Stenograph L.L.C. v. Bossard Associates, Inc.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued April 16, 1998 Decided June 2, 1998

No. 97-7049

Stenograph L.L.C.,

Appellee

v.

Bossard Associates, Incorporated, et al.,

Appellants

Appeal from the United States District Court

for the District of Columbia

(No. 95cv00141)

John E. Drury argued the cause and filed the briefs for
appellants.

William H. Crispin, argued the cause for appellee, with
whom Dean R. Brenner was on the brief.

Before: Edwards, Chief Judge, Henderson and Rogers,
Circuit Judges.

Opinion for the Court filed by Chief Judge Edwards.

Edwards, Chief Judge: Bossard Associates, Inc. and the
estate of Dennis K. Bossard (collectively "Bossard" or "appel-
lants") appeal from the judgment of the District Court in
favor of plaintiff Stenograph, L.L.C., on claims that Bossard
infringed Stenograph's copyright for computer software and
misappropriated its trade secrets. Appellants' primary con-
tention before this court is that Stenograph failed to present
evidence of "copying" sufficient to support an infringement
action under the Copyright Act of 1976 (the "Act") (codified
as amended at 17 U.S.C. s 101 et seq.). Because appellants
correctly concede that copying can be proven through evi-
dence that the software was installed on a computer and then
used for its principal purposes, we affirm the District Court.

I. Background

Stenograph, a Delaware corporation with its principal of-
fices in Illinois, provides goods and services to the court
reporting industry. Stenograph sells several different ver-
sions of Computer-Aided Transcription software, which en-
ables court reporters to convert their stenographic notes into
English text. In order to protect against the unauthorized
use of such software, which is copyrighted, the company has
developed "software protect devices" or "keys." When a
court reporter uses Premier Power software--the type of
transcription software at issue in this appeal--to convert
stenographic notes into text, the reporter must put a comput-
er disk containing the notes into a computer that has both the
software and a key plugged into the parallel port of the
computer. Premier Power will not work on a computer
unless a key simultaneously is plugged into the computer.

Stenograph requires that its customers enter into license
agreements for both the Transcription software and the keys.
The company's standard licensing agreement restricts the use
of the licensed materials to a single computer. The license
forbids the customer from transferring the Transcription
software, the key, or the accompanying documentation to any
third party, without the prior written consent of Stenograph.
See Exhibit ("Ex.") 5, at 19-20.

Stenograph filed its initial complaint on January 20, 1995,
in the United States District Court for the District of Colum-
bia, and its First Amended Complaint on May 22, 1995,
against, as pertinent to this appeal, Bossard Associates and
Dennis K. Bossard (collectively "defendants"). See Ex. 1.
Bossard Associates is a court reporting and litigation support
service located in Washington, D.C. Before his death in
August 1997, Mr. Bossard owned all of the stock of Bossard
Associates and served as the company's president and trea-
surer. Stenograph sought compensatory and punitive dam-
ages and an injunction for copyright infringement and state
law claims of trade secret misappropriation and conversion.
These claims arose from allegations that, from April 1992
through November 1994, Mr. Bossard illicitly purchased Sten-
ograph's Premier Power software and eleven keys from one
of Stenograph's sales representatives, John Baker, with
checks made payable to Baker personally, at a substantial
discount from Stenograph's normal retail price.

A jury trial commenced on November 20, 1996. Steno-
graph presented evidence that Mr. Bossard obtained the keys
and software from Baker during the alleged time periods.
See Trial Tr. (11/21/96) at Appendix ("App.") 164-66, 200; id.
(11/22/96) at App. 228-36. Stenograph also presented evi-
dence that defendants used the software and one or more of
the keys obtained from Baker, gave four keys to independent
contractors for them to use (at least partly for Bossard-
related jobs), and resold two other keys, all notwithstanding
Mr. Bossard's knowledge that Stenograph required users of
its software to enter into licensing agreements. See id.
(11/22/96) at App. 222-26; id. (11/25/96) at App. 440-46.
Baker testified that Stenograph fired him on November 4,
1994, after he admitted that he sold Premier Power software
and keys to Mr. Bossard for his own personal benefit. See id.
(11/21/96) at App. 164-66; Ex. 6, at 1. Stenograph did not
seek damages for any time after 1995, because in 1996
Christopher Bossard, the son of Mr. Bossard, obtained a
Premier Power key from another court reporter and paid
Stenograph for a license transfer. See id. (11/22/96) at 227-
28; Br. of Appellee at 16.

