Gates Rubber Co. v. Bando Chem. Indus. - 9 F.3d 823 (10th Cir. 1993)

Rule:

Once a plaintiff has shown that it holds a valid copyright, it must next prove that the defendant unlawfully appropriated protected portions of the copyrighted work. This question involves two separate inquiries: 1) whether the defendant, as a factual matter, copied portions of the plaintiff's program; and 2) whether, as a mixed issue of fact and law, those elements of the program that have been copied are protected expression and of such importance to the copied work that the appropriation is actionable.

Facts:

The plaintiff-appellee, Gates Rubber Co, was a manufacturer of rubber belts for use in industrial machinery. Defendant, Bando American, was a competitor of Gates in the manufacture and sale of industrial belts. In June 1989, Bando introduced a demonstration copy of “Chauffeur,” a computer program similar to Gates’ Design Flex program. Chauffeur was authored by defendant Steven Piderit, Bando American’s current employee, who used to work for Gates. Subsequently, Gates filed the present action against the defendants alleging unfair competition, misappropriation of trade secrets, infringement of copyright, and breach of contract. The district court held that the defendants had infringed Gates’ copyright and willfully and maliciously misappropriated trade secrets. The defendants appealed.

Issue:

1. Did the trial court err in holding that the defendants infringed Gates’ copyright?
2. Did the trial court err in holding that the defendants willfully and maliciously misappropriated Gates’ trade secrets?

Answer:

1) Yes. 2) No.

Conclusion:

The court vacated and remanded for reconsideration the finding of infringement, but affirmed the finding of the trade secrets claim. The court held that the district court failed to filter portions of the program that it found to have been misappropriated and, thus, failed to eliminate those elements that were not protected under copyright law. As such, the district court relied on unprotectable elements in determining that the defendants had infringed Gates’ copyright. Additionally, Gates took adequate steps to protect the confidentiality of its trade secrets and also established that the trade secrets were valuable. The court also held that Gates’ trade secret claims were not preempted by federal law.