High court won't hear programmer's appeal

The U.S. Supreme Court declined to hear an appeal by a programmer who sued his former employer for changing his programs' source code.

William Krause of New York first charged in 1996 that Titleserv, a title insurance firm, had committed copyright infringement when it altered eight programs he had written for the company over a decade of work.

Krause left the programs, which were designed to manage client information, on Titleserv's servers when he quit working for the company. He placed locks on the code and stipulated that Titleserv could run--but not alter--the programs, prompting a lawsuit from the company, which claimed it needed to make code tweaks in order to fix bugs and to perform other "routine" functions. Company employees ultimately picked the locks and made the changes they said they needed.

A federal trial court ruled in favor of Titleserv, and an appeals court upheld that judgment last year (click for PDF of opinion).

In both cases, the judges found that Titleserv was not at fault, because under U.S. copyright law, it's legal for people to make changes to software, provided that they own a physical copy of the program, the changes constitute "an essential step in the utilization" of the program, and the software is used "in no other manner."

The Supreme Court on Monday denied Krause's appeal without comment. The high court did not, however, make an anticipated announcement as to whether it will hear a patent infringement appeal in the case of eBay v. MercExchange.

The auction giant has asked the court to consider whether companies held liable in patent infringement cases should be subject to injunctions while their cases are on appeal.

[arluthier]

EULA's Wrong?

So I guess as long as I own a legal copy of Windows XP Pro... then item 5 of their EULA does not apply to me. Well that is as long as I am just 'trying to make it work correctly'.

5. LIMITATION ON REVERSE ENGINEERING,
DECOMPILATION, AND DISASSEMBLY. You may
not reverse engineer, decompile, or
disassemble the Product, except and only
to the extent that it is expressly
permitted by applicable law notwithstanding
this limitation.

Titleserv owned the code in the first place

If William Krause was working for Titleserv at the time of the software development (which is what I gathered from the article), why are they even arguing the legality of the copyright? Titleserv, by paying Mr. Krause's salary, owned the work he produced... unless Mr. Krause had a contract with Titleserv before he developed the programs stipulating that he would retain copyright to the source.

[SqlserverCode]

Another attempt to make money

Well people will try all kinds of things, for example sue McDonalds because they are fat. This guy got paid for the work he did and should be quiet. Next monday the gardener will sue me because I moved the flowers in my garden thus messed up his precious work

http://sqlservercode.blogspot.com/

[aabcdefghij987654321]

It's a complex situation

Titleserve contracted Krause to develop this code to meet their own needs but allowed Krause to own the code as well. I've worked contracts like this before and my understanding would be that the plan was Titleserv negotiated a lower development cost on the idea that Krause could resell this same software to other companies (which apparently never happened).

The description of the code makes it sound like pretty lousy code too. It's obvious that Krause made it so that adding customers and other normal business functions required recompiling the code (which explains why he never sold it to another company).

Based on my own experiences with contracts like this (from both ends of the contract) I would say the Judge made a good call and the Supreme Court recognized that good call and left it alone.

[m0u5y]

courts

sometimes I think that they invented courts to avoid having to practice common sense.

[judge_mental]

Two Bad Alternatives (human beings)

This decision and the decision it relies upon are clearly
erroneous, but at the same time it is easy to see how they
arrived at their decisions.

The basic problem happens when a bad actor makes a good
legal argument. The judge does not want to reward the bad
behavior, so they invent something that seems to make the
particular situation turn out appropriately. Unfortunately many
of these inventions created to right a particular wrong develop
into monsters.

In this case we see a programmer who the judges have clearly
decided was over-reaching and punishing his former customer
(although I do not believe the recompile claim -- that sounds
like the defense over-reaching). This may well have been a
correct conclusion and the plaintiff/programmer could be a
terrible person.

The problem is that their solution is incorrect and has
implications that they were unable to see. By accepting the
notion that software licensees have the right to decompile,
modify, and include works that they have licensed in new works
that they create, the 2nd Circuit has opened a Pandora's box.

The provision that they base this decision on was created with
the sole purpose of ensuring that the copies made during the
process of running software (eg, copies to ram, hard disk, etc.)
did not constitute infringement. This is a common sense
provision that was needed to make people comfortable at the
time. This context provides an appropriate basis for
understanding the terms 'machine' and 'essential'. Airplanes and
automobiles have nothing to do with it.

