Microsystems Software, Inc. v. Scandinavia Online AB

United States Court of Appeals
For the First Circuit

No. 00-1503

MICROSYSTEMS SOFTWARE, INC., ET AL.,
Plaintiffs, Appellees,

v.

SCANDINAVIA ONLINE AB, ET AL.,
Defendants, Appellees.
____________________

WALDO JAQUITH, LINDSAY HAISLEY, AND BENNETT HASELTON,
Appellants.

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, U.S. District Judge]
_____________________

Before

Selya, Circuit Judge,
Wallace,* Senior Circuit Judge,
and Tauro,** District Judge.

Christopher A. Hansen, with whom Sarah R. Wunsch, David L.
Sobel, and Jessica Litman were on brief, for appellants.
Charles R. Nesson, Lawrence Lessig, Jonathan L. Zittrain,
and Diane Cabell on brief for themselves as amici curiae.
Andrew Grosso on brief for Association for Computing
Machinery Committee on Law and Computing Technology, amicus
curiae.
Irwin B. Schwartz, with whom William C. Nystrom, Colleen C.
Cook, and Schwartz and Nystrom, LLC were on brief, for
plaintiffs-appellees.

September 27, 2000
________________
*Of the Ninth Circuit, sitting by designation.
**Of the District of Massachusetts, sitting by designation.
 SELYA, Circuit Judge. This appeal trails in the wake

of a permanent injunction entered by the United States District

Court for the District of Massachusetts that restrained the

named defendants — Eddy L.O. Jansson, Matthew Skala, and the

companies that host their respective web pages (Scandinavia

Online AB and Islandnet.com) — and "their agents, employees, and

all persons in active concert or participation" with them from

publishing or otherwise using a bypass code known as

"cp4break.zip" or "cphack.exe." The named defendants stipulated

to the entry of the injunction, but three nonparties — Waldo

Jaquith, Lindsay Haisley, and Bennett Haselton — now attempt to

appeal. They claim to have copied the proscribed code from the

named defendants' web pages and assert that the injunction

impermissibly interferes with their right to continue posting it

on their "mirror sites."

Although this proceeding takes place against the

futuristic backdrop of cyberspace, its resolution lies in

traditional principles of standing. Application of those

principles requires us to terminate the attempted appeal.

Consequently, we have no occasion to reach the tangled issues of

copyright and First Amendment law that simmer beneath the

surface of the appellants' plaints.

I. BACKGROUND

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 The plaintiffs, Microsystems Software, Inc. and Mattel,

Inc. (collectively, Microsystems), developed and distributed

"Cyber Patrol" — a blocking device coveted by parents who wish

to prevent their children from roaming into salacious Internet

venues. This software program contains a secret list of

objectionable web sites and, once installed, prevents computer

users from accessing those sites.

It is said that every action produces an equal, yet

opposite, reaction. So it was here: shortly after Microsystems

introduced Cyber Patrol, Jansson and Skala reverse-engineered it

and wrote a bypass code that enabled users not only to thwart

the program but also to gain access to the list of blocked

sites.1 They then posted the bypass code on their own web sites

and gave blanket permission for others to copy it. The

appellants took advantage of this offer.

Microsystems was not pleased. On March 15, 2000, it

brought suit seeking injunctive relief against the defendants

1
"Reverse engineering" involves gaining access to the
functional elements of a software program. Methods of reverse
engineering include observing the program in operation,
performing a static or dynamic examination of the individual
computer instructions contained within the program, and using a
program known as a disassembler to translate the binary machine-
readable object code that runs on the computer into the human-
readable words and symbols known as source code. See generally
Sony Computer Entertainment, Inc. v. Connectix Corp., 203 F.3d
596, 599-600 (9th Cir. 2000), petition for cert. filed, 69
U.S.L.W. 3023 (U.S. June 30, 2000) (No. 00-11).

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and "those persons in active concert or participation with

them." Microsystems complained that it was suffering

irreparable injury because "[m]ultiple individuals throughout

the United States and the world . . . have downloaded, copied

and created 'mirror' Web sites" revealing the bypass code. When

the district court issued a temporary restraining order two days

later, Microsystems e-mailed copies of it, along with sundry

supporting documents, to various persons (including the

appellants). Its cover letter stated in pertinent part:

On March 17, 2000, United States District
Judge Edward Harrington entered a temporary
restraining order . . . prohibiting any
further publication of "CP4break.sip" or
cphack.exe" or any derivative thereof, which
likely violate United States copyright laws
. . . It has come to our attention that
your Web hosting service or Web site is
publishing one or both of those prohibited
files. This letter and the enclosed Word
documents and *uni files will place you on
notice of Judge Harrington's order.

