The Failure of Software Copyright Law

                                  C1C David Croft

                                      Law 420

                                   Major Schmitt

                                   19 April 1990

Croft 2 A Definition ____________ With the Copyright Act of 1980, the following was added to the existing copyright laws: A "computer program" is a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result.1 A "program" or "software" instructs the "hardware," the computer, in its task of adding, storing, exchanging data, etc.2 At the base level, a program is simply a mathematical algorithm, a stream of on/off states, which the hardware uses. Copyright and patent law has generally excluded mathematical algorithms from legal protection due to the social benefits of their widespread dissemination.3 Software, however, is primarily protected by copyright law under the premise that an author is entitled to the financial incentive. The debate is this: "Is there a way to protect innovators without strangling further innovation?"4 The Harms of Protection _______________________ Early makers of computers handed out free accompanying software particular to their machines.5 Their thought was that this would encourage the purchase of their hardware. Soon, however, software producers began to copyright their products and the result was that each computer-maker had incompatible software.6 A company with sufficient lead-time over its competitors would push its particular version of

Croft 3 software on the consumers in the hope that it would become an industry standard. Once this had occurred, the company would have a virtual monopoly -- held in place by legal protection. The effect is as though someone were to patent the "QWERTY" format of a keyboard. Unless competing typewriter manufacturers wanted to come up with their own keyboard, they would be shut out. However, this is exactly what they did -- each developed its own software.7 The harm to society is in learning time. "Users" of software are more productive on "user-friendly" programs -- which generally tend to be those they are more accustomed to. Think of the cost of retraining a secretary to type on a non-standard keyboard every time you buy a typewriter from a different company.8 The social needs for the benefits of industry standardization are pressing: "If you want to get something done, you don't want to have 50 different [program] languages."9 Without legal protections, incompatible software would normally be an automatic market failure.10 A degree of compatibility allows innovations on existing works to appear, unless the original work is copyrighted. Progress in the software industry is primarily based on the rapid assimilation of new ideas; the key word is rapid.11 Copyright law grants protection for up to 75 years after the death of the author -- an extremely long duration in which programs are developing by orders of magnitude every few years.12,13 Apple Computers introduced

Croft 4 an "icon" system of file management in which users simply point to a pictured trash can to erase a file. When Microsoft and Hewlett-Packard attempted to emulate, Apple sued and the software users lost out.14 When Fox Software created a version of dBase's database program that was more than twice as fast, dBase sued and the users lost again.15 If the protection is interpreted too broadly by the courts, a company may have a virtual monopoly over an idea. If the author of the first word processor had been able to copyright that type of program, word processors today would be less developed and more expensive -- as expected of a monopoly product.16,17 Progression is based on past experience: "We stand on the shoulders of other giants."18 Whether copyright law is as expansive as to disuade improvement is the decision of the courts which interpret it.19 The legal costs which protection promotes is high. Many defendants in copyright infringement cases are countersuing; they claim that the plaintant companies are using the suit as a delay tactic.20 Ashton-Tate and Lotus appear to be using their lawsuit against competitors as a stopgap in order to gain time to work out the flaws of their own software.21 Smaller companies which cannot afford the litigation run the possibility of going bankrupt while the courts hold their product out of the market. The legal costs of all this litigation, of course, are passed on to the consumer.22 The inability to rapidly resolve these

Croft 5 conflicts may swing the leading tide of innovation to foreign competitors, particularly Japan.23,24 The Benefits of Protection __________________________ Thomas Jefferson said of the newly founded patent laws, "The issue of patents for new discoveries has given a spring to invention beyond my conception."25 Software company Ashton-Tate argues that it has spent millions of dollars in research and has a right to enjoy the financial fruits of it labors.26 It has long been recognized that without a limited legal protection after distribution, the incentive to produce is stymied by research and production costs. Legal production promotes originality and efficiency in competing software producers. While most typists prefer the "QWERTY" keyboard, it is the least efficient set-up for the English language.27 Since competitors must avoid copyrighted industry standards, they are forced to produce original, and usually more efficient, products. In time, the industry standard seeks better methods in a Darwinian fashion. Legal protection protects the small producer. Once a software author has copyrighted his product, he is free to show demonstrations to large corporations and software marketers without fear that his work will be stolen. Although there is still somewhat of a risk, legal recompensation is significant enough to disuade most software thieves.28

Croft 6 Alternative Forms of Protection _______________________________ Many professionals do not consider the illegal copying of intellectual property as they would any other theft.29 This is unfortunate as most software can be easily and rapidly copied by anyone. It was estimated that for every one copy of a program sold, eight copies were made.30 Copy-protection was seen as one method of slowing this trend. The software developer makes the sold program virtually impossible to copy by encrypting its transmission media.31 The drawback of this was that consumers could not excercise their right under the 1980 Copyright Act to make a back-up copy.32 If they lost or damaged their first copy, they would have to re-purchase the software license along with another copy. One developer stated that 30% of his customer service calls regarded copy-protection problems.33 Because of the inconvenience of copy-protection, the defense industry has refused to purchase any copy-protected programs. In addition, computer "pirates" were developing ways to defeat copy-protection systems just as fast as new ones were developed. Less and less software developers are relying on copy-protection as a substitute or even as a complement to legal protection. "To introduce a new product that is copy-protected would be suicide today."34 Another alternative is to scramble the program code.35 The program continues to function properly on the surface but it actually making convoluted leaps in its instructions to confuse any competing developer that might want to trace

