Source: https://case-law.vlex.com/vid/402-f-3d-119-594929570
Timestamp: 2020-08-13 12:24:34
Document Index: 419238706

Matched Legal Cases: ['§ 117', '§ 117', '§ 117', '§ 117', '§ 117', '§ 117']

402 F.3d 119 (2nd Cir. 2005), 03-9303, Krause v. Titleserv, Inc. - Federal Cases - Case Law - VLEX 594929570
402 F.3d 119 (2nd Cir. 2005), 03-9303, Krause v. Titleserv, Inc.
Docket Nº: 03-9303.
Party Name: 74 U.S.P.Q.2d 1262 William KRAUSE dba Special-T software, Plaintiff-Appellant, v. TITLESERV, INC., New York Settlement Corp., David Eisenberg, Kenneth Wodiska, Thomas Murphy and James J. Conway, III, Defendant-Appellees.
402 F.3d 119 (2nd Cir. 2005)
74 U.S.P.Q.2d 1262
No. 03-9303.
Before: LEVAL and KATZMANN, Circuit Judges. [*]
Plaintiff William Krause appeals from a judgment of the United States District Court for the Eastern District of New York (Thomas C. Platt, J.) granting defendants' motion for summary judgment. Krause brought this suit against Titleserv, its owner and CEO, three employees, and an affiliated company (collectively "Titleserv"). The complaint alleged that Titleserv infringed the plaintiff's copyright by modifying the source code of eight computer programs he authored for Titleserv.
Krause wrote the programs in Clipper, a DOS-based programming language. Code written in such a programming language is called source code. Source code becomes executable only when it is run through a compiler which converts it into the binary 1s and 0s of object, or executable, code. See Universal City Studios, Inc. v. Corley, 273 F.3d 429, 438-39 (2d Cir.2001).
In 1996, Krause and Titleserv began negotiating Krause's assignment of the copyright in his programs to Titleserv in exchange for a five-year consulting agreement. On July 10, 1996, before any agreement was reached, Krause terminated his relationship with Titleserv after learning that Titleserv intended that he take direction from its new Director of Information Technology. When Krause left, he took his notebook computer, which contained the only copies of the source code for two of the programs. He left copies of the source code for the other six disputed programs on the Titleserv file servers because Titleserv had backup tapes, so that in Krause's words, "removing the source from the file servers would have been a meaningless gesture." Krause left executable versions of all eight programs at issue
on Titleserv's file servers, but locked them with a command, which prevented a popular decompiler from converting the executable code back into source code.
On July 16, 1996, Titleserv filed suit against Krause in state court alleging, inter alia, misappropriation of its property. 1 Employees of Titleserv subsequently circumvented the "lock" he had placed on the executable code and decompiled it back into source code. An employee then set about "cleaning up" the source code by formatting it, assigning proper variable names, and adding comments. Titleserv made further modifications, including the fixing of bugs, the addition of new customers, and changes in customer addresses, to keep the old programs functional while Titleserv developed a new, Windows-based system. Krause's system was then phased out at some point between late 1997 and early 1998.
After discovery, Titleserv moved for summary judgment. The district court referred the matter to Magistrate Judge Wall, who recommended granting summary judgment in favor of Titleserv on the ground that Titleserv's use and modification of Krause's programs was protected by 17 U.S.C. § 117(a)(1).
On October 30, 2003, the district court adopted the magistrate judge's report and granted summary judgment for Titleserv. Krause v. Titleserv, Inc., 289 F.Supp.2d 316 (E.D.N.Y.2003). Krause then brought this appeal.
This appeal turns on whether Titleserv was entitled to summary judgment on the basis of the affirmative defense provided in 17 U.S.C. § 117(a)(1), as the district court found. 2 Section 117(a) allows the owner of a copy of a computer program to copy or modify the program for limited purposes without incurring liability for infringement. It states:
It is undisputed that Titleserv possessed executable copies of all the programs. The parties disagree whether Titleserv owned those copies within the meaning of § 117(a). Krause claims that Titleserv never owned the program copies saved on its file server, but rather possessed the copies as a licensee pursuant to an oral agreement. Titleserv asserts that it owns copies of the programs because it paid Krause a substantial sum to develop them and has an undisputed right to possess and use them permanently.
Interpreting the word "owner" is more complex than might first appear. Ownership of property is often described as a bundle of rights. See, e.g., Flagg Bros., Inc. v. Brooks, 436 U.S. 149, 160 n. 10, 98 S.Ct. 1729, 56 L.Ed.2d 185 (1978) (observing that for purposes of interpreting the Fourteenth Amendment, a "property interest is not a monolithic, abstract concept hovering in the legal stratosphere. It is a bundle of rights ...."). It is not clear from the text of § 117(a) how many and what kind of sticks may be removed from the bundle before the possessor of a copy of a computer program is no longer considered its owner for purposes of § 117(a).
The legislative history of § 117(a) is sparse and provides limited guidance on this point. Section 117(a) was based on the recommendations of the National...