725 F.2d 521 (9th Cir. 1984), 83-5875, Apple Computer, Inc. v. Formula Intern. Inc.

Docket Nº:83-5875.
Citation:725 F.2d 521
Party Name:631 APPLE COMPUTER, INC., Plaintiff-Appellee, v. FORMULA INTERNATIONAL INC., Defendant-Appellant.
Case Date:February 08, 1984
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit
 
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725 F.2d 521 (9th Cir. 1984)

631

APPLE COMPUTER, INC., Plaintiff-Appellee,

v.

FORMULA INTERNATIONAL INC., Defendant-Appellant.

No. 83-5875.

United States Court of Appeals, Ninth Circuit

February 8, 1984

Argued and Submitted Jan. 11, 1984.

Page 522

Lois W. Abraham, Brown & Bain, Palo Alto, Cal., for plaintiff-appellee.

Bruce G. Spicer, Law Offices of Thomas E. Schatzel, Santa Clara, Cal., for defendant-appellant.

Appeal from the United States District Court for the Central District of California.

Before ANDERSON, SKOPIL and FERGUSON, Circuit Judges.

FERGUSON, Circuit Judge:

Formula International, Inc. (Formula) appeals from the district court's grant of a preliminary injunction in favor of the plaintiff, Apple Computer, Inc. (Apple). The injunction prohibits Formula from copying computer programs having copyrights registered to Apple, from importing, selling, distributing, or advertising those copies, and from using the mark "Pineapple" or any other mark or name confusingly similar to the trademarks used by Apple. Because we find that the district court did not abuse its discretion or rely on erroneous legal premises in issuing the injunction, we affirm.

FACTS:

Formula is a wholesaler and retailer of electronic parts and electronic kits. In May 1982, Formula entered the computer market, selling a computer kit under the trademark "Pineapple." The computer was designed to be compatible with application software written for the home computer manufactured by Apple, the Apple II. Included within Formula's computer kit were two computer programs embodied in semiconductor devices called ROM's (Read Only Memory). Formula concedes for purposes of appeal that the two programs are substantially

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similar to two programs for which Apple has registered copyrights. Apple also introduced evidence to show that Formula had sold copies of three other programs for which Apple holds the copyright. These three programs are not sold as part of a computer by either Apple or Formula, but are distributed separately.

The computer programs involved in this lawsuit are operating systems programs, that is, programs that are designed to manage the computer system. For example, one program translates instructions written in a higher-level language that is more understandable to the computer user into a lower-level object code that the computer understands. As such, the programs are distinguishable from application programs, which are programs that directly interact with the computer user.

Apple brought suit against Formula claiming copyright, trademark, and patent infringement, as well as unfair competition. Formula counterclaimed for antitrust violations and unfair competition and sought declaratory relief as to the validity of certain patents and copyrights. After a brief period of discovery, Apple moved for a preliminary injunction based on its copyright and trademark infringement claims, and on its unfair competition claims. The district court granted the motion on April 12, 1983, and the district court's opinion is reported at 562 F.Supp. 775 (C.D.Cal.1983).

Standard of Review:

To obtain a preliminary injunction, a party must show either (1) a likelihood of success on the merits and the possibility of irreparable injury, or (2) the existence of serious questions going to the merits and the balance of hardships tipping in its favor. Beltran v. Myers, 677 F.2d 1317, 1320 (9th Cir.1982); Aleknagik Natives Ltd. v. Andrus, 648 F.2d 496, 502 (9th Cir.1980). The district court held that Apple had shown a likelihood of success on the merits of its copyright and trademark infringement claims and significant irreparable harm. 562 F.Supp. at 783, 785. Our review of the district court at this stage of the proceeding is very limited. See Sports Form, Inc. v. United Press International, Inc., 686 F.2d 750, 752 (9th Cir.1982). The district court's grant of the preliminary injunction must be affirmed unless the court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact. Beltran v. Myers, 677 F.2d at 1319.

ANALYSIS:

I. DID THE DISTRICT COURT ERR IN PRELIMINARILY ENJOINING FORMULA FROM COPYING, SELLING, AND DISTRIBUTING COMPUTER PROGRAMS WITH COPYRIGHTS REGISTERED TO APPLE?

A. Likelihood of success on the merits

On the basis of the evidence before the district court, we cannot conclude that the court erred in finding that Apple had demonstrated a likelihood of success on the merits of its copyright infringement claim. Under the Copyright Act, Apple's certificates of copyright registration constitute prima facie evidence of the validity of Apple's copyrights, 17 U.S.C. Sec. 410(c), and Formula has the burden of overcoming the presumption of validity. Williams Electronics, Inc. v. Artic International, Inc., 685 F.2d 870, 873 (3d Cir.1982).

Formula asserts that the district court erred in granting the preliminary injunction by relying on the legal premise that the Copyright Act, 17 U.S.C. Sec. 101 et seq., extends protection to all computer programs regardless of the function which those programs perform. Formula contends that the computer programs involved in this lawsuit, because they control the internal operation of the computer, are only "ideas" or "processes," and therefore, unlike application programs, they are not protected by copyright. See 17 U.S.C. Sec. 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.") (emphasis added). Formula

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also points to the idea/expression dichotomy recognized in case law, see, e.g., Baker v. Selden, 101 U.S. 99, 25 L.Ed. 841 (1879); Sid & Marty Krofft Television Productions, Inc. v. McDonald's Corp., 562 F.2d 1157, 1163-64 (9th Cir.1977), and contends that a computer program is protected under the Copyright Act only if the program embodies expression which is communicated to the user when the program is run on a computer.

Formula's position, however, is contrary to the language of the Copyright Act, the legislative history of the Act, and the existing case law concerning the copyrightability of computer programs. An examination of the legislative history reveals that Formula's arguments were considered and rejected by Congress when copyright protection was extended to computer programs.

In 1974, the National Commission on New Technological Uses of Copyright Works (CONTU) was established by Congress to consider, inter alia, to what extent computer programs should be protected by copyright law. The CONTU Final Report recommended that the copyright law be amended "to make it explicit that computer programs, to the extent that they...

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