Data Cash Systems, Inc. v. JS&A Group, Inc.

• Decision Date: 02 September 1980
• Docket Number: No. 80-1085,80-1085
• Citation: 628 F.2d 1038
• Parties: , 1978-81 Copr.L.Dec. 25,183 DATA CASH SYSTEMS, INC., a Florida Corporation, Plaintiff-Appellant, v. JS&A GROUP, INC., an Illinois Corporation, Joseph Sugarman and Mary Stanke, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1038

628 F.2d 1038

208 U.S.P.Q. 197, 1978-81 Copr.L.Dec. 25,183

DATA CASH SYSTEMS, INC., a Florida Corporation, Plaintiff-Appellant, v. JS&A GROUP, INC., an Illinois Corporation, Joseph Sugarman and Mary Stanke, Defendants-Appellees.

No. 80-1085.

United States Court of Appeals Seventh Circuit.

Argued May 7, 1980.

Decided Sept. 2, 1980.

Geraldine Soat Brown, Chicago, Ill., for plaintiff-appellant.

George H. Gerstman, Chicago, Ill., for defendants-appellees.

Before SWYGERT and CUMMINGS, Circuit Judges, and NICHOLS, Associate Judge. ^*

NICHOLS, Associate Judge.

This is an appeal from an order of the district court denying plaintiff's motion for a preliminary injunction and granting defendants' motion for summary judgment on Count I of plaintiff's complaint, a claim of copyright infringement. We affirm the result of the district court, but we do so on different grounds. Proceedings on Count II of plaintiff's complaint, a claim of unfair competition, are suspended pending resolution of this appeal.

The parties posit jurisdiction on 28 U.S.C. § 1292(a)(1) providing for appeals from interlocutory orders " * * * granting, continuing, modifying, refusing, or dissolving injunctions * * *." The order of the district court is appealable in its entirety. This conclusion is consistent with both Abercrombie & Fitch Co. v. Hunting World, Inc., 461 F.2d 1040 (2d Cir. 1972) and Helene Curtis Industries, Inc. v. Church & Dwight Co., 560 F.2d 1325 (7th Cir. 1977), cert. denied, 434 U.S. 1070, 98 S.Ct. 1252, 55 L.Ed.2d 772 (1978). In Abercrombie & Fitch, the district court by summary judgment narrowed a count of plaintiff's petition without expressly denying plaintiff's prayer for injunctive relief. The order was held appealable as effectively a final denial of injunctive relief. The only significant distinction in the instant action strengthens the case for interlocutory appeal. In the instant case the denial of injunctive relief was express.

In Helene Curtis Industries we find the interlocutory appeal of a grant of a preliminary injunction coupled with an order severing trial issues. Interlocutory appeal of the severance order was denied because the issues in that order were "too remote and unrelated to the issues on appeal." Helene Curtis Industries, supra at 1337. In the instant case the issues disposed of by summary judgment were the basis for the denial of the preliminary injunction.

Turning to the merits on appeal, we summarize the facts of this case. In 1976, plaintiff contracted with D. B. Goodrich and Associates for the creation of a computer program for a computer chess game. During 1976 and 1977, D. B. Goodrich developed such a program called the "Chess One-Move Calculation" (Program).

The program developed for plaintiff was capable of receiving the player's instructions, determining the computer's possible legal moves, choosing among the permissible moves in accordance with tactical principles, and displaying the computer's move. All of the above could be performed at six different levels of expertise. Needless to say, the development of the "Chess One-Move Calculation" involved considerable human time, effort, and ingenuity.

Typically, a computer program evolves through several stages of development before reaching its final form. Initially, the programmer develops a "flow chart," a schematic representation of the program logic. The next step is to render those instructions into a "source code," a programming language such as FORTRAN or COBOL. The source program is then translated into an assembly language or machine language, a series of "ones" and "zeros." Finally, the program is stored in some mechanical medium such as magnetic tape or disk. In this case the final storage medium was in the form of Read-Only-Memory chips (ROM). The ROM is a silicon chip which has been chemically imprinted with tiny switches, an assembly language "one" becoming a connection and a "zero" becoming the absence of a connection.

General Instruments Corporation manufactured the ROM's for plaintiff and they were electrically integrated into plaintiff's game. Marketing of plaintiff's game, CompuChess, began in the fall of 1977 and continued successfully into 1978.

In June of 1978, it came to the attention of plaintiff that a Hong Kong company claimed to be licensed to sell CompuChess at a lower price. Plaintiff learned from General Instruments that it was manufacturing a ROM for another chess game. At plaintiff's request, General Instruments tested the new ROM and found it to be identical to plaintiff's. Upon further inquiry, plaintiff learned that the other chess game was using a ROM made by General Instruments and was being manufactured by Novag Industries of Hong Kong for JS&A Industries to be marketed as JS&A Computer Chess.

