Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-92-02118/USCOURTS-ca10-92-02118-0/pdf.json

Parties Involved:
Autoskill Inc.
Appellee
National Educational Support Systems, Inc.
Appellant

Document Text:

FILLO 

Unltal 8ta1II Cioortaf A .. . Tenth Circuit 

PUBLISH 

IN THE UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

AUTOSKILL INC., a Canadian corporation, 

Plaintiff-Appellee, 

v. 

NATIONAL EDUCATIONAL SUPPORT SYSTEMS, 

INC., a New Mexico corporation, 

Defendant-Appellant, 

NATIONAL EDUCATIONAL SUPPORT SYSTEMS, 

INC., a New Mexico corporation, 

Plaintiff-Appellant, 

v. 

AUTOSKILL INC., a Canadian corporation, 

Defendant-Appellee. 

MAY 19 1993 

ROBERT L. HOECKER 

Clerk 

No. 92-2118 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF NEW MEXICO 

(D.C. No. CIV-91-960M) 

G. Gervaise Davis III of Davis & Schroeder, P.C., Monterey, 

California (Scott David Schroeder and Gary C. Shallcross of Davis 

& Schroeder, P.C., Monterey, California, and Ross Perkal, 

Albuquerque, New Mexico, with him on the brief), for National 

Educational Support Systems, Inc. 

Robert W. Harris, Albuquerque, New Mexico, for Autoskill Inc. 

Before BALDOCK and HOLLOWAY, Circuit Judges, and O'CONNOR,* 

District Judge. 

HOLLOWAY, Circuit Judge. 

* The Honorable Earl E. O'Connor, United States District Judge for 

the District of Kansas, sitting by designation. 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 1 
Autoskill, Inc. (Autoskill), a Canadian corporation, in 1986 

obtained a certificate of registration of copyright. on a computer 

program designed to test and train students with reading 

deficiencies. After National Educational Support Systems, Inc. 

(NESS), a New Mexico corporation, began marketing similar software 

in 1990, Autoskill sued for copyright infringement in the District 

of New Mexico. That court had jurisdiction of the claim of 

copyright infringement asserted under 28 U.S.C. § 1338(a) and 28 

U.S.C. § 1332(a). The district court granted Autoskill a 

preliminary injunction against NESS covering some portions of 

Autoskill's program, Autoskill. Inc. v. National Educational 

Support Systems Inc., 793 F. Supp. 1557, 1573 (D.N.M. 1992), and 

NESS appeals. We have appellate jurisdiction granted by 28 U.S.C . 

§ 1292(a) (1). We affirm. 

I. THE FACTUAL BACKGROUND 

Beginning in the late 1970s, Dr. Christina Fiedorowicz and 

Dr. Ronald Trites, the president of Autoskill, developed a 

computer software program for use in teaching reading skills to 

students with reading disabilities. After reviewing some research 

of others, they designed their program to identify students with 

reading difficulties in three categories or subtypes: Type O, the 

oral reading subtype; Type A, the intermodal associative deficit 

subtype; and Type S, the sequential deficit subtype. Autoskill 

obtained a United States certificate of registration of the 

copyright on the software Trites and Fiedorowicz developed, 

effective January 27, 1986, called "Autoskill: Component Reading 

Subskills Testing and Training Program." 793 F. Supp. at 1559. 

2 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 2 
NESS was incorporated as a New Mexico corporation in 1989. 

Two of the principals of NESS, Byron Manning and Ron Neil, were 

familiar with the Autoskill program. As a salesman for the 

computer manufacturer UNISYS Corp., Neil sold ICON computers with 

Autoskill software to educational institutions for about four 

years between 1986 and 1990. NESS has explained that as "the 

first alternative for business of the newly organized NESS," 

Manning and Neil decided to attempt to obtain a license to market 

the Autoskill program. Brief of Appellant at 15. However, 

several months of negotiations between NESS and Autoskill ended in 

late 1989, without an agreement. 

With the licensing negotiations with Autoskill still ongoing, 

Neil began discussions with a computer progranuning firm, 

Automation Consultants, Inc. (ACI), about developing a reading 

software program for NESS. The president of ACI, Lynn Beckwith, 

wrote in his notes about his initial conversations with Neil that 

the NESS software was "to be like AUTOSKILL" and was to be an 

"AUTOSKILL REPLACEMENT." 793 F. Supp. at 1559. 

In January 1990, ACI began progranuning the NESS reading 

software. NESS specified the substantive and pedantic content of 

the NESS program to the progranuning firm. In addition, NESS gave 

the progranuners copies of some of the published articles that had 

been used as part of the basis of the Autoskill program, as well 

as an Autoskill sales brochure. Id. By March 1990, the 

progranuning firm had produced a preliminary version of the NESS 

software, called "Nessi: Reading and Language Development 

Program." Appellant's App. at 391. 

3 

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With its reading software ready to demonstrate, NESS began a 

marketing effort in May 1990. Id. at 186. A Canadian-based firm, 

Lifeskills Technology, signed an agreement with NESS to distribute 

the NESS program in Canada. Both NESS and Lifeskills began 

hearing rumors that Autoskill was planning to initiate a copyright 

infringement action against NESS. In April 1991, an attorney for 

Autoskill sent a letter to Lifeskills stating that Autoskill 

viewed the NESS software as an infringing program, and warning 

that Lifeskills could be named in an infringement action. Id. at 

389-90. 

NESS filed a suit in the District of New Mexico in July 1991 

for a declaratory judgment that it did not infringe the Autoskill 

copyright, and other relief. Id. at 1, 5-6 (complaint). The 

district judge issued a temporary restraining order that 

prohibited Autoskill officers and other employees from interfering 

with the distribution of the NESS software. On September 25, 

1991, Autoskill filed this instant case in the District Court 

against NESS for copyright infringement and misappropriation of 

trade secrets, seeking a preliminary injunction, which is at issue 

here, to prevent continued infringement. Autoskill's action was 

consolidated with the NESS suit. 

On April 21, 1992, the district judge granted Autoskill a 

preliminary injunction which prohibited NESS from 

11 [m]anufacturing, reproducing, 

selling, renting, lending, 

demonstrating any portion of any 

duplicating, copying, marketing, 

distributing, displaying or 

NESSI Program or user manual 

which is substantially similar to the protectible elements of the 

4 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 4 
Autoskill Program" and "[d]oing any other act which infringes on 

the protectible portion of the Autoskill Program." 793 F. Supp. 

at 1573. 1 The judge concluded that Autoskill had shown a 

substantial likelihood of success on the merits and had prevailed 

on the other three elements -- irreparable harm, proof that the 

threatened injury outweighed the potential harm to NESS from the 

injunction, and that the injunction would not be adverse to the 

public interest. Id. at 1572. 

II. APPELLATE JURISDICTION 

In a motion to dismiss this appeal, Autoskill argued two 

theories: (1) the automatic bankruptcy stay of 11 U.S.C. § 362 

prevented NESS from appealing the preliminary injunction; and 

(2) NESS' notice of appeal was untimely because it was filed more 

than 30 days after the order granting the injunction. We reserved 

judgment on the jurisdictional question for disposition by the 

hearing panel. 

On April 27, 1992, six days after the district judge entered 

the preliminary injunction, NESS filed a voluntary petition in the 

Bankruptcy Court for the District of New Mexico in which it sought 

relief under Chapter 11. Commencement of the voluntary Chapter 11 

case constituted an order for relief under the chapter. See 11 

1 

As part of its separate cause of action for misappropriation 

of trade secrets, Autoskill sought a preliminary injunction 

restraining NESS from using "trade secrets of Autoskill, including 

injunctive relief against any further manufacture, distribution or 

sale of the Nessi Program." Appellant's App. at 22. The judge 

granted the preliminary injunction solely on the basis of 

copyright infringement. As Autoskill did not file a cross-appeal 

on the judge's failure to address the misappropriation of trade 

secrets claim, that claim is not an issue on this appeal. 

5 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 5 
U.S.C. § 301. Subsequently, on June 3, 1992, memorializing an 

oral ruling on June 2, the bankruptcy judge gr.anted Autoskill 

relief from the automatic stay so that Autoskill might enforce the 

preliminary injunction. None of the bankruptcy judge's orders are 

before us for review. 

NESS initiated this appeal of the preliminary injunction by 

filing a notice of appeal on June 26, 1992, the sixtieth day after 

it filed the Chapter 11 petition and the sixty-sixth day after the 

injunction issued. On July 7, 1992, Autoskill filed the motion to 

dismiss the appeal for lack of jurisdiction. NESS then sought a 

ruling in the bankruptcy court on the applicability of the 

automatic stay to the appeal, or in the alternative a ruling 

granting it relief from the automatic stay in order to pursue the 

appeal. See Appellant's App. at 162. On July 16, 1992, the 

bankruptcy judge ruled that the appeal was permissible on two 

grounds. First, he held that Rule 6009 of the Bankruptcy Rules 

controlled; thus, NESS had not needed court approval to prosecute 

the appeal. Id. Second, the judge granted NESS relief from the 

automatic stay to prosecute an appeal of the preliminary 

injunction. Id. 

A. 11 U.S.C. § 108(b) (2) 

We address first the timeliness of NESS' notice of appeal 

filed outside the 30 days allowed by Rule 4(a) of the Federal 

Rules of Appellate Procedure. 

