''Bowers v. Baystate Technologies'', 320 F.3d 1317 (Fed. Cir. 2003), was a U.S. Court of Appeals Federal Circuit case involving Harold L. Bowers (doing business as HLB Technology) and Baystate Technologies over

patent infringement A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an enabling disclosure of the invention."A ...

copyright infringement Copyright infringement (at times referred to as piracy) is the use of Copyright#Scope, works protected by copyright without permission for a usage where such permission is required, thereby infringing certain exclusive rights granted to the c ...

, and

breach of contract Breach of contract is a legal cause of action and a type of civil wrong, in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other part ...

. In the case, the court found that Baystate had breached their contract by

reverse engineering Reverse engineering (also known as backwards engineering or back engineering) is a process or method through which one attempts to understand through deductive reasoning how a previously made device, process, system, or piece of software accompl ...

Bower's program, something expressly prohibited by a

shrink wrap license Shrinkwrap contracts or shrinkwrap licenses are boilerplate contracts packaged with products; use of the product is deemed acceptance of the contract. Web-wrap, click-wrap and browse-wrap are related terms which refer to license agreements in s ...

that Baystate entered into upon purchasing a copy of Bower's software. This case is notable for establishing that license agreements can preempt

fair use Fair use is a Legal doctrine, doctrine in United States law that permits limited use of copyrighted material without having to first acquire permission from the copyright holder. Fair use is one of the limitations to copyright intended to bal ...

rights as well as expand the rights of

copyright A copyright is a type of intellectual property that gives its owner the exclusive legal right to copy, distribute, adapt, display, and perform a creative work, usually for a limited time. The creative work may be in a literary, artistic, ...

holders beyond those codified in US federal law.

Background

Baystate Technologies, Inc ("Baystate") and HLB Technology ("Bowers") were competing companies which created add-ons that interacted with a

computer-aided design Computer-aided design (CAD) is the use of computers (or ) to aid in the creation, modification, analysis, or optimization of a design. This software is used to increase the productivity of the designer, improve the quality of design, improve c ...

(CAD) program known as CADKEY. Bowers was the patent holder of a system called Cadjet that simplified interfacing with CAD software,. which he began to license commercially in 1989. Bower's initial software offering was later combined with a product, called Geodraft, that was produced by George W. Ford III (Ford) and inserted tolerances compliant with

ANSI The American National Standards Institute (ANSI ) is a private nonprofit organization that oversees the development of voluntary consensus standards for products, services, processes, systems, and personnel in the United States. The organiz ...

for features in a CAD design. Together, the products were marketed as Designer's Toolkit, which was sold with a shrink-wrap license that prohibited

. Baystate sold competing CADKEY tools including Draft-Pak version 1 and 2. According to the court filings, Baystate acquired a copy of Bowers' Designer's Toolkit, and three months later, Baystate released Version 3 of Draft-Pak, which substantially overlapped with the features offered by Designer's Toolkit. In 1991, Baystate sued Bowers and sought a declaratory judgement that Baystate's products did not infringe on Bowers' patent, the patent was invalid, and the patent was unenforceable. Bowers filed counterclaims for copyright infringement, patent infringement, and breach of contract and contended that Baystate had reverse engineered Designer's Toolkit. At court, expert testimonial revealed "evidence of extensive and unusual similarities" between Draft-Pak and Designer's Toolkit and supported supporting Bowers's claim that Baystate had reverse engineered a copy of his software. The District Court of Massachusetts concluded that Bowers was entitled to damages and found that the shrink wrap license tied to Bowers's software preempted any fair use case for reverse engineering as allowed by Copyright law. Baystate appealed the district courts decision.

Opinions of Federal Circuit

The central question the Federal Court addressed was whether a shrink-wrap license that forbids reverse engineering was preempted by federal copyright law, which expressly permits reverse engineering.

Majority opinion

The majority opinion of the Federal Court upheld that parties can freely enter into license agreements that enforce stricter requirements than copyright and that such agreements are not preempted by copyright law. In its decision, the court cited a number of prior cases involving contractual constraints that extend copyright law: * ''Data General v. Grumman'' demonstrated that state laws protecting trade secrets were not preempted by copyright law even though both deal with unlawful copying. Specifically, the federal court stated that "beyond mere copying, that state law claim required proof of a trade secret and breach of a duty of confidentiality." The additional terms result in a unique requirement that is not covered by copyright law and thus not preempted. * '' ProCD v. Zeidenberg'' determined that materials that could not be protected by copyright could be protected by a shrinkwrap license if the actions restricted by the license were not "equivalent to any of the exclusive rights within the general scope of copyright." As contracts affect only the involved parties, no new exclusive (universal) rights are created for the copyright holder. * Although '' Atari v. Nintendo'' established reverse engineering was a fair use exception to copyright infringement, it did not conflict with an additional contract disallowing reverse engineering. * In the Federal Court's own interpretation, '' Vault v. Quaid'' found that state law was preempted by copyright law, but it does not apply to a private contractual agreement.

Dissenting opinion

dissenting opinion A dissenting opinion (or dissent) is an Legal opinion, opinion in a legal case in certain legal systems written by one or more judges expressing disagreement with the majority opinion of the court which gives rise to its judgment. Dissenting opi ...

was entered by Judge Dyk agreeing with all decisions except that a copyright law does not preempt a state contract. Dyk formed his argument using

patent A patent is a type of intellectual property that gives its owner the legal right to exclude others from making, using, or selling an invention for a limited period of time in exchange for publishing an sufficiency of disclosure, enabling discl ...

and copyright law cases: * Cases establishing the rights of patent law were viewed as applicable toward copyright law. '' Bonito Boats v. Thunder Craft Boats'' defined that state law does not preempt patent rights. * ''Data General v. Grumman'' and ''ProCD v. Zeidenberg'' both focused on "extra elements" added by state contract law that were not covered by copyright law. * ''Atari v. Nintendo'' demonstrates the importance of the fair use defense in copyright law to ensure that copyright law did not inhibit understanding of an idea, process, or method of operation. * ''Vault v. Quaid'' established that state law could not be used to preempt copyright law. Dyk agreed that a private agreement could be used to preempt copyright law, but a shrinkwrap license is similar to a state law because the customer does not have an opportunity to renegotiate the license agreement. * Dyk created an analogy of a state law where software disallowing reverse engineering must have a black dot on the packaging. That analogy demonstrated a law that would give broader protections than those normally given in copyright law, which impedes publicly-given rights. * By allowing preemption of copyright law, Dyk questioned other limitations that could be applied to federal law. He also warned that it could undermine the protections that had originally been given in the Copyright Act.

Criticism

Critics scrutinized the outcome and argued that it not only allows companies to use state contract law to expand copyright protections but also creates non-negotiated license terms, which are equivalent to patent-like protection without the limiting conditions of patent law. Critics further argued that the precedent is unrealistic for the software industry. Reverse engineering is considered necessary to be to keep up with "feature wars," such as the issue in this case, and it is also essential for

interoperability Interoperability is a characteristic of a product or system to work with other products or systems. While the term was initially defined for information technology or systems engineering services to allow for information exchange, a broader de ...

and security purposes.

References

External links

* {{United States contract case law 2003 in United States case law United States copyright case law United States patent case law United States contract case law United States Court of Appeals for the Federal Circuit cases Reverse engineering Fair use case law