Free Other Notice - District Court of Arizona - Arizona

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FENNEMORE CRAIG, P.C. Ray K. Harris (No. 007408) 3003 North Central Avenue Suite 2600 Phoenix, AZ 85012-2913 Telephone: (602) 916-5000 Email: [email protected] Attorneys for the Nelcela Defendants UNITED STATES DISTRICT COURT DISTRICT OF ARIZONA Merchant Transaction Systems, Inc., Plaintiff, v. Nelcela, Inc., an Arizona corporation; Len Campagna, an Arizona resident; Alec Dollarhide, an Arizona resident; Ebocom, Inc., a Delaware corporation; POST Integrations, Inc., an Illinois Corp., Defendants. And Related Counterclaims, CrossClaims and Third-Party Claims. I. Background Pretrial Proceedings This action was originally filed by MTSI against Nelcela in this court. MTSI, Post Integrations and Nelcela had ongoing related litigation in the Arizona Superior Court, which the parties removed to this Court. After this litigation was underway, Lexcel intervened and joined as party Plaintiff. Post, MTSI and Lexcel are referred to No. CV-02-1954-PHX-MHM NELCELA'S PROPOSED ORDER ON ANALYTIC DISSECTION

collectively as the "Joint Parties" even though Post is actually a defendant in this case. Among other claims, the parties dispute copyright ownership of certain computer
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software used to transact credit card transactions. The parties stipulated to bifurcate this case, agreeing that copyright ownership would be decided in "Phase I" while infringement and the remaining claims would all be heard in "Phase II." See, Joint Stipulation dated March 4, 2005. The copyright ownership issue was tried to a jury in April 2007. Prior to trial, the Court ruled on cross motions for summary judgment that the similarities in the software were too substantial to be the result of random chance and that copying had occurred as a matter of law. See, Order dated September 30, 2006 (Docket #383).1 Request for Analytic Dissection by Nelcela at Trial After trial began, Nelcela asserted that the Court was required to engage in analytic dissection in order to identify the software that was eligible for copyright protection. Motion for Judgment as a Matter of Law (Docket #486). Nelcela repeatedly raised the Apple analytic dissection issue regarding whether the alleged similarities were copyrightable prior to the jury verdict. (Docket #486-487, 489-490). Nelcela also

requested that the jury instructions ­ including the "Summary of Claims" to be read to the jury ­ treat the Nelcela software (both a Merchant System and Authorization System) as a separate work from the Lexcel software (again, both a Merchant System and Authorization System). (Docket #494-495). Nelcela provided a revised Verdict Form that permitted the jury to distinguish Nelcela's software from Lexcel's. (Docket #493). Because the Court had previously ruled that copying had occurred,2 the jury was instructed that the Authorization System and Merchant System each constituted a single
1