In arguing that its notice of appeal was timely, NESS relies 

on the 60-day time period that 11 U.S.C. § 108(b) (2) provides for 

6 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 6 
certain actions by Chapter 11 trustees or debtors in possession. 2 

We must decide whether, when the Rule 4(a) 30-day period for 

filing a notice of appeal has not expired before the filing of a 

bankruptcy petition, § 108(b) (2) extends the time for filing a 

notice of appeal for 60 days after the order for relief is 

entered. Few courts have addressed the question and the issue is 

one of first impression in our circuit. 3 

Rule 4(a) (1) of the Federal Rules of Appellate Procedure 

requires a party appealing as of right in a civil case to file a 

notice of appeal "within 30 days after the date of entry of the 

judgment or order appealed from." Since the notice of appeal here 

was filed outside the 30-day time period, NESS relies on 

§ 108(b) (2) of the Bankruptcy Code. In general terms, § 108(b) 

embodies a longstanding provision in the bankruptcy statutes that 

"permit the trustee, when he steps into the shoes of the debtor, 

an extension of time for filing an action or doing some other act 

that is required to preserve the debtor's rights." H.R. Rep. No. 

2 

We note that the bankruptcy judge also concluded that "Title 

11 [U.S.C.], § 108(b) and/or (c) is applicable to the acts of the 

Debtor in prosecuting Debtor's appeal in such case." Appellant's 

App. at 162. 

3 

Two state court decisions address the effect of § 108(b) (2) 

on state periods for filing notices of appeal. Both courts 

interpreted§ 108(b) (2) as extending to 60 days the unexpired 

period for filing notices of appeal. Production Credit Ass'n v. 

Burk, 427 N.W.2d 108, 110-11 (N.D. 1988) (applying§ 108(b) (2) to 

extend unexpired 60-day period for filing notice of civil appeal 

under state rule to 60 days after order for relief, though ruling 

appeal untimely); Di Maggio v. Blache, 466 So. 2d 489, 490-91 

(La. Ct. App. 1985) (explaining § 108(b) (2) extended unexpired 

15-day period for filing notice of appeal to 60 days, though 

holding debtor's appeal was untimely). 

7 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 7 
595, 95th Cong., 1st Sess. 318 (1977), reprinted in 1978 

U. S.C.C.A.N. 5963, 6275; see also S. Rep. No. 989, 95th Cong., 2d 

Sess. 30 (1978), reprinted in 1978 U.S.C.C.A.N. 5787, 5816 (same). 

Section 108(b) provides: 

Except as provided in subsection (a) of this section, if 

applicable nonbankruptcy law, an order entered in a 

nonbankruptcy proceeding, or an agreement fixes a period 

within which the debtor or an individual protected under 

section 1201 or 1301 of this title may file any 

pleading, demand, notice, or proof of claim or loss, 

cure a default, or perform any other similar act, and 

such period has not expired before the date of the 

filing of the petition, the trustee may only file, cure, 

or perform, as the case may be, before the later of--

(1) the end of such period, including any 

suspension of such period occurring on or after the 

commencement of the case; or 

(2) 60 days after the order for relief. 

11 U.S.C. § 108(b). For certain types of actions, then, the 

statute "allows the trustee 'the later of' two periods, one being 

the end of the period prescribed by applicable nonbankruptcy law, 

and the other a specific extension granted by this section." 

2 Collier on Bankruptcy ,r 108. 02, at 108-5 ( 15th ed. 1992) . 

One requirement of§ 108(b) that the relevant time period 

"has not expired before the date of the filing of the petition" --

is not at issue. Since NESS filed the Chapter 11 petition just 

six days after the district judge entered the preliminary 

injunction, the 30-day period for filing a notice of appeal had 

just begun to run. We consider instead whether a notice of appeal 

is within the scope of the actions that Congress intended to 

include within the § 108(b) extended period for actions by a 

trustee or debtor in possession. 

Applying the basic canon of statutory construction, 11 [i]n 

determining the scope of a statute, we look first to its 

8 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 8 
language." · Moskal v. United States, __ U.S. , 111 S. Ct. 461, 

465 (1990); O'Connor v. United States Dep't of Energy. 942 F.2d 

771, 773 (10th Cir. 1991). The critical provision of § 108(b) 

extends any "period" established by "applicable nonbankruptcy law, 

an order entered in a nonbankruptcy proceeding, or an agreement." 

The first listed source for the time period, "applicable 

nonbankruptcy law," is relevant to NESS' appeal. Within the 

ordinary meaning of the language in the statute, the 30-day time 

period of Rule 4(a) (1) for filing a notice of appeal is a "period" 

established under "applicable nonbankruptcy law." 

Section 108(b) applies generally to fixed periods within 

which a debtor4 or trustee "may file any pleading, demand, notice, 

or proof of claim or loss, cure a default, or perform any other 

similar act." We agree with the courts holding that § 108(b) 's 

sweeping language "includes the filing of a notice of appeal." 

Production Credit Ass'n v. Burk, 427 N.W.2d 108, 110 (N.D. 1988); 

Di Maggio v. Blache, 466 So. 2d 489, 490-91 (La. Ct. App. 1985). 

Although§ 108(b) does not specifically refer to notices of 

appeal, the statute includes a broad catchall extending the time 

in which a debtor or trustee may "perform any other similar act" 

in addition to the steps listed. § 108(b) (emphasis added); see 

In re G-N Partners, 48 B.R. 462, 467 (Bankr. D. Minn. 1985) (that 

4 

Though the statute mentions only a trustee, the section also 

applies to a debtor in possession. ~' Martinson v. First Nat'l 

Bank (In re Martinson), 731 F.2d 543, 544 n.2 (8th Cir. 1984); 

Econo-Therm Energy Sys. Corp. v. Prudential Ins. Co. of Am. (In re 

Econo-Therm Energy Sys.), 80 B.R. 137, 139 n.6 (Bankr. D. Minn. 

1987); see also 11 U.S.C. § 1107(a) (extending rights of trustee 

to debtor in possession, with some exceptions). 

9 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 9 
§ 108(b) is "broader" than listed items "is obvious from its 

reading"). Filing a notice of appeal is at least a "similar act" 

with respect to two of the actions specified, filing a "pleading" 

or a "notice. 115 Consequently § 108(b) gives a 

debtor in possession or a trustee an extended period for filing a 

notice of appeal of up to 60 days, as long as the 30-day time 

period of Rule 4(a} has not expired when the bankruptcy petition 

is filed. 

We feel that under§ 108(b) NESS was required to file a 

notice of appeal "before the later of" either (1) the period 

provided by applicable nonbankruptcy law, or (2) "60 days after 

5 

We are aware that the term "pleading" at times is given a 

somewhat limited meaning. For example, under Rule ?(a) of the 

Federal Rules of Civil Procedure, "pleadings" include a complaint, 

an answer, a reply to a counterclaim, an answer to a cross-claim, 

a third-party complaint, and a third-party answer. Black's Law 

Dictionary also gives the term "pleadings" a relatively specific 

meaning: "The formal allegations by the parties to a lawsuit of 

their respective claims and defenses, with the intended purpose 

being to provide notice of what is to be expected at trial." 

Black's Law Dictionary 1152 (6th ed. 1990). 

However, we think~ the term "pleading" ordinarily has a 

broader meaning. For example, the term frequently is used to 

describe broad categories of documents filed by the parties in 

court proceedings. See American Heritage Dictionary of the 

English Language 1389 (3d ed. 1992) (defining "pleading" as "[t)he 

consecutive statements, allegations, and counter allegations made 

in turn by plaintiff and defendant, or prosecutor and accused, in 

a legal proceeding"). In§ 108(b), we feel that Congress used the 

term "pleading" in the more generic sense. 

We also think that the term "notice" ordinarily is broadly 

viewed as a statement of information that is communicated. See 

Black's Law Dictionary 1061 (6th ed. 1990). Black's defines 

"notice of appeal" as "[a) document giving notice of an intention 

to appeal." Id. at 1062. A notice of appeal, then, is plainly a 

form of notice. In any event, we are convinced that a notice to 

initiate · an appeal is a "similar act" to pleadings and notices as 

those terms are commonly used. 

10 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 10 
the order for relief. 116 The time period under relevant 

nonbankruptcy law, Rule 4(a) (1), would have expired 30 days after 

the district judge entered the preliminary injunction on April 21, 

1992 or on May 21, 1992. However, the extended 60-day time period 

provided by § 108(b) (2) began running on the date of the 

commencement of the Chapter 11 case -- April 27, 1992. The 60-day 

period extended to and included June 26, 1992, the day NESS filed 

its notice of appeal. NESS thus commenced the appeal within the 

extended time period provided by§ 108(b). 

B. Effect of Rule 4(a} on§ 108(b} (2) 

Autoskill argues that by extending the time for filing a 

notice of appeal, § 108(b) would override the explicit language of 

Rule 4(a) (1) which provides a 30-day period for filing notices of 

appeal "in all civil cases." Fed. R. App. P. 4(a) advisory 

committee's note. Autoskill would have us determine the effect of 

the two provisions, § 108(b) and Rule 4(a) (1), by applying the 

abrogation clause in the Rules Enabling Act, which provides that 

"[a]ll laws in conflict with such rules shall be of no further 

force or effect after such rules have taken effect." 28 U.S.C. 

§ 2072 (b) . 

We cannot agree with Autoskill that Rule 4(a) (1) supersedes 

§ 108 (b) . The abrogation provision on which such argument is 

constructed is currently codified at 28 u.s.c. § 2072(b). This 

statute is generally viewed as applying so as to abrogate 

6 

As noted earlier, the commencement of the voluntary Chapter 

11 case on April 27, 1992, constituted an "order for relief." 11 

u.s.c. § 301. 

11 

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conflicting statutes enacted before the rules. See Penfield Co. 

v. Securities & Exch. Comm'n, 330 U.S. 585, 589 n.5 (1947) ("Where 

a Rule of Civil Procedure conflicts with a prior statute, the Rule 

prevails."); 4 Charles A. · Wright & Arthur R. Miller, Federal 

Practice & Procedure § 1030 & n.2, at 125 (2d ed. 1987) ( "Statutes 

enacted prior to the rules that are inconsistent with them are 

superseded."). 

