Teradyne v. Ace Test Systems Inc. was a case that began in the Central District of California, but made its way up to the Ninth Circuit for a fair use analysis. With an eye toward the Supreme Court case of Google v. Oracle, the Ninth Circuit affirmed the district court’s dismissal of the plaintiff’s claim of copyright infringement.
In applying the first fair use factor, the Ninth Circuit affirmed that Ace Test System’s (“Ace”) use of Teradyne’s code was transformative – that is, Ace used the copied work for a purpose that was different from Teradyne’s purpose; it enabled customers to use their own test program sets on plaintiff’s software and test instruments.
The second fair use factor is the nature of the copyrighted work, and again the appeals court found no error with the district court’s reasoning. The plaintiff’s software wasn’t a painting, a book, or a piece of music. It was software. The more functional something is, the less it is a core value of copyright – and the more likely to fall to a fair use defense.
The third factor is the amount of the work that was copied by the alleged infringeIn the Google case that was decided by the Supreme Court, Oracle copied about 11,500 lines of code, which was only .04% of the API (application programming interface). Similarly, the amount of code that Ace copied, compared to the entire program, was very small.
The fourth factor is the effect on the potential market of the copyrighted work. In Google, as here, the effect on the potential market of the copyrighted work was found to be minimal.
Most importantly, the Ninth Circuit said that to rule in Teradyne’s favor would promote the type of “monopolistic lock-in” that the fair use law protects against. If testers could not rely on plaintiff’s software to run their own test program sets, such users would have to rewrite all of their programs. The Supreme Court found in Google that making it impossible for others to compete runs counter to copyright’s statutory purpose of promoting creative expression.
In the Supreme Court’s Goldsmith v. Andy Warhol Foundation, the decision hinged on whether Warhol’s use of Goldsmith’s work was for the same purpose as the work that it copied (both the original and the copy/adaptation served as magazine covers of Prince). In that case, the “new” work was found not to be transformative.
It seems to me that computer programs are almost deemed to have a different standard because they’re so functional. Once software or other works are deemed to be “functional,” that seems to be the death knell for the claim of infringement. If the court adopts that word choice, the analysis not only moves the work farther from the “core of copyright,” but also closer to the defendant’s fair use defense. Not a great place for the content provider, but a victory for the businesses that test and repair.