Nelcela filed a Motion for Clarification of Trial issues, which was denied, seeking to identify what was copied. 2 The Court found the works "substantially similar" in determining copying had occurred. Order dated September 30, 2006 (Docket No. 383). This is not the same analysis as is required for substantial similarity to prove illicit copying. As noted by professor Nimmer, this use of "substantial similarity" to describe elements of copying and infringement results in potential confusion. 4 Nimmer, Copyright § 13.01[B] at 13-12 n. 31.1. Id. § 13.03[A] at 13-34.1 n 3.2. Thus the evidence of copying in Joint Parties Exhibit 11 does not address the issue of substantial similarity before the Court on analytic dissection.
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work, that ownership should be determined based on which entity first created the work, and that the jury must accept that "copying took place." (Docket #500, Jury Instructions as given by the Court, at p. 14). On April 24, 2007 the jury returned a verdict that the Merchant System and the Authorization System were owned by Lexcel (Docket #501). Post Trial Ruling on Analytic Dissection In post trial motions, Nelcela urged that no judgment should be entered on the jury verdict until the Court engaged in analytic dissection. The Joint Parties agreed to proceed with analytic dissection before entry of judgment on the jury verdict. See, Order dated August 21, 2007 (Docket #547). Nelcela moved for judgment as a matter of law at the close of Lexcel's case. Motion for Judgment as a Matter of Law (Docket #486). After trial, Nelcela filed a renewed motion for judgment as a matter of law based, in part, on the need to engage in analytic dissection. Motion dated May 7, 2007; Reply dated June 4, 2007 (Docket #535). At oral argument "based upon counsel's proposal, the Court grant[ed] counsel until August 22, 2007 to submit a proposed case management plan to address discovery as to the remaining issues within the context of analytical dissection and statute of limitations." Minute Entry dated August 15, 2007 (Docket #545). In the Court's order, dated August 21, 2007 (Docket #547) the Court noted that In light of absence of the analytical dissection analysis the Court's determination of "substantial similarity" possess the real possibility that some, many or all of the overlapping features between the two software versions are not subject to copyright protection ... Notably, although the papers presented to the Court suggested otherwise, at oral argument the Parties appear to be in agreement with respect to the future handling of the "analytical dissection" issue. Specifically, the Parties agreed, that prior to any final determination or judgment regarding ownership, the issue of whether the software is subject to copyright protection must be addressed by the Court. [citations omitted] The Court agrees with the Parties that prior to any final determination of ownership, the Court must determine
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the copyrightability of the software by and through the "analytic dissection" analysis presented in Apple Computers. ... Therefore, while Lexcel Inc. has been deemed to be the owner of the software by the jury, this ownership determination will face scrutiny based upon the requisite "analytical dissection". Id. at 15. Thereafter, pursuant to the Court's August 21 order, the parties submitted proposed case management plans on August 22 (Docket #550 and #551). The Court ordered Lexcel to file a statement of the elements and works or the Lexcel software at issue in this litigation and alleged to have been infringed and copied by Nelcela by August 31, 2007. Order dated August 28, 2007 (Docket #554). The Court then set a briefing schedule regarding the elements and works identified by Lexcel, Inc. Nelcela did not voluntarily relinquish a known right to insist on analytic dissection. To the contrary, Nelcela raised the requirement for analytic dissection as soon it realized this step was required under the Apple precedent. Nor did Nelcela cause the Joint Parties to change position in reliance on a failure to request analytic dissection. Although the Court could not conduct analytic dissection in the midst of the trial on ownership, all parties agreed, in the context of post trial motions, that analytic dissection should be addressed and the Court set a briefing schedule for that purpose. If the concepts of waiver or estoppel apply at all, they would apply to the Joint Parties' agreement to address analytic dissection "prior to any final determination of ownership." (Docket #547 at 15, l. 15-16 ­ Order dated August 21, 2007). The parties have briefed the analytic dissection issue and presented expert testimony on March 20, 2008. As required by Ninth Circuit precedent, the Court now addresses analytic dissection as a matter of law. II. Legal Principles The Analytic Dissection Analysis In engaging in analytic dissection, the Court is guided by the steps articulated in
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Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1443 (9th Cir. 1994), cert. denied, 513 U.S. 1184 (1995): In this, as in other cases, the steps we find helpful to follow are these: (1) The Plaintiff must identify the source{s} of the alleged similarity between his work and the defendant's work. (2) Using analytic dissection, and, if necessary, expert testimony, the court must determine whether any of the allegedly similar features are protected by copyright. Where, as in this case, a license agreement is involved, the court must also determine which features the defendant was authorized to copy. Once the scope of the license is determined, unprotectable ideas must be separated from potentially protectable expression; to that expression, the court must then apply the relevant limiting doctrines in the context of the particular medium involved, through the eyes of the ordinary consumer of that product. (3) Having dissected the alleged similarities and considered the range of possible expression, the court must define the scope of the plaintiff's copyright ­ that is, decide whether the work is entitled to "broad" or "thin" protection. Depending on the degree of protection, the court must set the appropriate standard for a subjective comparison of the works to determine whether, as a whole, they are sufficiently similar to support a finding of illicit copying. The Court is also guided by the "successive filtration" analysis of Computer Associates Intern., Inc. v. Altai, Inc., 982 F.2d 693, 706 (2nd Cir. 1992): In ascertaining substantial similarity under this approach, a court would first break down the allegedly infringed program into its constituent structural parts. Then, by examining each of these parts for such things as incorporated ideas, expression that is necessarily incidental to those ideas, and elements that are taken from the public domain, a court would then be able to sift out all non-protectable material. Left with a kernel, or possible kernels, of creative expression after following this process of elimination, the court's last step would be to compare this material with the structure of an allegedly infringing program. The result of this comparison will determine whether the protectable elements of the programs at issue are substantially similar so as to warrant a finding of infringement.
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The remaining core of protectable expression is the "golden nugget". 982 F.2d at 710. The court must assess the relative importance of the golden nugget to the Plaintiff's overall program. Id. The Burden of Proof The Nimmer treatise acknowledges the general proposition that "the plaintiff bears the burden of proof on the prima facie case, and the defendant bears the burden as to defenses." 3 Nimmer, Copyright § 12.11 at 12-194. A Certificate of Registration made within five years after first publication of the work is prima facie evidence of the validity of the copyright. 17 U.S.C. § 410(c). Once the register of copyrights has issued a certificate, although certain prima facie presumptions are thereby created, the courts are free to examine the underlying facts and to rebut those presumptions, should the facts so warrant. Id. § 12.11[A] at 12-196. The most common pattern, however, is for courts adjudicating infringement actions simply to reach their own determinations, without adverting either to the agency's general level of expertise or to the copyright office's particular determination via its issuance (or denial) or a certificate. Thus, some courts uphold the copyrightability of a given item based on their review, where as others deny copyrightability of registered items, implicitly holding the certificate of prima facie presumption of copyright subject matter as easily rebuttable as the presumption of originality or of compliance with formalities. Id. § 12.11[B][3] at 12-208-09. Nelcela does not contend that the Lexcel software is not copyrightable; instead, Nelcela contends the specific elements identified as copied are beyond the scope of copyright protection. Without citation of authority, Nimmer concludes a defendant must prove the elements claimed by the plaintiff fall within the merger or scenes a faire doctrine. "Although plaintiff's failure to present proof about these issues could defeat a plaintiff's
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application for preliminary injunction, it would seem that defendant must go forward at trial with appropriate evidence as to those doctrines." 4 Nimmer, Copyright § 13.03[F][3] at 13-138. In the only case cited by Professor Nimmer, Liberty American Ins. Group, Inc. v. WestPoint Underwriters LLC, 199 F.Supp.2d 1271, 1290 (M.D. Fla. 2001), plaintiff failed to establish the protectablity of its source code and the Court found no case law imposing the burden of proof for the scenes a faire doctrine on the defendant. Under the better reasoned view, plaintiff "must do more than offer a laundry list of the elements which [defendant] has incorporated into IMS to demonstrate actionable copying. [Plaintiff] has the burden to show that these elements constitute protectable expression with reference to the various doctrines just discussed." Maddog Software, Inc. v. Sklader, 382 F.Supp.2d 268, 282 (D. N.H. 2005). See also, Mitek Holdings, Inc. v. Arce Engineering Co., Inc., 89 F.3d 1548, 1555 (11th Cir. 1996) (because the plaintiff has the burden of establishing infringement "perhaps the best approach for a district court in any computer program infringement case, whether involving literal or non-literal elements, is for it to require the copyright owner to inform the court as to what aspects or elements of its computer program it considers to be protectable). The burden was on [Plaintiff] to demonstrate the significance of the copied data structures, and, in this Court's opinion, [Plaintiff] did not meet that burden ... [Plaintiff] has failed to prove, by a preponderance of the evidence, that the relative significance of these data structures are substantial to the overall program and its operation. Baystate Technologies, Inc. v. Bentley Systems, Inc., 946 F.Supp. 1079, 1089, 1090 (D. Mass 1996).3
3

