` Filed September 24, 2002(cid:13)(cid:13)
`
`UNITED STATES COURT OF APPEALS(cid:13)
`
`FOR THE THIRD CIRCUIT(cid:13)(cid:13)
`Nos. 00-2772 and 00-2932(cid:13)(cid:13)
`
`DUN & BRADSTREET SOFTWARE SERVICES,(cid:13)
`
`INC.; GEAC COMPUTER SYSTEMS, INC.(cid:13)(cid:13)
`v.(cid:13)(cid:13)
`
`GRACE CONSULTING, INC.; GRACE MAINTENANCE(cid:13)
`
`INT.; ANTHONY ILUTZI(cid:13)(cid:13)
`
` GEAC ENTERPRISE SOLUTIONS, INC.(cid:13)
` f/k/a(cid:13)
`
` GEAC COMPUTER SYSTEMS, INC.,(cid:13)(cid:13)
`Appellant No. 00-2772(cid:13)(cid:13)
`
`DUN & BRADSTREET SOFTWARE SERVICES,(cid:13)
`
`INC.; GEAC COMPUTER SYSTEMS(cid:13)(cid:13)
`v.(cid:13)(cid:13)
`
`GRACE CONSULTING, INC.; GRACE MAINTENANCE;(cid:13)
`
`ANTHONY ILUTZI(cid:13)(cid:13)
`Appellants No. 00-2932(cid:13)(cid:13)
`
`Appeal from the United States District Court(cid:13)
`For the District of New Jersey(cid:13)
`D.C. No.: 94-cv-01090(cid:13)
`
`District Judge: Honorable Katharine S. Hayden(cid:13)(cid:13)
`
`Argued January 17, 2002(cid:13)(cid:13)(cid:13)(cid:12)(cid:13)(cid:13)
`
`Before: SCIRICA, ROSENN, Circuit Judges,(cid:13)
`
`and KANE,* District Judge(cid:13)(cid:13)
`(Filed: September 24, 2002)(cid:13)(cid:13)
`
` Wayne C. Matus (Argued)(cid:13)
` LeBoeuf, Lamb, Greene & MacRae(cid:13)
` 125 West 55th Street(cid:13)
`
` New York, NY 10019(cid:13)(cid:13)
`
` Harvey C. Kaish(cid:13)
` McCarter & English(cid:13)
` 100 Mulberry Street(cid:13)
` Four Gateway Center(cid:13)
`
` Newark, NJ 07107-0652(cid:13)(cid:13)
`
` Peter J. Gallagher(cid:13)
`
`
`
` Salans, Hertzfeld, Heilbronn,(cid:13)
` Christy & Viener(cid:13)
` 620 Fifth Avenue(cid:13)
`
` New York, NY 10020(cid:13)(cid:13)
`
` Counsel for Appellant(cid:13)
`
` Geac Computer Systems(cid:13)(cid:13)
`
` Andrew J. Kyreakakis (Argued)(cid:13)
` Ambrosio, Kyreakakis, DiLorenzo,(cid:13)
` Moraff & McKenna(cid:13)
` 317 Belleville Avenue(cid:13)
`
` Bloomfield, NJ 07003(cid:13)(cid:13)
`
` Counsel for Appellees(cid:13)
` Grace Consulting, Inc. and Grace(cid:13)
`
` Maintenance(cid:13)(cid:13)
`
` Leonard T. Nuara (Argued)(cid:13)
` Thacher, Proffitt & Wood(cid:13)
` 1 Exchange Place, Suite 600(cid:13)
`
` Jersey City, NJ 07302(cid:13)(cid:13)
`
` Counsel for Appellee(cid:13)
` Anthony Ilutzi(cid:13)
`
`_________________________________________________________________(cid:13)(cid:13)
`
`* Honorable Yvette Kane, United States District Court for the Middle(cid:13)
`
`District of Pennsylvania, Sitting by Designation.(cid:13)(cid:13)
`2(cid:13)(cid:12)(cid:13)(cid:13)
`
`
`
` Ronald S. Katz(cid:13)
` Coudert Brothers(cid:13)
` 600 Beach, 3rd Floor(cid:13)
`
` San Francisco, CA 94109(cid:13)(cid:13)
`
` Counsel for Amicus for(cid:13)
` Appellee Service Industry(cid:13)
`
` Association(cid:13)(cid:13)
`OPINION OF THE COURT(cid:13)(cid:13)
`ROSENN, Circuit Judge.(cid:13)(cid:13)
`
`This appeal presents serious problems of alleged(cid:13)
`copyright infringement in an evolving and highly(cid:13)
`competitive world of computer technology that challenges(cid:13)
`the effectiveness of our well-established copyright laws.(cid:13)
`Formerly known as Dun & Bradstreet Software Services,(cid:13)
`Inc. (DBS), Geac Computer Systems, Inc. (collectively Geac)(cid:13)
`is the undisputed owner of certain proprietary, copyrighted(cid:13)
`software, including a system known as Millennium. The(cid:13)
`system is designed to provide valuable services to the(cid:13)
`
`business community at large.(cid:13)(cid:13)
`
`Millennium contains highly confidential information and(cid:13)
`trade secrets that were designed and developed by Geac at(cid:13)
`great effort and expense. Geac complains that Grace(cid:13)
`
`
`
`Consulting, Inc., its founder, president, and chief executive(cid:13)
`officer Anthony Ilutzi, and a related enterprise, Grace(cid:13)
`Maintenance, Int. (collectively Grace) deliberately have(cid:13)
`infringed on Geac’s copyrighted software while in the(cid:13)
`course of providing consulting and maintenance services to(cid:13)
`
`companies licensed by Geac to use its software.(cid:13)(cid:13)
