issues from the application, then there will be no provisional rights even though the application has been published. Because claims are often amended during the examination of a patent application, provisional rights are available only when a published claim is substantially identical to a claim in the issued patent. If a claim is substantially changed, it will be necessary to have the application republished and new notice provided to a person thought to be violating the provisional rights.

IX. What To Do If You Are Told You Are Infringing a Patent

IX.A. Reviewing the Claims

The first thing you should do when you are notified that you may be infringing a patent, or suspect that that might be the case, is to review the claims of the patent in light of its prosecution history (which may give particular meaning to claim terms or otherwise limit the claims) to see if all the elements in the claims are components of the alleged infringing product. A patent attorney should be consulted to interpret the claims and, if infringement is not found, to provide a written opinion of why each claim of the patent is not infringed. (That will make it difficult to show willful infringement if you continue making or selling the product and a court later determines that your interpretation of the claims is incorrect.)

IX.B. Three Choices

If a claim of the patent does read on your product, you have three choices (besides ceasing to make and sell your product). You can try to negotiate a license with the patent owner, possibly cross-licensing a patent that you own that may be useful to the patent owner. (Many companies get patents not for stopping their competitors but as bargaining chips in negotiating cross-license agreements.) You can read the claims carefully to determine if there is some change you can make to your product such that the claims no longer read on your product because one element is missing or different in your product. (This is called inventing around the patent, and while it sounds like a sneaky thing to do, it is actually encouraged by the patent laws because it results in new ways of doing things. But you have to worry about continued infringement under the doctrine of equivalents if your change is minor.) Finally, you can try to invalidate the patent. This is difficult because the presumption of validity of a patent means that your evidence must meet a high standard. For example, you cant just say that the disclosure isnt enabling because deference is given to the examiners determination that it is enabling, as indicated by the lack of a rejection for that reason. The examiners decision that the claimed invention is not anticipated or made obvious in light of the prior art considered (and listed on the first page of the patent) is also given high deference. But prior art not known to the examiner cannot receive the same deference because it clearly did not form a part of the examiners decision to grant the patent. So trying to invalidate a patent generally results in a search for prior art not considered by the examiner and clearly different from the prior art that was considered.

IX.C. Reexamination
Any prior art discovered in such a search can be used as a defense in an infringement suit against you, as the basis for filing a declaratory judgment action to find the patent invalid if you have received a letter from the patent owner sufficiently threatening of an infringement suit, or to have the Patent Office reexamine the patent in light of the newly-discovered prior art. To have the Patent Office order a reexamination, you have to raise a new issue of patentability, which generally means that you have found new prior art and are not just saying that the examiner misapplied the prior art that he considered. Until a recent change in the patent statute, most people avoided reexamination since they could play no role in it beyond their original request, and in particular could not point out misconceptions on the part of the reexamination examiner. The give-and-take of the reexamination was entirely between the patent owner and the examiner. And any prior art supplied as part of the

reexamination request became essentially useless in later patent litigation, since the presumption of validity now applies to that prior art as well as the prior art considered during the original patent examination. The patent statute was changed in 1999 to permit the reexamination requestor to participate in the reexamination by providing written commentary on the actions of the examiner and the responses of the patent owner. Further changes were made in 2002 to give the requestor the same appeals rights as the patent owner. Previously, while either party could appeal the examiners decision to the Board of Patent Appeals and Interferences, only patent owner could further appeal the decision of the Board to the Court of Appeals for the Federal Circuit. The reexamination provision prevents you from using anything that you could have brought up at the time of the reexamination in later litigation. Because of uncertainty about the scope of this bar, reexamination may be undesirable unless you have prior art that you are sure will invalidate the patent, or at least cause new claims that will not concern you. Another change allowed the reexamination to be based on prior art already considered by the examiner, as long as a substantial new question of patentability is shown. But Congress made it clear that this is not a way to second-guess the examiner. However, this bill is not a license to abuse patentees and waste the life of a patent. The point must be stressed that the past requirement of a substantial new question of patentability has not been diminished. The issue raised must be more that just questioning the judgment of the examiner. There should be substantial evidence that the examiner did not properly understand the reference, or did not consider a portion of the reference in making his decision. That substantial new question must be put forward clearly in the request for reexamination. The bill preserves the necessary safeguard in the Patent Act against harassment of patentees with the safety-valve of a substantial new question of patentability' standard, not merely `any sort of question. The agency has discretion in this determination to permit reexamination, but it is not absolute. While the bill clarifies the basis for a reexamination determination and removes the overly-strict bar established by the court, which renders the available process useless in many obvious instances such as with previously considered prior art, the courts should judiciously interpret the substantial new question standard to prevent cases of abusive tactics and harassment of patentees through reexamination. {FN64: H.R. Rep. No. 107-120 at 3} Though each revision to reexamination makes an important improvement, there are still problems that keep people from taking advantage of reexamination as an alternative to litigation. Perhaps Congress will see this as reason to institute a simplified early reexamination, such as an opposition period for a short time after the issuance of a patent to weed out patents where the best prior art was unavailable to the examiner.

Chapter 5: Software-Based Inventions

Probably no aspect of patent law has been more uncertain than the issue of what, if any, software-based inventions can be patented. But recent developments have gone a long way toward clarifying when a software-based invention will be statutory subject matter. The Patent Office has issued guidelines {FN1: 61 Fed. Reg. 7478 (1996)} for examiners that clarify when a softwarebased invention is statutory subject matter. Recent decisions by the Court of Appeals for the Federal Circuit make it clear that software-based inventions and methods of doing business are

indeed patentable, although some uncertainty remains regarding the various forms for claiming such inventions. The past lack of clarity came not from the statute itself, but from the court decisions that have attempted to interpret Section 101of the patent laws, {FN2: 35 U.S.C. 101}which states what may be patented. The cases are difficult to reconcile and are often based on distinctions that dont stand up to technical (rather than legal) analysis. In many instances, an invention has been considered nonstatutory not because of the nature of the invention but because of the way it was claimed. In the prosecution of some patent applications for software-based inventions, most of the examiners time has been spent on the question of whether the invention contained statutory subject matter, while for other patent applications, the question hasnt even been raised. It is important to remember that whether a claimed invention recites statutory subject matter is just the first hurdle that must be conquered before one receives a patent. The invention must also be novel {FN3: 35 U.S.C. 102} and nonobvious, {FN4: 35 U.S.C. 103} and the application must fully disclose how to make and use the invention. {FN5: 35 U.S.C. 112, first paragraph} As an example, if an application today were to claim an ordinary pencil, it would clearly be claiming statutory subject matter, but no patent could issue because the claimed invention is not novel. On the other hand, if an application were to claim this text, it would be rejected because a writing is not statutory subject matter, regardless of its novelty or nonobviousness.

I. Reluctance at the Beginning

The history of the patentability of software-based inventions has been marked by a reluctance of the Patent Office to enter this new field of technology, an appeals court recognizing the broad range of what should be patentable, and a confusing decision by the Supreme Court when it first considered patents of software-based inventions. In 1966, the Presidents Commission on the Patent System issued a report that discussed, among other things, whether software should be protected by patents. Uncertainty now exists as to whether the statute permits a valid patent to be granted on programs. Direct attempts to patent programs have been rejected on the ground of nonstatutory subject matter. Indirect attempts to obtain patents and avoid the rejection, by drafting claims as a process, or a machine or components thereof programmed in a given manner, rather than as a program itself, have confused the issue further and should not be permitted. The Patent Office now cannot examine applications for programs because of a lack of a classification technique and the requisite search files. Even if these were available, reliable searches would not be feasible or economic because of the tremendous volume of prior art being generated. Without this search, the patenting of programs would be tantamount to mere registration and the presumption of validity would be all but nonexistent. It is noted that the creation of programs has undergone substantial and satisfactory growth in the absence of patent protection and that copyright protection for programs is presently available. {FN6: To Promote the Progress of Useful Arts, Report of the Presidents Commission on the Patent System, at 13 (1966)} The view that steady growth in the software industry since 1966 somehow obviates the need for patent protection is myopic. In the early days of digital computers (before 1970), there was little need for statutory protection of computer software, either by patent or by copyright. There were

few computers, most of which were at large companies, and most software was written by programmers at the company using the computer. Software marketed to others could be protected by contract and trade secret, since it was usually expensive and sold to a small market. The argument that something should not be protected by patents because of the inability of the Patent Office to amass the proper search library should be viewed as a condemnation of the Patent Office for not doing its job, not a reason to refuse applications for software-based inventions. In any inventive area where the Patent Office discourages applications, the necessary search library will never develop. This is a detriment not only to the Patent Office but to the country as a whole, since important techniques will remain trade secrets rather than being disclosed in patents.

