USL vs. BSDI documents

USL vs. BSDI documents



Michael D. Loprete (MDL1695) CRUMMY, DEL DEO, DOLAN, GRIFFINGER & VECCHIONE, P.C. One Riverfront Plaza Newark, New Jersey 07102 (201) 596-4500 George L. Graff James W. Kennedy Charles B. Ortner MILGRIM THOMAJAN & LEE P.C. New York, New York 10005-2815 (212) 858-5300 Sanford Tannebaum Executive Vice President and General Counsel UNIX System Laboratories, Inc. 190 River Road Summit, New Jersey 07901-1444 (908) 522-6666 Attorneys for Plaintiff Unix System Laboratories, Inc.



UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY



UNIX SYSTEM LABORATORIES, INC., Plaintiff, Civil Action No. 92-1667 (DRD) -againstCOMPLAINT BERKELEY SOFTWARE DESIGN, INC., Defendant.



Plaintiff UNIX System Laboratories, Inc. ("USL"), for its Complaint against defendant Berkeley Software Design, Inc. ("BSDI"), avers as follows: The Nature of The Action



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1. This is an action for trademark infringement, false advertising and unfair competition under the federal Lanham Trademark Act, 15 U.S.C. Section 1051, et seq., and under the statutory and common law of New Jersey and of each State in which BSDI has engaged in the conduct detailed below. USL seeks injunctive relief and damages to redress BSDI's ongoing unauthorized use of the UNIX(R) trademark in BSDI's toll-free telephone number, 1-800-ITS UNIX, and its inclusion in its advertising and promotional materials of materially false and misleading statements in violation of the rights of USL.



Jurisdiction and Venue 2. This Court has subject matter jurisdiction over this action pursuant to 15 U.S.C. Section 1121(a) and 28 U.S.C. Sections 1331, 1338. 3. Venue is properly laid in this district pursuant to 28 U.S.C. Section1391(b).



The Parties 4. USL is a Delaware corporation with its principal place of business located in Summit, New Jersey. USL is a subsidiary of American Telephone and Telegraph Company ("AT&T") engaged in the development, manufacture, licensing and sale of computer software operating systems and related products and servlces. 5. Defendant BSDI is a Delaware corporation engaged in the manufacture and sale of computer software operating systems and related services. BSDI's principal place of business is located in Richmond Falls, Virginia.



Background 6. Beginning in the early 1970s, AT&T's Bell Laboratories developed proprietary computer operating system software and other computer related products which it identified with the trademark "UNIX." 7. On May 6, 1986, AT&T's UNIX trademark was placed on



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the Principal Register of the United States Patent and Trademark Office for computer programs, under Registration No. 1,392,203. A copy of the registration is annexed as Exhibit A. This registration is valid, subsisting, in full force and effect, and is now incontestable pursuant to 15 U.S.C. Section 1065. 8. AT&T has assigned all of its proprietary rights in the UNIX trademark and the software sold and licensed thereunder to USL. For more than fifteen years, AT&T and its successor, USL, have widely used the trademark UNIX to identify their system software, computers and related products and services, including educational and training services, system manuals, and technical and consulting services. 10. The trademark UNIX is widely known as identifying the products of AT&T and its successor, USL. 11. Pursuant to agreement with AT&T, the Regents of the University of California (the "Regents") have been authorized to distribute to third parties certain works derived from UNIX system software subject to various restrictions intended to protect and preserve AT&T's proprietary rights thereto. Those restrictions include a requirement limiting such distribution to persons who have also acquired licenses from AT&T or USL. The derivative works distributed by the Regents are generally known as "Berkeley Software Distributions," and USL-authorized releases thereof have been widely distributed by the Regents under the initials "BSD" (e.g., "4.3BSD"). 12. BSDI is not affiliated with the Regents, nor has it entered into any license agreements with USL pertaining to UNIX brand software, computers or related products. 13. BSDI is attempting to develop a computer operating system software product that is directly competitive to products sold or licensed by USL and/or its licensees, and to market that product under the name "BSD/386". Exhibit B is a copy of a BSDI promotional brochure for its "BSD/386" system software. 14. Substantial portions of BSDI's BSD/386 operating system are copied from, based upon, or otherwise derived from, USL's proprietary software products. Plaintiff reserves the right to seek an amendment of this Complaint to add claims for relief with respect to violations by BSDI of USL's proprietary rights upon the development of additional facts.



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15. BSDI has attempted to market its BSD/386 software product to prospective licensees in New Jersey and elsewhere throughout the United States and beyond.



First Claim for Relief Federal Trademark Infringement 16. Some time prior to January 1992, BSDI acquired a tollfree telephone number that would permit someone to contact BSDI by dialing "1-800-ITS-UNIX". 17. BSDI has included the "ITS-UNIX" telephone number in its advertising and promotional materials and has otherwise used the UNIX trademark in connection with the sale, distribution or advertising of its goods and/or services in commerce. 18. BSDI's use of the "ITS-UNIX" telephone number is intended to and likely to cause confusion, or to cause mistake, or to deceive in that BSD/386 is not a "UNIX" product nor is BSDI authorized or licensed to use the UNIX trademark in connection with any of its products or services. 19. USL acted promptly to protect its rights in its UNIX trademark and to protest BSDI's conduct. 20. In response to USL's objections, BSDI, through its attorneys, represented that "BSDI has taken steps to discontinue advertising containing the mark, UNIX, as part of a telephone number." However, BSDI has failed or refused to discontinue its use of the 1-800-ITSUNIX telephone number. 21. BSDI's unauthorized use of the UNIX trademark has caused, and, unless enjoined, will continue to cause, irreparable injury to USL for which there is no adequate remedy at law. 22. In addition, BSDI's unauthorized use of the UNIX trademark has caused USL to sustain damage to its business, and to the value of its trademark and the goodwill associated with that mark. 23. BSDI's conduct constitutes infringement of a registered trademark in violation of Section 32 of the Lanham Act, 15 U.S.C. Section 1114.



Second Claim for Relief



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False Descriptions of Origin, Source, Sponsorship or Authorization 24. As shown in Exhibit B, BSDI's promotional materials contain the following representations concerning its "BSD/386" system: BSD/386 is a "Berkeley UNIX" compatible operating system for the 386 and 486 PC architectures. It is based on the most recent release from the Computer Systems Research Group of the University of California, Berkeley - the Networking Release 2. The NET2 tape contained no AT&T licensed code, but was not a complete system. BSDI has completed the system and added additional drivers. The resulting system does not require a license from AT&T, and so is available in source form at a fraction of AT&T's price. 25. This statement is materially false and misleading in that, among other things, the "Networking Release 2" referred to therein contains software code that was copied from, based upon, or derived from, code licensed to the Regents by AT&T, such that any operating system derived from "Networking Release 2" requires a license from AT&T or its successor, USL. 26. In the License Agreement by which BSDI sells its BSD/386 software product to consumers, BSDI represents that "THE LICENSED PROGRAM DOES NOT CONTAIN CODE FROM AT&T'S UNIX OPERATING SYSTEM CURRENTLY LICENSED BY UNIX SYSTEMS [sic] LABORATORIES." A copy of BSDI's form of License Agreement is attached as Exhibit C. 27. This statement is likewise materially false and misleading in that, to the extent the BSDI "LICENSED PROGRAM" is (as BSDI claims) based upon Berkeley's Networking Release 2, it is in fact based upon, copied from or derived from AT&T's code, such that users of the BSDI program require a license from AT&T or its successor, USL. 28. BSDI's conduct constitutes the use in commerce, in connection with goods or services, of false or misleading descriptions of fact or false or misleading representations of fact in commercial advertising or promotion which misrepresent the nature, characteristics or qualities of BSDI's goods, services or commercial activities. 29. BSDI's false and misleading use of the UNIX trademark has caused, and unless enjoined, will continue to cause irreparable injury



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to USL for which there is no adequate remedy at law. 30. BSDI's false and misleading use of the UNIX trademark has caused USL to sustain damage to its business, and to the value of its trademark and the goodwill associated with that mark. 31. BSDI's conduct constitutes false advertising in violation of Section 43(a) of the Lanham Act, 15 U.S.C. Section 1125.



Third Claim for Relief Dilution 32. Plaintiff repeats the foregoing allegations as if fully set forth herein. 33. BSDI's conduct threatens to and does impair the distinctive significance of the UNIX mark, in violation of USL's statutory and common law rights.



Fourth Claim for Relief Unfair Competition and Deceptive Trade Practices under State Statutory and Common law 34. Plaintiff repeats the foregoing allegations as if fully set forth herein. 35. BSDI's conduct constitutes unfair competition and deceptive trade practices in violation of applicable statutory and common law.



WHEREFORE, USL demands judgment as follows: 1. A temporary restraining order, and preliminary and permanent injunctions: (a) restraining BSDI, its officers, agents, employees, servants, and all persons in active concert or participation with them, from any and all use of a telephone number that can be expressed with the letters "UNIX"; (b) directing BSDI to publish and distribute corrective advertising and promotional matter;



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(c) directing BSDI, its officers, agents, servants, employees, and all persons in active concert with them, to surrender up for destruction all advertising or other material that contains reference to the telephone number "l-800-ITS-UNIX". 2. A preliminary and permanent injunction: (a) restraining BSDI, its officers, agents, employees, servants, and all persons in active concert or participation with them, from stating or implying in any advertising or promotional materials of any kind that (i) the BSD/386 system, or the "Networking Release 2" upon which it is based, contains no AT&T or USL licensed code or derivatives thereof and/or (ii) the BSD/386 system does not require a license from AT&T or USL; (b) directing BSDI to publish and distribute corrective advertising and promotional matter; (c) directing BSDI, its officers, agents, servants, employees, and all persons in active concert with them, to surrender up for destruction all advertising or other material that states or implies that (i) the BSD/386 system, or the "Networking Release 2" upon which it is based, contains no AT&T or USL licensed code or derivatives thereof and/or (ii) the BSD/386 system does not require a license from AT&T or USL. 3. An award of compensatory damages in an amount to be determined at trial, and treble damages pursuant to 15 U.S.C. Section 1117. 4. An award of punitive damages in an amount to be determined at trial. 5. An accounting and disgorgement of BSDI's profits derived as a result of its wrongful acts or such other amount as the court shall find to be just according to the circumstances of the case. 6. An award of attorneys fees and expenses incurred by USL herein, pursuant to 15 U.S.C. Section 1117. 7. Such other and further relief as this Court may deem just and proper.



Dated: Newark, New Jersey April 20, 1992



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CRUMMY, DEL DEO, DOLAN, GRIFFINGER & VECCHIONE, P.C.



By: Michael D. Loprete (MDL1695) One Riverfront Plaza Newark, New Jersey 07102 (201) 596-4500 and MILGRIM THOMAJAN & LEE P.C.



By: George L. Graff James W. Kennedy Charles B. Ortner 53 Wall Street New York, New York 10005-2815 (212) 858-5300 Attorneys for Plaintiff Unix System Laboratories, Inc. Of Counsel: Sanford Tannenbaum Executive Vice President and General Counsel UNIX System Laboratories, Inc. 190 River Road Summit, New Jersey 07901-1444 (908) 522-6666



USL vs. BSDI documents



Michael D. Loprete (MDL1695) CRUMMY, DEL DEO, DOLAN, GRIFFINGER & VECCHIONE, P.C. One Riverfront Plaza Newark, New Jersey 07102 (201) 596-4500 George L. Graff James W. Kennedy Charles B. Ortner MILGRIM THOMAJAN & LEE P.C. New York, New York 10005-2815 (212) 858-5300 Sanford Tannebaum Executive Vice President and General Counsel UNIX System Laboratories, Inc. 190 River Road Summit, New Jersey 07901-1444 (908) 522-6666 Attorneys for Plaintiff Unix System Laboratories, Inc.



UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY



UNIX SYSTEM LABORATORIES, INC., Plaintiff, Civil Action No. 92-1667 (DRD) -againstPLAINTIFF'S BERKELEY SOFTWARE DESIGN, INC., FIRST SET OF INTERROGATORIES Defendant.



Plaintiff Unix System laboratories, Inc. ("USL"), pursuant to Rule 33 of the Federal Rules of Civil Procedure and Local Rule 16, demands that Defandant Berkeley System Design, Inc. ("BSDI") serve answers to the following Interrogatories within thirty (30) days from teh date on which they are served, in accordance with the



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Definitions and Instructions set forth below. Definitions 1. The term "BSDI 386 Source" means any and all forms (e.g., source, alpha, beta, binary, or object code forms), in whole or in part (including without limitation any component, module or element thereof), of the operating system described in the "BSD 386 Source" product brochure (copy annexed as Exhibit A) as a "UNIX compatible operating system for 386 and 486 PC architectures," and all versions, releases or derivatives thereof, in whole or in part (including without limitation any component, module or element thereof), whether or not marketed, licensed or sold under the name "BSD 386 Source." 2. The terms "promotional materials" mean any and all matter that promotes, advertises or otherwise describes BSDI or its products and/or services, including but not limited to: (1) (2) (3) (4) Promotional brochures, Advertisements, Order forms, and Notices or other communications posted to computer network bulletin boards.



3. The terms "Berkeley NET2 software" and "Berkeley Networking Release 2" mean any and all forms (e.g., source, alpha, beta, binary, or object code forms), in whole or in part (including without limitation any component, module or element thereof), of the software referred to in BSDI's "386 Source" software product brochure (annexed as Exhibit A) as "the most recent release from the Computer Systems Research Group of the University of California, Berkeley - the Networking Release 2" and as the "NET2 tape," and all versions, releases or derivatives thereof, in whole or in part (including without limitation any component, module or element thereof). 4. Reference to any software product includes without limitation all versions, releases and derivatives thereof. 5. The term "communication" means any correspondence, contact, discussion or exchange between or among any two or more persons or entities. Without limiting the foregoing, "communication" includes all documents, telephone conversations, negotiations, meetings, and conferences.



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6. The term "identify" or "identifying" means: (a) when referring to a natural person, state his full name, present or last known business and home addresses, his present or last known business position, and, if different, his occupation or business position at the time to which the interrogatory or your response thereto has reference. When used with reference to any particular person, the information other than his full name need be given only once. (b) when referring to a corporation or other business enterprise or legal entity, state the full name and address and a brief description of the primary business in which such entity is engaged. With respect to any particular entity, the information other than the full name need be given only once. (c) when referring to communication or act: (i) state its date and place of occurrence (or, if a telephone call is involved, so state and provide the location of all parties to such telephone call and identify the person who initiated it) ; the identity of each person participation therein, who each such person participation therein represented or purported to represent, the nature and subject matter or any circumstances surrounding it, and the substance of what transpired or was said; and (ii) identify all documents, summarizing, recording, reflecting, reporting or containing a reference to it. 7. The term "concerning" includes referring to, relating to, embodying, connected with, commenting on, responding to, showing, describing, analyzing, reflecting or constituting. 8. The term "document" is used in the broadest sense allowed under Fed. R. Civ. P. 34 and includes, without limitation, any printed, written, recorded, taped, electronic, magnetic, optical, graphic, computerized printout, computer software, computer disc or other storage medium, or other tangible matter from whatever source, however produced or reproduced or stored, whether in draft or otherwise, whether sent or received or neither, including the original or any nonidentical copy (whether different from the original because of notes made on or attached to such copy or any other reason). 9. Reference to any entity includes its present and



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former subsidiaries, affiliates, divisions, joint ventures, partners, present and former officers, present and former directors, present and former employees, present and former advisors, and present and former trustees or administrators, both individually and collectively, and any person acting or purporting to act on their individual or collective behalf. 10. Subject to ythe foregoing, "USL" means UNIX System Laboratories, Inc., "BSDI" means defendant Berkeley Software Design, Inc., and "AT&T" means America Telephone and Telegraph Company. 11. Reference to any individual includes such individual, his or her employees, agents, and all persons acting or purporting to act on behalf of or in concert with that individual and all persons or entities under his or her control. 12. "And" as well as "or" shall be construed either disjunctively or conjunctively as necessary to bring within the scope of these interrogatories any response that might otherwise be construed to be outside their scope. 13. The singular includes the plural and the plural includes the singular; "any" shall mean "any and all" and "all" shall mean "all" and "any." 14. The term "including" means "including without limitation." Instructions 1. These interrogatories are to be regarded as continuing, and you are requested to provide, by way of supplementary answers, such additional information as you, or any other person in your behalf, may hereafter obtain, which will augment or otherwise modify your answers now given to these interrogatories. Such supplementary answers are to be filed and served upon USL's counsel within 30 days after receipt of such information, but not later than two (2) weeks preceding the date of Trial. 2. In answering these interrogatories, even though the question may be addressed to "you", you must include both information of which you have personal knowledge or which is available to you and information obtainable by reasonable investigation. This includes information in the possession of or



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available to any person acting on your behalf or under your control, including your representatives. 3. If all the information furnished in answer to all or any part of any interrogatory is not within your knowledge, identify each person to whom all or any part of the information furnished is a matter of personal knowledge, and each person who communicated to the affiant any part of the information furnished. 4. Where any of these interrogatories or any sub-part thereof may be responsibly and fully answered by the reference to a document, such interrogatory or sub-part may be answered by attaching to your answer a copy of such document, by referring in such answer to such document, and by identifying the paragraph, portion, or provision of the document that fully answers the interrogatory. 5. When referring to a document not being produced in lieu of answering an interrogatory, state its title and date; identify the auther or person who prepared it and any signatories to it; give the type of document (e.g., letter, memorandum, note agreement), its present location and custodian, a summary of its contents, or principal terms or provisions; and the identity of its addresses and all other persons receiving it or copies of it. If the document so identified was but is no longer in your possession, custody or control, state what disposition was made of it. 6. Each interrogatory and subpart thereof is to be accorded a seperate answer and interrogatories are not to be combined for the purpose of supplying a common answer thereto. 7. If, after exercising due diligence, you can obtain no information about the subject of a particular interrogatory, or if for some reason you are unable to answer it, the response to that interrogatory should specifically so state, and no interrogatory should be without some response. If you have some information responsive to an interrogaroty, but believe that further information not now available to you would also be responsive, you should provide the information you now have and should specifically state when the balance of the information will be provided; the fact that a full answer cannot be given is not a basis for you to fail to provide such information as is available to you at the time of your response to these interrogatories.



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8. If you assert that any interrogatory contains any objectionable inquiries, state your objection with regard to the particular inquiry or inquiries within any interrogatory which you deem objectionable. 9. If you contend that the contents of any writings described in your answers to these interrogatories are protected from disclosure by reason of a claim of privilege, work product or other ground of nonproduction a list is to be furnished, at the time your Response to these interrogatories is served, identifying specifically each such document by its nature (e.g., letter, memorandum, etc.), together with the following information with respect to each such document; author(s); recipient(s); sender(s); indicated or blind copies; date; subject matter; basis on which the privilege is claimed; number of pages; and each interrogatory to which such document relates.



INTERROGATORY NO. 1: State whether BSDI has at any time adopted and/or implemented a policy or practice with respect to the retention or destruction of documents, and, if so, describe in detail the policy or practice, identify all persons who were involved in discussing, considering, adopting or implementing the policy or practice, and state the date on which the policy or practice was first adopted or implemented.



INTERROGATORY NO. 2: State whether BSDI has at any time destroyed any documents, or is aware of the destruction of documents by anyone, that constitute, evidence, reflect or concern: (a) the technical development of the "BSD 386 Source" software product; (b) the use of, possession of, or access to, any computer related products developed and/or licensed by USL or AT&T (including without limitation UNIX brand computer software operating systems) occurring at any time by any past or present BSDI personnel or by any person or entity which has performed or is now performing services for or on behalf of BSDI; (c) any other document responsive to the Plaintiff's First Request for Production of Documents. If so, (a) identify each such document, including without



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limitation all authors, addressees and recipients thereof, as well as the subject matter of such document, (b) state the date of its destruction, (c) describe the manner in which destroyed, (d) identify all persons responsible for its destruction and all persons with knowledge of its destruction, and (e) state the reason(s) for its destruction.



INTERROGATORY NO. 3: Identify all persons and entities involved in any way in the technical development of the "BSD 386 Source" software product, including without limitation employees of BSDI, consultants, or outside contributors of software. In addition to the information required by Instruction No. 2, for each such person or entity: (a) describe the particular contribution made by such person or entity to the technical development of "BSD 386 Source"; (b) state the number of hours which such person or entity devoted to each particular contribution made to the technical development of "BSD 386 Source," and the dates in which such person or entity was engaged in making that contribution; (c) describe such person's or entity's educational experience, technical expertise and training; and (d) with respect to individuals, list such person's employers, dates of employments, job titles, duties and responsibilities over the last fifteen years.



INTERROGATORY NO. 4: With respect to each person and entity identified in response to the foregoing Interrogatory, state whether or not such person or entity is a licensee of UNIX operating system software; has performed or is performing services, as an employee, contractor or otherwise, for or on behalf of a licensee of UNIX operating system software; or has otherwise had access to UNIX operating system software. With respect to licensees, set forth the date of the License Agreement. Further, if such person or entity has had access to UNIX operating system software, set forth the date(s) of such access and a brief description of the circumstances in which such access was granted.



INTERROGATORY NO. 5: Identify all sources of software code or other technology from which "BSD 386 Source" is or may be copied or derived, and



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identify the specific portion of "BSD 386 Source" related thereto.



INTERROGATORY NO. 6: Identify all license agreements under which BSDI has obtained a past, current or prospective right of access to software or other computer-related technology. As to each such agreement, state whether BSDI has reviewed, referred to or relied upon any technology disclosed under such agreement in connection with the development of the "BSD 386 Source." If so, identify the specific portion of the "BSD 386 Source" related to such technology.



INTERROGATORY NO. 7: Identify all agreements, including without limitation license agreements, between BSDI, or its past or current employees, or its past or current consultants, or any person or entity which at at(sic) the time of the agreement was performing services for or on behalf of BSDI, and: (a) the Regents of the University of California (the "Regents"); or (b) the Computer Systems Research Group of the University of California, Berkeley ("CSRG"), or any individuals affiliated therewith. With respect to each such agreement, identify all communications constituting, evidencing, reflecting or concerning negotiations with respect to such agreement, and identify all persons with knowledge of such communications and negotiations. INTERROGATORY NO. 8: Identify all communications involving BSDI, including without limitation anyone acting on its behalf, concerning the question of indemnity for infringement of intellectual property rights arising out of the use, licensing or sale of "BSD 386 Source" or BSDI's other software products or services. With respect to each such communication, state whether or not the communication involved the question of infringing upon the intellectual property, contractual or other legal rights of (a) the Regents, (b) CSRG, (c) USL, or (d) AT&T. INTERROGATORY NO. 9: Identify all communications involving BSDI, including without limitation anyone acting on its behalf, that concern the question of any source from which it may have copied or derived its "BSD 386 Source," or any portion thereof. With respect to each such communication, state whether or not such communication



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involved the question of whether the BSD 386 Source may have been copied or derived from software developed or licensed by (a) the Regents, (b) CSRG, (c) USL, or (d) AT&T, and if so, identify such software by reference to its trade name. INTERROGATORY NO. 10: Identify all past and current shareholders of BSDI. With respect to each shareholder, state the number of shares owned and the dates of ownership. INTERROGATORY NO. 11: Identify all persons with knowledge of facts concerning the statement in the "BSD 386 Source" product brochure (copy annexed as Exhibit A) that: "It is based on the most recent release from the Computer Systems Research Group of the University of California, Berkeley-Networking Release 2." INTERROGATORY NO. 12: Identify all documents and other sources of information consulted, reviewed or relied on in making the foregoing statement that "It is based on the most recent release from the Computer Systems Research Group of the University of California, Berkeley Networking Release 2." INTERROGATORY NO. 13: Identify all persons with knowledge of facts concerning the statement in the "BSD 386 Source" product brochure (copy annexed as Exhibit A) that: "the NET 2 tape contained no AT&T licensed code, but was not a complete system." INTERROGATORY NO. 14: Identify all documents and other sources of information consulted, reviewed or relied on in making the foregoing statement that: "the NET 2 tape contained no AT&T licensed code, but was not a complete system." INTERROGATORY NO. 15: Identify all persons with knowledge of facts concerning the statement in the "BSD 386 Source" product brochure (copy annexed as Exhibit A) that: "BSDI has completed the system and added additional drivers." INTERROGATORY NO. 16: Identify all documents and other sources of information consulted, reviewed or relied on in making the foregoing statement that: "BSDI has completed the system and added additional drivers."



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INTERROGATORY NO. 17: Identify all persons with knowledge of facts concerning the statement in the "BSD 386 Source" product brochure (copy annexed as Exhibit A) that: "the resulting system does not require a license from AT&T and so is available in source form at a fraction of AT&T's price." INTERROGATORY NO. 18: Identify all documents and other sources of information consulted, reviewed or relied on in making the foregoing statement that: "the resulting system does not require a license from AT&T and so is available in source form at a fraction of AT&T's price." INTERROGATORY NO. 19: Identify all persons with knowledge of facts concerning the statement in the "BSD 386 Source" product brochure (copy annexed as Exhibit A) that: "BSD/386 is a `Berkeley-UNIX' compatible operating system for the 386 and 486 PC architectures." INTERROGATORY NO. 20: Identify all documents and other sources of information consulted, reviewed or relied on in making the foregoing statement that: "BSD/386 is a 'Berkeley-UNIX' compatible operating system for the 386 and 486 PC architectures." INTERROGATORY NO. 21: Identify all persons with knowledge of facts concerning the statement in the "BSD 386 Source" product brochure (copy annexed as Exhibit A) that: "The production system is planned to support SCO UNIX V3.3 binaries." INTERROGATORY NO. 22: Identify all documents and other sources of information consulted, reviewed or relied on in making the foregoing statement that: "The production system is planned to support SCO UNIX V3.3 binaries." INTERROGATORY NO. 23: Identify all persons with knowledge of facts concerning the statement appearing in the attached Exhibit C that: "we have been billed more than US $40,000 just for the legal services we have used to ensure that our code will [sic] is technically and legally free from AT&T/USL trade secrets." INTERROGATORY NO. 24:



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Identify all documents and other sources of information consulted, reviewed or relied on in making the foregoing statement that: "we have been billed more than US $40,000 just for the legal services we have used to ensure that our code will [sic] is technically and legally free from AT&T/USL trade secrets." INTERROGATORY NO. 25: Identify all persons with knowledge of facts concerning the statement appearing in the attached Exhibit C that: "we have seven people putting in more than 280 hours/week on getting the release out. That's every week. We pay them for their efforts. We'll certainly be hiring more[.]" INTERROGATORY NO. 26: Identify all documents and other sources of information consulted, reviewed or relied on in making the foregoing statement that: "we have seven people putting in more than 280 hours/week on getting the release out. That's every week. We pay them for their efforts. We'll certainly be hiring more[.]" INTERROGATORY NO. 27: Identify all persons involved in the drafting and/or review, prior to its release, of the "BSD 386 Source" product brochure (annexed as Exhibit A hereto). INTERROGATORY NO. 28: Identify all persons involved in the drafting and/or review, prior to its release, of the BSDI License Agreement (annexed as Exhibit B hereto). INTERROGATORY NO. 29: To the extent not identified above, identify all employees of BSDI. In addition to the information required by Instruction No. 2, for each such person, (a) describe each such person's title, duties and responsibilities at BSDI; (b) describe such person's educational experience, technical expertise, and training; and (c) list such person's employers, dates of employment, job titles, duties and responsibilities over the last fifteen years. INTERROGATORY NO. 30: With respect to each person identified in response to the foregoing Interrogatory, state whether or not such person is a licensee of UNIX operating system software; has performed or is



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performing services, as an employee, contractor or otherwise, for or on behalf of a licensee of UNIX operating system software; or has otherwise had access to UNIX operating system software. With respect to licensees, set forth the date of the License Agreement. Further, if such person has had access to UNIX operating system software, set forth the date(s) of such access and a brief description of the circumstances in which such access was granted. INTERROGATORY NO. 31: Identify all licensees or purchasers of the "BSD 386 Source" software product, and set forth the date of each license agreement or purchase. INTERROGATORY NO. 32: Identify all alpha and beta sites licensed to use, test or experiment with the "BSD 386 Source" software product. INTERROGATORY NO. 33: Separately identify all persons responsible for the marketing of "BSD 386 Source" within and without the United States and specifically describe each such person's responsibilities in that regard. INTERROGATORY NO. 34: Separately identify all persons involved in the distribution of "BSD 386 Source" including without limitation any outside distributors, and describe all planned methods of distribution. INTERROGATORY NO. 35: Separately identify all agreements relating to (a) the distribution of "BSD 386 Source" and (b) BSDI's other software products. INTERROGATORY NO. 36: Separately state the date(s) on which BSDI expects to make the production release of "BSD 386 Source" in binary and object code forms, and any intermediate versions thereof. INTERROGATORY NO. 37: Separately state the date(s) on which BSDI first released its BSD 386 Source in alpha and beta forms as well as the dates of any past or anticipated intermediate releases thereof. INTERROGATORY NO. 38: In addition to "BSD 386 Source", identify all other



USL vs. BSDI documents



products and services, including but not limited to software products and services, which are (a) being offered for licensing or sale by BSDI or (b) under development at or on behalf of BSDI. State the trade name of such product(s) or services and briefly describe the type and function of such product(s) or services. INTERROGATORY NO. 39: With respect to each product identified in response to the foregoing interrogatory, state whether or not BSDI believes that such product is, or in its final form is intended to be, compatible with (a) UNIX operating system software or (b) any other product licensed or sold by USL and/or AT&T. INTERROGATORY NO. 40: With respect to each product identified in response to Interrogatory No. 38, identify all persons or entities involved in the development of such product, whether or not employed by BSDI. In addition to the information required by Instruction No. 2, describe the contribution made or being made by each such person in the technical development of each such product. INTERROGATORY NO. 41: Identify all phone calls made to the telephone number 1-800 ITS UNIX. INTERROGATORY NO. 42: Identify all persons or entities with knowledge of facts concerning phone calls made to the telephone number 1-800-ITS UNIX, including without limitation all persons involved in answering such calls for or on behalf of BSDI. INTERROGATORY NO. 43: Describe in detail the operation of BSDI's toll-free telephone service which used the number 1-800 ITS UNIX, including the name and business address of the telephone company providing such service, and the location(s) to which calls made to the number 1-800 ITS UNIX were routed. Dated: Newark, New Jersey May 1, 1992



Unix System Laboratratories, Inc. By: Michael D. Loprete (MDL1695)



- 22 -



CRUMMY, DEL DEO, DOLAN GRIFFINGER & VECCHIONE, P.C. One Riverfront Plaza Newark, New Jersey 07102 (201) 596-4500



and By: George L. Graff James W. Kennedy Charles B. Ortner MILGRIM THOMAJAN & LEE P.C. 53 Wall Street New York, New York 10005-2815 (212) 858-5300 Attorneys for Plaintiff Of Counsel: Sanford Tannenbaum Executive Vice President and General Counsel UNIX System Laboratories, Inc. 190 River Road Summit, New Jersey 07901-1444 (908) 522-6666



USL vs. BSDI documents



JAMES H. FORTE (JF 2248) SAIBER, SCHLESINGER, SATZ & GOLDSTEIN 1 Gateway Center Newark, New Jersey 07102-5311 (201) 622-3333 ROBERT T. HASLAM VANESSA WELLS LESLIE A. FITHIAN MICHAEL A. BUCCI HELLER, EHRMAN, WHITE & McAULIFFE 525 University Avenue, 9th Floor Palo Alto, California 94301 Telephone: (415) 326-7600



Attorneys for Defendant Berkeley Software Design, Inc.



UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY ) Civil Action No. 92-1667 (DRD) ) UNIX SYSTEM LABORATORIES, INC., ) DEFENDANT'S MEMORANDUM OF LAW ) IN SUPPORT OF ITS MOTION TO Plaintiff, ) DISMISS PLAINTIFF'S SECOND ) THROUGH FOURTH CLAIMS UNDER v. ) RULE 12(b)(6) ) BERKELEY SOFTWARE DESIGN, INC., ) Date: July 13, 1992 ) Time: 10 a.m. Defendant. ) Hon. Dickinson R. Debevoise ________________________________)



I. INTRODUCTION In its Complaint, plaintiff UNIX System Laboratories, Inc. ("USL") has asserted four claims, three of which purport to set out claims for false advertising, dilution and unfair competition against Berkeley Software Design, Inc. ("BSDI"). All of these claims are based upon BSDI's advertising that certain of



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its software -- which is copyrighted by the Regents of the University of California (the "Regents") -- is free of AT&T code and does not require a license from USL. Notably absent from USL's complaint is any allegation that USL's proprietary rights have been violated by BSDI, or any allegation describing or defining USL's claimed proprietary rights, issues at the very heart of USL's false advertising claim. Apparently, USL believes it can avoid these core issues by dressing its claim for copyright or trade secret infringement in Lanham Act clothing. However, USL's failure to allege such a violation makes it impossible for its second claim for relief -- for false advertising under Section 43(a) of the Lanham Act -- to withstand a motion to dismiss. Moreover, USL's conclusory allegations based upon dilution, and upon unidentified "unfair competition" and "deceptive trade practices," fail to state any claim upon which relief could be granted. Instead of alleging any facts that could support its claim, or citing any particular statute or body of law under which it claims rights, USL recites mere legal conclusions, making it impossible for BSDI to adequately respond. Accordingly, BSDI moves, under Rule 12(b)(6) of the Federal Rules of Civil Procedure, to dismiss USL's second through fourth claims for relief.



II. BACKGROUND In mid-1991, BSDI obtained the Regents' copyrighted software -- the BSD Networking Release 2 -- from UUNET Technologies, Inc. -- a well-known public archives site. UUNET Technologies licensed the software from the Regents. After obtaining the software, BSDI devoted considerable time and effort developing and improving the Networking Release 2 program. These efforts culminated last year in the completion of the BSD/386 operating system. As part of its marketing of the BSD/386 system, BSDI produced and distributed promotional brochures describing its BSD/386 system. One brochure states: BSD/386 is a "Berkeley UNIX" compatible operating system for the 386 and 486 PC architectures. It is based on the most recent release from the Computer Systems Research Group of the University of California, Berkeley -- the Networking Release 2. The NET2 tape contained no AT&T licensed code, but was not a complete system. BSDI has completed the system and added additional drivers. The resulting system does not require a license from AT&T,



USL vs. BSDI documents



and so is available in source form at a fraction of AT&T's price. Complaint at 24. As stated in the advertisement, BSDI's improvements to the Networking Release 2 system have provided consumers with a lower-cost alternative to the system marketed by AT&T. Now, without any legal or factual support, USL claims that the software licensed from the Regents does contain AT&T code and that BSDI's advertising violates not only federal law, but also unidentified and unknown state statutory and/or common law. However, USL fails to assert any action alleging infringement of its proprietary rights. III. ARGUMENT A. USL'S Second Through Fourth Claims For Relief Must Be Dismissed Under Rule 12(b)(6). In order to avoid a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, USL must set forth "`a short and plain statement of the claim' that will give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). At a minimum, "the pleader is required `to disclose adequate information as to the basis of his claim for relief.'" Universe Tankships, Inc v. United States, 528 F.2d 73, 75 (3d Cir. 1975) (citation omitted). Because USL's second through fourth claims fail to satisfy even this liberal pleading standard, these claims must be dismissed. See Conley, 355 U.S. at 48. B. USL's Second Claim -- For False Advertising Under Section 43(a) Of The Lanham Act -- Fails To Adequately Allege Falsity. USL's claim under Section 43(a) of the Lanham Act fails to adequately allege the most essential element of a false advertising claim -- falsity. See Skil Corp. v. Rockwell Int'l Corp., 375 F. Supp. 777, 782-83 (N.D. Ill. 1974) (plaintiff must allege that defendant made false statements of fact in order to state a claim under Section 43(a)). USL does cite the published materials upon which it bases its claim. Complaint at 24, 26. Beyond this, however, USL offers only the conclusory assertion that BSDI's published statements are materially false and misleading in that, among other things, the `Networking Release 2' referred to therein contains software code that was copied from, based upon, or derived from, code licensed to the Regents by AT&T, such that any operating system derived from `Networking Release 2' requires a license from AT&T or its



- 26 -



successor, USL. Complaint at 25; see also, Complaint at 27 (setting forth similar allegations regarding a statement in BSDI's License Agreement). In so alleging, USL merely lumps legal conclusion upon legal conclusion, conveniently ignoring an essential component of its false advertising claim -- unlawful copying. See Xerox Corp. v. Apple Computer, Inc., 734 F. Supp. 1542, 1543 (N.D. Cal 1990) (where plaintiff failed to assert copyright infringement, it could not adequately state a Lanham Act claim which itself depended upon unlawful copying). USL's omission cannot be permitted. To maintain its falsity claim, USL must allege and eventually prove that the BSD/386 operating system infringes USL's proprietary rights. If BSDI's operating system does not infringe USL's proprietary rights, then the BSD/386 requires no license from AT&T, and there can be nothing false about BSDI's statements. Astoundingly, though, USL has not even asserted a claim alleging infringement of its proprietary rights. Rather, USL has "reserved its right" to later bring a claim for infringement of proprietary rights, apparently conceding that it does not have a good faith basis for such a claim at this time. Complaint at 14. However, if plaintiff's false advertising claim is based, as it appears, on copyright infringement, it necessarily must include allegations of copyright infringement on the part of BSDI. See Klinger v. Weekly World News, Inc., 747 F. Supp. 1477 (S.D. Fla. 1990); Gee v. CBS, Inc., 471 F. Supp. 600, 643 (1979), aff'd, 612 F.2d 572 (3rd Cir. 1979). Because a Lanham Act false advertising claim requires the plaintiff to plead and prove falsity, USL cannot evade the requirements of a copyright infringement claim by couching it as a claim under Section 43(a). At least one other court has rejected a similar attempt to use the Lanham Act as a way of circumventing the Copyright Act. In Xerox Corp. v. Apple Computer, Inc., 734 F. Supp. at 1543, Xerox sought damages for claimed violations of Section 43(a), premised on an assertion that Apple unlawfully copied portions of Xerox' copyrighted work. Id. at 1551-53. Similar to USL's claim in this case, Xerox' Lanham Act claim was based on the contention that Apple's copyright notice and claim were a "false designation of origin" because Apple's work allegedly was based on Xerox' proprietary technology, and thus violated Section 43(a). Id. at 1551-52. However, Xerox did not even assert a claim for copyright infringement. Id. at 1545. The court granted judgment on the pleadings as to the Section 43(a) claim. As the court stated, Xerox failed to allege



USL vs. BSDI documents



that Apple's Lisa or Macintosh Finder copyright registrations were false, or that Apple engaged in false advertising: Id. at 1552: At most, by reading between the lines of the complaint, it appears that Xerox' position is that because Apple's copyrights ought to be invalidated, any use by Apple of such copyrights constitutes a violation of 43(a) of the Lanham Act. . . . Xerox is putting the cart before the horse. The invalidity of Apple's copyrights needs to be proven before their use can be deemed false and misleading. What Xerox would like, to paraphrase the Red Queen, is its `Verdict first, proof afterward!.' Id. at 1552. In making its ruling, the court specifically noted Xerox's failure to assert a claim for copyright infringement. Id. at 1545, 1552-53. Indeed, it acknowledged that [i]f Apple were found to infringe Xerox' copyright, there might be some basis for Xerox to claim that advertising statements by Apple to the effect that Apple was the originator of the infringed ideas are actionable under the Lanham Act. Xerox, 734 F. Supp. at 1552 n.18. However, without alleging copyright infringement, Xerox was in no position to raise a false advertising claim that itself required a showing of unlawful copying. Id. at 1552-53. As the court concluded, "[i]f Apple copied material that Xerox created, Xerox should bring a copyright infringement action." Id. at 1553 (emphasis added); see also, Hartman v. Hallmark Cards, Inc., 639 F. Supp. 816, 824 (W.D. Mo. 1986), aff'd, 833 F.2d 117 (8th Cir. 1987) (defendant who advertised that it was "`sole and exclusive'" owner of allegedly infringing property could not be found liable where plaintiff failed to prove infringement). Likewise, if BSDI copied material for which USL owns a copyright, USL should bring a copyright infringement action. What it should not -- and cannot -- do is to attempt to evade its burden of proving infringement by disguising its infringement claim in Lanham Act clothing. Because USL has failed to allege copyright infringement -- or any other violation of its proprietary rights -it has not adequately alleged falsity and cannot state a claim for false advertising. C. USL'S Third and Fourth Claims For Relief Are Hopelessly Vague, And Therefore Fail To State A



- 28 -



Claim Upon Which Relief Could be Granted. In its third and fourth claims for relief, USL has thrown in a series of conclusory and cryptic allegations asserting a violation of completely unidentified statutes. Complaint at 3235. Even under the liberal pleading requirements of Rule 8 of the Federal Rules of Civil Procedure, a complaint must set forth "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). As one court has stated: The purpose of the Rule 8(a) requirement of a plain and simple statement of the claim is to give the defendant fair notice of the charges so that a meaningful response to the pleading may be filed. U.S. ex. rel. Dattola v. National Treasury Employees Union, 86 F.R.D. 496, 499 (W.D. Pa. 1980); see also, U.S. E.E.O.C. v. City Colleges of Chicago, 740 F. Supp. 508 (N.D. Ill. 1990), aff'd, 944 F.2d 339 (7th Cir. 1991) (plaintiff "must allege sufficient facts to outline the cause of action"). However, in its Complaint, USL speaks in such broad-based and vague language that BSDI could not possibly file a meaningful response. USL's fourth claim for relief is especially puzzling. In that claim, USL alleges that "BSDI's conduct constitutes unfair competition and deceptive trade practices in violation of applicable statutory and common law." Complaint at 35. Beyond these bald legal conclusions, USL alleges nothing that would indicate any actual claim for relief. USL does not even tell us what statute or statutes and what state's law it believes is "applicable." Nor does USL supply the particular facts upon which it purports to base its claim. This is significant because under New Jersey law, "unfair competition" is not a cause of action. It is merely a general term encompassing a wide range of possible causes of action. C.R. Bard, Inc. v. Wordtronics Corp., 235 N.J. Super. 168, 172, 561 A.2d 694, 696 (1989). Consequently, BSDI cannot even begin to evaluate -- never mind respond to -- these vague assertions. Instead of providing "fair notice," see Conley, 355 U.S. at 41, USL's fourth claim for relief merely hints at some unidentified unfair competition claim based upon statutory or common law from one or more of the 50 states. Plainly, these conclusory allegations fail to state any claim upon which relief could be granted. Therefore, the fourth claim must be dismissed under Rule 12(b)(6). See Duncan v. AT&T Communications, Inc., 668 F. Supp. 232, 234 (S.D.N.Y. 1987) (conclusory allegations which fail to give notice of the basic events and circumstances of which plaintiff claims injury fail to



USL vs. BSDI documents



state a claim under Rule 8). USL's third claim for relief at least asserts a distinguishable cause of action -- for dilution. Yet, it too fails to state any specific facts indicating that USL is entitled to relief. Nor does it declare what state's law it claims applies to this case. Not all states recognize a claim for dilution. Indeed, New Jersey has no anti-dilution statute, and no New Jersey cases have expressly recognized the cause of action. Without knowing what law USL claims applies, it is impossible to evaluate whether a dilution claim even exists, or if it does, what the elements of the claim are and whether they are met. Thus, USL's conclusory allegations that "BSDI's conduct threatens to and does impair the distinctive significance of the UNIX mark, in violation of USL's statutory and common law rights" is insufficient notice of USL's claim. Complaint at 33. Because it would not be possible to respond to this claim, USL's third claim for relief must be dismissed. IV. CONCLUSION For all of the foregoing reasons, BSDI respectfully requests that this Court grant its motion dismissing USL's second through fourth claims for relief pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. Dated: May 26, 1992 SAIBER, SCHLESINGER, SATZ & GOLDSTEIN



By: ________________________________ James H. Forte (2248) 1 Gateway Center Newark, New Jersey 07102-5311 (201) 622-3333 Attorneys for Defendant Berkeley Software Design, Inc.