Plaintiff's attempts followed to prevent the manufacture and marketing of JS&A Computer Chess. These efforts were unsuccessful.

In late 1978, JS&A began marketing its computer chess. Shortly thereafter, plaintiff filed this suit for copyright infringement and unfair competition. Defendants moved for summary judgment on both counts of plaintiff's petition on April 13, 1979.

The district court granted the motion for summary judgment for defendants on the grounds that the ROM was not a "copy" under the copyright law so that reproduction of the ROM could not be an infringement. The parties had neither briefed nor argued that issue and neither side on appeal defends the district court's position, so we do not consider it further. The parties focused their arguments in the district court and on appeal to whether the program had entered the public domain prior to the duplication, such that plaintiff's copyright had been forfeited. The prevailing party in the lower court may rely on any ground that supports the decision. Dandridge v. Williams, 397 U.S. 471, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970); Moraine Products v. ICI America, Inc., 538 F.2d 134, 149 (7th Cir.), cert. denied, 429 U.S. 941, 97 S.Ct. 357, 50 L.Ed.2d 310 (1976). Since we find the forfeiture issue dispositive, we do not reach the merits of the district court's decision.

There seems to be no dispute regarding the facts relevant to the issue of whether the program entered the public domain prior to duplication by defendants. The program, in the form of the ROM, was integrated into the CompuChess game, was distributed, and was sold to the general public without restriction in 1977. Over 2,500 CompuChess games were sold that year. Nowhere on the ROM, the game board, the packaging, or the accompanying instructions was there copyright notice. Plaintiff says it did not know that it was possible to read the program, as defendants did, if one had only the ROM. Defendants point out that a purchaser of the CompuChess who removed the ROM and unloaded its contents so as to see a printout of the program would not see a copyright notice because none was there. Plaintiff does not deny this, stating only that the printed readout copies generated by plaintiff and D. B. Goodrich were imprinted with copyright notice. But these were on internal documents and did not inform the public of plaintiff's claim. It does not seem to be denied that a copyright notice could have been placed in the ROM so that one who read out the game could not miss seeing it, and we understand this is now done. Of course a notice on the game board or the printed instructions would have presented no difficulty. Nonetheless plaintiff contends that the program has not entered the public domain.

The first question for decision is whether the applicable law is the Copyright Act of 1909, Act of March 4, 1909, ch. 320, 35 Stat. 1077 (1909 Act), or the Copyright Act of 1976 (1976 Act). This new law, Pub.L.No. 94-553, 17 U.S.C. § 101 and ff, had an effective date January 1, 1978. See "Historical Note" before § 101. Plaintiff contends that the applicable law is the 1976 Act. The basis of plaintiff's argument is that if publication of the program occurred at all, it was not until after January 1, 1978. From this premise, plaintiff argues that under the 1976 Act, plaintiff complied with all notice requirements and that even absent notice, publication would not result in forfeiture. Regardless of the merits of plaintiff's characterization of the effect of the 1976 Act, we find that that Act is inapplicable.

The foundation for plaintiff's assertion that the 1976 Act applies is the fact that there is no evidence that the public had seen a printout of the program before it was sent by Novag Industries to General Instruments Corporation in early 1978. For this reason, they argue that there was no publication in 1977 and that, therefore their common law copyright survived into 1978. Plaintiff would, of course, recognize that if the program went into the public domain prior to January 1, 1978, no copyright protection would be afforded by the 1976 Act. Furthermore, the determination as to whether a work entered the public domain prior to the effective date of the 1976 Act must be made according to the copyright law, common law and statutory, as it existed prior to the 1976 Act. 1 Nimmer on Copyright § 2.03(H) (1979).

While there is some philosophical appeal to plaintiff's contention that the absence of copyright notice is irrelevant until someone doesn't see any notice, a proposition akin to the epistemological query after whether a falling tree makes a sound when there is no one to hear it, we cannot accept plaintiff's assertion. While the 1909 Act did not define "publication," the "date of publication" was defined by section 26 of that Act as " * * * the earliest date when copies of the first authorized edition were placed on sale, sold, or publicly distributed by the proprietor * * *." Act of March 4, 1909, ch. 320, § 62, 35 Stat. 1087. For example, in Advisers, Inc. v. Wiesen-Hart, Inc., 238 F.2d 706 (6th Cir. 1956), cert. denied, 353 U.S. 949, 77 S.Ct. 861, 1 L.Ed.2d 858 (1957), the...