Apple Computer, Inc. v. Franklin Computer Corp., No. 82-1582

CourtUnited States Courts of Appeals. United States Court of Appeals (3rd Circuit)
Writing for the CourtBefore HUNTER, HIGGINBOTHAM and SLOVITER; SLOVITER
Citation219 USPQ 113,714 F.2d 1240
Docket NumberNo. 82-1582
Decision Date23 September 1983
Parties, 219 U.S.P.Q. 113, 1983 Copr.L.Dec. P 25,565 APPLE COMPUTER, INC., a California corporation, Appellant, v. FRANKLIN COMPUTER CORPORATION, a Pennsylvania corporation.

Page 1240

714 F.2d 1240
70 A.L.R.Fed. 153, 219 U.S.P.Q. 113,
1983 Copr.L.Dec. P 25,565
APPLE COMPUTER, INC., a California corporation, Appellant,
v.
FRANKLIN COMPUTER CORPORATION, a Pennsylvania corporation.
No. 82-1582.
United States Court of Appeals,
Third Circuit.
Argued March 17, 1983.
Decided Aug. 30, 1983.
Rehearing and Rehearing In Banc Denied Sept. 23, 1983.

Page 1242

Jack E. Brown (argued), Eugene D. Cohen, Joseph W. Mott, Lawrence G.D. Scarborough, Brown & Bain, P.A., Phoenix, Ariz., Edwin H. Taylor, Blakely, Sokoloff, Taylor & Zafman, Beverly Hills, Cal., Ronald L. Panitch, Jay K. Meadway, Seidel, Gonda, Goldhammer & Panitch, P.C., Philadelphia, Pa., for appellant.

Jerome J. Shestack (argued), Michael J. Mangan, Sherry A. Swirsky, Schnader, Harrison, Segal & Lewis, Manny D. Pokotilow, Barry A. Stein, Caesar, Rivise, Bernstein & Cohen, Ltd., Philadelphia, Pa., for appellee.

Before HUNTER, HIGGINBOTHAM and SLOVITER, Circuit Judges.

OPINION OF THE COURT

SLOVITER, Circuit Judge.

I.

INTRODUCTION

Apple Computer, Inc. appeals from the district court's denial of a motion to preliminarily enjoin Franklin Computer Corp. from infringing the copyrights Apple holds on fourteen computer programs.

The decision to grant or refuse to grant a preliminary injunction is within the discretion of the district court. See A.O. Smith Corp. v. FTC, 530 F.2d 515, 525 (3d Cir.1976). Although the scope of our review of the action of the district court in ruling on a motion for preliminary injunction is narrow, reversal is warranted if the trial court has abused its discretion or committed error in applying the law. Kennecott Corp. v. Smith, 637 F.2d 181, 187 (3d Cir.1980). As the Second Circuit has stated recently, "Despite oft repeated statements that the issuance of a preliminary injunction rests in the discretion of the trial judge whose decisions will be reversed only for 'abuse', a court of appeals must reverse if the district court has proceeded on the basis of an erroneous view of the applicable law." Donovan v. Bierwirth, 680 F.2d 263, 269 (2d Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 488, 74 L.Ed.2d 631 (1982).

In this case the district court denied the preliminary injunction, inter alia, because it had "some doubt as to the copyrightability of the programs." Apple Computer, Inc. v. Franklin Computer Corp., 545 F.Supp. 812, 812 (E.D.Pa.1982). This legal ruling is fundamental to all future proceedings in this action and, as the parties and amici curiae seem to agree, has considerable significance to the computer services industry. 1 Because we conclude that the district court proceeded under an erroneous view of the applicable law, we reverse the denial of the preliminary injunction and remand.

II.

FACTS AND PROCEDURAL HISTORY

Apple, one of the computer industry leaders, manufactures and markets personal computers (microcomputers), related peripheral equipment such as disk drives (peripherals), and computer programs (software). It presently manufactures Apple II computers and distributes over 150 programs. Apple has sold over 400,000 Apple II computers, employs approximately 3,000 people, and had annual sales of $335,000,000 for fiscal year 1981. One of the byproducts of Apple's success is the independent development by third parties of numerous computer programs which are designed to run on the Apple II computer.

Page 1243

Franklin, the defendant below, manufactures and sells the ACE 100 personal computer and at the time of the hearing employed about 75 people and had sold fewer than 1,000 computers. The ACE 100 was designed to be "Apple compatible," so that peripheral equipment and software developed for use with the Apple II computer could be used in conjunction with the ACE 100. Franklin's copying of Apple's operating system computer programs in an effort to achieve such compatibility precipitated this suit.

