Eleventh Circuit Lays Out the Legal Framework for Proving Copyright Infringement of Computer Code
September 23, 2020
Two software competitors that maintain databases of life insurance quote information for their clients squared off in a South Florida district court over claims of copyright infringement, trade secret misappropriation, false advertising, and anti-hacking violations. The plaintiff, Compulife, alleged that its proprietary data and source code were misappropriated and utilized to power defendants’ life insurance websites that offer quotes to their customers, and that this proprietary data and source code were obtained through false pretenses and espionage. The parties consented to a bench trial before a federal magistrate judge in two consolidated lawsuits covering similar allegations, where the judge ruled for the defendants. Compulife then appealed those rulings to the U.S. Court of Appeals for the Eleventh Circuit. Compulife Software, Inc. v. Newman, No. 18-12004, 2020 U.S. App. LEXIS 16052 (11th Cir. May 20, 2020). While numerous legal issues were examined on appeal, this blog post focuses on the legal framework for proving copyright infringement of computer software code.
To prevail on a copyright infringement claim with respect to computer software code, the plaintiff must prove “(1) ownership of a valid copyright and (2) copying of constituent elements of the work that are original.” Id. at *16. In this case, the copyrights associated with Compulife’s software were undisputed, so the court’s opinion focused on the “copying” allegations. With respect to copying of its code, Compulife had the burden of proving both “factual and legal copying.” See id. Factual copying requires the plaintiff to show that the defendant actually used the copyrighted material. The court ruled that the evidence in this case proved that the defendants had access to Compulife’s code and that there were probative similarities between the competitors’ code. Thus, Compulife established factual copying by the defendants.
The court then moved to the legal copying requirement, which is established when the elements that have been copied are proven protected and significant. See id. at *17. In most cases, proving a “substantial similarity” between the allegedly copied software and the protectable, original elements of the copyrighted software establishes legal copying. See id. Both the qualitative and quantitative significance of the copied work are assessed, but the court must first eliminate the unprotectable elements of the copyrighted work through a process called filtration. See id. at *18. In this process, unprotectable elements, such as elements taken from the public domain or underlying ideas and methods of operation, must be filtered out of the legal analysis because the copying of unprotectable elements is not actionable under copyright law. While the plaintiff carries the ultimate burden of proving factual and legal copying, the burden of proving that elements of the code are unprotectable falls upon the defendant.
Within this framework, the appellate court found numerous errors in the district court’s analysis. First, the magistrate judge did not reach the filtration issue because it placed the burden to prove that all elements of its computer code were protectable on Compulife. Second, the magistrate judge evaluated the significance of the copied work in view of the offending software code rather than in view of copyrighted code. When weighing the significance of the protectable code that was copied, the court must look to Compulife’s code. Ultimately, the U.S. Court of Appeals for the Eleventh Circuit vacated the judgment, remanded, and demanded that the district court filter out the unprotectable elements of Compulife’s copyrighted code before applying the principles discussed above. See id. at *32.
While trade secret claims are popular when a competitor, former employee, or bad actor misappropriates or steals your software, always remember that copyright infringement claims may be available. As a plaintiff, you may not want to leave actionable copyright claims on the table when filing your lawsuit.
The Opinion from the U.S. Court of Appeals for the Eleventh Circuit can be found here – https://media.ca11.uscourts.gov/opinions/pub/files/201812004.pdf.
Dustin Mauck focuses his practice on intellectual property and technology disputes, counseling, and licensing.
RegitzMauck PLLC is an intellectual property boutique based in Dallas, Texas. The firm focuses on providing value-based legal services to cost-conscious clients seeking high quality legal representation in intellectual property and technology matters and disputes.