Bowers v. Baystate Technologies
Encyclopedia
Bowers v. Baystate Technologies (320 F.3d 1317) was a U.S. Court of Appeals Federal Circuit case involving Harold L. Bowers (doing business as HLB Technology) and Baystate Technologies over patent infringement
Patent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...

, copyright infringement
Copyright infringement
Copyright infringement is the unauthorized or prohibited use of works under copyright, infringing the copyright holder's exclusive rights, such as the right to reproduce or perform the copyrighted work, or to make derivative works.- "Piracy" :...

, and breach of contract
Breach of contract
Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance....

. In the case, the court found that Baystate had breached their contract by reverse engineering Bower's program, something expressly prohibited by a shrink wrap
Shrink wrap
Shrink wrap, also shrinkwrap or shrink film, is a material made up of polymer plastic film. When heat is applied it shrinks tightly over whatever it is covering. Heat can be applied with a hand held heat gun or the product and film can pass through a heat tunnel on a conveyor.-Composition:The...

 license that Baystate entered into upon purchasing a copy of Bower's software. This case is notable for establishing that license agreements can preempt
Preempt
Preempt is a bid in contract bridge whose primary objectives are to thwart opponents ability to bid to their best contract, with some safety, and to fully describe one's hand to one's partner in a single bid. A preemptive bid is usually made by jumping, i.e. skipping one or more bidding levels...

 fair use
Fair use
Fair use is a limitation and exception to the exclusive right granted by copyright law to the author of a creative work. In United States copyright law, fair use is a doctrine that permits limited use of copyrighted material without acquiring permission from the rights holders...

 rights as well expand the rights of copyright
Copyright
Copyright is a legal concept, enacted by most governments, giving the creator of an original work exclusive rights to it, usually for a limited time...

 holders beyond those codified in US federal law.

Background

Baystate Technologies, Inc ("Baystate") and HLB Technology ("Bowers") were competing companies which created add-ons that interacted with a computer aided design (CAD) program known as CADKEY.

Bowers was the patent holder of a system called Cadjet that simplified interfacing with CAD software, which he began to license commercially in 1989. Bower's initial software offering was later combined with a product called Geodraft that was produced by George W. Ford III (Ford) that inserted tolerances compliant with ANSI
Ansi
Ansi is a village in Kaarma Parish, Saare County, on the island of Saaremaa, Estonia....

 for features in a CAD design. Together, these products were marketed as Designer's Toolkit. The Designer's Toolkit was sold with a shrink wrap license that prohibited reverse engineering
Reverse engineering
Reverse engineering is the process of discovering the technological principles of a device, object, or system through analysis of its structure, function, and operation...

.

Baystate sold competing CADKEY tools including Draft-Pak version 1 and 2. According to the court filings, Baystate acquired a copy of Bowers' Designer's Toolkit, and three months later, Baystate released version 3 of Draft-Pak which substantially overlapped with the features offered by Designer's Toolkit.

In 1991, Baystate sued Bowers seeking declaratory judgement that 1) Baystate's products do not infringe on Bowers' patent 2) the patent is invalid, and 3) the patent is unenforceable. Bowers filed counter claims for copyright infringement, patent infringement, and breach of contract, contending that Baystate had reverse engineered Designer's Toolkit.. At court, expert testimonial revealed "evidence of extensive and unusual similarities" between Draft-Pak and Designer's Toolkit, supporting Bowers' claim that Baystate had reverse engineered a copy of his software. The District Court of Massachusetts concluded that Bower's was entitled to damages, finding that the shrink wrap license tied to Bowers' software preempted any fair use case for reverse engineering as allowed by Copyright law. Baystate appealed the district courts decision.

Opinions of Federal Circuit

The central question the Federal Court addressed in Bowers v. Baystate was whether a shrink wrap license that forbids reverse engineering was preempted by federal Copyright law which expressly permits reverse engineering.

Majority opinion

The majority opinion of the Federal Court upheld that parties can freely enter into license agreements that enforce stricter requirements than copyright, and that such agreements are not preempted by copyright law. In their decision, the court cited a number of prior cases involving contractual constraints that extend copyright law:
  • Data General v. Grumman demonstrated that state laws protecting trade secrets were not preempted by copyright law, even though both deal with unlawful copying. Specifically, the federal court stated that "beyond mere copying, that state law claim required proof of a trade secret and breach of a duty of confidentiality." These additional terms result in a unique requirement that is not covered by copyright law and thus not preempted.
  • ProCD v. Zeidenberg
    ProCD v. Zeidenberg
    ProCD, Inc. v. Zeidenberg, 86 F.3d 1447 , is a United States contract case involving a "shrink wrap license". One issue presented to the court was whether a shrink wrap license was valid and enforceable. Judge Easterbrook wrote the opinion for the court and found such a license was valid and...