Chapter 5: Software-Based Inventions

I.A. Trying to Patent a Computer Algorithm
To test the waters of patenting software-based inventions, a number of companies (for example, Bell Telephone Laboratories) filed patent applications. Some applications claimed the invention in terms of an apparatus built from special-purpose hardware as well as implemented using a conventional digital computer. The Patent Office rejected many of these applications, and a few were appealed to the Court of Customs and Patent Appeals (CCPA) with mixed results. In 1963, Bell Labs filed an application on behalf of its employees, Benson and Talbot, entitled Conversion of Numerical Information. It was for a method for converting from binary-code decimal (BCD) numbers to pure binary numbers. The Patent Office Board of Patent Appeals and Interferences had affirmed the examiners rejection of the application, and the company appealed. At the time there were only two claims remaining: Claim 8. The method of converting signals from binary coded decimal form into binary which comprises the steps of (1) storing the binary coded decimal signals in a reentrant shiftregister, (2) shifting the signals to the right by at least three places, until there is a binary 1 in the second position of said register, (3) masking out said binary 1 in said second position of said register, (4) adding a binary 1 to the first position of said register, (5) shifting the signals to the left by two positions, (6) adding a 1 to said first position, and (7) shifting the signals to the right by at least three positions in preparation for a succeeding binary 1 in the second position of said register. Claim 13. A data processing method for converting binary coded decimal number representations into binary number representations comprising the steps of (1) testing each binary digit position i, beginning with the least significant binary digit position, of the most significant decimal digit representation for a binary 0 or a binary 1; (2) if a binary 0 is detected, repeating step (1) for the next least significant binary digit position of said most significant decimal digit representation; (3) if a binary 1 is detected, adding a binary 1 at the (i+1)th and (i+3)th least significant binary digit positions of the next lesser significant decimal digit

representation, and repeating step (1) for the next least significant binary digit position of said most significant decimal digit representation; (4) upon exhausting the binary digit positions of said most significant decimal digit representation, repeating steps (1) through (3) for the next lesser significant decimal digit representation as modified by the previous execution of steps (1) through (3); and (5) repeating steps (1) through (4) until the second least significant decimal digit representation has been so processed. The examiner rejected the claims because they did not recite statutory subject matter. They were not rejected because of a lack of novelty or nonobviousness, although those factors may indeed have been absent. Instead, the examiner thought the claims set forth mental processes or mathematical steps, neither of which he believed were statutory subject matter. The CCPA reversed the examiner in In re Benson. {FN7: 441 F.2d 682, 169 USPQ 548 (1971)} Considering claim 8, the CCPA first asked would a reasonableinterpretation of the claims include coverage of the process implemented by the human mind? Because of the reciting of a reentrant shift register as an element of the claim, the answer clearly is no. That is a hardware element, so we have a process that can be implemented only on a machine, not by a human mind. (The lawyer for the Patent Office referred to the inclusion of the hardware device in the claim as a most embarrassing phrase. In his decision, Judge Rich correctly pointed out that it is not a mere phrase, but a key limitation of claim 8, being referred to in most of the elements.) More important, the claimed process could be carried out without any human intervention, unlike processes with mental steps that require a subjective judgment to be made. The Patent Office urged that the method was not a process within the meaning of Section 101, because the method worked on numbers, which are mathematical abstractions. The court did not find that argument persuasive, since cash registers and other patentable machines also work on numbers and that has never been a reason for taking them out of the category of machines. Claim 13 was more problematical, since it did not recite any hardware, not even the reentrant shift register. It could be done with any hardware, with paper and pencil, or even with red and blue poker chips and a surface to put them on or slots to put them in so that Os and 1s can be represented. While the court conceded that the method of claim 13 could be performed by a person, it thought it was improbable that anyone would ever do it by hand in actual use: Realistically, the process of claim 13 has no practical use other than the more effective operation and utilization of a machine known as a digital computer. It seems beyond question that the machines the computers are in the technological field, are a part of one of our best-known technologies, and are in the useful arts rather than the liberal arts, as are all other types of business machines, regardless of the uses to which their users may put them. How can it be said that a process having no practical value other than enhancing the internal operation of those machines is not likewise in the technological or useful arts? {FN8:441 F.2d at 688, 169 USPQ at 553} The decision of the Board was reversed by the CCPA, and the Patent Office appealed to the Supreme Court.

I.B. The Supreme Courts Benson Decision

The Supreme Court has gone through phases where it is hostile to patents, viewing them as a monopoly that should not be extended any more than necessary. In 1949, Justice Jackson wrote that the only patent that is valid is one which this Court has not been able to get its hands on. {FN9: Jungersen v. Ostby, 335 U.S. 560, 572, 80 USPQ 32, 36(1949)} Justice Douglas, who wrote the opinion in Gottschalk, Commissioner of Patents v. Benson, {FN10: 409 U.S. 63, 175 USPQ 673 (1972)} was certainly not an advocate of expanding the scope of patents. In a unanimous decision (with three justices not taking part in the decision, presumably because of conflicts of interest), the Court reversed the decision of the CCPA. Citing past Supreme Court decisions, the opinion states While a scientific truth, or the mathematical expression of it, is not a patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be. That statement followed the long-standing rule that an idea of itself is not patentable. Here the process claim is so abstract and sweeping as to cover both known and unknown uses of the BCD to pure-binary conversion. The end use may (1) vary from the operation of a train to verification of drivers licenses to researching the law books for precedents and (2) be performed through any existing machinery or future-devised machinery or without any apparatus. {FN11: 409 U.S. at 68, 175 USPQ at 673} This is a strange argument. Because the claimed technique for converting from BCD to binary has great utility, in that it can be used in a wide variety of applications, it isnt entitled to patent protection! Many things have a variety of uses a novel fastener can be used to hold together parts of airplanes, furniture, or even broken human bones, but it is still a patentable manufacture. Justice Douglas then revisited Cochrane v. Deener, {FN12: 94 U.S. 780 (1876)} an 1876 Supreme Court patent decision, for its definition of a process as something that transforms its subject matter to a different state or thing, which he notes as a clue to the patentability of a process claim that does not include particular machines. But then he states: It is argued that a process patent must either be tied to a particular machine or apparatus or must operate to change articles or materials to a different state or thing. We do not hold that no process patent could ever qualify if it did not meet the requirements of our prior precedents. It is said that the decision precludes a patent for any program servicing a computer. We do not so hold. {FN13: 409 U.S. at 71, 175 USPQ at 676} So we now know what Benson does not mean: that computer programs as a broad class are unpatentable. But how do we tell if a software-based invention is patentable or unpatentable? Justice Douglas states in a nutshell the reason why the claims are unpatentable: It is conceded that one may not patent an idea. But in practical effect that would be the result if the formula for converting binary code to pure binary were patented in this case. The mathematical formula involved here has no substantial practical application except in connection with a digital computer, which means that if the judgment below is affirmed, the patent would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself.{FN14: 409 U.S. at 71-72, 175 USPQ at 676} Previously in the decision, an algorithm was described as a procedure for solving a given type of mathematical problem. But an algorithm, as the term is normally used, is simply an orderly procedure for solving a problem. While many algorithms solve mathematical problems (such as

finding a square root) or involve the manipulation of numbers (such as Bensons invention), other algorithms solve purely nonmathematical problems (such as finding a character string matching a pattern) or problems where numbers represent properties of items (such as the width of a line and the width of characters when trying to justify lines of type). The decision does not recognize these differences. Of course, the claimed algorithm isnt the only way to convert BCD numbers to pure binary. Other, presumably less efficient algorithms had been used before Bensons invention, and any valid claims by Benson cannot read on that prior art. The opinion then repeats the comments of the Presidents Commission on the Patent System discussed above, and indicates that if patent protection for software-based inventions is desirable, it should be Congress and not the courts that should extend that protection. But since Congress had described statutory subject matter using essentially the same language for almost 180 years at the time of the Benson decision, it apparently did not think that a special category of statutory subject matter was required for each new technology.

I.C. Trying to Make Sense of Benson

It is difficult to know where the Supreme Court drew the patentability line for computer algorithms in Benson. We do know that the Court did not think all computer programs were unpatentable because it specifically stated It is said that the decision precludes a patent for any program servicing a computer. We do not so hold. {FN15: 409 U.S. at 71,175 USPQ at 676} But we also know that Bensons claimed invention was not patentable. In In re Freeman, {FN16: 573 F.2d 1237, 197 USPQ 464 (1978)} the CCPA was asked to decide whether a technique for computer-based typesetting was statutory subject matter. Freeman had invented a system that made it easier to typeset mathematical formulas. The examiner had rejected the claims as involving mental steps, but the Board reversed the examiners rejection and instead rejected the claims as nonstatutory subject matter as described in Benson: The board construed the claims to cover a known program loaded display typesetting device wherein the novelty resides in the program. In applyingBenson, the board said the improvement covered by the claims appeared to have no substantial practical application except in connection with a digital computer and that the coverage sought in practical effect would be a patent on the algorithm itself. That claims 1-7 were apparatus claims was dismissed on the view that appellant should not be allowed to claim indirectly what he cannot claim directly with method language. Neither the examiner nor the board questioned that appellants invention, as claimed, was new, useful, and unobvious. {FN17: 573 F.2d at 1242-1243,197 USPQ at 469} The CCPA pointed out the problem with the Boards reasoning: The fundamental flaw in the boards analysis in this case lies in a superficial treatment of the claims. With no reference to the nature of the algorithm involved, the board merely stated that the coverage sought in practical effect would be a patent on the algorithm itself. Though the board gave no clear reasons for so concluding, its approach would appear to be that every implementation with a programmed computer equals algorithm in the Benson sense. If that rubric be law, every claimed method that can be so implemented would equal nonstatutory

subject matter under 35 USC 101. That reasoning sweeps too wide and is without basis in law. {FN18: 573 F.2d at 1245, 197 USPQ at 470} The CCPA proposed a two-part test for determining whether a claim recites statutory subject matter: First, it must be determined whether the claim directly or indirectly recites an algorithm in the Benson sense of that term, for a claim which fails even to recite an algorithm clearly cannot wholly preempt an algorithm. Second, the claim must be further analyzed to ascertain whether in its entirety it wholly preempts that algorithm. {FN19: 573 F.2d at 1245, 197 USPQ at 471} The dictionary definition for an algorithm is a step-by-step procedure for solving a problem or accomplishing some end. This broad meaning for an algorithm is essentially the same as for a process, and processes are specifically included in Section 101 as a class of statutory subject matter. Hopefully, the Supreme Court in Benson was not trying to remove processes from Section 101, so it must have been considering algorithms in a more restricted sense. In particular, it defined algorithms as a procedure for solving a given type of mathematical problem (emphasis added) and appeared to use the terms algorithm and mathematical algorithm interchangeably. The CCPA determined that an algorithm in the Benson sense of that term is a mathematical algorithm, and the two-part test can be paraphrased as follows: Determine whether the claim directly or indirectly recites a mathematical algorithm. If it does and the claim wholly preempts that algorithm, the claim is nonstatutory. The CCPA cautioned that there were many ways a mathematical algorithm could appear in a claim. In some claims, a formula or equation may be expressed in traditional mathematical symbols so as to be immediately recognizable as a mathematical algorithm. Other claims may use prose to express a mathematical computation or to indirectly recite a mathematical equation or formula by means of a prose equivalent therefor. A claim which substitutes, for a mathematical formula in algebraic form, words which mean the same thing, nonetheless recites an algorithm in the Benson sense. Indeed, the claims at issue inBenson did not contain a formula or equation expressed in mathematical symbols. When considered as a whole, each of the claims in Benson did, however, recite in prose a formula for converting binary coded decimal numbers into binary numbers. {FN20: 573 F.2d at 1246,197 USPQ at 471 (citations omitted)} Because the claims to Freemans computer-based typesetting system did not recite, directly or indirectly, a mathematical algorithm but instead an orderly procedure for specifying where the characters of a formula should be placed on a screen or phototypesetter, the first part of the twopart test was not satisfied and the claims were not drawn to nonstatutory subject matter.