- 30 -



.ffam NS .ps 12 .vs 14 .sp 12 .ta 4.5i .nf June 10, 1992 Press Contact: Donnalyn Frey (703) 764 9342 .sp 2 .fi USL has filed a complaint against BSDI in federal court in New Jersey alleging false advertising in violation of Section 43(a) of the Lanham Act and unfair competition in violation of state laws. The basis for the complaint is stated to be that BSDI's promotional materials are allegedly false and misleading in stating that no license from AT&T is required for the BSD/386 product or indeed for any product derived from the Networking Release 2 from the University of California. The parties are now engaged in the process of requesting information from one another and responding to the other's request. BSDI has also filed a motion to dismiss USL's claims of false advertising and unfair competition. This motion is based upon USL's failure to allege any basis for its allegation that the statements made by BSDI are false. USL has not included any claim, for example, for violation of any proprietary rights (such as patent rights, trade secrets, or copyrights) based upon distributing the BSD/386 product without a license from AT&T. BSDI contends that the reason USL has not done so is that it has no proprietary rights to violate with respect to the Networking Release 2 and products derived from it. BSDI argues that absent an infringement of USL's proprietary rights, the statements made by BSDI could not be false or misleading. Thus, USL's complaint is defective in that it has failed to give BSDI fair notice of its claims and the grounds upon which they rest. The complaint also requests a temporary restraining order and preliminary and permanent injunctions in connection with an allegation that BSDI has infringed USL's trademark rights in the word, UNIX. The demand for a temporary restraining order has been withdrawn as the result of a partial settlement of the trademark issues.



USL vs. BSDI documents



.ffam NS .ps 12 .vs 14 .sp 12 .ta 4.5i .nf July 14, 1992 Press Contact: Donnalyn Frey (703) 764 9342 .sp 2 .vs 20 .fi In a move with chilling overtones for the computer software industry, AT&T, through its subsidiary UNIX System Laboratories (USL), has filed suit in federal court in New Jersey against a small software developer, Berkeley Software Design, Inc. (BSDI). The principal issue in the case is USL's contention that the University of California, Berkeley is distributing software in violation of its license with AT&T. However, USL has not sued the University, nor have they stopped the University from distributing the software in question. Instead, the suit was filed against BSDI, a distributor of the University's software and a potential competitor. At issue in USL's lawsuit is the University's Networking 2 Release software. That software has been licensed to third parties, including BSDI, as "AT&T-free" and with the statement that no source code license from AT&T is required. USL has sued BSDI for falsely advertising that its own licensees need no source code license from AT&T, a contention that merely mirrors the University's statements to BSDI. The basis for the false advertising claim appears to be that distribution of the University's software without a license from AT&T violates USL's proprietary rights. However, USL has refused to state what proprietary rights it thinks are violated or to sue directly for copyright, patent or trade secret infringement. .bp .sp 4 Because USL's complaint is so vague and inconsistent, it fails to provide even the minimum notice required to properly inform BSDI of the legal basis for the suit. BSDI has therefore requested that the court dismiss the suit under Section 12(b)6 of the Federal Rules of Civil Procedure. Section 12(b)6 states that a complaint must be adequately formed so that the defendant



- 32 -



understands what it has allegedly done. Although USL has not sued the University of California, we expect that USL (or its parent, ATT) will threaten to review or withdraw research grants made to any university or research institution using or distributing software based on NET2, even though no violation has yet been proven. The nature of the suit against BSDI shows that AT&T's real motivation is to harass and to attempt to intimidate a potential competitor. It does not involve any legitimate dispute. AT&T has now signaled their intent to maintain a monopoly on the Unix System market by suing anyone who refuses to tithe to them. The result could be a significant chilling effect on the efforts of many companies to develop Unix-compatible software products. While we are flattered that AT&T considers BSDI's product to be such a significant competitive threat that they feel the need to file harassing and frivolous suits, we feel obligated to disclose their actions to the general public. We are therefore providing a copy of the actual complaint filed, the first set of interrogatories from USL and BSDI's motion to dismiss. .sp 2 .ce ###



USL vs. BSDI documents



Michael D. Loprete (MDL1695) CRUMMY, DEL DEO, DOLAN, GRIFFINGER & VECCHIONE, P.C. One Riverfront Plaza Newark, New Jersey 07102 (201) 596-4500 George L. Graff James W. Kennedy Charles B. Ortner VARET MARCUS & FINC P.C. (Formerly MILGRIM THOMAJAN & LEE P.C.) 53 Wall Street New York, New York 10005-2815 (212) 858-5300 Sanford Tannenbaum Executive Vice President and General Counsel UNIX System Laboratories, Inc. 190 River Road Summit, New Jersey 07901-1444 (908) 522-6666 Attorneys for Plaintiff UNIX System Laboratories, Inc.



UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY UNIX SYSTEM LABORATORIES, INC., Plaintiff, Civil Action No. 92-1667 (DRD) -againstBERKELEY SOFTWARE DESIGN, INC., and the Following Individuals in their Collective Capacity as THE FIRST AMENDED REGENTS OF THE UNIVERSITY OF CALIFORNIA: COMPLAINT PETE WILSON, LEO T. MCCARTHY, WILLIE L. BROWN, JR., BILL HONIG, DAVID P. GARDENER, RALPH M. OCHOA, GAIL G. ANDERSON, WILLIAM T. BAGLEY, ROY T. BROPHY, CLAIR W. BURGENER, YVONNE BRATHWAITE BURKE, GLENN CAMPBELL,



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FRANK W. CLARK, JR., DIANA DARNELL, TIRSO DEL JUNCO, ALICE J. GONZALES, JEREMIAH F. HALLISEY, S. SUE JOHNSON, MEREDITH J. KHACHIGIAN, LEO S. KOLLIGIAN, HOWARD H. LEACH, S. STEPHEN NAKASHIMA,



YORI WADA, DEAN A. WATKINS, HAROLD M. WILLIAMS, JACQUES S. YEAGER, CARL J. STONEY, JR., PAUL HALL, MARTIN A. TROW and W. ELLIOT BROWNIEE, Defendants.



Plaintiff UNIX System Laboratories, Inc. ("USL"), for its First Amended Complaint against Defendant Berkeley Software Design, Inc. ("BSDI") and Defendants Pete Wilson, Leo T. McCarthy, Willie L. Brown, Jr., Bill Honig, David P. Gardner, Ralph M. Ochoa, Gail G. Anderson, William T. Bagley, Roy T. Brophy, Clair W. Burgener, Yvonne Brathwaite Burke, Glenn Campbell, Frank W. Clark, Jr., Diana Darnell, Tirso del Junco, Alice J. Gonzales, Jeremiah F. Hallisey, S. Sue Johnson, Meredith J. Khachigian, Leo S. Kolligian, Howard H. Leach, S. Stephen Nakashima, Yori Wada, Dean A. Watkins, Harold M. Williams, Jacques S. Yeager, Carl J. Stoney, Jr., Paul Hall, Martin A. Trow, and W. Elliot Browniee (collectively, the "Regents"), avers as follows: Nature of The Action 1. This is an action for injunctive relief and damages to redress violations of USL's federal statutory and common law intellectual property and contractual rights in its renowned UNIX computer operating system software and related documentation, such as programmer's manuals distributed to licensees of USL. All references in this First Amended Complaint to UNIX(R) operating system software or source code includes such related documentation. 2.. USL seeks, among other things, to preliminarily and permanently enjoin the Regents and BSDI, a commercial enterprise founded by, among others, current and former University of California personnel, from developing, promoting, reproducing, and distributing computer software products which



USL vs. BSDI documents



are based upon, copied from, or derived from USL's proprietary and copyrighted UNIX operating system software, except as authorized by agreements between the Regents and USL or its predecessor, the American Telephone and Telegraph Company ("AT&T") (sometimes, collectively, "USL"). 3.. The computer operating system software involved in this action is written in a human readable form known as source code. Over the past two decades, USL has disclosed in confidence to the Regents of the University of California various editions of its proprietary and original UNIX(R) operating system source code pursuant to licenses that restrict the Regents to educational and administrative use of such software and which limit distribution of derivative works prepared by the Regents to authorized licensees of UNIX(R) system source code. 4.. In contravention of these license agreements, the Regents have permitted the Computer Sciences Research Group of the University of California ("CSRG"), a group established by the Regents ostensibly to engage in research, to widely distribute to persons who are not authorized licensees of USL, computer operating system software known as "Networking Release 2" which was substantially copied, based upon or derived from the UNIX(R) system source code. 5.. BSDI, in turn, has used the Networking Release 2 software as a primary source for the development of a commercial computer operating system, known as "BSD/386 Source," which it has been publicly distributing in a preliminary "beta" version and is preparing to release in a production "gamma" version. 6.. Substantial portions of the source code embodied in the Networking Release 2 software and its BSDI derivative, BSD/386 Source, are based upon, substantially copied from or derived from original UNIX(R) system source code disclosed in confidence to the Regents under restrictive license agreements. 7.. The development and distribution of Networking Release 2 software and its commercial BSD/386 Source derivative is the direct result of an illicit scheme on the part of the founding shareholders of BSDI to achieve financial gain by exploiting their access to CSRG's resources -- including CSRG's limited right to use proprietary UNIX operating system software for educational and administrative purposes -- to develop computer operating system software for commercial sale and distribution by BSDI, in violation of USL's proprietary rights in



- 36 -



the UNIX(R) operating system. 8.. By reason of CSRG's development and distribution of the Networking Release 2 software the Regents have breached their obligations under their UNIX(R) software license agreements with USL and have engaged in federal copyright infringement and misappropriation of trade secrets. The Regents have also engaged in false advertising and unfair competition in violation of the federal Lanham Trademark Act, 15 U.S.C. 1051, et seq., and applicable State laws by permitting CSRG to distribute promotional materials which falsely represent that its Networking Release 2 software is "free" of UNIX(R) software code. 9.. BSDI has unlawfully interfered with USL's contractual relations with the Regents by inducing CSRG to breach the Regents' contractual obligations to USL. Moreover, BSDI's development and distribution of its BSD/386 Source product constitutes federal copyright infringement and misappropriation of trade secrets on the part of BSDI. In addition, BSDI has violated the federal Lanham Trademark Act and engaged in unfair competition by distributing brochures and other promotional materials which falsely represent that the BSD/386 Source product does not contain any UNIX(R) operating system source code and that purchasers of the BSD/386 Source product are not required to secure a license from USL. BSDI has repeated these false statements in press release [sic] which also disparage USL. 10. In its original Complaint, USL also sought injunctive relief and damages to redress BSDI's unauthorized use of the UNIX(R) trademark in BSDI's toll-free telephone number, 1-800-ITS UNIX. Although the claim for injunctive relief was resolved by the entry, on April 29, 1992, of a Stipulated Order permanently enjoining BSDI's use of the UNIX(R) mark to identify its telephone number, USL is still seeking damages as a result of BSDI's said unauthorized use of the UNIX mark. Jurisdiction and Venue 11. This Court has subject matter jurisdiction over this action pursuant to 15 U.S.C. 1121(a), 28 U.S.C. 1331 and 1338, 28 U.S.C. 1332, and principles of supplemental jurisdiction. The amount in controversy exceeds $50,000 exclusive of interest and costs. 12. Venue is proper in this district pursuant to 28 U.S.C. 1391(b).



USL vs. BSDI documents



The Parties 13. Plaintiff USL is a Delaware corporation with its principal place of business located in Summit, New Jersey. USL is a majority-owned subsidiary of AT&T engaged in the development, manufacture, licensing and sale of computer software operating systems and related products and services. 14. Defendant BSDI is a Delaware corporation engaged in the manufacture and sale of computer software operating systems and related services. BSDI's principal place of business is located in Richmond Falls [sic], Virginia. 15. BSDI has attempted to market and has distributed its BSD/386 Source product and promotional materials relating thereto in New Jersey and elsewhere throughout the world. 16. Each of the individual defendants is a California resident serving as a member of the Board of Regents of the University of California. The Board of Regents, a licensee of UNIX(R) operating system software, is responsible for governing the affairs of the University and each of its members is legally responsible for the conduct of the University and CSRG. 17. The Regents, through CSRG, have distributed Networking Release 2 software and promotional material relating thereto to persons in New Jersey and elsewhere throughout the world. USL's Proprietary Rights in the UNIX Operating System 18. Beginning in the early 1970s, AT&T's Bell Laboratories developed original proprietary computer operating system software and other computer related products which it identified with the trademark "UNIX." 19. A computer operating system is a software program that controls computer processing; allocates internal and external resources; communicates with external devices such as disk drives, keyboards and printers; and provides the interface to and controls the processing of programs designed to perform specific tasks (called "application programs"). In addition to these basic functions, the UNIX operating system contains a host of utilities to assist users, administrators and programmers of UNIX(R) operating system installations. In addition to these basic



- 38 -



functions [sic], the UNIX(R) operating system is a highly sophisticated multi-user system (i.e., it allocates the computer's resources among multiple users at the same time) and multi-tasking system (i.e., it can perform more than one task at a time for each user). 20. The UNIX(R) system has been described as "the only major operating system available today that covers almost the entire spectrum of computer classes . . . including microcomputers, minicomputers, mainframes, RISC systems, faulttolerant computers, and parallel processors." 21. On May 3, 1990, AT&T assigned to USL all of its rights in the UNIX(R) operating system, including the UNIX trademark, its accompanying goodwill and its copyrights and other intellectual property rights in the software and related documentation sold and licensed thereunder. Copyright 22. The source code and object code for the UNIX(R) operating system software and all versions and releases thereof are original unpublished works of authorship created by USL and constitute copyrightable matter under the Copyright Law of the United States, 17 U.S.C. 101 et seq. (the "Copyright Act"). 23. USL has duly complied with all of the provisions of the Copyright Act and has received from the Register of Copyrights Certificates of Registration for, inter alia, the following versions of UNIX(R) operating system software and related documentation (collectively, the "Works"): Works Fifth edition Sixth edition Seventh edition 32V Registration No. TXU 510 028 TXU 511 236 TXU 516 705 TXU 516 704



Copies of these Certificates are attached as Exhibits A through D. These registrations constitute prima facie evidence of the validity of these copyrights and of the facts stated in the Certificates. Trademark



USL vs. BSDI documents



24. On May 6, 1986, AT&T's UNIX trademark was duly placed on the Principal Register of the United States Patent and Trademark Office for computer programs, under Registration No. 1,392,203. A copy of the registration is annexed as Exhibit E. This registration is valid, subsisting, in full force and effect, and is now incontestable pursuant to 15 U.S.C. 1065. 25. For more than fifteen years, AT&T and its successor, USL, have widely used the trademark UNIX to identify their system software, computers and related products and services, including educational and training services, system manuals, and technical and consulting services. 26. The trademark UNIX is widely known as identifying AT&T and USL as the source of UNIX(R) operating system software and authorized derivatives thereof and of related products. Trade Secrets and Confidential Information 27. Significant elements of the UNIX(R) operating system source code, including the methods and concepts utilized therein, constitute matter that derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use. 28. In order to protect and preserve its value, USL has treated the UNIX operating system software and the methods and concepts used therein as trade secrets and has taken measures that are reasonable under the circumstances to maintain such secrecy. Disclosure of the UNIX(R) Operating System Software To the Regents in Confidence 29. AT&T initially developed the UNIX(R) operating system for its own internal use. In 1973, AT&T began to license UNIX operating system source code to universities and institutions of higher education, including the Regents, under license agreements that limit the use of such software solely for authorized administrative and educational purposes. 30. As part of the measures employed by AT&T and USL to preserve USL's trade secrets, these license agreements require the licensee to maintain the UNIX(R) System source code in confidence, restrict the licensee from disclosing such source



- 40 -



code and the methods and concepts therein, and contain other restrictions intended to protect and preserve USL's proprietary rights in the UNIX operating system. A copy of one such agreement between AT&T's subsidiary, Western Electric Company, Inc. (hereafter, "USL"), and the Regents, dated April 1, 1979, pertaining to software for the UNIX/32V Time-Sharing System, Version 1.0 (the "32V Software Agreement"), is annexed as Exhibit F. 31. Under the 32V Software Agreement and similar license agreements, the Regents have been authorized to distribute to third parties works that are derived from UNIX(R) system software. However, the agreements permit distribution of such derivative work only to persons who have acquired a UNIX(R) system source code license from AT&T or USL. 32. Pursuant to these provisions, the Regents, through CSRG, have developed and distributed derivative works, which are generally known as "Berkeley Software Distributions," to licensees of AT&T and USL. These works have been generally known by a version number followed by the initials "BSD" (e.g., "4.3BSD"). 33. All versions of the BSD software released for distribution by the Regents prior to June 1991, up to and including 4.3BSD, were admittedly derived from UNIX(R) system software. Upon information and belief, the Regents limited distribution of such software to licensees of AT&T and USL. The Infringement of USL's Proprietary Right 34. BSDI is a closely held company formed May 21, 1991, by several persons including employees at CSRG who were and continue to be involved in the development of past, current and future editions of CSRG's "BSD" software. BSDI's shareholders and directors had access to unpublished original proprietary UNIX(R) system source code disclosed in confidence to the Regents under restrictive license agreements and the various "BSD" releases which were substantially copied and derived therefrom, and they also had knowledge of the restrictions contained in those licenses. 35. Some time in 1990, the individuals who eventually formed BSDI formed the collective intention to use the resources of CSRG, including its confidential access to unpublished original proprietary UNIX(R) software and the BSD releases



USL vs. BSDI documents



derived therefrom, to develop a commercial computer operating system in direct competition with USL. 36. As part of that plan, the involved CSRG employees induced the Regents to publicly distribute a substantial portion of the software which had previously been released only to AT&T licensees. 37. On or about June 28, 1991, the Regents -- at the behest of BSDI's founders -- commenced the distribution by CSRG of the Networking Release 2 software. In a June 28, 1991 statement announcing the release of its Networking Release 2 software (an excerpt of which is annexed as Exhibit G), CSRG stated that "[t]his software is copyrighted by the University of California and others, but may be freely distributed. It is available to anyone and requires no previous license, either from AT&T or The Regents of the University of California." 38. Substantial portions of the Networking Release 2 software are based upon, substantially copied from, or derived from proprietary UNIX(R) system software, including UNIX/32V software, disclosed to the Regents under restrictive licensee agreements. 39. BSDI is not affiliated with the Regents, nor has it entered into any license agreements with USL pertaining to UNIX brand software, computers or related products. Accordingly, BSDI is not authorized to receive, use, reproduce, disclose or distribute software containing UNIX(R) system source code or works derived therefrom. Nor is BSDI authorized to use the UNIX(R) mark to identify its products or services. 40. BSDI is attempting to develop its BSD/386 Source software as a computer operating system software product that is directly competitive to products sold or licensed by USL and/or its licensees. Exhibit H is a copy of a BSDI promotional brochure for its BSD/386 Source product. 41. BSDI's BSD/386 Source product is admittedly derived from the Networking Release 2 software. As such, the BSD/386 Source product is based upon, substantially copied from or derived from UNIX(R) system software or derivative works therefrom. Wholly apart from its reliance on the Networking Release 2 software, BSDI has added to its BSD/386 Source product source code that is based upon, substantially copied from or derived from UNIX(R) system software or derivative works



- 42 -



therefrom.



First Claim for Relief Breach of Contract (Against the Regents) 42. Plaintiff incorporates the foregoing allegations of the Complaint. 43. Under the 32V Software Agreement and similar licenses, USL granted the Regents a royalty-free, personal, nontransferable and nonexclusive right to use the Licensed Software "solely for 'academic, educational and administrative purposes'", solely on designated central processing units, or "CPUs". The agreement further provides that: Uses for "academic and educational purposes" means uses directly related to teaching and degree-granting programs. Such uses exclude, without limitation, administrative uses, commercial uses such as the development of software for sale or license, or uses in research if any third person is granted rights or preferential access to the fruits of such research. Other agreements extended to the Regents the right to use the licensed software for the internal administration and operation of the University. 44. Under all of its agreements with AT&T relating to the UNIX(R) software, the Regents agreed, among other things, "to hold the LICENSED SOFTWARE in confidence" and "not [to] make any disclosure of the LICENSED SOFTWARE or any portion thereof (including methods or concepts utilized therein) to anyone, except to employees or students" in accordance with the terms of the agreement. 45. Under all of its agreements with AT&T relating to the UNIX(R) software, the Regents further agreed, among other things, that "it will not use the LICENSED SOFTWARE except as authorized herein, that it will not make or have made, or permit to be made, any copies of the LICENSED SOFTWARE, except those copies which are necessary to the use, by [the Regents], for which rights are granted hereunder . . . ."



USL vs. BSDI documents



46. Certain agreements between AT&T and the Regents expressly authorized the Regents to distribute its own version of the UNIX(R) software "to other licensees of [AT&T] for UNIX(R) System V, provided that [the Regents] first verifies the status of any such other license in accordance with specific instructions issued by AT&T." 47. The Regents have breached the 32V Software Agreement and other license agreements by, among other things, (a) disclosing portions of the UNIX(R) operating system source code, and the methods or concepts used therein, to persons and for purposes other then those authorized in its license agreements with AT&T; (b) distributing its version of the UNIX(R) software to persons who were not licensed by AT&T or USL and without verifying the status of such persons in accordance with AT&T or USL's instructions; and (c) using UNIX(R) system source code for purposes not authorized under the agreements. 48. The agreements between AT&T and the Regents each provide that "[i]f the [Regents] shall fail to fulfill one or more of its obligations under this agreement, [AT&T] may, upon its election and in addition to any other remedies it may have, at any time terminate all the rights granted by it hereunder by not less than two (2) months' written notice to the [Regents] specifying any such breach, unless within the period of such notice all such breaches specified therein shall have been remedied; upon such termination [the Regents] shall within thirty (30) days deliver to [USL] all documentation containing the LICENSED SOFTWARE, and shall render unusable all LICENSED SOFTWARE placed in any storage apparatus." 49. The Regents have "failed to fulfill one or more of its obligations" as contemplated by the Termination provisions of the 32 [sic] Software Agreement and the other license agreements. 50. By reason of their breach of contract, the Regents have caused, and unless enjoined, will continue to cause irreparable injury to USL for which there is no adequate remedy at law.



- 44 -



51. The Regents have caused damage to USL's business in an amount to be determined at trial.



Second Claim for Relief Inducing Breach of Contract (Against BSDI) 52. Plaintiff incorporates the foregoing allegation of the Complaint. 53. At all relevant times, BSDI knew that USL had disclosed its UNIX(R) operating system software to the Regents pursuant to license agreements that limited the use of such software or derivatives thereof to administrative and educational purposes, limited disclosure of such software and the methods or concepts utilized therein and limited distribution of the Regent's [sic] version of such software to persons holding a UNIX(R) system source code license from USL or AT&T. 54. At all relevant times, BSDI knew that Networking Release 2, from which the BSD/386 Source software product is admittedly derived, was substantially copied from, derived from and based upon proprietary UNIX(R) operating system software and the methods and concepts utilized therein, and that the Regents had a duty not to disclose Networking Release 2 to persons who were not licensees of USL or AT&T. 55. BSDI intentionally and unjustifiably induced the Regents, through CSRG, to breach the 32V Software Agreement and similar license agreements by, among other things, (a) distributing Networking Release 2 to persons who are not authorized to receive UNIX(R) system software or works derived therefrom, (b) making copies of Networking Release 2 and permitting copies of such software to be made and distributed by persons who are not authorized to receive UNIX(R) system software or works derived therefrom, and (c) using the licensed software for purposes not authorized under the agreement. 56. By reason of the foregoing, BSDI has damaged USL's rights in the UNIX(R) operating system software in an amount to be determined at trial.



Third Claim for Relief Federal Copyright Infringement



USL vs. BSDI documents



(Against BSDI and the Regents, Severally) 57. Plaintiff incorporates the foregoing allegations of the Complaint. 58. BSDI and the Regents have without the permission of AT&T or USL, reproduced, prepared derivative works based upon, and distributed copies of copyrighted UNIX(R) operating system source code, including UNIX(R) operating system 32V, and works derived therefrom. 59. BSDI and the Regents have engaged in copyright infringement in violation of the Copyright Act. 60. BSDI's and the Regents' infringement of USL's copyrights has caused, and unless enjoined, will continue to cause irreparable injury to USL for which there is no adequate remedy at law. 61. BSDI and the Regents have caused damage to USL's business in an amount to be determined at trial.



Fourth Claim for Relief Misappropriation of Trade Secrets and Confidential Information (Against BSDI and the Regents, Severally) 62. Plaintiff incorporates the foregoing allegations of the Complaint. 63. Substantial portions of the source code embodied in or constituting the Networking Release 2 software and the BSD/386 Source product are based upon or derived from proprietary UNIX(R) operating system software and the methods and concepts utilized therein. 64. At all relevant times, BSDI knew or reasonably should have known that Networking Release 2, from which the BSD/386 Source software product is admittedly derived, was derived from and based upon proprietary UNIX(R) operating system software and the methods and concepts utilized therein and that the Regents had a duty not to disclose Networking Release 2 to persons who were not licensees of USL or AT&T. 65. The conduct of BSDI and the Regents constitutes misappropriation of USL's trade secrets and confidential



- 46 -



information, in violation of applicable State law. 66. BSDI and the Regents have caused, and unless enjoined, will continue to cause irreparable injury to USL for which there is no adequate remedy at law. 67. BSDI and the Regents have caused damage to USL's business in an amount to be determined at trial.



Fifth Claim for Relief False or Misleading Representations of Fact in violation of the Lanham Trademark Act (Against BSDI) 68. Plaintiff incorporates the foregoing allegations of the Complaint. 69. As shown in Exhibit H, BSDI's promotional materials contain the following representations concerning its "BSD/386" system: BSD/386 is a "Berkeley UNIX" compatible operating system for the 386 and 486 PC architectures. It is based on the most recent release from the Computer Systems Research Group of the University of California, Berkeley - the Networking Release 2. The NET2 tape contained no AT&T licensed code, but was not a complete system. BSDI has completed the system and added additional drivers. The resulting system does not require a license from AT&T, and so is available in source form at a fraction of AT&T's price. 70. This statement is materially false and misleading in that, among other things: (a) the "Networking Release 2 software referred to therein contains source code that was substantially copied from, based upon, or derived from, UNIX(R) operating system source code licensed to the Regents by AT&T, (b) the "Networking Release 2" software and any works derived therefrom may only be lawfully distributed to UNIX operating system "source code" licensees of AT&T or USL, (c) the BSD/386 Source software contains



USL vs. BSDI documents



additional source code, not included in the Networking Release 2 software, which is substantially copied from, based upon, or derived from, UNIX operating system source code; and (d) the BSD/386 Source source code may only be lawfully distributed to UNIX(R) operating system "source code" licensees of USL or AT&T. 71. In the License Agreement by which BSDI sells its BSD/386 software product to consumers, BSDI represents that "THE LICENSED PROGRAM DOES NOT CONTAIN CODE FROM AT&T'S UNIX OPERATING SYSTEM CURRENTLY LICENSED BY UNIX SYSTEMS [sic] LABORATORIES." A copy of BSDI's form of License Agreement is attached as Exhibit I. 72. This statement is likewise materially false and misleading in that, among other things, the BSDI "LICENSED PROGRAM" contains software source code that was copied from, based upon, or derived from, UNIX(R) operating system source code licensed to the Regents by AT&T and may only be lawfully distributed to UNIX operating system "source code" licensees of AT&T or USL. 73. BSDI has repeated these false and misleading statements in press releases that disparage USL, its business and the UNIX trademark. Copies of two press releases printed on BSDI letterhead are attached as Exhibit J. 74. BSDI's conduct constitutes the use in commerce, in connection with goods or services, of false or misleading descriptions of fact or false or misleading representations of fact in commercial advertising or promotion which misrepresent the nature, characteristics or qualities of BSDI's goods, services or commercial activities. 75. BSDI has caused, and unless enjoined, will continue to cause irreparable injury to USL for which there is no adequate remedy at law. 76. BSDI has caused USL to sustain damage to its business, and to the value of its trademark and the goodwill associated with that mark. 77. BSDI's conduct constitutes false or misleading



- 48 -



representations of fact in violation of Section 43(a) of the Lanham Trademark Act, 15 U.S.C. [section] 1125.



Sixth Claim for Relief False or Misleading Representations of Fact in Violation of the Lanham Trademark Act (Against the Regents) 78. Plaintiff incorporates the foregoing allegations of the Complaint. 79. The Regents's June 28, 1991 announcement that its Networking Release 2 software is "available to anyone and requires no previous license, either from AT&T or The Regents of the University of California" is materially false and misleading in that, among other things, the "Networking Release 2" referred to therein contains software code that was substantially copied from, based upon, or derived from, code licensed to the Regents by AT&T and that "Networking Release 2" and any works derived therefrom may only be lawfully distributed to licensees of AT&T or USL. 80. The Regents' conduct constitutes the use in commerce, in connection with goods or services, of false or misleading descriptions of fact or false or misleading representations of fact in commercial advertising or promotion which misrepresent the nature, characteristics or qualities of BSDI's goods, services or commercial activities. 81. The Regents have caused, and unless enjoined, will continue to cause irreparable injury to USL for which there is no adequate remedy at law. 82. The Regents have caused USL to sustain damage to its business. 83. The Regents' conduct constitutes false or misleading representations of fact in violation of Section 43(a) of the Lanham Trademark Act, 15 U.S.C. [section] 1125.



Seventh Claim for Relief False Descriptions of Origin in Violation of the Lanham Trademark Act (Against BSDI)



USL vs. BSDI documents



84. Plaintiff incorporates the foregoing allegations of the Complaint. 85. Statements contained in BSDI's product brochures, promotional materials, licenses and press releases falsely represent or imply that the source code embodied in BSD/386 Source product originates with BSDI and the Regents, and not with AT&T or USL. 86. Likewise, the copyright notice affixed by BSDI to its BSD/386 Source product falsely represents or implies that the source code embodied in that product originates with BSDI and the Regents, and not with AT&T or USL. 87. BSDI's conduct constitutes the use in commerce, in connection with goods or services, of a false designation of origin which is likely to cause confusion, or to cause mistake, or to deceive as to the origin of the source code embodied in the BSD/386 Source product. 88. BSDI has caused, and unless enjoined, will continue to cause irreparable injury to USL for which there is no adequate remedy at law. 89. BSDI has caused USL to sustain damage to its business. 90. BSDI's conduct constitutes false designations of origin in violation of Section 43(a) of the Lanham Trademark Act, 15 U.S.C. 1125. Eighth CLaim for Relief False Description of Origin in Violation of the Lanham Trademark Act (Against the Regents) 91. Plaintiff incorporates the foregoing allegations of the Complaint. 92. Statements made by the Regents in promotional materials, and the copyright notice affixed by the Regents to its Networking Release 2 software, falsely represent or imply that the source code embodied in the Networking Release 2 software originates with CSRG, and not with AT&T or USL.



- 50 -



93. The Regents' conduct constitutes the use in commerce, in connection with goods or services, of a false designation of origin which is likely to cause confusion, or to cause mistake, or to deceive as to the origin of the source code embodied in the Networking Release 2 software. 94. The Regents have caused, and unless enjoined, will continue to cause irreparable injury to USL for which there is no adequate remedy at law. 95. The Regents have caused USL to sustain damage to its business. 96. The Regents' conduct constitutes false designations of origin in violation of Section 43(a) of the Lanham Trademark Act, 15 U.S.C. 1125. Ninth Claim for Relief Federal Trademark Infringement (Against BSDI) 97. Some time prior to January 1992, BSDI acquired a toll-free telephone number that would permit someone to contact BSDI by dialing "1-800-ITS-UNIX". 98. BSDI included the "ITS-UNIX" telephone number in its advertising and promotional materials and has otherwise used the UNIX trademark in connection with the sale, distribution or advertising of its goods and/or services in commerce. 99. BSDI's use of the "ITS-UNIX" telephone number is intended to and likely to cause confusion, or to cause mistake, or to deceive in that BSD/386 is not a "UNIX" product nor is BSDI authorized or licensed to use the UNIX trademark in connection with any of its products or services. 100. On April 29, 1992, this Court entered a Stipulated Order, dated April 28, 1992, that permanently enjoins BSDI's use of the UNIX mark in connection with its telephone number. However, such Order is without prejudice to USL's right to seek damages based upon BSDI's use of the UNIX trademark. 101. BSDI's unauthorized use of the UNIX trademark has caused USL to sustain damage to its business, and to the value of its trademark and the goodwill associated with that mark.



USL vs. BSDI documents



102. BSDI's conduct constitutes infringement of a registered trademark in violation of Section 32 of the Lanham Trademark Act, 15 U.S.C. 1114. Tenth Claim for Relief Dilution (Against BSDI) 103. Plaintiff incorporates the foregoing allegations of this Complaint. 104. BSDI's conduct threatens to and does impair the distinctive significance of the UNIX mark, in violation of USL's rights under the common law of New Jersey and under the law of each State in which BSDI has engaged, is engaging or threatens to engage in the aforesaid conduct. Eleventh Claim for Relief Unfair Competition and Deceptive Trade Practices under State Statutory and Common Law (Against BSDI) 105. Plaintiff repeats the foregoing allegations as if fully set forth herein. 106. BSDI's conduct constitutes unfair competition and deceptive trade practices in violation of applicable statutory and common law.



WHEREFORE, USL demands judgment as follows: 1. A preliminary and permanent injunction: (a) restraining BSDI, its officers, agents, employees, servants, and all persons in active concert or participation with them, from developing, manufacturing, offering for license or sale, licensing, selling, displaying, distributing, promoting, disclosing or using, (1) its BSD/386 Source product or any derivatives thereof and (2) any other software product which, in whole or in part, is copied from, based upon, or derived from UNIX(R) operating system software, version 32V or from any other UNIX(R) operating system software. (b) directing BSDI, its officers, agents, employees, servants, and all persons in active concert or participation with



- 52 -



them, (1) to collect and surrender up to counsel for USL all copies, including copies stored on hard disc, tape drives or in any other storage medium, of matter copied from, based upon, or derived from any portion of the UNIX(R) operating system software source code in its possession, custody or control and (2) in the presence of representatives of USL and under the supervision of the Court, to render unusable all matter containing, copied from, based upon or derived from, in whole or in part, any portion of the UNIX operating system software source code in all storage apparatuses in their possession, custody of [sic] control. (c) restraining BSDI, its officers, agents, employees, servants, and all persons in active concert or participation with them, from referring to, consulting, copying, duplicating, or relying on or otherwise using UNIX(R) operating system software or any works, notes, memoranda, or other records, copied from, based upon, or derived from such software, in connection with the development of any computer operating system. (d) restraining BSDI, its officers, agents, employees, servants, and all persons in active concert or participation with them, from employing, authorizing or otherwise allowing any person who has had access to UNIX(R) operating system source code or any works, notes, memoranda, or other records, copied from, based upon, or derived from such software, disclosed to such person or his employer in confidence, to participate on behalf of BSDI in the development of source code for a multiuser computer operating system. (e) restraining BSDI, its officers, agents, employees, servants, and all persons in active concert or participation with them, from authorizing or purporting to authorize any person to engage in any of the foregoing actions. (f) directing BSDI, its officers, agents, employees, servants, and all persons in active concert or participation with them, to recall all copies of the BSD/386 Source software that were previously distributed and to notify actual and possible recipients of such software of this Court's order and the finding on which it is based. 2. A preliminary and permanent injunction: (a) restraining the Regents, and each of them, and all officers, agents, employees and servants of the University of California, and all persons in active concert or participation



USL vs. BSDI documents



with them, from using, developing, manufacturing, offering for license or sale, licensing, selling, displaying, disclosing, distributing or promoting (1) the Networking Release 2 software, (2) the BSD software releases, (3) the UNIX operating system software and (4) any other software which, in whole or in part, is copied from, based upon, or derived from UNIX(R) operating system software, version 32V or from any other UNIX(R) operating system software, except as authorized by the agreements between the Regents and USL or AT&T. (b) restraining the Regents, and each of them, and all officers, agents, employees and servants of the University of California, and all persons in active concert or participation with them, from authorizing or purporting to authorize any person to engage in any of the foregoing actions. (c) directing the Regents and each of them, and all officers, agents, employees and servants of the University of California, and all persons in active concert or participation with them, to recall all copies of the Networking Release 2 software that were previously distributed and to notify actual and possible recipients of such software of this Court's order and the findings on which it is based. 3. An award against BSDI and the Regents and each of them of all forms of monetary relief authorized by Section 504 of the Copyright Act including but not limited to USL's actual damages and/or the profits of BSDI which are attributable to the infringement in an amount to be determined at trial. 4. An award of compensatory damages against BSDI and the Regents and each of them. 5. An award of punitive damages against BSDI in an amount to be determined at trial. 6. An accounting and disgorgement of BSDI's profits derived as a result of its wrongful acts or such other amount as the court shall find to be just according to the circumstances of the case. 7. An award against BSDI, the Regents and each of them, of attorneys fees and expenses incurred by USL, to the full extent permitted by law. 8. Such other and further relief as this Court may



- 54 -



deem just and proper. Dated: Newark, New Jersey July 24, 1992 CRUMMY, DEL DEO, DOLAN, GRIFFINGER & VECCHIONE, P.C. By: (signed Mich Mxtx) Michael D. Loprete (MDL1695) One Riverfront Plaza Newark, New Jersey 07102 (201) 596-4500 and VARET MARCUS & FINK P.C. (Formerly MILGRIM THOMAJAN & LEE P.C.) By: (signed James W. Kennedy) George L. Graff James W. Kennedy Charles B. Ortner 53 Wall Street New York, New York 10005-2815 (212) 858-5300 Attorneys for Plaintiff UNIX System Laboratories, Inc. Of Counsel: Sanford Tannenbaum Executive Vice President and General Counsel UNIX System Laboratories, Inc. 190 River Road Summit, New Jersey 07901-1444 (908) 522-6666



h:\jwk\unix\regents4



USL vs. BSDI documents



JAMES E. HOLST JOHN F. LUNDBERG MARY E. MacDONALD University of California 300 Lakeside Drive, 7th Floor Oakland, California 94612-3565 Telephone: (510) 987-9800 JOEL LINZNER [JL 6426] CARLA J. SHAPREAU [CJS 2689] CROSBY, HEAFEY, ROACH & MAY Professional Corporation 1999 Harrison Street Oakland, California 94612 Telephone: (510) 763-2000 FREDERICK B. POLAK [FBP 3095] POST, POLAK & GOODSELL 280 Corporate Center 65 Livingston Avenue Roseland, New Jersey 07068 Telephone: (201) 994-1100 Attorneys for Defendant The Regents of the University of California UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY UNIX SYSTEM LABORATORIES, INC., Plaintiff, (DRD) -againstBERKELEY SOFTWARE DESIGN, INC., and the Following lndividuals in their Collective Capacity as THE REGENTS OF THE UNIVERSITY OF CALIFORNIA: PETE WILSON, LEO T. MCCARTHY, WILLIE L. BROWN, JR., et al., Defendants. Civil Action No.92-1667 AMICUS BRIEF BY DEFENDANTS THE REGENTS OF



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THE UNIVERSITY OF CALIFORNIA RE PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION Date: 1-22-93 Time: 10:00 a.m. Court: Honorable Dickinson R. Debevoise



AMICUS BRIEF BY DEFENDANT THE REGENTS TABLE OF CONTENTS Page I. INTRODUCTION II. STATEMENT OF FACTS 4 A. INTRODUCTION TO UNIX AND UNIX-COMPATIBLE SYSTEMS. B. THE UNIVERSITY'S LICENSE AGREEMENTS WITH AT&T C. THE UNIVERSITY'S NET2 RELEASE 13 III. ARGUMENT 14 A. USL CONTRACTUALLY AUTHORIZED THE UNIVERSITY TO DEVELOP AND DISTRIBUTE DERIVATIVE WORKS AND IS ESTOPPED FROM ASSERTING COPYRIGHT PROTECTION IN UNIVERSITY DEVELOPED DERIVATIVE WORKS 14 B. NET2 IS NOT AN INFRINGING WORK 18 1. THE ANCESTRY OF NET2 IN 32V IS NOT GROUNDS FOR FINDING INFRINGEMENT 19 2. NET2 IS NOT SUBSTANTIALLY SIMILAR TO 32V 20 C. USL FORFEITED ITS COPYRIGHT PROTECTION IN 32V WHEN IT PUBLICLY DISTRIBUTED 32V WITHOUT A COPYRIGHT NOTICE 25 1. THE PUBLICATION OF 32V HAS NOT BEEN LIMITED 26



a. USL HAS FAILED TO MEET THE SELECTED GROUP REQUIREMENT 28 a. USL MADE 32V AVAILABLE TO THE PUBLIC IN OBJECT CODE 29 b. USL DID NOT DISTRIBUTE 32V FOR A LIMITED PURPOSE 30 D. THE UNIVERSITY HAS NOT MISAPPROPRIATED USL'S TRADE SECRETS 32 1. USL'S MISAPPROPRIATION OF TRADE SECRET



USL vs. BSDI documents



CLAIM IS PREEMPTED BY THE COPYRIGHT ACT 3 2 2. USL'S TRADE SECRETS HAVE BEEN EXTINGUISHED BY PUBLICATION 33 TABLE OF AUTHORITIES



Academy of Motion Picture Arts And Sciences v. Creative House Promotions, 944 F.2d 1446 (9th Cir. 1991) 27,28 Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3rd Cir. 1983) 23 Apple Computer, Inc. v. Microsoft Corp., 717 F. Supp. 1428 (N.D. Cal. 1989) 15,21,23,24 Aqua Bay Concepts, Inc. v. Grosse Point Bd. of Realtors, 24 U.S.P.Q.2d 1372 (S.D. Mich. 1992) 33 Ashworth v. Glover, 156 U.S.P.Q. 219 (Utah 1967) 30 Atari Games Corp. v. Nintendo of America, Inc., F.2d , 1992 WL 217828 (Fed. Cir. 1992) 20 Avco Corporation v. Precision Air Parts, Inc., 210 U.S.P.Q. 895 (N.D. Ala 1980). Under 33 Bartsch v. Metro-Goldwyn-Mayer, Inc., 391 F.2d 150 (2nd Cir. 1968) 15 Brignoli v. Balch Hardy And Scheinman, Inc., 645 F.Supp. 1201 (S.D.N.Y. 1986) 33 Brown Bag Software v. Symantec, 960 F.2d 1465 (9th Cir. 1992) 20 Brown v. Tabb, 714 F.2d 1088 (11th Cir. 1983) 29 Bull Publishing Co. v. Sandoz Nutrition, 13 U.S.P.Q.2d 1678 (N.D. Ca. 1989) 27,30,32



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Burke v. National Broadcasting Co., 598 F.2d 688 (1st Cir. 1979) 30 Computer Assoc. Int., Inc. v. Altai, Inc., ___F.2d___, 23 U.S.P.Q.2d 1241 (2nd Cir. 1992) 21 Computer Associates International, Inc. v. Altai, Inc., 777 F.Supp. 455 (E.D.N.Y. 1991) aff'd,___F.2d ___(2nd Cir. 1992) 19,21 Continental Cas. Co. v. Beardsley, 253 F.2d 702 (2d Cir. 1958) 28,30 Data General Corp. v. Digital Computer Controls, Inc., 188 U.S.P.Q. 276 (Del. Ch. 1975) 30 Data General Corp. v. Grumman Systems Support Corp ., F.Supp. , 61 U.S.L.W. 2315, 1992 WL 297641 (D. Mass. Oct. 9, 1992) 31 Del Madera Properties v. Rhodes and Gardner, Inc., 830 F.2d 973 (9th Cir. 1987) 32 Durang, 711 F.2d 141 (9th Cir. 1983) 20 Eden Toys, Inc. v. Marshall Field & Co., 675 F.2d 498 (2nd Cir. 1982) 20 Effects Associates, Inc. v. Cohen, 908 F.2d 555 (9th Cir. 1990) 15 Feist Publications, Inc. v. Rural Tel. Service Co., __U.S.__ , 111 S.Ct. 1282 (1991) 21 Foreign Car Parts, Inc. of New England v. Auto World, Inc., 366 F.Supp. 977 (M.D. Pa. 1973) 30 GCA Corp. v. Chance, 217 U.S.P.Q. 718 (N.D. Cal. 1982) 29 H.W. Wilson Co. v. National Library Serv. Co., 402 F.Supp. 456 (S.D.N.Y. 1975) 28,29,30



USL vs. BSDI documents



Hadady Corp. v. Dean Witter Reynolds, Inc., 739 F.Supp. 1392 (C.D. Cal. 1990) 16 Hub Floral Corp. v. Royal Brass Corp., 454 F.2d 1126 (2d Cir. 1972) 30 Hubco Data Products Corp. v. Management Assistance Inc., 219 U.S.P.Q. 450 (D. Idaho 1983) 27



Jerome v. Twentieth Century Fox Film Corp., 67 F.Supp. 736 (S.D.N.Y. 1946) 31 Jewelers' Mercantile Agency, Ltd. v. Jewelers' Weekly Publishing Co., 155 N.Y. 241, 49 N.E. 872 (1898) 28 Key West Hand Print Fabric s, Inc. v. Serbin, Inc., 244 F.Supp. 287 (S.D. Fla. 1965) 30 Merton Co. v. Tony Trading of Hong Kong, Ltd., 6 U.S.P.Q.2d 1156 (S.D.N.Y. 1987) 20 NEC Corp. v. Intel Corp., 10 U.S.P.Q.2d 1177 (N.D. Cal. 1989) 19,25 Nucor Corp. v. Tennessee Forging Steel Serv., Inc., 476 F.2d 386 (8th Cir. 1973) 30 Patterson v. Century Productions, Inc., 93 F.2d 489 (2d Cir. 1937) cert denied, 303 U.S. 655 (1938) 31 Platinum Records Co. v. Lucasfilm, Ltd., 566 F.Supp. 226 (D.N.J. 1983) 15,16 Public Affairs Associates, Inc. v. Rickover, 284 F.2d 262 (D.C. Cir. 1960), vacated on other grounds, 369 U.S. 111 (1962) 31 Relational Design & Technology, Inc., 23 U.S.P.Q.2d 1074 (D. Kan. 1992) 33 Ruskin v. Sunrise Management, Inc.,



- 60 -



506 F.Supp. 1284 (D. Colo 1981) 30 Sega Enterprises Ltd. v. Accolade, F.2d (9th Cir. 1992) 30 Videotronics, Inc. v. Bend Electronics, 564 F.Supp. 1471 (D. Nev. 1983) 33 Warner Bros. v. American Broadcast Companies, 654 F.2d 204 (2nd Cir. 1981) 19 Whelan Assoc., Inc. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222 (3rd Cir. 1986) 20 White v. Kimmell, 193 F.2d 744 (9th Cir. 1952) 31 Williams & Wilkins Company v. United States, 487 F.2d 1345 (Ct. Claims 1973), aff'd, 420 U.S. 376(19 ) 29 Statutes 17 U.S.C. Section 101 27 17 U.S.C. 106 28,35 17 U.S.C. 301 32,35 17 U.S.C. 405 7,26



INTRODUCTION Plaintiff Unix System Laboratories ("USL") has brought a motion for apreliminary injunction against defendant Berkeley Software Design, Inc. ("BSDI")[fn 1] to halt BSDl's distribution of its 386/BSD software which is based primarily upon defendant The Regents of the University of California's ("the University") Networking Release 2 ("Net2") software. Although the motion is not directed against the University, the Court nonetheless will have to decide whether USL is likely to prevail on its claims that the University, by releasing Net2, infringed USL's alleged copyright in UNIX version 32V, or misappropriated trade secrets allegedly contained in UNIX 32V. Accordingly, the University files this amicus brief and supporting



USL vs. BSDI documents



declarations to provide the Court with the history and facts relevant to the development of Net2. [fn1] BSDI is in no way affiliated with the University. UNIX 32V was released by AT&T in 1978 (thirteen years before theUniversity released Net2) for a now-obsolete computer (Digital Equipment Company'sVAX). AT&T granted the University the right to enhance, modify, and improve 32V and granted the University all ownership rights to such enhancements, modifications, and improvements provided the University made those which did not contain AT&T code available to the public. At the time AT&T granted the foregoing rights to the University, it was a regulated public utility and it charged a nominal fee ofapproximately $1,500 for a 32V license. As USL states, UNIX has indeed become "one of the most highly regarded computer systems in the world." This is largely the result of software developed by the University and its contributors which has been incorporated into UNIX. The University, not USL or its predecessor, AT&T, developed the networking 2 and file system capabilities that have been critical to the success of UNIX. Since approximately 1979, the University has made modifications, enhancements, and improvements to UNIX which were licensed by the University to AT&T and then included by AT&T in successive versions of UNIX. Version 32V is now completely outdated. The current version of UNIX, System V Release 4 ("SVR4"), is comprised substantially of code developed by the University and is licensed by USL for a $200,000 plus fee. This high fee is now allowed as a result of the deregulation of USL's predecessor, AT&T. Despite the large amount of University code in SVR4, the University receives no royalties from USL.