`
`Geac brought suit against Grace in March 1994 in the(cid:13)
`United States District Court for the District of New Jersey.1(cid:13)
`Grace filed an answer together with counterclaims for(cid:13)
`
`_________________________________________________________________(cid:13)(cid:13)
`
`1. The District Court had subject matter jurisdiction pursuant to 28(cid:13)
`U.S.C. SS 1331, 1338 and 1367 because the plaintiffs’ complaint alleges(cid:13)
`claims under the federal Copyright Act and related state law claims. This(cid:13)
`court has appellate jurisdiction of the timely appeals from the final(cid:13)
`
`judgment of the District Court pursuant to 28 U.S.C.S 1291.(cid:13)(cid:13)
`3(cid:13)(cid:12)(cid:13)(cid:13)
`
`
`
`breach of contract and tortious interference. The District(cid:13)
`Court struck Grace’s counterclaims and six of its defenses(cid:13)
`after the close of testimony. The court, however, entered(cid:13)
`summary judgment in favor of the defendants on Geac’s(cid:13)
`claim for misappropriation of trade secrets. On the(cid:13)
`remaining issues, the case was tried to a jury which(cid:13)
`returned a verdict in favor of the defendants. The Court(cid:13)
`denied Geac’s motions for a judgment as a matter of law(cid:13)
`after trial and for a new trial. Geac timely appealed. The(cid:13)
`Court also rejected Grace’s claim for attorneys’ fees. Grace(cid:13)
`timely cross-appealed. We affirm in part and reverse in(cid:13)
`
`part.(cid:13)(cid:13)
`I.(cid:13)(cid:13)
`BACKGROUND(cid:13)(cid:13)
`A. GEAC’S MILLENNIUM SOFTWARE(cid:13)(cid:13)
`
`Among the United States copyrighted products owned by(cid:13)
`Geac are twelve different software business applications,(cid:13)
`collectively known as Millennium. These applications keep(cid:13)
`track of a host of business information, such as accounts(cid:13)
`payable, taxes payable, accounts receivable, fixed assets,(cid:13)
`and others. Trade secrets and highly confidential(cid:13)
`information are found in a wide variety of materials relating(cid:13)
`to Millennium, including but not limited to: (a) source and(cid:13)
`object codes for applications and operating software; (b)(cid:13)
`software documentation; (c) software upgrades; (d) manuals(cid:13)
`and materials for training, installation, service and(cid:13)
`maintenance; and (e) customer lists and other information(cid:13)
`about the specific needs of its licensees. Geac faces(cid:13)
`substantial competition for all of its Millennium products,(cid:13)
`and its confidential information and trade secrets allow it to(cid:13)
`
`compete effectively and advantageously.(cid:13)(cid:13)
`
`Geac authorizes its customers to use its Millennium(cid:13)
`software under licensing agreements that contain protective(cid:13)
`provisions for its trade secrets and copyrighted properties.(cid:13)
`
`
`
`The licensing agreements provide, inter alia, that if a(cid:13)
`customer engages a third party consultant to install or(cid:13)
`
`configure the software to the customer’s needs or for(cid:13)(cid:13)
`4(cid:13)(cid:12)(cid:13)(cid:13)
`
`
`
`maintenance, the consultant must execute a non-disclosure(cid:13)
`agreement acceptable to Geac. Geac also offers(cid:13)
`maintenance service to its customers for its Millennium(cid:13)
`software which includes, among other things, telephone(cid:13)
`support, repairs, fixing program errors ("bugs"), and(cid:13)
`updated versions of Millennium. Millennium runs on a(cid:13)
`large mainframe computer that is typically licensed to large(cid:13)
`corporations and institutions, with the customers electing(cid:13)
`which of Millennium’s twelve copyrighted software(cid:13)
`
`applications it wants to license.(cid:13)(cid:13)
`
`At issue here is the Human Resources application known(cid:13)
`as HR:M. This application enables licensees to perform(cid:13)
`various payroll, benefits, and other employee-related(cid:13)
`functions in any jurisdiction in the United States. HR:M(cid:13)
`consists of numerous individual programs, each of which(cid:13)
