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Copyrights and software development: Interoperability doesn’t make a work derivative
The U.S. Court of Appeals for the Ninth Circuit has weighed in on the latest battle in what it has described as “a pitched copyright war” that now has stretched out over a decade. In a significant ruling for both providers of interoperable software and the owners of the copyrights on the software with which such software interoperates, the court ultimately prolonged the conflict.
The battleground
Oracle USA licenses customized enterprise software and sells its licensees maintenance contracts. The maintenance includes software updates.
Oracle’s licenses permit its licensees to maintain their software and make development environments for themselves. Some licensees, though, outsource the maintenance to third parties, including Oracle itself and Rimini Street.
Rimini offers troubleshooting support and software updates. When troubleshooting Oracle software or creating updates for its clients, it uses Oracle’s products and creates files that only work with Oracle’s products.
Oracle sued Rimini for copyright infringement in 2010. Rimini was found to have infringed Oracle’s copyrights by engaging in “cross-use” and creating copies of Oracle’s materials on Rimini’s computer systems.
Rimini subsequently changed its business model and sought a declaratory judgment that its revised process didn’t infringe Oracle’s copyright. Oracle countersued for infringement, among other claims. (See “False advertising findings fall, too — mostly,” below.)
The trial court found that files and updates that Rimini developed during the new process were infringing derivative works. It relied on the fact that they were extensions to, and modifications of, Oracle’s copyrighted software. They interacted and were usable only with Oracle software. The court issued a permanent injunction against Rimini’s infringement, and Rimini appealed to the Ninth Circuit.
The need for more support
A copyright owner has the exclusive right to prohibit or authorize the preparation of derivative works. The Copyright Act defines a “derivative work” as “a work based upon one or more preexisting works.”
While this definition is broad, it’s followed by several examples of derivative works “based upon” preexisting work, including translations, movie adaptations and reproductions. The Ninth Circuit thus reasoned that being “based upon” another work must require the type of copying involved in the examples — and the examples all substantially incorporate the underlying work.
According to the appellate court, though, the trial court essentially adopted an “interoperability” test for derivative works. In the trial court’s view, if a product can only interoperate with a preexisting copyrighted work, the product must be derivative of the work. The appellate court disagreed, finding that neither the Copyright Act nor its own previous rulings supported such a test.
Mere interoperability alone, the court said, isn’t enough to render a work derivative. Whether a work is interoperable with another work doesn’t indicate whether it substantially incorporates the other work, either literally (for example, by copying copyrighted code) or nonliterally (for instance, by copying the “total concept and feel” of a preexisting work).
Even exclusive interoperability doesn’t make a work derivative if the work doesn’t substantially incorporate the preexisting work’s copyrighted material. Simply being an extension or modification of a copyrighted work without incorporation is insufficient to deem a work derivative.
Although the trial court concluded that a limited number of Rimini files copied Oracle’s code, it made no finding that Rimini incorporated nonliteral copyrighted material in its updates or programs for Oracle software. It instead ruled that interoperability was enough to render Rimini’s works derivative — even if they didn’t contain any of Oracle’s copyrighted code.
The appellate court therefore vacated the finding that Rimini created infringing derivative works based solely on the interoperability with Oracle’s programs. It sent the case back to the trial court to apply the correct legal standard.
The next skirmish
Because the trial court applied the wrong legal standard in determining whether Rimini created derivative works, the Ninth Circuit didn’t consider Rimini’s alternative argument that Oracle’s licensing agreements nonetheless authorized any derivative work. It remains to be seen whether Rimini’s works will be found to constitute derivative works and, if so, whether they were authorized.
Sidebar: False advertising findings fall, too — mostly
The U.S. Court of Appeals for the Ninth Circuit in Oracle (see main article) also rejected most of the trial court’s findings regarding Oracle’s allegations that security-related statements by Rimini constituted false advertising under trademark law’s Lanham Act. It found that statements that customers can be more secure with Rimini’s services than Oracle’s were mere “puffery,” or “exaggerated advertising, blustering, and boasting upon which no reasonable buyer would rely.”
The court also found that statements about the need for software patching, while bordering on falsehood, weren’t actionable. The statements about what customers “need” or “value” resembled the kind of “generalized boasting” that reasonable buyers wouldn’t rely on — especially Oracle’s customers, which are some of the most sophisticated companies in the world and take security seriously.
The appellate court did, however, uphold the trial court’s “unrefuted finding” that Rimini’s offer of “holistic security” solutions for Oracle software was false. It interpreted that term to refer to multilayered security protection, which Rimini doesn’t offer.
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