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Courts of Appeal Harmonize on Temporary Copies

· November 3, 2021

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The Ninth Circuit’s recent decision in CDK Global v. Brnovich harmonizes the treatment of temporary digital copies by different circuits and demonstrates the impact of the Supreme Court’s decision in Google v. Oracle on lower courts.

Background

The overarching issue in the case is the preemption of state laws by the Copyright Act. CDK provides database services for automobile dealers. CDK refused to provide access to its databases (which contained data provided by the dealers) by third party data-integration companies retained by the dealers to reformat the data for use with the dealers’ other software applications. The Arizona legislature unanimously passed a law requiring database service providers to grant access to their databases by dealer-authorized third-party integrators. 

Additionally, the Arizona law required the database service providers to adopt and make available a standardized framework for the sharing of data with the authorized integrators. The framework must be implemented with an open application programming interface (“API”) or other open access integration method.

CDK sued the Attorney General of Arizona, claiming inter alia that the Arizona law was preempted by the Copyright Act under a conflict preemption theory because it stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. The district court denied CDK a preliminary injunction and the Ninth Circuit affirmed that denial.

The Ninth Circuit panel noted that to succeed in its conflict preemption claim, CDK had to show that the state and federal law were irreconcilable. Specifically, CDK had to show that every possible application of the Arizona law would conflict with the Copyright Act. CDK argued that the Arizona law conflicted with the Copyright Act by granting the integrators the right to make copies of its database software and its APIs. As discussed below, the panel found that the Arizona law did not, in fact, authorize the making of copies of CDK’s protected expression, and thus did not conflict with the Copyright Act.

Temporary Copies

CDK contended that the Arizona law interfered with its exclusive right to reproduce its database software because every time a third party would access its database, a copy of CDK’s database software would be created in the memory of CDK’s servers. However, the panel found that an expert witness testified that a new copy of the software would not have to be made if the code was already running on the server at the time the third party accessed the database. 

Moreover, the panel found that CDK failed to show that even if the third-party requests created new copies on the CDK server, that those copies would infringe CDK’s reproduction right. The panel first focused on the fact that the copies of the software would remain on the CDK server and would not be shared with anyone else. The panel stated it was “unaware of any authority suggesting that causing a copyright holder to make a copy of its own copyrighted work and keep it within the copyright holder’s exclusive possession would violate the Copyright Act.” Additionally, the panel noted that it was possible “that causing a [database] provider to copy its software on its own server in these circumstances would be a fair use.” 

The panel proceeded to state that it did not need to resolve this issue because there was a more fundamental problem with CDK’s theory: it failed to prove that any copies had been made within the meaning of the Copyright Act. The reproduction right applies to the creation of “copies,” which are defined in 17 U.S.C. § 101 as “material objects, . . . in which a work is fixed . . . and from which the work can be perceived, reproduced, or otherwise communicated.” Section 101 further provides that a work is “‘fixed’ in a tangible medium of expression when its embodiment . . . is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration.” 

Digital technology requires the making of a wide variety of temporary copies, such as those in this case. Courts have wrestled with how to apply the section 101 definitions of “copies” and “fixed” to these temporary copies. If all these temporary copies are copies within the meaning of the Copyright Act, the unauthorized making of these copies could trigger infringement liability, unless permitted by an exception. 

Courts in other circuits have held that the Copyright Act imposes two distinct but related requirements for a copy to be a copy within the meaning of the Act: the embodiment requirement (the copy is embodied in a medium from which it can be perceived, reproduced, or otherwise communicated) and the duration requirement (the copy can be perceived, reproduced, or otherwise communicated for a period of more than transitory duration). Further, courts in other circuits have found that in certain cases, a temporary copy in a computer’s memory might meet the embodiment requirement, but not the duration requirement. For example, in Cartoon Network v. CSC, the Second Circuit found that a buffer copy in a remote DVR that lasted only 1.2 seconds did not satisfy the duration requirement. 

The Ninth Circuit in numerous previous cases, starting with MAI v. Peak, had found that copies stored in computer memory constituted copies within the meaning of the Act. But the CDK panel noted that the Ninth Circuit in those cases had not “considered what is required for a copy to persist for more than a transitory duration.” This arguably created the implication that in the Ninth Circuit, the loading of software or other works into computer memory satisfied both the embodiment and the duration requirements. 

The Second Circuit in Cartoon Network, however, rejected this interpretation of the Ninth Circuit’s precedents. The CDK panel expressly “agree[d] with the Second Circuit’s characterization of our decisions: MAI and the cases following it establish only that ‘loading a program into a computer’s [memory] can result in copying that program, not that loading a program into a form of [memory] always results in copying.’” Thus, the CDK decision eliminated any perceived inconsistency between the circuits regarding the duration requirement.

The CDK panel stated that “embodiments in a computer’s memory may perform some useful function despite being transitory.” Here, the embodiment would allow the database software to process a request made by an authorized integrator. The panel stressed that such use, by itself, did not constitute infringement: “the Copyright Act does not provide copyright owners the exclusive right to use their works. Such a right ‘can only be secured, if it can be secured at all, by letters-patent.’” 

Because CDK presented no evidence that the Arizona law would require embodiments of the database software to persist for a period of more than transitory duration, CDK did not establish a likelihood of success on its claim that the Arizona law conflicted with the Copyright Act.

Google v. Oracle

The CDK panel cited the Supreme Court’s decision in Google v. Oracle in support of the proposition that “the Copyright Act does not provide copyright owners the exclusive right to use their works.”

The panel also relied heavily on Google when rejecting CDK’s argument that the Arizona law permitted integrators to copy expression in its APIs. First, citing Google, the panel asserted that “it is not clear that the API would be subject to copyright protection.” It appears the panel is referring to Google’s statement that “the declaring code is, if copyrightable at all, further than are most computer programs (such as the implementing code) from the core of copyright.”

Nonetheless, the panel continued its discussion on the assumption that at least some code defining the database provider’s API was protectable. It relied on Google’s explanation of an API, including its description of implementing code, method calls, and declaring code. The panel noted that the integrators need not copy the database provider’s implementing code or declaring code. Rather, “all an authorized integrator needs to write is an API request, which is analogous to a method call.” Accordingly, “authorized integrators are analogous not to Google, but to the individual programmers in Google who used the Java API.” The panel states that “Oracle did not even attempt to argue that the mere use of an API by programmers writing method calls would infringe its copyrights—and for good reason. Programmers writing method calls do not engage in verbatim copying of API source code.” Because CDK could not show that an integrator’s use of its API would infringe its copyright, it could not demonstrate that the Arizona law conflicted with its reproduction right under the Copyright Act.

After issuance of Google v. Oracle, some commentators suggested that the decision would have little precedential value outside the specific facts of the case. The CDK decision belies that position. The CDK panel relied on Google for distinguishing the scope of copyrights from patents—a critical issue that arises repeatedly because copyright applies to functional works such as software and databases. Further, the CDK panel turned to Google for guidance in the application of copyright to APIs generally. APIs are important for competition and innovation in a wide range of software-dependent products and services.

Intellectual Property

The Internet enables the free exchange of ideas and content that, in turn, promote creativity, commerce, and innovation. However, a balanced approach to copyright, trademarks, and patents is critical to this creative and entrepreneurial spirit the Internet has fostered. Consequently, it is our belief that the intellectual property system should encourage innovation, while not impeding new business models and open-source developments.