Apple Computer, Inc. v. Formula Intern., Inc.

• Citation: 562 F. Supp. 775
• Decision Date: 25 April 1983
• Docket Number: No. CV82-5015-IH.,CV82-5015-IH.
• Court: U.S. District Court — Central District of California
• Parties: APPLE COMPUTER, INC., a California corporation, Plaintiff, v. FORMULA INTERNATIONAL, INC., a California corporation, Defendant.

562 F. Supp. 775

APPLE COMPUTER, INC., a California corporation, Plaintiff, v. FORMULA INTERNATIONAL, INC., a California corporation, Defendant.

No. CV82-5015-IH.

United States District Court, C.D. California.

April 25, 1983.

Brown & Bain by Jack E. Brown, Phoenix, Ariz., Lois W. Abraham, Palo Alto, Cal., and Blakely, Sokoloff, Taylor & Zafman by Edwin H. Taylor, Beverly Hills, Cal., for plaintiff.

Thomas E. Schatzel by Bruce G. Spicer, Santa Clara, Cal., for defendant.

OPINION

IRVING HILL, District Judge.

Before the Court is Plaintiff's motion for preliminary injunction filed September 27, 1982. The motion was argued on December 20, 1982.

In announcing its decision on the motion, the Court is making certain findings of fact and formulating certain conclusions of law. These are based only on the evidence now before the Court in connection with the motion and the Points and Authorities that have been submitted up to this time. These findings and conclusions are made without prejudice to those which the Court will be required to make on the same issues after the trial of the matter on the merits.

I. THE PARTIES AND THE PRODUCTS THEY MAKE AND SELL

Plaintiff Apple Computer, Inc., manufactures and sells computers and related peripheral equipment, including computer programs and other software for computers. Though established only in 1976, Apple has become a giant concern selling its products worldwide. Its gross sales are in the hundreds of millions of dollars annually. Among Apple's principal products is the Apple II computer, a small computer designed primarily for personal use in the home or in the office of a small business. Apple also makes a wide variety of peripheral equipment for compatible use with the Apple II computer. Among such items are diskettes.

The Apple II computer contains a number of computer programs embodied in ROMs. The Apple diskettes also contain computer programs embodied therein. Five Apple computer programs are in issue in this case. Two of these, "Autostart" and "Applesoft" are embodied in ROMs. The other three programs, "HELLO", "DOS 3.3" and "Apple Integer BASIC" are embodied in diskettes. All five programs have been registered under the Federal Copyright Act.

The ROMs in issue in this case have a copyright notice either printed on the ROM itself or printed immediately next to the ROM on the circuit board to which the ROM is affixed. Each diskette in issue in this case bears a copyright notice on its face.

The terms ROMs, diskettes and some of the other terms which have been used will shortly be defined.

The Defendant, Formula International, Inc., operates a single large electronics supply store selling at retail and wholesale. Its major business is the sale of electrical components of various kinds. Formula apparently does not itself manufacture any of the components it sells. To this point, Formula's revenues from the sale of computer products constitute only a small percentage of its total sales.

Up to now, Formula has sold no assembled computers. In May of 1982, Formula commenced the sale of a computer kit under the trade mark "Pineapple". When assembled, the materials contained in the kit make up a computer which is, like the Apple II, designed for personal use in the home or in small businesses. The assembled Pineapple computer in external appearance is virtually indistinguishable from the appearance of the Apple II counterpart and its uses and capacities are very similar if not identical. Formula, in addition, sells equipment for personal computers, some of which is identical to that which Apple sells.

Apple has presented evidence that Formula's kit and its peripheral equipment contain computer programs embodied in ROMs and diskettes which are virtually identical copies of the above mentioned computer programs embodied in Apple's ROMs and diskettes. This factual claim is not disputed. Formula claims no copyright on any of its computer programs. Formula's kits are assembled by apparently independent concerns in Taiwan and Hong Kong. Formula acknowledges that at least some of these concerns make the kits and components according to Formula's instructions and specifications.

As of the time Formula filed its response to Apple's motion for a preliminary injunction, Formula had sold only 49 Pineapple kits. The sale of these kits has now been discontinued. Formula, however, is advertising and offering for sale, a new type of Pineapple kit. From it, there can be assembled a personal computer with the same capacities and computer programs as are found in its previous model and in the Apple II. But its exterior is somewhat less like the present Apple II exterior.

