morning your honor michael baume in kirkland and ellis on behalf of the fleming close the confirmation process which is a trust that exists now solely for the purpose of distributing assets to creditors the issues on appeal your honor that i wish to address or first with regard to the registration the ninth circuit spoke very clearly in the kodak case that what is required to properly registered a copyright is of bona fide copies of the original work only should be deposited in this case there's no question that that did not occur the what did what the testimony was at trial was that in fact that there had been either hundreds or  at one thirty one thirty three and it one thirty two what was put into the record as registration is a january i mean september twenty seventh one thousand nine hundred nine certification there's a line item on it where you have to sign it gives you an instruction that says do not sign this before the date of publication it requires you to certify under oath that what is attached is what you are representing it to be what then occurred after that date in the record was that mr berry the developer of the software then made additional changes in october of one thousand nine hundred ninety and what he described as essentially a new software was put on to the system as part of the sale he had developed this as part of a company called a p i a p i was being acquired by fleming what they wanted was just free license so subsequent to the time even of the september twenty seventh start of the cation he made additional changes to the software was the instruction to the jury on this issue on the issue of the registration i don't believe there was an instruction to the jury i do not believe so you're right did you ask for one i don't think so i think was that it was viewed as a matter of law an issue of law that for determination by the  court whether or not in fact there was a registered copyright as to jurisdictional prerequisite not to owning a copyright but to being able to sue someone for infringement of a copyright and that issue was raised and you ask registration they asked for a judgment your honor on what it was that was presented recall that all this does is say that if you want to sue someone for infringement and obtain statutory damages for copyright or attorneys fees or lost profits all of the extras that are provided for this in the laws and regulations surrounding registration require that an exact copy be deposited it it identifying portions of the source code are revealed that sufficient you're i think what that's dealing with is the is what i just referred to that you don't have to put the entire source code into the record but cheap but it does require the first twenty pages in the last twenty pages for the purpose of knowing that if you go back to look at it it's going to line up to what what they don't require you to do is put everything into the record was there any finding in the trial court that very that engaged in fraud or that your client was prejudiced by any inadequate registration i don't believe there will there was and i don't believe that's a requirement for there to be a failure to properly register a copyright and bring a suit on a recall that with with a computer code like  if you make subsequent changes then this was what the underlying lawsuit was about there are derivatives created that's the accusation and allegation but in this case there was no registration of any derivative of the copyright there was nothing in the copyright registration going back to ninety three and ninety five saying that what he was really registering was a derivative when he changed it again and put it on the system in october of one thousand nine hundred ninety nine and as he called it it's like brand new software that is unstable and didn't want the employees to use it again you have a derivative and there is no registration that is a jurisdictional prerequisite to making the claim for an frenchman now that's different i understand from the licensing agreement he can license if you look at the vice things i syncing agreement it doesn't say copyrighted material it says any freight control system that you developed during the course of this time i'm giving you a free license to use he could have sued for breach of contract but the breach of contract damages are not what you're what he wants in this case because there sensually no real damages what he wanted was copyright infringement and there failure to properly register that's a jurisdictional prerequisite it's not a footfall it's not a technical violation it's a jurisdictional prerequisite then if you go to the next portion of the argument which is  alternative grounds for the ruling in that decision and they eyes criticized extensively in them or and in other cases that resulted in some changes to move on congress and the point of this is that when you give someone when you do what mr berry did in this case without refutation which is to to install the software system on it for the purpose of running a business then what one seventeen says it is not an the the definition that was that has been used by the second circuit whatever and i said in a footnote was that if you're a licensee you can't be an owner if you look at the legislative history and the critique of the m a o i decision i don't think that was  holding of them ai the purpose behind this is to permit someone to receive software if you think of a simple as system that you use from microsoft word comes loaded with lots of different things that you may or may not want to include and you're permitted to take it off your permitted to develop your own logo every time my firm turns it on