At trial, Mr. Bossard defended largely on the theory that
he did not know either that the products obtained from Baker
belonged to Stenograph, or that Baker lacked authority to
make the sales in question. Baker had had a fifteen year
sales relationship with defendants, during which time Baker
legitimately sold other Stenograph goods to Bossard Associ-
ates. See Trial Tr. (11/21/96) at App. 163, 173-74; Br. of
Appellee at 11. With respect to the eleven keys, Mr. Bossard
testified that Baker told him that Baker was merely serving
as a "broker" for third parties who wished to get rid of the
products. See Trial Tr. (11/21/96) at App. 212. It is undis-
puted, however, that after Baker was fired in November 1994,
Stenograph asked defendants to either pay for or return the
Premier Power keys, thereby putting defendants on explicit
notice of the illicit nature of the transactions involving the
keys. See Trial Tr. (11/21/96) at App. 112; Br. of Appellee at
14.

The District Court denied Bossard's motion for judgment
as a matter of law made at the conclusion of Stenograph's
case and renewed at the end of trial. See id. (11/22/96) at
App. 282; id. (11/26/96) at App. 539-40. On December 12,
1996, the jury returned a verdict for Stenograph on all
counts. The jury awarded damages in the amount of
$1,500,000 for copyright infringement; compensatory dam-
ages of $710,000 and punitive damages of $750,000 for trade
secret misappropriation; and compensatory damages of
$44,000 and punitive damages of $178,000 for conversion. See
Stenograph Corp. v. Bossard Assocs., Civ. No. 95-0141(NHJ)
(D.D.C. filed Feb. 12, 1997) ("Order"), reprinted at Ex. 3.
The District Court subsequently denied defendants' motion
for a new trial or, alternatively, to amend the judgment and
to stay the enforcement of the judgment. See id. The Court
also entered a separate judgment as a matter of law in favor
of Stenograph on other claims alleged in the lawsuit. See id.
The District Court then entered a judgment on the jury
verdict and awarded Stenograph monetary relief in the total
amount of $3,198,016.17 against Mr. Bossard and Bossard
Associates. See Ex. 4.

This appeal followed. Because of Mr. Bossard's death, the
estate of Mr. Bossard and Bossard Associates are now the
appellants in this proceeding.

II. Discussion

A.Copyright Infringement

Most of Bossard's numerous challenges to the District
Court's judgment are plainly meritless and thus do not war-
rant treatment in this opinion. We do, however, address
appellants' contention that the District Court erred in pre-
senting Stenograph's copyright infringement claim to the
jury, on the ground that Stenograph failed to present suffi-
cient evidence of impermissible "copying" of Premier Power
software by Bossard. In reviewing the denial of a judgment
as a matter of law, "the standard we apply is the same as that
applied by a district court considering the motion in the first
instance. Viewing the evidence in the light most favorable to
the non-moving party, we must ask ourselves whether any
reasonable jury could find in its favor." Harbor Ins. Co. v.
Schnabel Foundation Co., 946 F.2d 930, 935 (D.C. Cir. 1991);
see also Smith v. Washington Sheraton Corp., 135 F.3d 779,
782 (D.C. Cir. 1998); Scott v. District of Columbia, 101 F.3d
748, 752 (D.C. Cir. 1996). This entails an examination of "all
uncontradicted evidence offered by the moving party, as well
as all evidence introduced by the non-moving party." Harbor
Ins., 946 F.2d at 935.

