Thinking about selling a software-hardware package with a license agreement that prevents the licensee from using the software with a competing
hardware product? Think again. You may be giving your competitor free reign to steal your software codes.
Article I of the Constitution provides Congress with the power to “promote the progress of science and useful arts, by securing for a limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Respecting the idea that granting copyright protection over authors' works stimulates creativity, innovation, and public access to those ideas, Congress established the Copyright Act, which gives authors specific and limited rights to prohibit others from misappropriating the expressions of those ideas. The Act has slowly evolved to include various provisions recognizing software as copyrightable subject matter. The dissemination of copyrighted software into the public usually involve license agreements which grant licensees access to and use of the software while limiting or preventing "unauthorized" copying and access by non-licensees. The agreements recognize the economic value of dissemination, but restricting the distribution of software and conditioning license agreements on use and reverse engineering prohibitions necessarily prevents others from gaining access to the functions and ideas expressed. Presumptively, a copyright owner has a right to exclude others from using its copyrighted work, and can refuse to grant a license with some exception.
On the other hand, the Copyright Act does not protect ideas, procedures, processes, systems, methods of operations, concepts, principles, or discoveries in general. Instead, this provision protects the public right of access to these areas, codifying the idea that public dissemination enables further innovation, by allowing certain otherwise infringing activity to be classified as fair use. But software has established itself as a unique subject of copyright, encompassing both ideas and expression in a single, functional work the end product of which may profoundly impact competition. Granting the ability of a software copyright owner to restrict access to the copyrighted work through licensing agreements necessarily restricts access to the ideas and "functional" concepts within the software, subverting long-standing public policy.
Copyright Misuse
In light of the tremendous costs associated with research and development of increasingly complex computing equipment and the restrictive agreements that usually accompany its sale (read: access), courts increasingly rely on the copyright misuse doctrine to temporarily prevent the copyright holder from enforcing its copyright. In 1990, the Fourth Circuit court in Lasercomb America v. Reynolds found that a license agreement under which the plaintiff licensed software violated the public policy behind its copyright because it attempted to suppress competition in the same software business. A non-compete clause prohibited licensees from developing a competing version of the software for a period of 99 years. This prevented any attempt to "independently implement the ideas which [the software] expresses. Thus, the "misuse arises from Lasercomb's attempt to use its copyright in a particular expression . . . to control competition in an area outside the copyright. As a result, Lasercomb was in effect barred from asserting a claim of copyright infringement. In most cases, courts use copyright misuse to balance the public policy dichotomy: copyright protection versus competition. Looked at another way, “copyright misuse would appear to sanction at least some infringement as a necessary measure of self-help.”
Digital Millennium Copyright Act
Realizing the failure of some courts to adequately conduct this balancing act, Congress enacted the Digital Millennium Copyright Act which may give copyright holders reason to breath easier. Ostensibly enacted to promote competition and interoperability among computer components, the DMCA prohibits the circumvention of "a technological measure that effectively controls access" to computer software, allowing authors more authority to control access to works above and beyond traditional limitations. However, the DMCA provides a reverse engineering exception which distinguishes "lawful" acts of infringement to gain access to ideas from acts designed merely to appropriate expressions. But, this new provision grants the exception only to those who have a lawful right to use a copy of the software.
A Right to Compete?
In 1999, the Fifth Circuit court in Alcatel USA v. DGI Technologies found that although DGI had “clearly infringed [Alcatel’s] exclusive right to reproduce its software” when DGI in effect stole Alcatel’s software and reverse engineered it in order to develop a competing product, Alcatel misused its copyright through its license agreement that prohibited licensees from ‘using’ the software with a competing hardware product. In this case, a right to compete prevailed.
Article I of the Constitution provides Congress with the power to “promote the progress of science and useful arts, by securing for a limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Respecting the idea that granting copyright protection over authors' works stimulates creativity, innovation, and public access to those ideas, Congress established the Copyright Act, which gives authors specific and limited rights to prohibit others from misappropriating the expressions of those ideas. The Act has slowly evolved to include various provisions recognizing software as copyrightable subject matter. The dissemination of copyrighted software into the public usually involve license agreements which grant licensees access to and use of the software while limiting or preventing "unauthorized" copying and access by non-licensees. The agreements recognize the economic value of dissemination, but restricting the distribution of software and conditioning license agreements on use and reverse engineering prohibitions necessarily prevents others from gaining access to the functions and ideas expressed. Presumptively, a copyright owner has a right to exclude others from using its copyrighted work, and can refuse to grant a license with some exception.
On the other hand, the Copyright Act does not protect ideas, procedures, processes, systems, methods of operations, concepts, principles, or discoveries in general. Instead, this provision protects the public right of access to these areas, codifying the idea that public dissemination enables further innovation, by allowing certain otherwise infringing activity to be classified as fair use. But software has established itself as a unique subject of copyright, encompassing both ideas and expression in a single, functional work the end product of which may profoundly impact competition. Granting the ability of a software copyright owner to restrict access to the copyrighted work through licensing agreements necessarily restricts access to the ideas and "functional" concepts within the software, subverting long-standing public policy.
Copyright Misuse
In light of the tremendous costs associated with research and development of increasingly complex computing equipment and the restrictive agreements that usually accompany its sale (read: access), courts increasingly rely on the copyright misuse doctrine to temporarily prevent the copyright holder from enforcing its copyright. In 1990, the Fourth Circuit court in Lasercomb America v. Reynolds found that a license agreement under which the plaintiff licensed software violated the public policy behind its copyright because it attempted to suppress competition in the same software business. A non-compete clause prohibited licensees from developing a competing version of the software for a period of 99 years. This prevented any attempt to "independently implement the ideas which [the software] expresses. Thus, the "misuse arises from Lasercomb's attempt to use its copyright in a particular expression . . . to control competition in an area outside the copyright. As a result, Lasercomb was in effect barred from asserting a claim of copyright infringement. In most cases, courts use copyright misuse to balance the public policy dichotomy: copyright protection versus competition. Looked at another way, “copyright misuse would appear to sanction at least some infringement as a necessary measure of self-help.”
Digital Millennium Copyright Act
Realizing the failure of some courts to adequately conduct this balancing act, Congress enacted the Digital Millennium Copyright Act which may give copyright holders reason to breath easier. Ostensibly enacted to promote competition and interoperability among computer components, the DMCA prohibits the circumvention of "a technological measure that effectively controls access" to computer software, allowing authors more authority to control access to works above and beyond traditional limitations. However, the DMCA provides a reverse engineering exception which distinguishes "lawful" acts of infringement to gain access to ideas from acts designed merely to appropriate expressions. But, this new provision grants the exception only to those who have a lawful right to use a copy of the software.
A Right to Compete?
In 1999, the Fifth Circuit court in Alcatel USA v. DGI Technologies found that although DGI had “clearly infringed [Alcatel’s] exclusive right to reproduce its software” when DGI in effect stole Alcatel’s software and reverse engineered it in order to develop a competing product, Alcatel misused its copyright through its license agreement that prohibited licensees from ‘using’ the software with a competing hardware product. In this case, a right to compete prevailed.