Chapter 5: Software-Based Inventions

I.D. The Supreme Courts Flook Decision
About the same time as Freeman, the CCPA reversed a decision of the Board that the claims of Dale Flook to a method of updating alarm limits in a chemical process recited nonstatutory subject matter under the Benson decision. {FN21: In re Flook, 559 F.2d 21, 195 USPQ 9 (1977)} The only independent claim was

A method for updating the value of at least one alarm limit on at least one process variable involved in a process comprising the catalytic chemical conversion of hydrocarbons wherein said alarm limit has a current value of Bo+K wherein Bo is the current alarm base and K is a predetermined alarm offset which comprises: (1) Determining the present value of said process variable, said present value being defined as PVL; (2) Determining a new alarm base, B1, using the following equation: B1 = Bo(1.0-F)+PVL(F) where F is a predetermined number greater than zero and less than 1.0; (3) Determining an updated alarm limit which is defined as B1+K; and, thereafter (4) Adjusting said alarm limit to said updated alarm limit value. The CCPA framed the issue as whether a processes that uses a mathematical algorithm in an otherwise statutory process (in this case, a chemical conversion process), rather than is wholly a mathematical algorithm, is statutory. Bensons proscription was limited by its words to claims which involve a mathematical formula and which would wholly pre-empt the mathematical formula. The present claims do not preempt the formula or algorithm contained therein, because solution of the algorithm, per se, would not infringe the claims. Thus, Bensons holding does not render the claims before us unpatentable. {FN22: 559 F.2d at 23, 195 USPQ at 11 (citations omitted)} The CCPA stated that if a mathematical algorithm is claimed for a particular use but not all possible uses, it does not preempt the mathematical algorithm and is therefore statutory subject matter. The Patent Office appealed to the Supreme Court. The Supreme Court, in Parker v. Flook, {FN23: 437 U.S. 584, 198 USPQ 193 (1978)} held that the claim was nonstatutory. It observed that the claims cover a broad range of potential uses of the method but noted that they do not cover every conceivable application of the formula. But the Court said that the proper approach to be used is to look at the process in general: The process itself, not merely the mathematical algorithm, must be new and useful. Indeed, the novelty of the mathematical algorithm is not a determining factor at all. Whether the algorithm was in fact known or unknown at the time of the claimed invention, as one of the basic tools of scientific and technological work, it is treated as though it were a familiar part of the prior art. {FN24: 437 U.S. at 591-592, 198 USPQ at 198 (citations omitted)} Because the chemical process, absent Flooks particular alarm limits formula, was wellknown, the Court ruled that the claims did not recite statutory subject matter. Remember, though, that we are trying to determine only whether Section 101 is satisfied, not whether Section 102s novelty or Section 103s nonobviousness requirements are met. The Court has imported novelty considerations into statutory subject matter. Flook still does not provide the clear view of what, if any, software-based processes are statutory subject matter under Section 101. In light of Flook, the CCPA revised its two-step Freeman test in In re Walter. {FN25: 618 F.2d 758, 205 USPQ 397 (1980)} The second step of the Freeman test is stated in terms of preemption. We note, however, that Flook does not require literal preemption of a mathematical algorithm found in a patent claim. The Court there stated that Flooks claims did

not cover every conceivable application of the formula. Nevertheless, we believe that the Freeman test, as applied, is in no way in conflict with Flook. In order to determine whether a mathematical algorithm is preempted by a claim under Freeman, the claim is analyzed to establish the relationship between the algorithm and the physical steps or elements of the claim. In Benson and Flook, no such relationship could be found; the entire claim was, in each case, drawn to the algorithm itself. . . . When this court has heretofore applied its Freeman test, it has viewed it as requiring that the claim be examined to determine the significance of the mathematical algorithm, i.e., does the claim implement the algorithm in a specific manner to define structural relationships between the elements of the claim in the case of apparatus claims, or limit or refine physical process steps in the case of process or method claims? The point of the analysis is the recognition that A principle, in the abstract, is a fundamental truth; an original cause; a motive; these cannot be patented, and that, a hitherto unknown phenomenon of nature if claimed would not be statutory, but that the application of the law of nature to a new and useful end, would be. While we have stated the test in terms of preemption, we have consistently applied it in the spirit of the foregoing principles. Since we have noted thatFlook does not require literal preemption of a mathematical algorithm by a claim for a finding that the claim is nonstatutory, we thus deem it appropriate to restate the second step of the Freeman test in terms other than preemption. Once a mathematical algorithm has been found, the claim as a whole must be further analyzed. If it appears that the mathematical algorithm is implemented in a specific manner to define structural relationships between the physical elements of the claim (in apparatus claims) or to refine or limit claim steps (in process claims), the claim being otherwise statutory, the claim passes muster under Section 101. If, however, the mathematical algorithm is merely presented and solved by the claimed invention, as was the case in Benson and Flook, and is not applied in any manner to physical elements or process steps, no amount of post-solution activity will render the claim statutory; nor is it saved by a preamble merely reciting the field of use of the mathematical algorithm. {FN26: 618 F.2d at 767, 205 USPQ at 407 (citations omitted)}

Chapter 5: Software-Based Inventions

I.E. Chakrabartys Bacteria
Two years after the Supreme Court decided Flook, it decided Diamond v. Chakrabarty, {FN27: 447 U.S. 303, 206 USPQ 193 (1980)} another statutory subject matter case, but dealing with man-made, genetically-engineered bacteria capable of breaking down crude oil and having significant value in the treatment of oil spills. The Patent Office allowed method claims for producing the bacteria and for a combination of a floating carrier and the bacteria, but it rejected claims for the new bacteria itself. The examiner found that as living things, they were not statutory subject matter under Section 101. The Board upheld the examiners decision, and the CCPA reversed.

In contrast to its decisions in Benson and Flook,in Chakrabarty the Supreme Court (by a fiveto-four majority) took a broader view of Section 101: In cases of statutory construction we begin, of course, with the language of the statute. And unless otherwise defined, words will be interpreted as taking their ordinary, contemporary, common meaning. We have also cautioned that courts should not read into the patent laws limitations and conditions which the legislature has not expressed. {FN28: 447 U.S. at 308, 206 USPQ at 196 (citations omitted)} It then went on to consider whether the bacterium was a manufacture or composition of matter, and noted that Congress has purposely chosen broad and expansive terms to indicate what was statutory subject matter. Congress plainly contemplated that the patent laws would be given wide scope. The Committee Reports accompanying the 1952 act inform us that Congress intended statutory subject matter to include anything under the sun that is made by man. This is not to suggest that Section 101 has no limits or that it embraces every discovery. The laws of nature, physical phenomena, and abstract ideas have been held not patentable. {FN29: 447 U.S. at 309, 206 USPQ at 197 (citations omitted)} Finding that the bacterium did not occur naturally, the Court ruled that the bacterium was either a manufacture or composition of matter and was statutory subject matter.

I.F. Diehrs Rubber Molding

Given that Chakrabarty apparently held that anything under the sun that is made by man, with the exception of laws of nature, physical phenomena, and abstract ideas, was patentable, its not surprising that a year later the next (and last) software patent case before the Supreme Court produced a different result from Benson and Flook. James Diehr and Theodore Lutton had invented a method for operating the molding presses used in the manufacture of rubber articles such as tires. Their method produced properly cured rubber articles by ensuring that the articles remained in the press for the proper time so they were not either overprocessed or underprocessed. It did this by continually monitoring the actual temperature in the mold and repeatedly calculating the cure time using a well-known formula, the Arrhenius equation. They claimed A method of operating a rubber-molding press for precision molded compounds with the aid of a digital computer, comprising: providing said computer with a data base for said press including at least, natural logarithm conversion data (ln), the activation energy constant (C) unique to each batch of said compound being molded, and a constant (x) dependent upon the geometry of the particular mold of the press, initiating an interval timer in said computer upon the closure of the press for monitoring the elapsed time of said closure, constantly determining the temperature (Z) of the mold at a location closely adjacent to the mold cavity in the press during molding, constantly providing the computer with the temperature (Z),

repetitively calculating in the computer, at frequent intervals during each cure, the Arrhenius equation for reaction time during the cure, which is ln v = CZ + x where v is the total required cure time, repetitively comparing in the computer at said frequent intervals during the cure each said calculation of the total required cure time calculated with the Arrhenius equation and said elapsed time, and opening the press automatically when a said comparison indicates equivalence. The examiner rejected the claims because he felt Diehr and Lutton were claiming a computer program, subject matter to which the Supreme Court has declined to extend patent protection absent a considered action by Congress and the Board agreed with the examiner. The CCPA reversed. {FN30: In re Diehr and Lutton, 602 F.2d 982, 203 USPQ 44 (1979)} A claim drawn to a process or method does not depend for its validity under 35 USC 101 on whether a computer is involved. If the claim is drawn to subject matter, which is otherwise statutory, it does not become nonstatutory merely because a computer is involved in its execution. . . . Therefore, any rejection which is based solely on the determination that a computer or computer program is involved is insupportable because it is overly broad and must be reversed as being without basis in the law. {FN31: 602 F.2d at 985, 203 USPQ at 48-49 (citations omitted)} . . . This, as we perceive it, is the direction which has been given us by the Supreme Court. Until the Court directs us otherwise, we continue to disagree with the notion that a claim may be rejected as nonstatutory merely because it involves a computer program or is computer related. As far as we are concerned, claims may be rejected under Section 101 because they attempt to embrace only a mathematical formula, mathematical algorithm, or method of calculation, but not merely because they define inventions having something to do with a computer. {FN32: 602 F.2d at 986-987, 203 USPQ at 50} Not surprisingly, the Patent Office appealed again to the Supreme Court, but this time the outcome was different. The Court, in its five-to-four Diamond v. Diehr {FN33: 450 U.S. 175, 209 USPQ 1 (1981)} decision, affirmed the decision of the CCPA. In Diehr, the Court viewed the claimed invention as a conventional process, one that transforms rubber to a different state of thing. Were it not for the presence of a formula, or implementation using a computer, the claims would clearly be statutory. The Court then addressed this aspect of the claimed invention. Our conclusion regarding respondents claims is not altered by the fact that in several steps of the process a mathematical equation and a programmed digital computer are used. This Court has undoubtedly recognized limits to Section 101 and every discovery is not embraced within the statutory terms. Excluded from such patent protection are laws of nature, physical phenomena and abstract ideas. . . . Our recent holdings in Benson and Flook,both of which are computer-related, stand for no more than these long established principles. . . . In contrast, the respondents here do not seek to patent a mathematical formula. Instead, they seek patent protection for a process of curing synthetic