    determined that materials that could not be protected by copyright could be protected by a shrinkwrap license, so long as the actions restricted by the license were not "equivalent to any of the exclusive rights within the general scope of copyright". As contracts affect only the involved parties, no new exclusive (universal) rights are created for the copyright holder.
  • Although, Atari v. Nintendo established reverse engineering was a fair use exception to copyright infringement, this did not conflict with an additional contract disallowing reverse engineering.
  • In the federal courts own interpretation, while Vault v. Quaid found that state law was preempted by copyright law, this does not apply to private contractual agreement.

Dissenting opinion

A dissenting opinion
Dissenting opinion
A dissenting opinion is an opinion in a legal case written by one or more judges expressing disagreement with the majority opinion of the court which gives rise to its judgment....

 was entered by Judge Dyk agreeing with all decisions except the decision that a copyright law does not preempt a state contract.

Dyk formed his argument using patent
Patent
A patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....

 and copyright law cases:
  • Cases establishing the rights of patent law were viewed as applicable toward copyright law. Bonito Boats v. Thunder Craft Boats
    Bonito Boats, Inc. v. Thunder Craft Boats, Inc.
    Bonito Boats, Inc. v. Thunder Craft Boats, Inc., 489 U.S. 141 , is a decision of the United States Supreme Court holding a state anti-plug molding law preempted because it partially duplicated and therefore interfered with federal patent law. The decision reaffirmed the Supreme Court’s earlier...

    defined that state law does not preempt patent rights.
  • Data General v. Grumman and ProCD v. Zeidenberg both focused on “extra elements” added by state contract law which were not covered by copyright law.
  • Atari v. Nintendo demonstrates the importance of the fair use defense in copyright law ensuring that copyright law did not inhibit understanding of an idea, process, or method of operation.
  • Vault v. Quaid established that state law could not be used to preempt copyright law. Dyk agreed that a private agreement could be used to preempt copyright law, however, a shrinkwrap license is similar to a state law because the customer does not have an opportunity to renegotiate the license agreement.
  • Dyk created an analogy of a state law where software disallowing reverse engineering must have a black dot on the packaging. This analogy demonstrated a law that would give broader protections than normally given in copyright law which impedes publicly given rights.
  • By allowing preemption of copyright law, Dyk questions other limitations that could be applied to federal law. He also warned that this could undermine the protections originally given in the Copyright Act
    Copyright Act of 1976
    The Copyright Act of 1976 is a United States copyright law and remains the primary basis of copyright law in the United States, as amended by several later enacted copyright provisions...

    .

Impact

Critics scrutinized the outcome of this case, arguing that it not only allows companies to use state contract law to expand copyright protections, but also creates non-negotiated license terms which are equivalent to patent like protection without the limiting conditions of patent law. Critics further argued this precedent is unrealistic for the software industry. Reverse engineering is not only considered necessary to keep up with "feature wars", which Bowers v. Baystate is an example of, but is essential for interoperability
Interoperability
Interoperability is a property referring to the ability of diverse systems and organizations to work together . The term is often used in a technical systems engineering sense, or alternatively in a broad sense, taking into account social, political, and organizational factors that impact system to...

 and security purposes.

See also

  • Bnetd
    Bnetd
    bnetd is a software package that was reverse engineered from Blizzard Entertainment's Battle.net online multiplayer gaming service, providing near-complete emulation. The software allows users to create and play games on their own servers, instead of Battle.net servers...

  • Copyright Act of 1976
    Copyright Act of 1976
    The Copyright Act of 1976 is a United States copyright law and remains the primary basis of copyright law in the United States, as amended by several later enacted copyright provisions...

  • Reverse Engineering
    Reverse engineering
    Reverse engineering is the process of discovering the technological principles of a device, object, or system through analysis of its structure, function, and operation...

  • Software License Agreement
    Software license agreement
    A software license agreement is a contract between the "licensor" and purchaser of the right to use software. The license may define ways under which the copy can be used, in addition to the automatic rights of the buyer including the first sale doctrine and .Many form contracts are only contained...


Further reading

  • "Bowers v. Baystate Technologies: Using the Shrinkwrap License to Circumvent the Copyright Act and Escape Federal Preemption" - Merritt A Gardiner
  • "Restricting Reverse Engineering with shrink-wrap licenses: Bowers v. Baystate Technology, Inc" - S.Bressman
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