Storage Technology Corp. v. Custom Hardware Engineering & Consulting, Inc. was a dispute over third-party maintenance of automated tape libraries. StorageTek licensed, but did not sell, the software that ran its libraries. The licence covered the functional code and excluded the maintenance code, although the whole code was delivered to the customer and was loaded into memory when the library started. Custom Hardware Engineering & Consulting (“CHE”) repaired the libraries for customers.[1]
Background
To diagnose faults CHE intercepted fault symptom codes generated by the maintenance code. To make the control unit send them, it had to override a password protection scheme called GetKey, first with a device that tried passwords and later with one that mimicked a signal from the management unit when the control unit was rebooted.[1]
The dispute
StorageTek sued CHE and its president in the District of Massachusetts, alleging copyright infringement by rebooting and reconfiguring customers’ units, violation of the anti-circumvention provision of the Digital Millennium Copyright Act (DMCA), 17 U.S.C. section 1201(a), and trade secret misappropriation. CHE counterclaimed under antitrust law. The district court granted a preliminary injunction against circumventing GetKey, intercepting and displaying event messages, and causing the maintenance code to be copied on customers’ systems.[1] CHE did not dispute that the copying of the maintenance code into memory was outside the explicit grant of the licence, so absent a defence it would have been infringement.[1]
Decision or outcome
The Federal Circuit, applying First Circuit law, held that CHE was likely to prevail on copyright infringement for two reasons. First, the machine maintenance and repair provision in section 117(c), treated as a question of first impression, protected the copies because StorageTek’s maintenance code was so entangled with the functional code that all of it had to be loaded for the machine to activate. Second, the customers’ licences, which allowed use of the code “for the sole purpose of enabling the specific unit of Equipment”, implicitly permitted copying that activation necessarily involved, and CHE as the customers’ agent could rely on that permission.[1][2]
The DMCA claim failed on the court’s reading that section 1201 creates a cause of action only where the circumvented access bears a reasonable relationship to rights protected by the Copyright Act, which was not shown here. The court also found that the district court overlooked material factors on the trade secret claim, and held that it had abused its discretion in granting the preliminary injunction. It vacated the injunction and remanded; Judge Rader dissented.[1] On 14 December 2005 the court denied rehearing with further discussion of both the statute and the licence.[2] The sources reviewed do not cover the later history of the case.
Significance for software licensing and SAM practice
- Licence scope and implied rights. The court read the grant to enable equipment as carrying with it the copies needed to start it, despite the exclusion of maintenance code.[2] Compare MAI v. Peak, where the licence was held not to cover a third-party maintainer, and Avaya v. Telecom Labs, where the outcome depended on the wording of each contract generation.
- Code architecture. The result turned on a factual concession that the entire maintenance code had to be loaded into memory when the machine was turned on.[2]
- Technical protection measures. The DMCA did not create a new property right independent of copyright in this decision.[1]
Lessons learned
- Read the licence for what activation and use necessarily involve. The court implied the right to the memory copies that starting the equipment requires.[2]
- Statutory maintenance exceptions have conditions. Section 117(c) covered CHE’s copies only because of how the code was loaded.[2]
- A circumvention claim still has to connect to copyright. The court required a link between the access and infringement.[1]
- Say explicitly who may use maintenance tools. Where the licence is silent or excludes the code while delivering it, a third-party maintainer may argue implied permission.[2]
Out of scope
This article does not cover CHE’s antitrust counterclaims, the patent claims not on appeal, Judge Rader’s dissent in detail, or proceedings after remand.