However, a subsequent statute prevails. 2 James N. Moore & 

Jo D. Lucas, Moore's Federal Practice 1 1.02[5], at 1-10 (2d ed. 

1992) ("A clearly inconsistent statute enacted subsequent to the 

Rules' effectiveness would supersede or modify any 

conflicting Rule."). Rule 4(a) (1), with its 30-day time limit for 

filing notices of appeal, 7 became effective July 1, 1968. The 

rule as prescribed in 1967 provided, inter alia, that "the notice 

of appeal required by Rule 3 shall be filed with the clerk of the 

district court within 30 days of the date of the · entry of the 

judgment or order appealed from." 43 F.R.D. at 69; see also 28 

U.S.C. app. Fed. R. Civ. P. 4(a) (1970). The rule in 1968 thus 

contained the same provisions, with minor exceptions, as it did in 

1978 when§ 108(b) was adopted. 8 Therefore, the rule did not 

7 

The Supreme Court prescribed the Federal Rules of Appellate 

Procedure by an order entered on December 4, 1967. See 43 F.R.D. 

61, 67. The order made the rules effective on July 1, 1968, after 

having been reported to the Congress. 28 U.S.C. § 2072; 43 

F.R.D. at 113. 

8 

In our view the two changes that have been made to this 

language were not substantive, and do not affect our application 

of§ 2072. A 1979 amendment changed the phrase "within 30 days of 

the date" to read "within 30 days after the date." The change was 

(Footnote continued on next page) 

12 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 12 
abrogate or supersede§ 108(b) which was subsequently enacted in 

1978. 9 

We are persuaded that this interpretation serves the 

legislative purpose in adopting § 108(b). As is apparent from 

§ 108(b) itself, this bankruptcy provision was included to afford 

a trustee or debtor in possession a longer period to determine the 

advisability of further steps in litigation or business 

transactions to protect the interests of the bankruptcy estate. 

Both the House and Senate committee reports contained identical, 

broad statements that§ 108(b) permits "the trustee, when he steps 

into the shoes of the debtor, an extension of time for filing an 

action or doing some other act that is required to preserve the 

debtor's rights." H.R. Rep. No. 595, 95th Cong., 1st Sess. 318 

(1977); S. Rep. No. 989, 95th Cong., 2d Sess. 30 (1978). 

C. Effect of the Automatic Stay on§ 108(b} (2) 

Autoskill contends that even if§ 108(b) extended NESS' time 

for filing the notice of appeal, the automatic stay of§ 362 then 

in effect made the filing a void act. Under§ 362(a) (1) a 

petition in bankruptcy stays the "continuation of a 

judicial, administrative, or other action or proceeding against 

(Footnote continued): 

made for "clarity only" and did not change the meaning of the 

rule. Fed. R. App. P. 4(a) (1) advisory committee's note. In 

addition, the word "the" has been deleted before the phrase "entry 

of the judgment." 

9 

The Bankruptcy Code, including § 108, was approved on 

November 6, 1978. Bankruptcy Reform Act of 1978, Pub. L. No. 598, 

92 Stat. 2549, 2688 (1978). Section 108 became effective on 

October 1, 1979. See id. Pub. L. No. 598, sec. 402(a), 92 Stat. 

2682 (1978). 

13 

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the debtor that was ... commenced before the commencement" of 

the bankruptcy proceeding. Autoskill relies upon the rule that 

§ 362 stays "all appeals in proceedings that were originally 

brought against the debtor, regardless of whether the debtor is 

the appellant or appellee." Association of St. Croix Condominium 

Owners v. St. Croix Hotei Corp., 682 F.2d 446, 449 (3d Cir. 1982) 

(emphasis original). 

We disagree. Autoskill's argument ignores the first ground 

cited by the bankruptcy judge in recognizing the validity of the 

appeal: that Rule 6009 of the Bankruptcy Rules supported NESS' 

prosecution of the appea1. 10 As we read his ruling, the 

bankruptcy judge felt that Rule 6009 allowed NESS to prosecute its 

appeal from the preliminary injunction without obtaining relief 

1 1 from the automatic stay of§ 362, and we agree.-

Rule 6009 allows a trustee or debtor in possession "[w]ith or 

without court approval" to "enter an appearance and defend any 

pending action or proceeding by or against the debtor, or commence 

and prosecute any action or proceeding in behalf of the estate." 

10 

The Rules were prescribed by the Supreme Court on April 25, 

1983. 

11 

In what seems to have been an alternative ruling, the judge 

stated that, ~Rule 6009 notwithstanding, he was lifting or 

annulling the automatic bankruptcy stay in order to allow NESS to 

"file a notice of appeal and prosecute an appeal of the 

preliminary injunction." Appellant's App. at 162. Further, the 

judge stated that "[t]o the extent that acts have been taken by 

the Debtor prior to this ,Order, the stay is annulled and this 

Order is effective nunc pro tune to validate such acts." Id. In 

sum, the judge's order made relief from the stay retroactive. 

Autoskill did - not appeal the order granting NESS relief from the 

stay. 

14 

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The plain language of Rule 6009 enabled NESS to "commence" this 

appeal, which certainly was a "proceeding in behalf of the 

estate." See 8 Collier on Bankruptcy 11 6009.03 & n.7, at 6009-3 

(15th ed. 1992). "Rule 6009, · along with Code section 362 itself, 

makes it clear that the automatic stay does not apply to the 

continued prosecution of actions by the trustee or debtor in 

possession. Those entities may continue or pursue litigation 

without leave of court (or release of stay under section 362) ." 

Id. Rule 6009 enabled NESS to prosecute this appeal without the 

authorization of the bankruptcy court and the notice of appeal was 

not a void act. 

In its memorandum in support of its motion to dismiss this 

appeal, Autoskill argues that the automatic bankruptcy stay acts 

to stay an appeal by the debtor from an adverse decision in a 

nonbankruptcy suit brought against it, such as Autoskill's suit 

for copyright infringement, citing St. Croix, inter alia. There 

the pendency of a Chapter 11 reorganization petition was revealed 

in briefs filed with the Third Circuit. That court entered an 

order staying the appeal, stating that its order "staying this 

proceeding is without prejudice to the rights of the parties to 

apply to the Bankruptcy Court for relief from the provisions of 

section 362 " Id. at 449; see Borman v. Raymark Indus .• 

Inc., 946 F.2d 1031, 1036-37 (3d Cir. 1991) (applying St. Croix 

rule to stay appeal where debtor filed bankruptcy petition after 

oral argument but before disposition); Ingersoll-Rand Fin. Co;r:p. 

v. Miller Mining Co., 817 F.2d 1424, 1426-27 (9th Cir. 1987) 

(staying appeal); Commerzanstalt v. Telewide Sys .• Inc., 790 F.2d 

15 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 15 
206, 207-08 (2d Cir. 1986) (same); Cathey v. Johns-Manville Sales 

Corp., 711 F.2d 60, 62 (6th Cir. 1983) (same). 

St. Croix does not support NESS' motion that we dismiss this 

appeal as invalid. It is apparent from the order as quoted above 

that the . validity of the appeal in St. Croix was not rejected by 

the Third Circuit and that the court was merely staying the 

appellate proceeding, affording the parties an opportunity to have 

the stay of§ 362 lifted. That has already been done in the 

instant case, by application to the bankruptcy court which granted 

that relief on July 16, 1992, in addition to holding that Rule 

6009 of the Bankruptcy Rules controlled, permitting the 

prosecution of the appeal by NESS. 

In sum, we hold that NESS' appeal was timely and valid and 

deny the motion to dismiss. 

III. THE PRELIMINARY INJUNCTION 

We turn now to NESS' claims of error in the granting of the 

preliminary injunction by the district court. 

The Copyright Act authorizes a federal court to "grant 

temporary and final injunctions on such terms as it may deem 

reasonable to prevent or restrain infringement of a copyright." 

17 u.s.c. § 502(a). A district judge may grant a preliminary 

injunction if the moving party demonstrates: 

(1) substantial likelihood that the movant will 

eventually prevail on the merits; (2) a showing that 

the movant will suffer irreparable injury unless the 

injunction issues; (3) proof that the threatened injury 

to the movant outweighs whatever damage the proposed 

injunction may cause the opposing party; and (4) a 

showing that the injunction, if issued, would not be 

adverse to the public interest. 

16 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 16 
Hartford House, Ltd. v. Hallmark Cards, Inc., 846 F.2d 1268, 1270 

(10th Cir.) (quoting Lundgrin v. Claytor, 619 F.2d 61, 63 (10th 

Cir. 1980)), cert. denied, 488 U.S. 908 (1988); see also, e.g., 

Resolution Trust Co;r:p. v. Cruce, 972 F.2d 1195, 1198 (10th Cir. 

1992); Otero Sav. & Loan Ass'n v. Federal Reserve Bank of Kansas 

City. 665 F.2d 275, 278 (10th Cir. 1981). The district judge 

concluded that Autoskill demonstrated all four factors. We will 

not set aside a preliminary injunction on appeal "[u]nless the 

district court abuses its discretion, commits an error of law, or 

is clearly erroneous in its preliminary factual findings." 846 

F.2d at 1270. 

