Novel Ruling

Software can be copyrighted

Copyright laws, ruled the U.S. Court of Appeals in Philadelphia last week, are "not confined to literature in the nature of Hemingway's For Whom the Bell Tolls." Having made that point, the court's three judges went on to extend the protection of copyright laws to computer software, the virtually indecipherable strings of Is and Os that give instructions to make a computer work. The software industry, which is expected to be a $6 billion business by 1985, according to Dataquest, a California research firm, has been fighting a rearguard battle to protect its programs from imitators.

The ruling came as a result of a May 1982 suit by Apple Computer (past twelve months' sales: $885.4 million) against Franklin Computer of Cherry Hill, N.J., which makes two machines very similar to those produced by Apple. Franklin (sales during the past twelve months: $44 million) has been prospering from the success of its Ace computers, which cost only about $900 as compared with approximately $1,500 for the standard Apple machine. Franklin admitted in court that it had copied the operating-system programs for the Apple but claimed that those were not protected under copyright law. The judges, however, ruled that the programs, which are written on silicon chips and stored inside the machine, can be copyrighted just like a book or a trademark.

Last week's court ruling is expected to have wide-ranging effects on the entire computer industry. Copying has been the most sincere form of flattery in the personal-computer field. Duplicating the operating software is the key to making a successful ripoff. Several imitations of the Apple machine are made in Asia and carry names such as Golden Apple, Orange and Lemon. More than 20 companies are manufacturing versions of the hot-selling IBM Personal Computer that use the same kind of software and perform similar functions. Said Albert Eisenstat, Apple's general counsel: "Franklin is going to have to do something more than freeload off our stuff."

IBM copycats are not expected to be immediately affected by the decision handed down last week. In the past, rather than seek copyright protection, IBM has widely publicized the design of the PC's internal software to encourage other companies to develop additional applications for the machine. But IBM's policy may change now that the courts have ruled that its valuable programs can be copyrighted. This file is automatically generated by a robot program, so viewer discretion is required.