Croft 7 its workings. While copyright registration is still needed to protect against verbatim copying, it does slow down those who would wish to "reverse-engineer" the program by emulating its functions. Trade secret laws have been held by the courts to be inapplicable in situations where copyright protection is available.36 In addition, a product protected under trade secret laws may be legally reverse-engineered.37 Even though the exact workings of a program may be a secret, ingenious developers are finding it easier and easier to reverse-engineer a product. The Semiconductor Chip Protection Act of 1984 even promotes reverse-engineering to spur improved versions of computer instructions.38 A patent protects "the physical embodiments of novel ideas".39 Until just recently, this has excluded the non- physical computer programs under U.S. law. The current standard for a software patent requires a "state of the art" improvement -- a standard above most typical programs.40 Software Copyright Law ______________________ In 1978, a special committee was formed to consider the best form of legal protection for computer programs. The result was the Copyright Act of 1980.41 Copyright registration is simple; to register, one simply mails the first and last 25 pages of the code to the Copyright Office along with the easily-obtained form.42 Since only the printed code or "expression" is being registered, and not an "idea" as with a patent, the registration is almost always

Croft 8 automatically accepted. In addition, a software author may claim a copyright without registration simply by including "Copyright Year Name" somewhere within the program.43 An author may copyright a work up to five years prior to and after distribution.44 The ease with which copyrights are obtained facilitates the developer in regards to time and money. The problem with copyright is that software developers are requesting from courts broader rights than merely "expression"; they are requesting the right to safeguard their "ideas". Take for example Gone with the Wind: it is __________________ a literary work ideal for copyright protection. If the author chooses to restrict her expression of the novel, the consumer may simply purchase another civil war book. But what if someone copyrighted the wheel? The consumer would be restricted from the "idea," and thus cars, for up to 75 years after the inventor's death.45 With a literal interpretation of the 1980 Copyright Act, only verbatim copying of software would be restricted and the innovative ideas would still be available for dissemination to the public.46 Copyright law states: 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.47 The courts, however, have not been uniform in their judgments on such matters.48 The first generation of infringement suits involved direct copying of computer code,

Croft 9 usually imbedded in hardware.49 The second generation, however, involved "look and feel" issues such as the appearance of characters in a video game.50 The difficulty lay in the fact that a program was more of "utilitarian" product than an "expression," and thus was entitled to "neighboring rights" -- the rights usually granted with a patent.51 Dependent upon case law and statuatory language, the courts were making new law as they went along: "Managers are in the difficult position of having to run 21st century businesses with guidance from a 19th-century legal system."52,53 The general trend of the courts was a broad interpretation which tended to include "idea" into its protections.54 One court ruled that a "[c]omputer software developer's internal method . . . [was] entitled to ______ copyright protection.55 A standard that evolved was that a "look" was copyrightable if there were alternative methods of implementing the function.56,57,58,59 Thus, if a screen of data could be displayed by a competitor in another way that was reasonable, a developer could copyright the "look" of his programs.60 The problem with this is analogous to a cookbook: if a competitor can organize his chapters in another fashion, then a cookbook author may copyright the "appetizers, main dishes, desserts" order of presentation.61 Possible Solutions __________________ Peter S. Menell suggests that the courts should require defendants in "look and feel" infringement lawsuits to show that their inclusion of the plaintiff's "ideas" was for the

Croft 10 purpose of developing the most efficient program they could produce.62 As the software industry progresses, innovative ideas, such as trash-can deletion, would surface. Copyright law, protecting only "expression," would not limit the dissemination of those ideas. The plaintiff, on the other hand, would have the burden of proving that the "look and feel" of their program was mostly "expressive" -- that it is not the most efficient program that could have possibly been made. One such case developed when a plaintiff proved that the defendant had gone so far as to copy an error in his program.63 If this sounds unreasonable, consider that the standards for good programming techniques are beginning to include lists of user-friendly techniques normally considered "look and feel" functions by their original authors.64 An example of this might be using a function key, a key that calls up a computer process when pressed, instead of having to type out the name of the function desired. This method of judgment would protect against verbatim copying and promote research into more efficient programming which would build upon previously successful programs.65 A second alternative is to allow all "look and feel" copying and restrict verbatim copying for a ten year period while allowing reverse-engineering in the interim.66 This is a software version of the Semiconductor Chip Protection Act of 1984.67 Intel corporation, whose 8088 microprocessor chip was reverse-engineered by NEC corporation, is pleased

