View source for Bowers v. Baystate Technologies, Inc.

{{Use mdy dates|date=September 2023}}
{{Infobox COA case
  |Litigants= Bowers v. Baystate Technologies
  |image =Seal of the United States Court of Appeals for the Federal Circuit.svg
  |Court=[[United States Court of Appeals for the Federal Circuit]]
  |ArgueDate=
  |ArgueYear= 
  |DecideDate= January 29,
  |DecideYear= 2003
  |FullName= Harold L. Bowers (doing business as HLB Technology) v. Baystate Technologies, Inc., 
  |Citations=320 [[F.3d]] [https://law.justia.com/cases/federal/appellate-courts/F3/320/1317/615628/ 1317]
  |Prior=
  |Subsequent=
  |Holding= Baystate performed a breach of contract by reverse engineering HLB Technology's software.  The shrinkwrap license on HLB Technology's software preempts fair use rights given in copyright law.
  |Judges= [[Randall Ray Rader]], [[Raymond Charles Clevenger]], [[Timothy B. Dyk|Timothy Belcher Dyk]]
  |Majority= [[Randall Ray Rader]]
  |JoinMajority=
  |Concurrence=
  |JoinConcurrence=
  |Dissent= [[Timothy B. Dyk|Timothy Belcher Dyk]]
  |JoinDissent=
  |LawsApplied= {{UnitedStatesCode|17|117}}
}}

'''''Bowers v. Baystate Technologies''''', 320 F.3d 1317 (Fed. Cir. 2003),<ref name="Fed_opinion">{{cite court |litigants=Bowers v. Baystate Technologies, Inc. |vol=320 |reporter=F.3d |opinion=1317 |pinpoint= |court=[[Fed. Cir.]] |date=2003 |url=https://law.justia.com/cases/federal/appellate-courts/F3/320/1317/615628/ |accessdate=2018-06-30 |quote=}}</ref> was a [[Court of Appeals for the Federal Circuit|U.S. Court of Appeals Federal Circuit]] case involving Harold L. Bowers (doing business as HLB Technology) and Baystate Technologies over [[patent infringement]], [[copyright infringement]], and [[breach of contract]].  In the case, the court found that Baystate had breached their contract by [[reverse engineering]] Bower's program, something expressly prohibited by a [[shrink wrap license]] that Baystate entered into upon purchasing a copy of Bower's software. This case is notable for establishing that license agreements can [[preempt]] [[fair use]] rights as well as expand the rights of [[copyright]] holders beyond those codified in US federal law.

==Background==
<!--
===Summary of U.S. Patent No. 4,933,514===
Bowers invented Cadjet, a template used with a [[digitizing tablet]] to streamline CAD software commands. The template rested on top of the digitizing tablet to indicate command locations visually.<ref name="Patent No. 4,933,514">{{cite web|title=Patent No. 4,933,514|url=http://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1&Sect2=HITOFF&d=PALL&p=1&u=%2Fnetahtml%2FPTO%2Fsrchnum.htm&r=1&f=G&l=50&s1=4,933,514.PN.&OS=PN/4,933,514&RS=PN/4,933,514|accessdate=27 September 2011}}</ref>   
On Feb. 27, 1989, Bowers filed a [[patent]] for his template. It was issued on June 12, 1990 as Patent No. 4,933,514.<ref name="Patent No. 4,933,514" /> Bowers commercialized the patent template as Cadjet for use with the software [[CADKEY]].<ref name="Fed_opinion" />  On February 1, 1993, Bowers requested a re-examination of the patent to include art from his Keymaster template.  The amended patent was issued on December 9, 1997 as B1-4,933,514.<ref name="Fed_opinion" />
-->

Baystate Technologies, Inc ("Baystate") and HLB Technology ("Bowers") were competing companies which created add-ons that interacted with a [[computer-aided design]] (CAD) program known as CADKEY.<ref name="Fed_opinion" />

Bowers was the patent holder of a system called Cadjet that simplified interfacing with CAD software,<ref name="Patent No. 4,933,514">{{US patent|4933514}}.</ref> which he began to license commercially in 1989. Bower's initial software offering was later combined with a product, called Geodraft, that was produced by George W. Ford III (Ford) and inserted [[engineering tolerance|tolerances]] compliant with [[ANSI]] for features in a CAD design.  Together, the products were marketed as Designer's Toolkit, which was sold with a shrink-wrap license that prohibited [[reverse engineering]].<ref name="Fed_opinion" />

Baystate sold competing CADKEY tools including Draft-Pak version 1 and 2. According to the court filings, Baystate acquired a copy of Bowers' Designer's Toolkit, and three months later, Baystate released Version 3 of Draft-Pak, which substantially overlapped with the features offered by Designer's Toolkit.<ref name="Fed_opinion" />

In 1991, Baystate sued Bowers and sought a [[declaratory judgement]] that Baystate's products did not infringe on Bowers' patent, the patent was invalid, and the patent was unenforceable. Bowers filed counterclaims for copyright infringement, patent infringement, and breach of contract and contended that Baystate had reverse engineered Designer's Toolkit.<ref name="Fed_opinion" />

At court, expert testimonial revealed "evidence of extensive and unusual similarities" between Draft-Pak and Designer's Toolkit and supported supporting Bowers's claim that Baystate had reverse engineered a copy of his software.<ref name="Fed_opinion" /> The District Court of Massachusetts concluded that Bowers was entitled to damages and found that the shrink wrap license tied to Bowers's software preempted any fair use case for reverse engineering as allowed by Copyright law. Baystate appealed the district courts decision.

