copyright count, with particular reliance on the way in which Payday obtained its copy of the software.[1] S.O.S. has produced evidence that Payday requested a copy of the software from S.O.S., which S.O.S. refused to provide unless Payday agreed to pay for modifications to block access to the source code, and that Payday responded with self-help, obtaining a copy through Chu and Koyama, who had acquired a copy from the S.O.S. computer.
The district court relied on its copyright license analysis to reject S.O.S.’s claim:
As a licensee, PAYDAY has the contractual right to use the computer software, and to copy its content for its own purposes.
PAYDAY cannot be held liable for misappropriation of trade secrets because it has a license to use the computer software free from contractual limitations or restrictions. A licensee of a trade secret is not an infringer.
E.R. at 86.
The district court should have focused on how Payday acquired its copy. There is a genuine issue of fact as to whether the contract gave Payday a right to possess only a protected copy of the software if it elected to process its customers’ work on its own computer, or whether Payday was entitled to possess an unprotected copy.
The district court relied on Aktiebolaget Bofors v. United States, 194 F.2d 145, 148 (D.C.Cir.1951), to support its conclusion that a licensee of a trade secret cannot be an infringer. That case, however, holds only that one who lawfully acquires a trade secret, not just tangible property based on a trade secret, can use that trade secret in any manner not otherwise prohibited by contract or other body of law. It is precisely the lawfulness of Payday’s acquisition of the trade secret, in the form of the unprotected source code, that is at issue here.
Summary judgment in favor of Payday on this issue was error. S.O.S. has produced evidence rendering the contract susceptible to the interpretation that Payday did not have the right to possess an unprotected copy of the program. S.O.S. also presented evidence sufficient to create genuine issues of material fact as to whether Payday knew or had reason to know that the source code was acquired by improper means, and whether the source code was subject to reasonable efforts by S.O.S. to maintain its secrecy.
III. Account Stated
The district court granted S.O.S.’s motion for summary judgment on its claim for an account stated. The underlying facts are not disputed. In April 1986, S.O.S. sent Payday a statement showing an amount due for programming services under the original contract. Payday does not dispute that S.O.S. performed these services and that the account stated was correct. Payday made payments until September, 1985, reducing its balance to approximately $21,500.00.
- ↑ States may regulate trade secrets only to the extent that such regulation does net conflict with federal patent or copyright law. Kewanee Oil Co. v. Bicron Corp., 416 U.S. 470, 479, 94 S.Ct. 1879, 1885, 40 L.Ed.2d 315 (1974); Religious Technology Center v. Wollersheim, 796 F.2d 1076, 1089 (9th Cir. 1986), cert. denied, 479 U.S. 1103, 107 S.Ct. 1336, 94 L.Ed.2d 187 (1987). Since the California statute pleaded in this case does not involve a legal or equitable right equivalent to an exclusive right of a copyright owner under the Copyright Act, but only prohibits certain means of obtaining confidential information, its application here would not conflict with federal copyright law. See 17 U.S.C. § 301(b).