Microsystems also served the appellants with subpoenas directing

them to disclose information concerning the identity of "[e]ach

and every person who produced, received, viewed, downloaded or

accessed [the bypass code] or any derivative thereof from your

Web site or Web site hosting service."

The appellants promptly removed the bypass code from

their web sites. They then filed special appearances in the

pending case and, without submitting to the court's

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jurisdiction, moved to quash the subpoenas. They also proffered

oppositions to the pending motion for preliminary injunction.

Notably, however, they did not move to intervene.

On March 24, the district court granted the motion to

quash. Three days later, the court held a hearing on the motion

for preliminary injunction. At that session, Microsystems

advised the court that it had reached an accord with the named

defendants and proffered a proposed final decree that purported

to prohibit the defendants and those persons "in active concert"

with them from posting the bypass code. Notwithstanding the

appellants' nonparty status, the district court allowed them to

argue in opposition to the entry of the injunction and to file

a supplemental memorandum. The appellants submitted this

memorandum on March 28. Later that day, the court entered the

permanent injunction, accompanying it with findings of fact and

conclusions of law.2

Microsystems lost no time in furnishing the appellants

with notice of the injunction. The appellants unsuccessfully

sought a stay — the district court denied it, declaring that

they had "no standing to pursue any appeal . . . in view of the

2
The permanent injunction, together with certain comments of
the district court, appears in the official reporter. See
Microsystems Software, Inc. v. Scandinavia Online AB, 98 F.
Supp. 2d 74 (D. Mass. 2000). The court's findings of fact and
conclusions of law are not reported.

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fact that they ha[d] never intervened in the case" — and

simultaneously filed a notice of appeal.

II. ANALYSIS

The existence vel non of appellate standing calls for

a quintessentially legal judgment, to be made without deference

to the trial court's view. See In re Cusumano, 162 F.3d 708,

713 (1st Cir. 1998); see also New Hampshire Right to Life

Political Action Comm. v. Gardner, 99 F.3d 8, 12 (1st Cir. 1996)

(applying de novo review to trial court's standing

determination). Because standing is a sine qua non to the

prosecution of a suit in a federal court, the absence of

standing sounds the death knell for a case. See Sea Shore Corp.

v. Sullivan, 158 F.3d 51, 54 (1st Cir. 1998). The same holds

true for appeals: if the putative appellants lack standing to

appeal, the only role for the appellate court is to memorialize

that fact and simultaneously terminate the proceeding. See

Warth v. Seldin, 422 U.S. 490, 498-99 (1975); United States v.

AVX Corp., 962 F.2d 108, 113 (1st Cir. 1992).

As a general rule, only parties to a civil action are

permitted to appeal from a final judgment. See Marino v. Ortiz,

484 U.S. 301, 304 (1988) (per curiam). The Supreme Court, in

its most recent pronouncement on the subject, has described this

rule as "well settled." Id. History confirms the accuracy of

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that description. See, e.g., Karcher v. May, 484 U.S. 72, 77

(1987); United States ex rel. Louisiana v. Jack, 244 U.S. 397,

402 (1917); Ex parte Leaf Tobacco Bd. of Trade, 222 U.S. 578,

581 (1911) (per curiam); Ex parte Cockcroft, 104 U.S. (14 Otto)

578, 578-79 (1882); Ex parte Cutting, 94 U.S. (4 Otto) 14, 20-21

(1877); Dopp v. HTP Corp., 947 F.2d 506, 512 (1st Cir. 1991).

For purposes of the "only a party may appeal" rule, the

term "party" includes not only those who are parties in the case

when judgment is entered, but also those who properly become

parties (as, say, by intervention). See Marino, 484 U.S. at

304. The term sometimes encompasses those who "have acted or

been recognized as parties," but by some oversight were not

formally made parties. Ex parte Cutting, 94 U.S. at 20-21; see

also Sangre de Cristo Community Mental Health Serv. v. United

States (In re Vargas), 723 F.2d 1461, 1464 (10th Cir. 1983).

