Computer Management Assitance Co. v. DeCastro

• Decision Date: 25 July 2000
• Docket Number: No. 99-30513,99-30513
• Citation: 220 F.3d 396
• Parties: (5th Cir. 2000) COMPUTER MANAGEMENT ASSISTANCE COMPANY, Plaintiff-Appellant, v. ROBERT F. DeCASTRO, INC., et al. Defendants, INFORMATION MANAGEMENT CONSULTANTS & ASSOCIATES, INC., Defendant-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

Page 396

220 F.3d 396 (5th Cir. 2000)

COMPUTER MANAGEMENT ASSISTANCE COMPANY, Plaintiff-Appellant, v. ROBERT F. DeCASTRO, INC., et al. Defendants, INFORMATION MANAGEMENT CONSULTANTS & ASSOCIATES, INC., Defendant-Appellee.

No. 99-30513

UNITED STATES COURT OF APPEALS, FIFTH CIRCUIT

July 25, 2000

Appeal from the United States District Court For the Eastern District of Louisiana

Before GARWOOD, DeMOSS and PARKER, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

Plaintiff-Appellant appeals the district court's entry of judgment for Defendant-Appellee after a bench trial on claims of copyright infringement, trade secret misappropriation and unfair trade practices. We affirm the district court's ruling on these claims. Plaintiff also appeals the district court's award of attorney's fees pursuant to a fee-shifting statute. We express no judgment on the validity of this fee determination and dismiss this portion of the appeal for lack of jurisdiction.

FACTUAL HISTORY AND PROCEEDINGS BELOW

Computer Management Assistance Company ("CMAC") developed a computer program for the picture framing industry named ACCESS. ACCESS is a front-end pricing program that assists distributors in managing sales and facilitating transactions with customers. In 1983, CMAC licensed ACCESS to Robert F. de Castro, Inc., ("deCastro") a major wholesale distributor of picture frames, and trained deCastro's information systems manager, Luis Escalona, ("Escalona") to use ACCESS. Under this license agreement, CMAC placed confidentiality restrictions on deCastro's right to use and disclose ACCESS.¹

CMAC's package to deCastro included a sublicense of an interpreter, licensed by CMAC to run ACCESS on deCastro's computer. An interpreter translates instructions in a specific program language, in which a programmer has written a program (its "source code"), into a specific numerical language (its "object code") that the computer is built to run on. BUSS also depended on the CMAC licensed interpreter to run on deCastro's computer.

In 1992, Information Management Consultants ("IMC"), a value-added reseller of FACTS, a comprehensive software package for wholesale distributors in general (i.e., not industry specific) contacted deCastro. The next year, IMC presented a proposal to install and modify FACTS to fit deCastro's needs. This was IMC's inaugural foray into the picture framing industry. A document referred to as "Appendix A" proposed modifications to incorporate deCastro's internal BUSS and interface with deCastro's pricing regime.

In August of 1993, deCastro decided to enter into a new contract with CMAC. CMAC agreed to try to modify ACCESS to provide direct order entry and for that purpose got from IMC a FACTS demonstration package including that feature. CMAC was unable to modify ACCESS to satisfy deCastro's need for direct order capability. DeCastro renewed discussions with IMC and eventually entered into a contract for FACTS that included items from Appendix A. The uncomplicated modifications were made by adding files (approximately 750 lines of code) to generic FACTS (containing over 600,000 lines of code). IMC installed the modified FACTS and deCastro began using it in June of 1996. Because FACTS was written in a different language (BBX basic) than ACCESS, IMC also installed another interpreter. The CMAC software was still installed and the CMAC interpreter was still utilized to run BUSS.

In February of 1997, CMAC filed suit against deCastro, Escalona and IMC² alleging copyright infringement, trade secret misappropriation, unfair and deceptive trade practices and breach of contract. After a two-week bench trial, the district court entered judgment against CMAC on all claims. In addition, the district court awarded attorney's fees against CMAC pursuant to the Copyright Act's fee-shifting provision. CMAC appeals the district court's dismissal of its claims as against IMC and the award of attorney's fees.

STANDARD OF REVIEW

"We review the district court's findings of fact for clear error and decide issues of law de novo." Malchi v. Thaler, 211 F.3d 953, 956 (5th Cir. 2000).

