Opinion ID: 3011995
Heading Depth: 2
Heading Rank: 2

Heading: paytxabr and de minimis

Text: Initially, Grace performed maintenance work for Geac’s licensees as to which Geac made no complaint. However, commencing in 1993, Grace expanded its activities beyond maintenance service to provide Geac’s customers with software, particularly a program it called the Remain on Release. Geac viewed the expanded activities beyond mere maintenance, and especially the sale of Grace software, as a violation of its exclusive rights under the Copyright Act to make and distribute derivative works of its Millennium programs. Grace offered and sold a program that it obtained by copying and modifying Geac’s copyrighted Millennium product known as PAYTXABR. Grace distributed and sold it as its CNRTXABR program. It acquired this program from Cook and Reynolds, and immediately renamed it the GMITXABR program. Reynolds testified categorically on direct examination that his W-2 program was in no way similar to HR:M’s (DBS Millennium) program. This unexplained statement, however, lacks substance and verity because it is wholly inconsistent with his testimony concerning the origin of his program. He testified that when he was installing programs presumably on behalf of Dun & Bradstreet’s licensee Super Foods in Ohio, their local school district wasn’t showing up on the W-2. Reynolds, thereupon, asked for a copy of the PAYTXABR program. Then I made a copy and renamed it CNRTXABR, and then made a fix for Super Foods to pick up the local school tax. He acknowledged that CNRTXABR should have stayed at Super Foods and shouldn’t have been distributed with the other code - a bad idea. This is a plain statement of the root of his infringement. On cross-examination, he testified: Q: Could you have written the CNR W-2 program without making either copies or calls to Dun & Bradstreet copy members or source code? A: No. Reynolds’s denial of infringement is also inconsistent with earlier testimony given by Ilutzi under cross15 examination wherein he admitted unequivocally that CNR W-2 makes copies and calls to Geac codes and that CNR’s W-2 contains CNRTXABR. Ilutzi also admitted that Grace initially distributed CNRTXABR as part of its W-2 software, later renamed and replaced it as part of its W-2 software with GMITXABR, and distributed it as part of its W-2 software. Ilutzi testified: Q: Do you admit that CNR W-2 makes copies and calls to Geac codes? A: Yes. Q: Do you admit that CNR W-2 contains CNRTXABR? A: Yes. Q: Do you admit that GMI W-2 makes copies and calls to Geac code? A: Yes. Q: Do you admit that GMI W-2 contains GMITXABR? A: Yes. Ilutzi further admitted that CNRTXABR was created by copying and modifying Geac’s program PAYTXABR and that Grace’s CNRTXABR was used in the making of GMITXABR, both of which supplied the same tax program. Grace’s counsel conceded at trial that Grace was not contesting its use of Geac’s PAYTXABR. It is there and that’s literal copying. Ilutzi conceded under crossexamination that CNRTXABR should not have been in the CNR W-2 program because it was copied from PAYTXABR. He directed at the end of 1996 that Grace discontinue distributing CNRTXABR. Grace’s expert, Dewar, acknowledged that Grace’s distribution of CNRTXABR and GMITXABR was contrary to standard industry practice. However, he did not consider the distribution a copyright infringement because, in his opinion, it was de minimis. In supporting its de minimis defense, Grace asserts that the quantitative infringement amounted to only twentyseven lines out of 525,000 lines. This argument is irrelevant as a matter of law and we therefore will not tarry on the disputed factual element. The unrefuted trial 16 testimony was that if one considers Grace’s use of Copy and Call commands to gain access to PAYTXABR and the Geac code, the CNR W-2 program actually consists of 62% Geac code, and the GMI W-2 program possesses approximately 43% of Geac’s code. Much more significant, however, than the quantity of copy is the quality of the material purloined. A de minimis defense does not apply where the qualitative value of the copying is material. Kremin, Geac’s technical expert, and Dr. Dewar, Grace’s expert, both agree that Geac’s software would not work if PAYTXABR were removed from it and that Grace’s infringing W-2 software would not work without its copies of PAYTXABR. Thus, the information Grace copied was highly critical. In Harper & Row Publishers, Inc. v. Nation Enterprises, 471 U.S. 539, 564-66, (1985), the Supreme Court rejected a claim that copying 300 to 400 words of a copyrighted book was insubstantial and constituted fair use of the material. The Court looked to the qualitative value of the copied material, both to the originator and to the plagiarist. Id. at 565; see also Educational Testing Serv. v. Katzman, 793 F.2d 533, 542 (3d Cir. 1986). The trial judge appropriately struck the de minimis defense with respect to PAYTXABR from her jury charge and Grace does not contest this ruling. For the foregoing reasons, Grace’s de minimis argument made on appeal also must be rejected.