Like all computers both the Apple II and ACE 100 have a central processing unit (CPU) which is the integrated circuit that executes programs. In lay terms, the CPU does the work it is instructed to do. Those instructions are contained on computer programs.

There are three levels of computer language in which computer programs may be written. 2 High level language, such as the commonly used BASIC or FORTRAN, uses English words and symbols, and is relatively easy to learn and understand (e.g., "GO TO 40" tells the computer to skip intervening steps and go to the step at line 40). A somewhat lower level language is assembly language, which consists of alphanumeric labels (e.g., "ADC" means "add with carry"). Statements in high level language, and apparently also statements in assembly language, are referred to as written in "source code." The third, or lowest level computer language, is machine language, a binary language using two symbols, 0 and 1, to indicate an open or closed switch (e.g., "01101001" means, to the Apple, add two numbers and save the result). Statements in machine language are referred to as written in "object code."

The CPU can only follow instructions written in object code. However, programs are usually written in source code which is more intelligible to humans. Programs written in source code can be converted or translated by a "compiler" program into object code for use by the computer. Programs are generally distributed only in their object code version stored on a memory device.

A computer program can be stored or fixed on a variety of memory devices, two of which are of particular relevance for this case. The ROM (Read Only Memory) is an internal permanent memory device consisting of a semi-conductor "chip" which is incorporated into the circuitry of the computer. A program in object code is embedded on a ROM before it is incorporated in the computer. Information stored on a ROM can only be read, not erased or rewritten. 3 The ACE 100 apparently contains EPROMS (Erasable Programmable Read Only Memory) on which the stored information can be erased and the chip reprogrammed, but the district court found that for purposes of this proceeding, the difference between ROMs and EPROMs is inconsequential. 545 F.Supp. at 813 n. 3. The other device used for storing the programs at issue is a diskette or "floppy disk", an auxiliary memory device consisting of a flexible magnetic disk resembling a phonograph record, which can be inserted into the computer and from which data or instructions can be read.

Computer programs can be categorized by function as either application programs or operating system programs. Application programs usually perform a specific task for the computer user, such as word processing, checkbook balancing, or playing a game. In contrast, operating system programs generally manage the internal functions of the computer or facilitate use of application programs. The parties agree that the fourteen computer programs at

Page 1244

issue in this suit are operating system programs. 4

Apple filed suit in the United States District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1338 on May 12, 1982, alleging that Franklin was liable for copyright infringement of the fourteen computer programs, patent infringement, unfair competition, and misappropriation. Franklin's answer in respect to the copyright counts included the affirmative defense that the programs contained no copyrightable subject matter. Franklin counterclaimed for declaratory judgment that the copyright registrations were invalid and unenforceable, and sought affirmative relief on the basis of Apple's alleged misuse. Franklin also moved to dismiss eleven of the fourteen copyright infringement counts on the ground that Apple failed to comply with the procedural requirements for suit under 17 U.S.C. §§ 410, 411.

Page 1245

After expedited discovery, Apple moved for a preliminary injunction to restrain Franklin from using, copying, selling, or infringing Apple's copyrights. The district court held a three day evidentiary hearing limited to the copyright infringement claims. Apple produced evidence at the hearing in the form of affidavits and testimony that programs sold by Franklin in conjunction with its ACE 100 computer were virtually identical with those covered by the fourteen Apple copyrights. The variations that did exist were minor, consisting merely of such things as deletion of reference to Apple or its copyright notice. 5 James Huston, an Apple systems programmer, concluded that the Franklin programs were "unquestionably copied from Apple and could not have been independently created." He reached this conclusion not only because it is "almost impossible for so many lines of code" to be identically written, but also because his name, which he had embedded in one program (Master Create), and the word "Applesoft", which was embedded in another (DOS 3.3), appeared on the Franklin master disk. Apple estimated the "works in suit" took 46 man-months to produce at a cost of over $740,000, not including the time or cost of creating or acquiring earlier versions of the programs or the expense of marketing the programs.

Franklin did not dispute that it copied the Apple programs. Its witness admitted copying each of the works in suit from the Apple programs. Its factual defense was directed to its contention that it was not feasible for Franklin to write its own operating system programs. David McWherter, now Franklin's vice-president of engineering, testified he spent 30-40 hours in November 1981 making a study to determine if it was feasible for Franklin to write its own Autostart ROM program and concluded it was not because "there were just too many entry points in relationship to the number of instructions in the program." Entry points at specific locations in the program can be used by programmers to mesh their application programs with the operating system program. McWherter concluded that use of the identical signals was necessary in order to ensure 100%...