A. Likelihood of Success on the Merits 

To demonstrate a substantial likelihood of success Autoskill 

was required to present "a prima facie case showing a reasonable 

probability that [it] will ultimately be entitled to the relief 

sought." Continental Oil Co. v. Frontier Ref. Co., 338 F.2d 780, 

781 (10th Cir. 1964). Autoskill was not required to show to an 

absolute certainty that it has a right to prevail on the 

infringement claim at trial. See id. at 781. Rather, under our 

"liberal definition" of the likelihood of success factor, "[w]hen 

the other three requirements for a preliminary injunction are 

satisfied, 'it will ordinarily be enough that the plaintiff has 

raised questions going to the merits so serious, substantial, 

difficult and doubtful, as to make them a fair ground for 

litigation and thus for more deliberate investigation.'" Otero 

Sav. & Loan Ass'n, 665 F.2d at 278 (10th Cir. 1981) (quoting 

17 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 17 
Hamilton Watch Co. v. Benrus Watch Co., 206 F.2d 738, 740 (2d Cir. 

1953)). 

Thus Autoskill was required to present at least a prima facie 

case of infringement. To prove copyright infringement a plaintiff 

is required to show: 11 (1) ownership of 

(2) copying of constituent elements 

a valid 

of the 

copyright, 

work that 

and 

are 

original." Feist Publications, Inc. v. Rural Tel. Serv. Co., 

U.S. 111 S. Ct. 1282, 1296 (1991). NESS challenges the 

district judge's conclusion that Autoskill established these 

elements. 

1. Ownership of Valid Copyright 

The Copyright Act provides that a certificate of registration 

of a copyright "shall constitute prima facie evidence of the 

validity of the copyright and of the facts stated in the 

certificate." 17 U.S.C. § 410(c). By presenting a registration 

certificate a party establishes the validity of the copyright 

prima facie and the burden to dispute the validity of the 

copyright then shifts to the party challenging it. See Harris 

Market Research v. Marshall Mktg. & Communications, Inc., 948 F.2d 

1518, 1526 (10th Cir. 1991). The district judge ruled that NESS 

failed to present either argument or evidence sufficient to rebut 

Autoskill's prima facie showing of the validity of its copyright. 

793 F. Supp. at 1563. 

As proof of ownership, Autoskill presented evidence of the 

certificate of registration, No. TX 1 742 632, obtained on its 

reading program. Appellant's App. at 471-72. In the registration 

certificate Autoskill identified itself as the author of the work 

18 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 18 
and described the nature of its authorship as "[hlirer of entire 

work comprising program and including manual." Id. (emphasis 

added). We think the "facts stated in the certificate," to which 

the statutory presumption of validity extends, logically include 

the identification of the author and the statement that the entire 

work was made for hire. By introducing the registration 

certificate in which it identified itself as the author, then, 

Autoskill presented prima facie evidence that it was the owner of 

the copyright. ~ Broadcast Music, Inc. v. Moor-Law. Inc., 484 

F. Supp. 357, 363 (D. Del. 1980) ("Where the plaintiff in an 

infringement action is also the author of the composition, the 

registration statement is also generally prima facie evidence of 

ownership."); see also 3 Melville B. Nimmer & David Nimmer, 

Nimmer on Copyright § 12.ll[C], at 12-158 (1992) [hereinafter 

Nimmer] (explaining that plaintiff who first registers copyright 

in plaintiff's name thus obtains certificate that "constitutes 

prima facie evidence of the validity of his copyright, and of the 

facts stated therein"). We hold that Autoskill satisfied its 

initial burden on the ownership element by establishing a prima 

facie case on this issue. 

NESS argues that the district judge erred factually and 

legally in ruling that Autoskill was the owner of the United 

States copyright. One principal contention of NESS is that the 

judge erred in holding that Community for Creative Non-Violence v. 

Reid, U.S. 109 S. Ct. 2166 (1989), should not be 

retroactively applied to this controversy. And under Reid NESS 

says this was not a work made for hire because Autoskill's 

19 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 19 
programmers were not its employees under the common law agency 

test adopted by Reid. Appellant's Brief at 42-43. 12 

On the retroactivity point, we agree with NESS. It is now 

settled that "[o]nce retroactive application is chosen for any 

assertedly new rule, it is chosen for all others who might seek 

· its prospective application." James B. Beam Distilling Co. v. 

Georgia, U.S. 111 S. Ct. 2439, 2447-48 (1991); see 

Anixter v. Home-Stake Prod. Co., 977 F.2d 1533, 1543 (10th Cir. 

1992), cert. denied, S. Ct. (1993); Gray v. Phillips 

Petroleum Co., 971 F.2d 591, 596 (10th Cir. 1992). In Reid the 

new rule adopted was applied to the litigants before the Court; 

hence, selective non-retroactivity is barred in all other cases as 

to that new rule. Thus Reid should be applied here, but this does 

not carry the day for NESS. 

NESS had the burden of rebutting the statutory presumption of 

Autoskill's ownership of the copyright. NESS says the 

"uncontroverted evidence at both hearings is that all versions of 

the Autoskill programs were programmed in Canada by contract 

programming companies or individuals, none of whom worked for 

12 

As a general rule copyright ownership "vests initially in the 

author or authors of the work." 17 U.S.C. § 201(a). The author 

of a work is usually "the party who actually creates the work, 

that is, the person who translates an idea into a fixed, tangible 

expression entitled to copyright protection." Reid, 109 s. Ct. at 

2171. 

The statute provides that "[i]n the case of a work made for 

hire, the employer or other person for whom the work was prepared 

is considered the author" unless the parties agree otherwise. 

17 U.S.C. § 201(b). The Copyright Act defines a "work made for 

hire" as e_ither "a work prepared by an employee within the scope 

of his or her employment" or one of certain works specially 

ordered or commissioned. 17 U.S.C. § 101. 

20 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 20 
Autoskill." Appellant's Brief at 42 (footnote omitted). We note 

that Dr. Trites was asked by NESS' counsel about Edfour Education 

Consultants, 13 the programming firm used by Autoskill and referred 

to in Autoskill's copyright certificate as a manufacturer. Trites 

replied that Edfour was paid under an "independent contract" and 

its people were not "employees" of Autoskill at the time of that 

work. Appellee's Supp. App. at 211-12. 

The broad assertions by NESS about Autoskill's programming 

and the sparse evidence it presented on the issue do not address 

the critical question raised, i.e., whether the Autoskill 

programmers -- companies or individuals were or were not 

employees of Autoskill, considering the relevant factors under the 

"common law agency law meaning." Reid, 109 S. Ct. at 2172. 14 We 

13 

The trial judge found that Edfour Education Consultants did 

the original computer programming for the Autoskill program. 793 

F. Supp. at 1559. 

14 

Agency law uses the term "servant" to describe an "employee." 

See Restatement (Second) of Agency § 2 cmt. d, § 220 cmt. g 

(1958). Determining whether one acts as servant for another 

involves consideration of a number of fact-based criteria: 

(a) The extent of control which, by the agreement, 

the master may exercise over the details of the work; 

(b) whether or not the one employed is engaged in 

a distinct occupation or business; 

(c) the kind of occupation, 

whether, in the locality, the work is 

the direction of the employer or by a 

supervision; 

with reference to 

usually done under 

specialist without 

(d) the skill required in the particular 

occupation; 

(e) whether the employer or the workman supplies 

the instrumentalities, tools, and the place of work for 

the person doing the work; 

(f) the length of time for which the person is 

employed; 

(Footnote continued on next page) 

21 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 21 
have considered the references in NESS' brief which it relies 

upon, Appellant's Brief at 8-21, 44, and find no substantial 

evidence identified which addresses the important factors under 

the common law of agency which NESS relies on. See supra note 14. 

The state of the record is such that this issue -- whether the 

programmers were Autoskill's employees -- remains a fair ground 

for litigation. The prima facie case of Autoskill was not 

sufficiently rebutted to justify reversal of the preliminary 

injunction on this point. 

Furthermore, we note that there was proof on another basis to 

establish Autoskill's ownership of the copyright. NESS identified 

Edfour as the contract programmer on the first version of the 

Autoskill program. Appellant's Brief at 12. With respect to 

Edfour, there was testimony by Dr. Trites that Autoskill had 

received an assignment of rights from Edfour. 15 Appellee's Supp. 

(Footnote continued): 

(g) the method of payment, whether by the time or 

by the job; 

(h) whether or not the work is a part of the 

regular business of the employer; 

(i) whether or not the parties believe they are 

creating the relation of master and servant; and 

(j) whether the principal is or is not in 

business. · 

Restatement (Second) of Agency§ 220(2) (1958). 

15 

NESS argues that under 17 U.S.C. § 205(d), Autoskill was 

required to show that any assignment was recorded in the Copyright 

Office as a prerequisite to bringing an infringement action as a 

transferee. However, the section requiring recordation as a 

prerequisite to an infringement action was repealed March 1, 1989, 

more than two years before Autoskill filed this action. Berne 

Convention Implementation Act of 1988, Pub. L. No. 100-568, 102 

Stat. 2853~ 2861 (1988) (adopting effective date of Berne 

Convention, March 1, 1989). 

22 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 22 
App. at 211-12. The assignment was not in Dr. Trites' possession 

at the hearing, but the specific testimony about the assignment 

was given in response to NESS' questioning, it was not objected to 

nor contradicted, and it is still undisputed at this point. 16 

In sum, we are not persuaded that the preliminary injunction 

should be reversed on the basis of the ownership showing. 

2. Copying 

In a copyright infringement action a "plaintiff may prove 

defendant's copying either by direct evidence or, as is most often 

the case, by showing that (1) the defendant had access to the 

plaintiff's copyrighted work, and (2) defendant's work is 

substantially similar to the plaintiff's copyrightable material." 

Computer Assocs. Int'l. Inc. v. Altai. Inc., 982 F.2d 693, 701 (2d 

Cir. 1992); 3 Nimmer § 13.0l[B], at 13-10 to -11. These two 

types of circumstantial evidence of infringement are accepted 

because direct evidence of copying is rarely available. Baxter v. 

