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Storage Technology Corp. (Doing Business as Storagetek) v. Custom Hardware Engineering & Consulting
Citations: 431 F.3d 1374; 77 U.S.P.Q. 2d (BNA) 1317; 2005 U.S. App. LEXIS 27246; 2005 WL 3411773Docket: 2004-1462
Court: Court of Appeals for the Federal Circuit; December 13, 2005; Federal Appellate Court
Original Court Document: View Document
Storage Technology Corporation (StorageTek) filed a petition for rehearing regarding a previous court opinion related to copyright infringement involving Custom Hardware Engineering Consulting, Inc. (CHE) and David York. The core issue revolves around the statutory defense to copyright infringement under 17 U.S.C. § 117(c), which allows machine owners to make copies of software for maintenance and repair under specific conditions. StorageTek contends that CHE's use of its copyrighted software, specifically the "maintenance code," did not qualify for this defense because it involved accessing software that was not essential for machine activation. The court emphasized that determining whether software is "necessary for [the] machine to be activated" is complex. The opinion referenced 17 U.S.C. § 117(d), which clarifies that a service provider must be able to boot a computer to assess if it operates according to its specifications. It was determined that in this case, the maintenance code was so integrated with the functional code that the entire code needed to be loaded into RAM for proper machine operation, complicating the assessment of the statutory defense. Judge Rader dissented, indicating disagreement with the majority's interpretation. Loading the maintenance code into RAM is deemed 'necessary' for activating the machine, which contradicts StorageTek's claim that it could be loaded with certain functions disabled. This necessity was confirmed by a StorageTek software developer during a preliminary injunction hearing. StorageTek cited legislative history from section 117(c), arguing it supports their position; however, the relevant Senate Report clarifies that the defense does not apply to programs that must be loaded into RAM for machine activation. The court concludes that since the maintenance code is essential for activation, the cited legislative passage is inapplicable. Additionally, StorageTek contests the court's interpretation of its license agreement, asserting it misquoted the definition of 'Internal Code.' However, the court maintained that the license implicitly allows copying of StorageTek's software into RAM during equipment activation. The license grants customers a personal license to use 'Internal Code' solely for enabling the equipment, which entails copying both functional and maintenance code into RAM. The court determined that the necessity of copying the maintenance code for activation aligns with the license's intent, thus denying StorageTek's petition for rehearing. A dissenting opinion was expressed by Circuit Judge Rader.