rubber. Their process admittedly employs a well known mathematical equation, but they do not seek to pre-empt the use of that equation. Rather, they seek only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process. . . . Obviously, one does not need a computer to cure natural or synthetic rubber, but if the computer use incorporated in the process patent significantly lessens the possibility of overcuring or undercuring, the process as a whole does not thereby become unpatentable subject matter. Our earlier opinions lend support to our present conclusion that a claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula, computer program or digital computer. In Benson we noted It is said that the decision precludes a patent for any program servicing a computer. We do not so hold. Similarly, in Flook we stated, A process is not unpatentable simply because it contains a law of nature or a mathematical algorithm. It is now commonplace that an application of a law of nature or mathematical formula to a known structure or process may well be deserving of patent protection. As Mr. Justice Stone explained four decades ago: While a scientific truth, or the mathematical expression of it, is not a patentable invention, a novel and useful structure created with the aid of knowledge of scientific truth may be. We think this statement . . . takes us a long way toward the correct answer in this case. Arrhenius equation is not patentable in isolation, but when a process for curing rubber is devised which incorporates in it a more efficient solution of the equation, that process is at the very least not barred at the threshold by Section 101. In determining the eligibility of respondents claimed process for patent protection under Section 101, their claims must be considered as a whole. It is inappropriate to dissect the claims into old and new elements and then to ignore the presence of the old elements in the analysis. This is particularly true in a process claim because a new combination of steps in a process may be patentable even though all the constituents of the combination were well known and in common use before the combination was made. The novelty of any element or steps in a process, or even of the process itself, is of no relevance in determining whether the subject matter of a claim falls within the Section 101 categories of possibly patentable subject matter. It has been urged that novelty is an appropriate consideration under Section 101. Presumably, this argument results from the language in Section 101 referring to any new and useful process, machine, etc. Section 101, however, is a general statement of the type of subject matter that is eligible for patent protection subject to the conditions and requirements of this title. Specific conditions for patentability follow and Section 102 covers in detail the conditions relating to novelty. The question therefore of whether a particular invention is novel is fully apart from whether the invention falls into a category of statutory subject matter. {FN34: 450 U.S. at 185-190, 209 USPQ at 7-9 (citations omitted)} Diehr clearly answers a number of questions but leaves many unanswered. An otherwise statutory process, particularly one involving a change in state or composition of a physical object, is statutory subject matter even though it involves a law of nature, mathematical formula, or digital computer. But is a process that does not change a physical object also statutory subject matter?

Laws of nature, physical phenomena, and abstract ideas are excluded from patent protection. But are there other things that are excluded, or are those three the complete list? In Chakrabarty, the Court has indicated that one should not read into the patent laws limitations and conditions which the legislature has not expressed. What about hardware implementing an algorithm? Is that a machine, as that term is used in Section 101? What if the hardware is a general-purpose digital computer, programmed to implement the algorithm? The Court cautioned against allowing a competent draftsman to evade the recognized limitations on the type of subject matter eligible for patent protection. But we do know that there is at least one patent application for a computer-based invention that the Supreme Court believes claims statutory subject matter.

Chapter 5: Software-Based Inventions

II. Trying To Draw the Line II.A. After Diehr
Shortly after Diehr, the CCPA decided In re Abele and Marshall {FN35: 684 F.2d 902, 214 USPQ 682 (1982)} .It used the two-step test first proposed in Freeman and modified in Walter,discussed above. As described in a later decision: It is first determined whether a mathematical algorithm is recited directly or indirectly in the claim. If so, it is next determined whether the claimed invention as a whole is no more than the algorithm itself; that is, whether the claim is directed to a mathematical algorithm that is not applied to or limited by physical elements or process steps. Such claims are nonstatutory. However, when the mathematical algorithm is applied in one or more steps of an otherwise statutory process claim, or one or more elements of an otherwise statutory apparatus claim, the requirements of Section 101 are met. {FN36: Arrhythmia Research v. Corazonix,958 F.2d 1053, 1058, 22 USPQ2d 1033, 1037 (Fed. Cir. 1992)} Abele had invented a technique for enhancing images such as would be produced using a CAT scanner. Of particular interest are claims 5 and 6. Claim 5. A method of displaying data in a field comprising the steps of calculating the difference between the local value of the data at a data point in the field and the average value of the data in a region of the field which surrounds said point for each point in said field, and displaying the value of said difference as a signed gray scale at a point in a picture which corresponds to said data point. Claim 6. The method of claim 5 wherein said data is X-ray attenuation data produced in a two dimensional field by a computed tomography scanner. The CCPA ruled that claim 5 did not recite statutory subject matter because it was directed solely to the mathematical algorithm portion of appellants invention but found that claim 6 did. That is because it requires X-ray attenuation data. Were we to view the claim absent the algorithm, the production, detection and display steps would still be present and would result in a conventional CATscan process. Accordingly, production and detection cannot be considered mere antecedent steps to obtain values for solving the algorithm. . . .

We are faced simply with an improved CAT-scan process comparable to the improved process for curing synthetic rubber in Diehr.The improvement in either case resides in the application of a mathematical formula within the context of a process which encompasses significantly more than the algorithm alone.{FN37: 684 F.2d at 908-909, 214 USPQ at 687-688 (citations omitted)}

II.B. A New Clarity: The Alappat Decision

On July 29, 1994, the Court of Appeals for the Federal Circuit (the successor to the CCPA) decided en banc (all the judges of the court hearing the matter, rather than the more-common threejudge panel) on whether a rasterizer for graphical images was statutory subject matter. In re Alappat {FN38: 33 F.3d 1526, 31 USPQ2d 1545 (1994)} was complicated by a question of the courts jurisdiction because the Commissioner of Patents had stacked the panel of the Board of Patent Appeals and Interferences after the original panel had produced a decision he thought went against the policies of the Patent Office. It also involved how means-plus-function claim elements should be interpreted during a patent examination. After disposing of these two matters, the Federal Circuit noted that what was being claimed was a machine, albeit one that implemented an algorithm. There was no question that the machine was otherwise statutory subject matter. However, because of the mathematical algorithm exception to statutory subject matter created by the Supreme Court, simply classifying the claimed invention as a machine did not end the analysis. A past court decision, In re Johnson, {FN39: 589 F.2d 1070, 200 USPQ 199 (1978)} stated that the exception applies equally whether an invention is claimed as an apparatus or process, because the form of the claim is often an exercise in drafting. {FN40: 589 F.2d at 1077, 200 USPQ at 206} To determine the scope of the mathematical algorithm exception, Judge Rich examined the three Supreme Court cases on the patentability of software-related inventions: A close analysis of Diehr, Flook, and Benson reveals that the Supreme Court never intended to create an overly broad, fourth category of subject matter excluded from Section 101. Rather, at the core of the Courts analysis in each of these cases lies an attempt by the Court to explain a rather straightforward concept, namely, that certain types of mathematical subject matter, standing alone, represent nothing more than abstract ideas until reduced to some type of practical application, and thus that subject matter is not, in and of itself, entitled to patent protection. . . . Given the foregoing, the proper inquiry in dealing with the so called mathematical subject matter exception to Section 101 alleged herein is to see whether the claimed subject matter as a whole is a disembodied mathematical concept, whether categorized as a mathematical formula, mathematical equation, mathematical algorithm, or the like, which in essence represents nothing more than a law of nature, natural phenomenon, or abstract idea. If so, Diehrprecludes the patenting of that subject matter. {FN41: 33 F.3d at 1543, 31 USPQ2d at 15561557} The court concluded that this was not the case in Alappats claimed invention, and so the mathematical algorithm exception for statutory subject matter did not apply. The decision of the Board had also stated that one of Alappats claims was unpatentable merely because it reads on a general purpose digital computer means to perform the various

steps under program control. The Board decided that because the claim read on a programmed digital computer, it could be treated as a method claim rather than an apparatus claim. The court found no basis for software-based inventions running on programmed general purpose computers to be per se unpatentable. We have held that such programming creates a new machine, because a general purpose computer in effect becomes a special purpose computer once it is programmed to perform particular functions pursuant to instructions from program software. Under the Board majoritys reasoning, a programmed general purpose computer could never be viewed as patentable subject matter under Section 101. This reasoning is without basis in the law. The Supreme Court has never held that a programmed computer may never be entitled to patent protection. Indeed, theBenson court specifically stated that its decision therein did not preclude a patent for any program servicing a computer. Consequently, a computer operating pursuant to software may represent patentable subject matter, provided, of course, that the claimed subject matter meets all of the other requirements of Title 35. In any case, a computer, like a rasterizer, is apparatus not mathematics. {FN42: 33 F.3d at 1545, 31 USPQ2d at 1558 (citations omitted)} Alappat allowed the Federal Circuit to restate and clarify its past decisions on whether software-related inventions are patentable. In particular, it is clear that a programmed general purpose computer must be regarded as a specialized piece of hardware both for determining whether a claim is drawn to statutory subject matter and when determining whether the invention is novel and nonobvious. It is also clear that the mathematical algorithm exception to statutory subject matter first discussed by the Supreme Court in Bensonis limited to abstract mathematical concepts, not mathematics applied to a practical application. Machines, even though they carry out mathematical operations, are patentable. This really did not differ substantially from the Patent Offices practice. The time was long past when the Office rejected an application just because it was a software-related invention. There were over 10,000 patents that could be considered software-related at the time of Alappat.But the Office position had swung back and forth on the patentability of software-related inventions. Alappat restricts the Patent Office from treating software-related inventions more strictly under Section 101 than other inventions. It is interesting to compare the Federal Circuit decision inAlappat with the CCPA decision in Benson, decided in 1971 and the first of the cases weve discussed here. Although the Supreme Court eventually held that Benson did not claim statutory subject matter, the CCPA thought differently. Realistically, the process of claim 13 has no practical use other than the more effective operation and utilization of a machine known as a digital computer. It seems beyond question that the machines the computers are in the technological field, are a part of one of our best-known technologies, and are in the useful arts rather than the liberal arts, as are all other types of business machines, regardless of the uses to which their users may put them. How can it be said that a process having no practical value other than enhancing the internal operation of those machines is not likewise in the technological or useful arts?{FN43: 441 F.2d 682, 688, 169 USPQ 548, 553 (1971)}

Both decisions were written by Judge Giles Rich, who, after serving on a federal court longer than any other judge, saw his position in Benson become the accepted law regarding the patentability of software-based inventions and other methods used with computers. Whether something has a particular use in the technological arts (has utility) is what now separates patentable methods from abstract and unpatentable mathematical algorithms.