MCA. Inc., 812 F.2d 421, 423 (9th Cir.), cert. denied, 484 U.S. 

954 (1987). NESS contends that Autoskill demonstrated neither 

access nor substantial similarity. 

16 

NESS also says that on the ownership issue we should apply 

Canadian law which has no work for hire provision. Appellant's 

Brief at 44-45. Autoskill argues. that the foreign law was not 

raised below by proper notice as required by Rule 44.1 of the 

Federal Rules of Civil Procedure. No response to this waiver 

point was made in the Reply Brief of Appellant NESS and no 

reference is made by NESS to any place in the record showing 

proper notice and assertion of the issue below. It may not be 

relied on here. 

23 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 23 
a. Access to the Copyrighted Work 

Addressing the access prong, the district judge noted that 

the founders of NESS, Neil and Manning, were "thoroughly familiar 

with the Autoskill Program." 793 F. Supp. at 1559 (finding No . 

14). Neil, the judge found, had sold ICON computers for UNISYS 

with Autoskill software for four years. Id. Further, the court 

found that the supervisor of the programming of the NESS program 

had reviewed "a document which describes the Autoskill Program in 

detail." Id. (finding No. 22). The judge concluded "there is no 

question that NESS had access to the Autoskill Program." Id. 

On access, a plaintiff may meet his initial burden by showing 

that the defendant had a "reasonable opportunity to view" or 

"opportunity to copy" the allegedly infringed work. 3 Nimmer 

§ 13.02[A] & n.5, at 13-15 to -16; see also, e.g., Robert R. 

Jones Assocs., Inc. v. Nino Hornes, 858 F.2d 274, 277 (6th Cir. 

1988) (concluding "[a]ccess merely means an opportunity to view 

the protected material"). We agree that defining access as the 

"opportunity" to view or copy makes sense for the purposes of 

shifting the burden to the defendant, and we follow this approach. 

See 3 Nimmer § 13.02[A] n.5, at 13-15. NESS makes no argument 

that the judge's underlying factual findings on this point are 

clearly erroneous and those findings establish opportunity. 

b. Substantial Similarity 

As the district judge found, the Autoskill program "is based 

primarily upon the identification of three reading sub-types of 

students who are experiencing reading difficulties." 793 F. Supp. 

at 1559. In general, the Autoskill program is designed to improve 

24 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 24 
the student's rapid automatic responses to training stimuli. The 

Autoskill program first tests the students in order to identify 

their subtype for training purposes. Autoskill tests students for 

"oral reading, audio-visual matching, visual matching and visual 

scanning," in that order. Id. 

The tests are presented according to 13 categories of word 

form types, which are based on different combinations of vowels 

and consonants. The tests use words and nonwords and record 

accuracy and speed of response. Jg. at 1560. Based upon the 

results of the testing in Autoskill, students are assigned a 

training program that corresponds to their subtypes. "Training 

proceeds hierarchically from the simplest skills to the most 

complex." Id. Students receive immediate feedback to their 

responses, and in order to move to the next subprogram must 

achieve a 95 percent accuracy rate over three, consecutive 

SO-trial blocks, with a speed of no slower than 100 milliseconds. 

Id. 

Comparing the Autoskill and NESS programs, the district judge 

found numerous similarities and concluded that NESS had merely 

changed the names and sequence of the tests and had made minor 

format changes of "no pedagogical value." Id. at 1561. The 

testing categories in the NESS program have similar names to those 

in Autoskill: "reading aloud, audio identification, visual 

identification and visual scanning." Id. at 1560. The judge 

found that the three main sections of each program are testing or 

diagnosis, profile analysis, and training. In both programs, the 

judge found, students progress from the simplest skills to the 

25 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 25 
most complex and overall are "trained in substantially the same 

way." Id. He also concluded that in both programs students must 

attain similar criteria during training in order to move to the 

next level, and that both programs present similar profiles 

reflecting student speed and accuracy. Id. 

Substantial similarity analysis concludes with a comparison 

of portions of the alleged infringer's works with the portions of 

the complaining party's works which are determined to be legally 

protectable under the Copyright Act. To determine whether any 

portions of Autoskill's computer program were protectable, the 

district judge used a three-step method of analysis recommended in 

3 Nimmer§ 13.03[F], at 13-80, a variation of which was recently 

adopted by the Second Circuit in Altai: abstraction, filtration, 

and comparison· 17 In this preliminary injunction appeal we need 

not decide which is precisely the correct method of analysis for a 

final copyright judgment, Plains Cotton Cooperative Association v. 

17 

We are mindful that Altai is just one of the approaches 

courts have used in analyzing the substantial similarity of 

computer programs. See, e.g., Altai, 982 F:2d at 706 (adopting 

abstraction, filtration, comparison approach); Whelan, 797 F.2d 

at 1235-36 (adopting rule for separating idea from expression in 

computer programs); Gates Rubber Co. v. Bando Am., Inc., 798 

F. Supp. 1499, 1513 (D. Colo. 1992) - (adopting modification of 

Whelan approach based on Dawson v. Hinshaw Music Co., 905 F.2d 731 

(4th Cir. 1990) in conjunction with the abstraction test). 

However, here the district judge's use of a test like that 

articulated in Altai by the Second Circuit to determine 

substantial similarity was ~ot at issue. In its brief, NESS noted 

that the "proper way to examine the issue has been laid out in a 

number of recent cases ... but the Altai case is the most 

explicit." Appellant's Br~ef at 30. Of course NESS does argue 

vigorously that the judge misapplied the Altai test. Autoskill 

cites Altai and then states that "the trial court applied an 

appropriate method, recommended by the Second Circuit in Altai," 

saying that the method used below runs "very similar to that used 

by the Second Circuit in Altai." Appellee's Brief at 16. 

26 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 26 
Goodpasture Computer Service. Inc., 807 F.2d 1256, 1262 (5th 

Cir.), cert. denied, 484 U.S. 821 (1987), because we are satisfied 

that the trial judge used a permissible method of analysis here; 

moreover Autoskill showed a likelihood of success in defining as 

protectable the portions of its program for which the judge 

granted preliminary injunctive relief, after finding there was 

substantial similarity between the identified portions of the NESS 

and Autoskill programs which the judge compared. The choice of 

the precise test for such analysis can await an appeal requiring 

that choice, perhaps preferably one from a final copyright 

judgment. 

1. The Abstractions Analysis 

One of the fundamentals of copyright law is that a copyright 

does not protect an idea, but only the expression of the idea. 

See. e.g., Baker v. Selden, 101 U.S. 99, 104, 107 (1879); Mazur 

v. Stein, 347 U.S. 201, 217 (1954); see also 17 U.S.C. § 102(b) 

(codifying idea/expression distinction). This idea/expression 

dichotomy applies to computer programs. Altai, 982 F.2d at 703. 

Thus, in general, the portions of a computer program that are 

"ideas" are nonprotectable, and the portions that represent 

"expression" may be protected. "Infringement is shown by a 

substantial similarity of protectable expression, not just an 

overall similarity between the works." 3 Ninuner § 13.03[F], at 

13-82 (emphasis in original). Separating idea from expression, 

then, is one of the basic parts of a substantial similarity 

analysis. 

27 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 27 
In order to separate idea from expression, the judge here 

chose an approach known as the "abstractions" test or analysis. 

In articulating the approach, Judge Learned Hand explained: 

Upon any work, and especially upon a play, a great 

number of patterns of increasing generality will fit 

equally well, as more and more of the incident is left 

out. The last may perhaps be no more than the most 

general statement of what the play is about, and at 

times might consist only of its title; but there is a 

point in this series of abstractions where they are no 

longer protected, since otherwise the playwright could 

prevent the use of his "ideas," to which, apart from 

their expression, his property is never extended. 

Nichols v. Universal Pictures Cor:p., 45 F.2d 119, 121 (2d Cir. 

1930), cert. denied, 282 U.S. 902 (1931). Because Judge Hand's 

abstractions approach generally 

t 18 i't . compu er programmers use, is 

18 

"mirrors" the process that 

particularly suited to the 

A programmer begins by identifying the program's "function," 

or "what the program actually does, in contrast to its 

'implementation,' which is the method, including the instructions, 

that allow a program to accomplish that function." Steven R. 

Englund, Note, Idea, Process. or Protected Expression?: 

Determining the Scope of Copyright Protection of the Structure of 

Computer Programs, 88 Mich. L. Rev. 866, 870 (1990) [hereinafter 

Englund]. 

After identifying the ultimate function, a programmer 

develops an outline for the program. 3 Nimmer § 13.03[F], at 

13-85. The prograrmner "decomposes that function into simpler 

constituent problems or 'subtasks.'" Englund at 870. The portion 

of a program implementing a subtask is sometimes called a module 

or a subroutine. Id. at 871; 3 Nimmer§ 13.03[F], at 13-85. A 

module or subroutine is "a relatively short sequence of 

instructions in some prograrmning language · that, when executed, 

performs some well-defined function that is one of the subtasks 

defined in the course of decomposing the ultimate function of the 

program." Englund at 871. "The functions of the modules in a 

program, together with each module's relationship to other modules 

constitute the 'structure' of the .program." Id. The structure is 

the nonliteral aspect of computer programs. 

After designing the program conceptually, the programmer 

writes instructions in a "written language that the computer can 

read." Al t ai, 982 F.2d at 698; see 3 Nimmer § 13.03[F], at 

13-85. The programmer usually writes a "source code" in one of 

(Footnote continued on next page) 

28 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 28 
substantial similarity analysis for computer programs. 