Nelcela was precluded from presenting evidence that the alleged similarities were outside the scope of copyright protection. Consequently, Softel, Inc. v. Dragon Medical and Scientific Communications, Inc., 118 F.3d 955, 965 n. 9 (2nd Cir. 1997)(Court should merely "analyze evidence properly brought before it by a party"),cited by the Joint Parties, is inapposite.
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III. Analysis of the Evidence Presented A. The Sources of Alleged Similarity

The Joint Parties submitted a list of common features between the Lexcel software and Nelcela software on August 31, 2007. (Docket #555). The software at issue is similar in idea ("the processing of credit card transactions") and similar in non-literal elements, including the tasks performed, operation on a personal computer, and the breakdown into both an Authorization System and a Merchant System interacting with a single database. See, the Joint Parties Brief re Analytic Dissection at p. 8 (Docket #565). It is undisputed that "the court must dissect the works even further, to the source code level, to distinguish the ideas embodied in the software (i.e. credit card processing) from the expression of those ideas." Id. at p. 9 (Docket #565). With regard to the source code, the list of common features (Docket #555) coincides with the trial evidence presented in Exhibits 504 (Merchant System field names) and 509 (Authorization System source code). Two files apparently contribute to the list of field names in Exhibit 504: idr.sql and select.sql.4 Five sections of source code correspond to trial Exhibit 509 (Authorization System source code).5 On March 20, 2008, the Joint Parties provided expert testimony from Dr. David Posner to assist the Court in analytical dissection. Nelcela provided expert testimony from its trial expert, Jeffrey Pell, to likewise assist the Court in the analytic dissection of the Lexcel Merchant System and Authorization System.
4

