I. A Compromise Agreement
In John Sculley's book, __Odyssey__, he describes a conflict that arose between Microsoft Corp. and Apple Computer, Inc. in November 1985. Sculley recounts that Microsoft was developing a program called "Windows" which would give IBM computers Macintosh-like graphic features. Microsoft's Bill Gates called Sculley and said he was upset to hear that Apple was about to sue Microsoft. If this were true Gates wanted to hear it from Sculley. According to Sculley, Gates continued: "[I]f we are on a collision course, I want to know it because we'll stop all development on Mac products. I hope we can find a way to settle this thing." Sculley recognized that Apple could not sue its most important software supplier -- "the only company developing successful software for the Macintosh in a turbulent time." So they "hammered out a compromise license agreement, which," says Sculley, "was satisfactory to Microsoft yet protected the integrity of our Macintosh technology for Apple." Almost 10 years later, that Agreement insulated Microsoft from liability on copyright claims over the graphical user interface (GUI) in Apple's Lisa and Macintosh computers.
II. Licensing Visual Displays
In __Apple Computer Inc. v. Microsoft Corp., Hewlett-Packard Co.__, No. 93-16833 (9th Cir. September 19, 1994), the Ninth Circuit Court of Appeal reviewed Apple's appeal of judgments entered in favor of Microsoft and Hewlett-Packard by a district court, and paid particular attention to the 1985 Agreement. In the Agreement, Microsoft acknowledged "that the visual displays in Windows 1.0 are derivative works of the visual displays generated by Apple's Lisa and Macintosh graphical user interface programs." Apple, for its part, granted Microsoft "a non-exclusive, royalty-free, nontransferable license 'to use these derivative works in present and future software programs and to license them' to third parties for use in new software programs."

On appeal, Apple claimed the Agreement does not permit later Windows products to look more like the Macintosh than Windows 1.0 looked. The Ninth Circuit noted the Agreement licenses use of "derivative works," which refer to the visual displays generated by Apple's Lisa and Macintosh GUI programs. Dismissing Apple's claim, the Ninth Circuit quoted the lower court,

"Had it been the parties' intent to limit the license to the Windows 1.0 interface, they would have known how to say so. Instead, the 'derivative works' covered by the license are identified as the 'visual displays' in the Windows 1.0 interface, not the interface itself."

The Ninth Circuit also observed that Apple had tried to limit Microsoft's license to Windows 1.0. But Microsoft rejected Apple's first draft of the Agreement incorporating such a limitation.

Apple further argued the lower court's interpretation of the Agreement is wrong because "it would be unreasonable to suppose that Apple knowingly gave away its most valuable technological asset...." But, says the Ninth Circuit, Apple did receive value sufficient legally to support the Agreement, including Microsoft's agreement to release an improved version of Microsoft Word for the Macintosh and to delay release of an IBM-compatible version of Excel.
III. Authorized Copying
On whether the "total concept and feel" (i.e., the selection and arrangement of related images and their animation) of the Macintosh GUI had been unlawfully copied by Microsoft and Hewlett-Packard, the Ninth Circuit observed it does "not start at ground zero." The outcome of Apple's infringement claims is "fundamentally affect[ed]" by the fact Apple "__licensed__ the right to copy almost all of its visual displays." As noted by the Ninth Circuit,

"Authorized copying accounts for more than 90% of the allegedly infringing features in Windows 2.03 and 3.0, and two-thirds of the features in New Wave. More than that, the 1985 Agreement and the negotiations leading up to Microsoft's license left Apple no right to complain that selection and arrangement of __licensed__ elements make the interface as a whole look more 'Mac-like' than Windows 1.0."
IV. An Infringement Test
For Apple to prevail on its copyright infringement claims, it had to prove ownership of a valid copyright and that Microsoft and Hewlett-Packard copied unlicensed, protected elements of its copyrighted work. Such copying might be shown by direct or indirect evidence.

In cases where copying is sought to be proved by indirect evidence, the Ninth Circuit utilizes a two-part test with "extrinsic" and "intrinsic" components:

"[T]he extrinsic test ... objectively considers whether there are substantial similarities in both ideas and expression, whereas the intrinsic test ... measure[s] expression subjectively. Because only those elements of a work that are protectable and used without the author's permission can be compared when it comes to the ultimate question of illicit copying, we use analytic dissection to determine the scope of copyright protection before works are considered 'as a whole.'" (Citations omitted.)