Croft 11 by this as their future generation microprocessors will be nearly impossible to copy by reverse-engineering due to their complexity.68 It is argued that the software developer will have sufficient lead-time in the marketplace to reap the rewards of his innovation before the competitors catch up or the program becomes verbatim copiable.69 Additional benefits for being first include name recognition and long term contract establishment -- especially with regard to larger systems such as mainframe computers.70 This method would be more in accord with the original intent of the legal protection system: to promote innovation and progress. The third alternative is to give a strict interpretation of copyright law, which would only protect verbatim copying, and allow limited-duration patents, perhaps as short as five years, on "idea" innovations. Already this is occurring to a limited extent as software developers begin to seek the additional protection of patents as more and more courts begin to hand down judgments in favor of the infringement defendants.71 The high standards of a granted patent mandate that all but the most novel innovations will be refused -- thus allowing the dissemination of most "look and feel" creations and barring blanket copyrighting in an effort to lock-up the market. Additionally, those developers who do get the limited- duration patents for their ideas will be recompensated for

Croft 12 the extraordinary research and development costs of producing something "novel". Software copyright law has created considerable controversy since its beginnings. While there is a need to disseminate the "utilitarian" value of programs, the software developer must maintain a profit motive to produce. Courts have stretched the copyright law with their interpretations in order to seek a viable balance. The solution is a strict interpretation of copyright law combined with a special law regarding the "look and feel" rights of a computer program.

Croft 13 Notes 1 United States Copyright Office, Copyright Law of the ____________________ United States of America (March 1989) 7. ________________________ 2 "Software Protection in the EEC," California Law ______________ Review March 1987: 641. ______ 3 Ca. L. R., 643. _________ 4 Kathleen K. Wiegner and John Heins, "Can Las Vegas sue Atlantic City?" Forbes March 6, 1989: 137. ______ 5 Wiegner, 130. 6 ibid. 7 Peter S. Menell, "An Analysis of the Scope of Copyright Protection for Application Programs," Stanford Law ____________ Review (Stanford, May 1989), 1067. ______ 8 ibid. 9 Weigner, 131. 10 Menell, 1067. 11 "Don't use copyright to shackle software," Business ________ Week March 29, 1989: 122. ____ 12 Menell, 1085. 13 Keith Hammonds, "Don't bury software's promise in a legal bog," Business Week May 22, 1989: 86. _____________ 14 Weigner, 136. 15 Weigner, 132. 16 Menell, 1067. 17 Weigner, 132. 18 Hammonds, 86. 19 Menell, 1047.

Croft 14 20 John C. Dvorak and Jim Seymour, "Copyright protection: help or hindrance?" PC/Computing May 1989: 30. ____________ 21 Weigner, 136. 22 Dvorak, 30. 23 Weigner, 130. 24 Weigner, 136. 25 Weigner, 130. 26 Weigner, 136. 27 Menell, 1070. 28 Dvorak, 29. 29 Victor Rosenberg, "Software Theft and Copy Protection," Library Journal February 1, 1989: 46. _______________ 30 Philip Elmer-DeWitt, "A Victory for the Pirates?" Time October 20, 1986: 86. ____ 31 ibid. 32 U.S. Copyr. Off., Copyr. Law, 39. __________ 33 Rosenberg, 46. 34 Elmer-DeWitt, 86. 35 Dvorak, 29. 36 West's Federal Practice Digest, 3d ed., Vol. 21, ______________________________ (St. Paul, Minnesota: West Publishing Co., 1984) 10.4. 37 Ca. L. R., 643. ________ 38 Menell, 1078. 39 Ca. L. R., 643. _________ 40 Weigner, 133. 41 Menell, 1046.

Croft 15 42 United States Copyright Office, Copyright _________ Registration for Computer Programs, October 1989. __________________________________ 43 ibid. 44 West's Federal Practice Digest, 3d and 4th, ______________________________ February 1990 (St. Paul, Minnesota: West Pub. Co.) 423. 45 Weigner, 133. 46 Ca. L. R., 643. _________ 47 U.S. Copyr. Off., Copyr. Law, 7-8. __________ 48 Ca. L. R., 645. _________ 49 Menell, 1049. 50 Weigner, 133. 51 Ca. L. R., 644. _________ 52 ibid. 53 Weigner, 133. 54 Menell, 1049. 55 West's Feb. '90, 422. ______ 56 Menell, 1074. 57 West's Feb. '90, 425-6. ______ 58 West's 3d, 10.4. ______ 59 West's Feb. '90, 308. ______ 60 ibid., 422. 61 Menell, 1084. 62 Menell, 1088. 63 Menell, 1087. 64 Menell, 1082. 65 Menell, 1088. 66 Weigner, 137.

Croft 16 67 Menell, 1078. 68 Barinaga, Marcia, "Computer microcode instructions judged within copyright," Nature 16 February 1989: 591. ______ 69 Business Week, 122. _____________ 70 Menell, 1060. 71 Hammonds, 86.

Transcribed to HTML on 1997-09-29 by David Wallace Croft.