there's a headline that comes in that puts the name of my firm on it now that's a modification to the software system and what congress looked at particularly with regard to computer software was to say that cannot be a violation and if you look at the legislative history of that it was very clear that it was intended to apply to high sense or some  there's no distinction that should be made with regard to ownership what the second circuit looked at and said was that you have to look at the bucket of rights that you receive as an owner that it's not merely property ownership because you licensed the software you he has the copyright in the software the disk or the hard drive of the computer that it was placed on was own five flemming at that time so that's not going to be the determining factor in whether you're allowed to make any changes to it to make it work for you the testimony of record in his brief and other places with regard to the changes that were made are that it was used precisely the way it had been designed to be used to allow the operation of the business the company gets new entities that shipped it adds to mind to the software so that it can develop invoices or can record the incoming goods and shipment sense in the context of computer software everybody heist and says the software itself they don't give you a desk the issue is whether you're the owner of the hard item on which that software hears i can't go out and sell my disk of microsoft word to someone else but what i can do is put it on my system and then i can make it work the way i want to make it work i can add macros i can delete portions of it that i don't need that i don't want i can throw it away and burn it at the end of the time i don't have to ship it back to microsoft and tell them that i'm no longer using it now that's the difference i am a licensee but i'm an owner of the copy not of the software not of what's in it that remains with in this case mr barry and that was never the subject of dispute so and a license again is a contractual matter we don't have a breach of contract claim or an allegation or claim that there was a breach of contract here this is an infringement claim saying that the types of changes that were made to use vista software that mr berry developed for this company that he himself put it on the computers of the company was being used exactly the way it was intended to be used and what he did was to come in and say stuff sequentially i can point out that you deleted the table from my software you no longer use issue but the evidence is clear is there anything wrong with the instructions no i don't believe we have not contended that there is anything wrong with the instruction that was telling the jury got it is a factual issue they resolve it they resolve i agreement issue and the thrust of the dispute and what the jury addressed was the issue of whether or not under the license you're permitted to make changes that's a completely separate issue from whether or not there can be infringement under section one seventeen and what was requested of the corporate loan what we did ask is that based on the evidence that in fact every change was within the business there were originally accusations and claims made below that copies of the software have been distributed to other entities or sold to other entities and the plaintiff lost on all of that that it was only used within the business now given those facts the appropriate application of one seventeen is to say that there is no infringement and we're not seeking a retrial and that's you know frankly were a liquidating trust in the and the amount of issue isn't significant enough but the but it is a significant issue with respect to copyright law and it does have some implications that a tough and i apologize for not having provided this and written notice but there is a related case now pending in the ninth circuit there was a subsequent round of litigation post the bankruptcy that had to do with the use of this software and there's an appeal from that decision and there is now additional litigation being filed with respect to others accused of potentially improperly using the copyrighted material so the there are implications that remain with both with respect to whether there's a properly registered copyright that would allow this individual to bring these copyright clients and with respect to whether or not the types of changes that fleming made at the time were permissible the the next couple of issues that i would like to talk about are fairly related in the first has to do with the willfulness instruction under the new under the revised ninth circuit model rules the willfulness instruction was and correct it used that it may violate it may be an infringement and the word may has been taken out the requirement under p international deny circuit decision is that the alleged in french are must act with the knowledge that the defendants conduct constitutes copyright infringement now i am not arguing  you i believe that if you look at the record and what was developed although that it's clear that the standard is not met with knowledge we had a vice and since a jury found we believe the license permitted changes to be made there's multiple cases in the circuit that where you have a license you have reason to believe that it's ok to do what you're doing that's not of willful violation we've asked that the willfulness portion of it be reversed it has to do only with the maximum statutory damages which means you're not intruding on the province of the jury you're just saying that if that's not willful that you go back to the maximum statutory damages for a non willful