II.C. After Alappat

In In re Warmerdam, {FN44: 33 F.3d 1354, 31 USPQ2d 1754 (1994)} the invention was a method and apparatus for controlling the motion of objects and machines, such as robotic machines, to avoid collision with other moving or fixed objects. The technique required determining the shape and position of the edges of the objects to be avoided. The prior art taught that collision avoidance can be simplified by assuming that the objects are larger and more regularly shaped than they actually are. This can be done by treating the object as if it were a circle or sphere (called a bubble) of sufficient size to enclose the object, and by assuming that any motion that impinges upon the bubble would produce a collision. The invention was a refinement of prior art bubble systems. The positions of objects were determined by measuring the locations of artificial circular boundaries, but the measurement process did not end if the technique determined that the circular boundary would be violated in a potential collision. Instead, if a potential collision was detected, the determination of the boundary position was further refined by replacing the bubbles with smaller bubbles. The decision refers to the two-part Freeman-Walter-Abele test discussed above but points out a difficulty with the test: The difficulty is that there is no clear agreement as to what is a mathematical algorithm, which makes rather dicey the determination of whether the claim as a whole is no more than that. An alternative to creating these arbitrary definitional terms which deviate from those used in the statute may lie simply in returning to the language of the statute and the Supreme Courts basic principles as enunciated in Diehr, and eschewing efforts to describe nonstatutory subject matter in other terms. {FN45: 33 F.3d at 1359, 31 USPQ2d at 1758 (citations omitted)} The court then determined that Warmerdams claimed method merely involves no more than the manipulation of abstract ideas. Any physical steps, such as measuring positions, were simply data gathering for the algorithm, and that had been held in a prior case insufficient to make a claim patentable. One of Warmderdams claims was for a machine implementing the method, and the court found that claim recited statutory subject matter. In other words, the claim for an applied concept was patentable, but a claim for an abstract concept wasnt.

II.D. The Patent Offices Guidelines

On June 2, 1995, following hearings on whether, and how, software-based inventions should be protected by patents, the Patent Office issued proposed guidelines {FN46: 60 Fed. Reg. 28778 (1995)} for its examiners on how to determine whether a claimed software-based invention was statutory subject matter. Following public comments, final guidelines {FN47: 61 Fed. Reg. 7478 (1996)} became effective on February 28, 1996. The Guidelines are the Patent Offices understanding of the various court decisions discussed previously and established procedures to be followed by patent examiners in the handling of patent applications for software-based inventions.

These Guidelines do not have the force of a Patent Office regulation, because Congress has given the Patent Office regulatory authority limited to the way proceedings are conducted in the Patent Office. The theme of the Guidelines is that statutory subject matter for software-based inventions is based on the utility of the claimed invention. The subject matter sought to be patented must be a useful process, machine, manufacture or composition of matter, i.e., it must have a practical application. The purpose of this requirement is to limit patent protection to inventions that possess a certain level of real world value, as opposed to subject matter that represents nothing more than an idea or concept, or is simply a starting point for future investigation or research. Accordingly, a complete disclosure should contain some indication of the practical application for the claimed invention, i.e., why the applicant believes the claimed invention is useful. The utility of an invention must be within the technological arts. A computer-related invention is within the technological arts. A practical application of a computer-related invention is statutory subject matter. This requirement can be discerned from the variously phrased prohibitions against the patenting of abstract ideas, laws of nature or natural phenomena. An invention that has a practical application in the technological arts satisfies the utility requirement. {FN48: 61 Fed. Reg. at 7480} . . . The subject matter courts have found to be outside the four statutory categories of invention is limited to abstract ideas, laws of nature and natural phenomena. While this is easily stated, determining whether an applicant is seeking to patent an abstract idea, a law of nature or a natural phenomenon has proven to be challenging. These three exclusions recognize that subject matter that is not a practical application or use of an idea, a law of nature or a natural phenomenon is not patentable. Courts have expressed a concern over preemption of ideas, laws of nature or natural phenomena. The concern over preemption serves to bolster and justify the prohibition against the patenting of such subject matter. In fact, such concerns are only relevant to claiming a scientific truth or principle. Thus, a claim to an abstract idea is non-statutory because it does not represent a practical application of the idea, not because it would preempt the idea. {FN49: 61 Fed. Reg. at 7481} The Guidelines give examples showing how the test of utility arguably reconciles all the past court decisions on when a software-based invention is statutory subject matter. They also make a procedural change that may substantially lower the number of statutory subject matter rejections they require the examiner to address the novelty and nonobviousness of a claim even if it has been rejected as nonstatutory subject matter. A statutory subject matter rejection now results in additional work for the examiner and is not a quick way to dispose of the application.

Chapter 5: Software-Based Inventions

III. Business Methods and State Street Bank
On July 23, 1998, the Federal Circuit made one of its clearest statements on the patentability of software-based inventions in its State Street Bank {FN50: State Street Bank & Trust v. Signature

Financial Group, 149 F.3d 1368, 47 USPQ2d 1596 (Fed. Cir. 1998)} decision. This was truly a long-awaited decision, since it wasnt released until about 16 months after oral arguments were heard in the case. Signature Financial had received a patent on a data processing system for implementing an investment structure which was developed for use in Signatures business as an administrator and accounting agent for mutual funds. State Street Bank used a similar system, and after negotiations for a license to practice Signatures patent broke down, State Street Bank asked the district court to declare the patent invalid. The district court found the patent invalid because it did not claim statutory subject matter. The original patent application had 12 claims six method claims and six corresponding machine claims. When the examiner contemplated a statutory subject matter rejection of the method claims, Signature dropped them. The examiner then allowed the patent for the remaining machine claims. Claim 1 is representative of the machine claims, with the bracketed language indicating what the written description discloses as structure for the mean for limitations. 1. A data processing system for managing a financial services configuration of a portfolio established as a partnership, each partner being one of a plurality of funds, comprising: (a) computer processor means [a personal computer including a CPU] for processing data; (b) storage means [a data disk] for storing data on a storage medium; (c) first means [an arithmetic logic circuit configured to prepare the data disk to magnetically store selected data] for initializing the storage medium; (d) second means [an arithmetic logic circuit configured to retrieve information from a specific file, calculate incremental increases or decreases based on specific input, allocate the results on a percentage basis, and store the output in a separate file] for processing data regarding assets in the portfolio and each of the funds from a previous day and data regarding increases or decreases in each of the funds, [sic, funds] assets and for allocating the percentage share that each fund holds in the portfolio; (e) third means [an arithmetic logic circuit configured to retrieve information from a specific file, calculate incremental increases and decreases based on specific input, allocate the results on a percentage basis and store the output in a separate file] for processing data regarding daily incremental income, expenses, and net realized gain or loss for the portfolio and for allocating such data among each fund; (f) fourth means [an arithmetic logic circuit configured to retrieve information from a specific file, calculate incremental increases and decreases based on specific input, allocate the results on a percentage basis and store the output in a separate file] for processing data regarding daily net unrealized gain or loss for the portfolio and for allocating such data among each fund; and (g) fifth means [an arithmetic logic circuit configured to retrieve information from specific files, calculate that information on an aggregate basis and store the output in a separate file] for processing data regarding aggregate year-end income, expenses, and capital gain or loss for the portfolio and each of the funds. Clearly, the claim is to a specific machine, albeit one implemented using a conventional digital computer. But following Alappat,the programming of a general-purpose machine produces a special-purpose machine that performs the desired function. That does not end the analysis, though,

because the district court found that the machine fell into either the mathematical algorithm or business method exceptions to statutory subject matter. The court first addressed the mathematical algorithm exception: Unpatentable mathematical algorithms are identifiable by showing they are merely abstract ideas constituting disembodied concepts or truths that are not useful. From a practical standpoint, this means that to be patentable an algorithm must be applied in a useful way. In Alappat,we held that data, transformed by a machine through a series of mathematical calculations to produce a smooth waveform display on a rasterizer monitor, constituted a practical application of an abstract idea (a mathematical algorithm, formula, or calculation), because it produced a useful, concrete and tangible resultthe smooth waveform. Similarly, in Arrythmia Research, we held that the transformation of electrocardiograph signals from a patients heartbeat by a machine through a series of mathematical calculations constituted a practical application of an abstract idea (a mathematical algorithm, formula, or calculation), because it corresponded to a useful, concrete or tangible thingthe condition of a patients heart. Today, we hold that the transformation of data, representing discrete dollar amounts, by a machine through a series of mathematical calculations into a final share price, constitutes a practical application of a mathematical algorithm, formula, or calculation, because it produces a useful, concrete and tangible result a final share price momentarily fixed for recording and reporting purposes and even accepted and relied upon by regulatory authorities and in subsequent trades.{FN51: 149 F.3d at 1373, 47 USPQ2d at 1601 (citations omitted)} This reinforces the Guidelines theme of utility as the way to determine whether a claim is to statutory subject matter. Clearly, as long as the numbers being crunched have some meaning in the real world, the claimed invention is useful and statutory subject matter. The court then addressed the viability of the Freeman-Walter-Abele test: After Diehr and Chakrabarty, the Freeman-Walter-Abele test has little, if any, applicability to determining the presence of statutory subject matter. As we pointed out in Alappat, application of the test could be misleading, because a process, machine, manufacture, or composition of matter employing a law of nature, natural phenomenon, or abstract idea is patentable subject matter even though a law of nature, natural phenomenon, or abstract idea would not, by itself, be entitled to such protection. The test determines the presence of, for example, an algorithm. Under Benson,this may have been a sufficient indicium of nonstatutory subject matter. However, after Diehr and Alappat, the mere fact that a claimed invention involves inputting numbers, calculating numbers, outputting numbers, and storing numbers, in and of itself, would not render it nonstatutory subject matter, unless, of course, its operation does not produce a useful, concrete and tangible result. {FN52: 149 F.3d at 1374, 47 USPQ2d at 1601-1602 (citations omitted)} The court then discussed the business method exception, taking this opportunity to lay this ill-conceived exception to rest. The decision of the district court was reversed and the case remanded to that court for further proceedings. In doing this, the court adopted the arguments first put forward by Judge Newman in her dissent in In re Schrader. {FN53:22 F.3d 290, 298, 30 USPQ2d 1455, 1462 (Fed. Cir. 1994) (Newman, J., dissenting)}

