Opinion ID: 761260
Heading Depth: 4
Heading Rank: 1

Heading: sufficiency of the evidence

Text: 58 The jury found that DGI directly infringed DSC's copyrights in its pulse code modulation interface manual and printed circuit board assembly, its MP-8 firmware, and its operating system software. The jury also concluded that DGI had not contributorily infringed DSC's copyright in its operating system software. 59 To succeed on a claim for direct copyright infringement, a plaintiff must prove two elements: (1) ownership of the copyrighted material and (2) copying by the defendant. 69 A copy is legally actionable if (1) the alleged infringer actually used the copyrighted material to create his own work, and (2) substantial similarity exists between the two works. 70 A party is liable for contributory infringement when it, with knowledge of the infringing activity, induces, causes or materially contributes to infringing conduct of another. 71 Section 502 of the Copyright Act authorizes the district court to grant final injunctions on such terms as it may deem reasonable to prevent or restrain infringement of a copyright. 72 Likewise, section 503 provides that the court may impound and destroy any articles used to make infringing copies of a copyrighted material. 73 60 Regarding direct copyright infringement, DGI argues that the district court's injunction prohibiting the manufacture, sale and development of competing microprocessor cards is not justified by any such act. DGI first maintains that its competing microprocessor cards do not directly infringe DSC's operating system software copyright, as the DMP-2800 card contains no form of DSC's operating system software when sold to a customer. In addition, DGI submits that the cards do not directly infringe DSC's firmware copyright, inasmuch as the firmware contained in DGI's DMP-2800 cards is not substantially similar to DSC's firmware. Accordingly, DGI posits, the district court must have based its injunction on the theory that DGI developed its card with the benefit of earlier infringement of DSC's copyrights. DGI urges that, as we have previously rejected such a fruit of the infringing tree doctrine, the district court abused its discretion in enjoining DGI from continuing to produce a non-infringing product, even if DGI is guilty of past copyright infringement. 74 DGI likewise argues that the district court erred in ignoring the jury's finding that DGI's microprocessor cards do not contributorily infringe on DSC's copyright in its operating system software. 61 DSC responds that the district court did not abuse its discretion in issuing the injunction based in part on DGI's acts of copyright infringement. In addition to its assertion that the jury's finding of direct infringement is supported by the evidence, DSC advances that the injunction was also justified on the ground of contributory infringement. Towards this end, DSC notes the undisputed fact that its operating system is subject to a valid copyright, that DGI's microprocessor card downloads, i.e., reproduces, that system each time it is booted up, and that DGI intentionally designed its card to perform this infringing function. Furthermore, observes DSC, there is evidence in the record that DGI could have developed its own computer code to operate its card, but realized that copying DSC's system was faster and cheaper. Even though the jury found evidence of contributory infringement--specifically, that DSC's customers infringed DSC's software copyright by using DGI cards, and that DGI knowingly induced this infringing activity--the jury went on to conclude that there was no contributory infringement. This finding, urges DSC, is internally inconsistent, and the district court properly disregarded the jury's finding of no contributory infringement. 62 We have no problem upholding the district court's injunction on the basis of DGI's copyright infringement. There is no question that DGI engaged in at least one act of direct copyright infringement: None dispute that DGI personnel connected a laptop computer to the DSC switch at NTS, made a copy of the DSC operating system software, and carried the laptop back to the DGI labs. This unauthorized act clearly infringed DSC's exclusive right to reproduce its software. 75 63 We also agree with DSC and the district court that DGI engaged in contributory infringement as a matter of law. The evidence shows that each time a DGI microprocessor card is booted up, it downloads (makes a copy of) the DSC operating system. By selling its DMP-2800 card, therefore, DGI knowingly induces and causes its customers--i.e., DSC switch owners--to violate DSC's exclusive right to reproduce its software. Under section 117 of the Copyright Act, DGI could have avoided liability for contributory infringement by proving that its customers owned copies of the DSC operating system software, and were therefore authorized to make additional copies, provided such reproduction was an essential step in the utilization of the computer program. 76 In a specific interrogatory, however, the jury found that DGI did not prove by a preponderance of the evidence that DSC switch owners owned 77 copies of DSC software. 78 In light of this finding--which was unappealed--the jury's conclusion that DGI did not contributorily infringe DSC's software copyright is internally inconsistent. Considering the complex nature of this case and this issue, we understand and sympathize with the jury's confusion on this point. We have previously recognized, though, that when facts are undisputed, we may set aside a jury's finding concerning the legal significance of those facts. 79 64 DGI's reliance on Kepner-Tregoe is also unavailing. As DSC reminds us, that case involved a claim of direct infringement. Here, the district court's injunction can be upheld solely on the basis of contributory infringement. As such, the injunctive relief is grounded not in some earlier act of infringement by DGI, but in the recognition that DGI and its customers are violating the DSC software licensing agreement each time they boot up the DSC operating system into a DGI microprocessor card. 65