35 F.3d 1435 (9th Cir. 1994), 93-16867, Apple Computer, Inc. v. Microsoft Corp.

Docket Nº:93-16867, 93-16869 and 93-16883.
Citation:35 F.3d 1435
Party Name:32 U.S.P.Q.2d 1086 APPLE COMPUTER, INC., a California corporation, Plaintiff-Appellee, v. MICROSOFT CORPORATION, a Delaware corporation, Defendant-Appellant. APPLE COMPUTER, INC., a California corporation, Plaintiff-Appellee, v. MICROSOFT CORPORATION, a Delaware corporation, Defendant, and Hewlett-Packard Co., Defendant-Appellant. APPLE COMPUTER, I
Case Date:September 19, 1994
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1435

35 F.3d 1435 (9th Cir. 1994)

32 U.S.P.Q.2d 1086

APPLE COMPUTER, INC., a California corporation, Plaintiff-Appellee,


MICROSOFT CORPORATION, a Delaware corporation, Defendant-Appellant.

APPLE COMPUTER, INC., a California corporation, Plaintiff-Appellee,


MICROSOFT CORPORATION, a Delaware corporation, Defendant,


Hewlett-Packard Co., Defendant-Appellant.

APPLE COMPUTER, INC., Plaintiff-Appellant,


MICROSOFT CORPORATION, a Delaware corporation;

Hewlett-Packard Co., a California corporation,


Nos. 93-16867, 93-16869 and 93-16883.

United States Court of Appeals, Ninth Circuit

September 19, 1994

Argued and Submitted July 11, 1994.

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[Copyrighted Material Omitted]

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Jack E. Brown, Brown & Bain, Phoenix, AZ, for plaintiff-appellee-cross-appellant.

David T. McDonald, McDonald & Quackenbush, Seattle, WA, for defendant-appellant-cross-appellee Microsoft Corp.

Jonathan A. Marshall, Pennie & Edmonds, New York City, for defendant-appellant-cross-appellee Hewlett-Packard Co.

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Appeals from the United States District Court for the Northern District of California.

Before: FERNANDEZ, RYMER, and T.G. NELSON, Circuit Judges.

RYMER, Circuit Judge:

Lisa and Macintosh are Apple computers. Each has a graphical user interface ("GUI") which Apple Computer, Inc. registered for copyright as an audiovisual work. Both GUIs were developed as a user-friendly way for ordinary mortals to communicate with the Apple computer; the Lisa Desktop and the Macintosh Finder 1 are based on a desktop metaphor with windows, icons and pull-down menus which can be manipulated on the screen with a hand-held device called a mouse. When Microsoft Corporation released Windows 1.0, having a similar GUI, Apple complained. As a result, the two agreed to a license giving Microsoft the right to use and sublicense derivative works generated by Windows 1.0 in present and future products. Microsoft released Windows 2.03 and later, Windows 3.0; its licensee, Hewlett-Packard Company (HP), introduced NewWave 1.0 and later, NewWave 3.0, which run in conjunction with Windows to make IBM-compatible computers easier to use. Apple believed that these versions exceed the license, make Windows more "Mac-like," and infringe its copyright. This action followed.

In a series of published rulings, 2 the district court construed the agreement to license visual displays in the Windows 1.0 interface, not the interface itself; determined that all visual displays in Windows 2.03 and 3.0 were in Windows 1.0 except for the use of overlapping windows 3 and some changes in the appearance and manipulation of icons; dissected the Macintosh, Windows and NewWave interfaces based on a list of similarities submitted by Apple to decide which are protectable; and applied the limiting doctrines of originality, functionality, standardization, scenes a faire and merger to find no copying of protectable elements in Windows 2.03 or 3.0, and to limit the scope of copyright protection to a handful of individual elements in NewWave. 4 The court then held that those elements in NewWave would be compared with their equivalent Apple elements for substantial similarity, and that the NewWave and Windows 2.03 and 3.0 works as a whole would be compared with Apple's works for virtual identity. When Apple declined to oppose motions for summary judgment of noninfringement for lack of virtual identity, however, judgments in favor of Microsoft and HP were entered.

Apple asks us to reverse because of two fundamental errors in the district court's reasoning. 5 First, Apple argues that the court

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should not have allowed the license for Windows 1.0 to serve as a partial defense. Second, Apple contends that the court went astray by dissecting Apple's works so as to eliminate unprotectable and licensed elements from comparison with Windows 2.03, 3.0 and NewWave as a whole, incorrectly leading it to adopt a standard of virtual identity instead of substantial similarity. We disagree.