DISCUSSION

I. Copyright Infringement.

A plaintiff must prove the following elements to succeed on a claim of copyright infringement: (1) ownership of the copyrighted material and (2) copying by the defendant. See Alcatel USA, Inc. v. DGI Technologies, Inc., 166 F.3d 772, 790 (5th Cir. 1999). "Copyright ownership is shown by proof of originality and copyrightability in the work as a whole and by compliance with applicable statutory formalities." Engineering Dynamics, Inc. v. Structural Software, Inc., 26 F.3d 1335, 1340 (5th Cir. 1994) (citing Plains Cotton Coop. Ass'n v. Goodpasture Computer Serv., Inc., 807 F.2d 1256, 1260 (5th Cir. 1987)), opinion supplemented on denial of rehearing by 46 F.3d 408 (5th Cir. 1995). It is undisputed that CMAC obtained a copyright for ACCESS.

Not all copying by a defendant is actionable as copyright infringement. "A copy is legally actionable if (1) the alleged infringer actually used the copyrighted material to create his own work, and (2) substantial similarity exists between the two works." Alcatel, 166 F.3d at 790. The factual question of whether the defendant actually used the copyrighted material can be inferred by showing proof of access to the copyrighted work and probative similarity between the defendant's work and the copyrighted work. See Engineering Dynamics, 26 F.3d at 1340-41 (citations omitted). The second question is whether the copying is legally actionable. The inquiry here is whether there is substantial similarity between the two works. See id.

Computer programs are entitled to copyright protection. See id. at 1341; see also Vault Corp. v. Quaid Software Ltd., 847 F.2d 255, 259 (5th Cir. 1988) (noting that the Copyright Act was amended in 1976 "to include computer programs in the definition of protectable literary works"). The Copyright Act defines a computer program as "a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result." 17 U.S.C. § 101 (1994). "[C]opyright protection for an original work of authorship [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." 17 U.S.C. § 102(b) (1994). In other words, copyright protection does not extend to ideas, per se, but to the particular expression of those ideas.

The law in this Circuit lends copyright protection to the non-literal as well as the literal elements of computer programs. See, e.g., Kepner-Tregoe, Inc., v. Leadership Software, Inc., 12 F.3d 527, 536 n.20 (5th Cir. 1994) (embracing the "noncontroversial proposition that non-literal aspects of copyrighted works--like structure, sequence, and organization--may be protected under copyright law") (citing Feist Publications, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340 (1991)).

CMAC argues that copyright protection extends to the terms of its literal lines of code and its non-literal elements of architecture, design and coding methodology. Notwithstanding the fact that there is no literal similarity between the code lines of FACTS and ACCESS, CMAC argues that copyright protection was infringed on the non-literal design and organizational elements.

We use the "abstraction-filtration" method to determine copyright protection. See Engineering Dynamics, 26 F.3d at 1343. The approach was taken from the Tenth Circuit's analysis in Gates Rubber Co. v. Bando Chemical Indus., Ltd., 9 F.3d 823 (10th Cir. 1993). That court's thoughtful explanation guides our analysis on this issue:

First, in order to provide a framework for analysis, we conclude that a court should dissect the program according to its varying levels of generality as provided in the abstractions test. Second, poised with this framework, the court should examine each level of abstraction in order to filter out those elements of the program which are unprotectable. Filtration should eliminate from comparison the unprotectable elements of ideas, processes, facts, public domain information, merger material, scenes a faire material, and other unprotectable elements suggested by the particular facts of the program under examination. Third, the court should then compare the remaining protectable elements with the allegedly infringing program to determine whether the defendants have misappropriated substantial elements of the plaintiff's program.

Gates Rubber, 9 F.3d at 834, quoted in Engineering Dynamics, 26 F.3d at 1342-43.

The scenes a faire doctrine excludes from copyright protection work serving functional purposes or work that is dictated by external factors such as particular business practices. The Gates Rubber Court articulated the application of this doctrine to copyright issues involving computer programs.

In the area of computer programs these external factors may include: hardware standards and mechanical specifications, software standards and compatibility requirements, computer manufacturer design standards, target industry practices and demands, and computer industry programming practices.

9 F.3d at 838 (citations omitted), quoted in Engineering Dynamics, 46 F.3d at 410 n.2.

A. Abstraction.

We must first divide the ACCESS program segments into layers of abstraction and determine "whether the contents of that segment depict an idea, process or method, which, inseparable from its expression or incapable of expression by any other means" and are therefore not copyrightable. Engineering Dynamics, 26 F.3d at 1343.

Appendix A³ discusses how the generic FACTS system would be modified to incorporate deCastro's method of doing business. CMAC asserts that Appendix A provides ample evidence of a copyright violation. It alleges that Appendix A contains numerous copyrightable design specifications, not just general...