Finally, the term also extends, in limited circumstances, to

those who were parties "to some earlier judgment called into

question by the appeal." Dopp, 947 F.2d at 512. The appellants

plainly do not qualify as parties under any of these

definitions.

Of course, exceptions exist to virtually every rule,

and courts, from time to time, have endeavored to craft

exceptions to the rule that only parties may appeal from an

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adverse judgment. By and large, the Supreme Court has been

inhospitable to these endeavors. Marino illustrates the point.

In the underlying case, the Second Circuit had dismissed an

appeal taken by nonparties, but suggested in dictum that there

were several exceptions to the rule that only parties may appeal

from an adverse judgment. See Hispanic Soc'y of New York City

Police Dep't v. New York City Police Dep't, 806 F.2d 1147, 1152

(2d Cir. 1986). Although the Marino Court subsequently affirmed

the judgment, it took pains to add a caveat:

The Court of Appeals suggested that there
may be exceptions to this general rule,
primarily "when the nonparty has an interest
that is affected by the trial court's
judgment." 806 F.2d at 1152. We think the
better practice is for such a nonparty to
seek intervention for purposes of appeal . .
. .

484 U.S. at 304.

We believe that this message is reasonably clear.

While there is an exception to the "only a party may appeal"

rule that allows a nonparty to appeal the denial of a motion to

intervene, see id., the situation differs when intervention is

readily available. In that event, courts are powerless to

extend a right of appeal to a nonparty who abjures intervention.

See Felzen v. Andreas, 134 F.3d 873, 874 (7th Cir. 1998), aff'd

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sub nom. by an equally divided Court, California Pub. Employees'

Retirement Sys. v. Felzen, 525 U.S. 315 (1999).3

The appellants labor to convince us that, Marino

notwithstanding, we ought to recognize a long string of

exceptions to the rule mandating party status as a prerequisite

to an appeal. We are not persuaded. Marino, as we read it,

teaches that if any exceptions to the rule exist, those

exceptions are few and far between.

Turning from the general to the specific, we address

the appellants' principal arguments. First, they venerate our

statement that "when a lower court specifically directs an order

at a non-party or enjoins it from a course of conduct," the

nonparty may enjoy a right to appeal. Dopp, 947 F.2d at 512

(dictum). They then note that the injunction in this case

purports to bind not only the named defendants but also "those

persons in active concert or participation" with them. Using

this phrase as a springboard, they jump to the conclusion that

the injunction was specifically directed at them, and claim that

it therefore fits within the Dopp dictum. We reject this

construct.

3An affirmance by an equally divided court denies
precedential force to the opinion in question. See Rutledge v.
United States, 517 U.S. 292, 304 (1996). It does not, however,
tarnish earlier opinions.

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 To state the obvious, a dictum is not a holding — and

the Dopp dictum may be no more than mere buzznacking. We need

not probe that point too deeply, however, because, even if we

assume for argument's sake that the Dopp dictum has some force,

the resultant exception, narrow in all events, see id.

(describing exception as "isthmian"), would not apply at all in

this case. The boilerplate terminology contained in the instant

injunction merely parrots the language of Federal Rule of Civil

Procedure 65(d).4 So phrased, the injunction in no way attains

the degree of specificity necessary to open the gates to the

potential exception that Dopp envisioned. Cf. Keith v. Volpe,

118 F.3d 1386, 1391 n.7 (9th Cir. 1997) (holding that a nonparty

who was haled into court to respond to a show-cause order had

appellate standing in a subsequent appeal of that order).

In a related vein, the appellants assert that the lower

court's findings of fact propel them into a safe harbor. In

particular, they note the court's finding that "multiple

individuals throughout Massachusetts and the United States

downloaded, copied and created 'mirror' sites on the internet,

4
That rule provides in pertinent part that all orders
granting injunctive relief shall bind "the parties to the
action, their officers, agents, servants, employees, and
attorneys, and . . . those persons in active concert or
participation with them who receive actual notice . . . ." Fed.
R. Civ. P. 65(d).

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which replicated the Bypass Code," and that "many . . . did so

for the avowed purpose of seeking to prevent [the district

court] from awarding meaningful relief." This finding, they

say, specifically directs the injunction at them. But this line

of argumentation elevates hope over reason. The description

"multiple individuals throughout the United States" is

breathtakingly broad. There is nothing in the record that

limits its application to the appellants or that aims the

court's ukase in their direction.5

The appellants next attempt to lure us into weighing

the equities of the case, asseverating that it is unfair to

force them into a judicial proceeding and then prevent them from

prosecuting an appeal. We have two rejoinders, either of which

is fully dispositive of the matter.