The district court's approach was on target. In so holding, we readily acknowledge how much more complex and difficult its task was than ours. The district court had to grapple with graphical user interfaces in the first instance--and for the first time, with a claim of copying a computer program's artistic look as an audiovisual work instead of program codes registered as a literary work. In this case there is also the unusual, added complexity of a license that arguably covers some or most of the allegedly infringing works. The district court therefore had to cut new paths as it went along; we have the luxury of looking at the case at the end of the trip. From this vantage point, it is clear that treatment of Apple's GUIs, whose visual displays are licensed to a great degree and which are a tool for the user to access various functions of a computer in an aesthetically and ergonomically pleasing way, follows naturally from a long line of copyright decisions which recognizes that works cannot be substantially similar where analytic dissection demonstrates that similarities in expression are either authorized, or arise from the use of common ideas or their logical extensions.

We therefore hold:

(1) Because there was an agreement by which Apple licensed the right to make certain derivative works, the district court properly started with the license to determine what Microsoft was permitted to copy. Infringement cannot be founded on a licensed similarity. We read Microsoft's license as the district court did, to cover visual displays--not the Windows 1.0 interface itself. That being so, the court correctly decided first to identify which visual displays in Windows 2.03, 3.0 and NewWave are licensed and which are not.

(2) The district court then properly proceeded to distinguish ideas from expression, and to "dissect" unlicensed elements in order to determine whether the remaining similarities lack originality, flow naturally from basic ideas, or are one of the few ways in which a particular idea can be expressed given the constraints of the computer environment. Dissection is not inappropriate even though GUIs are thought of as the "look and feel" of a computer, because copyright protection extends only to protectable elements of expression.

(3) Having found that the similarities in Windows 2.03 and 3.0 consist only of unprotectable or licensed elements, and that the similarities between protectable elements in Apple's works and NewWave are de minimis, 6 the district court did not err by concluding that, to the extent there is creative expression left in how the works are put together, as a whole they can receive only limited protection. When the range of protectable and unauthorized expression is narrow, the appropriate standard for illicit copying is virtual identity. For these reasons, the GUIs in Windows 2.03, 3.0 and NewWave cannot be compared for substantial similarity with the Macintosh interface as a whole. Instead, as the district court held, the works must be compared for virtual identity. 7

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Apple also challenges dismissal of the Macintosh Finder as a work in suit. Although we agree that the Finder, which is registered as a derivative work of the Lisa Desktop, should not have been dismissed as a work in suit because the underlying copyright on the Lisa has not expired, Apple's non-opposition to judgment as to the Lisa applies to the Finder as well. The Macintosh Finder is not incrementally different from the Lisa Desktop in any respect material to Apple's claims of infringement. There is accordingly no basis in the record for reversal on account of the erroneous dismissal of the Finder.

Finally, Microsoft and HP cross-appeal denial of their requests for attorney's fees. Since the district court's decision, the Supreme Court has conferred greater discretion to award fees to prevailing defendants than our law previously acknowledged. Fogerty v. Fantasy, Inc., --- U.S. ----, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994). Therefore, we remand so that the district court may reconsider this issue in light of Fogerty.


Analysis of Apple's infringement claims must start with an agreement signed in 1985 by Apple and Microsoft, which resolved a dispute about visual displays generated by Microsoft software products. The 1985 Agreement licensed the right to use the visual displays generated by Apple's Lisa and Macintosh graphic user interface programs which appeared as derivative works in Windows 1.0. 8 As a result, to the extent that later versions of Windows and NewWave use the visual displays in Windows 1.0 (which came from Apple), that use is authorized.

Apple's appeal turns on whether the Agreement, properly construed, gives Microsoft the right to transfer individual elements or design features used in Windows 1.0. Apple particularly objects to any interpretation that would permit later Windows products to look more like the Macintosh than Windows 1.0 looked.

The plain language of the Agreement disposes of Apple's argument. It licenses Microsoft to use "these derivative works." "These derivative works" can only refer to Microsoft's acknowledgment that the "visual displays" generated by Windows 1.0 "are derivative works of the visual displays generated by Apple's Lisa and Macintosh graphic user interface programs." As the district court explained:

Had it been the parties' intent to limit the license to the Windows 1.0 interface, they would have known how to say so. Instead, the "derivative works" covered by the license are identified as the "visual displays" in the Windows 1.0 interface, not the interface itself. And there is nothing in the 1985 Agreement that indicates that it was intended as a product license restricting Microsoft and its licensees to the use of the Windows 1.0 interface as a whole.

Apple II, 717 F.Supp. at 1430-31.


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