A plaintiff seeking to establish copyright infringement must
prove "(1) ownership of a valid copyright, and (2) copying of
constituent elements of the work that are original." Feist
Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361
(1991); Fonar Corp. v. Domenick, 105 F.3d 99, 104 (2d Cir.),
cert. denied, 118 S. Ct. 265 (1997). The copying must be
beyond the scope of a license possessed by the defendant.
See MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d
511, 517 (9th Cir. 1993). In the instant case, the first element
is not in dispute, because Stenograph's certificates of regis-
tration for Premier Power, see Ex. 5, at 9-12, constitute
prima facie evidence of the validity of the copyright of the

software, and Bossard makes no argument that such certifi-
cates were improvidently issued. See 17 U.S.C. s 410(c);
Fonar, 105 F.2d at 104 ("possession of a registration certifi-
cate creates a rebuttable presumption that the work in ques-
tion is copyrightable" (internal quotation omitted)). As to the
second element, appellants argue that Stenograph never dem-
onstrated that Bossard copied the protected elements of
Premier Power--i.e., the original parts of the software for
which Stenograph validly held copyright protection.

Case law supports the general proposition that unoriginal
portions of a software program can be copied without result-
ing in copyright infringement. See Lotus Develop. Corp. v.
Borland Int'l, 49 F.3d 807, 815 (1st Cir. 1995) (holding
copying of uncopyrightable subject matter of software not
copyright infringement), aff'd by an equally divided court,
516 U.S. 233 (1996); Gates Rubber Co. v. Bando Chemical
Indus., Ltd., 9 F.3d 823, 832 (10th Cir. 1993) (copyright
plaintiff had to show that "those elements of the program that
have been copied are protected expression and of such impor-
tance to the copied work that the appropriation is action-
able"); see generally Rogers v. Koons, 960 F.2d 301, 307 (2d
Cir. 1992) ("[T]hat a whole work is copyrighted does not mean
that every element of it is copyrighted; copyright protection
extends only to those components of the work that are
original to the creator."). Drawing on these principles, appel-
lants posit that Stenograph failed to meet its evidentiary
burden on the copying issue, because Stenograph did not
show that use of Premier Power in tandem with the keys
resulted in the copying of the protected elements of the
software to a Bossard computer's random access memory
("RAM"). In support of this point, appellants contend that
Stenograph did not present an expert witness who could
testify competently on the manner in which Premier Power
software worked inside Bossard's computers.

Appellants' argument on copying--particularly their atten-
tion to the issue of whether protected elements of Premier
Power were copied to random access memory--is a nonstar-
ter. Appellants conceded at oral argument, and this court
agrees, that if someone loads validly copyrighted software

onto his or her own computer without the owner's permission,
and then uses the software for the principal purposes for
which it was designed, there can be no real doubt that the
protected elements of the software have been copied and the
copyright infringed. In other words, the only real question in
this case is whether the jury had sufficient evidence to find
that Bossard installed and used Stenograph's software for its
principal purposes.

As an analytical matter, there are two different ways to
describe the impermissible "copying" that occurred in this
case. First, it can be concluded, quite simply, that copying
occurred when appellants installed and used the software for
the principal purposes for which it was intended. Alterna-
tively, following a line of analysis adopted by a number of
courts, it can be concluded that appellants copied the software
when it was booted up for use for its principal purposes, and
thereby loaded into RAM. These two theories may be two
ways of saying the same thing; but in either of them, the
jury's verdict against appellants was fully justified.

1. Installation

The language of the Copyright Act, case law, and common
sense support the proposition that the installation of software
onto a computer results in "copying" within the meaning of
the Copyright Act. See 17 U.S.C. s 101 (defining "copies" as
"material objects ... in which a work is fixed by any method
now known or later developed, and from which the work can
be perceived, reproduced, or otherwise communicated, either
directly or with the aid of a machine or device"); 2 Melville
B. Nimmer & David Nimmer, Nimmer on Copyright
s 8.08[A][1], at 8-113 (1997) ("Nimmer") (the Act's language
"makes clear that the input of a work into a computer results
in the making of a copy"); cf. Vault Corp. v. Quaid Software
Ltd., 847 F.2d 255, 260 (5th Cir. 1988) ("the act of loading a
program from a medium of storage into a computer's memory
creates a copy of the program"). Appellant does not argue
that the installation of software onto a single computer works-
tation differs from the installation of software onto an office
network, for purposes of infringement analysis. Moreover, if

an entire program is thus copied, certainly the "protectible
elements" of the program are also copied. See Fonar, 105
F.3d at 106 (summary judgment for defendants inappropriate
assuming they made "complete copies" of plaintiff's software);
Triad Systems Corp. v. Southeastern Express Co., 64 F.3d
1330, 1335 (9th Cir. 1995) (where defendant's conduct "in-
volved copying entire programs, there is no doubt that pro-
tected elements of the software were copied").

