X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The meaning of the term “owner” in a federal law that provides an exception to copyright protection for computer programs is not limited to the title holder, the 2nd U.S. Circuit Court of Appeals has ruled. Clarifying an issue that has split at least two courts in the circuit, the panel said that formal title is “not an absolute prerequisite,” for an alleged infringer to assert an affirmative defense under 17 U.S.C. �117 (a). The statute provides an affirmative defense against copyright infringement for anyone who owns a physical copy of a computer program, makes an adaptation “as an essential step in the utilization of the computer program in conjunction with a machine,” and uses it “in no other manner.” In Krause v. Titleserv Inc., 03-9303, William Krause alleged infringement by Titleserv on eight software programs he designed for the company between 1986 and 1996. Krause had left executable versions of the software programs on Titleserv’s file servers when he terminated his relationship with the company in 1996, but he “locked” them with a command that prevented the executable versions from being converted back into source code. He told Titleserv it could continue to use the versions as they existed but insisted the company had no right to modify the source code. Nonetheless, Titleserv managed to unlock the versions and make several modifications, including cleaning up the source code by formatting it, fixing bugs, adding new customers to the lists and changing customer addresses. All of these measures, the company insisted, were taken to keep the system functioning until it could be replaced. Based on the recommendation of Magistrate Judge William Wall, Eastern District Judge Thomas Platt granted summary judgment for Titleserv. On the appeal, Krause contended that Congress’ decision to use the word “owner” in the statute instead of the term “rightful possessor” showed that Congress wanted to have the affirmative defense available only to title owners. However, while that interpretation has been accepted by one court in the Eastern District, 2nd Circuit Judges Pierre Leval and Robert Katzmann disagreed. Krause claimed Titleserv possessed the copies as a licensee pursuant to an oral agreement. Titleserv countered that it owned the copies because it paid Krause to create them and had a clear right to use them permanently. Judge Leval said the legislative history of �117 is “sparse and provides limited guidance” on when and how the possessor of a copy of a software program is no longer considered its owner. But in the court’s view, he said, Congress could not have intended to limit protection to the holders of formal title. Had the broad term “rightful possessor” been used, he said, “the authority granted by the statute would benefit a messenger delivering a program, a bailee, or countless others in lawful possession of a copy.” “Congress easily could have intended to reject so broad a category of beneficiaries without intending a narrow, formalistic definition of ownership dependent on title,” he said. ‘INCIDENTS OF OWNERSHIP’ From a policy perspective, Leval said, requiring formal title would undermine some of the uniformity achieved by the Copyright Act because the question of whether a party owns formal title is usually a question of state law. “Second, it seems anomalous for a user whose degree of ownership of a copy is so complete that he may lawfully use it and keep it forever, or if so disposed, throw it in the trash, to be nonetheless unauthorized to fix it when it develops a bug, or to make an archival copy as backup security,” Leval said. Instead of requiring formal title, he said, courts should “inquire into whether the party exercises sufficient incidents of ownership over a copy of the program to be sensibly considered the owner of the copy for purposes of �117(a).” In Titleserv’s case, he said, that standard has been met and, although Krause claimed he told Titleserv it had no right to modify the programs after he left the company, “Titleserv’s entitlement to do what it did arose as a matter of law and Krause’s expression of his opinion that it had no entitlement to do these things has no significance whatsoever.” The modifications made by Titleserv were also “essential” to the company’s continued use of the software, he said. The court rejected a definition argued by Krause that would have the term “essential” apply only to a modification without which the program could not function. And as to the issue of whether the modifications were made “in conjunction with a machine,” Leval said, “we see no reason why the modest alterations to Titleserv’s copies should not qualify.” The third member of the circuit’s panel who heard oral arguments was Judge Ellsworth A. Van Graafeiland, who died in November 2004. Eugene D. Berman and Scott J. Fine of Fine, Fine & Berman in Melville represented Krause. Ronald J. Rosenberg and Kenneth E. Aneser, of Rosenberg Calica & Birney in Garden City, represented Titleserv.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.