Computer Associates International v. Altai, Inc.

982 F.2d 693 (2d Cir. 1992)

Doctrine: For a finding of copyright infringement, the protectable, non-literal elements of one computer
program must be very similar to the same elements in a second computer program.

Facts: Computer Associates International (CAI) designed, developed, and marketed numerous types of
computer programs, including “CA-Scheduler,” a job-scheduling program containing a subprogram named
“Adapter.” Adapter was a wholly integrated component of CA-Scheduler with no capacity for independent
use.

In 1982, Altai, Inc. started to market its own job-scheduling program named “Zeke.” Altai decided to rewrite
Zeke to run in conjunction with a different operating system, and Altai’s president, Williams, approached
Arney, a computer programmer who work for CAI, about working for Altai.

When Arney left CAI to work for Altai, he took copies with him of the source code for 2 versions of Adapter
and used them to design Altai’s new component-program, “Oscar” (Version 3.4). Arney copied approximately
30% of Oscar’s code from CAI’s Adapter program.

When CAI discovered that Altai may have appropriated parts of Adapter, it brought a copyright and trade
secret misappropriation action against Altai. A rewrite of Oscar began, named Oscar 3.5.

The district court awarded plaintiff CAI $364,444 in actual damages and apportioned profits for copyright
infringement regarding Oscar 3.4. However, the court denied relief on CAI’s second claim, finding that Oscar
3.5 was not substantially similar to Adapter. In addition, the court concluded that plaintiff’s state law trade
secret misappropriation claim against defendant was preempted by the federal copyright act.

On appeal, Altai conceded liability for the copying of Adapter into Oscar 3.4 and raised no challenge to the
award of damages. Therefore, only CAI’s second and third claims were addressed on appeal.

Issue/s: WoN Altai’s OSCAR 3.5 was substantially similar to Adapter so as to constitute copyright infringement.
(No)

Ruling: In any suit for copyright infringement, the plaintiff must establish its ownership of a valid copyright,
and that the defendant copied the copyrighted work. The plaintiff my prove defendant’s copying either by
direct evidence or, as is most often the case, by showing that (1) defendant had access to the plaintiff’s
copyrighted work; and (2) defendant’s works is substantially similar to plaintiff’s copyrightable material. (For
the purpose of analysis, the district court assumed that Altai had access to the ADAPTER code when creating
OSCAR 3.5.)

As a general matter, and to varying degrees, copyright protection extends beyond a literary work's strictly
textual form to its non-literal components. It is of course essential to any protection of literary property that
the right cannot be limited literally to the text, else a plagiarist would escape by immaterial variations. Thus,
where “the fundamental essence or structure of one work is duplicated in another,” courts have found
copyright infringement.

It is now well-settled that the literal elements of computer programs, i.e., their source and object codes, are
the subject of copyright protection. For computer programs, the protectable, non-literal elements of one
computer program must be very similar to the same elements in a second computer program.
Altai made sure that the literal elements of its revamped Oscar program were no longer substantially similar
to the literal elements of CAI’s Adapter. If the non-literal structures of literary works are protected by
copyright (and by law computer programs are literary works), then the non-literal structures of computer
programs are also protected by copyright. It is a fundamental principle of copyright law that a copyright does
not protect an idea, but only the expression of the idea.

A three-step procedure (Abstraction-Filtration-Comparison test), was used by the court to determine whether
the non-literal elements of 2 or more computer programs are substantially similar. (1) In Abstraction the court
breaks up the program into different levels, from very general to very specific. e.g Main purpose, program
structure, modules, algorithms, data structures, source code. This focuses on whether defendant copied any
aspect of the protected expression along with an assessment of the copied portion’s relative importance
regarding plaintiff’s overall program. (2) In Filtration, the court decides what components are absolutely
essential to fulfilling the abstract function of the program at the various levels. Also, the court filters out
everything that is dictated by efficiency, external factors, or in the public domain. (3) In Comparison, the court
looks at the components of the program, which are not absolutely essential to fulfilling the abstract function
of the program to see if they are similar.

In adopting the above three-step procedure for substantial similarity between the non-literal ele- ments of
computer programs, the court seeks to insure 2 things: (1) that programmers may receive appropriate
copyright protection for innovative utilitarian works containing expression; and (2) that non-protectable
technical expression remains in the public domain for others to use freely as building blocks in their own work.
At first blush, it may seem counter-intuitive that someone who has benefited to some degree from illicitly
obtained material can emerge from an infringement suit relatively unscathed. However, so long as the
appropriated material consists of non-protectable expression, “This result is neither unfair nor unfortunate. It
is the means by which copyright advances the progress of science and art.”

The court found that the copyrightable elements from CAI's program were not substantially similar to those
elements in Altai's program.

Furthermore, the court ruled that so long as trade secret law is employed in a manner that does not encroach
upon the exclusive domain of the Copyright Act, it is an appropriate means by which to secure compensation
for software espionage.

The judgment of the district court is affirmed in part; vacated in part; and remanded for further proceedings.