The CONTU report that the court cites in their opinion suggests
that users be granted the right to translate existing source code
into another language looks like wishful thinking on the part of
banks and other significant lobbyists that did not make it into
the law. In fact such an interpretation is in conflict with the every
principle of copyright law that comes to mind with the exception
of political expedience.

All of this aside the better solution would have been for the
court to find a way to reach the bad actor without claiming that
licensors have rights that are not in the license agreement. This
may be because the attorneys did not raise the appropriate
issues at trial. In some respects at least we have avoided a
supreme court opinion that is equally problematic.

Yuck! Politicians and jurists creating ad hoc property law is just a
slimey awful mess. The power in the concept of property is that
it is something clear that people understand (mine/not mine
starts pretty early). The power of contract is that it is as flexible
as human imagination.

Can't we create a requirement that government be restricted in
how it modifies these important concepts? Oh yeah... Something
about that in the constitution isn't there? No after the fact
modification of contracts sounds familiar. And isn't the
government supposed to provide compensation when it takes
property? Hmmm...

In the meantime proximity to this decision and the process that
created it has made me feel unclean. I'm going to wash my
hands...

[Sentinel]

Flawed laws, flawed arguments.

I think we are lacking information here. Did this guy work for the company? That is: was he on their payroll? Did he get up every morning and go to work in his office at the company headquarters? Or was he casually contracted to make a program for a specific need? If he did work for the company (in the sense of going to his office at the Company HQ), then I don't think he has much to allege in a court of law, especially if it is a private company. What you produce for a company is the property of that company, no matter who wrote it. The company might have done good, if they had let him know about this before hiring him (and maybe they did).

There is an interesting paragraph in this story:"...it's legal for people to make changes to software, provided that they own a physical copy of the program, the changes constitute "an essential step in the utilization" of the program, and the software is used "in no other manner."

This must be a typo, an error the writer of the story made. It just can't be right. If I own a physical copy of Windows, the law lets me modify it? Why then, doesn't Microsoft open up Windows and let open source programmers fix all the bugs in Windows. That would be "an essential step in the utilization" of Windows. It also makes Microsoft unable to protest if their code is leaked on the Web if it is used to fix their OS. Heck, I should be able to modify all the programs installed on my computer, just because I have physical copies of them. It maked EULAs invalid and illegal.

But we all know that EULAs are defended by the courts... So, this paragraph HAS to be a typo.

[rhyssleary]

What about DCMA?

So far, after reading the article and the court ruling (PDF copy), this is my understanding of what happened:

Mr. Krause
* Consultant (dba Special-T software)
* Copyright owner
* Terms of license allowed normal usage, no modification of code allowed
* Initiated termination of consulting relationship

Titleserv
* License holder of copyrighted work
* Failed attempt to acquire copyright ownership
* Modified copyrighted code
* Successfully defends itself against copyright infringement via 17 USC SS 117(A)(1)

The Case
* Not about work for hire
* Not about copyright ownership
* Clarifies what copyright infringement is

Conclusions

It does appear that by this ruling, it would be permissible to license a program and create derivative works from it.

I wonder how this jives with copyright law?

Doesn't this ruling also fly in the face of the DCMA (which I think is unconstitutional BTW if anyone cares)?

Ooh, let the sparks fly!

I predict the big boys will tear this one down.

[newerawisp]

THE COMPANY OWNS THE PROGRAM

It's not the laws that are flawed. It's the courts and attorneys that are flawed. The programmer was paid for his time while he was in the employment of the Company. He did not own any programs, he developed while in the employment of the Company. The programs were owned by the Company.

If the programmer was diligent he should have loaded the programs so that the source code was not downloadable or atleast not with that much ease. The source code of Microsoft software is not availbe so esily although the hackers can download anything with comparative ease.

In any case if the infrastructure was server oriented as discussed at
http://www.newerawisp.blogspot.com/
the resale value would not be that much. People would have to be careful at what price they let the other party gain possession of the software.

Even with the present infrastructure the courts seem to be saying that if you have the code do what you like with it.