Design Data Corporation alleged that Unigate Enterprise, Inc., infringed the copyright on Design Data’s computer aided design program by downloading an unauthorized copy of the program and importing and distributing within the United States program output generated by a Chinese contractor using an unauthorized copy of the program.
Design Data created and owns a copyrighted CAD software program called SDS/2. Based on data input by the user, SDS/2 uses building and engineering codes to produce two- and three-dimensional drawings and models of steel structural components. These drawings and models enable the fabrication of steel components and assist with the building of structures. When SDS/2 is used to design steel components, SDS/2 also creates “job files,” which contain all information and files related to the project.
UE is a California corporation that outsources steel detailing services by selling steel detailing CAD files created by contractors in China. At least one of UE’s Chinese contractors created CAD images and files using an unauthorized copy of SDS/2 and sent the output to UE. UE, in turn, sold those images and files to clients in the United States. Design Data contends that UE was aware its Chinese contractor was using an unauthorized copy of SDS/2, UE denies such knowledge.
Despite advertising on its website that “We use the SDS/2 … if required,” UE never purchased a license to use SDS/2 and claims it never actually used the program. UE has admitted, however, to downloading a copy of SDS/2 from a website to a UE external hard drive. UE claims it was curious about “what the software was all about” and abandoned its efforts after reading the program’s “complicated explanations.” UE maintains that it merely downloaded a “free demo” of SDS/2 and was unaware it was actually a “cracked” (or hacked) copy. Design Data, however, contends it does not offer free trials of SDS/2 over the internet.
Suspecting that UE was using SDS/2 without a license, Design Data visited UE’s offices. Design Data found installation files on UE’s computers for two versions of SDS/2 and three patch files, whose purpose is to allow a user to work around the code protection for SDS/2. Relying on UE’s technical expert, the district court concluded there was no evidence that UE had actually installed SDS/2 on the computers that Design Data was allowed to inspect. UE’s computers did, however, contain SDS/2-generated images and job files, suggesting the CAD program had actually been used in some fashion.
Design Data brought the action against UE, alleging copyright infringement based on UE’s use of SDS/2 and its importation and distribution of SDS/2-generated images and files created outside the United States. The district court granted UE’s motion for summary judgment, finding that its download of SDS/2 was de minimis copyright infringement, that any infringement by UE’s Chinese contractor was beyond the reach of U.S. copyright law, and that Design Data failed to show that SDS/2’s copyright protected the SDS/2-generated images and files at issue.
Design Data did not raise a question of material fact that the imported SDS/2- generated images and files reflected the contents of its program. Design Data did not present evidence establishing that SDS/2 “does the lion’s share of the work” in creating the steel detailing files or that the user’s input is “marginal.”
Appeal court affirmed the district court’s determination that the copyright protection afforded Design Data’s computer program does not extend to the program’s output. But it reversed the district court as to its determination on summary judgment that UE’s download of Design Data’s SDS/2 program was a de minimis copyright violation, and remanded for further proceedings consistent with this opinion.