<!-- The jury further decided that Bowers's patent was valid and enforceable.<ref name="Mass1">{{cite court |litigants= Bowers v. Baystate Technologies |vol=101 |reporter=F.2d |opinion=53 |pinpoint= |court=Dist. Court, D. Massachusetts |date=2000 |url=http://scholar.google.com/scholar_case?case=2551100621924314024&q=Bower+v.+Baystate&hl=en&as_sdt=2,5&as_vis=1 |quote=}}</ref>  The district court determined the copyright damages were duplicative of the contract damages and so awarded only the contract damages and patent infringement to Bowers.<ref name="Mass2">{{cite court |litigants= Bowers v. Baystate Technologies |vol=112 |reporter=F.2d |opinion=185 |pinpoint= |court=Dist. Court, D. Massachusetts |date=2000 |url=http://scholar.google.com/scholar_case?case=2551100621924314024&q=bowers+v.+baystate+technologies&hl=en&as_sdt=2,5&as_vis=1 |quote=}}</ref>  -->

==Opinions of Federal Circuit==
The central question the Federal Court addressed was whether a shrink-wrap license that forbids reverse engineering was preempted by federal copyright law, which expressly permits reverse engineering.<ref name="Fed_opinion" />

===Majority opinion===
The majority opinion of the Federal Court upheld that parties can freely enter into license agreements that enforce stricter requirements than copyright and that such agreements are not preempted by copyright law.<ref name="Fed_opinion" /> In its decision, the court cited a number of prior cases involving contractual constraints that extend copyright law:

* ''Data General v. Grumman'' demonstrated that state laws protecting trade secrets were not preempted by copyright law even though both deal with unlawful copying.<ref name=data>{{cite court |litigants=Data Gen. Corp. v. Grumman Systems Support Corp. |vol=36 |reporter=F.3d |opinion=1147 |pinpoint= |court=[[1st Cir.]] |date=1994 |url=https://law.justia.com/cases/federal/appellate-courts/F3/36/1147/563484/ |accessdate=2018-06-30 |quote=}}</ref> Specifically, the federal court stated that "beyond mere copying, that state law claim required proof of a trade secret and breach of a duty of confidentiality."<ref name="Fed_opinion" /> The additional terms result in a unique requirement that is not covered by copyright law and thus not preempted.<ref name="Fed_opinion" /> 
* ''[[ProCD v. Zeidenberg]]'' determined that materials that could not be protected by copyright could be protected by a shrinkwrap license if the actions restricted by the license were not "equivalent to any of the exclusive rights within the general scope of copyright." As contracts affect only the involved parties, no new exclusive (universal) rights are created for the copyright holder.<ref name="procd">{{cite court |litigants=ProCD, Inc. v. Zeidenberg |vol=86 |reporter=F.3d |opinion=1447 |pinpoint= |court=[[7th Cir.]] |date=1996 |url=https://law.justia.com/cases/federal/appellate-courts/F3/86/1447/538242/ |accessdate=2018-06-30 |quote=}}</ref>
* Although ''[[Atari Games Corp. v. Nintendo of America Inc.|Atari v. Nintendo]]'' established reverse engineering was a fair use exception to copyright infringement,<ref name=Atari>{{cite court |litigants=Atari Games Corp. v. Nintendo of America Inc. |vol=975 |reporter=F.2d |opinion=832 |pinpoint= |court=[[Fed. Cir.]] |date=1992 |url=https://law.justia.com/cases/federal/appellate-courts/F2/975/832/163650/ |accessdate=2018-06-30 |quote=}}</ref> it did not conflict with an additional contract disallowing reverse engineering.<ref name="Fed_opinion" />
* In the Federal Court's own interpretation, ''[[Vault Corp. v. Quaid Software Ltd.|Vault v. Quaid]]'' found that state law was preempted by copyright law,<ref name=Vault>{{cite court |litigants=Vault Corp. v. Quaid Software Ltd. |vol=847 |reporter=F.2d |opinion=255 |pinpoint= |court=[[5th Cir.]] |date=1988 |url=https://law.justia.com/cases/federal/appellate-courts/F2/847/255/193888/ |accessdate=2018-06-30 |quote=}}</ref> but it does not apply to a private contractual agreement.<ref name="Fed_opinion" />