Contrary to USL's allegations, the University has not infringed USL'salleged copyright in 32V, or misappropriated trade secrets from 32V by releasingNet2. Net2 does not contain any USL trade secrets - the concepts contained thereinare in the public domain, in some instances put there by AT&T itself. The Universityincluded in Net2 modifications to 32V which, by the terms of its contracts withAT&T, were owned by the University. Further, USL does not have a valid copyrightto UNIX 32V as discussed more fully below; consequently, there can be no copyright infringement. [fn2] [fn2] 32V was published without the requisite copyright notice and was not registered with the U.S. Copyright Office within the



- 62 -



required five-year time period. USL asserts that 32V is an "unpublished" work and, as such, was excused from these requirements. To qualify as an unpublished work, however, USL would have to show that its distribution of UNIX was to a limited group for a limited purpose, neither of which it can do. Even if USL had a valid copyright in 32V, those similarities between Net2and 32V cited by USL are quantitatively minuscule and qualitatively legitimate and, consequently, provide no basis for finding that Net2 is an infringing work. USL claims similarities to 32V in only 30 of the almost 10,000 files in Net2; those 30 filescontain less than 1% of the 1.7 million lines of code in Net2. To the extent similarities exist, they are either well-established mnemonic devices for file names or interface standards. Significantly. USL's moving papers do not establish that any code contained in Net2 is substantially similar to any code in 32V. Instead, USL merely points to similarities in file names, functions, or values as alleged evidence of copying. In fact, those similarities are publicly documented, widely used by programmers, and largely dictated by interface specifications adopted by independent standard-setting organizations (or mandated by USL's own standard interface specifications) to ensure compatibility with applications programs written for USL's UNIX or any Unix-compatible system. As such, they cannot support a claim of copyright infringement. Rather than being a "classic case of unfair competition" as USL asserts, this case is one where the plaintiff seeks to stifle competition. The industry deregulation of AT&T led to the marketing of UNIX as a for-profit product and eventually led to the establishment in Spring 1991 of a subsidiary, plaintiff USL,whose primary product was UNIX. USL and Novell Computer formed a joint venture [fn3] to create and license a version of UNIX that, for the first time, could be used in personal computers (as opposed to mainframes and other types of computer configurations). The University's Net2 software can be used by others, including forprofit companies, as a basis for an effective operating system for personal computers. By seeking a preliminary injunction against BSDI, USL in essence is seeking an injunction against anyone's using the University's Net2 software. If granted, such an injunction would eliminate USL's potential competitors. In its attempt to obtain an injunction, USL is attempting to rewrite history to meet current goals that could not have been foreseen by its predecessor-ininterest in 1978. [fn3] Recent press releases indicate Novell will soon acquire all USL's shares, thereby buying out USL s current majority shareholder,



USL vs. BSDI documents



AT&T. STATEMENT OF FACTS A. INTRODUCTION TO UNIX AND UNIX-COMPATIBLE SYSTEMS Although "UNIX" is a trademark originally adopted by AT&T, there are-- in fact -- several Unix-like operating systems that are compatible with USL's "UNIX." These Unix-like operating systems include Xenix (by Microsoft), SunOS (by Sun Microsystems), Ultrix (by Digital Equipment Corporation), OSF/1 (by IBM and other computer vendors), Minix (by Andrew Tanenbaum), Coherent (by Mark Williams) and Xinu (by Douglas Comer). [fn4] The University began to develop its own variation of Unix -- named the Berkeley Software Distribution ("BSD") -- in the 1970s. The University's BSD software was the basis for SunOS and Ultrix and is generally recognized as one of the most important variants of Unix. [fn4] See, Joint Declaration of Dr. Kirk McKusick and Keith Bostic ("Joint Decl.") at 1 28.3. There is substantial question whether "UNIX" has become a generic term to describe any of the operating systems described herein. The University takes no position on that dispute but presents this information to apprise the Court that there are numerous Unix-compatible systems available from various vendors. As Unix System V Release 4: An Introduction ("Unix Introduction") [fn5] states at p. 14 "Many important innovations to the Unix system have been made at the University of California, Berkeley." The University's involvement began in 1974 and its development of the Unix-like BSD system was aided by an AT&T scientist who spent his sabbatical at Berkeley in 1975. Id. at 15. During this period, AT&T was not in the computer business and made its primitive UNIX Operating System available to universities, the government and commercial entities at virtually no cost. Id. at 13. Pursuant to that program, AT&T licensed, inter alia, an early version of UNIX for the Digital Equipment VAX Computer ("32V") to the University in 1979 and it relicensed 32V to the University in 1981 with a broader grant of rights to the University. The University used the early UNIX code for computer research which led to "valuable innovations." Id. at 15. The University's BSD releases (described in more detail in the Declaration of Dr. McKusick) contained numerous performance enhancements which AT&T has incorporated into its version of Unix. Id. at 14-15. [fn5] This text, published in 1990, was authored by K. Rosen, R.



- 64 -



Rosinski, and J. Farber, three AT&T employees at the time. See p. XXXV. The book is copyrighted by AT&T. Since AT&T is the predecessor-in-interest of USL and the text was written before AT&T created USL, the Court should have little hesitation accepting this text as support for factual assertions. For the Court's convenience, Chapter 1 of "Unix Introduction" is attached to the Declaration of Joel Linzner. The parallel developments of AT&T's UNIX, the University's BSD, Sun's SunOS, Microsoft's Xenix, etc., created problems for applications programmers who wished to build programs that could run on any computer using a Unix-like operating system. "To solve these problems, *various standards have been developed.* These standards define the characteristics a system should have so that applications can be built to work on any system conforming to the standard." Unix Introduction at 16-17. AT&T itself led the crusade to standardize interfaces when it published the System V Interface Definition ("SVID") in 1983. Id. at 17. These standard interfaces were published by AT&T so that "[d]evelopers can build programs that are *guaranteed to work on any machine running a SVIDcompIiant version of the Unix System* [e.g., BSD or Xenix]." Id. Moreover, an independent effort by users and the Institute for Electrical and Electronic Engineers has resulted in POSIX, "a family of standards that define the way applications interact with an operating system." Id. See also, Joint Decl., at Para. 28.3. POSIX has been endorsed in the United States by the National Institute of Standards and Technology and it declares standards for the operating system interface, system calls, libraries, etc. Id. *As a result of SVID. POSIX and related international standards. all variants of Unix have certain similarities which USL incorrectly has seized upon as "proof" of copyright infringement.* USL's current version of UNIX, SVR4, melds the most popular variations of Unix into a single operating system "that meets the needs described by various standards committees and vendor organizations." Unix Introduction, at 18. As aresult, approximately 50% of USL's current SVR4 is comprised of BSD code. Id. at18-19, Fig. 1-2. See also, Id. at 19 (BSD's commands), 20 (BSD's C Shell), 32(BSD's system calls for applications doing real-time processing), 22 (BSD's networking capabilities), 23-4 (BSD's file switch and file systems); See also, McKusick Decl., at Para. 14. USL pays no royalties for its use of the University's original code and concepts. McKusick Decl., at Para. 4. This litigation will determine whether



USL vs. BSDI documents



USL may enjoin others also from freely using the University's original code and concepts. B. THE UNIVERSITY'S LICENSE AGREEMENTS WITH AT&T The mutual intent of the University and AT&T remained unchanged throughout a series of license agreements the parties entered with respect to AT&T's UNIX Operating System Software (Karels Decl., at Para. 6; Wilson Depo., at 41:7-24; 43:1-17; 75:11-76:4); AT&T authorized the University to develop enhancements, modifications and derivative software for the public benefit. Towers Decl., at Para. 4; Karels Decl., at Para. 5 . The contracts, letters and communications between the University and AT&T, when read together, prove the University's ownership over its enhancements and modifications of AT&T code and illuminate what limitations actually were imposed on the University's public software distributions. Those limitations are much narrower than what USL now claims. As early as 1978, the University informed Western Electric (AT&T'ssubsidiary) that it was receiving requests by non-Western Electric licensees for software the University had derived from early versions of AT&T's UNIX. Exhibit A, attached to the Shapreau Decl. Western Electric's response to the University's inquiry regarding its distribution of derivative software to non-licensees set the precedent for the future: [W]e take no position with regard to your use or distribution of software developed by you which does *not contain* any of our proprietary information such as, without limitation, the computer programs and documentation, or any portion thereof, related to the UNIX Operating System, including methods and concepts utilized therein. (Emphasis added.) Exhibit B, attached to the Shapreau Decl. Mr. Edwin Baldwin, then Director of Licensing at Western Electric who signed Exhibit B, admitted that any University enhancements which did not "include our computer programs or documentation or the methods and concepts ... would appear not to be governed by the Software License Agreement." Baldwin Depo., at 125:8-128:11. In other words, as long as programs developed by the University from UNIX did notcontain UNIX code, documentation or trade secrets, AT&T had no objection to public dissemination. [fn6] [fn6] To the extent that the methods and concepts at issue in Net2 can also be found in the Sixth Version of the UNIX Operating System, USL can make no claim to these methods and concepts because



- 66 -



Western Electric permitted the University to use and disclose its methods and concepts when it amended the license agreement for the Sixth Edition of the UNIX Operating System as follows: This is to advise you that the parenthetical clause "... including methods and concepts utilized therein)..." in Section 4.05 of the Agreement may be considered deleted from such section. Exhibit D, attached to the Shapreau Decl. Moreover, to the extent USL would point to any "methods or concepts" in 32V, they were well documented before Net2 was released. See Joint Decl. Paras. 27, 28.1.1-28.6, 31,33, 36, 37, 39. 40, 45, 47, 50, 53 and 56. [end fn6] The April 1, 1979 license for 32V attached to USL's first amended complaint is for a central processing unit (CPU) in the Chemistry Department and not in the Computer Sciences Department. However, in August 1981, an educational license for 32V was entered into between the parties for a CPU in the Computer Sciences Department. The 1981 agreement provides a much broader grant to use than the 1979 agreement relied upon by USL. The 1981 license agreement provides in relevant part as follows: Uses for "academic and educational purposes" means uses directly related to teaching and degree-granting programs *and uses in research by students and faculty, provided that the results of such research are not intended primarily for the benefit of a third party and that such results are published and are available to the public for no more than reproduction and shipping charges.* Exhibit C, attached to the Shapreau Decl. | The underlined language did not appear in the 1979 32V license. Once AT&T divested, effective January 1, 1984, AT&T's orientation shifted to a more commercial vein (Wilson Depo., at 129:16-130:15; Frasure Depo., at 195:3-10) which is evidenced by AT&T's attempts to impose new restrictions on the University to generate additional profits. Towers Decl., at 11 5-6. One such attempt by AT&T was the redefinition of the defined term "Licensed Software" in the System V license agreement signed by the University on July 27, 1984. Shapreau Decl., Exhibit E; Towers Decl., at 1 5; Karels Decl., at 1 5. With its new definition of "Licensed Software," AT&T apparently was attempting to obtain control over any "modification" or "derivative work" which was "based on" AT&T source code or documentation, whereas previously AT&T only had claimed rights with respect to software that "contained" or "included" its source



USL vs. BSDI documents



code.[fn7] However, paragraph 1.01 (a) of Appendix A to the System V license agreement created ambiguity (in light of the new definition of "Licensed Software" in the granting clause) by stating the historic understanding between the parties: Uses for 'academic and educational purposes' means...uses made in connection with the development of enhancements or modifications to LICENSED SOFTWARE provided that...(ii) such results. enhancements and modifications (all to the extent that they do not include any portion of LICENSED SOFTWARE) are made available to anyone (including AT&T and its associated companies) without restriction on use, copying, or further distribution notwithstanding any proprietary right (such as a copyright or patent right) that could be asserted by [the University]...(Emphasis added.) Exhibit E, attached to the Shapreau Decl.[fn8] Concerned by AT&T's apparent attempt to restrict the University's rights in its BSD software (which had an ancestry in 32V, not System V), the University requested a meeting in which the definition of "Licensed Software" could be clarified. Karels Dec., at Para. 6. This was important to the University because it was about to license 4.2BSD and 4.3BSD to AT&T and other licensees. Towers Decl., at Para. 5; Karels Decl., at Paras. 4, 9. A meeting was held in California on March 6, 1985 between the University and representatives of AT&T to discuss this vital issue (Karels Decl., at Paras 6-7) and AT&T's effort to increase the fee BSD licensees would pay if they used computers other than the DEC VAX. Towers Decl., at Para. 6. [fn7] The applicable language in the granting clause of the System V license agreement prior to its modification by the parties stated as follows: LICENSED SOFTWARE means all or any portion of the computer programs, other information and documentation...(iii) prepared by LICENSEE as a modification of or a derivative work based on any of the materials so listed or furnished. Exhibit E, attached to the Shapreau Decl. [fn8] Three weeks after the University signed the System V license agreement, AT&T amended the agreement by stating in an August 15, 1984 letter that: By way of clarification, while we do not require that results, enhancements, and modifications be made public, we do require that if the material is to be released at all, it must be made available to anyone. Exhibit F, attached to the



- 68 -



Shapreau Decl. At the March 6, 1985 meeting the University expressed its concern to AT&T representatives that under the new definition of "Licensed Software," AT&T arguably would control the distribution of the original code in the University's enhancements to 32V even if they did not contain AT&T's source code, which was a clear departure from the parties' prior understanding of the University's rights with respect to the enhancements it developed from 32V. Towers Decl., at Paras 4-5; Karels Decl., at Paras. 5-7. AT&T responded to the University's concerns by indicating that it had not intended to change the meaning of the definition of "Licensed Software" and that it would confirm the parties' understanding with a letter. Karels Decl., at Para. 7.[fn9] [fn9] Previously, "Licensed Software" had been defined to include only "the COMPUTER PROGRAMS and the documentation, or any portions thereof, generally identified below and specifically listed in the attached Schedule: Unix/32V' Time-Sharing System, Version 1.0." Exhibit C, attached to the Shapreau Decl. USL's witnesses testified that "Licensed Software" as that definition was used in the 32V agreement was comprised of source and/or object code (identified in the software schedule attached to the license agreement), documentation, and methods and concepts. USL's witnesses did not identify modifications, enhancements or additions developed by the licensee as a component of the "Licensed Software." Wilson Depo., at 103:20-104:21; Baldwin Depo., at 121:5-125:5. The May 15, 1985 letter of clarification -- signed by both parties -provides the University with a complete defense to USL's infringement charge: This is to clarify our understandings regarding certain provisions in the referenced agreement and to amend the definition of LICENSED SOFTWARE therein. Regarding the definition of LICENSED SOFTWARE in the granting clause, *AT&T does not assert any ownership interest in any modification or derivative work made by LICENSEE* [the University] and does not consider that such definition claims such an interest. (Emphasis added.) However, for clarification, AT&T proposes to amend such definition by substituting the following therefor: --... LICENSEE agrees that *any modification or derivative work



USL vs. BSDI documents



prepared by it that contains any LICENSED SOFTWARE shall be treated as LICENSED SOFTWARE* hereunder (emphasis added) Regarding Section 1.01 (a) in Appendix A, the phrase "provided that...neither the results of such research nor any enhancement or modification so developed is intended primarily for the benefit of a third party..." *permits LICENSEE to use LICENSED SOFTWARE for sponsored research. provided the fruits of such research are not restricted by the sponsor and are published or otherwise made available to the public.* Exhibit A, attached to the Karels Decl.[fn10] [fn10] Although the "re" line of this letter suggests that the clarification and amendment pertained to the System V license agreement, the clarification pertained to future distributions of University BSD software, which had a heritage in 32V, System V. Karels Decl. Para. 9. In other words, AT&T agreed not to claim ownership in any derivative works developed by the University; however, the University agreed that any derivative works which "contains" AT&T code (i.e., "Licensed Software") would be treated as if it were AT&T code and distributed only to AT&T licensees. See Frasure Depo., at 154:15-155:13.



Shortly thereafter, AT&T further memorialized the parties' understanding regarding ownership and distribution of Unix enhancements by drafting the Educational Software Agreement No. E-SOFT-00089 (SOFT-00089). Wilson Depo.,at 139:10 -140:1 (the SOFT-00089 agreement was a "clearer representation of our intent")[fn11]. This supplemental agreement executed in November 1985 expressly provides that AT&T claims no ownership interest in the University's software as long as it does not contain AT&T's source code or disclose its methods and concepts.[fn12] Consistent with the May 15, 1985 letter-amendment (Exh. A to Karels Decl.) SOFT00089 provides in its "Grant of Rights:" Para. 2.01 (a) ...[the] right to use includes the right to modify such SOFTWARE PRODUCT and to prepare derivative works based on such SOFTWARE PRODUCT, provided that any such modification or derivative work that contains any part of a [AT&T] SOFTWARE PRODUCT subject to this Agreement is treated hereunder the same as such [AT&T] SOFTWARE PRODUCT. *AT&T-IS claims no ownership interest in any portion of such a modification or derivative work that is not part of a [AT&T] SOFTWARE PRODUCT.* (Emphasis added.)



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Para. 2.01(b)(ii) ...results enhancements and modifications (all to the extent that they do not include any portion of [AT&T] SOFTWARE PRODUCTS) are made available to anyone (including AT&T-IS and its corporate affiliates) without restriction on use, copying or further distribution.... Exhibit G, attached to the Shapreau Decl.



Thus, again, AT&T agreed in writing that the University owned all derivative code and that such derivative enhancements and modifications should be made "available to anyone" to the extent "they do not include" AT&T code.[fn13]



[fn11] The SOFT-00089 license agreement was intended to "clarify" the prior intent of the parties.Wilson Depo., at 139:10140:1. AT&T's Director of Licensing, Otis Wilson, testified that the language used prior to that contained in the SOFT-00089 license agreement was "somewhat confusing to some people in that they thought we were trying to assert ownership to anything they created, even though it contained nothing of ours. So this is to clarify that what's yours is yours and what's ours is ours"(emphasis added). Wilson Depo., at 75:24-76:4. USL's Mitzi Bond admitted that she understood 2.01(b)ii) meant that "enhancements and modifications made by the licensee were to be made available to anyone so long as they did not include any portion of the software products licensed under the agreement" emphasis added). Bond Depo., at 137:19-138:19. However, Ms. Bond also has espoused a mental "contamination" theory by which any university student exposed to AT&T code would be beholden to AT&T for any software product he/she might subsequently develop. Bond Depo,at 220:2-13, 237:24238:8. [fn12] USL's witness,Mitzi Bond,testified that the SOFT-00089 superseded AT&T's earlier agreements.Bond Depo., at 132:10-134:2. Ms. Bond testified that a licensee's use of 32V on a CPU licensed under SOFT-00089, would be subject to the terms and conditions of SOFT-00089. Bond Depo., at 39:7-43:5 referring to Exhibit J, attached to the Shapreau Decl.. [fn13] It appears that AT&T similarly tried to restrict other licensees' rights with respect to code they derived from AT&T's UNIX, because AT&T sent out a clarification to all its licensees in August, 1985 which stated: "Section 2.01. The last sentence was added to assure licensees that AT&T will claim ownership in the software that they developed -- only the portion of the software developed by AT&T." Exhibit H, attached to the Shapreau Decl. The



USL vs. BSDI documents



2.01 referred to in Exhibit H is the same 2.01 contained in the SOFT00089 agreement. Frasure Depo., at 1 08:21 -1 1 0; 1 1 2:7-21. USL's Mitzi Bond participated in the preparation of Exhibit H. She testified that the clarification to 2.01 "indicates that all we did was add a sentence to the existing one so that licensees would clearly understand that we were not claiming the ownership in code that they developed that didn't contain ours" (emphasis added). Bond Depo., at 189:14-191:21.



Finally, AT&T acknowledged the University's ownership rights in the University's derivative BSD code in June 1986, when AT&T signed license agreements with the University for 4.2BSD and 4.3BSD (which originated with 32V). Towers Decl., at Para. 3 and Exhibit A, attached. The agreement for 4.2/4.3BSD states in relevant part: WHEREAS, *The Regents of the University of California (the University) is the proprietor and owner of enhancements and additions to 32V,* which together with parts of 32V comprise computer programs and documentation entitled "Fourth Berkeley Software Distribution ("4BSD)....(Emphasis added.) *** Title: AT&T agrees that 4.2 and 4.3 contain proprietary software belonging to the University. *AT&T shall have no right, title or interest in or to such proprietary software* except as expressly set forth in this Agreement. (Emphasis added.) Exhibit A, attached to the Towers Decl. AT&T's admission that the University 'owned'' the enhancements I;d additions to 32V included the University's right to distribute its software to the public, as evidenced in the testimony of AT&T's former Director of Licensing, Otis Wilson: Q: And you weren't trying to assert restrictions on the part [of the software] that did not belong to AT&T? A: That's correct. In other words, if you follow that through, it's yours. I have no jurisdiction whatsoever. Wilson Depo., at 77:19-23. Q:... 'when the university owns it,' do you mean that they are free and clear of any restrictions by AT&T? A: Right... Wilson Depo., at 122:5-10. Indeed, the mere fact that AT&T needed a license to use the



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University's BSD software constitutes an additional admission that enhancements contained in 4.2BSD and 4.3BSD that were derived from 32V were not the property of AT&T.[fn14] However, because 4.2BSD and 4.3BSD also contained some AT&T source code, the University never licensed these products to nonAT&T licensees. Towers Decl., at 13. Net2, on the other hand, did not contain proprietary AT&T source code and, therefore, could be distributed to persons not holding an AT&T license [fn14] In 1988, the University registered its copyrights in 4.2BSD and 4.3BSD. DeFazio Exhibits G and H. These registrations indicate that the University was the author of various additions, enhancements and modifications to 32V. The registration for 4.2BSD indicates that 50% of the commands were derived from 32V and 80% of the files and 50% of the commands had been added to 32V by the University. The registration for 4.3BSD indicates that 45% of the commands were derived from 32V and that 85% of the files and 55% of the commands had been added to 32V by the University.



THE HISTORY OF THE UNIVERSITY'S NET2 RELEASE The University released the first Berkeley Software Distribution (1BSD) in 1978. McKusick Decl., at Para. 2. That first release was comprised of applications programs for PDP-11 computers running AT&T's Version 6 UNIX. Over the next ten years, the University released improved BSD software for various computers, including the DEC VAX, Computer Consoles' 6/32, and Hewlett-Packard's 9000/300 series. Beginning with 3BSD, released in 1980, each BSD release has been a complete system, including the operating system. Id. Since the BSD releases contained some AT&T code, they were distributed only to AT&T licensees. However, in 1987, the University began to distribute portions of the system that contained no AT&T code to non-AT&T licensees. Id., at Para. 2.8 and Para. 2.9. Moreover, large portions of 4.3BSD-Tahoe and 4.3BSD-Reno were marked as freely redistributable without an AT&T license; those files contained no AT&T code and, therefore, under the parties' agreements were owned by the University and were to be available to the public. Id., at Para. 2.10 and Para. 2.12. The University released Net1 in November 1988. Net1 was largely the AT&T-free files from 4.3BSD-Tahoe and it was clearly marked as requiring no AT&T license. At least three copies of Net1 were



USL vs. BSDI documents



shipped to AT&T. At no time did AT&T complain that Net1 was an infringing work released in violation of any license agreement even though -- like the subsequent Net2 release -- it could be traced back to 32V. Id., at Para. 2.11. Net2 was released in June 1991. Unlike USL's SVR4, Net2 is not a complete system; in its present state, Net2 will not compile and function. Id., at Para. 2.13. Net2 consists of the redistributable files from 4.3BSD-Reno which contained no AT&T code, new features that contain no AT&T software and utility programs that have analogs in 32V but which were completely rewritten with new, original code that implemented standard POSIX interfaces. Id., at Para. 2.13. The University made every attempt to ensure that none of the files released in Net2 contained AT&T code. Id., at Para. 2.13 and Para. 3 [fn15] Accordingly, USL does not claim in its pending motion that any of the 4,193 source files in Net2 are comprised of 32V code. [fn15] Indeed, several of the Net2 files specifically deleted all source code. See e.q.. Joint Decl. Paras. 31, 45. If any Net2 file mistakenly included a significant volume of 32V code, the University stands ready to remedy the error.



ARGUMENT A. USL CONTRACTUALLY AUTHORIZED THE UNlVERSlTY' TO DEVELOP AND DISTRIBUTE DERIVATIVE WORKS AND IS ESTOPPED FROM ASSERTING A COPYRIGHT AGAINST UNIVERSITY DEVELOPED DERIVATIVE WORKS USL and its predecessor entities contractually authorized the University to develop and non-commercially distribute to the public the University's modifications, enhancements and derivative works as long as the University's software did not contain USL's code or disclose its trade secrets. See, Section II, B, supra. This contractual grant of rights provides a complete defense to USL's claim that Net2 is an infringing work. Compare, Platinum Records Co. v. Lucasfilm, Ltd., 566 F.Supp. 226, 227 (D.N.J. 1983) (rights granted by license agreement provide complete defense to copyright infringement claims). The law is clear that the authority to copy, distribute or display a copyrighted work granted by a license agreement is an absolute defense to a claim of copyright infringement. See, Effects Associates, Inc. v. Cohen, 908 F.2d 555,558 (9th Cir. 1990) (company which created and delivered footage at request of movie maker



- 74 -



impliedly granted movie maker non-exclusive license to incorporate footage into movie, and thus movie maker did not infringe on maker's copyright);Apple Computer. Inc. v. Microsoft Corp., 717 F. Supp. 1428, 1432 (N.D. Cal. 1989)(to the extent license agreement authorizes the use of visual displays, it provides a defense to infringement claims based on the use of such visual displays). A copyright license is a contract like any other contract and the starting point of the analysis concerning the license must be the terms of the license. Apple Computer. Inc. v. Microsoft Corp., supra, 717 F. Supp. at 1432. The licensee may properly pursue any uses which may reasonably be said to fall within the license. "If the words are broad enough to cover the new use, it seems fairer that the burden of framing and negotiating an exception should fall on the grantor." Bartsch v. Metro-Goldwyn-Mayer. Inc., 391 F.2d 150, 155 (2nd Cir. 1968). In Bartsch, Judge Friendly held that a license agreement that authorized a motion picture company to"copyright, vend, license and exhibit such motion picture photoplay throughout the world" included the right to televise the motion picture version of the musical play,although television technology was not known at the time the contract was entered into. Placing the burden of expressly excluding a particular use on the grantor, Judge Friendly wrote: "If Bartsch or his assignors had desired to limit 'exhibition' of the motion picture to the conventional method where light is carried from a projector to a screen directly beheld by the viewer, they could have said so." Bartsch, supra at 155. See also, Platinum Record Company. Inc. v. Lucasfilm. Ltd., 566 F. Supp. 226,227 (1983) (where license agreement granted right to perform motion picture "by any means or methods now or hereafter known," it was immaterial whether the copyright owner anticipated new development of video tapes and video tape recorders; Rooney v. Columbia Pictures Industries, 538 F. Supp. 211 (S.D.N.Y. 1982). The University's right to develop and non-commercially distribute to the public the University's modifications, enhancements and derivative works cannot be repudiated by USL at this late date. Moreover, the parties' actions throughout the licensing history demonstrates the intent of the licenses and estops USL from asserting its copyright infringement claim for the entire period in dispute. Four elements are necessary to establish an equitable estoppel defense to a copyright infringement claim: (1) the plaintiff must know the facts of the defendant's infringing conduct; (2) the plaintiff must intend that his conduct be acted on or must so act that the defendant has a right to believe that it is so intended;



USL vs. BSDI documents



(3) the defendant must be ignorant of the true facts; and (4) the defendant must detrimentally rely on plaintiff's conduct. Hadady Corp. v. Dean Witter Reynolds. Inc., 739 F.Supp. 1392, 1399 (C.D. Cal. 1990). In this case, all four elements are satisfied with respect to USL's copyright infringement claim. First, the evidence is undisputed that USL knew that the University developed and distributed enhancements to the UNIX software. In fact, the license agreements specifically provided for these developments: --in 1981, in the 32V license for the University's Computer Sciences Department, AT&T granted the right to use 32V for research "provided the results of such research ... are published and are available to the public ...." [Exhibit C, attached to the Shapreau Decl.; --the May 15, 1985, the letter-amendment signed by both parties following a meeting called specifically to discuss the University's rights to the code it developed stated, "AT&T does not assert any ownership interest in any modification or derivative work made by [the University]" [Exhibit A, attached to the Karels Decl.];[fn16] [fn16] AT&T made similar assurances to other licensees. See Exhibit H, attached to the Shapreau Decl. --in November 1985, the new software boiler plate which AT&T claims superseded prior licenses acknowledged that AT&T "claims no ownership interest in any portion of such a modification or derivative work" that does not include AT&T code Exhibit G, attached to the Shapreau Decl.]; --in June 1986, AT&T signed the University's 4.2/4.3BSD License Agreement, acknowledging the University "is the proprietor and owner of enhancements and additions to 32V ...." [Exhibit A, attached to the Towers Decl.]. Second, the University has exercised the rights granted to it by AT&T as follows: - the TCP/IP files (originally part of 4.2BSD) were distributed to non-AT&T licensees in April 1988; - over 1300 files from 4.3BSD-Tahoe were released in June 1988 and marked as freely redistributable to non-AT&T licensees; - Net 1 - 687 source code files - was released in November 1988



- 76 -



to non-AT&T licensees; - 2200 source code files from 4.3BSD-Reno were released as freely redistributable in July 1990. McKusick Decl., at Paras. 2.9-2.12. Third, there is no evidence that the University had reason to believe that USL was asserting copyright protection over the University's enhancements until USL initiated the present lawsuit. At no time did AT&T complain that the University was in breach of any license agreement or in violation of the Copyright Act. Id. Finally, the University detrimentally relied on USL's actions demonstrating that USL was not asserting its copyright in 32V against the University's enhancements by expending time and effort in continuing to develop such enhancements and distributing those enhancements to the public (and to AT&T). Only one reasonable conclusion can be drawn from these facts. USL either granted the University a license to develop and release enhanced software or USL is equitably estopped to assert a copyright infringement claim based on the University's development and release of any enhancement to UNIX software. Any other conclusion would render the parties' agreements illusory. B. NET2 IS NOT AN INFRINGING WORK USL argues at pps. 28-38 of its memorandum that "substantial portions of Net2 were copied from UNIX 32V." USL is wrong both as a matter of fact and as a matter of law First, Net2 is not copied from 32V. USL cites no portion of the Net2 program source code which is copied from 32V source code. Instead, USL misleadingly directs the Court's attention to some file names or function names that are common to both programs; those file and function names are mnemonics dictated by programming conventions or interface requirements which are not protectible elements of 32V; more importantly, the files and functions cited by USL are implemented in Net2 by wholly original source code bearing no similarity to 32V. Second, USL is wrong when it argues that Net2 is an infringing derivative work merely because the "starting point" of Net2 was 32V. Even if the University did not have the contractual right to develop and distribute enhancements or improvements to 32V, Net2 still could not be considered an infringing work because it is not "substantially similar" to protected elements of 32V.



USL vs. BSDI documents



1. THE ANCESTRY OF NET2 IN 32V IS NOT GROUNDS FOR FINDING INFRINGEMENT USL would have this Court label Net2 an infringing derivative work simply because the University's development efforts originated in the late 1970s with 32V. The nation's leading treatise on copyright law should give the Court pause before it accepts USL's invitation to commit error in this manner: "[A] defendant may legitimately avoid infringement by intentionally making sufficient changes in a work which would otherwise be regarded as substantially similar to that of plaintiff's." 3 Nimmer on Copyright 13.03 [B] at 13-37 (1980), quoted with approval in Eden Toys, Inc. v. Marshall Field & Co., 675 F.2d 498, 501 (2nd Cir. 1982) and Warner Bros. v. American Broadcast Companies, 654 F.2d 204, 211 (2nd Cir. 1981). "Defendants are correct that if one starts with an infringing copy and makes enough changes eliminating the copied expression, the object eventually will cease to infringe. This may occur even before the last copied vestige have disappeared if the copied elements has been reduced to de minimis proportions." Merton Co. v. Tony Trading of Hong Kong. Ltd., 6 U.S.P.Q.2d 1156, 1157 (S.D.N.Y.1987). See also, See v. Durang, 711 F.2d 141, 142 (9th Cir. 1983) ("copying deleted or so disguised as to be unrecognizable is not copying.").[fn17] [fn17] These precedents have been applied to copyrighted computer programs such as the one at issue here. In NEC Corp. v. Intel Con)., 10 U.S.P.Q.2d 1177, 1187 (N.D. Cal. 1989), NEC had changed Intel's micro-code to such a degree that "there remain[ed] no basis for a claim of copying or even substantial similarity. In Computer Associates International. Inc. v. Altai. Inc., 775 F.Supp. 544(E.D.N.Y. 1991 ) aff'd F.2d (2nd Cir. 1992), defendant recalled an infringing program and wrote new code for 30% of it to certain defined parameters (Id. at 554); the revised program was held not to be infringing notwithstanding its tainted pedigree. Id. at 561-62. Net2 is light years beyond 32V in terms of its functionality, efficiency and implementation. The source code which makes Net2 far more powerful than 32V is original code developed by the University. Joint Decl., at 12. USL does not claim otherwise. Instead, USL points to an insignificant number of "artifacts" which"prove" a common starting point in 32V: the similarity in a mere 30 file names(0.2% of the Net2 files, Joint Decl., at 1 28 and 1 13); 16 kernel functions with similar parameters (out of 3,230 Net2 kernel functions or 0.4%, Id., at 1 39) and 66 matching symbols (0.5% of



- 78 -



Net2's 12,529 symbols, Id., at 147). The Copyright Act does not recognize the doctrine of "fruit of the poisonous tree" [3 N. Nimmer and D. Nimmer, Copyright 14.06 [C] (1991)]; therefore, USL must demonstrate far more than Net2's ancestry in 32V -- an ancestry which has all but been erased -- to establish that Net2 is an infringing work. 2. NET2 IS NOT SUBSTANTIALLY SIMILAR TO 32V To prove that Net infringes 32V, USL must show that Net2 is substantially similar to 32V. Whelan Assoc.. Inc. v. Jaslow Dental Laboratory, Inc.,797 F.2d 1222, 1232 (3rd Cir. 1986). In conducting the "substantial similarity comparison, the Court must disregard unprotected elements of 32V. Brown Bag 15 Software v. Symantec, 960 F.2d 1465, 1475-6 (9th Cir. 1992). Cf. Feist 16 Publications. Inc. v. Rural Tel. Service Co., U.S. , 111 S.Ct. 1282, 1290 (1991) 17 ("The mere fact that a work is copyrighted does not mean that every element of the 8 work may be protected.") USL's copyright in 32V (assuming it is valid) cannot prevent others from using the unprotected elements of the program. Brown Bag Software, 960 F.2d at 1476. The unprotectible elements of a computer program were explicated bythe Federal Circuit in Atari Games Corp. v. Nintendo of America. Inc., F.2d 24 U.S.P.Q.2d 1015, 1020 (Fed. Cir. 1992): "After separating the program into manageable components, the court must next filter the unprotectible components of the program from the protectible expression. The court must filter out as unprotectible the ideas, ... expression already in the public domain, expression dictated by external factors (like the computer's mechanical specifications, compatibility with other programs. and demands of the industry served by the program) " Accord, Computer Assoc. Int'l., Inc. v. Altai, Inc., F.2d , 1992, 23 U.S.P.(.2d 1241, 1252-3 (2nd Cir. 1992); Apple Computer v. Microsoft Corp., 799 F.Supp. 1006, 1020-21 (N.D. Cal. 1992). Every one of the "similarities" between 32V and Net2 cited by USL's expert, Dr. Carson, falls within the Federal Circuit's description of the unprotected elements of a computer program. Although page 31 of USL's brief states "Dr. Carson has found numerous instances of identity or substantial similarity between source code within the Net2 and Unix/32V kernels", nothing could be farther from the truth. As the Court may read for itself, Dr. Carson's affidavit makes no mention of any source code similarity between



USL vs. BSDI documents



Net2 and 32V. Instead, he points to file names, function names and defined constants. See, Carson Affid., at Paras. 28, 32, 47. These alleged similarities are de minimis in number but, more importantly, they are not protected by any copyright USL may have in 32V because they are "dictated by external factors." Atari Games,supra; Computer Associates, supra; Brown Bag Software, supra. Dr. Carson points to similarities in the names of nine source code files in Net2 (1..7% of the total 539 Net2 kernel source code files and 0.2% of the total Net2 source files, Joint Decl., at 128.1). Carson Affid., at Para. 28. In one of the nine, the Net2 file contained no source code at all; the code in the other eight source code files is all original material, Joint Decl., at Para. 28.1. The eight file names are similar because the file names are mnemonics which -- for technical reasons -- are limited to 10 characters and which -- by convention -- describe the contents of the file. Id., at Para. 26. With such a limited range of possible "expression," one would expect to find some duplication. Thus "acct" is an obvious mnemonic for "accounting" and the"clock" file describes the "clock" function. All of the "similarities" cited by Dr.Carson are explainable as standard industry mnemonics or programming conventions. Id. at Paras. 28.1.2-28.2. Those mnemonics are not protectible even if they were probative. [fn18] Dr. Carson also points to 20 header file names. Carson Affid., at Para. 28. The "header files define how utilities obtain services from the operating system." Joint Decl., at Para. 28.3. Similarity in header file names is dictated by standards and functionality requirements so that applications programs written for all variants of Unix will work with Net2: "If the names of the header files or their contents are changed, or the function names are changed or take different parameters, then utility programs and device drivers that were those header files or use those functions will no longer work." *** "Any operating system wishing to offer kernel services in a compatible fashion with the Unix interface specifications has no choice but to have the exact same header file names and contents, and functional interfaces.... The header files have to exist, with the name used by the standard, and with the specific contents listed by the standard, for an operating system to be certified as complying with the standard." Joint Decl., at Para. 28.3. Four of the header file names cited by Dr.



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Carson are "nonsensical;" the remainder are required interfaces. Id., at Para. 28.6. Accordingly, the header file names fall squarely within the Federal Circuits' holding in Atari Games that "expression dictated by external factors (like the computer's mechanical specifications, *compatibility with other programs. and demands of the industry* ...)" are not protectible elements of a computer program and, therefore, provide no grounds for a finding that Net2 is an infringing work. See also, Apple Computer, supra, 799 F.Supp. at 1021 ("The functionality of a feature may deprive it of protection under the copyright laws.")[fn19] 24 [fn18] The Copyright Office's Regulation 325.02(c) states that mnemonics are not copyrightable elements of a work. [fn19] Analysis of the function names cited by Dr. Carson is the same. Joint Decl. Para. 32. The statement by Dr. Carson in Para. 33 of his affidavit that the functions with the same names do "precisely the same task in both the UNIX/32V and Net2 code" is misleading. Joint Decl. Para. 33. Moreover, "The Net2 distribution did not contain actual source code that implemented any of these functions listed in 1 36], therefore the only possible commonality between 32V and Net2 was the names and parameters of the functions." Joint Decl. Para. 36. The names and parameters of these functions are widely documented mnemonics. Id. Paras. 36, 37, 39. Finally, the Court should note that only 16 of Net2's 3230 kernel functions (0.5%) are claimed to have the same parameters; those parameters are welldocumented and widely used. Id. Para. 39. See also, Id. Para. 40-42.