violation and that goes to the attorney's fees and cost one of the reasons we were denied notwithstanding substantial success to attorneys fees was because the court said there was a willful determination and therefore he would not to treat us as a prevailing party notwithstanding that the bulk of the issues we separate and apart from all of the other issues that have been tried in the case but i believe that on the record that it's here that there really is not much point in sending it back the testimony was developed and it's just in the records and it's not very difficult there's no question that there's a licensed plaintiff has not appealed the decisions with respect to the other software or alleged infringement he did not appeal with respect to you know other issues that he dropped at the time of trial lodging that we distributed to others so clearly if there's going to be a really and it should be very limited and focused narrowly on on just that willful issue but as i said because it's a statutory penalty and deals only with the maximum amount that can be collected i believe that's within your authorities simply to say that it was not willful based on facts and was that objected to at the trial level when the court  with your party i did and they and as i read the transcript there was an offer of an alternative instruction that was going to be submitted in writing on the record there was a clear objection to the made language and a citation to the ninth circuit case that resulted in the change of the jury instructions so all that was covered but i don't know frankly your honor if there was if in fact a piece of paper was going to the court and i don't know that it's in the record i haven't seen it ok you have some time for  talking about a reconstruction and it's very important to remember and regard the deposit that the exact work that is claimed to have been fringed is the work that's in the library of congress no dispute over that it isn't a recreate it is the original work i went back and looked at the registration and i looked at the statute and the registration asked the year in which the creation of this work was completed now my wife and i had a child in hundred ninety that was the year that child was created i dropped him off at school before i came out on the plane to come here doesn't look anything like the kid i have in one thousand nine hundred but that was the year creation was completed what and this is a rhetorical question what relevance with this question being other than when was it first fixed in any tangible medium when did the copyright arise and i went off the court that going back through the history of windows into dos that the beginning of those programs occurred in when i b m wrote dos and i'll bet you they don't have a copy of that all the windows programs going forward have built on dos if they don't have a copy of dos that they can't reproduce it according to the argument that's being made all the microsoft windows copyrights are boy that's a pretty harsh result mr barry created the work in ninety three there was never a competing deposit put in the record and the six circuit case it's been cited in which basically say you better preserve your work that's true if someone brings up one that says one thousand nine hundred eighty two on it and you can't beat them but no one ever claimed anyone wrote this other the mr it's clear he wrote it the work changed over time but the work that was registered was the work that was infringed and that's the key in a deposit i made in oregon in my brief on primary jurisdiction the copyright office makes the decision on this it says right in the in the regs it's the one they say is the best and i know that the courts of appeals don't necessarily defer to administrative agencies but when it comes to something as fundamental and as important as  in software is i think they deserve some degree of deference in this case the argument that there's a jurisdictional defect in this this filing is wrong the jurisdictional statute says he must have one geo scan says they didn't have one court that case is going to go get one mr barry has one that's the jurisdictional issue the statute then says the district court can give it whatever weight the district court wants to discretionary that went to the jury there was an instruction on the deposit instruction number twenty and it's the first one the first and last twenty five pages if it's more than fifty pages in length right out of the statute or out of the regs they said they did not object to the registration all the way through the case if you look at the summary judgment motions it was the deposit that was bad well made no sense it's kept saying well we want the first draft and i kept saying well why don't we call it well the arms a proud  to weaponry then because that's maybe what hemingway called it only first wrote it you want the work you want to prove that it was created at a certain date there was no evidence to breed but the creation date is one thousand nine hundred three so i do not concede for one moment all the modifications in it it's the it's everything that was in there it's if i were to posit my son is six foot tall six foot two and looks very different than the baby but that's the thing that's going to be infringed that's what he looks like now that's what was deposited and there's no claim that what was the case from the from the sixth circuit talks about it has to be a copy of the work that's an infringement the district court site says that's exactly what's in there so the question is their argument is if you didn't cheat the first draft no what draft would that be in one thousand nine hundred ninety