===Dissenting opinion===
A [[dissenting opinion]] was entered by Judge Dyk agreeing with all decisions except that a copyright law does not preempt a state contract.<ref name="Fed_opinion" />

Dyk formed his argument using [[patent]] and copyright law cases:

* Cases establishing the rights of patent law were viewed as applicable toward copyright law. ''[[Bonito Boats, Inc. v. Thunder Craft Boats, Inc.|Bonito Boats v. Thunder Craft Boats]]'' defined that state law does not preempt patent rights.<ref name="Fed_opinion" />
* ''Data General v. Grumman''<ref name=data/> and ''ProCD v. Zeidenberg''<ref name="procd"/> both focused on "extra elements" added by state contract law that were not covered by copyright law.<ref name="Fed_opinion" />
* ''Atari v. Nintendo'' demonstrates the importance of the fair use defense in copyright law to ensure that copyright law did not inhibit understanding of an idea, process, or method of operation.<ref name=Atari/><ref name="Fed_opinion" />
* ''Vault v. Quaid'' established that state law could not be used to preempt copyright law.<ref name=Vault/> Dyk agreed that a private agreement could be used to preempt copyright law, but a shrinkwrap license is similar to a state law because the customer does not have an opportunity to renegotiate the license agreement.<ref name="Fed_opinion" />
* Dyk created an analogy of a state law where software disallowing reverse engineering must have a black dot on the packaging. That analogy demonstrated a law that would give broader protections than those normally given in copyright law, which impedes publicly-given rights.<ref name="Fed_opinion" />
* By allowing preemption of copyright law, Dyk questioned other limitations that could be applied to federal law. He also warned that it could undermine the protections that had originally been given in the [[Copyright Act of 1976|Copyright Act]].<ref name="Fed_opinion" />

==Criticism==
Critics scrutinized the outcome and argued that it not only allows companies to use state contract law to expand copyright protections but also creates non-negotiated license terms, which are equivalent to patent-like protection without the limiting conditions of patent law.<ref name=RiceAnalysis>{{cite journal|last=Rice|first=D.A.|title=Copyright and Contract: Preemption|journal=Roger Williams U.L. Rev.|year=2004|volume=9|series=595|url=http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/rwulr9&div=29&id=&page=}}</ref>

Critics further argued that the precedent is unrealistic for the software industry. Reverse engineering is considered necessary to be to keep up with "feature wars," such as the issue in this case, and it is also essential for [[interoperability]] and security purposes.<ref name=InfoWorld1>{{cite news|last=Foster|first=Ed|title=Headed in Reverse|url=https://books.google.com/books?id=fz0EAAAAMBAJ&pg=PA57|accessdate=27 September 2011|newspaper=InfoWorld|date=16 September 2002}}</ref>

==See also==
*  [[Bnetd]]
*  [[Copyright Act of 1976]]
*  [[Reverse Engineering]]
*  [[Software License Agreement]]

==References==
{{reflist}}

==Further reading==
*  "Bowers v. Baystate Technologies: Using the Shrinkwrap License to Circumvent the Copyright Act and Escape Federal Preemption" - [http://heinonline.org/HOL/LandingPage?collection=journals&handle=hein.journals/umblr11&div=6&id=&page= Merritt A Gardiner]
*  "Restricting Reverse Engineering with shrink-wrap licenses: Bowers v. Baystate Technology, Inc" - [http://www.bu.edu/law/central/jd/organizations/journals/scitech/volume91/bressman.pdf S.Bressman]
*  "Canary in the Court" - Robert Storey White - https://www.amazon.com/Canary-Court-Robert-Storey-White/dp/069271250X
*  Kuney, George W., "Bamboozled? Anatomy of a Bankruptcy: Baystate v. Bowers and its Aftermath" (September 2011). University of Tennessee Legal Studies Research Paper No. 117. Available at SSRN: https://ssrn.com/abstract=1658963 or https://doi.org/10.2139/ssrn.1658963

==External links==
* {{caselaw source
 | case = ''Bowers v. Baystate Technologies'', 320 F.3d 1317 (Fed. Cir. 2003)
 | courtlistener =https://www.courtlistener.com/opinion/781029/harold-l-bowers-doing-business-as-hlb-technology-plaintiff-cross-v/
 | googlescholar = https://scholar.google.com/scholar_case?case=11442789824223925516
 | justia =https://law.justia.com/cases/federal/appellate-courts/F3/320/1317/615628/
 }}
{{United States contract case law}}

[[Category:2003 in United States case law]]
[[Category:United States copyright case law]]
[[Category:United States patent case law]]
[[Category:United States contract case law]]
[[Category:United States Court of Appeals for the Federal Circuit cases]]
[[Category:Reverse engineering]]
[[Category:Fair use case law]]