Three additional files (account.sql; card.sql and tables) appear to contain file names that may not appear in Exhibit 504. The Joint Parties offer no explanation of relevance or materiality for these materials. Finally, although identified in the list of common features, the Joint Parties provided no material for bank.sql.
5

The sections of source code reflected in Exhibit 509 include: authdaem.c; cmdexec.c; cmdexec.h; interchange.h; and iso8583struc.h. Again, no source code was provided for a sixth file identified in the list of common features: iso8583.c.
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The Court has previously determined that portions of the Nelcela and Lexcel software are sufficiently similar that copying must have occurred. However, "not all copying ... is copyright infringement." Feist Publications, Inc. v. Rural Telephone

Service Co., Inc., 499 U.S. 340, 361, 111 S.Ct. 1282 (1991). Having identified the sources of similarity between the works, the Court turns to analytic dissection and the expert testimony to determine "whether any of the allegedly similar features are protected by copyright". Apple, 35 F.3d at 1443. B. Features Protected by Copyright

The Court must separate unprotectable ideas from protectable expression and apply the relevant limiting doctrines to identify the features protected by copyright. 1. The Merchant System a. The field names are not original or expressive.

The idea of the software at issue is to process credit card transactions. It is undisputed that specific data in a specific format must be transmitted to successfully process Visa transactions. See, March 20 Testimony, Hearing Transcript (Docket #597) of Dr. Posner Testimony at p. 73, ll. 19-21; Pell Testimony at p. 77, ll. 14-21. These formats are established by documentation the parties have referred to as "Visa Regulations". Trial Exhibits 297, 310-14. The desire to transmit the data in a particular way influences the design of the software. Pell Testimony at p. 77, ll. 22-24. The Visa Regulations describe the required data elements with names such as PIN (personal identification number); PAN (primary account number); "authorized amount" and "card number." There are several hundred (approaching 1,000) of these names in the Visa regulations. Id.; see also, Pell Testimony, Hearing Transcript (Docket #597) at p. 98 ("There are literally hundreds of data fields in a VISA processing schema. ... Hundreds, and probably at this point I will guess probably in the neighborhood of thousands.") Additionally, it is undisputed that database schema were created to process Visa
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transactions by the Bank of America in its "Bank of America System Environment" (BASE). Jury Instructions (Docket #500, p. 5 of 19, fn. 3). Lexcel is not the author of the names created by the Visa Regulations; Lexcel did not author the data schema created by BASE; and, Lexcel's names are not "unique" as some of them are shared at least with the Sun West Bank of Albuquerque. It is undisputed that the field names identified in Trial Exhibit 504 are logically related to the names in the Visa Regulations. In some cases the relationship is self evident ("archived" for Archived, "purchase_date" for Purchase Date). Pell Testimony at pp. 8081, 96-97. In some cases, the only differences are in capitalization of initial letters and underscoring blanks (card_number v. Card Number). In other cases, some terms are abbreviated or omitted (e.g., "auth_code" v. Authorization Source Code or "merch_zip" for Merchant ZIP Code).6 "Card Number," "Authorization Source Code" or "Merchant ZIP Code" are not copyrightable data elements in the first place. The disputed field names consist of "industry standard abbreviations of a wide variety of data elements and data fields that are used commonly throughout the industry." Testimony of Pell at p. 82, l. 20 ­ p. 83, l. 3; 96-98. Choices dictated by the Visa Regulations are not original to Lexcel; consequently, they are not copyrightable. Law does not support the Joint Parties' position that the programmer's choices of capitalization and abbreviation constitute protectable expression. While the experts agree it is possible to write software choosing field names from a wide range of choices, Defendant's expert (Jeffrey Pell) testified that good practice entails use of a field name that identifies the data stored in the field. See, March 20 Testimony of Pell (Docket #597) at pp. 78-82 (good programming practice is to name variables "as close to and in a representative manner of the data that is actually being used or processed
6

"Variables cannot have spaces in them." Testimony of Dr. Posner at p. 51, ll. 21-22. Thus an underscore is used between words.
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in that particular situation").