`are self-contained units of code. Each of the programs(cid:13)
`performs one or more of the many individual tasks(cid:13)
`comprising the application. One of such programs is Geac’s(cid:13)
`W-2 PAYTXABR. This W-2 program enables employers to(cid:13)
`prepare employee W-2s and related year-end reports(cid:13)
`
`required by federal and state taxing authorities.(cid:13)(cid:13)
`B. GRACE’S OPERATIONS(cid:13)(cid:13)
`
`Grace Consulting, Inc. is a New Jersey corporation with(cid:13)
`its principal place of business in Verona, New Jersey, and(cid:13)
`is engaged in the business of computers and software(cid:13)
`consulting. Anthony Ilutzi, a New Jersey resident, formed(cid:13)
`the company to provide consulting services to Geac(cid:13)
`licensees. This company also does business as Grace(cid:13)
`Maintenance, Int., which was formed in 1993 to provide a(cid:13)
`program of maintenance support services for Millennium.(cid:13)
`We refer to them collectively as Grace. Grace’s activities in(cid:13)
`implementing their services apparently triggered this suit(cid:13)
`
`by Geac.(cid:13)(cid:13)
`
`Commencing in 1993, Grace offered and performed(cid:13)
`services for Geac’s licensees, including customizing(cid:13)
`Millennium software for their specific needs, fixing"bugs"(cid:13)
`in Millennium software, providing tax and regulatory(cid:13)
`updates, and modifying Geac’s programming language code.2(cid:13)
`
`_________________________________________________________________(cid:13)(cid:13)
`
`2. Instructions for a computer program may be written in any of three(cid:13)
`
`different levels of computer language.(cid:13)(cid:13)
`5(cid:13)(cid:12)(cid:13)(cid:13)
`
`
`
`Grace began offering Millennium licensees Grace’s"Remain(cid:13)
`on Release" program, which provides Geac customers with(cid:13)
`Grace’s own version of Geac’s W-2 program. Grace(cid:13)
`
`
`
`represented that this software maintenance program(cid:13)
`"allows customers to stay on their present release without(cid:13)
`having to accept expensive upgrades from the vendor."(cid:13)
`Under this program, Grace purported to save Geac(cid:13)
`customers considerable money they presumably would pay(cid:13)
`
`Geac under its maintenance program.(cid:13)(cid:13)
`
`Grace’s W-2 software was initially developed by Cook &(cid:13)
`Reynolds Services, Inc. (CNR), a company formed by two(cid:13)
`former Geac employees, Stan Cook and Rick Reynolds. In(cid:13)
`1996, Grace purchased the rights to CNR’s W-2 program,(cid:13)
`revised it, and renamed the individual programs to begin(cid:13)
`with a "GMI" prefix instead of "CNR." The CNR W-2 then(cid:13)
`became known as "GMITXABR."(cid:13)
`
`_________________________________________________________________(cid:13)(cid:13)
`
` Computers can "understand" (that is, execute) only programs in(cid:13)
` "machine language" -- the lowest level. A machine language is a(cid:13)
` cluster of "0" and "1" symbols called"bits," which are the only(cid:13)
` symbols recognized by digital computers. A program consisting of a(cid:13)
` sequence of machine language instructions is referred to as "object(cid:13)
`
` code."(cid:13)(cid:13)
`
` To make it easier for humans to read and write programs, two(cid:13)
` "higher" levels of languages exist. The first level is "assembly(cid:13)
` language." Assembly language instructions consist of alphanumeric(cid:13)
` labels rather than bits. To be executed by the computer, the(cid:13)
` alphanumeric instructions must be translated into their(cid:13)
` corresponding clusters of bits by another computer program known(cid:13)
` as an "assembler." At the next level are "high-level" computer(cid:13)
` languages, such as FORTRAN or COBOL, that employ English-like(cid:13)
` words and syntax and are therefore easier to use and understand(cid:13)
` than assembly or machine language. Each high-level instruction is(cid:13)
` the equivalent of several assembly or machine language(cid:13)
` instructions. A computer program known as a "compiler" translates(cid:13)