3 Nimmer § 13. 03 [Fl [1] . 

The trial judge here recognized that at the "highest and most 

general" level of abstraction the Autoskill program is "a reading 

program designed to diagnose, re-mediate and teach reading skills 

through the use of the computer." 793 F. Supp. at 1566. This 

level was thus treated as "idea" matter, not entitled to 

protection. Then the judge also excluded from the area of 

protection, Autoskill's use of the three subtypes of students with 

reading difficulties -- types O, A, and S -- explaining that 

"[b]ecause these particular sub-types are identified and discussed 

in the literature available to the public, Autoskill is not 

entitled to protection from their use by others with testing or, 

diagnosing, profiling and training." Id. at 1566. The judge 

explained that "[t]he identification of those sub-types by 

researchers would be of little value[] if such theories were not 

allowed practical application to real students" and that to "allow 

such protection would grant Autoskill a virtual monopoly over 

those concepts and serve to thwart efforts of others to build upon 

them." Id. (citing Feist, 111 s. Ct. at 1290). 

(Footnote continued): 

several computer languages. Whelan Assocs .• Inc. v. Jaslow Dental 

Lab .• Inc., 797 F.2d 1222, 1230 (3d Cir. 1986), cert. denied, 479 

U.S. 1031 (1987). The source code then is translated into an 

"object code," which is a binary code in Os and ls. Id. at 

1230-31. These codes, which are the literal aspects of computer 

programs, are protectable by copyright. Altai, 982 F.2d at 702; 

see also Whelan, 797 F.2d at 1233 (listing cases). 

Autoskill does not claim infringement of its source code. 

793 F. Supp. at 1563. 

29 

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The judge ruled, however, that "[t]he manner in which 

Autoskill utilizes those ideas and communicates them to students 

and teachers in the context of its reading program amounts to 

expression. Such expression can extend to the organization, 

structure and sequence if they are original." Id. The judge then 

proceeded to consider "Protectible v. Non-Protectible Expression," 

id., in his subsequent filtration analysis when he determined 

which elements of expression survived for protection. 

filt~ation below. 

We treat 

NESS essentially makes two complaints about the abstractions 

analysis of ·the trial judge. First, there is a generalized 

criticism that he erred when he "proceeded to examine the 

similarities in the highest level of abstraction (the functions 

performed) between Autoskill and NESS' programs." Appellant's 

Brief at 32. 

We disagree. As noted, we feel that the judge used a 

permissible method of analysis and reached reasonable conclusions, 

although we are not deciding which precise method of analysis 

should be followed in a final copyright decision. Under the 

abstractions analysis outlined in Altai a judge essentially 

retraces, in reverse order, the steps taken by the program's 

designer, beginning with the code and ending with the program's 

ultimate function. Altai, 982 F.2d at 707. It is true that the 

trial judge's analysis and conclusions here do P.ot reveal 

precisely the abstractions analysis outlined in Altai, cited by 

both NESS and Autoskill. _ However, we feel we should .focus on the 

court's findings and conclusions, and his resulting ruling on 

30 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 30 
protectable areas of expression, rather than on the precise method 

of analysis the judge used. 

We are not persuaded at this preliminary injunction stage 

that the judge's rulings should be reversed simply because of a 

lack of any particular detail in his analysis. See Altai, 982 

F.2d at 714 ("While the facts of a different case might require 

that a district court draw a more particularized blueprint of a 

program's overall structure, this description is a workable one 

for the case at hand."). Moreover, we find no persuasive 

presentation by NESS of any conflicting abstractions analysis 

which was presented below. We feel the record amply supports the 

judge's conclusions made as to the nonprotectable and protectable 

features of the Autoskill program for the purposes of a 

preliminary injunction. 

We are convinced that the record furnishes an ample factual 

basis for the trial judge's analysis on the levels of abstraction 

and his conclusions as to which were idea levels not entitled to 

protection, and which were in the expression area and possibly 

eligible for protection after filtration analysis. There was 

detailed testimony by Autoskill's expert, Dr. Olson, 19 that 

19 

NESS challenges the reliance of the trial judge on testimony 

of Autoskill's experts, particularly Dr. Olson, who was admittedly 

not a prograrmner. 

In his findings the judge analyzed carefully the 

qualifications of the experts. 793 F. Supp. at 1561. He referred 

to Dr. Olson's strong background in reading education and the use 

of software in reading education. Dr. Olson detailed his academic 

credentials, including his Ph.D. in psychology. Appellee's Supp. 

App. at 133-34. Olson pointed out his focus on reading and 

working with children with reading disabilities for approximately 

the past 15 years. For six or seven years Dr. Olson had been 

(Footnote continued on next page) 

31 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 31 
recognized the highest two levels of abstraction demonstrated in 

Autoskill's Exhibit AC, Appellee's Supp. App. at 319, as 

unprotectable idea levels. Dr. Olson explained that it was below 

the highest two levels of abstraction that "we are starting to get 

into some very specific aspects of expression of those top two 

level · 20 ideas." Appellee's Supp.. App. at 157. As the judge 

noted, the experts' opinions may be helpful, but their legal 

conclusions on these points are not binding. 793 F. Supp. at 

1570. The consideration of the experts' views on these matters in 

drawing the judge's conclusions was within his discretion and not 

error. Altai, 982 F.2d at 713-14. 

Second, NESS argues that the judge erroneously prevented the 

use by others of educational processes, methods and procedures, 

Appellant's Brief at 23-25, citing 17 U.S.C. § 102(b) and its 

provision that copyright protection does not extend to "any idea, 

procedure, or process, [or] system. " We are not persuaded. 

(Footnote continued): 

involved in research regarding the use of software in reading and 

he had personally designed reading education software. He stated 

that he was not a "programmer." Id. at 134. He directed the 

basic design of the project and how the studies are to be run in 

the schools, and had authored about 39 publications related to 

reading, 14 of which were related to software also. Id. at 

134-35. 

We are satisfied the findings of the trial judge on the 

qualifications of the experts were not clearly erroneous and that 

he did not abuse his discretion in the weight he gave to their 

testimony. 

20 

Exhibit AC diagramed the "Levels of Abstraction Approach." 

It broke them down into: (I) recognition that at highest level of 

abstraction both programs share common ideas of using a computer 

to diagnose, remediate and teach reading skills; 

(II) distinctions between subtypes in diagnosis and training; 

(III) specific subtypes diagnosis and training of Type 0, A, and 

S; and (IV) details of testing and training. 

32 . 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 32 
The judge explicitly dealt with§ 102(b) and pointed out that more 

than literal application of the statute is required. See Toro Co. 

v. R & R Prods. Co., 787 F.2d 1208, 1211-12 (8th Cir. 1986). He 

faced up to the need to deal with the idea/expression dichotomy, 

appropriately analyzing the dichotomy as discussed in Baker v. 

Selden. 793 F. Supp. at 1564. In his abstractions analysis and 

conclusions he excluded from protection the highest two levels of 

abstraction in the Autoskill program, as we have noted above, and 

left only the lower levels for further consideration in his 

filtration discussion and possible protection. 

In sum, we are not convinced that NESS has demonstrated any 

reversible error in the trial judge's abstractions analysis. For 

purposes of review of a preliminary injunction, on this issue we 

feel that Autoskill has shown a substantial likelihood of success. 

2. The Filtration Analysis 

Under the second step of his analysis -- filtration -- the 

judge considered whether any of the expression of the Autoskill 

program should be excluded from copyright protection. The step 

requires that a court examine the program's "structural components 

at each level of abstraction" to determine whether they are 

excludable under traditional copyright doctrines. Altai, 982 F.2d 

at 707. 21 By removing unprotected expression from the analysis, 

21 

Altai defined the filtration step as the step in which a 

court examines "the structural · components at each level of 

abstraction to determine whether their particular inclusion at 

that level was 'idea' or was dictated by considerations of 

efficiency, so as to be necessarily incidental to that idea; 

required by factors external to the program itself; or taken from 

the public domain and hence is nonprotectable expression." 

(Footnote continued on next page) 

33 

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the filtration step "serves 'the purpose of defining the scope of 

plaintiff's copyright.'" 982 F.2d at 707 (quoting Brown Bag 

Software v. Symantec Corp., 960 F.2d 1465, 1475 (9th Cir. 1992)); 

see 3 Nimmer§ 13.03[C], at 13-71. 

Applying the related copyright doctrines of merger and scenes 

a faire, the judge filtered out two aspects of the Autoskill 

program. The merger doctrine excludes expression from copyright 

protection if it is "merged" inseparably with an idea. 3 Nimmer 

§ 13.03[B] [3], at 13-65. The judge filtered out the 13 categories 

of vowel and consonant combinations used in the Autoskill program 

because he concluded they were an aspect of expression that is 

dictated by teaching reading in English, and thus is merged with 

the idea of the reading program. 793 F. Supp. at 1568. 

The judge also addressed whether any aspects of the 

expression in the Autoskill program were merged with the idea of 

testing and training the three subtypes of readers, and thus were 

nonprotectable. The judge found "no evidence that the idea of 

testing, diagnosing and training the particular sub-types could be 

expressed in only one way." Id. at 1560. The judge also found 

that the "idea of testing, diagnosing and training the particular 

sub-types is capable of being expressed in more than one way." 

Id. Thus the judge held that the idea of the Autoskill program 

for testing, diagnosing, and training the three subtypes need not 

(Footnote continued): 

982 F.2d at 707. The judge in this case expressly analyzed the 

Autoskill program under the idea/expression dichotomy in his 

abstraction · analysis, as we have noted earlier. We conclude this 

difference in labelling of the analyses was unimportant. 

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be denied copyright protection under the merger doctrine. Id . at 

1567. 

NESS does not specifically challenge the judge's factual 

findings on merger, but instead makes a general argument that the 

judge's ruling conflicts with the merger doctrine. Appellant's 

Brief at 33. We are not persuaded by this unsupported, vague 

argument and feel that the judge's findings were not clearly 

erroneous and that he properly concluded he should deny exclusion 

on the merger theory. 

