Opinion
Case No. 6:00-CV-896-ORL-31KRS
December 6, 2001
ORDER
THIS CAUSE comes before the Court on the parties' Joint Motion for Entry of Final Judgment (Doc. 141), and upon review of the record, including Plaintiff's Motion for Partial Summary Judgment and the evidence presented to this Court in support of the Preliminary Injunction, consent and stipulations of the parties, and such other and further evidence, this Court enters the following order:
I. BACKGROUND
Plaintiff, Superchips, Inc., ("Superchips") makes and sells computer chips designed to enhance the performance of automobile engines. The manufacturing process is common to the industry and may be summarized as follows: Automobile engines are controlled by on-board computers that regulate various parameters including maximum speed, fuel usage, and shift points. The engine computer needs two things to function: a software program and data tables. Data tables contain predetermined, factory-set values that the software program reads and acts upon to control the engine.
Superchips undertakes extensive dynamic testing of automobile engines to determine optimum performance characteristics unique to a specific engine or after-market products incorporated into the engine. Superchips downloads a factory-set data table to its own computer, changes a number of values within the data table, uploads the modified data table to a computer chip, and places the chip inside a "module" designed to attach to engine computers. By changing the values within the data table, Superchips changes the fuel curve, engine timing, transmission shift points, response time and numerous other values, which inter-relate to achieve optimum performance. Superchips does not write a new executable source, it only adjusts values in the data tables. The architecture of the Ford computer program controls and limits the nature and extent of any adjustments.
Superchips markets over 2,000 lines of its automotive computer modules containing its computer codes and sells the computer modules retail, directly out of its place of business, and through authorized dealers. Consumers may then purchase modules with chips designed to achieve particular results for their specific automobile (e.g., higher maximum speed, more horsepower, etc.). When attached to the engine computer, the module effectively disables the factory data table and instructs the computer to use the module's data table instead. In industry parlance, data tables are known as "codes."
In 1997, Superchips entered into an agreement with Defendant Street Performance Electronics, Inc. ("S P") for S P to distribute Superchips' modules. In February 2000, the parties' relationship ended when Superchips terminated S P's distribution rights and access to Superchips' codes.
In May 2000, a third party gave Superchips a module that it acquired from Defendant Bully Dog. After downloading and reviewing the code from the module, Superchips determined that it was identical to one of its codes, the XLE4HORS, designed for Ford automobiles with certain modifications — an "identifier" was changed to permit the code to be used with a different chip and module. In June 2000, Superchips submitted a copyright application for its XLE4HORS code. Upon receipt of the application, an Examiner in the Copyright Office requested confirmation that the object code deposit contained copyrightable authorship and advised Superchips that any registration would be issued under the "rule of doubt." In response, Superchips informed the Examiner that the deposit contained "hex code" rather than "object code" and that registration should therefore not be issued under the rule of doubt. Despite this assertion, however, the Examiner later confirmed by letter that the registration of the XLE4HORS was issued under the "rule of doubt," meaning the Copyright Office cannot independently confirm the work is an original work.
Superchips submitted a redacted copy of the code as part of its application to protect its trade secrets.
Shortly after Superchips' copyright issued on June 20, 2000, it filed this action alleging claims for copyright infringement and theft of trade secrets. The parties stipulate the "codes" are substantially similar. The issue for this Court is whether Superchips is the owner of the copyrighted material, whether the material has a sufficient modicum of originality to merit copyright protection and whether the code constitutes Superchips' trade secrets.
II. COPYRIGHT INFRINGEMENT
A. Computer Programs
In Montgomery v. Noga, 168 F.3d 1282 (11th Cir. 1999), the Eleventh Circuit Court of Appeals set forth the basic principles of copyright law with respect to computer programs:
The Copyright Act of 1976, 17 U.S.C. § 101 et seq. (1994), provides protection for computer programs. The Act defines a computer program as "a set of statements or instructions to be used directly or indirectly in a computer in order to bring about a certain result." 17 U.S.C. § 101 (1994). For original computer programs and other original works of authorship created after 1977, copyright automatically inheres in the work at the moment it is created without regard to whether it is ever registered. In order to bring an action for copyright infringement, however, the author must first register the copyright.Id. at 1288. (Non-statutory internal quotations and citations omitted.)
B. Proving Copyright Validity
In order to prevail on a copyright infringement claim, a plaintiff must prove "ownership of a valid copyright" and "copying of constituent elements of the work that are original." Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361 (1991). Although the plaintiff in a copyright infringement action initially bears the burden of proving ownership of a valid copyright, a plaintiff may benefit from a rebuttable presumption of validity by producing a certificate of copyright registration. See, Donald Frederick Evans Assocs. Inc. v. Continental Homes, Inc., 785 F.2d 897 (11th Cir. 1986). A copyright registration certificate constitutes prima facie evidence in favor of a plaintiff on the issue of originality and copyright-ability of the subject matter.See, Id. Production of the certificate of registration will then shift the burden to the defendant to demonstrate that "the work in which copyright is claimed is unprotectable (for lack of originality) or, more specifically, to prove that . . . the copyrighted work actually taken is unworthy of copyright protection." Montgomery v. Noga, 168 F.3d at 1289 (quoting Bateman v. Mnemonics. Inc., 79 F.3d 1532, 1541 (11th Cir. 1996)).