` high-level programs into the corresponding object code. Programs(cid:13)
` written in assembly or high-level languages are referred to as(cid:13)
`
` "source programs" or "source code."(cid:13)(cid:13)
`
`Copyright Protection of Computer Program Object Code , 96 HARV. L. REV.(cid:13)
`
`
`
`1723, 1725 (footnotes omitted).(cid:13)(cid:13)
`6(cid:13)(cid:12)(cid:13)(cid:13)
`C. GEAC’S LICENSING AGREEMENTS(cid:13)(cid:13)
`
`Geac has two standard Millennium licensing agreements(cid:13)
`that are at issue here: the DBS and the McCormack and(cid:13)
`Dodge (M&D) agreements (collectively, the License(cid:13)
`Agreements). The DBS License Agreement prohibits anyone(cid:13)
`from modifying Geac’s Millennium software without Geac’s(cid:13)
`authorization. The M&D License Agreements permit a third(cid:13)
`party consultant, in limited instances, to modify the Geac(cid:13)
`code, provided it satisfies the Agreement’s non-disclosure(cid:13)
`
`and work-for-hire prerequisites for accessing the code.(cid:13)(cid:13)
`
`Both of Geac’s License Agreements prohibit the removal(cid:13)
`of the Geac code from the licensee’s site. The M&D License(cid:13)
`Agreement authorizes and limits the licensee to use the(cid:13)
`
`
`
`system solely for its own internal operation on any central(cid:13)
`processor within Customer’s data center at the location(cid:13)
`designated on the "Customer and Product Information(cid:13)
`Schedule" or, with the prior approval of Geac, at a(cid:13)
`designated replacement site or service bureau. This(cid:13)
`Agreement defines use as "copying any portion of a(cid:13)
`Licensed Program . . . or transmitting [it] to a computer for(cid:13)
`processing of the instructions or statements contained in(cid:13)
`the Licensed Program." The Agreement expressly provides(cid:13)
`that "customer[s] shall not copy the System, in whole or in(cid:13)
`part, except as expressly provided in the [M&D] license(cid:13)
`agreement." The DBS License Agreement also restricts the(cid:13)
`use, including copying, of the Geac source code, solely for(cid:13)
`"purposes on the Hardware and Operating System Software(cid:13)
`at the Site." Both License Agreements bar the distribution(cid:13)
`of modified versions of the code. It is undisputed that(cid:13)
`approximately 35% of Grace customers are subject to the(cid:13)
`DBS license agreement and 65% are subject to the M&D(cid:13)
`
`license agreement.(cid:13)(cid:13)
`
`In relevant part, the M&D License Agreement specifically(cid:13)
`
`provides:(cid:13)(cid:13)
`
` - Customer may also disclose M&D confidential(cid:13)
` information to Customer’s consultants who have(cid:13)
` been retained to perform work for hire in connection(cid:13)
` with Customer’s use of the System. All Customer(cid:13)
` consultants having access to M&D confidential(cid:13)
`
`
`
` information will be required to execute a non-(cid:13)(cid:13)
`7(cid:13)(cid:12)(cid:13)(cid:13)
` disclosure.(cid:13)(cid:13)
`
` disclosure agreement acceptable to M&D prior to(cid:13)
`
` - Customer shall not copy the System, in whole or in(cid:13)
` part, except as expressly provided in this section.(cid:13)
` The System may be copied, in whole or in part, in(cid:13)
` printed or machine readable form, for use by(cid:13)
` Customer at the designated site, for archive or(cid:13)
` emergency restart purposes, to replace a worn copy,(cid:13)
` to understand the contents of such machine-(cid:13)
`
` readable materials . . . ."(cid:13)(cid:13)
`
`At trial, Geac’s counsel conceded that "under the M&D(cid:13)
`license, we allowed customers and consultants that(cid:13)
`
`qualified, to modify the source code for that customer only."(cid:13)(cid:13)
`
`In relevant part, the DBS Software License Agreement(cid:13)
`
`specifically provides:(cid:13)(cid:13)
`
` - Customer may make a reasonable number of copies(cid:13)
` of the Program exclusively for testing, disaster(cid:13)
`
` recovery, inactive back-up or archival purposes.(cid:13)(cid:13)
`