The scenes a faire doctrine in general excludes from 

copyright protection material that is "standard," "stock," or 

"conunon" to a particular topic, or that "necessarily follow[s] 

from a conunon theme or setting." 3 Ninuner § 13.03[B] [4], at 

13-70. Applying this doctrine, the judge also filtered out the 

"silent sentence" and "silent paragraph" components of the 

Autoskill program because he concluded they were "so standard to 

the field that they cannot be afforded protection." 793 F. Supp. 

at 1568. 

NESS further contends that the trial judge erred in the 

filtration analysis by not finding that the components of the 

Autoskill program at issue were either scenes a faire matter, or 

were taken from the public domain. Any components of the program 

that were taken from the public domain would be "free for the 

taking." Altai, 982 F.2d at 710. "It is axiomatic that material 

in the public domain is not protected 

incorporated into a copyrighted work." 

13-98. NESS contends that features 

35 

by copyright, even when 

3 Ninuner § 13. 03 [F] [ 4] , at 

of the Autoskill program 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 35 
sought to be protected were taken from the Doehring study upon 

which the Autoskill program was based and were common and obvious 

methods of testing subjects. Appellant's Brief at 34-37. 

Autoskill argues in response that its program involves 

substantial additional elements constituting original expression 

as shown by the testimony of Dr. Olson and Dr. Moya on the 

uniqueness of the Autoskill program, and by the testimony of Dr. 

Trites and Dr. Fiedorowicz on necessary changes and differences 

from Doehring's approach. Appellee's Brief at 42-43. 

The trial judge did not discuss the public domain issue in 

those precise terms, but he made findings dealing with the 

substance of this contention. His findings stated that he was 

persuaded by the testimony of Dr. Olson and Dr. Moya. He cited 

their testimony on the many unique aspects of the Autoskill 

program and found that the opposing testimony of Dr. Norton of 

lack of uniqueness of the Autoskill program was less convincing 

than that of Dr. Olson and Dr. Moya. 

(findings Nos. 53, 54). 

793 F. Supp. at 1561 

One of Autoskill's witnesses, Dr. T . 22 rites, explained that 

Autoskill did not simply use Dr. Doehring's theories in a 

computerized form, but instead had to make "significant changes" 

to Dr. Doehring's techniques to develop effective training 

programs. Appellee's Supp. App. at 24. As an example of the 

process used in developing the Autoskill program, Dr. Trites 

22 

Dr. Trites is a principal in Autoskill, as is his wife, Dr. 

Fiedorowicz . . Dr. Trites has been a computer programmer who worked 

with Burroughs Corporation, now Unisys. Appellee's Supp. App. at 

23. 

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explained that the original Autoskill testing to determine the 

reading subtypes was dependent on having a touch-sensitive screen 

on the computer. He further explained that the Autoskill system 

did not simply involve touching keys 1, 2, or 3, but involved 

looking at the word on the screen and responding with hands on the 

keyboard, a system that took considerable investigation and 

research scaff work, and also that of statisticians and 

programmers. Id. at 25. This testimony shows that the Autoskill 

program was unique and was not drawn directly from the Doehring 

research. 23 

As to uniqueness, Dr. Trites testified that the Autoskill 

program tested for 39 subskills, which were not the same subskills 

23 

This proof also disposes of a related argument. NESS 

contends that the judge erred in protecting the keying procedure 

the Autoskill program provides for students to respond to the 

audio-visual matching test. In the test, a student selects a 

response by pressing the 1, 2, or 3 keys. 793 F. Supp. at 1569. 

NESS argues that this is a "method" not protected by copyright. 

As noted, 17 U.S.C. § 102(b) precludes copyright protection for 

any "process" or "method of operation." But, as we have stated, 

we must go beyond the literal language of the statute and apply 

the idea/expression distinction to resolve this issue. See Toro 

Co., 787 F.2d at 1211-12. 

Copyright protection extends to any "original works of 

authorship fixed in any tangible medium of expression." 17 U.S.C. 

§ 102(a). The nonliteral aspects of computer programs certainly 

can be subject to copyright protection. "To qualify for copyright 

protection, a work must be original to the author. Original, as 

the term is used in copyright, means only that the work was 

independently created by the author (as opposed to copied from 

other works), and that it possesses at least some minimal degree 

of creativity." Feist, 111 S. Ct. at 1287 (citation omitted). We 

think, for the purposes of the preliminary injunction, that the 

record showed that the keying procedure reflected at least a 

minimal degree of creativity. Further, NESS has not pointed to 

substantial evidence in the record that this procedure was such a 

common practice, or that it was dictated by efficiency 

considerations, so that it should have been filtered out of the 

analysis. 

37 

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tested in the Doehring research. Dr. Trites testified that the 

NESS program used the same 39 subskills, which was not necessary 

because there were thousands of possible choices that could have 

been made. For example, he pointed out that while Autoskill used 

11 CVCC 11 syllables, other skills could have been selected. Id. at 

27. 

Dr. 

Another witness whose testimony was relevant to uniqueness, 

24 Moya, explained that there was uniqueness in the Autoskill 

program in .the manner in which it used the computer to record 

mastery and speed of response. The automaticity theory that 

Autoskill utilizes was not found in the other software programs. 

Dr. Moya also pointed to their manner of continuous reinforcement 

of the students, offering 50 trials to reinforce a student's 

response, as unique. He also mentioned Autoskill's presentation 

of graphs and its immediate feedback which was not found in other 

software programs. Id. at 267. In addition, he described the way 

that Autoskill assessed the abilities of students and divided them 

into three distinct subtypes, and then prescribed training 

according to those subtypes. In reporting to the superintendent, 

the committee considered this uniqueness of the Autoskill program 

24 

Dr. Moya, who was the staff psychologist of the San Benedito 

School System of South Texas, had experience with computer 

software used in a program for project management. The school 

system used the computer program to track juveniles corning into 

the criminal justice system with unidentified learning 

disabilities. Dr. Moya was chair of a committee reviewing 

hardware and software for use in reading education. Appellee's 

Supp. App. at 259-61. The committee reviewed several software 

programs, including that of Autoskill. Dr. Moya personally 

operated each of the reading education software products for 

several hours. The committee selected the Autoskill software for 

their school. 

38 

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in its recommendation, feeling that they 

software program that was going 

instructional program in their school 

had finally located a 

to impact the reading 

system and in their 

southwest area where reading scores are very low. Id. at 268-69. 

As another point of departure from the Doehring research, Dr. 

Trites explained that the Autoskill program emphasized errors as 

being more important than latency, a decision based on years of 

research. Id. at 28. Also, Dr. Trites testified that the 

Autoskill program contained unique aspects in assessing the 

subtypes of readers; to his knowledge, no programs other than 

Autoskill do a diagnostic assessment for a profile indicating a 

subtype of reading difficulty. Id. at 35. 

Turning to NESS' witnesses, Dr. Norton testified that she 

operated the Autoskill program for at least an hour. Appellee's 

Supp. App. at 250. She was asked about the subtype approach as 

defined by Doehring and Hoshko. She said she knew that concept 

through the learning disabilities literature and "that there are 

learner characteristics or subskills to the overall word 

recognition that draw a different perceptual strength." lg. at 

253. She agreed that in other reading software she was aware of 

there is no norm of using the zero and one keys in the same way 

that they are used in the Autoskill and NESS programs. Id. at 

256. She also said there are no other marketed programs that 

pursue a sequence of 13, 14, or 15 skill patterns using sense and 

nonsense words; but she explained that there was software around 

that used the sense and nonsense words and Dr. Norton herself 

designed a program to teach the patterns they were talking about 

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in 1980 or 1981. She found a lack of interest in it because some 

publishers she contacted "did not see computers in the schools 

II Id. at 257-58. 

We note that the trial judge accepted Dr. Olson's testimony 

that no other programs of which he was aware used alternating 

sense and nonsense words. 793 F. Supp. at 1569. In light of the 

uncertainty in Dr. Norton's testimony on the point we cannot say 

the judge's acceptance of Olson's testimony was clearly erroneous. 

Thus the judge heard considerable testimony that suggests 

that the Autoskill program was not identical to the testing 

outlined in the Doehring study. We feel that this evidence 

refutes NESS' argument that the Autoskill program was taken 

entirely from the public domain or was so standard to the topic as 

to be unprotectable scenes a faire material. 

NESS also contends that the oral reading test in the 

Autoskill program is not subject to copyright protection because 

it is the equivalent of using flash cards, a method which it 

argues is taken from the public domain or is akin to scenes a 

faire material. In support of the argument NESS refers, in part, 

to testimony comparing the "visual training mode" of the Autoskill 

program to "a computerized version of a human presenting flash 

cards and holding them up." Appellant's App. at 358. NESS' 

generalized complaints are not supported by substantial evidence 

that the Autoskill oral reading test contained no original 

expression. 

In sum, we are convinced that the expert 

exhibits furnish a substantial basis for 

40 

testimony and the 

the trial judge's 

Appellate Case: 92-2118 Document: 010110115098 Date Filed: 05/19/1993 Page: 40 
conclusion that there are protectable elements in the Autoskill 

program that survive the filtration process. 

3 . The Comparison 

Finally, after conducting an analysis to filter out the 

nonprotectable material, the judge attempted to compare the 

remaining "core" of material, the copyrightable expression. See 

3 Nimmer§ 13.03[F], at 13-99. "Once a court has sifted out all 

elements of the allegedly infringed program which are 'ideas' or 

are [other unprotected material], there may remain a core of 

protectable expression." Altai, 982 F.2d at 710. The analysis at 

this point "poses essentially a value judgment, involving an 

assessment of the importance of the material that was copied." 