The question in the instant case, then, is how installation
could be proven. Here, Mr. Bossard admitted outright at
trial that Premier Power was installed on his company's
computer network. See Trial Tr. (11/22/96) at App. 232-33.
During Mr. Bossard's testimony, after a series of exchanges
between Stenograph's counsel and Mr. Bossard on the issue
of how Bossard originally obtained the software and keys,
Stenograph's counsel elicited the following testimony:

QYou have your Premier Power software installed on
the network. Correct?

AI'll agree to that, okay?

Id. According to appellants, Mr. Bossard's statement only
established that Premier Power was installed on the compa-
ny's network as of the time of trial--i.e., November 1996.
Thus, they argue, Mr. Bossard's statement does not consti-
tute persuasive evidence of infringement, because earlier in
1996 Christopher Bossard had obtained a license for the
software. See Reply Br. at 7-8.

Appellants' self-serving reading of the record is not enough
to overcome the jury verdict in this case. First, Mr. Bossard
never claimed that his company's installation of Premier
Power occurred only after a license for its use had been
obtained. Second, and more important, Mr. Bossard essen-
tially conceded all of the points in issue when he testified that
Bossard had possessed and used Premier Power software
since 1993.

Bossard does not dispute that a court reporter who seeks
to use the software first must insert a disk containing steno-
graphic notes "into a computer on which the Premier Power

resides." Br. of Appellee at 7 (emphasis added); also see
Trial Tr. (11/22/96) at App. 322. This is hardly surprising,
because it is consistent with the way in which software is
typically used. See 2 Nimmer, s 8.08[B][1], at 8-118 ("[I]n-
stalling programs from floppy disks onto the hard drive
(instead of booting them from the floppy drive every time
they are desired) has become almost universal...."). In-
deed, even if it were possible to use Premier Power without
prior installation onto a computer, Bossard makes absolutely
no suggestion that it did so in this case. Furthermore,
Bossard makes no claim that it used only computers located
in other offices, on which Premier Power already was install-
ed pursuant to a license from Stenograph. In these circum-
stances, where installation of the software is a prerequisite to
its use, Stenograph could show that Bossard installed and
therefore copied the software by demonstrating that Bossard
used the software and keys for their principal purposes
during the relevant time periods.

There is substantial evidence in the record showing that
Bossard used Premier Power for the principal purposes for
which it was designed--i.e., to convert stenographic notes
into English text and produce transcripts for sale. First, Mr.
Bossard testified that his company initially obtained Premier
Power in 1993, when Bossard also obtained its first software
protect key from Baker. See Trial Tr. (11/22/96) at App. 234-
35. In addition, Stenograph elicited testimony from Mr.
Bossard that numbered keys were kept in Bossard's offices.
See id. at 229. On those occasions when Bossard would
purchase a key from Baker, the key would "ultimately go to
[Bossard's] computer room" if Baker did not first take it
there himself. Id. (11/25/96) at 381-82. At one point in his
testimony Mr. Bossard admitted that software had been used
from "whenever [the company] got the first Premier Power
key from John Baker." Id. (11/22/96) at 234.1 Mr. Bossard

__________
1 Later in his testimony, when confronted with plaintiffs' exhib-
its demonstrating that Bossard obtained its first key from Baker in
1993, Mr. Bossard appeared to backtrack from his earlier statement
that the company had been using Premier Power software from

separately admitted that a Bossard Associate employee used
the software and a key in the company's computer room to
process files and cause transcripts to be printed for sale to
customers. See id. (11/25/96) at 445-46. From these state-
ments, the jury easily could conclude that Bossard--through
both its regular employees and independent contractors--
used the software in tandem with the keys prior to 1996.

In sum, the evidence supports the finding that Bossard
impermissibly copied Premier Power by installing and using
the software for its principal purposes during the time in
question.

