Justia.com Opinion Summary: The issue before the Supreme Court was whether a claim under Colorado law for civil theft of a copyrightable work required a trial court to instruct the jury on principles of federal copyright law. Petitioner Steward Software hired Respondent Richard Kopcho to develop and market a new software program. Steward never entered into a written agreement governing the ownership of the software with Holonyx, Inc. (one of Respondent's multiple corporate entities) or Respondent. By the time the software was ready for testing, the relationship between the parties had become strained. Steward refused to make further payments and under Respondent's direction, Holonyx locked Steward out of the software code and refused to turn it over. Holonyx then filed a copyright registration for the software with the U.S. Copyright Office, listing the software's author a new corporation Respondent controlled called Ruffdogs Software, Inc. Steward sued Respondent for breach of contract and civil theft. Before trial, the parties tendered proposed jury instructions; one of Steward's proposed instructions pertained to the ownership and registration of copyrightable works. The trial court determined that copyright law did not pertain to Steward's civil theft claim and rejected the tendered instruction. Upon review, the Supreme Court agreed that ownership of the copyright in the code was irrelevant. The Court thus concluded the trial court correctly refused to instruct the jury on the principles of copyright law. The court reversed the appellate court and reinstated the trial court's opinion.
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Opinions of the Colorado Supreme Court are available
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ADVANCE SHEET HEADNOTE
December 12, 2011
No. 10SC711 -- Steward Software Co. v. Kopcho -- Civil Theft -Jury Instructions.
The supreme court holds that federal copyright law only
governs ownership of a copyright in software code, not ownership
of a material embodiment of the code.
Because Steward Software
alleged in this case that Kopcho committed civil theft of a
material embodiment of the code, ownership of a copyright in the
code is irrelevant.
The trial court thus correctly refused to
instruct the jury on principles of federal copyright law.
The
supreme court therefore reverses the judgment of the court of
appeals.
SUPREME COURT, STATE OF COLORADO
101 West Colfax Avenue, Suite 800
Denver, Colorado 80202
Certiorari to the Colorado Court of Appeals
Court of Appeals Case No. 09CA1690
Petitioner:
Steward Software Company, LLC,
v.
Respondent:
Richard Kopcho.
JUDGMENT REVERSED
EN BANC
December 12, 2011
Jeffrey M. Villanueva, P.C.
Jeffrey M. Villanueva
Nicole S. Schram
Denver, Colorado
Attorneys for Petitioner
Bell, Gould & Scott, P.C.
Gregory S. Bell
Fort Collins, Colorado
Stirman Law office, LLC
Laurie R. Stirman
Fort Collins, Colorado
Attorneys for Respondent
JUSTICE RICE delivered the Opinion of the Court.
Case No. 10SC711
In this case, we address whether a claim under Colorado law
for civil theft of a copyrightable work requires a trial court
to instruct the jury on principles of federal copyright law.
We
conclude that, because ownership of a work is distinct from
ownership of a copyright in that work, federal copyright law
does not apply to a claim under Colorado law for civil theft of
a work.
Because Steward Software Company (Steward Software)
claimed only that Richard Kopcho stole software and not that he
stole a copyright in the software, the trial court correctly
refused to instruct the jury on federal copyright law.
We
therefore reverse the judgment of the court of appeals.
I.
Background
Steward Software hired Kopcho, who initially acted through
a number of different corporate entities and later acted only
through Holonyx, Inc., to develop and market a new software
program.
Steward Software never entered into a written
agreement governing the ownership of the software with Holonyx,
Kopcho, or any of Kopcho’s previous corporations.
Kopcho and
Steward Software did, however, exchange many emails discussing
ownership of the software that Kopcho was developing.
By the time the software was ready for initial testing, the
relationship between the parties had become strained.
Steward
Software refused to make further payments and, at Kopcho’s
direction, Holonyx locked Steward Software out of the software
2
code and refused to turn the code over to Steward Software.
Holonyx then filed a copyright registration for the software
with the United States Copyright Office, listing as the
software’s author a new corporation that Kopcho controlled
called Ruffdogs Software, Inc.
Steward Software brought this action against Holonyx and
Kopcho (defendants) for, among other claims, breach of contract,
breach of fiduciary duty, and civil theft.
arise under Colorado law.
All of these claims
In its claim for theft, Steward
Software alleged that defendants “unlawfully exercis[ed]
dominion and control of the Property without authorization.”
The complaint defined “the Property” as “the software as well as
[a website and associated domain names], the source code, the
object code, all software documentation, [certain marketing
materials] for which it ha[d] paid and the associated
intellectual property rights.”
In their answer, defendants
asserted, among other affirmative defenses, that they owned the
software.
They also counterclaimed for breach of contract
against Steward Software.