There is, however, an exception to this general framework of shifting burdens on the issue of copyright validity for registration certificates issued under the so-called "rule of doubt." The Copyright Office utilizes its rule of doubt for submissions of computer programs in machine readable code form because its examiners cannot interpret such a code to determine if there has been copyrightable authorship. Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3d Cir. 1983),cert. dismissed, 464 U.S. (1984); Compaq Computer Corp. v. Procom Tech., Inc., 908 F. Supp. 1409 (S.D. Tex. 1995). Accordingly, plaintiffs who produce registration certificates issued under the rule of doubt do not benefit from a rebuttable presumption of copyright validity and retain the burden of proving that issue throughout the case.
Program code for a computer is written in two forms — object code which is machine readable and source code which is readable by humans. See Quinn v. City of Detroit, 988 F. Supp. 1044, 1054 (E.D. Mich. 1997).
The letter from the Copyright Examiner clearly states that the registration certificate was issued under the rule of doubt because Superchips chose to use object code on the application form. Deferring to the Copyright Office's conclusion, Superchips is not entitled to a presumption of validity from its registration certificate, and the burden of proof remains with Superchips to support its claim of a valid copyright.
C. Nature of the Work
Under the Copyright Act, the nature of the work determines the level of copyright protection it receives. See, Warren Publ., Inc. v. Microdos Data Corp., 115 F.3d 1509, 1515 n. 16 (11th Cir. 1997). Creative works are entitled to the most protection, followed by derivative works, and finally by compilations. See, Id. Here, Superchips contends that its computer module is a derivative work while Defendants assert that the module is an unoriginal compilation of facts. A derivative work is "[a] work consisting of editorial revisions, annotations, elaborations, or other modifications (to a preexisting work] which, as a whole, represent an original work of authorship. . . ." 17 U.S.C. § 101. A work will not be deemed derivative unless it has copied substantial portions from a prior work. See, 1 Melville B. Nimmer David Nimmer, Nimmer on Copyright § 3.01 (1999) [hereinafter Nimmer]. If it satisfies the requirements of originality, a derivative work qualifies for a separate copyright, but copyright protection does not extend to preexisting material used in the derivative work. See, Montgomery v. Noga, 168 F.3d at 1290.
Section 103(a) of the Copyright Act also provides protection for compilations. A compilation is "a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship. . . ." 17 U.S.C. § 101. While a derivative work is derived from pre-existing matter capable of copyright protection, a compilation is a combination of facts or data that are not otherwise capable of copyright protection. See Nimmer, § 3.02.
In the Court's view, Superchips' computer module is more appropriately identified as a derivative work than a compilation. Although Superchips admits that it used Ford's copyrighted program in creating its product, Superchips has significantly altered the data tables to achieve optimum performance from a specific automobile engine. Copyright protection is available for both derivative works and compilations alike, provided the work or compilation displays sufficient originality to qualify as an "original work of authorship." See, Matthew Bender Co. Inc. v. West Publ'g Co., 158 F.3d 674 (2d Cir. 1998). Thus, originality, and not the nature of the work, is the gravamen of copyright protection.
D. Originality
As stated supra, copyright protection exists only in "original works of authorship." 17 U.S.C. § 101, et seq. "With regard to the requirement of originality, all that must be shown is that the work possesses at least some minimal degree of creativity. . . . To be sure, the requisite level of creativity is extremely low; even a slight amount will suffice."Montgomery v. Noga, 168 F.3d at 1290 (quoting Feist, 499 U.S. at 345). Generally, in determining whether a derivative work has the necessary quantum of originality to qualify for copyright protection, courts consider whether there is a distinguishing variation between the derivative and underlying work and whether that variation is more than "merely trivial." Sherrv Mfg. Co. v. Towel King of Fla., Inc., 753 F.2d 1565, 1568 (11th Cir. 1985).
Based upon the expert testimony, this Court concludes the code is an original work of authorship and not a mere mechanical arrangement of facts. Superchips' code does not involve "merely changing a single look-up table value to increase performance," as suggested by S P. Rather, Superchips details the substantial ingenuity and skill involved in creating the computer chips at issue:
The look-up tables are numerous and control different aspects of the automobile. Look-up tables control such things as intake runner manifold control, rate of acceleration control, speed control, RPM control, power delays, power reductions, solenoid operations, solenoid control for waste gates, ignition timing and fuel control, among others. When Superchips tunes a car, it alters some or all of the variables, depending on the output desired. Each tuning design is for a specific application, such as high performance or increased horsepower. As [Superchips] tune(s], we must take into consideration a myriad of factors, including engine tolerances, fuel efficiency and the interplay between each of the controlled elements. [N]o two tuners would "tune" or write the programs in exactly the same way, despite attempting to achieve the same end result.