` - Each party shall hold Confidential Information of(cid:13)
` the other in confidence . . . . All Confidential(cid:13)
` Information shall remain the sole property of the(cid:13)
` disclosing party.(cid:13)
`
`
`
`(cid:13)
`
` - Upon execution of a satisfactory nondisclosure(cid:13)
` agreement, third parties may have access to(cid:13)
`
` Confidential information.(cid:13)(cid:13)
`
` - All programs and Documentation, and any(cid:13)
` modification or copies thereof are proprietary and(cid:13)
` protected by copyright and/or trade secret law and(cid:13)
` no ownership rights are transferred by this(cid:13)
`
` Agreement.(cid:13)(cid:13)
`
` - Customer shall not modify, reverse engineer, reverse(cid:13)
` assemble or reverse compile any Program or part(cid:13)
`
` thereof . . . .(cid:13)(cid:13)
`
`In addition, all third party consultants engaged to work(cid:13)
`on software products licensed by Geac to its customers are(cid:13)
`required to execute a consultant’s non-disclosure (cid:13)
`agreement.3 It provides, in relevant part, for an(cid:13)
`
`_________________________________________________________________(cid:13)(cid:13)
`
`3. The consultant non-disclosure agreement allows Consultant access to(cid:13)
`
`certain proprietary and confidential information about the Program,(cid:13)(cid:13)
`8(cid:13)(cid:12)(cid:13)(cid:13)
`
`
`
`acknowledgment by the Consultant of the secret trade(cid:13)
`status of the source code, program and system design(cid:13)
`specifics and all related items or materials developed by or(cid:13)
`licensed to the licensee. It also requires an agreement to(cid:13)
`abide by all of the terms of these provisions, using items(cid:13)
`only in accordance with the license agreements and making(cid:13)
`no duplicates of any items except with the written consent(cid:13)
`of the vendor as necessary in the course of any(cid:13)
`employment.(cid:13)
`
`_________________________________________________________________(cid:13)(cid:13)
`
`modifications thereto and derivative works thereof, upon the following(cid:13)
`
`conditions:(cid:13)(cid:13)
`
` - Consultant may use the Confidential Information, including(cid:13)
` adapting, modifying and crating derivative works of the Program,(cid:13)
` solely for purposes of assisting Customer in evaluating the(cid:13)
` Program and/or implementing or modifying the Program at(cid:13)
` Customer’s facility to meet Customer’s particular requirements.(cid:13)
` Consultant may not use the Confidential Information to perform(cid:13)
` maintenance services for Customer or for any other purposes,(cid:13)
` and may not in any event distribute the Confidential Information(cid:13)
`
` to any third party including other DBS licensees.(cid:13)(cid:13)
`
` - All adaptations and modifications to the Confidential Information,(cid:13)
` and all derivative works thereof shall be deemed to be the sole(cid:13)
` property of [Geac], whether prepared by [Geac], Customer,(cid:13)
` Consultant or any other party. Consultant agrees that any such(cid:13)
` adaptations, modifications and derivative works prepared by(cid:13)
` Consultant for Customer shall be deemed to be work for hire as(cid:13)
`
` defined under the U.S. copyright law.(cid:13)(cid:13)
`
` - Consultant shall have no right to use, copy or disclose the(cid:13)
`
`
`
` Confidential Information, in whole or in part, except as(cid:13)
` authorized herein. Consultant may disclose the Confidential(cid:13)
` Information only to DBS’s or Customer’s employees in the scope(cid:13)
` of their employment who have a need to know and to obtain(cid:13)
` access thereto for the purposes described above and who are(cid:13)
` bound by a written agreement with Consultant to maintain the(cid:13)
` confidentiality of such Confidential Information in a manner(cid:13)
`
` consistent with this Agreement.(cid:13)(cid:13)
`
` - All tangible Confidential Information and any copies thereof, shall(cid:13)
` be promptly returned to DBS or destroyed at DBS’s option upon(cid:13)
`
`
`
