of prior authors. Raw material is not needed.

There are lots of reasons to doubt that this vision of “creation out of nothing” works very well, even in the arts, the traditional domain of copyright law. 4 But whatever its merits or defects in the arts, it seems completely wrong-headed when it comes to software. Software solutions to practical problems do converge, and programmers definitely draw upon prior lines of code. Worse still, software tends to exhibit “network effects.” Unlike my choice of novel, my choice of word-processing program is strongly influenced, perhaps dominated, by the question of what program other people choose to buy. That means that even if a programmer could find a completely different way to write a word-processing program, this programmer has to be able to make it read the dominant program’s files and mimic its features if the programmer is to attract any customers at all. This hardly sounds like completely divergent creation.

Seeing the way software failed to fit this Procrustean bed of copyright, many scholars presumed the process of forcing it into place would be catastrophic. They believed that, lacking patent’s high standards, copyright’s monopolies would proliferate. Copyright’s treatment of follow-on, or “derivative,” works would impede innovation, it was thought. The force of network effects would allow the copyright holder of whatever software became “the standard” to extract huge monopoly rents and prevent competing innovation for many years longer than the patent term. Users of programs would be locked in, unable to shift their documents, data, or skills to a competing program. Doom and gloom abounded among copyright scholars, including many who shared the premise that software should be covered by property rights. They simply believed that these were the wrong property rights to use.

Copyright did indeed cause problems for software developers, though it is difficult to judge whether they outweighed the economic benefits of encouraging software innovation, production, and distribution. But the negative effects of copyright were minimized by a remarkably prescient set of actions by courts and, to a much

for some time,
the u.S. court
of appeals for the
federal circuit
(the leading patent
court in the u.S.)
has seemed
to believe that
computers
can turn an
unpatentable idea
into a patentable
machine.

lesser extent Congress, so the worst scenarios did not come to pass. Courts interpreted the copyright over software narrowly, so it covered little beyond literal infringement. They developed a complicated test to work out whether one program infringes the details of another program.a The details give law students headaches, but the effects were simple. If your software is similar to mine merely because it performed the same function or because I picked the most efficient way to perform some task or even because there was market demand for doing it that way, then none of those similarities counted for the purposes of infringement. Nor did material that was taken from the public domain. The result was that while someone who made literal copies of Windows Vista was clearly infringing copyright, the person who made a competing program generally would not be.

In addition, courts interpreted copyright’s fair-use doctrine to cover something called “decompilation,” basically taking apart someone else’s program so you can understand and compete with it.b As part of the process, the decompiler had to make a copy of the program. If the law were read literally, decompilation would hardly seem a fair use. The decompiler makes a whole copy, for a commercial purpose, of a copyrighted work, precisely in order to cause harm to its market by offering a substitute good. But the courts took a broader view. The copy was a necessary part of the process of producing a competing product, rather than a piratical attempt to sell a copy of the same product. This limitation on copyright provided by fair use was needed in order to foster the innovation that copyright is supposed to encourage.

These rulings and others like them meant that software was protected by copyright but also that the copyright did not give its owner the right to prevent functional imitation and competition. Is that enough? Clearly the network effects are real. Most of us use Windows and Microsoft Word, and one very big reason is because everyone else

 

a See, for example, Computer Assocs. Int’l, Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir. 1992).

b See, for example, Sega Enters. Ltd. v. Accolade Inc., 977 F.2d 1510 (9th Cir. 1992).