Net2 contains 12,529 symbols similar to those described in Para. 47 of Dr.Carson's affidavit. Joint Decl., at Para. 47. From that large universe, Dr. Carson has found 116 matches; he admits that 50 of those 116 matches are required by the POSIX standards, leaving only 66 "unexplained" matches (0.5% of the 12,529 symbols in Net2) which he claims indicate copyright infringement. Carson Affid., at Para. 47. But the "remaining 66 matches are also dictated by industry standards,compatibility, or common usage." Joint Decl., at Para. 47 "The similarity of such functional elements in products of like kind does not suggest unlawful copying, but standardization across competing products for functional considerations." Apple Computer, supra, 799 F.Supp at 1023. As documented over three pages in Table 7 of the Joint Declaration, the symbols cited by



USL vs. BSDI documents



Dr. Carson are widely documented and "every single one of them is part of the interface specification of UNIX or a Unix-compatible system. Joint Decl., at Para 47. "Application, operating system and device-driver programmers use these symbols constantly, and to change them would mean that 20 years of software development would be useless on the modified system [Net2]." Id. Hence, as with the header file names, the symbols cited by Dr. Carson are not protectible; they are mandated by "compatibility with other programs and demands of the industry served by the program." Atari Games,supra. The Third Circuit -- unlike the Federal Circuit, Second Circuit and Ninth Circuit -- has not recently addressed the scope of a copyright in computer programs,but its older decisions in Whelan and Apple Computer. Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3rd Cir. 1983) are not inconsistent with the more recent authorities *as they apply to this action.* This case does not concern screen interfaces; this case implicates the protectibility of technical interfaces, i.e., elements of a program that are required for it to work with other programs. Apple Computer, one of the seminal computer code copyright cases,recognized that a program is not a copyrightable expression of an "idea" if other programs cannot be written to perform the same function. 714 F.2d at 1253. The Apple Computer Court cited with approval page 20 of the CONTU Report (Id.)[fn20] which states the applicable rule: "The 'idea-expression identity' exception provides that *copyrighted language may be copied without infringing when there is but a limited number of ways to express a given idea.* This rule is the logical extension of the fundamental principle that copyright cannot protect ideas. *In the computer context this means that when specific instructions. even though previously copyrighted. are the only and essential means of accomplishing a given task. their later use by another will not amount to infringement....* [C]opyright protection for programs does not threaten to block the use of ideas or of program language previously developed by others *when that use is necessary to achieve a certain result."* (Emphasis added) CONTU Final Report (1979) at 20. [fn20] In Apple Computer, the Third Circuit stated, "[W]e can consider the CONTU Report as accepted by Congress ...." 714 F.2d 1252. See also, Apple Computer. Inc. v. Formula Int'l.. Inc., 725 F.2d 521, 525 (9th Cir. 1984)



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Whelan likewise recognized there are limits upon copyright protection for computer programs: "It is true that for certain tasks there are only a very limited number of file structures available, and in such cases the structures might not be copyrightable and similarity of file structures might not be strongly probative of similarity of the program as a whole." 797 F.2d at 1243 n.43. Applying the "scenes a faire" doctrine developed for traditional literary works, the Court also recognized "that anything necessary to effecting [a] function is also, necessarily, part of the idea, too" and, therefore,unprotected by copyright. 797 F.2d at 1236. Although the proof necessary to invoke the limitations on plaintiff's copyright described by the Court was lacking in Whelan (797 F.2d at 1243 n.43), the Joint Declaration certainly establishes sufficient facts to support the University's defense in this case: the similarity in mnemonic filenames and symbols are neither protected nor probative of similarity between the programs "as a whole." Id. After 400 hours of research, the only similarities between 32V and Net2 found by Dr. Carson which are described in his affidavit are unprotected elements of the program. If this Court sifts out the elements of 32V which are found in Net2 because of external factors (e.g., compatibility with other programs) or in the public domain (e.g., standardized, technical interface specifications), it has nothing left with which to conduct the "substantial similarity" analysis. See Atari Games, supra; Computer Associates, supra; Brown Bag Software, supra. Accordingly, this Court cannot find Net2 to be an infringement of USL's alleged copyright in 32V. C. USL FORFEITED ITS COPYRIGHT PROTECTION IN 32V WHEN IT PUBLICLY DISTRIBUTED 32V WITHOUT A COPYRIGHT NOTICE USL's 32V code was created in 1978. DeFazio Decl., Exh. F. USL forfeited its copyright protection for 32V when its predecessors, Western Electric and AT&T, distributed 32V to the public without a copyright notice (McKusick Decl, at Para. 4 and Joint Decl., at Para. 28.4) and failed to register 32V until 1992, fourteen years after 32V was first published. [fn21] [fn21] Unlike USL's 32V, post-Berne Convention Implementation Act works, created after March 1, 1989, are not required to have a copyright notice. 17 U.S.C. Section 405.



USL vs. BSDI documents



Under the 1976 Copyright Act, omission of a copyright notice from copies publicly distributed by the copyright owner invalidates the copyright in the work unless (1) notice has been omitted from a small number of copies[fn22], (2)registration is made within five years after publication without notice, or (3) notice was omitted in violation of an express requirement in writing. 17 U.S.C. Section 405(a).Here, USL can find no refuge in any of the three exceptions under 405(a) because thousands of copies of 32V were publicly distributed without copyright notices and registration followed publication by fourteen years. To the University's knowledge, no express requirement by Western Electric that notice be included in 32V was violated. In fact, Western Electric intentionally removed copyright notices from every file contained in 32V prior to publication. McKusick Decl., at Para. 4. [fn22] NEC Corp. v. Intel Cor., 10 U.S.P.Q.2d 1177 (N.D. Cal. 1989) (copyright forfeited when Intel allowed a relatively large number of copies of its microcode to be publicly distributed without a copyright notice). 1. THE PUBLICATION OF 32V HAS NOT BEEN LIMITED



USL contends that its distribution of 32V to thousands of licensees constituted a "limited publication" which purportedly precludes "publication" of 32V. See USL's Memorandum, at 27 fn 14. What USL does not tell the Court is that the distribution of 32V in source and object code[fn23] was widely distributed to virtually anyone willing to pay for it (see Greene Depo., at 86:21-90:21; Bond Depo., at 17:1320:18; Baldwin Depo., at 71:25-73:5), provided that the United States government did not prohibit the distribution, and that the licensees were willing to comply with the licensing restrictions (Greene Depo., at 80:13-17). USL's licensees for 32V included thousands of governmental, educational, and commercial licensees [fn24] around the world. [fn25] USL's limited publication argument is an attempt to escape the statutory requirements of the Copyright Act while simultaneously enjoying its exclusive rights under Section 106. [fn23] The very header files about which USL complains were published in object code distributions. Joint Decl., at Para. 28.4. [fn24] USL produced a 1986 data base of its source code licensees, bates nos. P8832-9312) which is too large to attach in total. However, the data base contains approximately 5,760 licensees for AT&T's various software products. A large number of these licensees could obtain 32V though AT&T's source code exchange program.



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Frasure Depo., at 54:25-57:8. The voluminous data base does not even list every source licensee for 32V, as evidenced by the absence of any 32V entries for the University of California. Exh. I, attached to the Shapreau Decl.; see Bond Depo., at 199:1-201:19; Greene Depo., at 124:19-129:9. In addition, AT&T required that each central processing unit be individually licensed for the use of 32V. Bond Depo., at 202:15-19. Therefore, the number of licenses for 32V (and the individuals exposed to 32V) far exceeded the number of entity licensees.USL's predecessors also distributed 32V in source code through its "source code exchange program"which enabled an AT&T licensee for any Unix operating system subsequent to 32V to obtain 32V from another AT&T licensee. Frasure Depo., at 54:25-57:8; Wilson Depo. at 92:23-93:9. [fn25] In fact, AT&T divided its international licensing group in the mid-1980s into three groups: (1) London and Europe; (2) Tokyo and the Pacific Rim; and 3) "The Rest of the World." Greene Depo., at 82:20; 83:7-9; see also. Exhibit P, attached to the Shapreau Decl.



Under the common law, a publication is "limited" only if it communicates the contents of a work to: (1) a definitely selected group; (2) for a limited purpose; and (3) without the right of diffusion, reproduction, distribution or sale. White v. Kimmell, 193 F.2d 744 746-747 (9th Cir. 1952); accord Academy of Motion Picture Arts And Sciences v. Creative House Promotions, 944 F.2d 1446, 1452-53 (9th Cir. 1991); Bull Publishing Co. v. Sandoz Nutrition, 13 U.S.P.Q.2d 1678, 1682 (N.D. Ca. 1989). Although the text of the 1976 Copyright Act does not make any reference to the doctrine of limited publication and Section 101 defines "publication," courts have continued to apply the common law doctrine of limited publication to works published after January 1, 1978, the effective date of the 1976 Copyright Act. Nimmer, The Law of Copyright, 4.13 [B], at 4-72-73 (1992), citing Hubco Data Products Corp. v. Management Assistance Inc., 219 U.S.P.Q. 450 (D. Ida. 1983). Examples of limited publications typically arise where an author distributes copies of her work to a small group for the limited purpose of review, criticism, education or performance 2 and with an express or implied understanding that no reproduction or distribution will take place. See, White v. Kimmell, supra 193 F.2d at 746-47. a. USL HAS FAILED TO MEET THE DEFINITELY SELECTED GROUP REQUIREMENT



USL vs. BSDI documents



A publication will not be "limited" if the distribution of copies of a work is available to all comers, even if there is a limited purpose for the publication or if restrictions are placed upon the use of the work.[fn26] For example, in Brown v. Tabb,714 F.2d 1088 (11th Cir. 1983) the Eleventh Circuit held that a musical jingle had been "published." The customized jingle at issue was not distributed to a "selected group" because it was "available to any automobile dealer doing business in a market not yet exposed to the jingle who would pay the price." 714 F.2d 1092. Accord, Continental Casualty Company v. Beardsley, 253 F.2d 702, 706-07 (2nd Cir. 1958)(distribution of a work to prospective customers was not a "definitely selected group" because the only limitation was that attributable to a lack of general interest in the highly specialized subject matter of the work).[fn27] "In cases where general publication has been found, the creator had made his work available in a manner that suggested that *any interested person could have a copy.*" (Emphasis added) Burke v. National Broadcasting Co., 598 F.2d 688, 692 (1st Cir. 1979).



[fn26] See e.g., American Visuals v. Holland, 239 F.2d 740, 744 (2d Cir. 19561 ("while the 'purpose' of the distribution was limited, the 'persons' to whom it might be given was unlimited); Brown v.Tabb, 714 F.2d 1088, 1091 (11th Cir. 1983) ("the requirement that there be no right of sale or distribution is separate from and in addition to the requirement that there be a limited purpose."); H.W.Wilson Co. v. National Library Serv. Co., 402 F.Supp. 456, 457-58 (S.D.N.Y. 1975) (legend in a book restricting transfer insufficient to constitute limited publication because the publication was not limited to a selected group or for a limited purpose; Continental Cas. Co. v. Beardsley, 253 F.2d 702, 706|07 (2d Cir. 1958); Jewelers' Mercantile Agency. Ltd. v. Jewelers' Weekly Publishing Co., 155 N.Y., 251, 49 N.E. 872 (1 898) ("The fact that the publisher of the book undertook to place restrictions on the use which individual purchasers could make of it. . .does not constitute such a limitation as takes away from the act of the plaintiff its real character, which is that of publication"); compare American Vitagraph, Inc. v. Levy, 659 F.2d 1023, 1028 (9th Cir. 1981) (one week screening of motion picture in one location to gauge audience reaction to the film during the editing process and with no commercial exploitation was held to be a limited publication under the 1909 Act.); Academy of Motion Picture Arts v. Creative House, 944 F.2d 1449, 1452 (9th Cir. 1991). [fn27] Although USL has indicated that it did not license 32V in source code to individuals or 27 partnerships, 32V was first



- 86 -



published in an era that predated personal computer proliferation. As such, there was a lack of general interest in 32V by individuals or partnerships who, by virtue of the size of their businesses and the technology of the day, would not be using the large computer systems on which 32V was generally utilized. Therefore, the lack of general interest in 32V on the part of individuals and partnerships does not aid USL in its "selected group" argument.



Similarly, in H.W. Wilson Co. v. National Library Service Co., 402 F.Supp. 456 (S.D.N.Y. 1975), from 1900 to 1970, plaintiff disseminated its Reader's Guide without a copyright notice. Plaintiff claimed it did not intend to dedicate the material to the public and pointed to a *restrictive legend* on many of the volumes which read "This volume has been supplied on a contract which provides that it is not to be sold or given away without the permission of the publisher." Id. at 457-458,fn 1. However, the work was otherwise unrestricted to either persons or purpose.Therefore, the court found that a general publication had taken place Id. at 458. Here, just as in Tabb, Continental and Wilson, the work at issue was widely available those interested in the product.[fn28] The fact that USL placed restrictions on the distribution of 32V does not alter the fact that 32V was distributed to a non-selected group. [fn28] USL's licensing of 32V to thousands of licensees further undermines its ability to meet the"selected group" requirement. e.g., Williams & Wilkins Company v. United States, 487 F.2d 1345, (Ct. Claims 1973), aff'd 420 U.S. 376 1975) (publication is a "concept which invokes general distribution, or at least a *supplying of the material to a fairly large group"* (emphasis added). i. USL MADE 32V AVAILABLE TO THE PUBLIC IN OBJECT CODE In USL's Memorandum, it admits that 32V was "published" in object code. (USL's Moving Papers, at 11,[fn29] and 27) In GCA Corp. v. Chance, 217 U.S.P.Q. 718, 720 (N.D. Cal. 1982), the court stated that "[a]ny prior distribution of its object code by plaintiff, if public, would have placed it in the public domain,beyond copyright protection." It is clear that the source and binary code for 32V are but one work. As Judge Patel pointed out in GCA Corp. v. Chance, 217 U.S.P.Q.(N.D. Cal. 1982): Because the object code is the encryption of the copyrighted source code, the two are to be treated as one work; therefore, copyright of



USL vs. BSDI documents



the source code protects the object code as well. Id. 217 U.S.P.Q. at 720. Accord, Data General Corp. v. Grumman Systems Support Corp., F.Supp. , 612315, 1992 WL 297641, at page 3-4 (D. Mass. Oct. 9, 1992) (the source code and object code are two representations of the same computer program).Similarly, in Sega Enterprises Ltd. v. Accolade, F.2d , 24 U.S.P.Q.2d 1561,n.8 (9th Cir. 1992), the Ninth Circuit rejected plaintiff's argument that its source code was an unpublished work because plaintiff had published its software in object code. Therefore, because USL's predecessors published 32V in object code(which also contained the 32V header files in source code), *the source code version of 32V also has been published.* [fn29] Contrary to USL's contention, the object code distributions of 32V contained no copyright notices. Joint Decl., at Para. 28.4.



b. USL DID NOT DISTRIBUTE 32V FOR A LIMITED PURPOSE A "limited purpose" has traditionally meant distribution of copies of a work for limited purposes such as review or criticism[fn30], promotion,[fn31] education[fn32] or performance,[fn33] not for mere commercial gain.[fn34] In White v. Kimmell, 193 F.2d 744 (9th Cir. 1952), the Ninth Circuit stated that "[o]ne must...look to what [the publisher] intended to do rather than at what he intended to be the legal consequence of his acts." Id. at 747. "However, an author's intent as to publication should not be given controlling weight against the effect of his acts." Public Affairs Associates. Inc. v. Rickover, 284 F.2d 262, 270 (D.C. Cir. 1960), vacated on other grounds, 369 U.S. 111 (1962) (Admiral Rickover's distribution of almost all of his addresses constituted dedication to public use because the addresses were available to anyone who was interested). What USL intended, and what it did, was to publish 32V for commercial profit. Here, USL's purpose in distributing 32V has not been limited. Instead,USL's principal purpose for licensing 32V to governmental entities, educational institutions, and commercial entities around the world has been primarily for commercial gain. As USL notes in its Moving Papers, it currently sells its Unix operating system licenses for $200,000 each. Accordingly, because USL did not distribute 32V for a limited purpose, such as review, criticism, education or promotion, it cannot seek refuge under the limited publication doctrine.



- 88 -



[fn30] See Key West Hand Print Fabrics. Inc. v. Serbin. Inc., 244 F.Supp. 287,291 (S.D. Fla. 1965)(exhibition of fabric renderings to get opinion or reaction); Nucor Corp. v. Tennessee Forging SteelServ.. Inc.. 476 F.2d 386 (8th Cir. 1973) (distribution of architectural plan to contractors for bidding purposes); Ashworth v. Glover. 156 U.S.P.Q. 219, 221 (Utah 1967) (requiring $25 deposit for bidder's review of architectural plans and filing plans with city pursuant to permit requirement); Hub Floral Corp.v. Royal Brass Corp., 454 F.2d 1226 (2d Cir. 1972) (distribution of samples and photographs to dealers for purpose of obtaining orders held limited publication); [fn31] Ruskin v. Sunrise Management, Inc., 506 F.Supp. 1284, 128788 (D. Colo 1981 ) (distribution of sound recording to radio stations without copyright notice for promotional purpose only, and not for sale or other commercial purpose, constitutes limited publication); Foreign Car Parts. Inc. of New England v. Auto World, Inc., 366 F.Supp. 977, 979-880 (M.D. Pa. 1973) (distribution of promotional material to dealers held a limited publication). [fn32] Bull Publishing Co. v. Sandoz Nutrition. 13 U.S.P.Q.2d 1678, 1682 (N.D. Ca. 1989). [fn33] See Jerome v. Twentieth Century Fox Film Corp., 67 F.Supp. 736, 739 (S.D.N.Y. 1946) (performance of musical composition and distribution of copies to professional entertainers); American Vitagraph, Inc. v. Levy. 659 F.2d 1023, 1027 (9th Cir. 1981) (one week film screening followed by additional editing). [fn34] See e.g. American Vitagraph. Inc. v. Levy, 659 F.2d 1023, 1028 (9th Cir. 1981); compare Academy of Motion Picture Arts And Sciences v. Creative House Promotions, 944 F.2d 1446, 1453(9th Cir. 1991 )("indirect commercial benefits do not necessarily transform a limited distribution into a general publication where no direct sales of the work are involved); Patterson v. Century Productions.Inc., 93 F.2d 489, 491 (2d Cir. 1937) cert denied, 303 U.S. 655 (1938) (limited and non-commercial display and distribution of film constituted a limited publication);Nimmer, The Law of Copyright, 4.11[A], at 4-54 (1992). D. THE UNIVERSITY HAS NOT MISAPPROPRIATED USL'S TRADE SECRETS Although USL defines a trade secret as "[a]ny formula, pattern, device or compilation of information" (USL's Moving Papers, at 39), it has failed to identify which specific trade secrets have purportedly been misappropriated by the University in Net2. Instead,



USL vs. BSDI documents



USL claims its entire "source code" constitutes its trade secrets.(USL's Moving Papers, at 40.) To the extent the University can guess what USL contends to be its trade secrets, its misappropriation claim must fail for two distinct reasons: (1) it is preempted by the Copyright Act and (2) USL's purported trade secrets are not secrets at all because they were injected into the public domain prior to the distribution of Net2. 1. USL'S MISAPPROPRIATION OF TRADE SECRET CLAIM IS PREEMPTED BY THE COPYRIGHT ACT



USL's claim that the University misappropriated its trade secrets when it allegedly reproduced and distributed software "based upon or derived from" 32V is preempted by the Copyright Act. The Copyright Act preempts state common law claims that assert rights equivalent to-those protected by federal copyright law. 17 U.S.C. 301(a). A finding of preemption requires the satisfaction of a twoprong test: (1) the common law state claim must protect legal or equitable rights that are equivalent to the exclusive rights under 106 of the Copyright Act and (2) the work must fall within the subject matter of the Copyright Act as defined in 17 U.S.C.Sections 102 and 103. Del Madera Properties v. Rhodes and Gardner. Inc., 820 F.2d 973, 976 (9th Cir. 1987), citing Harper & Row Publisher. Inc. v. Nation Enterprises, 501 F. Supp. 848, 850 (S.D.N.Y. 1980), aff'd 723 F 2d 197 (2nd Cir. 1983), rev'd on other grounds, 471 U.S. 539 (1985). An "equivalent" right is infringed by simply engaging in the prohibited reproduction, modification or distribution of a work which are acts within the exclusive right of the copyright holder. See 17 U.S.C. 106., 1 Nimmer, Nimmer on Copyright 1.01[B]. See e.g., Aqua Bay Concepts. Inc. v. Grosse Point Bd. of Realtors, 24 U.S.P.Q.2d 1372 (S.D. Mich. 1992); Relational Design & Technology.g Inc., 23 U.S.P.Q.2d 1074 (D. Kan. 1992); Avco Corporation v. Precision Air Parts.Inc., 210 U.S.P.Q. 895 (N.D. Ala 1980). Under the 1980 amendments to the Copyright Act, Congress intended to extend copyright protection to computer programs. Videotronics. Inc. v. Bend Electronics, 564 F.Supp. 1471 (D. Nev. 1983)."The fact that portions of the computer programs may be uncopyrightable as "ideas"rather than "expressions," (citation omitted) does not take the work as a whole outside the subject matter protected by the Act." Brignoli v. Balch Hardy And Scheinman. Inc., 645 F.Supp. 1201, 1204 (S.D.N.Y. 1986). Here, USL's trade secret claim is defective because it is based on



- 90 -



the University's alleged reproduction, modification and distribution of the purported trade secrets embodied in USL's UNIX 32V program. Without more, USL's trade secret claim is not qualitatively different from its copyright infringement claim. Accordingly,Section 301 bars the trade secret claim. 2. USL'S TRADE SECRETS HAVE BEEN EXTINGUISHED BY PUBLICATION USL's trade secrets -- at least all of those mentioned in Dr. Carson's affidavit -- were injected into the public domain before Net2 was distributed. Joint Decl., at Paras. 27, 28, 31, 33, 36, 37, 39, 40, 45, 47, 50, 53 and 56.[fn35] "Public disclosure of a trade secret destroys any confidential relationship upon which a trade secret is based." Videotronics. Inc. v. Bend Electronics, 564 F.Supp. 1471, 1475 D. Nev. 1983), 1 Servo Corporation of America v. General Electric Company, 393 F.2d 551 (4th Cir. 1968). Since USL has not identified any specific trade secret that is not widely documented, it cannot obtain any relief for misappropriation.



[fn35] The 32V agreement at issue provides that disclosure of a trade secret or "technical data" which is publicly available or which later becomes publicly available will not form the basis for a breach of contract claim. The relevant portion of 32V license agreement provides as follows: 4.07 The obligations of the LICENSEE and of its employees and students under Section 4.06 shall not extend to any information or technical data relating to the LICENSED SOFTWARE which is now available to the general public or which later becomes available to the general public by acts not attributable to LICENSEE, its employees or students. The public availability of USL's "information or technical data" prior to the release of Net2 (see Joint Declaration relieved the University of any contractual obligation to hold USL's trade secrets in confidence. As such, USL's breach of contract claim must fail with respect to the "information or technical data" which already entered the public domain before the release of Net2. CONCLUSION For all of the foregoing reasons, the University respectfully submits the Court should not find Net2 to be an infringement of USL's alleged copyright in 32V or a misappropriation of its claimed trade secrets.



USL vs. BSDI documents



DATED: January , 1993



FEDERAL CERTIFICATE OF SERVICE BY MAIL Re: Unix System Laboratories v. Berkeley Software Design U.S. District Court - New Jersev No. 92-1667 (DRD) Michael D. Loprete, Esq. (VIA FEDERAL EXPRESS) CRUMMY, DEL DEO, DOLAN, GRIFFINGER & VECCHIONE, P.C. One Riverfront Plaza Newark, NJ 07102 George L. Graff, Esq. (VIA FEDERAL EXPRESS James W. Kennedy, Esq. Charles B. Ortner, Esq. PAUL, HASTINGS, JANOFSKY & WALKER 399 Park Avenue New York. NY 10022-4697 Sanford Tannebaum, Esq. (VIA FEDERAL EXPRESS) Executive Vice President and General Counsel UNIX SYSTEM LABORATORIES, INC. 190 River Road Summit, NJ 07901-1444



James H. Forte, Esq. (VIA U.S. MAIL) SAIBER SCHLESINGER SATZ & GOLDSTEIN One Gateway Center, 13th Floor Newark. NJ 071 02-5311 Robert T. Haslam, Esq. (VIA U.S. MAIL) Vanessa Wells, Esq. Leslie A. Fithian, Esq. Michael A. Bucci, Esq. HELLER, EHRMAN, WHITE & MCAULIFFE 525 University Avenue, 9th Floor Palo Alto, CA 94301 James. E. Holst, Esq. (VIA U.S. MAIL) John L. Lundberg, Esq. UNIVERSITY OF CALIFORNIA 300 Lakeside Drive, 7th Floor



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Oakland, CA 94612-3565



Frederick B. Polak, Esq. (VIA FEDERAL EXPRESS) POST, POLAK & GOODSELL 280 Corporate Center 65 Livingston Avenue Roseland, NJ 07068 FEDERAL CERTIFICATE OF SERVICE BY MAIL



USL vs. BSDI documents



JAMES H. FORTE (2248) SAIBER SCHLESINGER SATZ & GOLDSTEIN 1 Gateway Center Newark, New Jersey 07102-5311 (201) 622-3333 HELLER, EHRMAN, WHITE & McAULIFFE 525 University Avenue, 9th Floor Palo Alto, California 94301 Telephone: (415) 326-7600 Attorneys for Defendant Berkeley Software Design, Inc. UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY UNIX SYSTEM LABORATORIES, INC., Plaintiff, v. BERKELEY SOFTWARE DESIGN, INC., Defendant. Hon. Dickinson R. Debevoise Civil Action No. 92-1667 (DRD) Defendant Berkeley Software Design's Opposition To USL's Motion For Preliminary Injunction



TABLE OF CONTENTS INTRODUCTION ........... FACTUAL BACKGROUND ..................... ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . 14 I. USL HAS NOT MET ITS HEAVY BURDEN OF ESTABLISHING ENTITLEMENT TO A PRELIMINARY INJUNCTION , . . . . . . . 4 II. USL IS NOT LIKELY TO SUCCEED ON ITS COPYRIGHT INFRINGEMENT CLAIM . . . . . . . . . . . . . . . . . . 16



- 94 -



A. USL Has No Valid Copyright in the 32V code . . . lo 1. The Limited Publication Doctrine is Inapplicable 2. The Header Files Which USL Claims Have Been Infringed Have Been Included in Binary Distributions Made By USL Licensees With No Copyright Notice . . . . . . . . , . . . 26 B. THE SIMILARITIES RELIED UPON BY USL WOULD NOT ESTABLISH COPYRIGHT INFRINGEMENT EVEN IF THE 32V CODE WERE COPYRIGHTED...............



1. The Features Relied Upon By USL's Experts Are Not Protectible 2. The Similarities Relied Upon By USL's Expert Are Neither Quantitatively Nor Qualitatively Substantial 3. USL Could Not Enforce A 32V Copyright Against The University Or BSDI Because Of The Lack Of Copyright Notice . . . . . . 3 7 III. USL CANNOT DEMONSTRATE A LIKELIHOOD OF SUCCESS ON ITS TRADE SECRET CLAIM A. To Prevail On Its Trade Secret Claim, USL Must Demonstrate That BSD/386 Contains USL Trade Secrets 1. The License Agreements Authorize Use Of The UNIX 32V Code To Create Modifications, Enhancements and Derivative Works 2. The License Agreements Permit Derivative Works Not Containing USL Trade Secrets To Be Made Available to Non-Licensees 3. The Duty of Confidentiality Does Not Apply To Information That Is Or Becomes Generally Known . . 1l 9



USL vs. BSDI documents



B . USL Cannot Demonstrate That Net2 or BSD/386 Contain Any USL Trade Secrets IV. USL CANNOT SHOW IRREPARABLE HARM V. THE PUBLIC INTEREST FAVORS DENIAL OF THE PRELIMINARY INJUNCTION VI. EVEN IF USL COULD ESTABLISH THAT NET2 CONTAINED SOME USL PROPRIETARY INFORMATION, THE INJUNCTION IT SEEKS IS OVERLY BROAD A. An Injunction Against The Entire BSD/386 Program WouldBe Impermissibly Overbroad B. Plaintiff is Misusing its Copyright by Attempting to EnjoinAll of BSD/386 , 787 F.2d 875 (3d Cir. 1986) cert. dismissed, 488 U.S. 918 (1988) . . . . . . . . . . . . . . . . . . . . 53 Apollo Technologies Corp. v. Centrosphere Industrial Corp,., No. 92-3712 (AJL), 1992 WL 289943 (D.N.J. 1992) . . . . 15 Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240 (3d Cir. (1983), cert. dismissed, 464 U.S. 1033 (1984) . . . . . . . . . . . . . . . . . . . 7 Baker v. Selden, 101 U. S . 99 . . . . . . . . . . . . . . . . . . . . . . 3 6 Breffort v. I Had A Ball Co., 271 F. Supp. 623 (S.D.N.Y. 1967) . . . . . . . . . . . 54 Brown v. Tabb, 714 F.2d 1088 (11th Cir. 1983). . . . . . . . . . . 19, 20, 23, 24 Brown Bag Software v. Symantec Corp., 960 F.2d 1465 (9th Cir. 1992) . . . . . . . . . . . . . 33 Campbell Soup Co. v. ConAgra. Inc., 977 F.2d 86 (3d Cir. 1992) . . . . . . . . . . . . . . 15 Colonial Book Co.. Inc. v. AMSCO School Publications. Inc., 41 F. Supp. 156 (S.D.N.Y. 1941) . . . . . . . . . . . . 54



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Craft v. Kobler, 667 F. Supp. 120 (S.D.N.Y. 1987) . . . . . . . . . . . 54 Data General Corp. v. Digital Computer Controls. Inc., 188 U.S.P.Q. 276 (Del. Ch. 1975) . . . . . . . . . . . 24 Davis v. Romney, 490 F.2d 1360 (3d Cir. 1973) . . . . . . . . . . . . . 53 Educational Testing Services v. Katzman, 793 F.2d 533 (3d Cir. 1986) . . . . . . . . . . . . . . ~5 Feist Publications. Inc. v. Rural Telephone Service Co., 499 U.S. ___, 113 L. Ed. 2d 358, 111 S. Ct. 1282 (1991) ~ . . . . . . . . 27, 2~, 29 Ferroline Corp. v. General Aniline & Film Corp., 207 F.2d 912 (7th Cir. 1953), cert. denied., 347 U.S. 953 (1954) . . . . . . . . . . . . . . . . . . . . 49 Frank's GMC Truck Center. Inc. v. General Motors Corp., 847 F.2d 100 (3d Cir. 1988) . . . . . . . . . . . . 14, 15 Hubco Data Products Corp. v. Management Assistance. Inc., 219 U.S.P.Q. 450 (D. Idaho 1983) . . . . . . . . . . . 24 Ideal Toy Corp. v. Plawner Toy Mfg. Corp., 685 F.2d 78 (3d Cir. 1982) . . . . . . . . . . . . . . 53 International Film Service Co., v. Affiliated Distributors, 283 F. 229 (S.D.N.Y. 1922) . . . . . . . . . . . . . . 54 Landsberg v. Scrabble Crossword Game Players. Inc., 736 F.2d 485 (9th Cir. 1984) . . . . . . . . . . . 28, 31 Lasercomb America, Inc. v. Reynolds, 911 F.2d 970 (4th Cir. 1990) aff'd without op. 961 F.2d 211 (1992) . . . . . . . . . . . . . . . . . . . . 56 Magic Marketing v. Mailing Services of Pittsburg. Inc., 634 F. Supp. 769 (W.D. Pa. 198, 1986) . . . . . . . . . 33 McLendon v. Continental Can Co., 908 F.2d 1171 (3d Cir. 1990) . . . . . . . . . . . . . 53



USL vs. BSDI documents



Merchant & Evans v. Roosevelt Building Products, 963 F.2d 628 (3d Cir. 1992) . . . . . . . . . . . . . . 15 Morton v. Beyer, 822 F.2d 364 (3d Cir. 1987) . . . . . . . . . . . . . . 15 National Broadcasting Co. v. Sonneborn, 630 F. Supp. 524 (D. Conn. 1985) . . . . . . . . . . . 24 Orth-o-Vision. Inc. v Home Box Office, 474 F. Supp. 672 (S.D.N.Y. 1979) . . . . . . . . . 29, 54 Paramount Pictures Corp. v. Rubinowitz, 217 U.S.P.Q. 48 (E.D.N.Y. 1981) . . . . . . . . . . 24, 25 - ivqad. inc. v. ALN Associates, Inc., 770 F. Supp. 1261 (N.D. Ill. 1991) . . . . . . . . . . ,, Rexnord. Inc. v. Modern Handling Systems, Inc., 379 F. Supp. 1190 (D. Del. 1974) . . . . . . . . . 16, 13,27 Reyher v. Children's Television Workshop, 533 F.2d 87 (2nd Cir. 1976) . . . . . . . . . . . . . . 29 SEGA Enterprises LTD., Accolade, Inc., 24 U.S.P.Q. 2d 1561 (9th Cir. 1992) . . . . . . . . . . 31 Salinger v. Random House, Inc., 811 F.2d 90 (2d Cir.) cert. denied, 484 U.S. 890 (1987) . . . . . . . . . . . . . . . . . . . . . . . . 54 See v. Durang, 711 F.2d 141 (9th Cir. 1983) . . . . . . . . . . . . . 29 Sen-Torq, Inc. v. K Mart Corp.,, 936 F.2d 851 (6th Cir. 1991) . . . . . . . . . . . . . 33 Walker v. Time Life Films. Inc., 615 F. Supp. 430 (U.S.D.C. SD. NY, 1985) . . . . . . . 30 Warner Bros. Inc. v. American Broadcasting Companies. Inc., 770 F.2d 231 (2nd Cir. 1983) . . . . . . . . . . . . . 28 Whelan Associates, Inc. v. Jaslow Dental Laboratory. Inc.,



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797 F.2d 1222 (3d Cir. 1986), cert. denied . . . . . . 32 White v. Kimmell, 193 F.2d 744 (9th Cir.), cert. denied, 343 U.S. 957 (1952) . . . . . . . . . . . . . . . . . . . . . . 18, 19, 23, 2~, STATUTES 17 U.S.C. S 401 (former version) . . . . . . . . . . . . . . 16 17 U.S.C. Section 401(a) (former version applicable) . . . . 20 17 U.S.C. S 405 . . . . . . . . . . . . . . . . . . . . . . . 16 37 C.F.R. 202.1(9) (1985) . . . . . . . . . . . . . . . . 27, 3~ 37 C.F.R. 202.1(a) . . . . . . . . . . . . . . . . . . . . 33 OTHER AUTHORITIES 3 Nimmer, Nimmer on Copyright, 3.03 [F][5] . . . . . . . . 28 1 Nimmer on Copyright 4.13[A], at 4-70 n.13.1 (1992) . . . 25 11 Wright & Miller, Federal Practice and Procedure: Civil 2947, at 424 (1973) . . . . . . . . . . . . . . . 53 3 Nimmer on Copyright, supra 13.03[F][2], 3 Nimmer on Copyright, supra, 14.06[C] 3 Nimmer on Copyright. supra, 14.06[c]



JAMES H. FORTE (2248) SAIBER SCHLESINGER SATZ & GOLDSTEIN 1 Gateway Center Newark, New Jersey 07102-5311 (201) 622-3333 HELLER, EHRMAN, WHITE & McAULIFFE 525 University Avenue, 9th Floor Palo Alto, California 94301 Telephone: (415) 326-7600



USL vs. BSDI documents



Attorneys for Defendant Berkeley Software Design, Inc. UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY UNIX SYSTEM LABORATORIES, INC., Plaintiff, -againstBERKELEY SOFTWARE DESIGN, INC., and the Following lndividuals in their Collective Capacity as THE REGENTS OF THE UNIVERSITY OF CALIFORNIA: PETE WILSON, LEO T. MCCARTHY, WILLIE L. BROWN, JR., et al., Defendants. Civil Action No.92-1667 (DRD) MEMORANDUM OF LAW ON BEHALF OF DEFENDANT BERKELEY SOFTWARE DESIGN, INC. IN FURTHER OPPOSITION TO PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION Introduction With this motion, plaintiff UNIX System Laboratories, Inc., ("USL") asks this Court to prohibit Berkeley Software Design, Inc. ("BSDI") from selling its only product and from maintaining any of its current employees, based on the fact that, like most experienced computer programmers, they have had access to UNIX source code. USL's supposedly secret source code has been licensed to universities and companies around the world for many years and has been so widely available that many aspects of it have become industry standards. In addition, hundreds of books have been written describing the code in great detail with no complaint from USL. (See Joint Declaration of Marshall Kirk McKusick and Keith Bostic, ~ 28.5 and 36; Affidavit of David Kashtan, ~ 6, 8, 14, 15, 17-19, 23; Affidavit of Michael Karels, ~ 34-36).[fn1] Thus, this is hardly the "garden variety" misappropriation suit USL claims it is. Having chosen to disclose its source code to students and computer programmers all over the world, and having promoted it as an industry standard, USL's attempt to portray it as a closely guarded secret, based on its own internal safeguards, is ludicrous.



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As in any trade secret case, a finding of misappropriation requires a showing that the specific items BSDI allegedly misappropriated are in fact secret. No such showing has been or can be made. In fact, most of the items USL relies on are standard features, consisting of file names and mnemonics commonly used, both in USL-licensed products and in UNIX-compatible products for which no USL license is required or are disclosed in publicly available materials. (See McKusick and Bostic Decl. ~ 26-28.4, 28.6.2, 28.7, 32, 33, 37, 39, 45, 53, 56, 59, and 61; Karels Aff. ~ 34-36; Kashtan Aff. ~ 3, 5, 7, 12, 17, 19, 21, 23). [fn1] The Joint Declaration of Marshall Kirk McKusick and Keith Bostic shall be referred to as the "McKusick and Bostic Decl.," respectively. The Affidavits of David Kashtan and Michael Karels shall be referred to as "Kashtan Aff." and "Karels Aff.," respectively. Unable to find significant similarities in the actual code, USL points to these same standard file names and mnemonics as evidence of copyright infringement, even though USL forfeited any copyright protection in the 32V code long ago, by making it widely available with no copyright notice. Even if USL had not forfeited copyright protection in the 32V code, it could not show copyright infringement, since mnemonics and common industry standards are not protectible under copyright law and their use does not prove illicit copying. As for the actual code, out of the over 1.5 million lines of code in BSD/386, USL's expert relies solely on a few lines interspersed in two functions, ignoring the fact that instructions on how to implement those functions are contained in various textbooks. (See McKusick and Bostic Decl., ~1 53-56; Kashtan Aff., ~1 4-6). Given the specific instructions available in such books, the trivial similarities relied on by USL are to be expected and prove neither copying nor use of the 32V code. In short, with this motion, USL seeks to exclude a legitimate competitor from the marketplace by attempting to invoke a nonexistent copyright, by relying on commonly used industry standards as evidence of copying, and by falsely claiming generally known information as its trade secrets. Not content to destroy one potential competitor, USL also seeks to keep a stranglehold on the entire market by claiming that everyone who has had ever had access to UNIX source code a group that include~ most experienced programmers in the industry is "mentally contaminated" and may not develop any functionally similar product,



USL vs. BSDI documents



without first purchasing an exorbitantly expensive license from USL. In accordance with this argument, USL requests this Court to prohibit BSDI from hiring anyone who has had access to UNIX source code. USL's request would not only require BSDI to fire all of its current employees, but would make it difficult to find any qualified replacements. Having chosen to widely disseminate its source code in order to build a market for its product and having succeeded in making it an industry standard, USL cannot now claim that everyone with knowledge of it is restricted from developing competing products. USL is also unable to show irreparable harm, as it must in order to obtain a preliminary injunction. As authorized under its license agreements with USL, the University of California has distributed the Net2 software on which BSD/386 is based, with no restrictions on further disclosure and distribution. The Net2 software was written by students and employees of the University of California and thousands of other individuals around the world who have contributed their work to the University. (See Karels Aff. ~l 13-14). Hundreds of thousands of copies of Net2 have been publicly distributed and Net2 remains available from a variety of public archives. (See Affidavit of Richard F. Adams, Jr., ~1 15-16) ("Adams Aff.). In addition, at least one other company has created a complete system based on Net2 and continues to market that system. (Adams Aff., ~ 17). USL has taken no legal action against that company or against any of the numerous other entities still distributing Net2. The number of additional copies of the code BSDI will sell while this case is pending is insignificant relative to the huge number of copies already distributed and which remain freely available to the public. Thus, USL's claim of irreparable harm is totally divorced from reality. BSDI, on the other hand, will be forced out of business long before any trial is had and will be unable to pay for its defense, if it is prevented from continuing to sell its only product. For all of these reasons, USL is unable to meet the standards required for a preliminary injunction and its attempt to force BSDI out of business without affording it a full trial must be denied. Factual Background A. The Parties. Plaintiff USL is a majority-owned affiliate of AT&T. It was formerly a division within AT&T and was spun off to form a separate company with the goal of marketing UNIX source code and other software. (Thiel Dep. T. 80-8 to 80-25, 81-1 to 81-24).[fn2] It has



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recently been announced that AT&T's stock in USL will be sold to Novell Corporation. (See Affidavit of James H. Forte, 2) (hereinafter "Forte Aff."). Defendant University of California ("the University") is a worldrenowned university. For many years, the University has distributed, on a nonprofit basis, software developed by its Computer Systems Research Group ("CSRG"). These distributions are known as Berkeley Software Distributions, and have been used by many companies, including USL, in a variety of commercial products. (See Karels Aff., 11 3-10, 12-13, 20). Some of the Berkeley Software Distributions have included code licensed to the University by USL and thus have been provided only to USL licensees. (Id., 1 9). Others not including any USL-licensed code have been made available to anyone, without requiring proof of a USL source code license. (Id., ~1 9-13). As discussed below, such distributions were expressly authorized in the University's license agreements with USL.



