Apple v. Franklin

Citation

Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 219 U.S.P.Q. (BNA) 113 (3d Cir. 1983) (full-text), cert. dism., 464 U.S. 1033 (1984).

Factual Background

Apple created proprietary software that would only run on Apple computers (Apple II). Franklin developed a computer (ACE 100) to compete with Apple that would run Apple's application software and its operating system. In creating a computer compatible with the Apple II, Franklin's software resembled Apple's to a large degree. The fourteen software programs in suit were in object code stored in read-only memory (ROM).

The National Commission on New Technological Uses of Copyrighted Works ("CONTU") had not yet decided whether object code was to be categorized as a process/idea (which would not be protected by copyright), or as a literary work (that could be protected). There was no clear consensus on how to describe the technology employed by microcomputers.

Trial Court Proceedings

Apple's request for a preliminary injunction for copyright infringement was denied because they failed to show:

1. A reasonable probability of success on the merits;
2. Irreparable injury to the plaintiff that exceeds any injury to the enjoined defendant;
3. The improbability of harm to other interested persons; and,
4. A public interest that would be furthered.

The standard was set forth in Delaware River Port Authority v. Transamerican Trailer Transport, Inc. The court relied on factors 1. and 2. Apple had failed to show likelihood of success on the merits because the issue of whether object code in the form of ROM was copyrightable subject matter had not been resolved by CONTU. Franklin's size was largely its salvation, the court found that the harm of granting a preliminary injunction to Apple would likely bankrupt Franklin, and also due to its size it never posed any substantive threat to Apple, and thereby failed prong 2. of the test.

Appellate Court Proceedings

The Court of Appeals found "abuse" in the lower court and overruled the denial of the injunction as an erroneous application of the law.

Beyond the technical jargon, the Court's task was simplified as it relied on the CONTU Final Report and the 1980 Amendment to 17 U.S.C. §117, which redefining the scope of copyrighted works to include computer software. These developments plainly rejected defendant's contention that application and operating system software were distinct in terms of copyright.

The Court rejected Franklin's claim that under Baker v. Selden, that Apple's code was not copyrightable because the idea was sufficiently merged with the expression. Franklin claimed that the 14 programs could not have been written in any other functional way which did not infringe Apple's specific manifestation, but Apple found other software engineers which had accomplished such a feat. Furthermore, Apple had proof that Franklin directly copied the code (as evidenced by the word "Applesoft" found in Franklin's code).

This Court held that: (1) a computer program, whether in object code or source code, is a “literary work” and is protected from unauthorized copying, whether from its object or source code version; (2) a computer program in object code embedded in ROM chip is an appropriate subject of copyright; (3) computer operating system programs are not per se precluded from copyright protection; and (4) even without a presumption of irreparable harm generally applied in copyright infringement actions, the jeopardy to the copyright holder's investment and competitive position caused by a competitor's wholesale copying of many of the copyright holder's key operating programs would satisfy the requirement of irreparable harm needed to support a preliminary injunction.

Lastly, the Court held that irreparable harm must be presumed in every copyright case.

Therefore, the Court reversed and remanded to the lower court.