` request of DBS or upon termination of this Agreement.(cid:13)(cid:13)
`9(cid:13)(cid:12)(cid:13)(cid:13)
`D. INFRINGEMENT CLAIMS(cid:13)(cid:13)
`
`Geac claims that one of its most important software(cid:13)
`products is its Millennium package, including the twelve(cid:13)
`separate programs which compose it. It alleges that it has(cid:13)
`never authorized defendants to market or license(cid:13)
`Millennium software or upgrades, either to the general(cid:13)
`public or to specific business clients. The defendants,(cid:13)
`however, it asserts, have induced one or more of Geac’s(cid:13)
`customers to provide them with Millennium software,(cid:13)
`upgrade programs, documentation, and customer lists, all(cid:13)
`of which constitute confidential information of Geac. Geac(cid:13)
`further alleges that Ilutzi and Grace have illegally and(cid:13)
`without Geac’s permission copied these proprietary(cid:13)
`materials and used the confidential information to solicit(cid:13)
`directly in competition with Geac existing Geac licensees(cid:13)
`and provide them with software and maintenance service(cid:13)
`for Geac software. By improperly taking this confidential(cid:13)
`information and software programs, Geac alleges that Grace(cid:13)
`has avoided a substantial investment in time and money(cid:13)
`that Geac found necessary to develop the Millennium(cid:13)
`confidential package. Grace, therefore, has been able to(cid:13)
`offer their services at prices significantly lower than those(cid:13)
`charged by Geac. Further, Geac asserts that Grace has(cid:13)
`improperly used Geac’s confidential information and(cid:13)
`
`materials to upgrade and alter Millennium software.(cid:13)(cid:13)
`
`In a systematic attempt to lure away Geac’s software(cid:13)
`maintenance customers, it alleges that Grace has(cid:13)
`disseminated advertising and marketing materials 4 to(cid:13)
`existing Geac licensees using Geac customer lists to which(cid:13)
`Grace had no right to access, as well as confidential and(cid:13)
`proprietary information and materials which they had no(cid:13)
`
`right to possess or use.(cid:13)(cid:13)
`
`Geac claims of copyright infringement may be divided(cid:13)
`into three general categories. First, Geac claims that the(cid:13)
`
`_________________________________________________________________(cid:13)(cid:13)
`
`4. An excerpt of the nature of the marketing materials states: "GMI has(cid:13)
`its own proprietary Year End processing software for HR:M. This(cid:13)
`software was developed by Rick Reynolds and Stan Cook, both former(cid:13)
`developers of the M&D HR:M package and is in use at our maintenance(cid:13)
`clients as well as clients who are continuing on DBS maintenance but(cid:13)
`
`
`
`have found our W-2 process to be superior to the vendor’s process."(cid:13)(cid:13)
` 10(cid:13)(cid:12)(cid:13)(cid:13)
`
`defendants have infringed upon the aforesaid copyrights(cid:13)
`not only by copying and obtaining unauthorized copies of(cid:13)
`Millennium programs and documentation but loading such(cid:13)
`copies into computer memory and delivering unlawful(cid:13)
`copies to Grace’s customers, and amending the Millennium(cid:13)
`software. These acts of infringement, it asserts, were(cid:13)
`committed for the purpose of marketing, maintaining, and(cid:13)
`upgrading Millennium software without Geac’s authority.(cid:13)
`Second, it claims that Grace’s W-2 program contains literal(cid:13)
`copying of Geac’s PAYTXABR package. Third, it also asserts(cid:13)
`that Grace’s use of the Copy and Call commands to access(cid:13)
`
`Geac’s software infringes.(cid:13)(cid:13)
`
`In its answer to Geac’s complaint, Grace states that it(cid:13)
`has entered into one or more Consultant’s Confidentiality(cid:13)
`Agreements with Geac, but denies generally all other(cid:13)
`allegations of infringement alleged in the complaint. It(cid:13)
`claims that the consulting services it performed did not(cid:13)
`infringe because: (1) no copying was performed; (2) no(cid:13)