When the State Street Bank decision was announced, many people (and the press) reported it as permitting a new type of patent the business method patent. But the Patent Office had been granting patents of business techniques for many years. Some were for business machines, like Herman Holleriths punch-card handling machines (which formed the basis for IBM) and cash registers, but others were business methods like Signatures. In 1982, patent 4,346,442 was issued to the brokerage firm Merrill Lynch, covering a Securities BrokerageCash Management System. Although another brokerage sued to have the patent declared invalid because it was for a business method, the district court{FN54: Paine, Webber v. Merrill Lynch, 564 F.Supp. 1358, 218 USPQ 212 (D. Del. 1983)} held that it was statutory subject matter. So not only were business method patents possible before State Street Bank, but one had been granted so long before State Street Bank that it was near its expiration at the time of that decision. On June 28, 2010, the Supreme Court issued its long-awaited Bilski decision, holding that a claim to a commodities hedging strategy was unpatentable because it was abstract. But while four justices would find business methods unpatentable, the Court did not go that far, saying that Section 101 similarly precludes the broad contention that the term process categorically excludes business methods. It also rejected the particular machine or transformation test that the Federal Circuit had stated in the case as not the exclusive test, although it is a good clue to patentability. Where the line for patenting business methods is much less clear than it was before the Supreme Courts Bilski opinion, and wont be until new case law is developed by the Federal Circuit (and not, hopefully, trashed again by the Supreme Court).

Chapter 5: Software-Based Inventions

IV. Other Ways of Claiming
Alappat and State Street Bank make it clear that a software-based invention claimed as a machine, even though that machine is a general-purpose computer, is statutory subject matter as long as it performs a useful and specific act. But claiming a software-based invention as a machine seems artificial when what is really being protected is a method or process. In a concurring opinion in Alappat, {FN55: 33 F.3d 1526, 31 USPQ2d 1545 (1994) (Rader, J., concurring)} Judge Rader clarified that although Alappats invention was claimed as a machine, the analysis under Section 101 does not depend on whether the invention is classified as a machine or a process. Inventors may express their inventions in any manner they see fit, including mathematical symbols and algorithms. Whether an inventor calls the invention a machine or a process is not nearly as important as the invention itself. Thus, the inventor can describe the invention in terms of a dedicated circuit or a process that emulates that circuit. Indeed, the line of demarcation between a dedicated circuit and a computer algorithm accomplishing the identical task is frequently blurred and is becoming increasingly so as the technology develops. In this field, a software process is often interchangeable with a hardware circuit. Thus, the Boards insistence on reconstruing Alappats machine claims as processes is misguided when the technology recognizes no difference and the Patent Act treats both as patentable subject matter. {FN56: 33 F.3d at 1583, 31 USPQ2d at 1590-1591} This is an important observation, because often the most direct way to claim a softwarerelated invention is as a process or method running on a general-purpose computer. The claim

recites a general-purpose computer in its preamble, including any special components necessary for the invention (such as disk storage or a network interface). The elements of the claim are then the specific steps of the method. Such a claim does not read on a person performing the method using paper and pencil and, when considered as a whole, is not mathematics standing alone. However, as we saw in Warmerdam, the fact that a software-based invention runs on a computer does not give it the utility to make it statutory subject matter. In those cases, the invention was not directed to a specific purpose. But should patents be issued only for data processing techniques that have limited purposes, or should techniques that have a wide range of applicability also be protectable? For example, can a method for sorting numbers that has better performance than previous sorting techniques be patented? In light ofBenson and Warmerdam, the answer appeared to be no. But now that the patentability of software-based inventions has been clearly established, the Federal Circuit is beginning to take a closer look at when a method is a statutory process. Recently, in AT&T v. Excel Communications, {FN57: 172 F.3d 1352, 50 USPQ2d 1447 (1999)} Judge Plauger, the same judge who had written the decision inWarmerdam, examined the patentability of a software method for deciding the routing of long distance telephone calls. The claim at issue was: A method for use in a telecommunications system in which interexchange calls initiated by each subscriber are automatically routed over the facilities of a particular one of a plurality of interexchange carriers associated with that subscriber, said method comprising the steps of: generating a message record for an interexchange call between an originating subscriber and a terminating subscriber, and including, in said message record, a primary interexchange carrier (PIC) indicator having a value which is a function of whether or not the interexchange carrier associated with said terminating subscriber is a predetermined one of said interexchange carriers. Essentially, the invention sets an indicator bit in the message based on the boolean AND of two pieces of information. The court first pointed out that a mathematical formula alone, sometimes referred to as a mathematical algorithm, viewed in the abstract, is considered unpatentable subject matter. But it went on to observe: Since the process of manipulation of numbers is a fundamental part of computer technology, we have had to reexamine the rules that govern the patentability of such technology. The sea-changes in both law and technology stand as a testament to the ability of law to adapt to new and innovative concepts, while remaining true to basic principles. {FN58: 172 F.3d at 1356, 50 USPQ2d at 1450} The court then summarized the key cases we have just examined, noting that State Street Bank had reassessed the mathematical algorithm exception by finding that: unpatentable mathematical algorithms are identifiable by showing they are merely abstract ideas constituting disembodied concepts or truths that are not useful. {FN59: 149 F.3d at 1373, 47 USPQ2d at 1601} It then extended the decisions in Alappat and State Street Bank, where the inventions were claimed as machines, to method claims: Whether stated implicitly or explicitly, we consider the scope of Section 101 to be the same regardless of the form machine or process in which a particular claim is drafted. . . . Furthermore, the Supreme Courts decisions in Diehr, Benson, and Flook, all of which involved method (i.e., process) claims, have provided and

supported the principles which we apply to both machine- and process-type claims. Thus, we are comfortable in applying our reasoning in Alappatand State Street to the method claims at issue in this case. {FN60: 172 F.3d at 1357-1358, 50 USPQ2d at 1451} Next, the court examined the argument that AT&T was using something based on simple boolean algebra, and the effect of that on whether the invention was statutory: But that is not determinative because AT&T does not claim the Boolean principle as such or attempt to forestall its use in any other application . . . Because the claimed process applies the Boolean principle to produce a useful, concrete, tangible result without pre-empting other uses of the mathematical principle, on its face the claimed process comfortably falls within the scope of Section 101. {FN61: 172 F.3d at 1358, 50 USPQ2d at 1452} The court then addressed whether methods are limited to things that alter something physical. Excel argues that method claims containing mathematical algorithms are patentable subject matter only if there is a physical transformation or conversion of subject matter from one state into another. The physical transformation language appears in Diehr, and has been echoed by this court in Schrader. The notion of physical transformation can be misunderstood. In the first place, it is not an invariable requirement, but merely one example of how a mathematical algorithm may bring about a useful application. As the Supreme Court itself noted, when [a claimed invention] is performing a function which the patent laws were designed to protect (e.g., transforming or reducing an article to a different state or thing), then the claim satisfies the requirements of Section 101. The e.g. signal denotes an example, not an exclusive requirement. {FN62: 172 F.3d at 1358-1359, 50 USPQ2d at 1452} Finally, the court commented on the concerns about the patentability of software-based inventions: In his dissent in Diehr, Justice Stevens noted two concerns regarding the Section 101 issue, and to which, in his view, federal judges have a duty to respond: First, the cases considering the patentability of program-related inventions do not establish rules that enable a conscientious patent lawyer to determine with a fair degree of accuracy which, if any, program-related inventions will be patentable. Second, the inclusion of the ambiguous concept of an algorithm within the law of nature category of unpatentable subject matter has given rise to the concern that almost any process might be so described and therefore held unpatentable. Despite the almost twenty years since Justice Stevens wrote, these concerns remain important. His solution was to declare all computer-based programming unpatentable. That has not been the course the law has taken. Rather, it is now clear that computer-based programming constitutes patentable subject matter so long as the basic requirements of Section 101 are met. Justice Stevenss concerns can be addressed within that framework. His first concern, that the rules are not sufficiently clear to enable reasonable prediction of outcomes, should be less of a concern today in light of the refocusing of the Section 101 issue that Alappat and State Street have provided. His second concern, that the ambiguous concept of algorithm could be used to make any

process unpatentable, can be laid to rest once the focus is understood to be not on whether there is a mathematical algorithm at work, but on whether the algorithmcontaining invention, as a whole, produces a tangible, useful, result. {FN63: 172 F.3d at 1360-1361, 50 USPQ2d at 1453 (citations omitted)} On June 28, 2010, the Supreme Courts Bilski decision re-opened the question of when a software-based invention can be claimed as a method. While not about a software-based invention, but instead about a business method not limited to being performed on a digital computer, the Court revitalized its past Benson-Flook-Diehr holdings as saying that abstract methods are not patentable. It also criticized State Street Bank to the extent that it was read by some as saying that anything producing a useful, concrete and tangible result was patentable.

