Computer Associates International Inc. v. Altai, Inc.

Computer Associates International Inc. v. Altai, Inc.

982 F.2d 693; 1992

Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]1Name of the parties: Computer Associates International Inc. (CA) Altai

Judges: ALTIMARI, MAHONEY and WALKER, Circuit Judges.

Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org] Background of the case

CA is a Delaware corporation, with its principal place of business in Garden City, New York.

Altai is a Texas corporation, doing business primarily in Arlington, Texas. Both companies are in the computer software industry--designing, developing and marketing various types of computer programs.

Computer Associates (CA) created a job scheduling program called CA-SCHEDULER designed for IBM mainframe computers which sorts, runs, and controls the various tasks given to a computer.

CA-SCHEDULER contains a sub-program entitled ADAPTER, also developed by CA.

The IBM System 370 family of computers, for which CA-SCHEDULER was created, is, depending upon the computer's size, designed to contain one of three operating systems: DOS/VSE, MVS, or CMS.

Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]Facts of the case

1982: Altai began marketing its own job scheduling program entitled ZEKE. The original version of ZEKE was designed to run with a VSE operating system.

1983: Altai decided to rewrite ZEKE so that it could run in conjunction with an MVS Operating system.

At that time, James William is an employee of Altai and and Arney is a computer programmer who worked for CA and both had been co-workers in CA for sometime before William left CA to work for Altais predecessor.

Williams wanted to recruit Arney to assist Altai in designing the MVS version of ZEKE and was aware of both the CA- SCHEDULER and ADAPTER Programs but he had never seen the codes of either program.

While working for CA, Arney helped in improving the VSE version of ADAPTER and was permitted to take copy of ADAPTERS source code.

1984: Arney left for CA to work for Altai, at that time only he took the copies of the source code with him for both VSE and MVS versions of ADAPTER.

After that, William created VSE version of ZEKE, thought that approx 30% of his original program would have to be modified and decided to name this new component program OSCAR.

Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]Facts ContdIn 3 months, Arney successfully completed the OSCAR project. When finally settled, he had copied approx 30% of OSCARS code from CAS ADAPTER program.

1988: CA learned that Altais may have appropriated parts of ADAPTER. After confirming, CA secured copyrights on its 2.1 & 7.0 versions of CA- SCHEDULER.

Later, William started rewrite the OSCAR AND Arney was excluded from the process, and his copy of the ADAPTER code was locked away.

William put eight other programmers on the project, none of whom had been involved in any way in the development of OSCAR 3.4.

The rewrite project was finished in 1989 and the resulting program was entitled as OSCAR 3.5. Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]Issues

Whether OSCAR 3.5 have substantial similarity to CAS ADAPTER or not?

To what extent the non-literal elements are protected by the Copyright Law? Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]Contentions of CA

CA contends that the District Court applied an erroneous method for determining whether there exists substantial similarity between computer programs or not?

It also contends that District Court erred in determining that OSCAR 3.5 did not infringe the copyrights held on the different versions of its CA- SCHEDULER program.

Further, it asserts that test applied by the District Court failed to account sufficiently for a computer programs non-literal elements.

It alleged that Altai misappropriated CAs trade secrets by incorporating into ZEKE.

CA argues that, despite Altais rewrite of the OSCAR code, the resulting program remained substantially similar to the structure of its ADAPTER program. Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]Contention of AltaiAltai argued that S.301 of the Copyright Act preempted CAs state law cause of action. Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]Holding of the CourtThe court re-examined the District Courts process and found no significant fault with it. After taking out all the functional elements from the public domain, only a few lists and macros in OSCAR 3.5 were similar to ADAPTER and their impact on the program was not large enough to declare copyright infringement.

The court found that similarity in services required by the operating system was due to the nature of the operating system, thus it was not protected by the copyright.

Similarly, the flow charts were found to be an element dictated by the external factors are also not protectable by the copyright.

The court applied its new AFC (Abstraction Filtration Comparison) Test to the two programs and held that non- literal elements of Altais program were not substantially similar to the program copyrighted by the CA. So, Infringement was not found.

The court determined that the allegation of misappropriation was based on Altais use of the infringing material, therefore copyright infringement claim preempted the misappropriation claim according to S. 301. Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]Holding contdThe court found that the extra elements differentiate the trade secret misappropriation claim from the copyright infringement claim. The court vacated the district court's preemption ruling and remanded the case back to the district court.

Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]AFC TestIn determining whether copyright infringement existed, the Court took this opportunity to introduce a test, the Abstraction-Filtration-Comparison (AFC) test. The AFC test begins by breaking down the copyrighted software into its structural parts ("abstraction"). The portions in the public domain, incorporated ideas, and expression necessary to those ideas are filtered out ("filtration"). Finally, the court compares the residue of remaining creative expression to see if the protected elements are substantially similar to the allegedly infringing software ("comparison").

Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]

Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]

Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]THANK YOU Nisha Sharma, LL.M., National Law University Jodhpur [www.lawlex.org]