`derivative works were created; (3) any copying, if performed,(cid:13)
`was inadvertent and de minimis; (4) the "call and copy"(cid:13)
`commands used in providing services were non-infringing;(cid:13)
`(5) Geac licensing agreements authorized its customers to(cid:13)
`use maintenance services like Grace; and (6) the services(cid:13)
`that Grace performed comported with "standard industry(cid:13)
`
`practice" and Geac’s licensing agreements.(cid:13)(cid:13)
`
`In addition, Grace pled counterclaims for breach of(cid:13)
`contract and tortious interference. At the close of(cid:13)
`testimony, the District Court struck the following defenses:(cid:13)
`(1) copyright misuse defense; (2) de minimis defense; (3)(cid:13)
`waiver defense; (4) estoppel defense; (5) 17 U.S.C.S 117(cid:13)
`defense; and (6) fair use defense. One of the struck(cid:13)
`defenses that Grace has cross-appealed only for is the(cid:13)
`copyright misuse defense. On appeal, Grace contends that(cid:13)
`as required by Section 15 of the License Agreement, it(cid:13)
`entered into non-disclosure agreements with each licensed(cid:13)
`customer it served in which each consultant agreed to(cid:13)
`protect the confidentiality of the software. It further argues(cid:13)
`that Geac’s course of conduct demonstrated that(cid:13)
`consultants like Grace "were expressly permitted" to provide(cid:13)
`"maintenance to licensees." If there was some copying, it(cid:13)
`
`was de minimis and, therefore, not infringing.(cid:13)(cid:13)
` 11(cid:13)(cid:12)(cid:13)(cid:13)
`II.(cid:13)(cid:13)
`THE MOTION FOR JUDGMENT AS A MATTER OF LAW(cid:13)(cid:13)
`
`Geac presented two motions for judgment as a matter of(cid:13)
`law during a complex and difficult trial and one after the(cid:13)
`jury returned its verdict for the defendants. The trial court(cid:13)
`denied each of them. A trial court’s denial of motions for(cid:13)
`
`
`
`judgment as a matter of law during the trial and after the(cid:13)
`verdict by the jury must be affirmed where the evidence(cid:13)
`viewed in a light most favorable to the non-moving party(cid:13)
`contains a "minimum quantum of evidence" reasonably to(cid:13)
`support the jury’s verdict. Kuth v. Truck Stops of Am., 909(cid:13)
`F.2d 743, 745 (3d Cir. 1990). Our review of a District(cid:13)
`Court’s action in each of these instances is plenary. Id. In(cid:13)
`denying plaintiff ’s motion for judgment as a matter of law,(cid:13)
`the trial judge stated that she believed there was ample(cid:13)
`evidence on which the jury could have decided that the(cid:13)
`defendants were not liable for copyright infringement. She(cid:13)
`offered no explanation on what evidence she relied for her(cid:13)
`
`conclusion.(cid:13)(cid:13)
`
`A motion for judgment as a matter of law should be(cid:13)
`granted only if, viewing the evidence in the light most(cid:13)
`favorable to the non-movant and giving it the benefit of(cid:13)
`every favorable and reasonable inference, there is(cid:13)
`insufficient evidence from which a jury reasonably could(cid:13)
`find liability. In assessing whether the evidence is sufficient(cid:13)
`to sustain liability, the court may not weigh the evidence,(cid:13)
`determine the credibility of the witnesses, or substitute its(cid:13)
`version of the facts for the jury’s version. Although(cid:13)
`judgment as a matter of law should be granted sparingly, a(cid:13)
`scintilla of evidence is insufficient to sustain a verdict of(cid:13)
`liability. Lightning Lube, Inc. v. Metro Corp. , 4 F.3d 1153,(cid:13)
`1166 (3d Cir. 1993). Thus, although the court draws all(cid:13)
`reasonable and logical inferences in the non-movant’s favor,(cid:13)
`we must reverse an order denying judgment as a matter of(cid:13)
`law if, upon review of the record, it is apparent that the(cid:13)
`
`verdict is not supported by legally sufficient evidence.(cid:13)(cid:13)
`
`Although we do not set aside a jury verdict lightly or(cid:13)
`without careful review of the complete record, we must(cid:13)
`