First and foremost, the appellants' asseveration is a

doctrinal misfit. Although it draws some sustenance from the

case law, see, e.g., Commodity Futures Trading Comm'n v.

Topworth Int'l, Ltd., 205 F.3d 1107, 1113 (9th Cir. 2000), the

asseveration overlooks the abecedarian principle that a court

5
In mounting this argument, the appellants place great
weight on Microsystems's statements and its transmission of a
copy of the injunction to the appellants. But the direction of
the injunction is for the district court to determine, and the
statements and actions to which the appellants advert are in no
way attributable to the court.

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that lacks adjudicatory power has no authority over a case. See

Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 94

(1998); Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514 (1868).

Since standing is jurisdictional in nature, that principle

dictates that where, as here, the putative appellants lack

standing, the court lacks power to assay and reconcile the

equities of the case. See Felzen, 134 F.3d at 877-78.

Consequently, equitable considerations are immaterial to our

determination of the standing issue.

Second — and equally devastating to the appellants'

position — the equities do not favor permitting them to appeal.

After entering the proceedings in a successful effort to quash

the subpoenas that had been served upon them, the appellants did

not quit the field victorious, but, rather, elected to expand

their role and contest the merits of the case before the

district court. At the same time, they made a strategic choice

not to intervene in the proceedings. By intervening, see Fed.

R. Civ. P. 24, the appellants could have become parties,

entitled to both that status's benefits (including the right to

appeal an unfavorable judgment) and its burdens.

In our view, the decision to forgo intervention works

a forfeiture of any claim to appellate standing. Those who

aspire to litigate issues cannot have it both ways: they cannot

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evade potential liability by declining to seek party status and

still expect to be treated as parties for the purpose of testing

the validity of an ensuing decree.6 Cf. United States v.

Tierney, 760 F.2d 382, 388 (1st Cir. 1985) ("Having one's cake

and eating it, too, is not in fashion in this circuit.").

Moving ahead, the appellants maintain that they should

be permitted to appeal because they have an interest that is

affected by the district court's judgment and they were

permitted to vindicate that interest by participating in the

proceedings below. Some courts have recognized exceptions to

the "only a party may appeal" rule in analogous cases. See,

e.g., Kaplan v. Rand, 192 F.3d 60, 66-67 (2d Cir. 1999). To the

extent that these cases are authority for the appellants'

position, we respectfully decline to follow them. A mere

interest in the outcome of litigation will not suffice to confer

6 To be sure, the appellants complain that they were put
between a rock and a hard place because intervention would have
forced them to waive their jurisdictional defenses and submit to
the district court's jurisdiction. But this seems to be another
way of saying that they made a calculated decision that the
injunction sought by Microsystems would not aggrieve them enough
to warrant taking whatever risks were attendant to intervention.
There is nothing remotely unfair about being put in that
position. Litigation strategies almost always involve balancing
of risk and reward, and the fundamental rationale behind the "no
intervention, no appeal" rule counsels in favor of holding the
appellants to the predictable consequences of their strategic
choice. See Dopp, 947 F.2d at 512; Kenny v. Quigg, 820 F.2d
665, 667 (4th Cir. 1987).

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standing upon a nonparty. See Marino, 484 U.S. at 304; Felzen,

134 F.3d at 874; J.A. Shults v. Champion Int'l Corp., 35 F.3d

1056, 1060 (6th Cir. 1994); see also Guthrie v. Evans, 815 F.2d

626, 627 (11th Cir. 1987). As we have said, "the fact that an

order has an indirect or incidental effect on a non-party does

not confer standing to appeal. If the rule were otherwise,

Pandora's jar would be open, and strangers to a litigated case

could pop in and out of the proceedings virtually at will."

Dopp, 947 F.2d at 512.

By the same token, mere participation in the

proceedings below will not suffice to confer standing upon a

nonparty. After all, the officers who became the nonparty

appellants in Hispanic Society participated in the proceedings

before the district court, see 806 F.2d at 1152, but the Supreme

Court found that they lacked standing to appeal, see Marino, 484

U.S. at 304; see also Croyden Assocs. v. Alleco, Inc., 969 F.2d

675, 679 (8th Cir. 1992) (noting that the Marino Court did not

perceive the Marino appellants' participation in the proceedings

below as warranting an exception to the general rule). Thus, we

reject the appellants' claim that participation below, even if

coupled with an indirect interest in the judgment sought to be

appealed, confers standing.