3 Nimmer§ 13.03[F], at 13-102; TM Altai, 982 F.2d at 710. 

NESS concedes "there are many similarities in the two 

programs," but contends that after filtration there is no 

protectable expression remaining to compare. Reply Brief of 

Appellant at 18. Having rejected NESS' arguments concerning the 

filtration step, we disagree. We think the judge, after his 

comparison analysis, had an adequate basis for observing "many 

significant similarities" in the protectable aspects of the 

Autoskill program and the allegedly infringing NESS program. 793 

F. Supp. at 1569. 25 

25 

The judge considered expert testimony about the similarities 

between the programs, including an expert's views "as to what [the 

witness] believed legal conclusions should be in a number of areas 

based upon his review of legal materials and the programs at 

issue." 793 F. Supp. at 1568. The judge explained, however, that 

he "need not .rely on such [legal] conclusions." Id. We feel that 

the judge properly viewed the legal conclusions as matters for the 

court to decide. 

41 

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The judge identified similarities in the three basic tests 

used in the programs. The judge concluded that in the oral 

reading tests in both programs, "a word or words come up on the 

screen and the student attempts to read it orally" and both 

programs "require a trainer to decide whether or not the word is 

read correctly and to record speed and accuracy into the 

computer." The judge concluded that in the auditory visual 

matching test, or audio identification test, in both programs 

"three word choices appear on the screen and an auditory stimulus 

of a target word or nonsense word is presented to the student. 

The student must select which word he hears and indicate his 

response by hitting the 1, 2 or 3 key." Id. In the visual match, 

or visual identification, test in both programs, the judge 

concluded, "the screen displays four words or nonsense words. The 

target word is isolated from the other words and the student is 

expected to choose one of the remaining three words which is 

identical to the target word." Id. 

The judge noted that both programs use alternating words and 

nonsense words. The judge concluded that both programs record 

speed, or latency of response, and accuracy data and use the 

information in the same manner. Id. Further, the judge concluded 

that in both programs the students are trained according to the 

same three testing topics. In both programs, the judge noted, 

students receive immediate feedback about accuracy. The judge 

concluded that the criteria for a student's progressing to the 

next subprogram is similar in both programs. Further, the judge 

noted that in both programs: the presentation of skills proceeds 

42 

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hierarchically from the simple to the complex; a visual scanning 

test is administered in combination with the other tests to 

determine the student's subtype; matrices record student progress 

within each section; and graphs are used for the same purposes. 

Id. 

To show lack of similarity of the Autoskill and NESS 

programs, a prime witness for NESS was Mr. Johnson-Laird. The 

trial judge noted his strong background in computer software but 

said he has no background in the area of reading education or its 

software. Jg. at 1561. Johnson-Laird's testimony particularly 

sought to prove lack of similarity between the NESS and Autoskill 

programs. He presented charts showing differences in logic flow 

between the display screens of both programs. 

We have examined the testimony of Mr. Johnson-Laird on these 

points,~, Appellant's App. at 317-328, and Ex. 10, photographs 

of the program screens, .ig. at 473-78, used in his testimony. He 

said the Autoskill screen does have elements, similar to that of 

NESS, that were arguably protectable, Appellant's App. at 397, 

identifying "the matrices here, when you take them as an entire 

entity." Id. at 398; see also id. at 400-401. He said, however, 

that there was not substantial similarity in the look and feel of 

the Autoskill and NESS screens, stressing the way NESS uses color. 

Id. at 401-03. He referred also to the fact that in the NESS 

program, one's voice could be recorded and played back, which was 

not done on the Autoskill program. Id. at 442. 

The judge explained that he rejected NESS' suggestions of 

differences because the differences (color in NESS' program absent 

43 

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in Autoskill's, word choices appearing in phases in NESS' program 

while those on the Autoskill screen appear at the same time) were 

not important or substantial parts of Autoskill's program. The 

judge gave greater weight to Dr. Olson's testimony that the 

differences were not pedagogically significant. 793 F. Supp. at 

1570-71. We are satisfied the judge's crediting of the Autoskill 

witness' testimony over that of NESS' witness was not clearly 

b f d . . 26 erroneous or an a use o iscretion. 

In sum, we affirm the judge's conclusion that Autoskill 

satisfied its burden on the substantial similarity requirement for 

purposes of the preliminary injunction. , Having satisfied its 

burden at this stage on both elements required to show copying 

access and substantial similarity Autoskill thus demonstrated a 

substantial likelihood of success on the merits. Our ruling, of 

course, is for purposes of the preliminary injunction alone and 

does not represent a final determination on the substantial 

similarity issue. 

B. Irreparable Harm 

The district judge held that Autoskill had made the requisite 

showing of irreparable harm on two alternative grounds. First, 

the judge applied the rule a leading commentary describes as the 

prevailing one in the circuits: a showing of a prima facie case 

of copyright infringement or of a reasonable likelihood of success 

26 

During his testimony about the use of color in the screens 

and the difference he saw between them iμ this respect, Mr. 

Johnson-Laird said: " .. I don't necessarily mean in the 

pedagogical sense. I am not competent to talk about matters of 

teaching." Appellant's App. at 402; see also id. at 415, 416. 

44 

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on the merits usually raises a presumption of irreparable harm for 

preliminary injunction purposes. 3 Nimmer§ 14.06[A], at 14-78.13 

to -78.14; 793 F. Supp. at 1572. We need not decide whether to 

adopt that test because of the second ground on which the trial 

judge found irreparable injury one that is independently 

sufficient. 

In his second holding on irreparable injury, the judge cited 

testimony that from NESS' conduct, Autoskill "will suffer from a 

loss of uniqueness in the marketplace." 793 F. Supp. at 1572. 

The judge also noted testimony that if the NESS program produced 

poor results, "such results would affect Autoskill's reputation." 

Id. Further, the judge noted testimony that Autoskill "had no way 

of ascertaining how many customers were lost to NESS." Id. On 

the basis of this evidence, the judge held that Autoskill had 

demonstrated irreparable harm by presenting evidence that the NESS 

program "jeopardizes Autoskill's investment and competitive 

position and thus shows irreparable harm." IQ.. 

We are satisfied that the judge's conclusion that a danger of 

irreparable harm was shown was not in error. 

C. Balance of Hardships 

Autoskill was also required to demonstrate that the injury it 

would sustain if the injunction did not issue outweighed the 

potential harm that the injunction would cause to NESS. See 

Tri-State Generation & Transmission Ass'n, Inc. v. Shoshone River 

Power, Inc, 805 F.2d 351, 356-57 (10th Cir. 1986). The district 

judge observed that while NESS argued that the injunction would 

have a devastating impact on its business, it presented no 

45 

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evidence to support the contention. 793 F. Supp. at 1572. 

However, even assuming the injunction would have such a 

devastating effect on NESS, the judge adopted the reasoning of 

other courts that "a knowing infringer cannot be 'permitted to 

construct its business around its infringement.'" Id. (quoting 

Apple Comnuter, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 

1255 (3d Cir. 1983)). Thus the judge made a primarily legal 

ruling on the factor. 

Autoskill's burden on this factor was to demonstrate that the 

harm it would sustain without an injunction outweighed · the 

potential harm of an injunction to NESS. Autoskill presented 

evidence that it would sustain at least some harm; under the 

usual application of the balancing test, the judge did not make it 

clear how this potential harm to Autoskill outweighed the harm it 

assumed NESS would sustain. Instead, the judge recognized that in 

the copyright context the four factors require sensitive weighing. 

Stated another way, the district judge adopted the view that the 

potential injury to an allegedly infringing party caused by an 

injunction "merits little equitable consideration and is 

insufficient to outweigh the continued wrongful infringement." 

Georgia Television Co. v. TV News Clips of Atlanta, Inc., 718 

F. Supp. 939, 949 (N.D. Ga. 1989). We agree that placing too much 

weight on this factor would reward infringers. Under the law that 

the judge applied to the factor, which we rule was correct, 

Autoskill made a persuasive showing that the balance of the harms 

weighed in its favor. 

46 

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D. The Public Interest 

On the final factor, Autoskill was required to demonstrate 

that the issuance of the injunction was not adverse to the public 

interest. See Tri-State Generation & Transmission Ass'n. Inc., 

805 F.2d at 357. The district court implicitly addressed this 

factor by acknowledging that by granting an injunction it would 

uphold the rights of the copyright holder. 793 F. Supp. at 1572. 

In copyright cases, we think this factor normally weighs in favor 

of the issuance of an injunction because the public interest is 

the interest in upholding copyright protections. See 3 Nimmer 

§ 14.06[A], at 14-80. The issuance of the injunction clearly was 

not adverse to the public interest. 

IV. CONCLUSION 

In sum, in his filtration analysis the district judge denied 

copyright protection to two aspects of the Autoskill program, the 

13 categories, or skill levels, based on different combinations of 

vowels and consonants, as well as the "silent sentence" and 

"silent paragraph" components. 793 F. Supp. at 1568. Further, 

for the reasons already given, the judge gave preliminary 

injunctive relief against infringement, due to the likelihood of 

success which was shown, as to the essential aspects of the 

Autoskill program, including: the oral reading test; the 

auditory visual matching test; the visual match test; the visual 

scanning test; alternating words and nonsense words; utilization 

of speed and accuracy data; use of speed and accuracy criteria; 

and hierarchical presentation of skills. Id. at 1569. 

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We hoid that we have appellate jurisdiction and the motion to 

dismiss the appeal is DENIED. We hold that the district judge's 

findings were not clearly erroneous, his grant of the preliminary 

injunction was not an abuse of discretion, and the injunctive 

order is AFFIRMED. The case is REMANDED for further proceedings. 

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