Although Defendants dispute that the creation of computer chips for the tuning of specific automobile engines is original, the testimony of Defendant belies this assertion. Indeed, S P actively promotes its own chips as superior in terms of performance, thereby portraying the computerized tuning of automobiles as a creative skill.
The Court concludes from the record that Superchips' act of changing numerical values in the factory data tables to achieve optimum engine performance is not one which is "so mechanical or routine as to require no creativity whatsoever." Feist, 499 U.S. at 362. Accordingly, Superchips has met its burden of showing that the modifications it made to the Ford program were sufficiently original to support a valid copyright.
Cf., Secure Serv. Tech., Inc. v. Time and Space Precessing, Inc., 722 F. Supp. 1354, 1363 (E.D. Va. 1989) (finding that facsimile machine manufacturer was not entitled to copyright protection for its minor reordering or variance of binary signals in machine's "handshake protocol" because the manufacturer was able to make only minor changes which did not require significant choice or selection but were dictated by the need to communicate with other machines).
E. Ownership
In addition to showing originality, a plaintiff must also prove ownership to prevail on a copyright claim. See, Feist, 499 U.S. at 361. To establish an ownership interest in the copyright, the plaintiff must show personal authorship, a transfer of rights, or some other relationship between the author and the plaintiff evidencing ownership.See, Bell v. Combined Registry Co., 397 F. Supp. 1241 (N.D. Ill. 1975). Superchips claims that its engineers designed and developed the copyrighted computer code and that S P has no ownership interest in it. S P, on the other hand, claims that the copyrighted work is a product of joint authorship because the parties "jointly contributed to the data field adjustments" and "freely shared information and jointly worked on projects." In support of this claim, S P relies on the testimony of its owner who testified at the preliminary injunction hearing. The transcript, however, does not support S P's contention that it co-authored the XLE4HORS code. At the hearing, Mr. Boveia testified that S P helped Superchips design most of the menus used in the creation of their programs. However, when questioned specifically concerning S P's contribution to the development of the XLE4HORS code, Mr. Boveia testified that he was not certain that S P had aided Superchips in the code's development.
F. Substantial Similarity
By consent and stipulation, there is no dispute that the original Superchips' works and the S P programs are substantially similar although the copying may have been innocent based upon Defendant's past relationship and interpretation of the law. Because Superchips has a valid and enforceable copyright, and the accused work is substantially similar, S P has infringed Superchips' copyright. The infringing program was distributed by Defendant Bully Dog and S P for sale to the public. The distribution and offer for sale of the infringing work will cause Superchips irreparable injury not compensable by monetary damages. As such, Superchips is entitled to injunctive relief enjoining S P Bully Dog from selling or offering for sale any computer programs which are substantially similar to the copyrighted works.
III. TRADE SECRETS
Superchips has also brought a claim for theft of trade secrets for both the copyrighted and uncopyrighted Superchips' codes. Superchips alleges S P, a former distributor of Superchips, misappropriated Superchips' trade secrets when it offered for sale identical or substantially similar software as its own. Once again, there is no dispute the codes are substantially similar, the only dispute is whether the codes constitute trade secrets under Florida law. The Court finds that the Superchips' programs are in fact trade secrets owned by Superchips.
Florida's Trade Secret Statute, Chapter 688, require the codes to (1) derive independent economic value, actual or potential, from not being generally known to and not being readily ascertainable by proper means by persons who can obtain economic value from its use and (2) are the subject of efforts that are reasonable under the circumstances to maintain its secrecy. Fla. Stats., § 688.002.
Superchips has invested substantial time and effort in locating certain tables, identifying the inter-relationship between the tables, testing the changes to the code and debugging the codes. The locations of data tables, the inter-relationship between the data tables and engine performance and other factors are not generally known to third parties who have not devoted the substantial time and effort in the research and development. If a competitor could gain access to Superchips' codes, it would save months, if not years, of research and development and save hundreds of thousands of dollars. Accordingly, the codes derive independent economic value from not being generally known to Superchips' competitors.
Superchips encrypts its codes before they are made available to the public and seals the chip in a module to prevent direct copying. Superchips creates password protections on its bulletin board system to insure that only authorized distributors and dealers have access to the encrypted programs. The programs contain identifiers that limit the chip program to Superchips' own modules. Based upon these efforts, the Court finds that Superchips has exercised reasonable efforts to maintain the secrecy of the programs under the circumstances.
There exist elements necessary to prove that the codes constitute protectable trade secrets under Chapter 688, Fla. Stats., that do not exist under the Copyright Act. Thus, the Copyright Act does not preempt Superchips' right to a remedy under Florida's Trade Secret Statutes. The Court finds that Plaintiff owns all rights to the trade secrets in its computer files and computer codes. The Court further finds that the activities of Defendants constitute actual or threaten misappropriation of the trade secrets, entitling Superchips to injunctive relief.
It is, therefore,
ORDERED that the Joint Motion is hereby GRANTED. The Court will enter a final judgment and permanent injunction in substantially the form submitted by the parties.