Chapter 5: Software-Based Inventions

V. Printed Matter and Computer Software
In re Lowry {FN64: 32 F.3d 1579, 32 USPQ2d 1031 (1994)} is about how a software invention whose novelty is in the way that it stores data can be claimed. The invention in Lowry was a Data Processing System Having a Data Structure with a Single, Simple Primitive. As noted in the decision, The invention provides an efficient, flexible method of organizing stored data in a computer memory. Claim 1 is representative. A memory for storing data for access by an application program being executed on a data processing system, comprising: a data structure stored in said memory, said data structure including information resident in a database used by said application program and including: a plurality of attribute data objects stored in said memory, each of said attribute data objects containing different information from said database; a single holder attribute data object for each of said attribute data objects, each of said holder attribute data objects being one of said plurality of attribute data objects, a being-held relationship existing between each attribute data object and its holder attribute data object, and each of said attribute data objects having a beingheld relationship with only a single other attribute data object, thereby establishing a hierarchy of said plurality of attribute data objects; a referent attribute data object for at least one of said attribute data objects, said referent attribute data object being nonhierarchically related to a holder attribute data object for the same at least one of said attribute data objects and also being one of said plurality of attribute data objects, attribute data objects for which there exist only holder attribute data objects being called element data objects, and attribute data objects for which there also exist referent attribute data objects being called relation data objects; and an apex data object stored in said memory and having no being-held relationship with any of said attribute data objects, however, at least one of said attribute data objects having a being-held relationship with said apex data object. The examiner rejected this claim as nonstatutory under Section 101 and obvious under Section 103 in light of a prior art patent showing a different data structure stored in a computer memory. The Board reversed the examiners rejection under Section 101 but affirmed the rejection under

Section 103 under the printed matter doctrine of not giving weight to the printed matter when considering whether an invention is novel and nonobvious. As expressed in In re Gulack: Where the printed matter is not functionally related to the substrate, the printed matter will not distinguish the invention from the prior art in terms of patentability. {FN65: 703 F.2d 1381, 1385, 217 USPQ 401, 404 (1983)} The Board held that Lowry had not shown that there was a functional relationship between the data structures and the memory containing them, and gave no weight to the nature of the data structures in the claims. Since the prior art patent disclosed a computer with memory containing data structures (although of a different form), disregarding the nature of Lowrys data structures makes his invention obvious in light of that patent. Lowry appealed to the Federal Circuit. In its decision, the court first noted that Gulack cautioned against a liberal use of printed matter rejections under section 103 because it stands on questionable legal and logical footing and felt that it should not be extended to a new field, such as information stored in a computer memory. This case, moreover, is distinguishable from the printed matter cases. The printed matter cases dealt with claims defining as the invention certain novel arrangements of printed lines or characters, useful and intelligible only to the human mind. The printed matter cases have no factual relevance where the invention as defined by the claims requires that the information be processed not by the mind but by a machine, the computer. Lowrys data structures, which according to Lowry greatly facilitate data management by data processing systems, are processed by a machine. Indeed, they are not accessible other than through sophisticated software systems. The printed matter cases have no factual relevance here. . . . More than mere abstraction, the data structures are specific electrical or magnetic structural elements in a memory. According to Lowry, the data structures provide tangible benefits: data stored in accordance with the claimed data structures are more easily accessed, stored, and erased. Lowry further notes that, unlike prior art data structures, Lowrys data structures simultaneously represent complex data accurately and enable powerful nested operations. In short, Lowrys data structures are physical entities that provide increased efficiency in computer operation. They are not analogous to printed matter. The Board is not at liberty to ignore such limitations. {FN66: 32 F.3d at 1583-1584, 32 USPQ2d at 1034-1035 (citations omitted)} Since the elements of the claims limited to particular data structures could not be ignored, the claims were not obvious in light of prior art cited by the examiner, and the decision on the Board affirming the examiner was reversed. But one should be careful about abolishing the printed matter doctrine too quickly, even when information is recorded in a way that can be perceived only by a machine. As Chief Judge Archer warned in his dissent in Alappat: Consider for example the discovery or creation of music, a new song. Music of course is not patentable subject matter; a composer cannot obtain exclusive patent rights for the original creation of a musical composition. But now suppose the new melody is recorded on a compact disc. In such case, the particular musical composition will define an arrangement of minute pits in the surface of the compact

disc material, and therefore will define its specific structure. Alternatively suppose the music is recorded on the rolls of a player piano or a music box. Through the expedient of putting his music on known structure, can a composer now claim as his invention the structure of a compact disc or player piano roll containing the melody he discovered and obtain a patent therefor? The answer must be no. The composer admittedly has invented or discovered nothing but music. The discovery of music does not become patentable subject matter simply because there is an arbitrary claim to some structure. And if a claim to a compact disc or piano roll containing a newly discovered song were regarded as a manufacture and within Section 101 simply because of the specific physical structure of the compact disc, the practical effect would be the granting of a patent for a discovery in music. Where the music is new, the precise structure of the disc or roll would be novel under Section 102. Because the patent law cannot examine music for nonobviousness, the Patent and Trademark Office could not make a showing of obviousness under Section 103. The result would well be the award of a patent for the discovery of music.{FN67: 33 F.3d 1526, 1553, 31 USPQ2d 1545, 1565 (1994) (Archer, C.J., dissenting) (citations omitted)}

V.A. Beauregards Floppy Disks

In re Beauregard was an appeal by IBM of a decision of the Board of Patent Appeals that a floppy disk or other computer storage medium containing a novel and nonobvious computer program is not proper subject matter for a patent. (Because the Patent Office agreed to Beauregards arguments, there is no decision by the Federal Circuit, simply an order vacating the case and remanding it to the Patent Office.) Beauregard and his co-inventors, employees of IBM, had already received a patent (4,962,468) on a technique for filling the interior of a polygon displayed on a computer graphics device. As is common for software-based inventions, the patent claimed both methods for performing the filling technique and a system for performing the technique. The system could be either a general-purpose digital computer programmed to perform the method (the preferred embodiment) or a special-purpose graphics processor. IBM was concerned that the primary people who would directly infringe these claims would be the end-users of graphics software, because it is only when the method is actually performed or when it configures a general-purpose computer that direct infringement occurs. Competitors would directly infringe the patent only when they ran the patented method, not when they made and sold floppy disks containing programs using the patented method. A competitor could be sued as a contributory infringer, but that generally means also suing a direct infringer (often a current or potential customer) and requires that the competitor using the patented method have actual knowledge of the patent. And if there is a substantial noninfringing use for the programs being sold, there may not be contributory infringement. Since most software is distributed on a storage medium such as a floppy disk or CD-ROM, IBM figured that if it could get a patent on the storage medium containing the novel and nonobvious technique, it could sue the competitor as a direct infringer for making or selling the patented invention. In a continuing application, it claimed the invention as what it called a computer program product a computer-readable medium having a program implementing the technique of the invention. In proceedings in the Patent Office, IBM argued that a computer

program product was an article of manufacture or a component of a machine, both patentable subject matter. The patent examiner and the Board of Patent Appeals rejected the claims as not being proper subject matter for a patent. They relied on a series of court decisions regarding printed matter which said that if the information stored on a medium was not related to that medium, the invention was not statutory or, alternatively, the novelty of the information could be disregarded when considering the novelty of a claim. Since there was nothing special about how the program was written on the floppy disk or other media, the Patent Office found the claims nonstatutory and obvious in light of other programs written on floppy disks. IBM appealed the Patent Offices decision to the Federal Circuit. This was not surprising, since IBM had developed this case as a vehicle for the Federal Circuit to state whether computer program products were patentable subject matter. IBM was supported in its appeal by ten amicus briefs from industry and bar associations, stressing the importance of protecting computer software. After seeing that there was virtually no popular support for its position, the Patent Office reversed its stand and declared that a computer program product was proper subject matter for a patent, that the printed matter doctrine did not apply to computer-readable programs, and that it was preparing appropriate guidelines on software patents for its examiners. The Federal Circuit found that there was no longer a dispute between the parties, and it remanded the application to the Patent Office for further prosecution in light of the Patent Offices new position.

V.B. Patent Office Guidelines: Stored Information

Under the guidelines, the Patent Office will accept Beauregard-type claims to a computer program product. The proposed guidelines stated that a computer-readable memory that can be used to direct a computer to function in a particular manner when used by the computer is a statutory article of manufacture. {FN68: 60 Fed. Reg. 28778, 28778 (1995)} In fact, any memory device is an article of manufacture, whether its contents can direct the functioning of a computer or not. Although the proposed guidelines included floppy disks and compact discs in the examples of a computer-readable medium that are statutory subject matter, disks storing a program, in contrast to a computers RAM, do not seem to fit the guidelines own test. The bits stored in the program repository do not cause a computer to operate in a particular manner any more than any other data bits do. The program data on a disk must be first read and processed by a loader program to be placed in executable memory. It is only programs in RAM or ROM that cause a computer to perform the desired functions. Furthermore, there is no difference in a floppy disk or compact disc itself if its stored information is a computer program that can be loaded into execution memory or data that can be converted to audio. Yet, according to the guidelines, one is a statutory article of manufacture and the other isnt. The decision is based on the intended use of the data, not thenature of the possible article of manufacture. The same floppy disk, containing both a program and data operated on by a computer (such as text or digitally-encoded music or pictures) would be both an article of manufacture and not an article of manufacture, depending of what data on the floppy disk you consider. It is important that law be anchored in reality, and distinctions be drawn only where they actually exist. The mathematical algorithm distinction did not work well because there was no similar distinction in computer science. In contrast, the a general-purpose computer when

