Background of The Case
Computer Associates (CA) created a job scheduling program called CA-SCHEDULER which sorts, runs, and controls the various tasks given to a computer. This scheduler was designed to be compatible with IBM System 370 computers which ran one of three different operating systems: DOS/VSE, MVS, and VM/CMS. Traditionally, a program must be specifically compiled to run on a designated operating system. In order to allow the same code to run on the different operating systems, the CA-SCHEDULER included a component called ADAPTER that was designed to translate the language of the program into commands understandable to that particular operating system. This way the CA-SCHEDULER could use the same code but run on different operating systems.
In 1982, Altai established their own job scheduler called ZEKE written for the VSE operating system. In efforts to create a version of ZEKE to run over the MVS operating system, Altai employee James Williams recruited his longtime friend Claude Arney, an employee of Computer Associates, to create the MVS version. Williams claims that at the time he did not know about the ADAPTER component or that Arney had familiarity with the CA-SCHEDULER and ADAPTER code. Arney left CA to work on Altai's ZEKE program, taking the VSE and MVS versions of the source code for ADAPTER with him. Using his knowledge of ADAPTER, Arney then convinced Altai to restructure the program to include a program translator to interface with various operating systems. Arney created the translator OSCAR 3.4 for Altai in which about 30% of OSCAR's source code was taken directly from CA's ADAPTER code.
In 1988, CA discovered Altai's use of the CA ADAPTER code and brought an action for copyright infringement and trade secret misappropriation against Altai. In response, Altai ordered a clean room rewrite of the copied portions of the code to be performed by eight programmers who had no knowledge or involvement with the previous OSCAR code. This new program was released as OSCAR 3.5.
In the judgment of the United States District Court for the Eastern District of New York, the Honorable George C. Pratt, United States Circuit Judge found that OSCAR 3.4 was a copyright infringement of CA's CA-SCHEDULER and awarded CA $364,444 in damages and apportioned profits. The district court ruled that OSCAR 3.5 rewrite, on the other hand, did not constitute copyright infringement. It also ruled that the state law trade secret claims were preempted by the federal Copyright Act, and thus Altai was not liable for trade secret misappropriation.
Initially, both parties appealed the judgment. Altai appealed the judgment on OSCAR 3.4, but subsequently dropped the claim. CA appealed the judgment on OSCAR 3.5 and preemption on trade secret misappropriation.
Read more about this topic: Computer Associates Int. Inc. V. Altai Inc.
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