Monday, April 18, 2011
Trade Secrets and Copyright Infringement
In ATPAC Inc. v. Aptitude Solutions, Inc., (EDCA April 12, 2011), the court considered the issue of whether computer source code that had been registered with the copyright office could be considered a trade secret. Plaintiff ATPAC creates software and imaging solutions for county clerks. Under Section 301 of the Copyright Act, any state law claims that are "equivalent" to copyright are preempted by federal law.
Here is the operative language of the Copyright Act:
§ 301. Preemption with respect to other laws
(a) On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.
(b) Nothing in this title annuls or limits any rights or remedies under the common law or statutes of any State with respect to —
(1) subject matter that does not come within the subject matter of copyright as specified by sections 102 and 103, including works of authorship not fixed in any tangible medium of expression; or
(2) any cause of action arising from undertakings commenced before January 1, 1978;
(3) activities violating legal or equitable rights that are not equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106;
17 USC 301.
Under the preemption doctrine, if a claim brought under state law is brought that is "equivalent" to a right or remedy under the Copyright Act, it fails. Thus court look at state law claims and analyze them to see whether the claim adds an "extra element". If so, it may survive a preemption challenge.
In ATPAC, the plaintiff had registered its source code with the copyright office in such a manner as to keep it confidential. This is a special procedure designed to preserve computer code as a potential trade secret.
On a summary judgment motion, the district court permitted the "misappropriation of trade secrets" claim to survive because the "extra element" of the plaintiff preserving the secrecy of the trade secrets is qualitatively different from mere copyright infringement and its application would not conflict with copyright law.
In Chapter 10 of Copyright Litigation Handbook, Removal from State Court and Preemption, I cover the preemption doctrine and how it can be used to remove proceedings from state to federal court.
More on the ATPAC suit here and here.
More on trade secrets here.
Purchase Copyright Litigation Handbook 2010 by Raymond J. Dowd from West here
Labels: 17 usc 301, aptitude solutions, ATPAC, copyright infringement, copyright law, copyright registration, preemption, registering source code, software copyright, software licenses, trade secrets
Partner in law firm Dunnington Bartholow & Miller LLP in New York City litigating in federal and state courts and arbitrations. Experienced trial and appellate practitioner. Author: Copyright Litigation Handbook (Thomson Reuters 2019-2020). The New York Law Journal called it "an indispensable guide". Board of Directors of the Fordham Law Alumni Association, former General Counsel & Director Federal Bar Association, FBA Chair of the Circuit VPs, ViP for Second Circuit. Member Board of Governors, National Arts Club. President, Network of Bar Leaders (2013-2014). Attorney advertising disclaimer - prior results do not guarantee success. The statements and opinions voiced here are my own and not of my law firm.