Computer Associates International, Inc. v. Altai, Inc.
982 F.2d 693 (1992)
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Rule of Law:
To determine if a computer program's non-literal structure infringes a copyright, courts must apply a three-step 'Abstraction-Filtration-Comparison' test to filter out unprotectable elements such as ideas, public domain material, and expression dictated by efficiency or external factors, before comparing the remaining core of protectable expression.
Facts:
- Computer Associates (CA) developed a job scheduling program, CA-SCHEDULER, which contained a sub-program called ADAPTER that served as a compatibility component for different operating systems.
- In late 1983, Altai, Inc., a competitor, sought to make its own scheduling program, ZEKE, compatible with a new operating system.
- Altai manager James P. Williams hired Claude F. Arney, a programmer from CA who was intimately familiar with ADAPTER.
- In January 1984, Arney left CA and, in violation of his employment agreement, took copies of ADAPTER's source code with him to Altai.
- Arney used the stolen ADAPTER code to develop a compatibility component for ZEKE called OSCAR, copying approximately 30% of OSCAR's code directly from ADAPTER. This initial version was known as OSCAR 3.4.
- After CA discovered the copying in 1988, Altai management, upon being notified via lawsuit, initiated a 'clean room' rewrite of the program, excluding Arney.
- This rewrite project resulted in OSCAR 3.5, a new version which contained no literal code copied from ADAPTER but allegedly retained a similar non-literal structure.
Procedural Posture:
- Computer Associates (CA) sued Altai, Inc. in the U.S. District Court for the District of New Jersey for copyright infringement and trade secret misappropriation.
- The case was transferred to the U.S. District Court for the Eastern District of New York.
- After a bench trial, the district court found Altai liable for copyright infringement for its OSCAR 3.4 program, a finding Altai did not contest on appeal.
- The district court found that Altai's rewritten program, OSCAR 3.5, did not infringe CA's copyright because it was not substantially similar to protected elements of CA's ADAPTER program.
- The district court also held that CA's state law trade secret claim was preempted by the federal Copyright Act.
- CA, as appellant, appealed the district court's rulings on OSCAR 3.5 and trade secret preemption to the U.S. Court of Appeals for the Second Circuit.
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Issue:
Does a competitor's computer program, which contains no literal code from a copyrighted program but allegedly mimics its non-literal structure, constitute copyright infringement?
Opinions:
Majority - Walker, Circuit Judge
No. A program's non-literal structure is protected by copyright only to the extent that it contains original expression not dictated by ideas, efficiency, external factors, or public domain material; here, after filtering out such unprotectable elements, Altai's OSCAR 3.5 was not substantially similar to any protected expression in CA's ADAPTER. The court rejected the Third Circuit's broad test from Whelan v. Jaslow, finding it conceptually flawed for assuming a program has only one 'idea.' Instead, the court established a three-step Abstraction-Filtration-Comparison test. Applying this framework, the district court correctly determined that the similarities between OSCAR 3.5 and ADAPTER existed only in unprotectable elements, such as those dictated by the operating system's functional demands, efficiency, or public domain concepts. Therefore, the finding of no copyright infringement for OSCAR 3.5 is affirmed. However, the district court erred in finding CA's trade secret misappropriation claim was preempted by the Copyright Act. That ruling is vacated, and the claim is remanded for further proceedings on the merits.
Concurring-in-part-and-dissenting-in-part - Altimari, Circuit Judge
This opinion concurs with the majority's copyright infringement analysis but dissents from the decision to vacate the district court's preemption ruling on the trade secret claim. The judge would have affirmed the district court's preemption finding as decided in the court's original, now-withdrawn, opinion.
Analysis:
This case established the Abstraction-Filtration-Comparison test, which became the dominant legal standard for assessing claims of non-literal software copyright infringement in the United States. By rejecting the broader Whelan test, the Second Circuit significantly narrowed the scope of copyright protection for software, emphasizing that functional, efficient, and standard elements are not protectable. This decision promoted competition and interoperability in the software industry by allowing developers to build upon existing ideas and functional methods, so long as they do not copy protected creative expression. The Altai test created a higher bar for plaintiffs in software infringement cases and clarified the boundary between unprotectable ideas and protectable expression in a utilitarian work.
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