[fn2] All citations to the deposition transcript of Charles Thiel are attached as Exhibit A to the Affidavit of James H. Forte. In July of 1991, the University began distributing its Second Networking Release ("Net2"), which did not contain USL proprietary code and thus required no USL license. USL now falsely accuses the University of violating its trade secrets and copyrights by releasing Net2 to non-licensees. Defendant BSDI is a small startup company that has spent approximately eleven man-years developing the Net2 release into a commercially viable product - BSD/386 - which is potentially competitive with USL's UNIX operating system. (Adams Aff., ~ 3-6). Initially, USL sued only BSDI, even though the claim was based on an allegation that the University's release of Net2 violated its intellectual property rights. Subsequently, USL added the University as a defendant and alleged that the code added to Net2 by BSDI also violated its rights. B. The Technology A computer program is a set of instructions implementing algorithms that enable a computer to perform various functions. Computer programs are written in a form called "source code," which consists of humanly-comprehensible instructions in one of



USL vs. BSDI documents



many computer languages. UNIX source code is usually written in a language called "C". Before source code can be run on a computer it must be compiled into machine-readable code called object code or binary code. Through the use of a compiler program, the source code is turned into binary code, which consists of "1s" and "Os" strung together in a particular order. The binary code is used to operate the computer or perform a particular application. There are different kinds of computer programs, including operating system programs and application programs. An operating system is a program that directs the internal operations of the computer and interacts with a variety of compatible application programs. An application program is a program that enables the computer to perform a specific task, such as word processing, accounting or mathematical calculations. See Apple Computer. Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1243 (3d Cir. (1983), cert. dismissed, 464 U.S. 1033 (1984). C. History of the UNIX Source Code The original UNIX operating system was developed by employees of AT&T's Bell Laboratories in the late 1960's, and was based on an earlier system called Multics. (See Maurice J. Bach, The Design of the UNIX Operating System, pp. 1-3, attached as Exhibit B to the Forte Aff.; McKusick and Bostic Decl., f 28.1.3). At that time, AT&T was prohibited from selling software and developed the UNIX code solely for its own internal use. Subsequently AT&T began licensing the UNIX source code to universities for educational use, ; [REDACTED] This marketing strategy has been so successful that many aspects of the UNIX operating system have become industry standards. (See Exhibit D to the Forte Aff.; see generally McKusick and Bostic Decl.). [fn3] All citations to the deposition transcript of Edwin G. Baldwin are attached as Exhibit C to the Forte Aff. Unlike most software companies, who distribute their products only in object code, USL has distributed its operating system in source code form. (Thiel Dep- T- 95-20 to 96-5). In licensing its source code to universities for research and other educational uses, USL has required universities to distribute their enhancements and derivative works developed using the code to anyone, including AT&T, at a nominal cost. (See Karels Decl., 23). To the extent the enhancements or derivative works have included the licensed source code, they could be provided only to licensees, but still had to be provided at nominal cost. (See Karels Decl., ~ 23). As a result, USL has received the benefit of free



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development work from thousands of computer programmers, and has incorporated the best of that work into its own system. (See Karels Decl., ~ 20 and 34). After divestiture, which took place in 1984, AT&T began to market its UNIX source code actively in the United States and in many other countries as a commercial product. As a result of this widespread licensing and the access permitted to students all over the world, as USL admits, the UNIX source code has become "world-renowned," and many portions of it have become industry standards. Although USL may have strict internal safeguards in place, it has so widely licensed its UNIX source code that it cannot be considered a "secret" by any stretch of the imagination. Indeed, since the source code has been licensed to universities all around the country, most people who have studied computer science at universities over the past fifteen years have had access to the source code at some time, E to the Forte Aff.). Further, the strict safeguards USL claims to observe have not been observed by its thousands of licensees. consequently, USL's licensed code periodically appears on publicly accessible computers. (Bond Dep. T. 71-24 to 74-16;[fn4] Adams Aff., ~ 10). [fn4] All citations to the deposition transcript of Mitzi D. Bond are attached as Exhibit F to the Forte Aff.



USL has also permitted numerous books to be written on the UNIX source code. These books describe nearly every aspect of the code, including its design, architecture, sequence, organization, structure, implementation and algorithms, and provide instruction on how to write UNIX-compatible code. See infra. Among other things, such publicly available reference materials disclose the specific features USL's expert relies upon as evidence of copying and trade secret misappropriation. (See generally McKusick and Bostic Decl.; Kashtan Aff., ~l 6, 8). D. The Berkeley Distributions The University began releasing its Berkeley Software Distributions in the late 1970's. The original distributions were modifications and enhancements of the AT&T-licensed code. Over the years, the University continued to modify the licensed code and rewrote many of the programs from scratch. It also developed many additional programs which it included in its releases and obtained a variety of other programs from outside contributors. (See Karels Aff. Il 2-14). What is now known as Berkeley UNIX has been very popular and has



USL vs. BSDI documents



been included in a variety of commercial products including operating systems marketed by Sun Microsystems, Digital Equipment Corporation, and USL. (See Karels Aff. ~ 6 and 20). Thus, USL has benefitted enormously by its licensing of UNIX source code to the University and other educational institutions. In accordance with the terms of its license agreements with USL, the University has made several of its releases available to nonlicensees, since they did not contain any of USL's licensed code. The first of these was in 1987 and consisted of a reimplementation of a particular function for handling daylight savings time that existed in the 32V code. The second was a package of networking code distributed in 1988. Both of these releases were made via anonymous FTP, which means that they were placed on a publicly accessible computer network, with over a million users. (See Karels Aff. ~ 9-10). Starting with the BSD4.3-Tahoe release in 1987, the University also began marking files which did not contain AT&T code with a special legend, indicating that they were freely redistributable. (See Karels Aff. ~ 9). Although the University provided the 4.3 Tahoe release only to AT&T licensees, USL has never objected to the designation of certain files as freely redistributable, and those files have in fact been redistributed by those who obtained the release. (See Karels Aff. ~ 9-11). In 1988, the University distributed its first Networking Release ("Net1"), which consisted of 134 source files from the networking portion of the BSD kernel, a login program, and a number of utility and C-Library programs. No AT&T source code license was required to obtain the Net1 release. (See Karels Aff. I 10). Contrary to USL's representation, Net1 did include some code that had a functional analogue in 32V and, like the Net2 release, made reference to code that was not included. In both the Net1 and Net2 releases, these references are present because the code is intended to be used with other programs that contain the referenced code. (See Karels Aff. ~ 10, 15-16). Thus, they do not indicate mindless copying, as USL suggests. After the Net1 release, the University made another release called BSD4.3-Reno. Although this release was provided only to USL licensees, it contained more files marked freely redistributable, and such files have in fact been distributed to non-licensees by others. (See Karels Aff. ~ 12). Although USL received a copy of both the Tahoe and Reno releases, and used portions of them in its own code, USL made no objection to any of the designations. Nor has it ever



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objected to the distribution of Net1 to non-licensees. (See Karels Aff. f 12). The University released its second license-free release, the Net2 software at issue in this action, in July of 1991. This included not only an updated version of the networking software included in the earlier Net1 release, but a host of other programs that had been written by University students and employees or contributed to the University. (See Karels Aff. ~1 13-14). This release was the culmination of a project begun years earlier to sort out the programs that were not subject to AT&T license restrictions and make them available to anyone, as contemplated by the University's license agreements with AT&T. (See Karels Aff. 1 17). Thus, it includes the work of thousands of authors written at different times over a period of many years. On several occasions, CSRG members attempted to obtain USL's views as to whether certain programs contained any USL proprietary matter. (Bostic Dep. T. 39-7 to 40-1, 41-11 to 41-i,, and exhibits P70 and P-71 attached as Exhibit I to the Forte Aff.; McKusick Dep. T. 267-2 to 268-24).[fn5] Although USL has provided such opinions to others, USL refused to take any position on the code submitted by the CSRG members. (Id.). Prior to the release of Net2, CSRG members discussed the release many times with University counsel and performed a detailed code comparison to make sure that the Net2 release did not include USLproprietary code, applying criteria received from University counsel. The release was then reviewed by University counsel in conjunction with outside counsel and a technical expert, and ultimately was approved by University officials. (see Karels Aff. ~ 18-27). [fn5] All citations to the deposition transcripts of Keith Bostic and Marshall Kirk McKusick are attached as Exhibits G and H, respectively, to the Forte Aff. E. The Formation of BSDI and the Development of BSD/386 After the release of Net1, CSRG members had made several public announcements regarding the additional software they planned to include in the next USL-license-free release. After hearing these announcements, Richard Adams, who is now the president of BSDI, became interested in the possibility of developing a commercial product based on the upcoming release and discussed his idea with various acquaintances, including three CSRG members, Keith Bostic, Kirk McKusick and Michael Karels. (See Karels Aff., ~ 19; Adams Aff., ~ 4). Believing the release to be imminent, in January of 1991, he



USL vs. BSDI documents



organized a meeting with these and several other interested individuals to explore the feasibility of the idea. Because they were concerned that USL would not like a high-quality, lower-priced competitor in the market, and might try to drive them out, they also discussed the concept with attorneys to satisfy themselves that USL would have no basis for interfering with the project. (See Karels Aff., 19; Adams Aff., ~ 4). At the time of that meeting, the CSRG members had nearly completed the process of reviewing the University's software to determine what could be included in Net2, based on the criteria that had been supplied to them by the University's counsel. They also had made several public announcements of the upcoming release and what programs they anticipated would be included in it. These announcements took place long before BSDI existed, and before anyone associated with BSDI ever discussed the idea of using the release in a product. Thus, USL's suggestion that BSDI instigated the release is ridiculous. It was the announcement of the release that "induced" the formation of BSDI, not the other way around. At the time of the January meeting, Mr. Adams was unsuccessful in persuading any of the CSRG members to leave the University to join the company he was contemplating. The CSRG members also did not agree to invest any money in the venture at that time, nor did they receive any commitments from BSDI. (See Karels Aff., 1 19-21; McKusick Dep. T. 151-20 to 152-17; Bostic Dep. T. 152-16 to 153-7; Adams Aff., 1 4). Thus, USL's assertions that the CSRG members had a financial interest in BSDI while they were working on the Net2 release is completely false. No CSRG member had any interest in BSDI until after the release of Net2. Although USL has gone to great lengths to try to portray BSDI as the driving force behind the Net2 release - including misrepresenting the testimony of BSDI and CSRG employees - USL has failed to present any evidence to support such a claim. BSDI received the Net2 release with the understanding that it contained no USL-proprietary code and put a great deal of effort and expense into making it a usable operating system.[fn6] In doing so, BSDI relied entirely on publicly available reference materials. (See Adams Aff., ~ 5). USL now seeks to enjoin BSDI from continuing to sell its BSD/386 product, which it has been selling in preproduction form for over nine months. USL further seeks to enjoin BSDI from hiring any employees that have had access to UNIX source code, a limitation that would rule out not only all of its current employees, but the thousands of other computer programmers who have had access to UNIX source code as students or employees.



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[fn6] USL's argument that the indemnification clause contained in the Net2 agreement should have put BSDI on notice of possible violations is belied by the fact that the same clause was included in the University's earlier licenses of BSD code to AT&T. (See Exhibit J to the Forte Aff., ~ 12). ARGUMENT I. USL HAS NOT MET ITS BURDEN OF ESTABLISHING ENTITLEMENT TO A PRELIMINARY INJUNCTION. The Third Circuit has held repeatedly that "injunctive relief is an extraordinary remedy which should be granted only in limited circumstances." Frank's GMC Truck Center. Inc. v. General Motors Corp., 847 F.2d 100, 102 (3d Cir. 1988). To obtain such extraordinary relief, the moving party bears a heavy burden of establishing: (1) The probability of irreparable injury to the moving party in the absence of relief; (2) The absence of possibility of harm to the nonmoving party if relief were granted; (3) The likelihood of success on the merits; and (4) The public interest in granting preliminary relief. Merchant & Evans v. Roosevelt Building Products, 963 F.2d 628, 632 (3d Cir. 1992); Apollo Technologies Corp. v. Centrosphere Industrial Corp., No. 92-3712 (AJL) 1992 WL 289943 (D.N.J. 1992). The injunction should issue only if plaintiff produces sufficient evidence showing that "all four factors favor preliminary relief." Merchant & Evans, 963 F.2d at 632-33. Of these four requirements, the Third Circuit places particular weight on the probability of irreparable harm and the likelihood of success on the merits. If "either or both of these prerequisites are absent," the circuit court will reverse the grant of an injunction by the district court. Frank's GMC, 847 F.2d at 102 (quoting In re Arthur Treacher's Franchisee Litigation, 689 F.2d 1137, 1143 (3d Cir. 1982)); Morton v. Beyer, 822 F.2d 364, 367 (3d Cir. 1987). Further, the moving party must make a "clear showing of immediate irreparable harm." Campbell Soup Co. v. ConAgra. Inc., 977 F.2d 86, 91, (3d Cir. 1992). To bear this burden, "the plaintiff must demonstrate potential harm which cannot be redressed by a legal or an equitable remedy following a trial. The preliminary injunction must be the only way of protecting the plaintiff from harm." Id.



USL vs. BSDI documents



As shown in detail below, USL has failed to make the required showing on any of the four factors necessary to obtain the requested preliminary injunction. Thus, its motion should be denied. II. USL IS NOT LIKELY TO SUCCEED ON ITS COPYRIGHT INFRINGEMENT CLAIM. A. USL Has No Valid Copyright In The 32V Code. USL's copyright infringement claim is fundamentally flawed, in that USL has no valid copyright in the UNIX/32V source code, which USL permitted to be widely published without a copyright notice. Before March 1, 1989 (the effective date of the Berne Convention Implementation Act), the law required that a copyright notice be placed on published works to notify recipients that the author intended to claim a copyright in the work. See 17 U.S.C. 401 (former version); 17 U.S.C. 405.[fn7] Without such a notice, those receiving the work could assume that the author did not intend to claim copyright. [fn7] 17 U.S.C. 401 was amended in connection with passage of the Berne Convention in 1988, and no longer requires notice to be placed on copies of published works. Thus, publication of a work without a copyright notice resulted in forfeiture of any copyright protection, unless adequate steps were taken to cure the lack of notice and the work was registered within five years. See 17 U.S.C. S 405; see also Rexnord. Inc. v. Modern Handling Systems. Inc., 379 F. Supp. 1190, 1197 (D. Del. 1974) ("Copyrighted material loses its protected status if it is published without notice of copyright."). No such steps were taken with respect to the 32V code. As recently as 1992, USL belatedly registered its copyright in UNIX and 32V. See Exhibits A - D to Plaintiffs' Amended Complaint (copyright registration for UNIX operating system, editions 5, 6, 7, and 32V). Prior to 1989, USL made the 32V code available to thousands of educational, commercial and governmental entities throughout the world, without any copyright notice. [REDACTED] In discovery, USL produced a 3-inch-thick list of licenses which indicates that, as of 1986, at least [REDACTED] computers were licensed under either System III or System V, and thus also were



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licensed under 32V. (A copy of this list is attached to the Forte Aff. as Exhibit M). [REDACTED] Since AT&T permitted the widespread distribution of the32V source code without a copyright notice prior to 1989, USL has lost any copyright protection it might otherwise have had in it,and, as a matter of law, there can be no claim for copyright infringement of the 32V code. [fn8] All citations to the deposition transcript of David Frasure are attached as Exhibit K to the Forte Aff. [fn9] All citations to the deposition transcript of Chuck Greene are attached as Exhibit N to the Forte Aff. 1. The Limited Publication Doctrine Is Inapplicable. In an attempt to dodge this fatal defect in its copyright claim, USL makes the incredible assertion that the 32V source code is an unpublished work, even though it has been marketed to the commercial world for many years and has been made available to many thousands of commercial, educational and governmental entities. Compare USL's Moving Brief, at 27 with R.L. Martin The UNIX System: Preface, and A.V. Aho, The UNIX System: Foreword, AT&T Bell Laboratories Technical Journal, Vol. 63, No. 8, October 1984, pp. 1571-73, a copy of which is attached to the Forte Aff. as Exhibit P. To make such a claim, USL contends that its widespread commercial distribution has been only a "limited publication," and thus has not forfeited its copyright protection. Although courts have created a narrow exception to the forfeiture doctrine known as the doctrine of limited publication, this doctrine is not applicable here. Under the doctrine of limited publication, a work published without the proper notice will not fall into the public domain if the copyright owner can prove that its distribution was limited to (1) a definitely selected group, (2) for a limited purpose, and (3) without the right of diffusion, reproduction, distribution or sale. See White v. Kimmell, 193 F.2d 744, 746-47 (9th Cir.), cert. denied, 343 U.S. 957 (1952); Rexnord, 379 F. Supp. at 1197. Unless all three of these criteria are met, however, a publication cannot qualify as a limited publication. White, 193 F.2d at 746-47. Accordingly, restrictions on use or redistribution alone are not



USL vs. BSDI documents



sufficient. Plainly, USL cannot meet the first of these requirements. Distribution of the 32V source code has not been limited to a definitely selected group. Rather, the 32V source code has been available to [REDACTED] 1988, attached as Exhibit 0 to the Forte Aff.; see also AT&T Technical Journal, p. 1573 ("UNIX System V is available to the commercial world from AT&T in a fully supported form) (emphasis added)) (See Exhibit P to the Forte Aff.). USL representatives have testified that [REDACTED] as if the category of [REDACTED] could be a "definitely selected group" under the test set forth in White. The limited publication exception is much more narrowly drawn than this. See Brown, 714 F.2d at 1092 (Court found that group consisting of "all automobile dealers or dealers in markets where the [allegedly copyrighted work] was not already in use" did not constitute a limited group). Moreover, considering the realities of the marketplace, this socalled "restriction" is really no restriction at all. As [REDACTED] well.[fn10] (Affidavit of Michael J. DeFazio in Support of Plaintiff's Motion for Preliminary Injunction, 11 and n.3 at pp. 11-12). In reality, rather than limiting its source code to a narrowly selected group, USL has actively marketed its UNIX source code [REDACTED] Forte Aff.). Limitations on sales to particular foreign countries are irrelevant to the publication issue, since a copyright notice was required to preserve USL's rights upon publication of the code "in the United States or elsewhere". 17 U.S.C. Section 401(a) (former version applicable). [fn10] The fact that one had to pay for a work in order to receive it does not make it a limited publication. See Brown v. Tabb, 71; F.2d 1088 (11th Cir. 1983). [fn11] A copy of Plaintiff's Response to Defendant's Third Set of Interrogatories is attached as Exhibit Q to the Forte Aff. In comparison with the 3-inch thick list of 1986 licensees USL produced in discovery, in its interrogatory responses, USL was able to identify only [REDACTED] who had been refused a license.



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[REDACTED] [fn12] A copy of Exh. D-2 is attached as Exhibit S to the Forte Aff. [fn13] [REDACTED] [fn14] All citations to the deposition transcript of Otis L. Wilson are attached as Exhibit U to the Forte Aff.



. T. 86-21 to 87-4, 87-25 to 88-4, 94-15 to 97-3; Bond Dep. T. 1723 to 19-21). [REDACTED] 23).[fn15] Thus, this practice did not in fact place any significant limitation on the group to whom the code was available. Neither the ability to pay nor the willingness to adhere to restrictions on use are sufficient limitations to establish a limited publication. See Brown, 714 F.2d at 1092 (no limited group where the alleged copyrighted jingle "was available to any automobile dealer doing business in a market not yet exposed to the jingle who would pay the price"); White, 193 F.2d at 746-47 (the requirement that there be restrictions on use is separate and distinct from the requirement that there be a limited group). In fact, the instant case is virtually identical to a recent Ninth Circuit decision, D.C.I. Computer Systems. Inc. v. Pardini, 1992 U.S. App. Lexis 29951; 1992 Copyright L. Rep. (CCH) ~27,005 ( 9th Cir.) (A copy of this case is attached as Exhibit V to the Forte Aff.). In D.C.I., the Ninth Circuit upheld the district court's ruling that by licensing its software to automobile dealers without a copyright notice, D.C.I. published the software and forfeited its copyright in the work. Under circumstances virtually identical to those in the present case, the Court found that the limited publication doctrine did not apply: D.C.I. did not select a particular group of people and then offer to distribute ~the program] to members of that group. It is undisputed that D.C.I. licensed its F & I program to any automobile or recreational vehicle dealership in the country that would agree to enter into a contract, and so fails the select group test. The court in D.C.I. also noted that D.C.I. failed to meet the second prong of the test: "Moreover, it did not meet the limited purpose prong, since its purpose in distribution was pecuniary gain." See also Academy of Motion Picture Arts and Sciences v. Creative House



USL vs. BSDI documents



Promotions, 944 F.2d 1445, 1453 (9th Cir. 1991). Obviously, since USL marketed its 32V code commercially, it cannot meet this prong of the test either. Having chosen "'the more worldly rewards that come with exploitation of [its] work"' (Brown, 714 F.2d at 1092), USL's widespread distribution of the 32V source code without a copyright notice forfeited any copyright protection in the work. Both the Hubco case and the Data General case cited by USL are inapplicable. In those cases, the code was distributed only to those who purchased a computer from the plaintiff. See Hubco Data Products Corp. v. Management Assistance. Inc., 219 U.S.P.Q. 450 (D. Idaho 1983); Data General Corp. v. Digital Computer Controls. Inc., 188 U.S.P.Q. 276 (Del. Ch. 1975). There has been no such restriction on the UNIX source code. Although AT&T does sell computers, the source code itself has been marketed as a separate product. Nor can USL find solace in a couple of questionable district court opinions, in which works distributed to a small number of entities through separately negotiated agreements were held to be limited publications. See National Broadcasting Co. v. Sonneborn, 630 F. Supp. 524 (D. Conn. 1985); Paramount Pictures Corp. v. Rubinowitz, 217 U.S.P.Q. 48 (E.D.N.Y. 1981). These cases are distinguishable in that, as explained above, USL has actively marketed its source code [REDACTED] 13 to 80-17, 81-16 to 18-23); AT&T Technical Journal, Vol. 63, No 8, p. 1573, attached as Exhibit P to the Forte Aff. ("UNIX System V is available to the commercial world from AT&T in a fully supported form"). Moreover, these cases have been criticized by Nimmer, who reasoned that "[u]nless the [parties] which might engage in such negotiations were limited in some manner, it would seem that there was no limitation as to persons." I Nimmer on Copyright 4.13[A], at 4-70 n.13.1 (1992). In the instant case, where USL has permitted distribution of its source code to thousands of entities, application of the questionable rationale espoused by Paramount and NBC would obliterate the notice requirement. USL emphasizes that its publication has been limited based on the fact that it has been distributed subject to restrictive licenses. (See USL's Moving Brief, p. 12 n. 4; Affidavit of Michael J. DeFazio in Support of Plaintiff's Motion for Preliminary Injunction, p. 27 n. 14). Unlike other types of copyrighted works, software is virtually always distributed subject to license restrictions. In any event, this argument addresses only one prong of the test for limited publication. As the court emphasized in White v. Kimmel, "the



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circulation must be restricted k~ as to persons and purpose, or it cannot be called a private or limited publication." White, 193 F.2d at 747 (emphasis added). Thus, USL cannot meet the limited publication test, regardless of any restrictions placed on its customers' use of the source code. Because AT&T's distribution of the 32V code constituted a general publication, and because such publication occurred without a valid copyright notice, AT&T's work has fallen into the public domain. Accordingly, USL has absolutely no basis to claim any copyright protection for its 32V source code. 2. The Header Files Which USL Claims Have Been Infringed Have Been Included in Binary Distributions Made by USL Licensees With No Copyright Notice. The binary version of the UNIX operating system has been even more widely distributed than the source code version. Although current binary versions of the code contain copyright notices, earlier versions did not. (See Bostic & McKusick Decl., 28.4). Moreover, these binary distributions included some source code files, and in particular, included the header files USL accuses the University of copying in Net2. (Bostic & McKusick Decl., ~ 28.4; Kashtan Aff. ~ 8). USL itself has never distributed binary code, but has sublicensed numerous other companies to distribute binary versions of its UNIX operating system, placing no limitations on whom they could license it to, other than those required by law. Thus, USL cannot possibly argue that the distribution of the binary code (including the header files in source form) was a limited publication. Not only is it impossible for USL to meet the "definitely selected group" test, but simply offering a work "for further distribution," as USL did with its binary code, in itself constitutes a general publication of the work. See White, 193 F.2d at 746-47; Rexnord, 379 F. Supp. at 1197. Thus, USL has no basis for claiming any copyright in the header files. B. THE SIMILARITIES RELIED UPON BY USL WOULD NOT ESTABLISH COPYRIGHT INFRINGEMENT EVEN IF THE 32V CODE WERE COPYRIGHTED. Even if USL did have a valid copyright in the 32V code, USL would not be able to establish a substantial likelihood of success on its infringement claim. Copyright law, unlike trade secret or patent law, protects only original expression. It does not protect ideas,



USL vs. BSDI documents



processes, concepts or methods. Computer Associates International. Inc. v. Altai. Inc., 1992 WL 372273, at p. 9 (2d. Cir. Dec. 17, 1992). As the Supreme Court recently reaffirmed: "The mere fact that a work is copyrighted does not mean that every element of the work may be protected." Feist Publications. Inc. v. Rural Telephone Service Co., 499 U.S. 113 L.E.2d 358, 371 (1991). Whether the claim is based on direct or indirect evidence of copying, infringement may be found only where there is substantial similarity in protectible expression. Computer Associates. Inc. v. Altai. Inc., 1992 WL 372273, p. 7; Landsberg v. Scrabble Crossword Game Players. Inc., 736 F.2d 485, 488 (9th Cir. 1984). De minimis copying or copying of unprotectible portions of a work do not give rise to an infringement claim. Feist. 113 L.E.2d at 379 ("not all copying . . . is copyright infringement"); Computer Associates v. Altai, 1992 WL 372273, at 22; Warner Bros. Inc. v. American Broadcasting Companies. Inc., 720 F.2d at 242; see also 3 Nimmer on Copyright, S 13-03 [F][5]. USL has made no attempt to distinguish between similarities in protectible elements of its software and similarities in unprotectible elements. As explained below, virtually all of the specific items discussed in the Carson Declaration fall into the category of unprotected elements. Moreover the similarities are neither quantitatively nor qualitatively substantial. Indeed, the Carson Declaration seems to be aimed simply at establishing that Net2 was "derived" from the 32V code in the colloquial sense. For purposes of copyright law, however, a derivative work, like any other work, can be infringing only if it contains substantial, protectible expression from the prior work. 1 Nimmer on Copyright, 1 3.01 at p. 3-3 (1992) ("A work is not derivative unless it has substantially copied from a prior work. If that which is borrowed consists merely of ideas and not of the expression of ideas, then although the work may have been in part derived from prior works, it is not a derivative work".); Reyher v. Children's Television Workshop, 533 F.2d 87, 90 (2nd Cir. 1976) (quoting from Treatise). Thus, if Net2 does not contain substantial protectible expression from 32V, it cannot infringe any copyright in 32V. Id. Merely "using" a prior copyrighted work, or referring to it in developing one's own work, does not amount to copyright infringement. Feist v. Rural Telephone Service, supra, 111 S. Ct. 1282, 1290; Sega Enterprises Ltd v. Accolade Inc., 1992 WL 293141, at p. 15 (9th Cir.) ("the fundamental purpose of the Copyright Act [is] to encourage the production of original works by protecting the expressive elements of those works while leaving the ideas, facts, and functional concepts in the public domain for others to build on").



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Anyone is free to make a "derivative work" that uses unprotectible aspects of a copyrighted work, such as ideas, methods or concepts. It is also permissible to remove or replace those portions of an otherwise infringing work that are protected by copyright. See, e.q., Computer Associates v. Altai, supra, 1992 WL 372273 (program from which infringing portions had been removed held non-infringing); See v. Durang, 711 F.2d 141, 143 (9th Cir. 1983); Orth-o-Vision. Inc. v Home Box Office, 474 F. Supp. 672, 686 n.14 (S.D.N.Y. 1979) ("when the infringing portion of a defendants work may be removed from the remainder, injunctive relief ought extend only to the former"); see also Sega v Accolade, 1992 WL 293941,at p. 6 (intermediate copying may infringe regardless of whether the final product infringes). In such instances, even if an intermediate version might have constituted an infringement, a subsequent version which does not contain substantial expression from the copyrighted work does not infringe. Id. In the instant case, there can be no claim for intermediate copying. As explained at length below in connection with the trade secret claim, the University's license agreements with USL expressly permit it to make modifications, enhancements and derivative works based on the licensed software. Thus, it is not copying per se that USL challenges, but the fact that Net2 was distributed to non-licensees. Since any prior BSD releases that contained AT&T proprietary code were distributed only to licensees, there can be no claim of intermediate copying. Thus, regardless of whether portions of Net2 were once included in a distribution that also included code derived from USL licensed code, the question is whether the Net2 distribution itself contains any substantial protectible expression from 32V. As explained below, it does not.



1. The Features Relied Upon by USL's Expert Are Not Protectible. Not all copyrighted works are entitled to the same level of protection. See SEGA Enterprises Ltd. v. Accolade Inc., 1992 WL 293141 at p 12. In particular, works that are highly factual, functional, technical or utilitarian in nature receive less protection than fictional works." Id. at p. 12-13. The reason for this distinction is that as a work becomes more technical or functional, the range of options for expressing ideas narrows. If there are only a limited number of ways to express a particular idea, of necessity, there will tend to be similarity in two works expressing the same idea. Such similarity cannot be the basis for a finding of copyright infringement. Otherwise, later authors would be barred from using the unprotected ideas, concepts and methods expressed in an earlier work a result that is completely contrary to the fundamental tenets



USL vs. BSDI documents



of copyright law. For this reason, a much greater degree of similarity is required before such works will be found to infringe. See Landsberg v. Scrabble Crossword Game Players, Inc. v. Crown Publishers. Inc., 736 F.2d 485, 488-89 (9th Cir.), cert. denied, 469 U.S. 1037 (1984). In some cases, an idea, method or concept can be expressed in such a limited number of ways that virtual identity in expression will be required before infringement will be found. This principle is applicable to computer programs as with any other copyrighted work: [C]opyrighted language may be copied without infringing when there is but a limited number of ways to express a given idea . . . . In the computer context, this means that when specific instructions, even though previously copyrighted, are the only and essential means of accomplishing a given task, their later use by another will not amount to infringement. National Commission on Technological Uses of Copyrighted Works ("CONTU"), Final Report 1, at 20 (1979) ("CONTU Report"). [fn16] [fn16] Congress adopted all of the statutory changes recommended by CONTU verbatim. Subsequent Congresses, the courts, and commentators have regarded the CONTU Report as the authoritative guide to Congressional intent. SEGA Enterprises LTD.. Accolade. Inc., 24 U.S.P.Q. 2d 1561, 1567 fn.5 (9th Cir. 1992). A computer programmer's choices of expression also are limited by efficiency considerations. Thus, although there might be many possible ways of implementing a given task, there might be a very limited number of ways to do so efficiently. In such instances, two programmers attempting to achieve the same result in the most efficient manner would be likely to arrive at similar programming solutions. As stated in Altai, "while hypothetically, there might be a myriad of ways in which a programmer may effectuate certain functions within a program, i.e., express the idea embodied in a given subroutine efficiency concerns may so narrow the practical range of choice as to make only one or two forms of expression workable options." See 3 Nimmer on Copyright, supra, 13.03~F][2], at 13-8913-90; Whelan Associates. Inc. v. Jaslow Dental Laboratory. Inc., 797 F.2d 1222, 1243 n.43 (3d Cir. 1986), cert. denied, 479 U.S. 1031 (1987) ("It is true that for certain tasks there are only a very limited number of file structures available, and in such cases the structures might not be copyrightable . . . .) Thus, if there are only a very limited number of ways to implement a particular feature efficiently, similarities in such implementations do not provide evidence of copying. Computer Associates v Altai, supra, 1992 WL



- 118 -



372273, at 15-16. Other external considerations which limit the range of options for programmers and hence limit the degree of protectible expression in computer programs include: (1) the mechanical specifications of the computer on which a particular program is intended to run; (2) compatibility requirements of other programs with which a program is designed to operate in conjunction; (3) computer manufacturers' design standards; and (4) demands of the industry being serviced. Computer Associates v Altai, supra, 1992 WL 372273, at 17; Sega v. Accolade, supra 1992 WL 293141 at p. 12. If such external factors dictate particular features, the use of such features does not give rise to an infringement claim. Id. Copyright law also does not protect "fragmentary words and phrases" and "lists of contents". 37 C.F.R. S 202.1(a); Sen-Torq. Inc. v. K Mart Corp.., 936 F.2d 851, 854-55 (6th Cir. 1991); Magic Marketing v. Mailing Services of Pittsburg. Inc., 634 F. Supp. 769, 771 (W.D. Pa. 1986) (copyright law does not protect "fragmentary words and phrases" or "forms of expression dictated by functional considerations"). Nor does it protect standard forms of expression. This is particularly significant in the computer industry where a variety of accepted programming practices, techniques and conventions are widely used by programmers. As stated by Nimmer, "in many instances it is virtually impossible to write a program to perform particular functions in a specific computing environment without employing standard techniques." 3 Nimmer on Copyright, 13.03 [F][3] at 1365. The fact that such standard programming techniques appear in two programs does not evidence copying, and such techniques cannot be monopolized by one programmer- See Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1973 (9th Cir.), cert. denied, L.E.2d 141 (1992) ("affirming the district courts' finding that [p]laintiffs may not claim copyright protection of an . . . expression that is, if not standard, then commonplace in the computer software industry"); Computer Associates International. Inc. v. Altai Inc., supra, 1992 WL 372273, at 16-17. There is also a large amount of software that is freely available and freely redistributable. Such material is in the public domain and cannot be claimed by a single author simply by including it in a copyrighted work. Computer Associates International Inc. v. Altai. Inc., supra, 1992 WL 372273, at p. 17-18.



USL vs. BSDI documents



Virtually all of the specific features relied on by USL's expert fall into one of these categories and thus are not protectible. It is notable that with the exception of two extremely short functions [REDACTED] which on their face differ from the supposedly copied 32V Code - Carson does not point out any similarities in the actual code itself. Instead, he relies on similarities in things such as file names and function names, which consist of simple and obvious mnemonics, all of which are standard in the industry and welldocumented in the literature. As noted above, short words and phrases are not protectible under copyright law. 37 C.F.R. Section 202.1(9). Indeed the Compendium of Copyright Office Practices includes such "mnemonics" in a list of examples of noncopyrightable elements in computer programs. (A copy of this rule is attached as Exhibit W to the Forte Aff.). USL's expert also attempts to rely on the ordering of such mnemonics, but since the order has no significance, it is simply an unprotectible list, devoid of any element of authorship or expression. (See Kashtan Aff., ~ 14). UNIX operating systems are specifically designed to permit users to modify, enhance and write their own additions or replacement programs. Some of these programs are application programs, while others, such as device drivers, become part of the operating system itself. To enable customers to write their own programs, the required interface definitions are described in the header files. As noted above, these header files are included not only in the source code distributed by USL, but also in the binary versions distributed by various other companies. Header files are provided precisely for the purpose of being used by programmers in writing UNIXcompatible software. (McKusick and Bostic Decl., ~ 28.4 and 28.4; Kashtan Aff., I 9). Thus, there can be no claim of copyright infringement based on the use of the information contained in such files. Likewise, numerous books describe how to write UNIX-compatible programs. These materials provide all the information needed to write UNIX-compatible programs, and in particular provide detailed information about the interfaces and how to write them, including such elements as the file names, function names, and the defined symbols which USL's expert relies upon. (See generally McKusick and Bostic Decl.; see generally Kashtan Aff.). The fact that these features appear in Net2 or BSD/386 thus does not establish copying. Id. Nor are these features protectible given that their use is either dictated by external considerations, including the need for compatibility with other programs, or merely reflects terms that are standard in the industry. Id.



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With respect to the discussion of [REDACTED] in the Carson Declaration, these are simply two functions within a single file called [REDACTED]. The implementation of these functions is welldescribed in the literature and includes standard features. Numerous books have been written telling programmers exactly how to implement these functions in the most efficient manner. If one follows those instructions, using standard programming conventions, the range of options is extremely narrow, and similarities are virtually guaranteed. (See McKusick and Bostic Decl., 1 53-56; Kashtan Aff., ~ 4-6). For these reasons, similarities in the way these functions are implemented do not indicate that the code was copied, and cannot form the basis for a copyright infringement claim. 3 Nimmer on Copyright, 13.03 [F][3]; see also, Baker v. Selden, 101 U.S. 99, 102-04 (one may copy expressive elements that must be used to express the underlying ideas, functional concepts or facts). A comparison of the 32V implementation of the [REDACTED] and [REDACTED] functions and the implementation of these functions in BSD/386 shows that in neither case are they the same. In the [REDACTED] function, only [REDACTED] lines are similar. And in [REDACTED]" only [REDACTED] lines are similar. (See tables in Affidavit of John H. Carson, at pp. 34 and 36). This degree of similarity is to be expected given the various reference books available that teach one how to implement such code. (See generally McKusick and Bostic Decl.; Kashtan Aff., ~ 4-6). 2. The Similarities Relied upon by USL's Expert Are Neither Quantitatively Nor Qualitatively Substantial. USL completely ignores how minuscule the points of similarity relied upon by their expert are in a quantitative sense. USL further distorts their qualitative significance by equating their value with the value of the kernel as a whole. Out of the over 8,000 files in BSD/386, only 80 are accused in this motion, only 30 of which have even been named. Moreover, most of them are accused simply because they use similar standard mnemonics, and not because there was any similarity in the actual code. (USL's Moving Brief at 21). Only two functions, both contained in the file [REDACTED] are challenged on the basis of actual working code. Thus, out of 1.5 million lines of code, only [REDACTED] lines of working code are challenged, and only a few of them are even similar to lines in 32V. (See Kashtan Aff., ~ 46 and 23). There has been no showing whatsoever that these particular lines of code provide any significant value to the kernel. With respect to the other items,



USL vs. BSDI documents



[REDACTED] (See Affidavit of John Carson, ~ 23). They are significant now only because they are needed for purposes of compatibility with other code. Thus, although the kernel as a whole is significant, the particular items USL claims have been copied are both unprotectible and de minimis and do not give rise to a claim of copyright infringement. (See generally Bostic and McKusick Decl.; Kashtan Aff., ~ 4-6 and 23). 3. USL Could not Enforce a 32V Copyright Against the University or BSDI Because of the Lack of Copyright Notice. Even if USL had not forfeited its copyright in the 32V code, such a copyright could not be enforced against the University or BSDI due to the lack of notice. 17 U.S.C. 405(b). Where notice has been omitted from a copyrighted work, section 405 of the Copyright Act bars enforcement of the copyright against an innocent infringer who relied on the lack of notice, even if the copyright is later recaptured by taking the necessary steps to cure the omission. Both the University and BSDI believed AT&T did not claim copyright in the 32V code because it had been widely distributed with no copyright notice, and that USL had chosen to rely on trade secret law instead. (McKusick Dep. T. 247-1 to 25115; McKusick and Bostic Decl., ~ 28.4 and 28.5). Thus, to the extent there were any infringement, it would not be actionable due to the lack of notice. III. USL CANNOT DEMONSTRATE A LIKELIHOOD OF SUCCESS ON ITS TRADE SECRET CLAIM. The Affidavits submitted by Keith Bostic, Kirk McKusick and David Kashtan establish unequivocally that none of the features USL relies on in support of its motion are trade secrets. In an attempt to salvage its trade secret claim, USL argues that mere access to its licensed code was sufficient to "taint" the authors of Net2, whether or not Net2 actually contains or discloses any USL trade secrets. In order to make this argument, USL blatantly ignores the terms of its own software license agreements with the University, which preclude such a claim. A. To Prevail On Its Trade Secret Claim USL Must Demonstrate That BSD/386 Contains USL Trade SECRETS. As USL itself admits, its agreements with the University authorize the University to develop its own versions of the UNIX software. What is more, those agreements expressly provide that derivative works which do not "include" USL proprietary information are to be made available to anyone for unrestricted use.



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1. The LICENSE Agreements Authorize Use of the UNIX 32-V Code To Create Modifications, Enhancements and Derivative Works Over the course of their relationship, in the late 1970s and 1980s, USL's predecessors-in-interest and the University entered into a series of software license agreements governing use of the UNIX 32V software. Although those agreements were clarified and made more specific over time, all had the same basic meaning concerning the University's right to use the licensed software for research purposes, to create derivative works based upon it and to publicly release its results, modifications, enhancements and derivative works, so long as they did not contain the licensed trade secrets. The first agreement governing use of the UNIX 32V software was the April 1, 1979 Software Agreement between Western Electric Company and the University of California (the "April 1, 1979 Agreement"), which USL has attached as Exhibit B to the Affidavit of Michael J. DeFazio. This agreement-- the earliest of the series-- is the only agreement USL refers to in its motion papers. The second agreement governing use of the UNIX 32-V software,[fnl7] was the August 1, 1981 Software Agreement between western Electric and the University of California (the "August 1, 1981 Agreement") (attached as Exhibit X to the Forte Aff.). [fn17] See, e.q., Baldwin Dep. T. 59-6 to 59-13. The most recent agreement governing the University's use of the 32V source code was entered into on November 12, 1985, and is called the Educational Software License Agreement, E-SOFT-00089 (hereinafter the "E-SOFT-00089 Agreement"). (Bond Dep. T. 32-17 to 32-25, 33-1 to 33-9, 39-7 to 43-5 and Exhibits D-25 and D-26 (see Exh [REDACTED] (Wilson Dep. T. 60-11 to 61-2; Bond Dep. T. 32-25 to 33-9, 132-10 to 133-19). Further, since the E-SOFT-00089 agreement expressly supersedes all prior agreements on the subject matter contained therein, it is the language of the E-SOFT-00089 that governs in this action. See paragraph 4 of the E-SOFT-00089 Agreement (attached as Exhibit F to the Forte Aff.). Although the language in these agreements was clarified over time, the basic intent with respect to the University's right to use the



USL vs. BSDI documents



software and its confidentiality obligation was the same in each of them. (See, Karels Aff., 1 24; see also Wilson Dep. T. 36-17 to 37-8). Under each of these agreements, the University was authorized to make modifications, enhancements and derivative works using the licensed software. If a derivative work contained the licensed software or disclosed any proprietary methods or concepts used in the licensed software, it could be distributed only to those who had purchased a source code license from AT&T. As demonstrated below, however, if an enhancement, modification or derivative work did not contain or disclose any AT&T proprietary information, it belonged to the University, and was not governed by the restrictions applicable to the licensed software. See discussion infra. 2. The License Agreements Permit Derivative Works Not Containing USL Trade Secrets To Be Made Available To Non Licensees Section 2.01(b) of the E-SOFT-00089 Agreement expressly provides that the University was to distribute to anyone, on an unrestricted basis, modifications and enhancements that did not include USL's proprietary information. Likewise, Section 2.01(a) of the E-SOFT00089 Agreement, provides that derivative works "that contain" licensed software must be treated as licensed software i.e, must be subject to the same restrictions on disclosure as the licensed software: [Licensee's] right to use includes the right to modify such software product and to prepare derivative works based on such software product, *provided that any such modification or derivative work that contains any part of a software product subject to this Agreement is treated hereunder the same as such software product.* (See Exhibit D-25 to Bond Dep.T. (emphasis added)). The negotiations leading up to the execution of this agreement, as well as the prior course of dealing between the parties, make it clear that the words "that contains any part of a software product subject to this agreement" were intended to distinguish between derivative works that actually contained licensed software and derivative works that did not- while the former were subject to the license restrictions, the latter were not. In the negotiations leading up to the execution of the E-SOFT-00089 Agreement, USL initially proposed language providing that any derivative work "based on" the licensed materials was to be treated as licensed software. The University objected to that language, however, and insisted that it be changed to cover only derivative works "that contain" licensed software. USL accepted this



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modification, providing a new version of the E-SOFT-00089 Agreement in which the language "based on" licensed materials had been changed to "that contains" licensed software. (Wilson Dep. T., Exh. D-67 and D-68 (attached as Exhibits Y and Z to the Forte Aff.). This same clarification i.e., that only derivative works containing AT&T code had to be treated as licensed software had also been made in discussions surrounding a prior license agreement, the "UNIX System V Agreement". This agreement initially included within the definition of "LICENSED SOFTWARE" any derivative works prepared by the licensee "based on" the licensed materials. The University objected to that provision, which had not appeared in any of its prior agreements with AT&T, and was contrary to its understanding of its obligations. (See Karels Aff., ~ 23-26). Following discussions regarding the provision, USL wrote a letter agreement to the University "clarifying" the definition of "Licensed Software" by deleting from the definition "derivative works prepared by the licensees'. The letter further stated that AT&T never had intended to claim any interest in such works. (See Exhibit B to Karels Aff.; Exhibit D-34 to Wilson Dep. T. (Bates P000243) (Exhibit aa to the Forte Aff.)). In place of the prior language, a sentence was added stating "LICENSEE agrees that any modification or derivative work prepared by it *that contains any LICENSED SOFTWARE* shall be treated as LICENSED SOFTWARE hereunder." (Emphasis added). USL now attempts to read into the earlier 32V agreement (which it mistakenly argues applies), the same language that was deleted from both the System V Agreement and the E-SOFT-00089 Agreement even though no such language appears in either of those agreements. Contrary to USL's argument, this same point also was clarified with respect to the April, 1979 Agreement: In a letter dated January 18, 1978, the University inquired whether it could distribute UNIX-derived software.[fn18] In a written response, Edwin G. Baldwin, who was AT&T's Director of Technology Licensing at the time, stated: We take no position with regard to your use or distribution of software developed by you which does not contain any of our proprietary information such as, without limitation, the computer programs and documentation, or any portion thereof, related to the UNIX operating system, including the methods and concepts utilized therein. With regard to the distribution of any software which does contain some of our proprietary information, our primary concern is the prevention of unauthorized disclosure, either intentional or



USL vs. BSDI documents



inadvertent, which might jeopardize our valuable proprietary rights in such information. [fn18] Exhibit D-11 to Baldwin Dep. T. (attached as Exhibit bb to the Forte Aff.). (See Exhibit-12 to Baldwin Dep- T- (attached as Exhibit cc to the Forte Aff.) (emphasis added)). Mr- Baldwin testified at his [REDACTED] (Baldwin Dep. T. 33-15 to 34-16). Mr. Baldwin further testified that [REDACTED] Another USL employee, Mitzi Bond, similarly testified to her understanding that [REDACTED] [fn19] ?



