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Don’t Copy That - Software Code Arrangement is Protectable
Although an individual musical note isn’t copyrightable, an arrangement of notes may be. Does the same reasoning apply to source code for software? The U.S. Court of Appeals for the Eleventh Circuit recently weighed in on this very question.
Source of the dispute
Compulife created software that used its proprietary and encrypted database of insurance rates to generate life insurance quotes. It works by looking up information in the database to compile a quote.
The software has different blocks of code that correspond to different areas of the database. The major code components (for example, state, birth month, smoking status and insurance type) are arranged in a specific order. The software must be arranged in exactly that order for it to work with the database.
While some of the insurance rates the software relies on are independently available, the entire compilation isn’t, and it includes some rates that aren’t publicly available. Compulife both licenses its software to customers and has an online version that public users can access to generate quotes.
A former insurance agent, who was permanently barred from the profession, created several websites that used the software without a license. He accessed the software by misleading Compulife into thinking he worked with someone with a license. His son allowed him to conduct these insurance activities with his agent number.
The former agent and a colleague who owned one of the websites directed an employee to supervise a “scraping attack” of Compulife’s website to acquire many millions of quotes generated by the site. They then used the quotes for their own websites, causing Compulife’s sales to decline. (See “Scraping public website constitutes trade secret theft,” at XXX for more on scraping.)
Compulife sued the former agent, his colleague, his son and the employee for copyright infringement. After a few rounds of litigation, the trial court ruled that the defendants didn’t infringe the software, finding that most of the code wasn’t protectable. Compulife appealed.
Policy of protection
There was no question that the defendants, as a factual matter, copied some of the software. So the appeal turned on so-called “legal copying.” This occurs when the elements of the copyrighted work that have been copied are protected expression and so important to the work that the copying is actionable.
The trial court found no legal copying. According to the appellate court, though, the trial court came to that conclusion after slightly erring in its application of the relevant standard, known as the abstraction-filtration-comparison test.
Under the test, a court must break down the allegedly infringed program into its constituent structural parts. It then should sift out all nonprotectable material and compare the protected material with the copycat work. When evaluating the literal elements of a program, such as source code, a plaintiff must establish only a “sufficient similarity” between the two works. The appellate court found that the trial court erred in the first step, abstraction.
Courts have generally held that the arrangement of elements in a program may be protectable. Compulife argued that the arrangement of its various components of source code constituted a constituent part of its program that was creative, and therefore protectable. The court agreed.
The trial court, it said, should have abstracted the arrangement as something to be analyzed in the filtration step. Although it did consider the selection and arrangement of code to some degree, it never identified the entire arrangement of variables in the code as a component of the code. For example, it evaluated the arrangement of the birth month, birthday and birth year variables before filtering, but not the arrangement of all the variables together.
Pending claim
Ultimately, the appeals court found that Compulife’s code arrangement may be protectable — which would merit filtering. But it drew no conclusion on whether it was protectable. Instead, it sent the case back to the trial court to determine the matter.
Sidebar: Scraping public website constitutes trade secret theft
In Compulife (see main article), the trial court ruled the defendants misappropriated the plaintiff’s trade secret when they obtained part of the plaintiff’s database by “scraping” its website to extract data. The U.S. Court of Appeals for the Eleventh Circuit affirmed this ruling. Notably, the appeals court acknowledged that scraping and related technologies like crawling may be “perfectly legitimate” — but actions can be improper for trade secret purposes even if they’re independently lawful.
Here, though, the defendants didn’t just take screenshots of a publicly available site. Rather, they copied the order of Compulife’s copyrighted code and used it to conduct a scraping attack that acquired millions of variable-dependent insurance quotes, “far more than a human could ever physically obtain.”
The court found this “deceptive behavior” resembled the unlawful acquisition of a trade secret through surreptitious aerial photography. And, because the defendants took so much of the database that they posed a competitive threat to Compulife, the appellate court affirmed the trial court’s misappropriation finding.
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