2. Loading Into RAM

It is also evident that copying of Premier Power occurred
through the loading of the software into the random access
memories of Bossard's computers while the software was in
use. Courts that have addressed the issue agree that the
loading of software from some permanent storage medium,
such as a floppy disk or a computer's hard drive, to the
computer's random access memory ("RAM") when the soft-
ware is "booted up" causes a copy to be made. See MAI
Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 518 (9th
Cir. 1993) (defendant's "loading of copyrighted software into
RAM creates a 'copy' of that software in violation of the
Copyright Act"); Triad Systems Corp. v. Southeastern Ex-
press Co., 64 F.3d 1330, 1335 (9th Cir. 1995); Advanced
Computer Servs. v. MAI Systems Corp., 845 F. Supp. 356, 363
(E.D. Va. 1994); 2 Nimmer s 8.08[A][1], at 8-113 to 8-114
(describing trend recognizing that reproduction of program in
RAM constitutes "copy"); see generally, Jane C. Ginsburg,
Putting Cars on the "Information Superhighway": Authors,
Exploiters, and Copyright in Cyberspace, 95 Colum. L. Rev.

__________
that time. According to Mr. Bossard's later statement, Bossard
Associates only "possibly" had been using the software since 1993,
because the first key obtained from Baker "could be the key that
blew up on us." Trial Tr. (11/22/96) at 235. Of course, it would
have been reasonable for the jury, in determining Mr. Bossard's
credibility as a witness, to resolve contradictions in his testimony
against him.

1466, 1476 (1995) ("Copies of a work are made ... when a
temporary copy is received into the memory of [a] comput-
er."). Appellants erroneously argue in their brief that the
holding in MAI Systems has no bearing on the instant case
because it only addressed the issue of whether a computer
program in RAM is "fixed" under the Act, independent of the
issue of whether the RAM reproduction constitutes a "copy."
See Br. of Appellant at 9. On the contrary, MAI Systems
held that a RAM reproduction was a copy precisely because it
was fixed under the Act. See 17 U.S.C. s 101 (defining the
terms "copies" and "fixed"); MAI Systems, 991 F.2d at 518;
Advanced Computer, 845 F. Supp. at 362-64 (rejecting con-
tention that program in RAM was not "fixed").

We do not read appellants' arguments to seriously chal-
lenge the holding in MAI Systems and other cases that a
RAM reproduction constitutes a copy, although this holding
has drawn some criticism. See, e.g., Jessica Litman, The
Exclusive Right to Read, 13 Cardozo Arts & Ent. L.J. 29, 40
(1994) (protesting result in which all acts of reading or
viewing a digitalized work with the use of computer involves
"actionable reproduction"); see generally, Ginsburg, 95 Co-
lum. L. Rev. at 1476 n.39 (citing critics). Rather, appellants
complain that Stenograph failed to prove that the protected
elements of Premier Power were reproduced into RAM in the
first instance. But this argument is specious, because, at oral
argument, appellants conceded that the protected elements of
Premier Power were copied if in fact the software was used
for the principal purposes for which it was designed. As
described above, there was ample evidence from which the
jury could conclude that Bossard used Premier Power to
convert stenographic notes into English text and produce
transcripts for sale, without a license from Stenograph.
Equally important, appellants do not argue that they had any
reason to use Premier Power other than for the software's
principal purposes. Thus, evidence of Bossard's use of Pre-
mier Power served as sufficient evidence that protected ele-
ments were copied, insofar these elements were reproduced
into RAM. On the current record, it is simply irrelevant that
Stenograph never presented an expert witness who could

testify that specific parts of Premier Power were reproduced
into RAM when the software was used by Bossard.

