Source code is the English language version that is used to write software programs. The source code is then processed through a translator which converts it to machine language or object code. The object code is used to execute the program on a computer. Arguably the most well-known case in the area of the copyright infringement of source code is the Ninth Circuit's 2016 decision in Antonick v. Electronic Arts, 841 F.3d 1062. In Antonick, the court held that when a developer could not produce evidence that his source code was substantially similar to the source code used by a video game manufacturer, the developer could not seek contract damages for derivative works arising from copyright infringement. Antonick is partially a procedural holding, as plaintiff's failure to introduce the source code precluded the jury from undertaking a “substantial similarly” analysis, the governing standard for copyright infringement claims.

Although many developers license source code under general public licenses, allegations of copyright infringement of the developer's source code are increasingly prevalent. Litigation confronting the often granular distinction between copyright infringement of the finished software and the underlying source code occurs with increasing frequency as well. A recent example is Vickerman Co. v. Kushner, No. 17-cv-1771, 2018 WL 1399311 (D. Minn. March 20, 2018). In Vickerman, a developer of custom-made software moved to enjoin his customer, on grounds of purported copyright infringement, from continued use of the software and underlying source code once the business relationship ended. As discussed in greater detail below, the court partially granted and partially denied the injunction, while laying out the difference between injunctive relief as applied to the software itself and the core source code.

Background

Beginning in 2004 and then roughly yearly until 2017, defendant/counterclaimant Alexander Kushner, through a controlled entity, wrote software (the Software) for plaintiff/counter-defendant Vickerman Company, a supplier of ornamental products. The parties' relationship ended in 2017. As Vickerman considered the Software “absolutely vital” to its operations, it sued Kushner in state court alleging, inter alia, breach of contract and breach of an implied license for an alleged failure to provide updates to the Software nor access to its source code.

Kushner removed to federal court and counterclaimed, alleging copyright infringement of the Software and moved to preliminarily enjoin Vickerman from the alleged infringement. Kushner disputed Vickerman's claim that an implied license (nor any other contract) granted Vickerman continuing access to the Software and its underlying source code. Kushner further alleged that, as the Software remained in Vickerman's possession, the latter had been editing and copying the Software.

Legal Conclusion and Analysis

The standard for injunctive relief for copyright infringement requires Kushner to show a “fair chance” of prevailing on his claim. See Richland/Wilkin Jt. Powers Auth. v. U.S. Army Corps. of Eng'rs, 826 F.3d 1030 (8th Cir. 2016). Vickerman could have infringed on Kushner's copyright in the event it had prepared derivative works based on the Software. Kushner could also license otherwise infringing activities.

The court held that Kushner did not have a fair chance to defeat Vickerman's implied license defense to the Software. An implied license formed because: (1) Vickerman compensated Kushner to write and adjust the Software for its website; and (2) Kushner wrote the website's source code and adapted it for Vickerman's use. Accordingly, preventing Vickerman from use of the Software installed and assembled on its own machines would deny its use rights obtained subsequent to paying Kushner. The court denied Kushner's motion for an injunction concerning Vickerman's use of the Software.

Kushner fared better in his attempt to enjoin Vickerman from use of the source code. Kushner had a fair chance of success in this “more limited” injunction because he could sufficiently allege that Vickerman had threatened derivative infringement. The court credited Kushner's arguments that he would be fairly likely to show that Vickerman threatened derivative infringement and that Vickerman's license defense would fail concerning this type of infringement.

In a classic case of “don't ever put anything problematic into an email,” the court used as evidence of Vickerman's threatened infringement two emails from Vickerman's programmers. One email involved a programmer proposing to add a “watcher to the printing process” while “looking at the code” from a program called Epick that Kushner had created for Vickerman. Another more damningly involved a Vickerman programmer suggesting that he “go into the [source code of another Kushner-created piece of Software] and replac[e] something.” Consequently, on “the preliminary record,” it is fairly likely that Vickerman possessed some of the Software's source code and stood at the cusp of creating a derivative work therefrom.

Second, the court rejected Vickerman's implied license defense under FRCP 8(c)(1). Kushner retained the Software largely on his computers and Vickerman's payments to Kushner included remuneration for “writing, monitoring, maintaining and troubleshooting” the Software. Unlicensed updating activities would infringe Kushner's copyright.

Finally, the court held that the other three factors under Eighth Circuit law supported the injunction as to the source code. First, Kushner's theory of the copyright infringement accorded with the presumption of irreparable harm. That Kushner did not move for the injunction until roughly two-months after the discovery of the inculpatory emails did not rebut the presumption in favor of irreparable harm. See also Novus Franchising v. Dawson, 725 F.3d 885 (8th Cir. 2013) (rebutting presumption when movant failed to seek relief for 17 months). Second, the injunction was narrowly tailored inasmuch as it protected Kushner's sole interest in the source code and Vickerman's derision of the Software as obsolete belied its claim that the Software was “absolutely vital” to its continued viability. In any event, Vickerman retained the right to use the Software installed on its machines.

Finally, the injunction served the public interest in protecting copyright holders. The harms borne by the parties, labeled as “small, private actors” that participated in a competitive marketplace, could not constitute a countervailing public interest.

The court denied Kushner's motion as to the Software but granted it as to the source code. For other recent decisions on topic, see also DataCarrier S.A. v. WOCCU Servs. Grp., 2018 WL 1514456 (W.D. Wisc. March 27, 2018) (defendant did not infringe source code that was not a protectable expression of the underlying software); Ford Motor Co. v. Launch Tech Co. Ltd., 2018 WL 1089276 (E.D. Mich. Feb. 26, 2018) (evidence of theft of licensor's protected intellectual property can be obtained through review of licensee's source code; licensee's motion to dismiss denied); Epic Tech v. Lara, 2017 WL 5903331 (S.D. Tex. Nov. 29, 2017) (granting motion for default judgment and permanent injunction for willful infringement of game-promotion software in part because the extent of the distribution of the software over three states could not be reasonably quantified in a dollar amount).

Richard Raysman is a partner at Holland & Knight and Peter Brown is the principal at Peter Brown & Associates. They are co-authors of “Computer Law: Drafting and Negotiating Forms and Agreements” (Law Journal Press).