Mr. Pell agreed that Lexcel had some "discretion" in

choosing its field names, but that "discretion" is limited by use of "good programming practice" to "clearly identify the source of the data, the contents of it, what it's used for, and what its purpose in the process is." Id. at 79. Programmers "want to provide the name of a variable that expresses the contents of the data element so that one would understand what it represents ..." Id. at 90. Lexcel simply chose field names that expressed the exact content of the data elements required by the Visa regulations. Neither Lexcel nor Nelcela chose arbitrary names for the field names; instead, the names bear logical relationships to the data required by the Visa Regulations. Testimony of Dr. Posner at p. 60, l. 19 ­ p. 61, l. 1; p. 62, ll. 2-11. "It was certainly the case that the programmer created a name to remind him what that information represented." Id. at p. 61, ll. 21-22. Under the scenes a faire doctrine, stereotypical expression (such as abbreviating "authorization" as "auth") cannot be appropriated by a single author. See, Pell Testimony at p. 81, ll. 16-21. The Joint Parties' expert, Dr. Posner, suggested there were no

limitations on the potential field names that Lexcel could have used in its software. Docket #597 at p. 72. Dr. Posner, however, has no actual experience writing Visa code. Nelcela's expert, Jeffery Pell, has 30 years experience writing Visa code and testified all of the 84 field names in Trial Exhibit 504 are well recognized abbreviations of the names in the Visa Regulations. Mr. Pell testified credit card processing software from other companies could share these same exact field and table names. Id. at 81, 97-99. In general, all of ... all of these processor end points must follow the Visa Regulations and at some point somewhere in their processing facilities, they must produce code that uses this type of data in order to process Visa transactions successfully. Id. at 82.7
7

At trial Mr. Pell abbreviated several field names differently than the abbreviation used in
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I find the Pell testimony more persuasive on this issue.8 Mr. Pell has written credit card processing software and has witnessed others who have used names similar to Lexcel and Nelcela. Consequently, there is little (if any) originality in the field names chosen by Lexcel as reflected in Exhibit 504. Were I to find, as suggested by Dr. Posner, that Lexcel was free to choose any symbolic designation for the field names, then I would still conclude the choices made by Lexcel contain no meaningful expression. Dr. Posner discussed the field names in terms of "choice points." This characterization, however, misapprehends the role of creative choices and protectable expression: That a particular design was the product of a creative choice does not render the design copyrightable; rather, the focus of the inquiry remains whether the ultimate product of that choice is entitled to protection. Situation Management Systems v. ASP Consulting Group, 2008 WL 538808 (D. Mass. Feb. 28, 2008) at *7. "The decision to combine unprotectable elements does not render the resulting product original." Id. at *8. [T] fact that Sklader chose from among some number of programming options in creating FastFreight does not make the results of his choices protectable unless the options he eschewed also would have made sense as a practical matter. Maddog Software Inc. v. Sklader, 382 F.Supp.2d 268, 281 (DNH 2005) The Joint Parties point to inconsistencies in the abbreviations used for terms such as response, information, code, indicator and number. See, Joint Parties Exhibit 11. While these inconsistencies corroborate the Court's determination that copying occurred (a determination the Court is not inclined to revisit at this point), these discrepancies do the Lexcel code. Again, the abbreviations chosen By Lexcel are common sense abbreviations of the entity names in the Visa Regulations and their use may show "copying", but not protected expression. See note 1 above.
8