`grant judgment here in this case as a matter of law because(cid:13)(cid:13)
` 12(cid:13)(cid:12)(cid:13)(cid:13)
`
`there is plain evidence of copyright infringement. When the(cid:13)
`record is distilled, filtered, and shaken down, 5 it becomes(cid:13)
`
`apparent that there is no legal basis for such infringement.(cid:13)(cid:13)
`A. COPYRIGHT LAW(cid:13)(cid:13)
`
`We commence our analysis with the relevant provisions(cid:13)
`of the copyright law. Beginning with the federal(cid:13)
`Constitution, copyright protection has enjoyed a revered(cid:13)
`place in our national legal system and in the development(cid:13)
`of the arts, sciences, the economy, and industrialization of(cid:13)
`our nation. Under Constitutional mandate, Congress is(cid:13)
`specifically empowered "To promote the Progress of Science(cid:13)
`and useful Arts, by securing for limited Time to Authors(cid:13)
`and Inventors the exclusive Right to their respective(cid:13)
`Writings and Discoveries." U.S. CONST. ART. I, S 8. Congress(cid:13)
`enacted the first copyright statute as early as 1790. The(cid:13)
`existing copyright laws are codified in the Copyright Act of(cid:13)
`1976 (the Act). This Act contains a complete revision of(cid:13)
`copyright law in response to far reaching new developments(cid:13)
`made in technology and the sciences. Congress amended(cid:13)
`
`
`
`the Act in 1980 expressly to extend copyright protection to(cid:13)
`computer programs and derivatives. 17 U.S.C. SS 101 et(cid:13)
`
`seq.(cid:13)(cid:13)
`
`The Copyright Act as amended provides, in relevant part,(cid:13)
`
`that:(cid:13)(cid:13)
`
` (a) Copyright protection subsists, in accordance with(cid:13)
` this title, in original works of authorship fixed in any(cid:13)
` tangible medium of expression, now known or later(cid:13)
` developed, from which they can be perceived,(cid:13)
` reproduced, or otherwise communicated, either directly(cid:13)
` or with the aid of machine or device. Works of(cid:13)
` authorship include the following categories: (1) literary(cid:13)
` works:(cid:13)
`
`_________________________________________________________________(cid:13)(cid:13)
`
`5. Counsel for the parties were not of much assistance to the court with(cid:13)
`respect to the contents of the record. The joint appendix consisted of(cid:13)
`many volumes and supplemental appendices but the index to them does(cid:13)
`not identify or refer to a single witness by name. Typical references to(cid:13)
`the testimony are: "Excerpts of transcript trial" and date. This is(cid:13)
`meaningless and frustrating to the court. Moreover, the transcript of(cid:13)
`
`testimony also fails to identify the witness under examination.(cid:13)(cid:13)
` 13(cid:13)(cid:12)(cid:13)(cid:13)
`
`17 U.S.C. S 102(a). Computer programs are entitled to(cid:13)
`copyright protection as "literary works." Whelan Assoc. v.(cid:13)
`
`Jaslow Dental Lab., 797 F.2d 1222, 1234 (3d Cir. 1986).(cid:13)(cid:13)
`
`To establish a claim of copyright infringement, a plaintiff(cid:13)
`must establish: (1) ownership of a valid copyright; and (2)(cid:13)
`unauthorized copying of original elements of the plaintiff ’s(cid:13)
`work. Whelan, 797 F.2d at 1231; Gator Rubber Co. v. Bondo(cid:13)
`Chem. Indus., 9 F.3d 823, 831 (10th Cir. 1993). Copying is(cid:13)
`a "shorthand reference to the act of infringing any of the(cid:13)
`copyright owner’s five exclusive rights set forth at 17 U.S.C.(cid:13)
`S 106." Ford Motor Co. v. Summit Motor Products, Inc., 930(cid:13)
`F.2d 277, 291 (3d Cir. 1991). Of relevance here, 17 U.S.C.(cid:13)
`
`S 106 provides:(cid:13)(cid:13)
`
` Subject to sections 107 through 121, the owner of(cid:13)
` copyright . . . has the exclusive rights to do and to(cid:13)
`
` authorize any of the following:(cid:13)(cid:13)
`
` (1) to reproduce the copyrighted work in copies or(cid:13)
`
` phonorecords;(cid:13)(cid:13)
`
` (2) to prepare derivative works based upon the(cid:13)
`
` copyrighted work;(cid:13)(cid:13)
`
` (3) to distribute copies or phonorecords of the(cid:13)
`