three because the statute says copyright arises when it's first fixed so i would say when you put a dot on a paper you might have to submit that congress was right in congress that that the thing in the copyright registration comes right out of the statute it's four or nine of title seventeen number seven the year in which the creation of the work was completed not that the work was completed the creation of the work i went back and looked at the dictionary what creation means it doesn't mean that everything went on after creation it's what happened at the moment of creation so i would say what mr berry is deposited is the correct deposit the copyright office if we don't want all your trade secrets twenty five and twenty five you could have anything in the bill in the middle that it's that thick two phone books and he didn't have to even put that in he took the exact word for word you could sit down at a computer typing w deposit and recreate the work that's what he was required to do he didn't even have to do that he did and there's never been any showing prejudice the prejudice is the work he deposited looked too much like the one  would offer that's not a legitimate prejudice the one seventeen my system i understand that the claim that is being criticised but it's still the law and i went back and looked at the crowds decision and i think under kratos if i may you you can see that they're not unknown or even under the second circuit it's very expansive i think actually it's difficult i think you can have to rebut infringement in the second circuit if you have to do business with somebody that they were stood on the server owned by title search which was the cross case there the evidence is clear up until the time he put it on their machine it was in this home which is the north shore of hawaii up and up in the boondocks sitting up there and it never was on there that's the record never had it on their server they talk about in kraus that they have the right to repossess in his you and he said that if i tell you if you violate this you have to destroy your copies he maintain control over the bundle of rights as to that software and partly funding it mix the thing it wasn't an owner of a copy they admit that this product is licensed not sold if there was ever a case standing on it you can  you can say you agree fully with the second circuit on crowds and absolutely fine for mr barry because if there was ever a case in which krauss shows that these people were not an owner of a copy this is the case would need to make these changes dylan cites in the testimony of mark dylan at the supplemental seventy seven seventy eight at sixty two six and sixty three five he admits that they didn't have to make the changes they felt how can we work out how to pay its excerpt a cracker twenty they say how we're going to pay you we will give you a savings from what you generate they knew that he preserves his right in this eula then you go through they say clean the eula is not the issue you go to their letter and it says in it that he owns all the copies and that it is license not sold if ever one seventeen does not apply this is the case this is not a case where you buy a copy of windows and put it on a machine and  microsoft says you can change it that's their business but if you go in and reverse compiling crack windows saying you know i really would like to change these are you willing to bet that their license would prohibit that i don't have their license in front of me but that's their right to control  can't do that this is except thirty one however this is technically in violation of the licensing agreement presented to us by wayne very on friday it's complicated but if you just look at the one thing it talks about the t s i interface whatever right to change it they knew that's what he did for a living they knew that if they did that they were told it would be willful infringement and in fact it was well for the jury you got it absolutely right this was willful infringement so you're saying i gave it and there was an objection i'll concede that there was an objection placed during the selling of the instructions not on the posit not on the registration no request for fraud instruction no claim of fraud in the case which would we it would nestor knock out the registration they didn't ask for and now they're claiming it's jurisdictional it's not it's retrying the case the worthless was not under fifty a motion they brought it as a motion for new trial an deposit was correct it is and it was whether there was evidence of willfulness well the you have to be there this isn't just happened in a vacuum this was a week and a half of trial where was down black was white day it was night nobody agreed with anybody and the jury had to sort it out it was not simple and i before i came in here i went back and pulled out my little constitution her gave me this on an elevator went before i was a lawyer and i looked up the seventh amendment and i didn't realize that the standard of review are in there doesn't just say you have a right to a jury trial it says when you get one if the rules are different as to whether it gets thrown out and i didn't realize the interview i'm not a judicial scholar but it's in the seventh amendment and under the standards of review that applied in this case this case cannot be reversed it has to stan jury made the call they were asked to decide things the judge did make a mistake on the instruction on the posit and all those things he wasn't asked to do it there's nothing to preserve it the issue of the registration is wasn't even raise until the briefs the issue of the willfulness instruction being wrong is not even