Storagetek ruling on DMCA, software copyrights
The Federal Circuit decided Storage Technology Corp. v. Custom Hardware Engineering & Consulting,Download file last week. The case is noteworthy for a number of reasons -- it takes a limited view of the scope of the DMCA anti-circumvention provisions, and it takes a broad view of the rights of third party agents to access software for maintenance purposes under copyright law, as well under software license terms.
StorageTek sued Custom Hardware for DMCA and copyright infringement violations arising out of Custom Hardware's business of repairing data libraries manufactured by StorageTek. These activities included diagnosing problems with the libraries and accessing error messages produced by StorageTek's maintenance code. The opinion does a great job in laying out the facts clearly in terms of the technology and how it was used.
DMCA Claim
On the DMCA claim, the court referred to its 2004 ruling in Chamberlain Group v. Skylink Technologies. There the court stated that in enacting the DMCA:
"[Congress] chose to create new causes of action for circumvention and for trafficking in circumvention devices. Congress did not choose to create new property rights."
As a result, in Chamberlain the Court held that:
"[Section 1201] prohibits only forms of access that bear a reasonable relationship to the protections that the Copyright Act otherwise affords copyright owners."
Accordingly,
"A copyright owner alleging a violation of section 1201(a) consequently must prove that the circumvention of the technological measure either 'infringes or facilitates infringing a right protected by the Copyright Act.'"
Because the Court held that Custom Hardware's activities were not an infringement of copyright (as discussed below), the DMCA claim thereby failed. This suggests that if a technological control were circumvented for a noninfringing personal or fair use, the DMCA circumvention could be permissible.
The Court also rejected the notion that a contractual violation of the StorageTek license agreement would be sufficient basis for redress under the DMCA:
"The activiation of the maintenance code may violate StorageTek's contractual rights vis-a-vis its customers, but those rights are not the rights protected by copyright law."
This conclusion merits further thought, in terms of how broadly this proposition might apply. Custom Hardware was not under contract with StorageTek. However it would seem that this could also apply to a party in privity where the conduct prohibited by contract would otherwise not be copyright infringement. This could be complicated however by a license grant that is conditioned upon the prohibited conduct.
Copyright Claim
The Court also concluded that Custom Hardware was not an infringer, even though it accessed and used the StorageTek software without permission. Custom Hardware's clients were licensed by StorageTek, but Custom Hardware was not.
The Court construed Section 117(c) of the Copyright Act broadly and held that Custom Hardware's on-going maintenance analytic activities were covered by this exemption for software infringement.
Section 117(c) provides that it is not an infringement of copyright to make a copy of a software program if it is made to activate the machine for purpose of maintenance or repair.
The gist of the Court's ruling is that a broad construction of Section 117(c) is necessary in order to effectuate the intent of the statute to permit maintenance and repair of computer systems. It rejected a legalistic reading that could result in infringement "gotchas" for maintenance and repair providers.
Customer License Agreement
The Court also construed StorageTek's customer license agreement broadly to permit Custom Hardware's conduct under the license as an alternate theory. StorageTek argued that its license did not extend rights to third parties, because it stated that the licensee may not "permit another person to use" the code. However the Court looked to other clauses of the agreement to conclude:
"The clear implication of those sections is that the license is tied to the piece of equipment on which the software resides. Thus, the authorized use is tied to a particular machine, rather than a particular person."
The clauses in question stated that the software may be transferred only with the equipment, and the license is solely for use in enabling the equipment on which the code was provided.
It seems questionable for the implication of particular license language to override an express prohibition on permitting access by third parties. It would also seem that these restrictions should be read in addition, not as an alternative, to the express prohibitions.
The Court distinguished the MAI Systems case in the 9th Circuit, which held that a third party was not authorized to copy software into RAM by activating a computer. It did so on the grounds that the license in that case had "severe, explicit restrictions," and then stated further:
"The court in MAI Systems would not have had to rest its decision on those restrictive license terms if third parties were disallowed from copying the software even in the absence of such restrictive languge in the license."
"StorageTek, of course, could have drafted the license agreement to explicitly disallow copying by third parties through activiation of the equipment owners' machines. In the absence of such language, however, CHE's copying appears to be protected as long as CHE is acting as an agent of the equipment owners."
These conclusions reflect that license agreements need to be drafted with precision and clarity, and should be drafted from an "all rights not expressly granted are reserved" standpoint.
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