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MAI Systems Corporation v. Peak Computer, Inc.

MAI Systems was a manufacturer of computers, who both designed software for those computers and serviced the same. MAI had a copyright in the operating software utilized in its computers. Defendant Peak Computer was in the business of maintaining and servicing computers, including those manufactured by MAI Systems. In the course of servicing these computers, Peak would turn on the computer and run the computer's operating software, which had been licensed to the owner and/or lessee of the machine. This was done to view the system error log, which assisted the repairman in servicing the machine. When this program was run, it was retrieved from the computer's storage system, placed into the computer's Random Access Memory ("RAM") and viewable on the computer's screen. After the repair was completed, the machine was turned off and no permanent copy of the copyrighted operating system software was made or removed from the machine or premises by Peak. If a computer had to be removed from the client's place of business to repair it, Peak apparently offered to loan the customer a similar MAI machine until the computer was repaired. MAI charged the defendants, inter alia, with copyright infringement. The Ninth Circuit affirmed the district court below, and held that the foregoing conduct constituted copyright infringement. The linchpin of the court's holding was its finding that unauthorized "copying, for purposed of copyright law occurs when a computer program is transferred from a permanent storage device to a computer's RAM." Thus, the court concluded that such action created a copy within the meaning of 17 U.S.C. 101. Section 101 defines copies as: "Material objects, other than phonorecords, 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." The act further explained that "a work is 'fixed' in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration." It does not appear that the Court addressed the argument that the license granted by MAI to the purchaser and/or lessee of the machine and its operating program gave that licensee the right to utilize the program or cause third parties such as Peak to use the program to repair the machine.