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    • United States Courts of Appeals. United States Court of Appeals (3rd Circuit)
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    ...on a preliminary injunction yields to our plenary scope of review as to the applicable law. Apple Computer, Inc. v. Franklin Corp., 714 F.2d 1240, 1242 (3d LEGAL PRINCIPLES GOVERNING ABORTIONS The legal principles which guide our consideration of the Pennsylvania statute have evolved from t......
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    ...which are invested in the protected work." Marturano, 2009 WL 1530040, *8 (citing Apple Computer, Inc., v. Franklin Computer Corp., 714 F.2d 1240, 1255 (3rd Cir. 1983)). 125. Accordingly, the Court finds injunctive relief is proper. IT IS HEREBY ORDERED that Shah, his agents, employees, rep......
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    ...Bros. Entm't, Inc. v. WTV Sys. , 824 F.Supp.2d 1003, 1015 (C.D. Cal. 2011) (citing Apple Computer, Inc. v. Franklin Computer Corp. , 714 F.2d 1240, 1255 (3rd Cir. 1983) ). Accordingly, the Court concludes that a preliminary injunction is in the public interest.IV. AMOUNT OF SECURITYFederal ......
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    • February 9, 2012
    ...which are invested in the protected work.” Marturano, 2009 WL 1530040, *8 (citing Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1255 (3rd Cir.1983)). 125. Accordingly, the Court finds injunctive relief is proper. IT IS HEREBY ORDERED that Shah, his agents, employees, repre......
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    ...on a preliminary injunction yields to our plenary scope of review as to the applicable law. Apple Computer, Inc. v. Franklin Corp., 714 F.2d 1240, 1242 (3d LEGAL PRINCIPLES GOVERNING ABORTIONS The legal principles which guide our consideration of the Pennsylvania statute have evolved from t......
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    ...which are invested in the protected work." Marturano, 2009 WL 1530040, *8 (citing Apple Computer, Inc., v. Franklin Computer Corp., 714 F.2d 1240, 1255 (3rd Cir. 1983)). 125. Accordingly, the Court finds injunctive relief is proper. IT IS HEREBY ORDERED that Shah, his agents, employees, rep......
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    ...Bros. Entm't, Inc. v. WTV Sys. , 824 F.Supp.2d 1003, 1015 (C.D. Cal. 2011) (citing Apple Computer, Inc. v. Franklin Computer Corp. , 714 F.2d 1240, 1255 (3rd Cir. 1983) ). Accordingly, the Court concludes that a preliminary injunction is in the public interest.IV. AMOUNT OF SECURITYFederal ......
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    • JD Supra United States
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    ...organization. See TheComputer Software Act of 1980 (that amended § 101 of the 1976 Act); Apple Computer, Inc. v. FranklinComputer Corp., 714 F.2d 1240 (3d Cir. 1983), cert. dismissed, 464 U.S. 1033 (1984).[12] Id., citing Eldred v. Ashcroft, 537 U.S. 186, 212 (2003).[13]Thaler v. Hirshfeld,......
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    ...1345, 1349 (8th Cir. 1994); Walt Disney Co. v. Powell, 897 F.2d 565, 567 (D.C. Cir. 1990); Apple Comput., Inc. v. Franklin Comput. Corp., 714 F.2d 1240, 1254 (3d Cir. (20.) See, e.g., Shyamkrishna Balganesh, Demystifying the Right to Exclude: Of Properly, Inviolability, and Automatic Injunc......
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    • Harvard Journal of Law & Technology Nbr. 31, March 2018
    • March 22, 2018
    ...(617.) See supra notes 83-86. (618.) See Oracle v. Google, 750 F.3d at 1371 (quoting Apple Comput., Inc. v. Franklin Comput. Corp., 714 F.2d 1240, 1253 (3d Cir. 1983)); see also id. at 1366 (noting that the Third Circuit in Apple v. Franklin "focused 'on whether the idea is capable of vario......
  • ENCODING MUSIC: PERFORATED PAPER, COPYRIGHT LAW, AND THE LEGIBILITY OF CODE, 1880-1908.
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    • Case Western Reserve Law Review Vol. 71 Nbr. 2, December 2020
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    ...the grounds that it is not a "writing" or "copy"), aff'd, 628 F.2d 1038 (7th Cir. 1980); Apple Comput., Inc. v. Franklin Comput. Corp., 714 F.2d 1240, 1254 (3d Cir. 1983) (reversing similar reasoning by the district court, and holding a computer program's source code to be a copyrightable (......

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