Dr. Posner admitted "I'm not an expert at all" on the Visa specification for the BASE2 system. Posner Testimony at pp. 70-71. Dr. Posner "assumed" ISO 8583 was "some kind of ISO standard" but was not familiar with it. Id. at p. 64, ll. 16-22.
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not establish that the choices made by Lexcel constitute protectable expression. There remain only a few ways to abbreviate the names in the Visa regulations, and the abbreviations chosen by Lexcel are standard and common place. Other courts have also found that these types of abbreviations are scenes a faire. See Bucklew v. Hawkins Ash Baptie & Co., LLP, 329 F.3d 923, 930-31 (7th Cir. 2003); Baystate Technologies, Inc. v. Bentley Systems, Inc., 946 F.Supp. 1079, 1087-89 (D. Mass. 1996) ("Under the scenes a faire doctrine, protection is denied to those elements of a program that have been dictated by external factors"). Individual fields which seek information do not constitute original expression, but rather are abbreviations for common place terms, and as such are unoriginal and uncopyrightable. ... OPS has also included in its proposed list of similarities the names of the fields in its grids and in other places in its screens ... These terms, by themselves, are not original, are within the public domain, and are not entitled to individual protection. OP Solutions, Inc. v. Intellectual Property Network, Ltd., 1999 WL 47191, 50 U.S.P.Q.2d 1399 (S.D. NY Feb. 2, 1999) at *14-15. The OP Solutions court subsequently held that copying of the action grid which "constitutes the heart of plaintiff's program" was actionable. 1999 WL 1122475, 52 U.S.P.Q.2d 1818, 1827 (S.D. NY Oct. 21, 1999). However, the court noted [T]he selection of those input fields is driven by external forces like industry convention where anyone composing a compilation of the type at issue would necessarily select the same categories of information. ... In arguing that it has demonstrated the necessary creativity in selecting the terms and field names, plaintiff has submitted a list of alternative names that could be used.... However, those alternatives are either obvious or gardenvariety variations.... Those variations do not cross the threshold of originality; the choice of "Reg" as opposed to "Registration Date" or "Date of Registration" is a rather obvious one.... I find that OPS' selection of field names is not
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sufficiently original. 52 U.S.P.Q.2d at 1824. Here these identified elements are not the heart or "golden nugget" of the Lexcel software. b. The field names are not "substantial elements" of the Lexcel Merchant System. First, it is undisputed that the field names reflected in Exhibit 504 do not constitute a database schema.9 The databases in both the Lexcel and Nelcela system store data in specific columns in individual rows of separate tables. Lexcel has not identified the total number of columns, rows or tables in its system. Moreover, the Lexcel software is inoperable. Based on everything presented, it is impossible for this Court to conclude that that there is copying of any "substantial elements" of the Lexcel Merchant System.10 More importantly, it is Lexcel's burden to prove significance of the items "copied," and the Joint Parties' expert could not establish importance of the data elements, the percentage of copied field names or tables (Id. at p. 59, ll. 7-10, p. 63, l. 6-10, p. 71, ll. 410, p. 73, l. 24-p. 74, l. 3) or relevance to the functionality of the Lexcel Merchant System.11
9

The Joint Parties' expert, Dr. Posner, testified that the database schema would include field names, tables, constraints defining the relationships between the tables and indexes used to access the tables. Posner Testimony at p. 48 and 55. The Joint Parties cite two cases granting copyright protection to a relational database schema for preliminary injunctions. Szen Corp. v. Anderson, 2007 WL 1728717 (E. D. Wash. 2007); Positive Software Solutions, Inc. v. New Century Mortgage Corp., 259 F.Supp.2d 531 (N.D. Tex. 2003) (near verbatim copying of significant portions of the SQL data structures"). These cases do not extend protection to individual field names. The Joint Parties have not shown verbatim copying of the SQL data structures or data schema. 10 Mr. Pell testified Ex. 504 represents "a minority of the fields" in the Nelcela software (Id. at p. 83, ll. 4-9); indeed "a very small subset of the total entities that would be required in order to perform them successfully or have a successful system". Id. at p. 98, l 11 ­ p. 99, l. 7. The Nelcela software would have around 30 tables. Id. at p. 83, ll 10-18. Plaintiff's expert (Dr. Posner) cited copying in only 4 tables. Id. at p. 63-64. 11 With regard to at least one of the 4 tables Dr. Posner examined (ISO8583settle) there are "fewer matches than nonmatches" in the field names. Posner Testimony at p. 65, ll.
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The Joint Parties' expert (Dr. Posner) testified any set of consistent field names would satisfy the formal programming requirements imposed by the hardware and software used. Id. at 73, 75. Consequently, the specific names chosen appear to lack significance to Lexcel. Conversely, Nelcela could substitute any consistent naming

scheme and avoid infringement. In the terms of the Altai analysis, the disputed field names do not constitute the kernel or "golden nugget" of the Lexcel software. Even if they were copyrightable, both quantitatively and qualitatively the disputed field names are an insubstantial portion of the totality of the Lexcel Merchant System. Lexcel did not show that the field names were contained in the same system of tables, that the indexes used to access the tables were the same or that the constructs define the relationships between the tables in the same way. Dr. Posner testified that the field names, tables, constraints defining the relationship between the tables, and indexes used to access the tables all constitute the data schema. Id. at p. 48, ll. 7-19, p. 55, ll 17-23. It is undisputed that the application software in the Lexcel Merchant System which manipulates data (written in the C++ programming language) is not similar in the Lexcel and Nelcela Merchant Systems. Again, Dr. Posner conceded the Lexcel Merchant System included more than a database. Id. at p. 68, ll. 22-24. The disputed field names are neither a substantial portion nor a significant aspect of the Lexcel Merchant System. Exhibit 504 does not establish substantial similarity between the Lexcel Merchant System and the Nelcela Software. Conclusion Regarding Merchant System Because the field names in the Lexcel Merchant System are logically dictated by the Visa Regulations and good programming practice, the Lexcel field names reflected in Exhibit 504 are not sufficiently original to warrant copyright protection. Even if