in the very clearly that the circuit has changed the model instruction but i don't know if that's retroactive it's parties going back and doing this case over again i dread the thought but the reality is if i wouldn't use what about statutory damages if i went back and did it again i need to look the court that there has been a subsequent judgment on the merits finding in cringed and with the same deposit same registration same party that we have in here today that that has not been appealed that judgment is i believe collateral stoppel as to the issue of registration deposit and all the other issues that come out of it necessary judgment in a copyright infringement case fleming was found infringer i don't understand when that occurs that occur after this trial occurred after the case is moot you have to notify the panel the case is not moot the registration issue i believe is i don't know if i call it moot i pondered that it's collateral stop or if this if you were to reverse on it i've got a judgment against them that has not been appealed on hundred years old it because they won't stop using the work now we'll look at the polo cases that were out of business well yeah but still for cooking analysis which is pretty good for people out of business the reality is this case doesn't stop they are supporting people who are who we have claims of infringement they are they are operating under the the files tax returns and under the can and this is the important thing bankruptcy code doesn't just take all the property of the debtor and throw it in the dustbin it wasn't there evidence they're running removed any changes to the f c s following the jury were well that's what they claim to have done and i would i would offer to  maybe i'm confused in this case you asked for four and were denied in and jump shots correct in the course of stating it's reasons for refusing an injunction did not the district court in this case find that fleming had a race the changes if you will i don't think we've gotten to that i believe that the judge more ways order said that whatever they were doing didn't see why are we talking that they can we have a risk that they'd infringe again i prove that they did i've got to leave maybe we should have a bright line maybe three if i get three of them i get an injunction for i know that that's being cute and i'm just saying there's a point where it's so much easier to enjoin someone than the burden these are these cases are huge the dockets this one was like three hundred in the in the docket it's over a thousand in the second case it's a waste of everybody's time and money and resources judicial resources to simply give us an injunction to allow it to go back on a on an evidentiary record to the district court to let the court get that you don't want to force a judge to have an injunction and i understand that it's a big deal barry was the prevailing party he prevailed on ownership copyright ability and on infringement and yes the hundred fifty thousand was the most that congress said that he could have gotten but he got ninety eight and change i believe plus plus the attorney fees i just want to make sure it's clear that this the copyright software that is the subject of this case is the software that's residing in the library of congress there's no question that wasn't reconstruction the code that case the cases that are cited are simply an applicable this is software not picture of beavis and butt head it is something that even the copyright office says you don't have to put the whole thing in there and so  office on this or at least defer to the jury that the case was submitted to the jury they made the decision and i think that under the standards review it has to be affirmed other than the injunction thank you thank you for your is no longer worth in fact true with regard to the us what is the operating now it's not operating flemming it's not operating it does not use any free tracking software it doesn't sell grocery goods it's not in the wholesale business it has sold off its assets in the bankruptcy pursuant to a reorganization plan with respect to i want to go to section one seventeen for a minute i think i've made the arguments on the other points but the section one seventeen argument i think this case illustrates why it's important for this court to look at m a o i and the subsequent while they the decision actually addressed whether or not it's going to follow what the second circuit did and a leave was the intent of congress with respect to the adoption of the final report of the national commission on new technological uses of copyrighted works and recognize that once you have something on your system that is computer and software every time you started up every time you make a change technically under the old rules you would have been violating copyright law because you were making a copy or making a derivative and congress looked at that and said that makes no sense makes no sense for the li just makes no sense for the licensees so we've adopted a revision that permits you to make changes to keep the system functioning to make it efficient to make it work the way you're supposed to make it work now they are using they are attempting and did to extract what is a contractual promise out of this they're saying we thought we had a contract with you that we would be the only people to make that change that is different from an infringement of the copyright under one seventeen one seventeen is not an exception it says flat out that if you are making changes in the us within the system for something that you're involved full possession of that you are not infringing the copyright fine making those