programmed becomes a new machine concept works well because the idea matches almost exactly the concept of virtual machines as discussed in operating systems. The proposed guidelines made a distinction not well-anchored in computer science. They try say that a storage medium, or the bits it holds, is somehow different because of the intended use of a bit. By adding a qualification about its ultimate use, the guidelines depart from the intuitive concept that an article of manufacture is any tangible object made by man. In response to public comments, the final guidelines took a different approach to drawing a line between patentable CD-ROMs holding computer programs and regular CDs holding music. It first noted that the statute requires an invention to be useful: The subject matter sought to be patented must be a useful process, machine, manufacture or composition of matter, i.e., it must have a practical application. The purpose of this requirement is to limit patent protection to inventions that possess a certain level of real world value, as opposed to subject matter that represents nothing more than an idea or concept, or is simply a starting point for future investigation or research. Accordingly, a complete disclosure should contain some indication of the practical application for the claimed invention, i.e., why the applicant believes the claimed invention is useful. The utility of an invention must be within the technological arts. A computer-related invention is within the technological arts. A practical application of a computer-related invention is statutory subject matter. This requirement can be discerned from the variously phrased prohibitions against the patenting of abstract ideas, laws of nature or natural phenomena. An invention that has a practical application in the technological arts satisfies the utility requirement. {FN69: 61 Fed. Reg. 7478, 7479 (1996)} The final guidelines then drew a distinction between function and nonfunctional descriptive material: Descriptive material can be characterized as either functional descriptive material or non-functional descriptive material. In this context, functional descriptive material consists of data structures and computer programs which impart functionality when encoded on a computer-readable medium. Nonfunctional descriptive material includes but is not limited to music, literary works and a compilation or mere arrangement of data. Both types of descriptive material are non-statutory when claimed as descriptive material per se. When functional descriptive material is recorded on some computer-readable medium it becomes structurally and functionally interrelated to the medium and will be statutory in most cases. When nonfunctional descriptive material is recorded on some computer-readable medium, it is not structurally and functionally interrelated to the medium but is merely carried by the medium. Merely claiming non-functional descriptive material stored in a computer-readable medium does not make it statutory. Such a result would exalt form over substance. Thus, non-statutory music does not become statutory by merely recording it on a compact disk. {FN70: 61 Fed. Reg. at 7481} It is likely that the validity of computer program product claims will not be tested in court until a software distributor is sued for infringement. The Patent Office now appears to allow any novel software-based invention that has any practical use, and will treat any media storing such an invention as a patentable article of manufacture.

V.C. The Effect on Copyright

Although consideration should be given to the effect on copyright of patents for articles of manufacture that are programs stored in repository memories, such consideration was clearly outside the permissible scope of the PTO guidelines. Because programs are works of authorship stored in a tangible medium of expression, they are already protected by copyright. Further, copyright law not only provides protection to the author but also provides rights to users. It is an infringement of a patent to make the patented invention. Whenever the program is copied, a new instance of the program stored in a memory is made. If a memory storing a particular program is patented, any copying results in a new instance of the program stored in memory that infringes the patent. For most inventions, a replicator capable of taking one instance of a machine or manufacture and directly producing a new instance would be something out of science fiction. For a program stored in memory, the copy command on the computer system is such a replicator. For example, if the program was originally stored on a floppy disk, as would be the case when it is received from the software developer, another instance of the patented stored program is made when the program is copied from the floppy disk onto a hard disk. Another instance is made whenever an archive copy of the hard disk is made. Finally, each time the program is run it must be copied from the hard disk into the RAM of the computer, making yet another instance of the patented program stored in memory. The patent laws do not contain an equivalent to Section 117 of the Copyright Act, {FN71: 17 U.S.C. 117} which permits copying of a computer program if it is a necessary step in its use. Anyone copying a program that includes a method that is the subject of a program stored in memory patent would infringe that patent, no matter how minor the method is to the entire computer program. This would be similar to the situation where an automobile containing a patented screw infringes the patent on that screw, even if the screw is an inconsequential part of the automobile. In addition, patent law does not provide an equitable balance between the legitimate rights of the patent owner and the rights of users such as provided by fair use under Section 107 of the Copyright Act. {FN72: 17 U.S.C. 107} It might be argued that the patent exhaustion doctrine, which allows the rightful owner of a patented device to use or sell that device, permits the making of new instances of patented stored programs if such copies are necessary for the use of the software. Nevertheless, the patent exhaustion doctrine has never allowed the owner of one instance of a patented article of manufacture to make another instance without the permission of the patent owner. On the contrary, there are many cases that try to resolve whether an apparatus is being repaired (not making the invention) or rebuilt (making the invention and infringing the patent). It is uncertain whether a court would extend the patent exclusion doctrine to include the making of new instances of stored programs. Patents on computer programs residing in memory devices could preempt many of the user rights provided under the Copyright Act, particularly Section 117. By their nature, such patents will be infringed as part of the normal and expected usage of the programs. As a result, such patents distort both the patent and copyright systems simply to provide an avenue for suing the producer, instead of the end user, of a program that infringes a patented method.

V.D. Beyond Beauregard

Unfortunately for the people who promoted Beauregard as a way of reaching the producer of infringing software without having to go through an end user, more and more software is being distributed not by floppy disk or CD-ROM but over the Internet. And that means there is no article of manufacture that stores the program being distributed, and no clever way to claim the invention to reach the real infringer. While there is an article of manufacture produced on the end users machine from the download, the whole purpose ofBeauregard was to avoid having to look to the end user for any infringement. In training materials for the Guidelines, the Patent Office suggested a possible claim to a propagated signal carrying a program. In its example, the program both compressed and encrypted data. This claim was: A computer data signal embodied in a carrier wave comprising: a. a compression source code segment comprising [the code]; and b. an encryption source code segment comprising [the code]. {FN73: Examination Guidelines For Computer-Related Inventions, United States Patent and Trademark Office, 37, Claim 13 (1996)} But is a data signal a process, machine, manufacture, or composition of matter, as required by Section 101. {FN74: 35 U.S.C. 101} In early 2008, the Federal Circuit answered this question, holding that a claim to a signal did not fall into any of the four statutory categories: process, machine, composition of matter, or manufacture. The majority felt that an article of manufacture had to be something tangible.{FN74a: In re Nuijten, 515 F.3d 1361, 85 USPQ2d 1927 (Fed. Cir. 2008)} One justification for a Beauregard-type patent on a memory device, like a floppy disk, that storees a novel and nonobvious computer program is that the conventional ways of claiming a software-based invention did not provide proper protection against the true infringer. If the invention is claimed as a method, the claim is infringed only when the method is actually used. If the invention is claimed as a machine running the program, the claim is infringed only when the program is actually loaded into the computer. In both cases, it is the end user of the program who is the actual infringer, and who may not be aware that use of the software infringes a patent. But the true infringer of the patent on the software-based invention is the competitor who included the patented method in its software and sold it to the end user. The competitor could be accused of inducing or contributing to the infringement of the patent. However, such an accusation presents a number of problems. For example, to be a contributory infringer, the competitor must know that what it is producing will lead to an infringement; they must have actual knowledge of the patent. Beauregard-type claims attempt to get around these problems by claiming any memory device containing the patented software method. But as discussed above, such claims cause problems because end users infringe the patent whenever they copy or use the program, and because such claims base the patentability of a memory device on the intended use of its contents. It is a red herring to say that it is more difficult to prove inducement of infringement or contributory infringement because some end user must be dragged into the case to show a direct infringement. First, it is highly unlikely that somebody is selling software infringing a patented method without testing it and thereby using the patented method, so such a software marketer is likely to be a direct infringer. But more important, direct evidence of infringement by an end user is not required to prove inducement of infringement. Circumstantial evidence of infringement, such as evidence of extensive sales, is sufficient. {FN75: Moleculon Research v. CBS, 793 F.2d 1261, 1272, 229 USPQ 805, 813 (Fed. Cir. 1986)}

It would be better to concentrate on getting court interpretations of Section 271 {FN76: 35 U.S.C. 271} clearly holding that the distribution of a computer program whose use infringes a machine or process patent is inducing infringement or is contributory infringement, or congressional amendment of Section 271 to state it explicitly, rather than trying to make data signals an article of manufacture or to make floppy disks magically either an article of manufacture or not, depending on the intended use of the information on that floppy disk.

Chapter 5: Software-Based Inventions

VI. Applying for a Software Patent
Software-based inventions can be claimed in a straightforward manner using method claims, where the elements of the claims are the steps of the method performed by the new software technique. If a separate patent application is filed for each innovative technique used in a computer program, the drafting of the patent application can be quite straightforward. But while it is possible for a competent computer programmer to draft a patent application, and a programmer should definitely take an active role in the preparation of the application, often an experienced patent attorney or patent agent can draft claims that may have broader or better coverage. Although it is not required by law, once you have identified an innovative technique you should conduct a search of the prior art. This search starts with a literature review (journal and magazine articles, books, conference proceedings, and research reports) to find the material closest to the technique. The online collection of patents and pending applications offered by the patent office should also be searched. This can be done either by looking for keywords in the text, or by the classification numbers assigned to each patent. The results of the search will let you know how broadly you can claim the invention, and give you an idea of the language used to describe similar inventions. The first step after identifying the innovative technique and determining its potential scope is to prepare a simple diagram or flowchart showing its major steps and what causes a transition from one step to the next. Additional diagrams can be prepared to show more details for particular steps. Then write the specification describing what is done at each step and how to do it. Always describe both the best way to perform the step (the best mode, or preferred embodiment, as required by Section 112) {FN77: 35 U.S.C. 112} and all the possible alternative implementations that you can think of. Describing a variety of implementations lessens the possibility that a particular step in the claims will be read as covering only the preferred embodiment. But it is equally important that you dont describe something that you dont claim. It may not be possible to assert the doctrine of equivalents to cover the disclosed but unclaimed embodiments. {FN78: Johnson & Johnston v. R.E. Service, 285 F.3d 1046, 62 USPQ2d 1225 (Fed. Cir. 2002)} In light of the Supreme Courts decision in Festo, {FN79: Festo v. Shoketsu Kinzoku Kogyo Kabushiki Co., __ U.S. __, 62 USPQ2d 1705 (2002)} the doctrine of equivalents likely does not capture subject matter that the patent drafter reasonably could have foreseen during the application process and included in the claims. This can be solved by having a generic claim that encompasses all of the described embodiments, as well as specific claims for important embodiments. While treatise originally proposed using a method claim for computer software, followed by simple dependent claims to a computer system and an article of manufacture, with the Supreme Courts recent opinion in Bilski, there may be a problem if such a method claim is considered

abstract. Until the Federal Circuit can clarify what the patentability line is, it may be best to claim general data processing techniques as machines or systems, rather than methods.