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 Ably represented, the appellants take yet another tack.

They remonstrate that if they are not permitted to appeal at

this juncture, they will forfeit any opportunity to contest the

injunction on the merits. In their view, this would deprive

them of due process.

This argument has a certain superficial allure, because

"the validity and terms of an injunction [ordinarily] are not

reviewable in contempt proceedings." G. & C. Merriam Co. v.

Webster Dictionary Co., 639 F.2d 29, 34 (1st Cir. 1980). This

rule applies both to those who were parties to the underlying

case, see, e.g., NLRB v. Union Nacional de Trabajadores, 611

F.2d 926, 928 n.1 (1st Cir. 1979), and to nonparties in active

concert or participation with the enjoined party, see, e.g., NBA

Props., Inc. v. Gold, 895 F.2d 30, 33-34 (1st Cir. 1990).

The attractiveness of the appellants' argument

diminishes rather rapidly, however, when one recalls that the

appellants filed two memoranda with the district court and

contested the merits of the injunction at a hearing. More

importantly, they had every opportunity to intervene and

purposefully declined to do so. In these circumstances,

whatever predicament they envision is of their own construction.

Even if more were needed — and we doubt that it is —

the adjudicative framework surrounding contempt proceedings

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fully protects nonparties' constitutional rights. If contempt

proceedings are in fact undertaken, the forum court will resolve

the fact-specific question of whether the cited nonparty was in

active concert or participation with the named defendant. If

so, the named defendant will be deemed the nonparty's agent, and

the nonparty's right to due process will have been satisfied

vicariously. See Merriam, 639 F.2d at 35; Alemite Mfg. Corp. v.

Staff, 42 F.2d 832, 832-33 (2d Cir. 1930) (L. Hand, J.). If,

however, the party prosecuting the contempt proceeding fails to

show active concert or participation, a finding of contempt will

not lie. See Zenith Radio Corp. v. Hazeltine Research, Inc.,

395 U.S. 100, 112 (1969); Merriam, 639 F.2d at 35.

We explain briefly why, in either of these events, due

process is not at risk. Contempt proceedings operate to ensure

that nonparties have had their day in court. In order to hold

a nonparty in contempt, a court first must determine that she

was in active concert or participation with the party

specifically enjoined (typically, the named defendant). See

Merriam, 639 F.2d at 35; Alemite, 42 F.2d at 832-33. This

means, of course, that the nonparty must be legally identified

with that defendant, or, at least, deemed to have aided and

abetted that defendant in the enjoined conduct. See Merriam,

639 F.2d at 35; Alemite, 42 F.2d at 832-33. The existence of

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such a linkage makes it fair to bind the nonparty, even if she

has not had a separate opportunity to contest the original

injunction, because her close alliance with the enjoined

defendant adequately assures that her interests were

sufficiently represented. See NBA Props., 895 F.2d at 33;

Merriam, 639 F.2d at 37; cf. Regal Knitwear Co. v. NLRB, 324

U.S. 9, 14 (1945) ("[D]efendants may not nullify a decree by

carrying out prohibited acts through aiders and abettors,

although they were not parties to the original proceeding.").

The coin, however, has a flip side. A nonparty who has

acted independently of the enjoined defendant will not be bound

by the injunction, and, if she has had no opportunity to contest

its validity, cannot be found in contempt without a separate

adjudication. See id.; see also Alemite, 42 F.2d at 832

(declaring that a decree which purports to enjoin nonparties who

are neither abettors nor legally identified with the defendant

"is pro tanto brutum fulmen," and may safely be ignored). This

tried and true dichotomy safeguards the rights of those who

truly are strangers to an injunctive decree. It does not offend

due process.

III. CONCLUSION

To summarize, we hold that nonparties who have had the

opportunity to seek intervention, but have eschewed that course,

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lack standing to appeal. See Marino, 484 U.S. at 304; Dopp, 947

F.2d at 512. While there may be isolated exceptions to this

rule — a matter on which we take no view — the instant appeal

falls comfortably within the mainstream. Because the appellants

lack standing, we can go no further.

Appeal dismissed. Costs in favor of plaintiffs-

appellees.

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