Contrary to appellants' contentions, this conclusion is not in
tension with Fonar Corp. v. Domenick, 105 F.3d 99 (2d
Cir.1997), cert. denied, 118 S. Ct. 265 (1997). In Fonar, the
plaintiff sued for copyright infringement on the theory that
the defendant copied plaintiff's software when the defendant
booted up the software for use. Although the district court
granted summary judgment to the defendant primarily on the
ground that plaintiff failed to establish a valid copyright, the
court of appeals reversed and stated, in pertinent part, "at
trial Fonar will undoubtedly have to break down its software
into its constituent parts in order to allow the examination of
these parts" for protected elements. Id. at 104. That a
copyright plaintiff should have to demonstrate a software's
protected elements for purposes of establishing a valid copy-
right does not lend support to Bossard's contention that the
same plaintiff must specifically show reproduction of these
elements into RAM during defendant's unauthorized use of
the software, for purposes of showing "copying." Indeed, the
Fonar court assumed, in reversing the district court, that
loading a program into RAM resulted in "wholesale copying,"
id. at 103, and that therefore whatever protected elements
that were contained in the software were copied during the
software's use. See id. at 106. Thus, Fonar supports, rather
than undermines, our position that impermissible copying
occurs when a validly copyrighted program is used for its
principal purposes.

Our holding in this case does not address a situation in
which it might be claimed that no copying occurred through
prior installation. See, e.g., Fonar, 105 F.3d at 101-02 (in-
fringement action brought against company that uses pro-
grams residing on third parties' computer systems); MAI
Systems, 991 F.2d at 517 (same). Nor does this case involve
a claim that defendant used only the unoriginal--or unpro-
tected--portions of a program. In other words, a defendant
might claim that he or she used only those elements of a
software program that are common to other programs and,
therefore, by themselves, not copyrightable. In such a case,

it might be argued that such limited use of the software by
the defendant does not support an action for infringement,
because the limited use did not cause any of the software's
protected elements to be reproduced into RAM. We leave
these questions for another day.

B. Damages

The total damages awarded by the District Court to Steno-
graph reflected, in part, the jury's awards of $1,500,000 for
copyright infringement and "$710,000 for actual losses and
unjust enrichment" on the claim of trade secret misappropria-
tion. Order, at 1. Appellants' arguments attacking these and
other aspects of the total damages award are without merit.

The amount of $1,500,000 presumably represents Bossard
Associates' total revenues ($1,700,000) for the time period
under dispute (December 1994 through December 1995), mi-
nus an estimation of expenses related to the use of Premier
Power software (approximately $200,000). Bossard's chal-
lenge to the $1,500,000 figure is meritless because, after
Stenograph introduced the statement containing Bossard As-
sociates' gross revenues for the relevant time period, see Ex.
5, at 25-27; Trial Tr. (11/22/96) at App. 236-37, the burden
shifted to Bossard under 17 U.S.C. s 504(b) to "prove his or
her deductible expenses and the elements of profit attribut-
able to factors other than the copyrighted work." Id. Be-
cause appellants clearly failed to carry their burden under
s 504(b), we have no reason to disturb the copyright infringe-
ment award of $1,500,000. See s 504(b), Notes of the Com-
mittee on the Judiciary on Actual Damages and Profits; cf.
Blackman v. Hustler Magazine, Inc., 800 F.2d 1160, 1163
(D.C. Cir. 1986) (holding, where defendants failed to meet
burden under 1909 Copyright Act, that "the gross figure is
left to stand as the profit factor" (internal quotation omitted)).

We are perplexed, however, as to how the jury reached the
amount of $710,000 "for actual losses and unjust enrichment"
on the trade secret misappropriation claim. The trial judge
instructed the jury that "unjust enrichment" was based upon
"Defendants' profits from the misappropriation." Trial Tr.

(11/27/96) at App. 613. The trial judge further stated that
such profits should be determined through a burden-shifting
process largely identical to the one it had set forth for the
copyright infringement claim. Id. To the extent Stenograph
was awarded damages based on Bossard Associates' 1995
profits for both the misappropriation of trade secrets claim
and the copyright claim, it would appear that Stenograph
obtained a questionable double remedy. See Softel v. Dragon
Med. & Scientific Communications, 118 F.3d 955, 969 (2d
Cir. 1997) (upholding district court's refusal to award dam-
ages on trade secret claim because such damages would have
been "coextensive with the damages it had already awarded
for copyright infringement"), cert. denied, 118 S. Ct. 1300
(1998). However, Bossard never raised this issue, either at
trial or on appeal, so we have no valid basis upon which to
disturb the judgment of the District Court.

III. Conclusion

For the foregoing reasons, the judgment of the District
Court is affirmed.