(Bond Dep. T. 138-14 to 138-19, 137-13 to 138-13). After consulting with Ms. Bond during a break at the deposition, USL's attorney cross-examined her, at which point she changed her testimony, now stating that it was her understanding [REDACTED] 215-24, 216-20 to 216-25, 217-6 to 217-15, 219-3 to 219-15, 224-18 to 224-25). [REDACTED] (Frasure Dep. T. 172-11 to 172-20). [REDACTED] 36-18 to 39-10, 49-20 to 50-2). Given that USL twice attempted to include a provision that any derivative work "based on" the licensed software would have to be treated as licensed software (in the 1983 System V Agreement and the 198S E-SOFT-00089 Agreement) and both times the University insisted that the language be narrowed to cover only derivative works that "contain" licensed software -- the argument that the



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intent was to cover any work "based on" the licensed software, or any work benefiting from knowledge of the licensed software, is completely unsupportable, much less the argument that anyone who has ever seen UNIX source code is "mentally contaminated" and may never write another piece of code that is not subject to USL's license. This argument is further contradicted by USL's own conduct ; [REDACTED] The testimony of USL's witnesses is contradicted by the express language of the agreements, the conduct of the parties, the testimony given by other USL witnesses, and in some cases, even their own prior testimony. Their alleged understanding is also contrary to the understanding of the representatives of the University who were involved in the negotiation of those agreements. (See Karels Aff. 18-36; McKusick Dep. T. 247-1 to 251-25). In interpreting the agreement, the Court should look to the parties' words and conduct before this litigation arose and particularly to the language of the agreement itself and not to USL's litigation construct. The agreements themselves and the conduct of both parties make it very clear that only enhancements, modifications and derivative works that contain or disclose USL proprietary information must be treated as licensed software. This interpretation is further confirmed by the confidentiality provision in the agreements. Section 7.05(a) of the E-SOFT-00089 Agreement provides that confidentiality must be maintained for the Software Products subject to the Agreement, including methods or concepts utilized therein. It does not require that confidentiality be maintained for derivative works not containing such Software Products or methods and concepts utilized therein.[fn.20] Likewise, section 5.06 of the August 1, 1981 Agreement and section 4.06 of the April 1, 1979 Agreement prohibit only disclosure of the Licensed Software (including methods or concepts utilized therein." At page 9 of the August l, 1981 Agreement and p. 7 of the April 1, 1979 Agreement, "Licensed Software" is defined to mean "the Computer Programs and the documentation, or any portions thereof, generally identified below and specifically listed in the attached schedule . . . ." As explained above, the one time when USL attempted to include derivative works prepared by the licensee in the definition of Licensed Software, the University objected to that definition, and the agreement was "clarified" by removing that language from the



USL vs. BSDI documents



definition. In its place, a new sentence was added providing instead that derivative works "that contain" licensed software had to be treated as licensed software. Thus, USL's attempt to read into the earlier agreements a provision that derivative works not containing or disclosing AT&T proprietary information are subject to the same confidentiality restrictions as the licensed software must be rejected. Since the license agreements expressly impose a duty of secrecy only for the licensed software and methods and concepts utilized therein, and the parties' understanding in this regard was repeatedly clarified to limit the license restrictions to derivative works that actually contain or disclose USL proprietary information, no duty of secrecy can be implied for derivative works that do not contain or disclose any of USL's proprietary code, methods or concepts. See Ferroline Corp. v. General Aniline & Film Corp., 207 F.2d 912, 922, 925-26 (7th Cir. 1953), cert. denied, 347 U.S. 953 (1954) (where a license agreement expressly imposes an obligation of secrecy with respect to certain information, no further confidentiality restrictions can be implied). Thus, the cases USL cites with respect to advantages obtained by familiarity with the code are inapplicable. In this case, unlike in those, the University was authorized to use licensed software in developing its own code and was prohibited from distributing it to non-licensees only if it contained USL trade secrets. 3. The Duty of Confidentiality Does Not Apply to Information That is or Becomes Generally Known. Consistent with fundamental trade secret law, the agreements governing use of the UNIX 32-V Software expressly provide that no duty of confidentiality extends to information already generally known. Section 7.05(a) of the E-SOFT-00089 Agreement states: If information relating to a SOFTWARE PRODUCT subject to this Agreement at any time becomes available without restriction to the general public by acts not attributable to LICENSEE or its employees, students or faculty members, LICENSEE's obligations under this section shall not apply to such information after such time. Section 5.07 of the August 1, 1981 Agreement and Section 4.07 of the April 1, 1979 Agreement contain similar provisions excluding information that is or becomes generally known from the University's obligation of confidentiality. Thus, there can be no claim of misappropriation based on use or disclosure of generally known information, regardless of where the numerous authors of



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Net2 obtained that information. In this case, therefore, the only issue to be determined is whether by releasing Net2 to non-licensees, the University disclosed to nonlicensees any code, method or concept that can be considered a trade secret. USL has not made and cannot make any such showing. B. USL Cannot Demonstrate That Net 2 or BSD/386 Contain any USL Trade Secrets The affidavit of USL's expert misses the point entirely since he has failed to identify any original licensed code, methods or concepts contained in Net2 that still qualified as USL trade secrets at the time of Net2's release. Although at one time portions of the code, methods and concepts may have been trade secrets, UNIX source code has now been so widely licensed and is so well-documented in the technical literature that its internal operation, algorithms, design, sequence, structure and organization, and many portions of the specific code, are generally known or readily ascertainable. Indeed in many respects it has become a standard in the industry. The Affidavits submitted by Keith Bostic, Kirk McKusick and David Kashtan demonstrate conclusively that USL has failed to establish the presence of any USL trade secrets in Net2 or BSD/386, since all the items USL relies on in this motion are disclosed in publicly available materials and are commonly known in the industry. Thus, USL's trade secret claim cannot possibly succeed. IV. USL CANNOT SHOW IRREPARABLE HARM USL also cannot meet the requirement of irreparable harm. Although USL has submitted a lengthy declaration outlining the supposed harm it will suffer if lower-priced competition is permitted, USL ignores the fact that Net2 has been distributed to hundreds of thousands of individuals and remains freely available from at least 66 different sources. At least one other company has already widely distributed a complete system based on Net2 and USL has taken no action against that company. (See Adams Aff., 9 -11). Moreover, a number of other UNIX clones which share many of the same features USL relies on in its motion, have been available for years. Although these systems are inferior to BSDI's, they disclose and make use of the same types of information BSDI is alleged to have misappropriated. (Bostic & McKusick Decl., ~ 28.1.3). Thus, in reality, USL cannot show any urgent need to put BSDI out of business pending the trial in this action.



USL vs. BSDI documents



BSDI, on the other hand, will suffer irreparable harm if the preliminary injunction USL requests is granted. BSDI will be forced out of business and will have no way to finance its defense of this lawsuit. (Adams Aff., ~ 14). USL not only seeks to keep BSDI's only product off the market, but also seeks to force BSDI to fire all of its employees based on the fact that they, like so many other experienced computer programmers, have had access at some point to UNIX source code. This is a frivolous request that, if taken seriously, would strike fear into the hearts of programmers all over the world, who would also potentially be subject to such restrictions on their employment opportunities as a result of their access to UNIX source code as students or employees. V. The Public Interest Favors Denial of the Preliminary Injunction. BSDI makes its system available to programmers who could not afford [REDACTED] for a source license from USL. USL is able to charge this exorbitant fee only because of the lack of com petition. Denial of USL's motion thus will serve the public interest by promoting competition. Denial will also prevent USL from unjustly inhibiting the employment opportunities of the thousands of computer programmers who have had access to UNIX source code. VI. EVEN IF USL COULD ESTABLISH THAT NET2 CONTAINED SOME USL PROPRIETARY INFORMATION, THE INJUNCTION IT SEEKS IS OVERLY BROAD. A. An Injunction Against the Entire BSD/386 Program Would Be Impermissibly Overbroad. Injunctive relief "must be tailored to remedy the specific harms shown," Davis v. Romney, 490 F.2d 1360, 1370 (3d Cir. 1973), and should "be no broader than necessary to provide full relief to the aggrieved plaintiff." McLendon v. Continental Can Co., 908 F.2d 1171, 1182 (3d Cir. 1990); see also Ameron. Inc. v. U.S. Army Corps of Engineers, 787 F.2d 875, 890 (3d Cir. 1986) cert. dismissed, 488 U.S. 918 (1988) (an injunction which exceeds what is required to provide plaintiff with complete relief is contrary to "jurisprudence governing injunctive remedies."); Ideal Toy Corp. v. Plawner Toy Mfg. Corp., 685 F.2d 78, 84 (3d Cir. 1982) ("The injunctive decree must be broad enough to protect the plaintiff, yet sufficiently narrow to avoid affording undeserved patent protection, and to permit the defendant to participate in activity outside the intended scope of the injunction"). This Court thus has the discretion and the responsibility to "mold its



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[preliminary injunction] decree to meet the exigencies of [the] particular case." 11 Wright & Miller, Federal Practice and Procedure: Civil 2947, at 424 (1973). USL would have this court far exceed those boundaries by granting a preliminary injunction whose sweeping effect would enjoin the entire BSD/386 product, even though USL accuses only 80 of the more than 8000 files, and points to only a few lines of similar code out of 1.5 million. Given that the Net 2 files were written separately by thousands of different authors over a period of many years, there would no basis whatsoever for finding copying as to all of them based on allegations or evidence against only one. Thus, even if USL could establish infringement as to a few lines of code, which as explained at length above it has not, there would still be no basis for preventing BSDI from using the remaining code in BSD/386: [I]f the infringing portion of defendant's work can be removed without destroying the usefulness of the remainder of the work, the whole of the work need not be enjoined. 3 Nimmer on Copyrights. supra, li.06[c], at 14-91-92; see also OrthO-Vision. Inc. v. Home Box Office, 474 F. Supp. 672, 686 n.14 (S.D.N.Y. 1979) ("When the infringing portion of a defendant's work may be removed from the remainder, injunctive relief ought extend only to the former."); Breffort v. I Had A Ball Co., 271 F. Supp. 623, 625-26 (S.D.N.Y. 1967) (excluding from injunction prohibiting performance of a copyright infringing play the independent performance of original music created for the play); Craft v. Kobler, 667 F. Supp. 120, 125 (S.D.N.Y. 1987) (noting that injunction prohibiting sale of author's infringing biography nevertheless allowed author to revise the work so as to eliminate the infringing materials); Salinger v. Random House. Inc., 811 F.2d 90, 100 (2d Cir.) (same), cert. denied, 484 U.S. 890 (1987); International Film Service Co. v. Affiliated Distributors, 283 F 229, 235 (S.D.N.Y. 1922) (allowing defendant to remake movie so as to delete those scenes which infringed plaintiff's copyright); Colonial Book Co.. Inc. v. AMSCO School Publications Inc., 41 F. Supp. 156, (S.D.N.Y. 1941) (injunction must be limited to the eleven pages of defendant's work which infringed plaintiff's copyright). Otherwise, USL would be granted a monopoly over a huge volume of material which even USL admits was not copied. In Educational Testing, plaintiffs' request for a similarly broad preliminary injunction was rejected by this circuit. See Educational Testing, 793 F.2d 533, 545 (3d Cir. 1986). The plaintiff in Educational Testing, claiming that defendant infringed its copyright



USL vs. BSDI documents



in certain test materials, sought to enjoin defendants' "use of information obtained from" plaintiff's copyrighted tests and from "adapting" any of plaintiffs' materials. Id. The court noted that such an injunction would prohibit legitimate uses of plaintiffs' work as well as legitimate original works by defendants. See also 3 Nimmer on Copyright, supra, 14.06[C], at 14-92-14-93. B. Plaintiff is Misusing its Copyright by Attempting to Enjoin All Or BSD/386. A misuse of copyright protection is found when a copyright holder attempts to utilize his copyright to gain protection beyond that which copyright law allows. When analyzing a copyright holder's conduct for misuse, the court does not look to the validity of the copyright, but rather to the manner in which the copyright is being used. qad. inc. v. ALN Associates. Inc., 770 F. Supp. 1261, 1266 n.14 (N.D. Ill. 1991). As the court noted in qad, "[n]o party can use the limited grant that a copyright confers to gain control of components over which it has no such right." Id. at 1266 The plaintiff in qad asserted copyright infringement of its computer software program, alleging that its entire program, of which it claimed defendant's was a derivative, was original with plaintiff. When it became apparent that, in fact, much of plaintiff's program was itself copied from yet another program, the court denied plaintiff any relief even with regard to those portions of defendant's program which were infringing. The court noted that "[w]hen a copyright holder attempts to use legal proceedings to protect an improper extension of a copyright, the court may refuse to enforce the copyright." See also Lasercomb America. Inc. v. Reynolds, 911 F.2d 970, 976-78 (4th Cir. 1990), aff'd without op., 961 F.2d 211 (1992) (plaintiff was guilty of misuse of copyright where it licensed copyrighted program on the condition that licensee refrain for 99 years from creating a competing program). Plaintiffs in this action likewise are attempting to use their alleged copyright to enjoin BSDI's use not only of those programs accused of-being infringing, but of thousands of other files, consisting of hundreds of computer programs, that USL does not even accuse. In addition, USL improperly seeks to enjoin the use of standard file names and mnemonics that are protected neither by copyright nor trade secret law. For all of the reasons outlined above, plaintiffs cannot gain the expansive preliminary injunction that they seek in this action. Although no injunction is warranted, to the extent the Court grants any injunction, it must be narrowly tailored to the few lines of code



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USL relies upon. Conclusion Both USL's trade secret claim and its copyright infringement claim are fundamentally flawed. One because the information allegedly misappropriated is not in fact secret. And the other because USL has no valid copyright in 32V and can show no substantial copying of protectible expression. A grant of USL's motion will put BSDI out of business permanently and will prevent it from having the means to defend itself in this action. A denial of USL's motion will simply maintain the status quo, since BSDI has been selling BSD/386 for over twelve months and the Net2 code is available from dozens of other sources. For all the foregoing reasons, BSDI respectfully requests that USL's motion for preliminary injunction be denied in its entirety. Respectfully submitted, SAIBER SCHLESINGER SATZ & GOLDSTEIN Attorney f or Defendant Berkeley Software ~ Design, Inc. JAMES H. FORTE A Member of the Firm Dated: January 8, 1992 -56-



USL vs. BSDI documents



JAMES E. HOLST JOHN F. LUNDBERG MARY E. MacDONALD University of California 300 Lakeside Drive, 7th Floor Oakland, California 94612-3565 Telephone: (510) 987-9800 JOEL LINZNER [JL 6426] CARLA J. SHAPREAU [CJS 2689] CROSBY, HEAFEY, ROACH & MAY Professional Corporation 1999 Harrison Street Oakland, California 94612 Telephone: (510) 763-2000 FREDERICK B. POLAK [FBP 3095] POST, POLAK & GOODSELL 280 Corporate Center 65 Livingston Avenue Roseland, New Jersey 07068 Telephone: (201) 994-1100 Attorneys for Defendant The Regents of the University of California UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY UNIX SYSTEM LABORATORIES, INC., Plaintiff, (DRD) -againstBERKELEY SOFTWARE DESIGN, INC., and the Following lndividuals in their Collective Capacity as THE REGENTS OF THE UNIVERSITY OF CALIFORNIA: PETE WILSON, LEO T. MCCARTHY, WILLIE L. BROWN, JR., et al., Defendants. Civil Action No.92-1667 SECOND DECLARATION OF DR. KIRK MCKUSICK IN SUPPORT OF



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THE REGENTS OF THE UNIVERSITY OF CALIFORNIA'S AMICUS BRIEF RE MOTION FOR PRELIMINARY INJUNCTION Date: 1-22-93 Time: 10:00 a.m. Court: Honorable Dickinson R. Debevoise



1. Introduction I, Dr. Marshall Kirk McKusick, am the Research Computer Scientist for the University of California at Berkeley Computer Systems Research Group("CSRG"), in charge of the development of the Berkeley Software Distribution("BSD''). I submit this sur-reply declaration on behalf of the Defendant, The Regents of the University Of California (the "Regents''). 2. Clarification of Deposition USL has taken a few pages of my deposition testimony and attempted to mischaracterize that testimony. 3. 32V Code in Net2 Kernel Files USL refers to my deposition for the proposition that AT&T's "actual code" was included in the Net2 release and that University officials were so advised. That is true as far as it goes, but it does not reveal the insignificant, indeed trivial, extent to which USL code appears in Net2. Keith Bostic and I have reviewed Net2 in detail since this lawsuit began (before the deposition was taken), spending hundreds of hours comparing it to 32V. Based on this exhaustive search I have found only 56 lines of code in five kernel files that appear to match lines of code in 32V. These 56 lines are out of the total of 539 source files and 230,995 lines of source code in the Net2 kernel. The files in which I have found matches are discussed below. 2.1.1. 32V: sys/dsort.c, Net2: ufs/ufs_disksubr.c There are 358 lines of text in the Net2 ufs/disksubr.c file. Conservatively, fourteen of these 358 lines of source code in ufs/disksubr.c are the same as lines insys/dsort.c from 32V (including one line that is composed solely of the C directive 2 "return"). The fourteen matching lines implement trivial listinsertion code that could be easily replaced with original code in much less than an hour.



USL vs. BSDI documents



2.1.2. 32V: sys/iget.c, Net2: ufs/ufs_ inode.c There are 697 lines of text in the Net2 ufs/ufs inode.c file. Being conservative,nine of these 697 lines of source code in ufs/ufs inode.c are the same as lines insys/iget.c from 32V. Of the nine lines, most of them cannot be changed, as they are dependent on header file constants and cannot be written any other way. 2.1.3. 32V: sys/prf.c, Net2: kern/subr_prf.c There are 592 lines of text in the Net2 kern/subr_prf.c file. Generously, four ofthe 592 lines of source code in kern/subr_prf.c are the same as lines in sys/prf.c from32V. The four lines in question are completely insignificant to the whole of the kernel, and could be written another way in well under an hour. 2.1.4. 32V: sys/sys1.c, Net2: kern/kern exit.c There are 403 lines of text in the Net2 kern/kern exit.c file. Only three of the403 lines of source code in kern/kern exit.c are the same as lines in sys/sys1.c. It is unlikely that these three lines could be implemented in any other way. 2.1.5. 32V: sys/rdwri.c and sys/sys4.c, Net2: ufs/ufs_vnops.c There are 1863 lines of text in the Net2 ufs/ufs_vnops.c file. Being generous, 26 of these 1863 lines of text in ufs/ufs_vnops.c match code in 32V. Net2 is clearly an enhanced implementation of the 32V functionality. It would take less than two hours to reimplement these lines of text with completely original code. 2.2. 32V Code in Net2 Utility and Library Files I have found a total of 130 lines of text from 9 files in the utilities and libraries that appear to match lines of text in 32V. This is out of the total of 4,176 source files and 1,288,072 lines of source code in the Net2 utilities and libraries. As with the matches in the kernel, the matching lines were an insignificant number of lines not only from the total Net2 distribution but also compared to the particular file in which they appear; their importance to the utility as a whole was similarly trivial. This does not include the cpio utility, as it is a special case of source code which USL requested that we add to the Berkeley distributions (see section 6.2 of our Second Joint Declaration). The entire cpio utility (1,494 lines of text) is identical to AT&Tproprietary source code.



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2.3. Significance of Pseudo-Code References in my deposition testimony to the use of pseudo code in determining whether code could be released in Net2 did not concern the release in Net2 ofcode identical to that in 32V. Instead it addressed the determination of whether algorithms that appeared in 32V could be released in Net2. All code in Net2 implementing an algorithm is completely new and original work. However, if the original Net2 code implemented the same algorithm as one used in 32V, we did not release the corresponding Net2 code unless the algorithm was described in the public literature, because it could have potentially divulged an AT&T trade secret. As computer scientists, we believed that if an algorithm (such as bread) was described in the public literature in enough detail (through pseudo code or otherwise) that its implementation could only be done with one reasonable coding and that coding happened to match a few lines of 32V code, that we were free to include such code in Net2. However, the University chose to take a more conservative approach, *so the bodies of such routines were deleted from the Net2 distribution in all instances that we were aware of them.* In my deposition, Mr. Graff also asked me about the buffer cache routine in the vfs_bio.c file. This file is an example where the routines had their body of code deleted despite the fact that they were well defined by pseudo code in the literature. *As far as I am aware, Net2 source files do not contain any 32V source code because 32V code was described in published pseudo code.* 2.4. The Footnote Hypothesis Regarding my comment at my deposition about copying code as one might do in a footnote to a legal document, the transcript reveals I was merely providing a hypothetical example about how one develops software. In reviewing code for the Net2 release, we checked for code from 32V that may have been introduced into Net2 in this way. Where we found examples of 32V code, we either replaced it or deleted the file from the Net2 distribution. As discussed above, a few lines slipped through. However, the 186 lines of matching code is remarkably small and totally insignificant when considering the 1.7 million lines code included in Net2. 3. The Reply Memorandum Accusation In footnote 5 of USL's Reply Memorandum, I am accused that I "provided the body of that file [bio.c] to BSDI for use in BSD/386 while acting in [my] dual role asa director of BSDI and a research



USL vs. BSDI documents



assistant to the University." This claim is completely absurd. I did not give the bio.c file from 32V to anyone at BSDI, indeed it would have done them little good, as it works completely differently than the code implementing that interface in Net2. I did work cooperatively with BSDI, as I do with many other companies to improve their implementation of this interface using my knowledge of Net2, new code within their product, and pseudo code available in the public literature. In exchange for my help, they agreed to contribute the resulting code (based on my input and their coding, testing, and debugging) to the University for unrestricted redistribution. 4. Conclusion At the time that Net2 was released, I was not aware of the trivial amount of matching code described above. I was aware of and notified the University of the presence of the cpio utility on Net2. Further, I was aware of the similarities between some of the header files defining the interfaces on Net2 and 32V. The need to include these functional interfaces is described at section 28.3 of the First Joint Declaration that I prepared with Keith Bostic. I am not now aware, nor was I aware during the discussions or preparation of the release of Net2 of any other commonalities between 32V and Net2.



I declare under penalty of perjury that the forgoing is true and correct. Executed in Berkeley, California this 19th day of January 1993. Marshall Kirk McKusick



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JAMES E. HOLST JOHN F. LUNDBERG MARY E. MacDONALD University of California 300 Lakeside Drive, 7th Floor Oakland, California 94612-3565 Telephone: (510) 987-9800 JOEL LINZNER [JL 6426] CARLA J. SHAPREAU [CJS 2689] CROSBY, HEAFEY, ROACH & MAY Professional Corporation 1999 Harrison Street Oakland, California 94612 Telephone: (510) 763-2000 FREDERICK B. POLAK [FBP 3095] POST, POLAK & GOODSELL 280 Corporate Center 65 Livingston Avenue Roseland, New Jersey 07068 Telephone: (201) 994-1100 Attorneys for Defendant The Regents of the University of California UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY UNIX SYSTEM LABORATORIES, INC., Plaintiff, (DRD) -againstBERKELEY SOFTWARE DESIGN, INC., and the Following lndividuals in their Collective Capacity as THE REGENTS OF THE UNIVERSITY OF CALIFORNIA: PETE WILSON, LEO T. MCCARTHY, WILLIE L. BROWN, JR., et al., Defendants. Civil Action No.92-1667 SUPPLEMENTAL AMICUS BRIEF BY DEFENDANTS THE REGENTS OF



USL vs. BSDI documents



THE UNIVERSITY OF CALIFORNIA RE PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION Date: 1-22-93 Time: 10:00 a.m. Court: Honorable Dickinson R. Debevoise TABLE OF CONTENTS I INTRODUCTION II ARGUMENT A. NET2 IS NOT AN INFRINGING WORK 1. THE UNIVERSITY CANNOT INFRINGE ITS OWN COPYRIGHT B. DE MINIMIS "LITERAL COPYING" DOES NOT PROVE INFRINGEMENT C. USL CANNOT DISTINGUISH ATARI GAMES AND COMPUTER ASSOCIATES D. USL FORFEITED ITS COPYRIGHT IN 32V 1. CONGRESS' DEFINITION OF PUBLICATION UNDER THE 1976 COPYRIGHT ACT DOES NOT ALTER USL'S FORFEITURE OF ITS COPYRIGHT IN 32V 2. USL DISTRIBUTED 32V WELL BEYOND A SELECTED GROUP 3. USL DID NOT DISTRIBUTE 32V FOR A LIMITED PURPOSE III CONCLUSION



TABLE OF AUTHORITIES



Apple Computer v. Microsoft Corp., 799 F.Supp. 1006 (N.D. Cal. 1992) 8



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Atari Games Corp. v. Nintendo of America, Inc., ___ F.2d ___, 24 U.S.P.Q.2d 1015 (Fed. Cir. 1992) 8,9 Brown Bag Software v. Symantec, 960 F.2d 1465 (9th Cir. 1992) 8 Computer Assoc. International, Inc. v. Altai, Inc., ___ F.2d ___, 1992, 23 U.S.P.Q.2d 1241 (2nd Cir. 1992) 8 Feder v. Videotrip Corp., 697 F.Supp. 1165 (D. Colo. 1988) 7 Harper & Row Publisher's, Inc. v. The Nation, 471 U.S. 539 (1985) 8 Koontz v. Jaffarian, 787 F.2d 906 (4th Cir. 1986) 11 Lotus Development Corp. v. Borland International, Inc., 799 F.Supp. 203 (D. Mass. 1992) 8 Narell v. Freeman, 872 F.2d 907 (9th Cir. 1989) 7 National Broadcasting Co., Inc. v. Sonneborn, 630 F.Supp. 524 (D. Conn. 1985) 14 Paramount Pictures Corp. v. Rubinowitz, 271 U.S.P.Q. 48 (E.D.N.Y. 1981) 14 PRC Realty Systems v. National Ass'n of Realtors 766 F.Supp. 453 (E.D. Va. 1991) rev'd in part without opinion, 972 F.2d 341 (1992) 14 R.L. Polk & Co.v. Musser, 105 F.Supp. 351 (E.D. Penn. 1952) 7 Rokeach v. Avco Embassy Pictures Corp., 1097 U.S.P.Q. 156 (S.D.N.Y. 1977) 7 SAS Institute, Inc. v. S&H Computer Systems, Inc., 605 F.Supp. 816 (M.D. Tenn. 1985) Sega Enterprises, Ltd. v. Accolade, Inc., ___ F.2d ___, slip op. at 41 (9th Cir. 1993) 9



USL vs. BSDI documents



Stewart v. Abend, 495 U.S. 207 (1990) quoting Russell v. Price, 612 F.2d 1123 (9th Cir. 1979), cert. denied, 446 U.S. 952 (1980) 12 Universal Athletic Sales Co. v. Salkeld, 511 F.2d 904 (3rd Cir. 1975) 6 Werlin v. Reader's Digest Assoc., Inc., 529 F.Supp. 451 (S.D.N.Y. 1981) 7 White v. Kimmell, 193 F.2d 744 (9th Cir.1952) 13



Page Statutes 17 U.S.C. Section 301 3 17 U.S.C. Section 405 10,13 1976 Copyright Act 10,13 H.R. Rep. No. 1476 (1976) 13,14 Publications Goldstein, The Law of Copyright 12,13 Nimmer, Nimmer on Copyright 11,13



I. INTRODUCTION USL has made no showing of either quantitative or qualitative similarity between its 32V code and the University's Net2 software. Nonetheless, USL asks this Court to avoid a "morass of issues" and, instead, summarily to condemn 4,176 Net2 source code files en masse and put out of business one independent company that plans to use them. Essentially, USL would have this Court skip the trial and proceed directly with the sentence. In its haste to rush this Court to an erroneous judgment, USL hopes to cover up a gaping hole in its copyright claim by virtually ignoring it (apparently hoping the Court will do likewise), i.e., USL has ceded to the University the copyright in all modifications. improvements



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and enhancements to 32V developed by the University.Thus, even if one assumes that USL holds a valid copyright in 32V, USL cannot claim that Net2 is an infringing derivative work based upon 32V because -- by agreement with AT&T -- the University owns the copyright in that derivative work. As a result of AT&T's grant of ownership to the University of all modifications, enhancements and improvements to 32V, USL cannot complain that the University's distribution of its Net2 software infringes any copyright USL may hold in 32V. While USL may wish to complain that the University has breached an agreement not to distribute to non-USL licensees any University-owned code that "contains" old 32V code, that is a matter of contract law. As the Second Joint Declaration of Dr. McKusick and Keith Bostic ("Second Joint Decl.") and the Second Declaration of Dr. McKusick ("Second McKusick Decl.") explain, there has been no substantial breach of that commitment.



USL would lead this Court to believe that Dr. McKusick provided the equivalent of a "smoking gun" with his deposition testimony on the subject of whether Net2 contains 32V code. In reality, however, McKusick's testimony was as explosive as a "pop gun." As Dr. McKusick states in his second declaration, his testimony was intended to explain the University's treatment of AT&T 32V code for which a trade secret possibly could have been asserted: before the University would release code that contained a reimplementation of a 32V algorithm, the CSRG staff looked forpublic explications of the algorithm in question; if an algorithm was publicly describedin pseudo-code, the University included the algorithm (implemented by improved codedeveloped by the University) in the Net2 release. Second McKusick Decl., at Para. 2.3.Header files -- which were essential to ensure the compatibility of Net2 withapplications, programs and peripherals -- were also included in Net2. Id. at Para. 4. Itis a gross misuse of the McKusick deposition to represent it as an admission ofwidespread incorporation of 32V code in Net2 because -- in fact -- there is virtuallyno 32V code in the Net2 source files. Id. at Para. 2. A painstaking review of the Net2 source code files has uncovered only 14 files (out of the total 4,176 Net2 source files) which contain any 32V code in them. As explained in the Second McKusick Declaration, those files collectively contain only 186 lines of common code (out of the 1.5 million lines of source code in Net2). Id.at 1 2. In the kernel -- which USL concedes is the core of the system -- only 56 lines of source code from Net2 (which has



USL vs. BSDI documents



230,995 lines of source code in the kernel)match lines from the 14,293 lines of source code in the 32V kernel. Id. at Para 1. After spending hundreds of hours searching for textual matches, USL's paid expert could only find and report on two source files in Net2 that actually contain 32V code which he considered significant. The first, Net2's "ufs_disksubr.c" file contained 14 lines of code (out of 358 total lines) that also appeared in 32V. Id. at Para. 2.1.1. The second example belatedly cited by Dr. Carson in his Reply Affidavit, is the "cpio.c" file: this file was included in Net2 by the University at the specific request of AT&T. See Second Joint Decl., at 1 6.2. But even if it were not estopped to complain about "cpio.c," the inclusion of that file and the 14 lines from "ufs_disk.subr.c" -out of the total 1.5 million lines of source code in Net2 -- hardly amounts to either copyright infringement or a material breach of the agreement not to distribute the University-owned enhancements that "contained" 32V code. In any event, USL's judicial admissions confirm that its claimed copyright in 32V has been waived. DeFazio Exhibit F establishes that 32V was created in 1978. USL's moving papers admitted that 32V was published in object code. But -- as the certificate attests -the copyright in 32V was not registered until 1 991, long after the five year grace period expired. Although USL may claim copyright protection for its current version of Unix (SVR4), any copyright in the long-obsolete 32V code was forfeited years ago. USL's trade secret claim (at least on this record) is wholly specious because no specific trade secret has been identified by USL. First, insofar as USL would like to claim trade secret protection for,the 32V source code in its entirety, the claim is surely preempted by the Copyright Act. See 17 U.S.C. 301(a). Indeed, the bar of Section 301 (a) is so clear that USL makes no effort to dispute the point. Second, to the extent USL's expert claims trade secret protection for specific file names or values, Messrs. McKusick and Bostic previously demonstrated the documentation of those "secrets" in the public domain. USL's predecessor-- AT&T-- had agreed that the University need not keep secret "any information or technical data relating to the licensed software which is now available to the general public or which later becomes available to the general public" See DeFazio Decl., Exh. B, Para. 4.07. Even if the law recognized a claim where the alleged trade secrets were publicly documented (which it does not) it is far too late for USL to renege upon the release granted to the University in 1 4.07 of the 32V license.



- 144 -



Finally, the equities in no way favor USL. As set out in detail in the University's amicus brief and supporting declarations, USL has incorporated huge portions of the University's code into its current SVR4 Unix operating system. USL does not deny that it pays the University nothing to use the original code and ~ functionality developed by the University, yet it charges over $200,000 per license for an operating system that is approximately 50% University code. A court sitting in equity cannot condemn a public university which has so freely bestowed its gifts upon a private corporation simply because it also has made them available for other members of the public to use. II. ARGUMENT A. NET2 IS NOT AN INFRINGING WORK USL would have the Court believe that McKusick's testimony that Net2 contains some 32V code -- regardless of how slight and insignificant that code maybe -- is some kind of "trump" card which dictates "the end of the case." USL should not be so smug: (1) the University's copyright in the derivative Net2 code is an absolute defense to USL's copyright claims; (2) USL has made no showing that the trivial (and accidental) duplication of 186 lines of 32V source code sprinkled among the 1.5 million lines of Net2 source code is either quantitatively or qualitatively substantial and its default on this critical issue renders it impossible for the Court to find infringement of any protectible expression in 32V (even if the University were not privileged to create derivative works). 1. The University Cannot Infringe Its Own Copyright USL's copyright claim proceeds upon an erroneous syllogism: i.e., (1)USL owns the copyright in 32V [fn.1]; (2) Net2 is a derivative work based upon 32V; therefore, (3) Net2 (or any program incorporating Net2) is an infringing work. The flaw in USL's reasoning was hidden from the Court in USL's opening papers but revealed by the University's amicus brief and supporting evidence. Although parts of Net2 may be derivative programs which enhanced and improved 32V, USL expressly granted the University the right to create such derivative works and -- furthermore-- granted the University ownership of all such derivative works. Accordingly, as the copyright certificates attached as Exhibits G and H to the DeFazio Declaration attest,the University holds the copyright in the BSD code (of which Net2 is a subset).



USL vs. BSDI documents



USL inexcusably failed to bring to the Court's attention the numerous written, signed agreements between the parties in which AT&T surrendered any claim to joint ownership of the derivative BSD code: "AT&T does not assert any ownership interest in any modification or derivative work made by [the University].... " Karels Decl., Exh. A *** "AT&T-IS claims no ownership interest in any portion of such modification or derivative work that is not part of a [AT&T] Software Product." Shapreau Decl., Exh. G. *** "The Regents of the University of California (the University) is the proprietor and owner of enhancements and additions to 32V ... AT&T shall have no right, title or interest in or to such proprietary software...." Towers Decl., Exh. A. [fn.1] As the Court is well aware, the issue of whether the copyright in 32V has been forfeited is subject to much debate. For purposes of this section of the argument, however, the Court may assume that USL holds a valid 32V copyright. The University supplied the omissions in USL's half-told story by placing this critical evidence before the Court. Although USL dismisses these contracts as mere "wasted paper," the University trusts the Court sees their significance. Net2 cannot be an infringing work because the creation of the derivative code in Net2 was expressly authorized by AT&T and ownership of that derivative code was expressly given by AT&T to the University. Significantly, USL makes no effort to dispute the University's ownership of the copyright in the derivative code in Net2. For this obvious reason, this case is far different from cases such as SAS Institute, Inc. v. S&H Computer Systems. Inc., 605 F. Supp. 816 (M.D. Tenn. 1985) where the defendant had no right to create a derivative work, much less ownership of the copyright in such derivative work. Essentially, USL asks this Court to find the University has infringed its own copyright; that is a legal impossibility which the Court should not pause long to consider. [fn2] [fn2] The question of whether the Net2 software contains any significant portion of 27 | 32V code is a "red herring" in the context



- 146 -



of USL's copyright claim because the University owns all of the derivative code it developed, including those 14 files (out of 4,176 Net2 files) which contain a smattering of original 32V code. USL may attempt to seek remedies under contract law for any material breach of the University's agreement not to distribute University-owned derivative programs which "contain" 32V code but USL has no copyright claim against Net2. B. DE MINIMIS "LITERAL COPYING" DOES NOT PROVE INFRINGEMENT In Universal Athletic Sales Co. v. Salkeld, 511 F.2d 904 (3rd Cir. 1975), the Third Circuit recognized the rule for cases (such as this one) of de minimis similarity:"[I]f the points of dissimilarity not only exceed the points of similarity, but indicate that the remaining points of similarity are (within the context of plaintiff's work) of minimal importance either quantitatively or qualitatively then no infringement results."511 F.2d at 909 n.4. Reversing a preliminary injunction, the Court of Appeals recognized that mere copying is not enough to prove infringement: "substantial similarity to show that the original work has been copied is not the same as substantial similarity to prove infringement." 511 F.2d at 911. USL must prove similarities between 32V and Net2 that are quantitatively or qualitatively substantial. Thus, USL's assertion that proof of trivial copying "establishes literal copyright infringement" and "renders unnecessary the substantial similarity analysis" is plain wrong. See Narell v. Freeman, 872 F.2d 907, 910 (9th Cir. 1989) ("A finding that a defendant copied a plaintiff's work, without application of a substantial similarity analysis, has been made only when the defendant has engaged in virtual duplication of a plaintiff's entire work.") USL has established neither quantitative nor qualitative substantiality on this motion. First, the 14 lines of common source code, the few common file names and two common comments are quantitatively de minimis. See Joint Decl., at 11 13, 28,39, and 47; Second Joint Decl., at 114, 6; Second McKusick Decl., at 12. Second,USL has made no effort to explain why -- qualitatively -- the 14 lines of common code (out of 1.5 million) or two comments (out of 33,350) are so important to either it or the University's work as to justify a finding of infringement. The only evidence before this Court is that the common code is insignificant and easily could be replaced and that the comments are automatically omitted from the program once it is compiled. Second Joint Decl., at 11 6.1, 6.2. This trivial, fragmented (and accidental, Second McKusick Decl., at 1 5) duplication of code/comments is insufficient to establish infringement. [fn3]



USL vs. BSDI documents



[fn3] Compare, Feder v. Videotrip Corp., 697 F. Supp. 1165, 1176 (D. Colo. 1988) ("If, however, the similarity is only as to non-essential matters, then a finding of no substantial similarity should result... thus the Courts have applied a de minimis standard in ruling that some similarities, while suspect, may be too insignificant to arise to the level of 'substantial."'); Werlin v. Reader's Digest Assoc., Inc., 528 F. Supp.464 (S.D.N.Y. 1981) ("the Court finds the literal duplication that occurred hereto be so fragmented as to be de minimis, and accordingly declines to rely on this similarity to find copyright infringement."); Rokeach v. Avco Embassy Pictures Corp., 1097 U.S.P.Q. 156, 161 (S.D.N.Y. 1977) (one hundred words out of 70,000 a de minimis taking); R.L. Polk & Co. v. Musser, 105 F. Supp. 351, 353 (E.D. Penn. 1952)(less than one-half of one percent of a work being copied "was trivial and inconsequential").USL's citation of Harper & Row Publisher's. Inc. v. The Nation, 471U.S. 539 (1985) is off point because the misappropriated text was qualitatively the most important part of plaintiff's work. C. USL CANNOT DISTINGUISH ATARI GAMES AND COMPUTER ASSOCIATES USL misuses the opinion in Lotus Development Corp. v. Borland International Inc., 799 F. Supp. 203 (D. Mass. 1992). That case addresses duplication of a "user interface," i.e., the screen display generated by a program and the keystrokes used to operate it. Borland argued that its emulation of Lotus' screen display, menu structure and keystroke sequences were justified because people were familiar with Lotus 1-2-3, and therefore it had become a "standard." This case is far different. It does not involve mere user interfaces with which the public has become comfortable; this case deals with technical requirements. If certain header files, symbols or function names are not included in a system, that system simply will not work with certain applications programs or peripherals. See Joint Decl., at 1 28.3, 1 47. Thus, unlike Lotus, this case falls squarely within the description of the unprotected elements of a computer program set forth only a few months ago by the Federal Circuit: the unprotected elements of a computer program include "expression dictated by external factors (like the computer's mechanical specifications, compatibility with other programs, and demands of the industry served by the program) ..." Atari Games Corp. v. Nintendo of America. Inc., F.2d 24 U.S.P.Q.2d 1015, 1020 (Fed. Cir. 1992). See also Computer Assoc. International, Inc. v. Altai. Inc., __F.2d ___, 1992, 23 U.S.P.Q.2d 1241, 1252-3 (2nd Cir. 1992); Brown Bag



- 148 -



Software v. Symantec, 960 F.2d 1465, 1475-6 (9th Cir. 1992); Apple Computer v. Microsoft Corp., 799 F.Supp. 1006, 1020-21 (N.D. Cal. 1992). USL's effort to distinguish Atari Games and Computer Assoc. is off base: contrary to USL's reading of those cases, they do not turn on when the infringed program was created. Indeed, the CONTU Report explicitly acknowledges that an original program may lose copyright protection under circumstances such as those presented here. "[C]omputer programs are, in essence, utilitarian articles - articles that accomplish tasks. As such they contain many logical, structural, and visual display elements that are dictated by the function to be performed, by considerations of efficiency, or by external factors such as compatibility requirements and industry demands. [citing Computer Assoc.] In some circumstances, even the exact set of commands used by the programmer is deemed functional rather than creative for purposes of copyright. When specific instructions. even though previously copyrighted. are the only and essential means of accomplishing a given task. their later use by another will not amount to infringement." Sega Enterprises. Ltd. v. Accolade, Inc., ___F.2d___, slip op. at 41. (9th Cir. 1993) (as amended), quoting CONTU Report at 20. All of the recent cases and the legislative history as set forth in the CONTU Report recognize that when the copyright holder's program was created is not important; what is important is whether the code in the accused work is "dictated by external factors." As explained in detail in the First Joint Declaration and the Second Joint Declaration, the header file names and symbols that are common to 32V and Net2 are required by the need for "compatibility with other programs and demands of the industry served by the program." Atari Games, supra. As such, they are not protectible by USL's claimed copyright in 32V.