II. THE COMPLAINT

Apple sues Formula on three separate theories, copyright infringement, trademark infringement and unfair competition. Apple charges that Formula violates its copyrights on the various computer programs embodied in the Apple ROMs and diskettes.

Apple has five trademarks embodying the "Apple" name as used on various computers, computer equipment and computer programs. Apple accuses Formula of infringing each of its registered trademarks by adoption of the "Pineapple" name. Formula does not claim any federal trademark registration of its "Pineapple" name.

The unfair competition charge is centered on (1) alleged misappropriation of the fruit of Apple's efforts in developing an integral computer component called a "Mother Board" and (2) alleged palming off resulting from the use of similar names in marketing.

The complaint also charges Formula with infringement of two of Apple's patents but that claim is irrelevant to the present motion. The request for preliminary injunction is not in any way based on alleged patent infringements.

III. THE REQUESTED PRELIMINARY INJUNCTION

Apple's motion asks the Court, pending trial of the case, to enjoin Formula from:

(1) Manufacturing, importing, distributing or selling the Pineapple computer either in assembled or kit form,

(2) Using a case which copies or imitates the configuration of the Apple II computer case (3) Using the mark or name Pineapple or any other colorable imitation of the Apple trademark or trade name and

(4) Distributing or selling any items which are, or include, copies of the computer programs copyrighted by Apple including the Autostart, Applesoft, HELLO, DOS 3.3 and Apple Integer BASIC.

Plaintiff says that all of said computer programs are fixed on ROMs or diskettes.

It is appropriate now to describe each of those latter items.

ROM is an acronym for Read Only Memory. A ROM is a photochemically imprinted silicon chip which stores information in the form of minute "bits". Bits are simply on-and-off switches. The pattern, sequence and frequency with which these switches are activated gives instructions to the machine and causes it to function in its various modes. The entire pattern imprinted on a ROM makes up what is generically called computer programs.

To manufacture a ROM or diskette containing an original computer program, one must write out the program in graphic form (e.g., flow charts) or in "source code" (generally a high level computer language which can be understood by humans). The graphic rendition or source code is itself copyrightable. If flow charts are used, they are reduced to source code by the programmer. The source code form is often translated into letters, numbers, and symbols sometimes called assembly language. Then the source code or assembly language is finally translated to what is called "object code" which is machine language useable by the machine. Then, as a final step, the object code is imprinted onto the silicon chip or diskette by photochemical process or electrically. Apple represents that the programs involved here have been copyrighted and published in various forms, in either source or object code versions, or both. The extent of copyright protection afforded to a computer program does not appear to depend on the form in which it has been copyrighted, and neither party in this case contends that it does.

"Autostart" identifies a particular program on an Apple ROM. "Applesoft" identifies a different Apple program on a ROM. DOS 3.3, HELLO and Apple Integer BASIC are different computer programs which Apple sells on diskettes. A technical description of each program is contained in Apple Computer, Inc., v. Franklin Computer Corp., 545 F.Supp. 812, 815 (E.D.Pa.1982), which is adopted here by reference.

The Court will enjoin Defendant, pending trial, from using as a trademark or trade name, the name "Pineapple" or any other name embodying the word or term "Apple" or otherwise confusingly similar to the trademarks of Plaintiff. However, the said injunction will not include a restraint on the Defendant as to the shape or configuration of the container or box in which its computer, or a computer made from its kit parts, is contained.

A preliminary injunction is also granted to Plaintiff as prayed which will enjoin Formula, pending trial, from distributing or selling any items which are, or include, copies of Apple's copyrighted computer programs, namely, Autostart, Applesoft, HELLO, DOS 3.3 or Apple Integer BASIC. The injunction is based on a finding that Plaintiff's evidence demonstrates sufficient probability of success in proving actionable infringements of Plaintiff's copyrights on those computer programs.

In reaching these decisions, the Court has taken into account the standard for the grant or denial of preliminary injunction which governs in the Ninth Circuit. This will be discussed in more detail later.

IV. DISCUSSION OF THE COPYRIGHT LAW

Before beginning a detailed legal discussion of the copyrightability of computer programs, the record should note certain concessions which have been made in this case. Defendants concede a number of propositions which have been litigated by previous Defendants in copyright litigation involving computer programs. Formula does not dispute the...