Computer Associates International, Inc. v. Altai,Inc.U.S. Court of Appeals, Second CircuitJune 22, 1992982 F.2d 693, 23 USPQ2d 1241[Editor's note: This case is discussed in Legal Protection of Digital Information in:Chapter 2, Section III. (Beyond Mere Copying of a Computer Program),Chapter 2, Section III.A.2. (Criticism Of Whelan),Chapter 2, Section III.B. (Abstraction, Filtration, Comparison),Chapter 2, Section IV.A. (A Suggested Approach),Chapter 2, Section V. (Reverse Engineering Of Software), andChapter 2, Section VI.D.1. (Using a Clean Room).]Walker, J.In recent years, the growth of computer science has spawned a number of challenging legal questions,particularly in the field of copyright law. As scientific knowledge advances, courts endeavor to keep pace,and sometimes – as in the area of computer technology – they are required to venture into less than familiarwaters. This is not a new development, though. “From its beginning, the law of copyright has developed inresponse to significant changes in technology.” Sony Corp. v. Universal City Studios, Inc.,464 U.S. 417, 430[220 USPQ 665] (1984).Article I, section 8 of the Constitution authorizes Congress “[t]o promote the Progress of Science anduseful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respectiveWritings and Discoveries.” The Supreme Court has stated that “[t]he economic philosophy behind theclause . . . is the conviction that encouragement of individual effort by personal gain is the best way toadvance public welfare.” Mazer v. Stein, 347 U.S. 201, 219 [100 USPQ 325] (1954). The author’s benefit,however, is clearly a “secondary” consideration. SeeUnited States v. Paramount Pictures, Inc., 334 U.S. 131,158 [77 USPQ 243] (1948). “[T]he ultimate aim is, by this incentive, to stimulate artistic creativity for thegeneral public good.” Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 [186 USPQ 65] (1975).Thus, the copyright law seeks to establish a delicate equilibrium. On the one hand, it affords protectionto authors as an incentive to create, and, on the other, it must appropriately limit the extent of that protectionso as to avoid the effects of monopolistic stagnation. In applying the federal act to new types of cases, courtsmust always keep this symmetry in mind. Id .Among other things, this case deals with the challenging question of whether and to what extent the“non-literal” aspects of a computer program, that is, those aspects that are not reduced to a written code, areprotected by copyright. While a few other courts have already grappled with this issue, this case is one offirst impression in this circuit. As we shall discuss, we find the results <23 USPQ2d 1245> reached by othercourts to be less than satisfactory. Drawing upon long-standing doctrines of copyright law, we take anapproach that we think better addresses the practical difficulties embedded in these types of cases. In sodoing, we have kept in mind the necessary balance between creative incentive and industrial competition.This appeal comes to us from the United States District Court for the Eastern District of New York, theHonorable George C. Pratt, Circuit Judge, sitting by designation. By Memorandum and Order entered August12, 1991, Judge Pratt found that defendant Altai, Inc.’s (“Altai”), OSCAR 3.4 computer program hadinfringed plaintiff Computer Associates’ (“CA”), copyrighted computer program entitled CA-SCHEDULER.Accordingly, the district court awarded CA $364,444 in actual damages and apportioned profits. Altai has<982 F.2d 697> abandoned its appeal from this award. With respect to CA’s second claim for copyrightinfringement, Judge Pratt found that Altai’s OSCAR 3.5 program was not substantially similar to a portion ofCA-SCHEDULER called ADAPTER, and thus denied relief. Finally, the district court concluded that CA’sPage1of22Computer Associates v. Altai10/2/2007http://digital-law-online.info/cases/23PQ2D1241.htmstate law tradesecret misappropriation claim against Altai had been preempted by the federal copyrightact. CA appealed from these findings.Because we are in full agreement with Judge Pratt’s decision and in substantial agreement with hiscareful reasoning, we affirm the judgment of the district court in its entirety.BackgroundWe assume familiarity with the facts set forth in the district court’s comprehensive and scholarlyopinion. See Computer Associates Int’l, Inc. v. Altai, Inc., 775 F.Supp.544, 549-55 [20 USPQ2d 1641](E.D.N.Y. 1991). Thus, we summarize only those facts necessary to resolve this appeal.I. Computer Program DesignCertain elementary facts concerning the nature of computer programs are vital to the followingdiscussion. The Copyright Act defines a computer program as “a set of statements or instructions to be useddirectly or indirectly in a computer in order to bring about a certain result.” 17 U.S.C. Section 101 . Inwriting these directions, the programmer works “from the general to the specific.” Whelan Associates, Inc. v.Jaslow Dental Laboratory, Inc.,797 F.2d 1222, 1229 [230 USPQ 481] (3d Cir. 1986), cert. denied,479 U.S.1031 (1987). See generally, Steven R. Englund, Note,Idea, Process, or Protected Expression?: Determiningthe Scope of Copyright Protection of the Structure of Computer Programs, 88 MICH. L. REV. 866, 867-73(1990) (hereinafter “Englund”); Peter S. Menell, An Analysis of the Scope of Copyright Protection forApplication Programs,41 STAN. L. REV. 1045, 1051-57 (1989) (hereinafter “Menell”); Mark T.Kretschmer, Note, Copyright Protection For Software Architecture: Just Say No!, 1988 COLUM. BUS. L.REV. 823, 824-27 (1988) (hereinafter “Kretschmer”); Peter G. Spivack, Comment, Does Form FollowFunction? The Idea/Expression Dichotomy In Copyright Protection of Computer Software,35 U.C.L.A. L.REV. 723, 729-31 (1988) (hereinafter “Spivack”).The first step in this procedure is to identify a program’s ultimate function or purpose. An example ofsuch an ultimate purpose might be the creation and maintenance of a business ledger. Once this goal has beenachieved, a programmer breaks down or “decomposes” the program’s ultimate function into “simplerconstituent problems or ‘subtasks,’ “ Englund, at 870 , which are also known as subroutines or modules.SeeSpivack, at 729 . In the context of a business ledger program, a module or subroutine might beresponsible for the task of
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