D. USL FORFEITED ITS COPYRIGHT IN 32V USL forfeited its copyright in 32V when it globally published 32V without a copyright notice and failed to timely cure the notice defect. USL's use of the limited publication argument to escape the consequences of its conduct stretches the bounds of the limited publication doctrine beyond all reasonable parameters in light of USL's admissions that:



USL vs. BSDI documents



32V was created in 1978 (DeFazio Decl., Exh. F); 32V was distributed in source and object code to thousands of licensees around the world (Exh. M and 0 to Forte Aff.; Greene Depo., at 82:20; 83:7-9 attached to the Shapreau Decl.); USL published 32V in object code (USL's Moving Papers at 11 and 27 and Reply at page 5 footnote 10 and page 10, first bullet);[fn4] USL failed to affix copyright notices to its 32V UNIX operating system in both source and object code until 1984 (Pfeffer Decl.,at Paras 4-5;[fn5] see also McKusick Decl., at Para. 5 and Joint Decl., at Para 28.4; Exhibit A attached to the Second Shapreau Decl. and Shapreau Decl., at 12; compare Exhibit A attached to the Second Karels Decl. and Karels Decl., at Para. 2)[fn6] and USL failed to register 32V until 14 years after it first published this work. DeFazio Aff., Exh. F. USL is mistaken when it claims that the University has not looked in the proper place for USL's missing copyright notices. The University has looked at a copy of the container for the source code version of 32V and found no copyright notice affixed. Exhibit A, attached to the Second Shapreau Decl.; see also McKusick Decl., at 1 5. In addition, the header files contained in the object code version of 32V have likewise



[fn4] USL does not dispute the University's legal argument and authority that the source and object code for 32V are but one work. [fn5] USL's Mr. Pfeffer has admitted that: No copyright notice was included in those [object code] files in order to avoid any possible implication that AT&T had "published" these files so as to deprive them of their trade secret status. Pfeffer Decl., at Para. 4. In 1984,when AT&T initiated its general purpose computer business, it decided that the binary code which it was planning to provide with such computers should bear a copyright notice in the name of AT&T." Id. at Para. 5. [fn6] USL erroneously contends in footnote 10 of its Reply that because the copyright notice requirements have been removed from



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post-Berne Convention Implementation Act works, that USL should be relieved of the statutory requirements of the 1976 Copyright Act. If Congress had intended the Berne Convention Implementation Act to be retroactive, it would have provided for such a result. Instead, Congress specifically required that copyright notice be affixed to "copies...publicly distributed ...before the effective date of the Berne Convention Implementation Act of 1988...." 17 U.S.C. Section 405(a). SUPPLEMENTAL AMICUS BRIEF BY DEFENDANT THE REGENTS 10 entered the public domain as a result of publication without copyright notice. Joint Decl., at 1 28.4; see also Second Karels Decl., and Exhibit A attached thereto.i Moreover, USL's reliance on Exhibits 1-4 attached to the Weitz Reply Aff., as evidence that copyright notices were properly affixed to its 32V code is nothing short of ridiculous, in light of the fact that Exhibits 1-4 are not versions of 32V and are, therefore, irrelevant.~ Moreover, Sun Microsystems copyright notices, affixed to Exhibits 1-2, did not transform 32V, which had already entered the public domain, into a properly copyrighted work.9 USL incorrectly claims at footnote 21 that a copyright notice in a derivative work is "deemed notice of the copyright in all underlying works." As Nimmer has pointed out: if the underlying work itself had previously been published without a copyright notice, then a derivative work incorporating such preexisting work cannot, under any circumstances regardless of the notice used,serve to revive the pre-existing work, which had theretofore entered the public domain. Nimmer, Nimmer On Copyright, 7.12[C], at 7-100.1(1992) . [fn7] USL's citation to Koontz v. Jaffarian, 787 F.2d 906, 909-910 (4th Cir. 1986) does not support its copyright notice argument because even if USL had provided reasonable copyright notice for its code within its 32V manual (which it did not), no notice existed whatsoever for the multitude of copies of 32V code distributed through Western Electric and AT&T's source code exchange program, in which copies of 32V were exchanged without a manual. Moreover, in the case of a time-sharing system such as 32V, it is highly doubtful whether a copyright notice affixed to a manual or to packaging would give reasonable notice of the claim of copyright under 17 U.S.C. Section 401(c); see also Nimmer, Nimmer on Copyright, 7.10[A][1], at 7-69 (1992)..



USL vs. BSDI documents



[fn8] The University does not contend that USL's forfeiture of its copyright in the antiquated, outdated 32V version of the Unix operating system constitutes a forfeiture of USL's copyright in subsequent versions of the UNIX operating system which contain new code. Therefore, copyright notices contained in System III and V code are not germane to this litigation [fn9] The University's copy of the copyright notice purportedly affixed to Exhibit 4 attached to the Weitz Aff. is not legible and Exhibit 3 does not appear to contain any copyright notice.



Moreover, if USL had carefully read Stewart v. Abend, 495 U.S. 207 (1990), cited by USL, it would have discovered that the case involved the issue of whether the owner of a derivative work infringed the rights of a successor owner of the preexisting work by continued distribution and publication of the derivative work during the renewal term of the pre-existing work. In fact the Supreme Court quoted the 'well-established doctrine that a derivative copyright protects only the new material contained in the derivative work, not the matter derived from the underlying work.' Stewart v. Abend 495 U.S. 207, 223 (1990) quoting, Russell v. Price, 612 F.2d 1123, 1128 (9th Cir. 1979), cert denied, 446 U.S. 952 (1980). In fact, the Copyright Act itself addresses this very issue in Section 103(b) which provides: The copyright in a compilation or derivative work extends only to the material contributed by the author of such work, as distinguished from the preexisting material employed in the work, and does not imply any exclusive right in the preexisting material. The copyright in such work is independent of, and does not affect or enlarge the scope, duration, ownership, or subsistence of, any copyright protection in the preexisting material. 17 U.S.C. Section 103(b). Accordingly, USL's widespread distribution of 32V without a copyright notice has injected 32V into the public domain. 1. Congress' Definition of Publication Under The 1976 Copyright Act Does Not Alter USL's Forfeiture of its Copyright in 32V USL mistakenly contends that under the 1976 Copyright Act its



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"contractual restrictions [alone] negate any requirement of notice" (Moving Papers, at 6 and 7). USL's incredible contention that the "selected group" requirement no longer exists under the 1976 Act is unsupported by the Copyright Act, cases construing it and the commentators. [fn10] [fn10] USL suggests that cases which continue to apply the three part test promulgated in Kimmell are "patently inconsistent with the intent of Congress and should not be followed." Moving Papers at 8. USL does not cite one single case to support its rather unique legal position. Instead, USL cites a "work for hire" case hoping that will do. For example, Goldstein, in The Law of Copyright, analyzes the House Report discussion of limited publication in the 1976 Act, which characterizes the "public" as "persons under no explicit or implicit restrictions with respect. to disclosure of [a work's] contents," [fn11] in which Goldstein states: Congress arguably intended to drop the first element of the test employed under the 1909 Act [the selected group requirement]. But the reference to restrictions on "disclosure," rather than to restrictions on "copying" as required under the 1909 Act, suggests that Congress probably contemplated distribution to a limited group beyond which thework would not be disclosed. Courts have adopted this construction.... (citations omitted, emphasis added). Goldstein, Copyright, Section 3.3.1, at 258; see also Nimmer, The Law of Copyright, Section 4.13[B], at 4-72-73 and the cases cited therein. [fn11] H.R. Rep. No. 1746, 94th Cong., 2d Sess. 138 (1976). Furthermore, USL is confused when it cites to the legislative history to support its contention that Congress adopted the definition of "publication" in the1976 Act because it viewed the common law definition of "publication" (as crystallized in White v. Kimmell, 193 F.2d 744, 746-747 (9th Cir. 1952) as "defective." Moving Papers, at 6-7, quoting, H.R.Rep. No. 1476, 94th Cong., Second Session, 129130 (1976). The House Report to which USL selectively cites at pages 129-130 discusses "publication" in the context of preemption of common law copyright claims under Section 301 of the 1976 Act and the need for national uniformity in copyright protection, as well as the change in the nature of "publications" in light of the 20th Century communications revolution. The legislative history does not, as USL suggests, criticize the three part test used by the courts to determine when a "limited publication" occurs. [fn12]



USL vs. BSDI documents



[fn12] Reference to other sections of the 1976 Copyright Act, and its legislative history, which focus on the issue of when copyright interests are implicated by public distribution, (although not on point) may aid the Court in its determination of whether 32V has been distributed beyond a "selected group." For example, the Copyright Act makes clear that a copyright will not be invalidated if copyright "notice has been omitted from no more than a relatively small number of copies... distributed to the public....17 U.S.C. Section 405(a) (emphasis added). In addition, under clause (1) of the definition of "publicly" in section 101 (the definitions section of the Act) a performance or display is "public" if it takes place "at a place open to the public or at any place where a substantial number of persons outside of a normal circle of a family and its social acquaintances is gathered." H.R. Rep. No. 1746, 94th Cong., 2d Sess. at 64 (1976).



2. USL Distributed 32V Well Beyond A Selected Group As amply discussed in the University's Amicus Brief at 28:1-29:16, USL has failed to meet the "selected group" requirement. The cases cited by USL do not undercut the University's facts and law which demonstrate that USL has published 32V to a non-selected group. Both Paramount Pictures Corp. v. Rubinowitz, 217 U.S.P.Q. 48 (E.D. N.Y. 1981) and National Broadcasting Co., Inc. v. Sonneborn, 630 F.Supp. 524 (D. Conn. 1985), arose under the 1909 Act and the courts' discussion of the 1976 Act is mere dicta. However, neither of these opinions states that the selected group requirement does not exist under the 1976 Act. [fn13] PRC Realty Systems v.National Ass'n of Realtors, 766 F.Supp. 453, 461 (E.D. Va. 1991 ), rev'd in part without opinion, 972 F.2d 341 (1992), summarily disposes of the publication issue without any discussion of the change in the publication analysis in the 1976 Act with respect to the selected group requirement. Therefore, because USL cannot satisfy the selected group requirement, its limited publication argument must fail. ...[fn13] Moreover, in National Broadcasting Co.. Inc. v. Sonneborn, 630 F.Supp. 524 (D. Conn. 1985), the court noted that "[t]he number of persons with the technical ability to broadcast or copy 'Peter Pan' was relatively small in the early to mid 1960's." Id. at 536. This comment indicates that had a large number of individuals had sufficient technical ability to copy or broadcast the work, a general publication might occur. 3. USL Did Not Distribute 32V For A Limited Purpose



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USL fails to address the "limited purpose" requirement which focuses on the publisher's conduct (not on restrictions placed on the recipient of the work) and requires that the publication be for a limited purpose, such as review, criticism, promotion, education, or performance. Instead, USL contends that one of the general purposes of the copyright law, i.e., to encourage creativity by enabling copyright authors to profit from their work, is sufficient to meet this requirement; it is not. See the University's Amicus Brief, at 30:15-31:18 and cases cited therein. As such, USL's limited purpose argument falls short of meeting the required showing of a limited purpose in its publication of 32V.



CONCLUSION For all of the foregoing reasons, this Court should rule that Net2 is not an infringing work even if USL possess a valid copyright in 32V. Nor should the Court find that the University misappropriated any trade secrets by releasing Net2.



DATED: January 19, 1993. CROSBY, HEAFEY, ROACH & MAY Professional Corporation



By Joel Linzner Attorneys for Defendant Regents of the University of California POST, POLAK & GOODSELL By Frederick B. Polak Attorneys for Defendant The Regents of the University of California



USL vs. BSDI documents



UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY UNIX SYSTEM LABORATORIES, INC., Plaintiff, (DRD) -againstBERKELEY SOFTWARE DESIGN, INC., and the Following lndividuals in their Collective Capacity as THE REGENTS OF THE UNIVERSITY OF CALIFORNIA: PETE WILSON, LEO T. MCCARTHY, WILLIE L. BROWN, JR., et al., Defendants. Civil Action No.92-1667 MEMORANDUM OF LAW ON BEHALF OF DEFENDANT BERKELEY SOFTWARE DESIGN, INC. IN FURTHER OPPOSITION TO PLAINTIFF'S MOTION FOR PRELIMINARY INJUNCTION JAMES H. FORTE (2248) SAIBER SCHLESINGER SATZ & GOLDSTEIN One Gateway Center Newark, New Jersey 07102-5311 (201) 622-3333 LESLIE A. FITHIAN HELLER, EHRMAN, WHITE & MCAULIFFE 525 University Avenue, 9th Floor Palo Alto, California 94301 (415) 326-7600 Attorneys for Defendant Berkeley Software Design, Inc. Scheduled Argument Date: January 22, 1993



TABLE OF CONTENTS TABLE OF AUTHORITIES . . PRELIMINARY STATEMENT . . . . . . . . . . . . . . . ... . . . . . .



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ARGUMENT . . . . _ . . . . . . . . . . _ . . . . . . . . . . . . . 2 I. USL HAS NO VALID COPYRIGHT IN THE 32V CODE . . . . . . . . . . . . . . . . . . . . . 2 II. THE HEADER FILES HAVE INDEED BEEN DISTRIBUTED IN BINARY RELEASES CONTAINING NO COPYRIGHT NOTICE . . . . . . . . . . . . . . . . . . . . 6 III. USL HAS NOT ESTABLISHED INFRINGEMENT, BY DIRECT EVIDENCE OR OTHERWISE . . . . . . . . . . . . . 8 A. USL Cannot Avoid The Substantial Similarity Test . . . . . . . . . . . . 8 B. USL Cannot Meet The Substantial Similarity Test . . . . . . . . . . . 8 C. The Similarities Upon Which USL Relies Are De Minimis . . . . . . . . . . . . . . . 16 IV. THE UNIVERSITY'S AGREEMENTS WITH USL PRECLUDE USL'S TRADE SECRET CLAIM . . . . . . . . . . . . 17 V. THE BALANCE OF HARM WEIGHS SHARPLY IN FAVOR OF DENIAL OF A PRELIMINARY INJUNCTION . . . . . . . . . . . . . . . . 19 CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21



TABLE OF AUTHORITIES Cases Academy of Motion Picture Arts v. Creative House, 944 F.2d 1446 (9th Cir. 1991) . . . . . . . . . . . . . . . 5 Altai v. Computer Associates, 1992 WL 372273 (2d Cir. 1992) . . . . . . . . . . . . . . . . . . . . . . 8,13,1



USL vs. BSDI documents



Brown v. Tabb, 714 F.2d 1088 (11th Cir. 1983) . . . . . . . . . . . 5 DCI Computer Systems. Inc. v. Pardini, 1992 U.S. App. Lexis 29951; 1992 Copyright L. Rep. (CCH) . . . . . . . . . . . . . . . . . . Feist Publications. Inc. v. Rural Telephone Service Co., 499 U.S. ___, 113 L. Ed.2d 358, 111 S.Ct. 1282 (1991) . . . . . . . . . . . 8 Hubco Data Products Corp. v. Management Assistance. Inc., 219 U.S.P.Q. 450 (D. Idaho 1983) . . . . _ . . . . . . . . . . . . . . . . . . . . 2 S.A.S. Institute, Inc. v. S&H Computer System. Inc., 605 F. Supp. 816 (M.D. Tenn. 1985) . . . . . . . . . lS SEGA Enterprises v. Accolade, 977 F.2d 1510 (9th Cir. 1992) . . . . . . . . . . . . . . . 9,13,17 Shapiro & Son Bedspread Corp. v. Royal Mills, 568 F. Supp. 72 (S.D.N.Y. 1983) . . . . . . . . . . . . . . . . . 7 Videotronics, Inc. v. Bond Electronics, 586 F. Supp. 478 (D. Nev. 1984) . . . . . . . . . . . . . . . . . . 7 White v. Kimmel, 193 F.2d 744 (9th Cir.), cert. denied, 343 U.S. 951 (1952) . . . . . . . . . . . . . . . . . 2 Other Authorities Compendium of Copyright Office Practices, Section 325.02(c) 3 Nimmer on Copyright Section13.03(A) _ . . . . . . . . . . . . . . . 3 Nimmer on Copyright, Section13.01(B) . . . . . . . . . . . _ _ . . 3 3 Nimmer on Copyright, Section13.03(F) _ _ . . . . . . . . . . . . .



PRELIMINARY STATEMENT USL has submitted over eighty pages in reply to BSDI 's opposition, much of which consists of new matter. USL appears to have abandoned most of its trade secret claim, now arguing only that the actual disclosure of any 32V code to nonlicensees violates the



- 158 -



University's license agreements with USL. USL overlooks the provision in those agreements that explicitly excludes from the University's obligation of confidentiality any information that is generally known. Moreover, USL has failed to address the evidence submitted by BSDI and the University that all of the features USL has relied on are generally known. The new items discussed in the Carson affidavit likewise are unable to withstand scrutiny. In seeking to salvage its nonexistent copyright claim, USL attempts to persuade this Court to abandon the well-established test for limited publication, even though courts have invariably upheld that test as applicable, both before and after the 1976 Copyright Act. All of the cases USL cites acknowledge this as the proper test. Nor can USL -- a company set up for the specific purpose of marketing UNIX source code for financial gain -- legitimately claim that it has offered its source code only to a limited group for a limited purpose. Since USL has no copyright in 32V, the Court need not address the other issues with respect to USL's claim of infringement. Even if there were a copyright, moreover, USL has not established infringement. Contrary to USL's assertions, the deposition testimony of Kirk McKusick provides no admission of infringement. Even when there is direct evidence of copying, the substantial similarity test must still be met. USL has made no showing of quantitatively or qualitatively substantial similarity between 32V and Net2 or BSD/386. Even if USL could establish substantial similarity, the scope of the injunction it is seeking is unconscionably overbroad. USL has no response to this charge other than to say that it is "premature." USL's Reply Brief at 2, n.3. In fact, it is USL's request for an injunction that is premature, since it has not met any of the requirements for obtaining such relief. ARGUMENT I. USL HAS NO VALID COPYRIGHT IN THE 32V CODE Ignoring all the case law to the contrary, USL argues that this Court should ignore the well-established test for compliance with the limited publication doctrine. USL has failed to cite a single case to support its argument that the Court should ignore this test. Indeed, even in the cases USL relies on, the courts invariably have adopted the three-pronged test set forth in White v. Kimmel, 193 F.2d 744 (9th cir.), cert. denied, 343 U.S. 957 (1952), in which the Court held that restrictions on redisribution alone are not sufficient to meet



USL vs. BSDI documents



the limited publication doctrine. See, e.g., Hubco Data Products Corp. v. Management Assistance, Inc., 219 U.S.P.Q. 450, 455 (D. Idaho 1983) ("[The White v. Kimmel definition] of 'limited publication' remains valid for judging conduct occurring both before and after the copyright Act became effective in 1978"). [fn1] [fn1] If licensing restrictions were sufficient to make a publication limited, as USL argues, software would never be "published," since it is standard practice to license software pursuant to various restrictions on its use and further distribution. Yet, unlike the 32V source code, most software is distributed with a copyright notice. USL would have this court ignore two of the three requirements for a limited publication -- the limited group and limited purpose requirements -- precisely because USL realizes that it cannot possibly meet those requirements. USL's 32V code has not been offered to a limited group for a limited purpose, but in its own words, has been marketed "to the commercial world". (see AT&T Technical Journal, p. 1573, Forte Decl. Exh. P; Thiel Dep. T. 31-4 to 37-5, Forte Decl. Ex. A). USL has struggled to find examples of instances in which it turned down a prospective customer, arguing that it had the discretion to enter into agreements or not. When a company markets a product, it always has the option of turning away a particular customer. But the fact that a few customers have been turned down for business reasons is hardly sufficient to make it a limited publication. To hold otherwise would be to turn the doctrine of limited publication on its head: Rather than making its source code available to only a limited group, USL *has withheld it* only from a limited group, USL's own documents belie its current attempt to portray its source code offering as limied. For example, USL's [TEXT OMITTED HERE] .... Likewise, as noted above, in a journal published by AT&T, AT&T represented that UNIX source code has been "available to the commercial world." (See AT&T Technical Journal, p. 1573, Forte Decl. Exh. P). There was no hint in these documents that only a narrowly selected group within the commercial world could obtain the source code, and [TEXT OMITTED] .... Thus, regardless of whether USL (like anyone selling a product) had the discretion to refuse prospective customer, the reality is that it has rarely done so.



- 160 -



USL also misconstrues the limited purpose requirement, focusing only on the purposes for which its licensees may use the code. Regardless of those restrictions, since USL's purpose in distributing the code has been to commercially exploit the code, it cannot meet the limited purpose requirement. See, e g., DCI Computer Systems. Inc. v Pardini, 1992 U.S. App. Lexis 29951; 1992 Copyright L. Rep. (CCH), par. 27,005 (9th Cir.) (limited purpose test not met where purpose of distribution was financial gain); Academy of Motion Picture Arts v Creative House, 944 F.2d 1446, 1453 (9th Cir. 1991) (limited purpose requirement met because commercial gain was incidental rather than direct); Brown v.Tabb, 714 F.2d 1088, 109192 (11th Cir. 193) (commercially exploited work did not meet limited purpose test). USL correctly points out that the purpose of the copyright law is to encourage authors to disseminate ideas. The point of the limited publication doctrine is to distinguish between instances in which the author of a work has chosen to take advantage of the benefit of commercial exploitation of copyrighted works and instances in which the author has instead chosen to forego such benefits by not seeking financial gain from distribution of work. Where an author chooses to widely disseminate his work for financial gain, as USL as done, he must meet the statutory requirements in order to claim copyright. USL, however, wants to have its cake and eat it too. One cannot market a product to the commercial world and simultaneously claim it is an unpublished work, simply to avoid the limitations and requirements imposed by copyright law. Thus, USL's argument on the limited purpose prong misses the point entirely.



II. THE HEADER FILES HAVE INDEED BEEN DISTRIBUTED IN BINARY RELEASES CONTAINING NO COPYRIGHT NOTICE USL provides examples of instances in which binary distributions did have copyright notices, and states that it is unaware of distributions without a copyright notice. In fact, USL's binary distribution agreements from the early 1980s [TEXT OMITTED] USL has submitted no evidence contradicting the testimony of Keith Bostic and Kirk McKusick that no copyright notices appeared in the early binary releases they saw. (See Bostic and McKusick Joint Decl., 28.4). In any event, USL relied solely on copyright notices that appeared on the "media" in which the code was contained, ignoring the fact that ordinary users of such software would never have seen the media, but rather, were permitted to access the code directly on



USL vs. BSDI documents



the computer through timesharing arrangements, i.e., the software was to be used on computers which could be accessed by many different users who would never see the "medium" on which the code was originally stored. [fn2] All citations to the Second Supplemental Declaration of James H. Forte shall be referred to as "Forte Sec. Supp. Decl." To be effective, notice had to be given "in such a manner and location as to give reasonable notice" to the ordinary user. 17 U.S.C. Section 401 (former version). It is not sufficient to put a notice on a box that those actually using the software would never see. See Shapiro & son Bedspread Corp. v. Royal Mills, 568 F. Supp. 972, 975 (S.D.N.Y. 1983) (notice on a wrapper or container which might not be seen by user is inadequate notice); Videotronics, Inc. v. Bond Electronics, 586 F. Supp. 478, 42 (D. Nev. 1984) (notice appearing randomly on videoscreen is inadequate because it fails to give notice to each user). Since even USL does not dispute the fact that these header files have been published and has failed to refute the evidence that they contained no visible copyright notice, USL cannot claim copyright protection in such files. In any event, these same header files also were included in the source code distributions of 32V. It is undisputed that such distributions contained no copyright notice. With respect to such distributions, USL relies only on its contention that its distribution of 32V source code was merely a limited publication -- an assertion that finds no support in the facts or the case law, as explained above.



III. USL HAS NOT ESTABLISHED INFRINGEMENT, BY DIRECT EVIDENCE OR OTHERWISE Even assuming the existence of a valid copyright, USL has not shown a likelihood of success on its copyright claim. A. USL Cannot Avoid The Substantial Similarity Test USL erroneously argues that evidence of direct copying renders unnecessary the "substantial similarity" analysis. his argument was rejected recently by the United States Supreme Court in Feist Publications, Inc., v. Rural Telephone Service Co., 113 L. Ed.2d 358 (1991). As the Supreme Court held in that case, "[n]ot all copying ... is copyright infringement." See Altai v. Computer Associates, 1992 WL 37223, at 20 (2d Cir. 1992) ("once some amount of copying has



- 162 -



been established, it remains solely for the trier of fact to determine whether the copying as 'illicit'; "We have subsequently described this method of inquiry as 'merely an alternative way of formulating the issue of substantial similarity"). As Nimmer explains, "substantial similarity between the plaintiff 's and defendant's works is an essential element of actionable copying." 3 Nimmer on Copyright Section 13.03[A]. Thus, even if "one can conclude that, as a factual proposition, copying took place, ... the question still remains whether such copying is actionable." Id. 13.01[B]. Thus, USL may not avoid the need to show substantial similarity in protectible expression. B. USL cannot Meet the Substantial Similarity Test The testimony of Dr. McKusick, which USL quotes out of context, provides no evidence of infringement. As explained by Dr. McKusick in his Second Declaration,[fn3] his testimony regarding reliance on the existence of pseudocode in reviewing Net2 involved a determination as to whether code implementing algorithms used in 32V could be included, not whether 32V code itself could be included. (See Second Bostic and McKusick Decl., Para 2.3). Algorithms are not even copyrightable (See Compendium of Copyright Office Practices, 325.02(c), Forte Decl. Exh. W); see also 3 Nimmer on Copyright, Section 13.3[F], at 13-85, n.289. To the extent any code was included based on the existence of pseudocode, it was not the 32V code, but code written by the University and its contributors. (See Second Bostic and McKusick Decl., Para. 2.3). USL also cites testimony of Dr. McKusick regarding his familiarity with 32V code. But mere familiarity with a work does not make one's later works infringing. Indeed actual reference to or use of a work in developing one's own code does not amount to copyright infringement. Such uses are exactly what the copyright law is designed to foster. See, e.g., SEGA Enterprises v. Accolade, 977 F.2d 1510, 1527 (9th Cir. 1992). Thus, this testimony is irrelevant to the question of whether NET2 or BSD/386 would infringe a copyright in 32V (if one existed). McKusick also testified that in programming one might reuse a fourline piece of code, much like one might reuse a footnote. But McKusick was testifying hypothetically about common practices in programming, and not testifying to a particular event. (See Second Bostic and McKusick Decl., 2.4); see also 3 Nimmer on Copyright, Section 13.03[F], at 13-96 (Most programmers rely on a number of traditional solutions to recurring problems in their programming").



USL vs. BSDI documents



Thus, USL's reliance on this testimony as evidence of copying is misplaced. [fn3] All citations to the Second Declaration of Keith Bostic and Marshall Kirk McKusick, which is being submitted on behalf o the defendant Regents of the University of California, shall be referred to as "Second Bostic and McKusick Decl." In his Second Declaration, McKusick does note that after the Release of Net2, he discovered that a total of 56 lines of 32V code had been inadvertently included in the Net2 Kernel, scattered in 5 files; but he also demonstrates that those lines are not significant either quantitatively or qualitatively and they thus do not amount to copyright infringement, nor do they provide any basis for prohibiting use of other code, as to which there has been no showing of copying, de inimis or otherwise. Since the Net2 distribution was a combination of many programs and subprograms written by many people over a period of many years, even if USL could show copying of substantial expression in a particular piece of code, this would have no bearing on whether the remaining code -- written by different people at different times - was copied. None of the testimony of Dr. McKusick upon which USL now relies concerned the particular features relied on by USL in it motion and addressed in David Kashtan's Affidavit. Thus, USL's attempt to dismiss the Kashtan Affidavit in light of this testimony is unavailing. While USL states that Kashtan concluded that "all of the remarkable textual similarities" found by Dr. Carson were standard and well-documented, in fact, Kashtan found those similarities unremarkable, and unreliable as proof of copying, given the fact that they are well-documented and widely known and used. Out of the more than 1.5 million lines of code in BSD/86, in his initial affidavit, Dr. Carson pointed to no instances of similarity in the working code itself, other than a few isolated lines in two functions within a single file, which, as noted in the Kashtan Affidavit and in the Joint Declaration of Bostic and McKusick, evidence only the use of standard programming techniques to implement functions described in the available reference materials. There is no evidence to support Dr. Carson's conclusion that such code was copied. Since defendants have rebutted all of the items relied on by Dr. Carson in his initial affidavit, he now attempts to rely on new evidence which has never before been disclosed to BSDI. Carson contends that he has provided only examples, but other than those



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examples he has proffered nothing more than unsupported conclusory statements. Nor is there any reason to believe that any such unidentified similarities would be any more probative than those USL has chosen to identify. To the extent USL has evidence it wants considered in this motion, it must place that evidence before the Court, and provide BSDI a fair opportunity to respond to the assumptions on which Carson's conclusions are based. Such conclusory allegations of unidentified similarities are not sufficient to support a motion for preliminary injunction. In any event, USL's new evidence appears no more reliable than what it presented the first time around: ACTUAL CODE. In actual working code, USL has identified only [TEXT OMITTED] identical lines in a particular file, [TEXT OMITTED] with no analysis as to whether those lines are significant in any way. (See Second Bostic and McKusick Decl., Para 6.1). In reality, those lines provide no particular value and are easily replaceable. Although they were inadvertently included in the Net2 release and can easily be removed from the release, they are a classic example of de minimis copying and thus provide no basis for a finding of infringement. In an attempt to avoid disclosing how little similarity actually exists in the code, USL's expert makes vague references to other unidentified similarities. In reality, only 56 lines out of the 230,995 lines in the Net2 kernel re common to 32V. (See Second Bostic and McKusick Decl., 2.1-.1.5). These common lines do no appear together; but rather are interspersed in only 5 of the Kernel files. In each of these instances, the small piece of common code is completely trivial and cannot be considered a taking of any substantial protectible expression from 32V. (Id.). COMMENTS. USL also relies on a small number of identical comments, which consist of short, fragmentary phrases describing the function performed by a piece of code. They are not part of the code itself, have no role in the operation of the program and are not protectible as "original expressions of authorship. " (See second Bostic and McKusick Decl. Paras. 6.2, 14.1.A, 15.5; see also BSDI's Memorandum of Law in opposition to USL's motion and cases cited therein). Moreover, the range of expression in such comments is extremely limited since they are entirely descriptive of a narrow idea, i.e., the function performed by a small piece of code. For this reason as well, they are not protectible. See Altai, 1992 WL 372273 at 14; SEGA Enterprises, 977 F.2d at 1524, n 7. CPIO. USL also relies on use of the CPIO file in Net2 as evidence of



USL vs. BSDI documents



copying. Curiously, although Carson characterizes it as the most "extreme" example of copying, he failed to even mention it in his initial Affidavit. He failed to mention it for good reason, since it was included in Net2 only after USL representatives urged the University to use CPIO in its releases in place of another routine called TAR, which the University had previously used to perform the same function. USL made this request specifically because it wanted CPIO to become a standard . The University had no particular interest in changing from the AR format to the CPIO format, since the TAR format is superior. At the request of USL, however, the University agreed to use CPIO instead. (See Second Bostic and McKusick Decl ., 16 3 ) . These facts were well-known to USL and its counsel since Kirk McKusick testified to them at his deposition, yet USL never mentions them in its reply papers, disingenuously implying that the presence of CPIO is simply an example of surreptitious copying. Thus, USL's reliance on the inclusion of CPIO as evidence o copying is a deliberate misrepresentation of the facts. HEADER FILES. With the exception of a couple of comments and the few lines of identical code discussed above, all the features USL relies on are in header files. For the most part, USL relies on nothing more than common mnemonics that are well-known and welldocumented. These interfaces are provided in header files and in a variety of programmer's reference materials, precisely so that they can be used in developing compatible software, and they have historically been so used with no objection from USL or its predecessors. (See Second Bostic and McKusick Decl., 6.4; Bostic and McKusick Decl., 28.3 28.7). Thus, such use cannot form the basis for an infringement action. Although Richard Hamilton admits that [TEXT OMITTED] In making this argument, he ignores the fact that those programs are more limited in scope than Net2, do not contain all o the same functionality, and make no attempt to be compatible with device drivers written for use with UNIX-compatible programs. (See Second Bostic and McKusick Decl., Paras.17-34) He ignores, however, numerous other documents that identify the remaining.file names. The other arguments made hy Carson and Hamilton with respect to the header files are equally specious as explained in detail in the Supplemental Declaration of Bostic and McKusick. (See generally Second Bostic and McKusick Decl.) C. The Similarities Upon Which USL Relies Are De Minimis



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USL makes a half-hearted attempt to argue that the specifics relied on by Dr. Carson are not de minimis, but neglects to provide any facts to support this conclusory assertion. In reality, USL has identified only a small number of lines of working code that are identical or similar to lines in 32V. As explained in BSDI's opposition papers, some of these lines of similarity are to be expected in light of standard programming techniques and other available reference materials, and provide n evidence that those lines were copied, much less any evidence f copying elsewhere in Net2. The others, as explained in the Second Bostic and McKusick Declaration, were inadvertently included and are trivial both quantitatively and qualitatively. USL's reliance on S.A.S. Institute, Inc. v. SH Computer System. Inc_, 605 F_ Supp. 816 (M.D. Tenn_ 1989), is misplaced. In that case, the court found that those particular lines were qualitatively significant, not quantitativelysignificant. See S.A.S. Institute, 605 . Supp. at 829. Likewise, in the other cases on which USL seeks to rely, there was a showing that the specific code copied was qualitatively significant. Although USL argues that the kernel as ,a whole is significant, it makes no attempt to argue that the specific lines of identical or similar code at issue in this case are significant. In reality they have no special significance and are easily replaced with no effect whatsoever on the operation of the files at issue. (See generally Second Bostic and McKusick Decl.) Lacking any similarity in the actual code that is not completely trivial, Carson relies instead on similarities in unprotectible function names and constant definitions, which as explained in BSDI's and the University's opposition papers and supporting affidavits, consist of well-known abbreviations or "mnemonics," commonly used in UNIX-compatible programs. Dr. Carson provides no support for an argument that such names are either a quantitatively or qualitatively significant portion of he 32V source code. Thus, there is no basis for a finding of infringement based on the use of such mnemonics. See Altai, supra, 1992 WL 372273 at 22 (use of a few similar parameter lists and macros "did not warrant a finding of infringement given their relative contribution to the overall program"); see also SEGA Enterprises, 977 F.2d a 1516, 1524, n.7 (admitted copying of header file containing interface needed for compatibility did no give rise to a claim for copyright infringement). IV. THE UNIVERSITY'S AGREEMENTS WITH USL PRECLUDE USL'S TRADE SECRET CLAIM



USL vs. BSDI documents



At least for purposes of this motion, USL has not disputed the defendants' interpretation of its license agreements with USL, and appears to have abandoned its claim that any familiarity with the UNIX source code is sufficient to taint programmers writing their own code. [fn4] Thus, the only issue is whether any trade secrets contained in USL's source code were disclosed to non-licensees. Faced with overwhelming evidence to the contrary, USL also appears to have abandoned the contention that the methods and concepts used in UNIX source code are trade secrets . [fn4] Although USL has modified its prayer for relief in its proposed Second Amended Complaint, in its proposed order submitted with this motion, USL requests the Court to enjoin BSDI from employing any programmers that have had access to UNIX source code. USL's only remaining argument -- that disclosure of *any* USL code to non-licensees violates the University's license agreement -totally ignores Section 7.05(a) of the E-SOFT-0089 Agreement (and the identical provisions in the earlier agreements). (See Exh. D-25 to the Bond Deposition Transcript, Forte Decl. Exh. F). That section expressly excludes from the duty of nondisclosure any licensed information that is or later becomes generally known. Thus, the University had no obligation to limit disclosure to generally known code, methods or concepts. As established in the Bostic and McKusick Declarations and the Kashtan Affidavit, USL has not demonstrated that any of the similarities relied on by Dr. Carson were secret at the time Net2 was released. Rather, all of those elements were well-documented in publicly available reference materials. USL's argument that defendants have not shown that those materials were actually relied on in developing Net2 misses the point, since the University's obligation of nondisclosure did not apply to any 3-14; Bostic and McKusick Decl., Paras. 22.13; Second Bostic and McKusick Decl., Para. 15.4). USL's arguments regarding the advantages one would have had in working on such code as a result of access to or familiarity with USL licensed code are simply irrelevant in that the license agreements prohibit only disclosure of works that actually contained USL proprietary information, and exclude from the obligation of confidentiality any information that is or becomes generally known. Since USL chose to disclose its source code to student programmers



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throughout the world, encouraged its use among such students for educational purposes, and has licensed its source code to all the major competitors in the computer industry, as a practical matter, mere familiarity with UNIX source code provides no special advantage not shared by the industry as a whole. V. THE BALANCE OF HARM WEIGHS SHARPLY IN FAVOR OF DENIAL. OF A PRELIMINARY INJUNCTION USL admits that only a small portion of the Net2 release is even accused in this motion. Even within the kernel, USL points only to a few lines of actual code in a couple of files, which lines are both quantitatively and qualitatively insignificant. USL's concern about comments is ludicrous, since the use of any particular phrase to describe the function performed by a portion of the code provides no advantage whatsoever. USL's real goal is to bar any significant competition by preventing the use of standard file names and mnemonics in interfaces that are required in order to make the operating system compatible with other computer programs -mnemonics that are not even protectible under copyright law and are well-documented and available for use by all programmers. Moreover, since USL has no copyright in the 32V code, the court need not even address these issues. Based on such flimsy arguments, USL asks this Court to put BSDI out of business (which would mean instant unemployment for all of its employees), without even granting it the right of a trial USL asks the Court to do this simply to sen a message to the thousands of individuals that already have the Net2 release. No such message is necessary. The existence of USL's challenge to Net2 is already wellknown in the industry, and has had an inhibiting effect. USL will suffer no harm if BSDI is permitted to remain in business long enough to complete discovery and present its case at trial. On the other hand, a grant of USL's motion will not only destroy BSDI and prevent it from having the financial means to defend itself, but also will cast a pall over the entire industry by locking up information that has long been in the public domain. Thus, USL cannot show any compelling need for preliminary relief, and particularly cannot show any harm outweighing the harm to BSDI should the far-reaching injunction it seeks be granted. CONCLUSION In seeking to enjoin BSD/386, USL attempts to prevent BSDI from using thousands of files as to which USL has submitted no evidence



USL vs. BSDI documents



whatsoever, most of which it admits are not even accused. Even within the kernel, USL accuses only a small number of files, with no showing that any substantial, protectible expression has been copied. Since USL does not even have a valid copyright in 32V, moreover, these issues are moot. USL's trade secret claim likewise is completely unsupported. USL's only remaining argument ignores the plain language of the licensing agreements, which do not require that the University limit disclosure of information that is already generally known. For all the reasons set forth above and in the the papers submitted by BSDI and the University in opposition to USL's motion, USL's request for a preliminary injunction should be denied. Respectfully submitted, SAIBER SCHLESINGER SATZ & GOLDSTEIN Attorneys for Defendant Berkeley Software Design, Inc. By: JAMES H. FORTE A Member of the Firm Dated: January 20, 1993 Of Counsel: Leslie A. Fithian, Esq. Heller, Ehrman, White & McAulife 525 University Avenue, 9th Floor Palo Alto, California 94301



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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY



___________________________________ ) UNIX SYSTEM LABORATORIES, INC. ) ) Plaintiff, ) ) Civ. No. 92-1667 vs. ) OPINION ) BERKELEY SOFTWARE DESIGN, INC., ) and certain named individuals in ) their collective capacity as The ) Regents of the University of ) California, ) ) Defendants. ) ___________________________________)



Attorneys for Plaintiff Crummy, Del Deo, Dolan, Griffinger & Vecchione, P.C. One Riverfront Plaza Newark, NJ 07102 By: Gary F. Werner, Esq. Paul, Hastings, Janofsky & Walker 399 Park Avenue NY, NY 10022 By: George L. Graff, Esq. James W. Kennedy, Esq.



Attorneys for Defendant Regents of the University of California Crosby, Heafey, Roach & May 1999 Harrison Street Oakland, CA 94612 By: Joel Linzner, Esq. Post, Polak & Goodsel 280 Corporate Center 65 Livingston Avenue



USL vs. BSDI documents



Roseland, New Jersey 07068 By: Frederick B. Polak, Esq. Attorneys for Defendant Berkeley Software Design, Inc. Saiber Schlesinger Satz & Goldstein One Gateway Center Newark, NJ 07102-5311 By: James H. Forte, Esq.