Implementing this test, the Ninth Circuit requires a plaintiff to identify the source of the alleged similarity between its work and the alleged infringing work. The court then determines whether any of the allegedly similar features are protected by copyright. If, as in Apple's case, a license is involved, the court determines which features a defendant is entitled to copy. After separating the protectable from the unprotectable features, the court applies certain limiting doctrines. Next, the court determines the degree of protection to be afforded the plaintiff's work (e.g., "broad" or "thin") and the 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.
V. Unprotectable Features
The ideas of a graphical user interface and a desktop metaphor are embodied in the Macintosh GUI. Neither are protectable, as confirmed by the Ninth Circuit. Ideas embodied in the desktop metaphor also are not protectable, including use of windows to display multiple display images, iconic representation of familiar objects from the office environment, manipulation of icons to convey instructions and to control operation of the computer, use of menus, and opening and closing objects as a means of retrieving, transferring and storing information. Apple's use of animation, overlapping windows and well-designed icons were licensed to Microsoft and, therefore, also found not protectable.

The limiting principles implicated in this case, as found by the Ninth Circuit, are "merger," "__scenes a faire__, and originality." Under the merger doctrine, "when an idea and its expression are indistinguishable, or 'merged,' the expression will only be protected against nearly identical copying." Similarly, under the doctrine of scenes a faire,

"[W]hen similar features in a videogame [-- a work viewed as closely analogous to a GUI --] are '"as a practical matter indispensable, or at least standard, in the treatment of a given [idea]," 'they are treated like ideas and are therefore not protected by copyright. Furthermore, ... 'the mere __dispensable__ expression of these ideas, based on the technical requirements of the videogame medium, may be protected only against virtually identical copying.'" (Citations omitted.)

Here, the Ninth Circuit observed that "use of overlapping windows inheres in the idea of windows." Protected similarity could not be based on the use of overlapping windows, but "Apple's __particular expression__ may be protected." The Ninth Circuit also noted that GUIs are partly artistic and functional, stating:

"To the extent that GUIs are artistic, there is no dispute that creativity ... is constrained by power and speed of computers.... Design alternatives are further limited by the GUI's purpose of making interaction between the user and the computer more 'user friendly.' These, and similar environmental and ergonomic factors which limit the range of possible expression in GUIs, properly inform the scope of copyright protection."

On originality, the Ninth Circuit recognized that "protection extends only to those components of a work that are original to the author, although original selection and arrangement of otherwise uncopyrightable components may be protectable." For example, the Ninth Circuit upheld the denial of protection to certain GUI items because of Apple's admitted heavy borrowing from iconic treatments in the Xerox Star and an IBM Pictureworld research report. The Ninth Circuit also found that even if certain folder and page icon designs were original to Apple, they "added so little to the mix of protectable material that the outcome could not reasonably be affected."

In its appeal, Apple complained the lower court had twisted its arm to provide a list of features in its work that were similar to features in Windows 2.03, 3.0 and New Wave ( a product of Hewlett-Packard). According to Apple, the court was only to consider the works as a whole. But the Ninth Circuit found Apple's complaint misplaced -- the lower court was justified in requesting a list of similarities for use in meeting its obligation to identify similarities, determine their source, and decide which elements of the GUI are protectable. Moreover, the lower court had numerous demonstrations of the GUI as a whole.
VI. Virtual Identity & Attorneys' Fees
In light of the above, the Ninth Circuit held that any claim of infringement Apple may have against Microsoft "must rest on the copying of Apple's __unique selection and arrangement__" of the protectable and unlicensed features Apples claimed were copied. Further, ruled the Ninth Circuit, the Macintosh GUI only qualifies for "thin" protection, i.e., against virtually identical copying.

Apple contested this virtual identity standard, but the Ninth Circuit rejected the claim because Apple failed to do so before the lower court at the appropriate time. The Ninth Circuit similarly dismissed Apple's claim a jury should have evaluated the works side-by-side, as Apple elected not to have a jury do so.

The suit between the parties was not fully resolved by the Ninth Circuit. It was sent back to the lower court for reconsideration in accordance with a recent decision by the U.S. Supreme Court on the award of attorney's fees to prevailing defendants.
VII. Looking to Lotus
Many in the computer industry will be disappointed by the Apple decision because it was considerably influenced by the license given to Microsoft by Apple. The Ninth Circuit did not resolve a number of open questions about the scope of copyright protection that may be afforded nonliteral aspects of computer software, i.e., the "total concept and feel" as opposed to the actual code of the software. More definitive answers will be provided by the decision on the appeal currently pending between Lotus Development Corp. and Borland International, Inc. over alleged infringement of Lotus 1-2-3.
CyberLaw (tm) is published solely as an educational service. The author, a California attorney, is Executive Editor of LEXIS COUNSEL CONNECT CALIFORNIA. He may be contacted at jrosen03@reach.com or cyberlaw@cyberlaw.com; questions and comments may be posted on America Online (go to keyword "CYBERLAW"). Copyright (c) 1994 Jonathan Rosenoer; All Rights Reserved. CyberLaw is a trademark of Jonathan Rosenoer. CyberLaw on the World Wide Web (http://www.portal.com/~cyberlaw/cylw_home.html) is made possible with support from Portal Communications Co., an Internet provider based in Cupertino, CA (ph. 408/973-9111).

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