Computer Associates International v. Quest Software, Inc.
2004 WL 1459495, 2004 U.S. Dist. LEXIS 11832, 333 F.Supp.2d 688 (2004)
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Rule of Law:
A computer program's source code can constitute a protectable trade secret under the Illinois Trade Secrets Act if reasonable measures are taken to keep it secret and it possesses value to competitors, and its unauthorized use by former employees without authorization constitutes misappropriation; additionally, original elements of computer source code are protected by copyright law, and infringement can be shown by literal or non-literal copying using tests like abstraction-filtration-comparison.
Facts:
- In 1996, Platinum technology International, Inc. (Platinum) released its Enterprise Database Administrator (EDBA) software program, designed to automate database administration tasks.
- Platinum began modifying the EDBA source code to create a DB2-compatible version, which was anticipated to be highly valuable due to DB2's widespread use.
- Individual defendants Jenson, Friel, Mackowiak, Wahlgren, and Bisotti played key roles in developing the EDBA source code for Platinum, including the DB2-compatible version; Mackowiak developed the parser, Wahlgren the analysis engine, and Bisotti the job scheduler.
- In spring 1999, Computer Associates International, Inc. (CA) announced its intent to acquire Platinum, and after the acquisition, many Platinum employees, including the five individual defendants, left the company.
- Quest Software Inc. (Quest) hired the five individual defendants and assigned them to roles similar to those they held at Platinum in developing new DB2 database administration software.
- Despite Quest's policy prohibiting new employees from bringing proprietary information, Mackowiak, Wahlgren, and Bisotti brought copies of the EDBA source code to Quest, and the individual defendants repeatedly referenced this code while developing Quest’s program.
- In October 2000, Quest released Quest Central for DB2 (QCDB2), a database administration program for DB2, and has since released several new versions.
- In early 2000, CA received information suggesting Quest possessed portions of the EDBA source code, and after receiving a detailed anonymous letter in February 2002, CA wrote to Quest and eventually filed this lawsuit in July 2002.
- After receiving the letters from CA, defendants, including Mackowiak, erased or attempted to erase files from their computers containing parts of the EDBA source code.
- Upon learning of arguable similarities between the source codes, defendants engaged in a “clean room” exercise to rewrite the parser code, completing the lengthy process on January 9, 2004, with plans to incorporate the new code into QCDB2 version 4.0.1.
Procedural Posture:
- Computer Associates International, Inc. (CA) filed a lawsuit against Quest Software Inc. and individual defendants in federal trial court in July 2002, alleging copyright infringement and trade secret misappropriation.
- CA moved for a preliminary injunction to stop the defendants from using, selling, or distributing Quest Central or any future product derived from CA’s source code.
- Defendants filed motions to strike the testimony and reply brief of plaintiff's expert witness Martin Hubel.
- Defendants filed objections to Magistrate Judge Mason’s April 5, 2004, order which compelled the disclosure of certain communications.
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Issue:
Should a preliminary injunction be granted to prevent former employees and their new company from using, selling, or distributing software, where there is a strong likelihood that the new software was developed by misappropriating the former employer's trade secret source code and infringing its copyrights?
Opinions:
Majority - Moran, Senior District Judge
Yes, a preliminary injunction should be granted because CA has demonstrated a strong likelihood of proving that Quest and the individual defendants misappropriated CA's trade secret source code and infringed its copyrights, causing irreparable harm that outweighs harm to defendants and serves the public interest. The court found that the EDBA source code, including its parser, analysis engine, and job scheduler, constituted protectable trade secrets, as Platinum and CA took reasonable measures to protect them through confidentiality policies, limited access, and employee reminders upon departure, and the defendants were aware of their confidential nature. Quest misappropriated these trade secrets by hiring former Platinum employees for identical roles, providing them access to the EDBA code, and using it as a guide, with forensic evidence showing repeated access and attempts to erase files, and the striking similarities between QCDB2 and EDBA in key components. The court also determined that CA had valid copyrights in the EDBA source code, as its use of third-party elements (like Bison) was permissible under licenses (e.g., GPL exception for output files from Bison versions 1.24 and later) and did not negate the originality of the overall EDBA creation. Copyright infringement was likely shown through both literal copying, evidenced by a large number of identical lines in the parser's grammar and lexicon source code and duplicated non-functional comments, and non-literal copying, indicated by strong functional similarities in components like the analysis engine's rules and job scheduler's functions, consistent with the "abstraction-filtration-comparison" (AFC) test approved in Computer Associates, Intern., Inc. v. Altai, Inc. and Gates Rubber Co. v. Bando Chemical Industries, Ltd. The court noted a presumption of irreparable harm in trade secret misappropriation and copyright infringement cases, which defendants failed to rebut, and found the balance of harms favored CA, with public interest supporting the protection of intellectual property rights.
Analysis:
This case highlights the critical challenges of protecting intellectual property in the dynamic software industry, especially when skilled employees transition between competing companies. It reinforces the importance of implementing and vigorously enforcing robust confidentiality agreements and establishing clear boundaries for new hires to prevent the illicit transfer of proprietary information. The court's detailed application of the "abstraction-filtration-comparison" (AFC) test for non-literal copying in complex software source code demonstrates a consistent and adaptable legal framework for analyzing such infringement claims. Furthermore, the ruling underscores that 'clean room' development procedures must be meticulously executed and free from any potential contamination to serve as a credible defense against prior infringement, as any perceived compromise can negate their mitigating effect.