protected, the testimony presented by Lexcel suggests that virtually any field names could 12-15; Joint Parties Ex. 10.
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have been used; consequently, the expressive content of the field names is minimal. The field names would not be apparent to the ordinary user of the system, but instead would be used by programmers to debug and modify the underlying software. Lexcel has not shown the field names play a significant role in the database schema or any role in the application software of the Lexcel Merchant System. Copyright law does not protect individual words and fragmentary phrases apart from their role in a database schema or compilation. Hutchins v. Zoll Medical Corp., 492 F.3d 1377, 1385 (Fed. Cir. 2007) (instructions for performing CPR). Substantial similarity requires more than copying a small portion of Lexcel's field names. Worth v. Selchow & Righter Co., 827 F.2d 569, 570, 572-73 (9th Cir. 1987) (verbatim reproduction required for factual works), cert denied, 485 U.S. 977 (1988); Ristuccia v. Super Duper, Inc., 2008 WL 533800 (S.D. Ga., Feb. 27, 2008) ("selection" of words to teach speech not original to plaintiff). Based on the record in this case, copying of the disputed field names does not support a finding of substantial similarity between the Nelcela Merchant System and the Lexcel Merchant System as a matter of law.12 The Court finds as a matter of law that Lexcel Merchant System and the Nelcela Merchant System are not substantially similar. 2. The Authorization System

The asserted similarities in the Authorization System are reflected in Trial Exhibit 509. While portions of Exhibit 509 were not copied from Lexcel, Lexcel claims that 5 portions of Exhibit 509 were copied. See fn. 4, supra, and Joint Parties Exhibits 2, 4, 5, 7 and 8. Again, the Joint Parties offer evidence of fragmented literal similarity.
12

Consequently, it is not necessary to determine if the more stringent virtual identity standard applies. If it was necessary to define the scope of the copyright, I would find protection is "thin," requiring application of the virtual identity standard. The similarity proven by the Joint Parties could not satisfy the virtually identical standard for a compilation of data elements and field names. The evidence of fragmented literal similarity does not meet the virtual identity standard.
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Mr. Pell testified that the portions of Exhibit 509 identified by the Joint Parties perform standard functions corresponding to C programming and Visa processing requirements. Those functions initialize the software and database and obtain the required data (see, Hearing testimony, Docket #597 at p. 84, l. 24 - p. 85, l. 6), send standard ISO error messages (Id. at p. 84, ll. 7-23), and display a "spinning asterisk" to confirm the software is running (Id. at p. 85, ll. 7-24). He confirmed that to perform the desired task the computer would have to perform these functions (Id. at p. 85, l. 21 ­ p. 86, l. 10). Copyright protection does not extend to a "procedure, process, system [or] method of operation." 17 U.S.C. § 102(b). Thus, references to ISO 8583, the Visanet interface configuration, or any of the Bank of America System Environment (BASE) procedures are unprotectable procedures, processes, systems or methods of operation, or scenes a faire required by any software implementing the idea of computerizing Visa transaction processing. a. The Authorization System source code is functional and not original "Copyrighted software ordinarily contains both copyrighted and unprotected or functional elements." Sony Computer Entertainment, Inc. v. Connectix Corp., 203 F.3d 596, 599 (9th Cir. 2000), cert. denied, 531 U.S. 871 (2002). Copyright protection does not apply to software that merely implements ISO error messages or satisfies the requirements of the Visanet interface configuration. These elements are simply a "method of