Debevoise, District Judge. Plaintiff UNIX System Laboratories, Inc. instituted this action to seek relief from Defendants' ongoing distribution of computer software in alleged violation of USL's proprietary rights in the UNIX operating system. Plaintiff pleads eleven claims for relief, including federal copyright and trademark claims, and state contract, tort, and trademark dilution claims. Defendants now move (i) to dismiss, for lack of personal jurisdiction because Defendant Regents lack capacity to be sued and because of improper venue; (ii) to transfer because of improper venue and inconvenience; and (iii) to strike parts of the pleadings. Plaintiff cross-moves to amend its complaint and for a preliminary injunction. This court has subject matter jurisdiction pursuant to 15 U.S.C. 1121(a) (jurisdiction over actions under Chapter 22 (Trademarks) of Title 15); 28 U.S.C. 1331 (federal question), 1332 (diversity), and 1338 (copyrights and trademarks); and supplemental jurisdiction over Plaintiff's state law claims, 28 U.S.C. 1367(a). I. STATEMENT OF FACTS Plaintiff UNIX System Laboratories ("USL") is a Delaware corporation and majority-owned subsidiary of American Telephone and Telegraph Company ("AT&T"), with its principal place of business in Summit, New Jersey. Plaintiff develops, manufactures, licenses, and sells computer operating systems and related products and services. Plaintiff is also the present assignee of AT&T's rights to UNIX, the computer software at the heart of this dispute. Defendant Berkeley Software Designs, Inc. ("BSDI") is a recently-formed Delaware corporation with its principal place of business in Richmond Falls, Virginia. BSDI someday plans to develop, manufacture, and sell computer operating systems like Plaintiff. Defendant individuals are members of the Board of Regents (the "Regents") of the University of California ("Berkeley"). The Regents are a non-profit public corporation organized to administer the University of California pursuant to the California constitution, art. 9 9, and California state law. The central issue here is whether Defendants BSDI and



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Regents appropriated parts of Plaintiff's allegedly proprietary program "UNIX," and then used and distributed these parts without authorization in violation of Plaintiff's copyrights and trade secrets. UNIX is a computer operating system; that is, it is a software program that oversees a computer's internal and external activities, including processing, resource allocation, communications, and applications use. AT&T's Bell Laboratories developed UNIX in the 1970s, and registered the name UNIX as Trademark No. 1,392,203 on May 6, 1986. (1st Am. Compl. Ex. B.) In addition, AT&T has received copyright certificates of registration on UNIX software and documentation for the Fifth through Seventh Editions and for version 32V. (Id., Exs. C-F.) Before exploring the details of Plaintiff's allegations, it is important to step back and appreciate the importance of UNIX in the world of computing. All parties agree that UNIX is one of the most highly-regarded operating systems in the world. Numerous treatises, courses, graduate student theses, and research projects have investigated, expounded, and improved upon UNIX. In addition, programmers at Microsoft, Sun Microsystems, Digital, IBM, and elsewhere have all developed their own UNIX-like, UNIX-compatible operating systems (some under license by Plaintiff). (Carson Reply Aff. at 11-12.) After developing UNIX in late 1960s and early 1970s, AT&T quickly began licensing UNIX to educational, government, and commercial users, including Berkeley. Berkeley and AT&T apparently collaborated on UNIX's development at least in the early years, with AT&T personnel often visiting Berkeley for consultations. The parties executed their first UNIX licensing agreement in 1973, and by 1979 the parties had executed their first agreement covering the software that Plaintiff now seeks to protect, UNIX version 32V. The parties' most recent 32V agreement is the Educational Software License Agreement, or E-SOFT-00089, executed in 1985 ("the 00089 agreement"). (Forte Aff., Ex. F.) The 00089 agreement permits the Regents to create derivatives of UNIX and, to the extent that the derivatives are free of proprietary information, to distribute them without restriction. In addition to its source code, AT&T also prepared and distributed copies of 32V object code beginning in 1984. Object code is simply the source code translated into the form recognized by computer hardware, a binary sequence of Os and 1s. Although readable by computers, sequences of Os and 1s are generally inscrutable to humans. Relying on this inscrutability for protection from disclosure, AT&T has distributed 32v object code publicly subject to notice of copyright but without redistribution restrictions (Pferrer Reply Decl. at 4). Berkeley, a recipient of 32V source code, exercised its



USL vs. BSDI documents



contractual right to derivative 32V to the hilt. It began to create its own embellishments and additions, which it called Berkeley Software Distributions ("BSD") releases, and distributed them via the Regents' Computer Sciences Research Group ("CSRG"). In the early 1980s, Berkeley only distributed the releases to other licensees (which now number in the thousands) because the releases contained proprietary code governed by Berkeley's license with AT&T. But demand for the releases from unlicensed users grew, so Berkeley began distributing reacted releases with the proprietary material allegedly removed. These releases included the operating system at the heart of the present dispute, Net2, which Plaintiff has alleged violates its proprietary rights in 32V. Net2 apparently began as a project to develop a UNIX-like product devoid of AT&T proprietary code. This product contained both non-proprietary software from the BSD releases and software written specifically for Net2, sometimes by volunteers. (Kennedy Aff., Ex. 6.) To guarantee that no proprietary code remained, CSRG screened and eliminated overlapping code sections in accordance with criteria developed together with Berkeley's legal counsel. In addition, Berkeley "repeatedly contacted the USL licensing office, in an attempt to have them review software we intended to distribute." (McKusick Decl. at 8.) Plaintiff allegedly refused to cooperate, although it had performed similar services for others. Berkeley's decision to excise AT&T's code was motivated by several related concerns. First, the University of California received substantial benefits by being the center of UNIX software development, benefits that would increase if it could expand the family of UNIX users by extending UNIX to non-licensees (Ibid.); second, the cost of an AT&T UNIX license had increased to around $200,000, excluding all but the largest users (Ibid.); third, the Net2 version of UNIX would offer new and improved services (Keith Bostic, Marshall K. McKusick, & Michael J. Karels, Berkeley UNIX Yesterday, Today and Tomorrow, in Kennedy Aff. Ex. 8); and finally, the CSRG programmers, at least those who founded BSDI (Karels, McKusick, and Bostic), presumably saw in Net2 an opportunity to profit from the widespread interest in UNIX-like systems. The end result of Berkeley's efforts was a product that, by all accounts, contains a very small proportion of 32V code. But this is not to say that Net2 fails to display its 32V roots. Plaintiff hired Professor John Carson to unearth these roots and, after over 400 hours of digging, Professor Carson has now identified a number of instances where 32V code is embedded in the Net2 system. (Carson Aff. at 13.) The legal significance of this code is, of course, a matter of dispute. To begin with, it is important to compare Net2 side-by-side with 32V. Net2 has far outgrown 32V and now weighs in



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at nearly ten times the size of its parent. The alleged overlaps between parent and child probably amount to less than a percent of the total. (Joint Decl. at 12, 13.) Indeed, ignoring header files and comments (see below), the overlap in the critical "kernel" region is but 56 lines out of 230,9995, and the overlap elsewhere is 130 lines out of 1.3 million. However, as both sides argue (but to different effect), the nature of the overlap is more significant than its size. According to Professor Carson, eighty of the 8,000 Net2 files are "littered with textual references which are or (sic) identical or substantially similar to corresponding textual matter in the UNIX/32V source code." (Ibid.) These textual overlaps include variable and parameter names, function names, the text of noncoding comments, and the actual sequence of the instruction code itself. (Id. at 23.) Most of these textual references are concentrated in files in the "kernel" of Net2, "which forms the central core of the operating system-" (Id. at 14.) To understand the functional importance of this overlap, it is necessary to understand its nature. Overlap in items such as variable, file, and function names is functionally irrelevant to the program insofar as the program is wholly self-referential. That is, is a programmer could name a variable or function anything at all without disabling the program, as long as the program did not interface with other programs. But once a program interfaces with another program, the file, function, or variable names can become significant. The two programs may have certain files, functions, or variables in common, and these must have the same names in order for the programs to interface. Programs written to run with a UNIX-like operating system have now became so common that industry standards govern the requirements of UNIX interfaces. For example, the UNIX operating systems contain files called "header" files. Header files are repositories of common definitions and declarations. If a programmer knows that an operating system contains a certain header file, then the programmer can simply refer to the header file and avoid reproducing all of the definitions and declarations. Of course, such a program can only run with an operating system having the proper header files. Therefore, Defendants have included 32V's header files in Net2 as a matter of necessity, to insure that the many programs written for UNIX-like systems will be compatible with Net2. Another type of overlap identified by Professor Carson is overlap in code instructions. Code instructions embody and implement the programmer's solution to a programming problem ~ a solution that directly determines how well or how poorly the



USL vs. BSDI documents



program runs. Professor Carson has found several sections of instructions that BSDI appears to have copied from 32V. Again, BSDI argues that these instructions are widespread and well-documented, and that their structure is substantially dictated by the need to preserve compatibility with other programs (Joint Decl. at 53-61.) The final type of overlap identified by Professor Carson is "comment" overlap. All computer programs contain short explanatory comments annotating the code in which they are embedded. The function of these comments is simply to inform programmers of the purpose and operation of particular sections of code. Comments have no role whatsoever in software performance. In summary, Professor Carson has examined the traits shared by Net2, BSD/386, and 32V, and detected a common lineage. Defendants argue that virtually all of these traits reflect publicly available code, copied comments, or overlap dictated by compatibility with industry standards. Professor Carson disagrees, and has allegedly identified at least some overlapping files that are irrelevant to program interfacing. (Carson Reply Aff. at 6(d), 8-15.) Berkeley began licensing and distributing Net2 in June 1991. Plaintiff has alleged that the "highest levels," meaning persons reporting directly to the Regents, approved Net2's release. (E.g. Proposed 2d Am. Compl. at 2, 9, 38, 64, 72, 89, 103.) Indeed, Plaintiff has alleged that the University Chancellor himself approved Net2's release. (Kennedy Aff. 16.) In soliciting new licensees, Berkeley distributed promotional materials stating that Net2 "may be freely redistributed. It is available to anyone and requires no previous license, either from AT&T or The Regents of the University of California." (Bostic Dep. at 76, Kennedy Aff. Ex. 3K.) According to Mr. Bostic, a member of CSRG, promotional materials were mailed to firms in New Jersey, although no New Jersey firms were among the approximately 120 firms that signed a licensing agreement to use Net2. An early Net2 licensee was UUNET, an electronic information exchange for people interested in UNIX. (Adams Dep. at 149, Kennedy Aff. Ex. 12. UUNET added Net2 to its standard archives, enabling any subscriber to UUNET to freely and anonymously copy Net2 to their own computer system. When asked the number of people who had copied Net2 from UUNET, Mr. Bostic replied that "I've been told it's in the tens of thousands." (Bostic Dep. at 81, Id.). UUNET is available to hundreds of thousands of users worldwide, including users in New Jersey. (Rorke Aff. 1-4.) One organization that obtained Net2 from UUNET was BSDI. (Adams Dep. at 149, Kennedy Aff. Ex. 12.) BSDI, which is not



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licensed by AT&T to use UNIX, used Net2 to create its sole product, the operating system BSD/386 Source. (Ans. & Countercl. at 5-6.) BSDI is now close to bringing BSD/386 to market, having distributed preliminary "alpha," "beta," and "gamma" versions of BSD/386 as well as promotional literature. This literature states that BSD/386 Source "contains no AT&T licensed code" and "does not require a license from AT&T." (1st Am. Compl. Ex. I.) II. PROCEDURAL HISTORY Plaintiff filed its complaint in this action on April 20, 1992. On April 29, the parties agreed to a court-ordered stipulation that BSDI would cease using the phone number "1-800-ITS-UNIX". Plaintiff filed its First Amended Complaint on July 24, and on the same date Defendants' motion to dismiss Counts Ten and Eleven were denied. Defendants answered on September 3 and counterclaimed for declarations of noninfringement, unenforceability, and invalidity of Plaintiff's trademark and copyrights in the UNIX name and materials. Plaintiff replied on September 25, and subsequently moved for a preliminary injunction. The motion for an injunction was adjourned and consolidated with the present motions. III. DISCUSSION Defendants move for relief on three separate grounds: this complaint should be dismissed against the individual Regents pursuant to Rules 12(b) and 12(f) of the Federal Rules of Civil Procedure, because the individual Regents lack the capacity to be sued; Plaintiff has no personal jurisdiction over the University of California; and venue in New Jersey is improper under 28 U.S.C. 1391. Plaintiff cross-moves to amend its complaint, in part to correct some of the defects asserted by Defendants, and for a preliminary injunction. A. Plaintiff's Motion To Amend Plaintiff cross-moves to amend its complaint pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. Rule 15(a) states that, in cases where the adverse party has served a responsive pleading, "a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." The Supreme Court has held that: [i]n the absence of any apparent or declared reason ~ such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. ~ the leave sought should, as the rules require, be "freely given."



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Foman v. Davis, 371 U.S. 178, 182 (1962). Plaintiff seeks to amend its complaint to add allegations of wrongdoing on the part of the individual Plaintiffs (e.g. Proposed 2d Am. Compl. at 2, 9, 38, 64, 72, 89, 103); factual allegations concerning the University's distribution of its Net2 code to persons in New Jersey (e.g. Id., at 41, 43, 44); and allegations of willfulness on the part of the University and BSDI (e.g. Id. at 50, 63-66). In addition, Plaintiff wishes to change the named Defendants from "the Following Individuals in their Collective Capacity as The Regents etc." to "The Regents of the University of California and the Following Persons in their Individual and Official Capacity etc." There is no evidence that Plaintiff is seeking a second amendment of its complaint for reasons of bad faith and delay. Plaintiff is simply trying to meet Defendant's objections to the present complaint, to insert new factual matters learned through discovery, and to clarify the nature of its claims. Moreover, the proposed amendments cause no prejudice to Defendants. The amendments do not eliminate claims which the Defendants have expended time and resources to rebut, nor do the amendments drastically alter the expected costs of defense, length of the action, or nature of the complaint. Consequently, I grant Plaintiff's motion for leave to amend. B. Defendant Regents Lack The Capacity To Be Sued Defendants argue that Plaintiff "has chosen to incorrectly name individual Regents of the University of California, 'in their collective capacity,' rather than the legal entity known as the [sic] 'The Regents of the University of California' as required by federal and state law." (Defs.'s Supp'g Br. at 5.) In addition, Defendants argue that "Plaintiff has not stated any facts which would support a claim against individual Regents," and that "claims against individuals acting in their official governmental capacities may be barred by qualified immunities." (Defs.'s Supp'g Br. at 6-8.) Defendants base these arguments in the Federal Rules of Civil Procedure and the California constitution. Plaintiff's Second Amended Complaint answers Defendants, "collective capacity, objection by expressly naming the Regents of the University of California as Defendants. Defendants' other objection, that Plaintiff has improperly named the individual Regents, needs no answer. Defendants have not elaborated on their one-sentence suggestion that Plaintiff has failed to state a claim against these Defendants. Accordingly, I must deny Defendants' motions to dismiss all claims against the individual Regents and to strike the related



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matters from the pleadings. C. Personal Jurisdiction Over The Regents Defendants also allege that this action must be dismissed for lack of jurisdiction over "the University." The Second Amended Complaint no longer names "the university" per se, instead naming the Regents in their corporate, official, and individual capacities. Consequently, this motion will be treated as a motion to dismiss for lack of jurisdiction over the Regents as named in the Second Amended Complaint. This court has personal jurisdiction over a defendant if the exercise of personal jurisdiction complies with the laws of New Jersey, Fed. R. Civ. P. 4(e), and does not violate due process. International Shoe Co. v. Washington, 326 U.S. 310 (1945) (the fourteenth amendment limits state long-arm statutes); Provident National Bank v. California Federal Savings & Loan Ass'n, 819 F.2d 434, 436 (3d Cir. 1987) (citing Rule 4(e) and International Shoe). The due process clause permits a court to exercise jurisdiction over a party whenever the party has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe, 326 U.S. at 316. The dual considerations of state law and Constitutional limits coincide in New Jersey because New Jersey's long-arm statute reaches as far as the due process clause of the Fourteenth Amendment permits. Carteret Savings Bank, FA v. Shushan, 954 F.2d 141 (3d Cir.), cert. denied, ___ U.S. ___, 113 S.Ct. 61 (1992) (citing New Jersey Court Rule 4:4-4, which permits service "consistent with due process of law"); Charles Gendler & Co., Inc. v. Telecom Equip. Corp., 102 N.J. 460, 469 (1986) (Rule 4:4-4 allows "'out-of-state service to the uttermost limits permitted by the United States Constitution'", citing Avdel Corp. v. Mecure, 58 N.J. 264, 268 (1971)); Giangola v. Walt Disney World Co., 753 F. Supp. 148, 154 (D.N.J. 1990) (New Jersey's long-arm statute extends to the limits of the U.S. Constitution). If a defendant raises the issue of personal jurisdiction, the plaintiff bears the burden of establishing that the defendant's contacts with the forum state comport with the requirements of due process. "To carry this burden, plaintiff must show `with reasonable particularity' that the forum, and thus the court, has either: (1) specific jurisdiction (where the cause of action arose from the defendant's activities within the forum state), or (2) general jurisdiction (derived from defendant's continuous and systematic conduct in the forum state)." Giangola, 753 F.Supp. at 154 (citing Provident National Bank, 819 F.2d at 437). Once a court has found that a defendant's contacts with the forum state are significant enough to confer jurisdiction on



USL vs. BSDI documents



the forum, "in appropriate cases" the court may evaluate other factors. Burger King, 471 U.S. at 476-77. These include the "`burden on defendant,' `the forum State's interest in adjudicating the dispute,' 'the plaintiff's interest in obtaining convenient and effective relief,' `the interstate judicial system's interest in obtaining the most efficient resolution of controversies,' and the `shared interest of the several States in furthering fundamental substantive social policies.'" Id. at 477, citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980). To apply these principles in the present case, it is first necessary to briefly review the connections between the various defendants and the alleged wrongdoing. Plaintiff's allegations against the Regents, in their various capacities, stem from the release of Net2 by the CSRG, a group affiliated with the University of California. The Regents, in their corporate capacity, are apparently liable under a theory of respondent superior for the activities of CSRG. In their official and individual capacities, the Regents are apparently liable in so far as they authorized, knew of, or reasonably should have known of Net2's release. Thus Plaintiff can satisfy the burden of providing jurisdiction by showing with "reasonable particularity" that CSRG's acts bring it within this court's jurisdictional ambit, and that the Regents approved those acts. Plaintiff points to several different activities by the University of California that give this court specific jurisdiction over the Regents' alleged misdeeds. The first of these activities was the negotiation and execution of licensing agreements between Plaintiff and the University: "the University `reached out beyond' California and knowingly contracted to obtain and use . . . software developed in New Jersey" (Pl.'s Opp'g Br. at 19, citing Burger Kinq v. Rudzewicz, 471 U.S. 462, 476 (1985).) The Supreme Court analyzed a similar issue of personal jurisdiction in the seminal case Burger King v. Rudzewicz. In Burger King, the Michigan defendant Rudzewicz had contracted with the Florida corporation Burger King for a restaurant franchise near Detroit. Business lagged at the restaurant, and when Rudzewicz was unable to meet the lease payments, Burger King brought an action for eviction in the Southern District of Florida. Although Rudzewicz's manager had trained at Burger King headquarters in Florida, Rudzewicz himself had apparently never even visited there. None the less, the Court found that the Southern District of Florida had personal jurisdiction over Rudzewicz because the contract had substantial connections with Florida and because Rudzewicz had purposefully reached out and availed himself of the benefits of a continuing relationship with a citizen of Florida. The Third Circuit has also found personal jurisdiction in



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cases where a contract provided the defendant's only contacts with the forum state. In Associated Business Telephone Systems v. Greater Capital Corp., 861 F.2d 793 (3d Cir. 1988), the court found jurisdiction in New Jersey over a California company that had contracted with a New Jersey company for telephone services for an Illinois hotel. Following the methodology prescribed in Burger King, the court examined the connections between the contract and New Jersey; (1) the defendant had created long-term (ten-year) obligations between itself and the New Jersey plaintiff; (2) the plaintiff would be the exclusive contractor and manager of the phone system, with 24-hour access to it; (3) all communications with the plaintiff were with its New Jersey office; (4) the plaintiff continually monitored phone usage in New Jersey; (5) the plaintiff had the power to unilaterally disconnect the defendant; (6) the plaintiff sent its personnel to the defendant's offices; and (7) the defendant knew that its acts would cause injury in New Jersey. The contractual contacts here arise out of Count One, a count that names the Regents in all their capacities. The contacts are less substantial than those in Burger King and Associated Business, but a side-by-side comparison between the contacts here and those in Associated Business listed above shows that the contacts here are not insignificant. (1) Defendants knowingly entered into a relationship with a New Jersey facility that has now lasted nineteen years, compared to a ten-year contract in Associated Business. It is true that Defendants signed the initial contract with AT&T in New York, but they maintained their operational relationships with Plaintiff in New Jersey at all times. (2), (4), (5) The New Jersey facility continued to develop, distribute, and service the software licensed to Defendants. In addition, Defendants also participated in the development and distribution of UNIX to Plaintiff's licensees, to such an extent that Defendants' development efforts now apparently outstrip those of Plaintiff. (3) Most communications concerning UNIX were presumably with Plaintiff's New Jersey office. (6) Plaintiff sent technical people to meet with Defendants in California "on quite a large number of occasions." (McKusick Dep. at 318, Kennedy Aff. Ex. 5.) (7) Defendants knew its acts would cause injury in New Jersey. In sum, Defendants and Plaintiff have worked together for nearly two decades to develop, expand, and distribute UNIX softw are to Plaintiff's licensees. Defendants and Plaintiff are not two organizations whose only contact is an agreement cemented by fax and phone to engage in a single transaction. See Colmen Financial Services v. Charter Equip, Leasing, 708 F. Supp. 664 (E.D. Pa. 1989) (no jurisdiction arising out of Plaintiff's contract with



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out-of-state Defendant to give financial advise in sale of business). Plaintiff and Defendants are long-term business associates, and Defendants should reasonably have expected to be subject to suit in New Jersey. Plaintiff asserts a second ground for jurisdiction in that it has alleged that Defendants committed unlawful that inflicted foreseeable harm on New Jersey residents. Again, this jurisdiction involves the Regents in both their collective and individual capacities because it arises out of counts alleging unlawful acts in these capacities. (2d Am. Compl., Counts 3, 4, 6, 8). The U.S. Supreme Court has upheld such jurisdiction in several cases. In Calder v. Jones, 465 U.S. 783 (1984), the Supreme Court held that parties who intentionally aim their tortious acts at victims in other states must expect to be haled into court in those states. Id. at 790 (California had jurisdiction over Florida defendants who allegedly libeled a California plaintiff in a magazine whose primary market is in California). In Rustler v. Keeton, 465 U.S. 770 (1984), the Court held that New Hampshire had jurisdiction in a libel action against Hustler magazine even though only a fraction of Hustler's sales occurred in New Hampshire. Plaintiff relies especially on the case Horne v. Adolph Coors Co., 684 F.2d 255 (3d Cir. 1982). In Horne, the plaintiff alleged that defendant Coors, a Colorado corporation, manufactured its beer using a device that infringed one of the plaintiff's patents. Even though Coors had made every effort to prevent the sales of its beer in New Jersey, the beer remained available in the bootleg market. Coors also knew that selling its beer anywhere would injure the plaintiff regardless of whether he resided in a state selling the beer. Moreover, Coors had allegedly devalued intellectual property, which has a fictional situs at the residence of the owner. Considering all of these factors, the court found that Coors was subject to jurisdiction in New Jersey. See also Paolino v. Channel Home Centers, 668 F.2d 721 (3d Cir. 1981) (out-of-state manufacturer produced device in violation of agreement with plaintiff to protect plaintiff's trade secrets, and sold the device to defendant who resold it in-state). Plaintiff argues "unlawful act" jurisdiction, as explained in Calder, Hustler, and Horne, is proper for several of Defendants' acts. First, jurisdiction is proper because Defendants mailed an offer to prospective Net2 licensees in June 1991, allegedly in violation of the Lanham Act. Unlike Coors in Horne, Defendants here targeted UNIX users in New Jersey, offered them the allegedly proprietary Net2, and encouraged them to distribute it freely to other parties. Defendants contend that this single offer, which apparently no New Jersey residents accepted, cannot create personal



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jurisdiction, especially since Defendants lacked an "express intention to injure" Plaintiff. (Defs.'s Reply Br. at 18.) Defendant might be correct if the offers were innocuous absent an acceptance. But Plaintiff has alleged that the offers themselves create a violation of the Lanham Act by the Regents in both their individual and corporate capacities. See, e.g, Calder, 465 U.S. 783 (parties who intentionally aim their tortious acts at victims in other states must expect to be hauled into court in those states). In addition, Defendants had an "express intention to injure" in the sense that they must have known that their acts could injure Plaintiff. Second, Plaintiff argues that "unlawful act" jurisdiction is proper because Defendants have misappropriated trade secrets and infringed Plaintiff's copyright by licensing Net2 to UUNET. This act inevitably and foreseeably led to the downloading of Net2 by tens of thousands of users, whose use of Net2 foreseeably eroded the value of Plaintiff's trade secrets. Plaintiff has not submitted an estimate of the number of Net2 programs actually downloaded in New Jersey, but with tens of thousands of copies distributed, the odds are that at least several hundred reside on disks and tape within this state (in addition to the copy downloaded by Plaintiff's personnel). These acts are analogous to acts that gave rise to jurisdiction in Paolino v. Channel Rome Centers, 668 F.2d 721 (3d Cir. 1991). In Paolino, a Pennsylvania plaintiff confided trade secrets to a Tennessee defendant, who abused plaintiff's confidences and used the secrets to manufacture its products. The defendant then sold these products to a third party in New Jersey, who in turn distributed the goods to customers at its Pennsylvania stores. The court found jurisdiction even though the defendant was not the party selling the goods in Pennsylvania. "[The Defendant], knowing that Paolino had an interest in intellectual property recognized by the law of Pennsylvania where he resided, obtained his property in confidence and set out on a course of action which would destroy it." This behavior sufficed to create jurisdiction in Paolino, and it suffices to create jurisdiction here as well. In summary, Plaintiff has pleaded a number of grounds sufficient to create jurisdiction over Defendant Regents and University. None the less, the Regents argue that "the presence of some other considerations would render jurisdiction unreasonable." Burger King, 471 U.S. at 477. Such considerations are usually handled by means other than denying jurisdiction, such as choice of law rules, transfer, and change of venue. Ibid. In this case, as discussed below, the Regents' contentions of improper and inconvenient venue are insufficient to "render jurisdiction unreasonable." Consequently, I deny the Regents' motion to dismiss



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the second Amended Complaint for lack of personal jurisdiction. D. Dismissal For Improper Venue Or Transfer Defendants also move to dismiss for improper venue. This motion must be denied as well. Venue is proper under 28 U.S.C. 1391(b)(2), which applies to suits where subject matter jurisdiction is based on a federal cause of action. Section 1391(b)(2) states that venue is proper in "a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of the property that is the subject of the action is situated. . . ." In the present case, Plaintiff's claims are based at least in part on alleged misrepresentations and trademark violations made in New Jersey, and on alleged unlawful distributions to individuals in New Jersey. At this early stage of discovery, it is impossible to know exactly how large a part of the alleged actions occurred elsewhere, but the record offers no evidence that any state received substantially more solicitations or distributions than New Jersey. Furthermore, Plaintiff's trade secrets and, presumably, UNIX trademark are located at its home in New Jersey. Consequently, Plaintiff's claim involves both property and acts in New Jersey. See Cottman Transmission v. Metro Distributing, 796 F. Supp. 338 (E.D. Pa. 1992) (franchisees' unlawful use of trademarks out-of-state created venue in-state). Even if venue is proper in New Jersey, Defendants argue that this case must be transferred to a California district court under 28 U.S.C 1404(a), "[f)or the convenience of parties and witnesses, in the interest of justice". Defendants bear the burden of persuasion on this issue. Shutte v. Armco Steel Corp., 431 F.2d 22, 25 (3d Cir. 1970), cert. denied, 401 U.S. 910 (1971). Section 1404(a) leaves transfer decisions to the discretion of the court, but a court should not lightly disturb Plaintiff's choice of forum. "`[U]nless the balance of convenience of the parties is strongly in favor of defendant, the plaintiff's choice of forum should prevail.'" Ibid. (citing Owatonna Manufacturing Co. v. Melroe Co., 301 F. Supp. 1296, 1307 (D. Minn. 1969)) (emphasis added in Shutte). Defendants assert that "virtually all the witnesses and all the defendants reside a considerable distance from New Jersey's state borders," and that California has a considerable interest in the litigation. (Def.'s Supp'g Br. at 15.) Defendants are surely correct with regard to the issue of whether the Regents individually committed unlawful acts. However, as shown by the briefs arguing Plaintiff's motion for a preliminary injunction against BSDI, the threshold issues here are not issues of who did what, but rather issues of similarity among source codes, of contract interpretation, and of



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law. How closely does Net2 or BSD/386 resemble 32V? Was 32V published without notice of copyright? What sorts of publications do Berkeley's licenses permit? Can any part of 32V possibly be considered a trade secret, given that much of it is industry standard and known to a generation of users and programmers? These are all issues without a particular geographical situs. Consequently, I will not disturb Plaintiff's decision to bring this action in New Jersey. Considering the various issues that must be tried in this case, a New Jersey forum is not so burdensome for Defendants as to require transfer or dismissal in the interests of convenience and justice. E. Preliminary Injunction Plaintiff moves for a preliminary injunction against further distribution of the source code by BSDI (the Regents have voluntarily ceased distributing the source code at issue here). Federal district courts have the power to grant preliminary injunctions pursuant to Rule 65(a) of the Federal Rules of Civil Procedure. Preliminary injunctions allow a court to "prevent the judicial process from being rendered futile by defendant's action or refusal to act." Charles A. Wright and Arthur R. Miller, Federal Practice and Procedure 2947 (1973). In other words, a preliminary injunction allows a court to maintain the status quo until trial. To obtain a preliminary injunction, the movant must establish: (1) the reasonable probability of eventual success in the litigation and (2) that the movment will be irreparably injured pendente lite if relief is not grunted. Moreover, while the burden rests upon the moving party to make these two requisite showing[s], the district court should take into account, when they are relevant, (3) the possibility of harm to other interested persons from the grant or denial of the injunction, and (4) the public interest." Instant Air Freight Co. v. C.F. Air Freight, Inc., 882 F.2d 797 (3d Cir. 1989) 1. Copyright Infringement Plaintiff claims that BSDI has violated Plaintiff's copyright in the UNIX source code and, unless I enjoin further violations, BSDI's continuing violations will irreparably harm Plaintiff. The first factor to be considered is whether Plaintiff has a reasonable probability of prevailing on the merits of this claim. In order to prevail, Plaintiff must prove that it has a valid copyright in the UNIX code. Plaintiff's chief difficulty here is the "Publication doctrine." The publication doctrine



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denies copyright protection to works which the copyright owner "publishes," unless the owner has properly affixed a notice of copyright to the published work. This doctrine has suffered steady erosion over the years, and it now applies in full force only for works published prior to January 1, 1978. For works such as 32V (published in 1978), which were published after that date but before March 1, 1989, the doctrine is subject to the escape provisions of 17 U.S.C. 405(a) and the common-law "limited publication rule." For works published after March 1, 1989, the publication doctrine has been eliminated by the Berne Convention Implementation Act, 102 Stat. 2857 (1988). Because Plaintiff copyrighted 32V in 1992, Plaintiff benefits from a statutory presumption of validity and BSDI has the burden of proving otherwise. Williams Electronics, Inc. v. Arctic International, Inc., 685 F.2d 870, 873 (3rd Cir. 1982). BSDI seeks to carry this burden by proving that AT&T and Plaintiff have widely published 32V without proper notice. Publication is defined as: the distribution of copies or phono records of a work to the public by sale or other transfer of ownership, or by rental lease or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display, constitutes publication. A public performance or display of a work does not of itself constitute publication. 17 U.S.C. 101. Version 32V source code has now been distributed, without notice, to literally thousands of licensees. Consequently, Plaintiff can have no valid copyright on 32V unless it can fit within one of the statutory or common law escape provisions. The three statutory escape provisions are listed in section 405(a). These provisions relieve a copyright owner from the harsh consequences of noticeless publication if the owner (i) omitted the notice from a "relatively small number of copies;" (ii) registers the work within five years of publication, and then makes a "reasonable effort" to add notices to the noticeless copies already distributed; or (iii) proves that a third party omitted, notice in violation of an express agreement in writing 17 U.S.C 405(a)(1)-(3). Plaintiff cannot avail itself of any of these provisions. Notice was omitted from thousands of copies of 32V; no contractual agreements require the licensees to affix notice; Plaintiff failed to copyright 32V until 1992, well over five years



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after 32V was published; and Plaintiff has not yet made reasonable efforts to add notices to the many noticeless publications of 32V. Consequently, Plaintiff must try to fit within the common-law doctrine of limited publication. Under the common-law doctrine of limited publication, a publication will not divest an author of copyright protection if the author "`communicates the contents of a manuscript to a definitely selected group and for a limited purpose, and without the right of diffusion, reproduction, distribution or sale. . ." Rexnord, Inc. v. Modern Handling Systems, Inc., 379 F. Supp. 1190, 1197 (D. Del. 1974) (quoting White v. Kimmell, 193 F.2d 744, 746-47 (9th Cir. 1952), cert. denied, 343 U.S. 957 (1952); see also American Visuals Corq. v. Holland, 239 F.2d 740, 744 (2d Cir. 1956) (quoting White v. Kimmell). There is some question as to whether the doctrine of limited publication survived the 1976 amendments to federal copyright law, but the weight of authority holds that its has. See Nimmer on Copyrights, 4.13[B](1992), and the cases cited therein ("the doctrine of limited publication continues under the current Act"). For the present dispute, the key criterion is that the alleged copyright owner must only have distributed the works to a "Selected group." To qualify as a selected group," those receiving the work must he more than just customers self-selected by their desire to purchase the work. Otherwise, "all the purchasers of the work" would qualify as a "selected group," and all publications would be limited publications. For example, if a programmer sells software to anyone willing to meet the asking price, then the programmer can hardly be said to have communicated the work to a selected group. See Brown v. Tabb, 714 F.2d 1088, 1092 (11th Cir. 1983) (the group containing all of the potential purchasers of a jingle was not a "selected group"); Academy of Motion Picture Arts v. Creative House Promotions, 944 F.2d 1446 (9th Cir. 1991) (Oscar winners are not a selected group because Plaintiff did not distribute its Oscars generally to the public). Situations where courts have found selected groups include distribution of manuscripts by authors to a small collection of friends; of floor plans to contractors so they can prepare bids; of advance copies of works to colleagues for criticism or review; of samples to potential customers; and of promotional material to dealers. Himmer an copyright, 4.13[A] (1992). As the above examples suggest, the traditional scope of the limited publication doctrine is narrow. But courts have shown a tendency to expand the scope of this doctrine when applying it to computer products. See Nimmer on copyright, 4.13[A][1], [2). For example, several courts have declined to find a publication where a copyright owner has communicated support materials to



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customers buying computers. One such case is Hubco Data Products Corp. v. Management Assistance Inc., 219 U.S.P.Q. 450 (D. Idaho 1983), where the court faced the issue of whether the plaintiff computer manufacturer had published the operating system distributed with its computers. The computers (complete with operating systems) apparently were available to anyone willing to pay their price, but the court none the less found only a limited publication of the operating system. The court reasoned that the "operating systems were only offered to owners of [plaintiffs) computers." Id. at 455. See also Data General Corp. v. Digital Computer Controls, Inc., 188 U.S.P.Q. 276 (Del. Ch. 1975) (schematic drawings were the subject of a limited publication because they were only distributed to those who bought computers). The limited-publication variations endorsed in Hubco and Data General, even it valid, are of no help to Plaintiff here. Version 32V was not distributed as an ancillary communication supporting the sale of a computer ~ 32V was the actual product itself. Consequently, the only question is whether AT&T and Plaintiff limited 32V's distribution or offered it to whomever could pay. Plaintiff argues that it has only distributed 32V to three select groups of licensees: educational organizations, U.S. government agencies, and carefully-screened corporate entities. Although the former two groups could conceivably qualify as "selected," the latter can qualify only if the screening process is suitably restrictive. According to depositions of Plaintiff's personnel, the screening includes investigating the kind of code a potential customer seeks (source or binary); detailed information about the nature of the customer's business; the customer's financial ability to pay; and whether the customer is in a country that protects trade secrets. Plaintiff needs all of this information to assess three features of its prospective customers: which product is best for the customer, whether the customer can pay, and whether the customer will take good care of Plaintiff's intellectual property, (Kennedy Decl., Ex. C at 1622, Ex. D at 111-12; Pl.'s Reply Br. at 10.) Even accepting this description of Plaintiff's screening process as true, it is hard to see how the screening would yield a selected group of corporations within the meaning of the doctrine of limited publication. Plaintiff essentially seeks what any lessor of property seeks: someone who will take good care of the property and pay the bills as they fall due. If this were enough to create a selected group, then practically anyone who leased property would belong to a selected group. The copyright laws in effect prior to 1989 do not allow such expansive protection against the consequences of noticeless



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publication. As quoted above, publication includes distributing copies by "renting, leasing, or lending." 17 U.S.C. 101. Under Plaintiff's construction of the doctrine of limited publication, "renting, leasing, or lending" would not constitute publication whenever the owner of the copyright screened out irresponsible customers. It seems unlikely that Congress drafted this section with this purpose in mind. Consequently, I find that Plaintiff has failed to demonstrate a likelihood that it can successfully defend its copyright in 32V. Plaintiff's claims of copyright violations are not a basis for injunctive relief. 2. Trade Secret Misappropriation Plaintiff also claims that BSDI misappropriated trade secrets when, via Net2, BSDI incorporated parts of 32V into BSD/356. This claim raises two key issue. First, is Plaintiff's claim preempted by federal copyright law? And second, after a generation of scrutiny and imitation as a highly-regarded computer operating system, does any part of 32V remain secret? Section 301 of Title 17 expressly preempts state laws protecting "legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106." Section 301 explains the scope of this preemption by listing the exceptions: (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 between January 1, 1978; or (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. Section 106 lists the rights protected by copyright law, including the right to "reproduce the copyrighted work . . . ; to prepare derivative works . . . ; [and) to distribute copies." Net2 fails to meet the first preemption exception, because computer programs fall "within the subject matter of copyright." Accordingly, the key issue is whether state misappropriation laws protect activities that are equivalent to those protected by the copyright laws. To test whether a particular state law is preempted, courts have generally adopted an "extra element" test;



USL vs. BSDI documents



If, under state law, the act or reproduction, performance, distribution or display . . . will in itself infringe the state created right, then such right is preempted. But if other elements are required, in addition to or instead of, the acts of reproduction, performance, distribution or display, in order to constitute a state created cause of action, then the right does not lie "within the general scope of copyright," and there is no preemption. SBK Catalogue Partnership v. Orion Pictures, 723 F. Supp. 1053, 1066 (D.N.J. 1989) (quoting Nimmer on Copyright, 1.01[B]{l}); see also Harper & Row Publs., Inc. v. Nation Enter., 723 F.2d 195, 199-200 (2d Cir. 1983) (if the elements of a state-law cause of action also state a claim under the copyright laws, the state law cause of action is preempted). In the present case, the state law in question is either that of New York or New Jersey. Plaintiff assumes that New Jersey law should apply, and Defendants note that the licenses require the application of New York law. I need not decide this issue now, however, because both New York and New Jersey have adopted laws substantially similar to section 757 of the Restatement of Torts. See Enlicky Enterprises, Inc. v. Spotlight Presents, Tnc., 213 U.S.P.Q. 855 (S.D.N.Y. 1981); Rohm and Haas Co.v. Adco Chemical Co., 689 F.2d 424 (3d Cir. 1982). According to section 757, "[a] trade secret may consist of any formula, pattern, device or compilation of information which is used in one's business, and which gives him an opportunity to obtain an advantage over competitors who do not know or use it." Restatement of Torts 757 cmt. b (1939). Thus, by definition, a trade secret claim requires Plaintiff to prove an element not present in a copyright claim: the existence of a trade secret. Because of this extra element, section 757 does not protect rights equivalent to those protected by the copyright laws, and hence is not preempted. See Brignoli v. Balch Hardy and Scheinman, Inc., 645 F. Supp. 1201, 1205 (S.D.N.Y. 1986) (allegations that computes programs are trade secrets protects them from preemption); Nimmer on Copyright, 1.01[B][1][h)(1992) ("[a]ctions for disclosure and exploitation of trade secrets require a status of secrecy, not required for copyright, and hence are not preempted.") Given that Plaintiff's trade secret claims are not preempted, the next question is whether Plaintiff still has any trade secrets to protect. Plaintiff argues that these programs contain a variety of materials that Defendants could have obtained



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only from proprietary sources, sources subject to contractual guarantees against redistribution. If so, then Plaintiff has not lost its secrets. Trade secrets need not actually be secret, as long as the owner of the secrets controls their dissemination. For example, the owner may disclose it to employees or to others pledged to secrecy. In addition, the components of the secrets may all lie in the public domain as long as their combination does not. "[T]he fact that every ingredient is known to the industry is not controlling for the secret may consist of the method of combining them which produces a product superior to that of competitors." Sun Dial Corp. v. Hideout, 16 N.J. 252, 257 (1954). Plaintiff's first argument is that Defendants have copied the filenames and header files from 32V. Defendants insist that filenames and the contents of header files can be readily printed from Plaintiff's binary code (Joint Decl. at 28.1.1.), which Plaintiff has apparently distributed without restriction on redistribution. In addition, some of this code is available in reference manuals distributed by Plaintiff. (Carson Reply Aff. at 9.) Plaintiff also argues that Defendants have copied certain non-operational aspects of the code, such as allocation of functions to files and the exact wording of comments. Even though these matters might be "secret," they have only small significance to Net2's value as an operating system. As such, Defendants would not seem to have obtained an "advantage over competitors" by their use. Finally, Plaintiff argues that Defendants have copied 32V in writing the instructions and organizing the logical structure of Net2. Defendants counter that even if Plaintiff does retain trade secrets in Unix, Defendants carefully plucked these secrets out of Net2 and BSD/386. This argument is an argument over facts, and Plaintiff and Defendants have joined it with their experts. At the present state of the record, it seems that the side who gets in the last word wins. In an affidavit accompanying Plaintiff's supporting brief, Professor Carson identified two sets of instructions as examples of copying: the functions "bread" and "biodone." In an affidavit accompanying the opposing brief, Defendants' experts rebutted these arguments by explaining how they could have replicated "bread" and "biodone" from publicly-available information. (Joint Decl. at 53-56.) In an affidavit accompanying the reply brief, Professor Carson identified further examples of copying. (Carson Reply Aff.) Defendants have now submitted a surreply and rebutted these examples. (2nd Joint Decl.) After reviewing the affidavits of Plaintiff's and Defendants, experts, a great deal of uncertainty remains as to what



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trade secrets Net2 might contain. One fact does seem clear: the header files, filenames, and function names used by Defendants are not trade secrets. Defendants could have printed these off of any of the thousands of unrestricted copies of Plaintiff's binary object code. (Kashtan Aff. at 9-11.) Moreover, the nonfunctional elements of the code, such as comments, cannot be trade secrets because these elements are minimal and confer no competitive advantage on Defendants. The copied elements that contain instructions, such as BREAD and CPIO, might perhaps be trade secrets, but Defendants' experts have argued persuasively that these instructions are either in the public domain or otherwise exempt. As Defendants have repeatedly emphasized, much of 32V seems to be publicly available. On the other hand, even it Defendants are correct, it is not clear whether 32V is publicly available in a form suitable to BSDI's purposes. There is an enormous difference between an expert programmer sitting down with a pile of textbooks and disjointed segments of code to write out an operating system from scratch, and that same programmer downloading the operating system intact from a public network. In the first case, the programmer could expend large amounts of time writing, testing, and debugging the newly-created system, with an uncertain prospect of immediate success. But in the second case, immediate success would be virtually assured. Thus, even if all of the pieces of the 32V code had been thoroughly revealed in publicly available literature, the overall organization of the code might remain a trade secret unless it too had been disclosed. On the present record, however, it is impossible to determine whether the overall organization of Net2 has been disclosed. The record itself contains little information directly pertinent to this issue. Moreover, the parties' submissions hint that some of 32V's organization may already be publicly available. Berkeley has apparently released nonproprietary programs such as Net1 since 1987 (Regents Am. Opp'g Br. at 13), programs that presumably have divulged at least some information about 32V's organization. A further consideration is that 32V's overall organization may not even be protectable in the first place. Berkeley's license to use 32V protects 32V derivatives only to the extent that they contain certain proprietary information. If Berkeley excises the proprietary information (as it attempted to do with Net2), Berkeley is free to distribute derivatives without restriction. Berkeley has utilized this freedom in the past to distribute a number of non-proprietary systems and portions of systems, all apparently without objections from AT&T. These distributions, to some degree, must have disclosed the overall



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organization of 32V. Thus, Berkeley's activities under the licensing agreement, and AT&T's acceptance of those activities, are evidence that Berkeley and AT&T interpreted the agreement to allow the disclosure of at least some of 32V's organization. In summary, I find that I am unable to ascertain whether any aspect of Net2 or BSD/386, be it an individual line of code or the overall system organization, deserves protection as Plaintiff's trade secret. Since Plaintiff has failed to provide enough evidence to establish a "reasonable probability" that Net2 or BSD/386 contain trade secrets, I find that Plaintiff has failed to demonstrate a likelihood of success on the merits of its claim for misappropriation of trade secrets. No preliminary injunction will issue. IV. CONCLUSIONS I grant Plaintiff's motion to amend, and deny Plaintiff's motion for a preliminary injunction. I deny Defendants' motion to dismiss for lack of jurisdiction and venue, and I deny Defendants' motion to transfer. Dated: March____, 1993 _______________________________ Dickinson R. Debevoise U.S.D.J. UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY



UNIX SYSTEMS LABORATORIES, INC., Plaintiff,



v. BERKELEY SOFTWARE DESIGN, INC., and certain named individuals in their collective capacity as The Regents of the University of California, Defendants.



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) ) ) ) ) ) ) ) ) ) ) ) ) ) )



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Civ. No. 92-1667 ORDER )



This matter having been opened to the court upon application of Paul Hastings Janofsky & Walker, counsel for Plaintiff, to amend their complaint and for a preliminary injunction against Defendant Berkeley Software Design, Inc.; and upon application of Post Polak & Goodsell, counsel for Defendant Regents of the University of California, to strike pleadings, to dismiss for lack of capacity to be sued and lack of personal jurisdiction and improper venue, and, in the alternative, to transfer; and the court having considered all papers submitted in support of and in opposition to said motions; and in accordance with the opinion of even date; IT IS on this ___ day of March, 1993 ORDERED as follows: 1. Plaintiff's motion to amend its complaint is granted; 2. Plaintiff shall serve its amended complaint upon all parties within ten days of the filing of this order; 3. Plaintiff's motion for a preliminary injunction is denied; 4. Defendant Regents of the University of California's motion to strike pleadings is denied; 5. Defendant Regents of the University of California's motion to dismiss for lack of capacity to be sued is denied; 6. Defendant Regents of the University of California's motion to dismiss for improper venue is denied; 7. Defendant Regents of the University of California's motion to dismiss for lack of personal jurisdiction is denied; 8. Defendant Regents of the University of California's motion to transfer venue is denied. ________________________________ Dickinson R. Debevoise, U.S.D.J.