operation" outside the scope of copyright protection. ILOG, Inc. v. Bell Logic LLC, 181 F.Supp.2d 3, 14 (D. Mass 2002); Lotus Development Corp. v. Borland Intern., Inc., 49 F.3d 807, 815 (1st Cir. 1995), aff'd by equally divided court, 516 U.S. 233 (1996). Standard programming techniques are as much the "stock" elements of computer programming as are the common themes, incidences and plot elements referred to in the literary scenes a faire cases.
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4 Nimmer, Copyright § 13.03[F][4][b][i] at 13-144.1. Likewise, lines of code required to perform standard functions in the C programming language are not original to Lexcel and are not copyrightable. The use of standard programming techniques that allow access to predefined functions and capabilities in the C compiler environment13 is not original expression worthy of copyright protection. Pell testified at trial, for example, the ISO 8583 include function appears in "just about every authorization system" as a common format to exchange transaction information. Pell Trial Testimony at 1308-10. He confirmed that the INT, CHAR and STR instructions are standard in the C programming language; indeed, they are dictated by the requirements of the programming language. Id. at 1311-1316. The disputed code is not expressive or original. b. The disputed source code is not a substantial element of the Lexcel Authorization System It is undisputed that the Lexcel Authorization System was not operational. The burden was on the Joint Parties to identify the "golden nugget" in the Authorization System code. The software designated authdaem.c causes an asterisk to spin on the screen while the computer is functioning (which could be seen by the consumer), but no witness ­ lay witness nor expert ­ identified this functionality as essential to the operation of the software or an element of the commercial advantage for Lexcel Authorization System. Displaying a "spinning asterisk" is an idea. The Joint Parties have not identified any alternative method of displaying a spinning asterisk that is at least as efficient as the software in authdaem.c. While it appears that the similarities in the parties' Authorization Systems are quantitatively greater than the similarities in their Merchant Systems, no
13

Dr. Posner testified an include file like "config_def" is "an essential part of how to represent the data" (Poster Testimony at p. 52, ll. 1-9) and the header file contains "the description of various functions that are provided to carry out actions and how those functions should be invoked. And so then the program can then use those ­ those definitions, those functions to execute actions." Id. at p. 53, l. 12 ­ p. 54, l. 2.
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compelling evidence was presented regarding the qualitative importance of the similar source code. The disputed source code, even if copyrightable, is an insubstantial and not a significant element of the Lexcel Authorization System. Thus, while the similarities have convinced me that this Court was correct that copying occurred, I am not convinced there was copying of copyrightable material or substantial similarity of any kernel of protected material. c. There is a "thin" scope of copyright protection for the Authorization System The Joint Parties offered no evidence of a broad range of protectable expression to achieve the functionality of the allegedly copied source code. At most, treatment of the disputed source code as a compilation would result in thin protection requiring proof of virtual identity. The Court must "filter out and disregard nonprotectable elements." 4 Nimmer, Copyright § 13.03[F] at 13-125; see also, e.g., Cavalier v. Random House, Inc., 297 F.3d 815, 822, 826 (9th Cir. 2002). The selection or arrangement of unprotected components cannot be found to constitute "bodily appropriation of expression" without "copying or unauthorized use of substantially the entire item." Apple Computer, Inc. v. Microsoft Corp., 821 F.Supp. 616, 623 (N.D. Cal. 1993) (quoting Harper House, Inc. v. Thomas Nelson, Inc., 889 F.2d 197, 205 (9th Cir. 1989)), aff'd, 35 F.3d 1435 (9th Cir. 1994), cert. denied, 513 U.S. 1184 (1995). Here, there is no claim that the entirety of the work was copied, and there is no evidence of the relative importance of the copied portions with respect to the Lexcel Authorization System as a whole. Less than the "entire" Lexcel Authorization System was copied. Consequently, the Joint Parties cannot satisfy the virtual identity standard. Moreover, there was no evidence the disputed source code was "selected, coordinated or arranged" so as to constitute a protectable compilation. Conclusion Regarding Authorization System Many of the similarities in the source code are dictated by standard programming
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techniques and the need to interface with the Visanet environment. The Joint Parties have not shown the asserted source code is eligible for copyright protection under the scenes a faire doctrine. The disputed source code does not contribute any significant expressive content to the Lexcel Authorization System. As unprotected elements, the source code could only be protected from virtually identical copying as part of a compilation involving selection, coordination or arrangement. There was no testimony that the Authorization System involved the All of the

selection, coordination or arrangement of the disputed source code.

commonality in the Authorization System Software was due to requirements to process Visanet transactions. Pell Testimony at p. 86, ll. 3-16. Any authorization system would have to perform the functions of the disputed source code. Thus, there was no selection and the functions involved were not creative expression. The Joint Parties have not shown the disputed code is the "golden nugget" of the Lexcel Authorization System or that equally efficient alternatives are available to Nelcela. I conclude copyright protection does not extend to the disputed software; consequently, despite my finding that copying has occurred, the works are not sufficiently similar to support a finding of illicit copying under Apple and Altai.

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