Before trial, the parties tendered proposed jury
instructions to the court.
One of defendants’ proposed
instructions stated:
3
Federal copyright law provides that the title to
copyrightable material vests initially in the author
or authors of the work.1 Ownership of a copyright does
not require registration or other action by the author
to receive protection.
Registration of a copyright
simply creates a presumption that ownership exists
with the registrant.
After briefing by the parties, the trial court determined that
federal copyright law did not apply to Steward Software’s civil
theft claim and thus rejected the tendered instruction.
At trial, Steward Software argued to the jury that
defendants had committed civil theft by locking Steward Software
out of the software and refusing to turn the software over to
Steward Software.
On direct examination, Steward Software’s
attorney asked the company’s owner what the company believed
defendants had stolen.
The owner answered that defendants had
stolen the “software, video, Web site, brochure information,
[and] the code behind it.”
Steward Software introduced into evidence the federal
copyright registration that defendants had filed, but did not
argue to the jury that defendants had stolen a copyright in the
software by filing the registration.
1
This instruction contains an incorrect statement of federal
copyright law. As discussed below, ownership of a copyright,
not ownership of copyrightable material, vests automatically in
the author of a copyrightable work. 17 U.S.C. § 201(a) (2006).
Kopcho’s conflation of these two concepts is the central concern
of our opinion in this case.
4
The jury returned verdicts in favor of Steward Software for
civil theft, breach of contract, and breach of fiduciary duty.
Kopcho alone appealed.
The court of appeals reversed the judgment for civil theft
because it concluded that the trial court erred by refusing to
instruct the jury on federal copyright law.
It determined that
Steward Software’s claim for civil theft presented the jury with
“a significant factual question as to who owned the copyrights
in the software” because Steward Software contended that “Kopcho
stole object code and source code, which are copyrightable.”
Steward Software Co. v. Kopcho, No. 09CA1690, 2010 WL 3432214,
at *4-5 (Colo. App. Sept. 2, 2010).
The court of appeals also
determined that “some evidence at trial suggested that Kopcho
stole certain of [Steward Software’s] copyright interests.”
Id.
at *5.
We granted certiorari to review whether a claim under
Colorado law for civil theft of a copyrightable work requires a
trial court to instruct the jury on principles of federal
copyright law.
We conclude that such an instruction is not
appropriate and therefore reverse the judgment of the court of
appeals.
II.
Standard of Review
A trial court is obligated to instruct the jury correctly
on the law applicable to the case.
5
Krueger v. Ary, 205 P.3d
1150, 1157 (Colo. 2009); Gordon v. Benson, 925 P.2d 775, 777
(Colo. 1996).
We review de novo whether a particular
instruction correctly states the law.
1064, 1067 (Colo. 2011).
Day v. Johnson, 255 P.3d
We review for abuse of discretion the
trial court’s evidentiary finding on whether sufficient evidence
exists to support the submission of an instruction.
Garhart ex
rel. Tinsman v. Columbia/Healthone, L.L.C., 95 P.3d 571, 589
(Colo. 2004).
III.
Analysis
Steward Software claimed that it owned the software code
and therefore defendants committed civil theft of the code by
refusing to turn over the code to Steward Software.
Kopcho
defended against this claim by asserting that he owned the
software code.
In relation to this defense, Kopcho contends that federal
copyright law exclusively governs ownership of software code
because software code is copyrightable material under federal
copyright law.
He therefore asserts that the trial court erred
by refusing to instruct the jury on principles of federal
copyright law in this case.
Federal copyright law, however, does not govern ownership
of the code; it only governs ownership of a copyright in the
code.
Because Steward Software argued that Kopcho committed
civil theft of the code, and not civil theft of a copyright in
6
the code, ownership of the copyright under federal law is
irrelevant to Kopcho’s defense.
The trial court therefore
correctly declined to instruct the jury on federal copyright
law.
A.
Civil Theft and Ownership
The owner of property can bring a civil action for damages
against a person who obtained the property by theft.
§ 18-4-405, C.R.S. (2011).
A person commits theft when he or
she “knowingly obtains or exercises control over anything of
value of another without authorization, or by threat or
deception, and . . . [i]ntends to deprive the other person
permanently of the use or benefit of the thing of value.”
§ 18-4-401(1)(a), C.R.S. (2011); Itin v. Ungar, 17 P.3d 129,
133-34 (Colo. 2000).
Because a person must commit theft of the
property of another, ownership of the property at issue is a
defense to civil theft.
B.
See §§ 18-4-401(1)(a), -405.
Civil Theft of the Software Code
Kopcho contends that federal copyright law governs
ownership of copyrightable material and therefore an instruction
on federal copyright law is necessary for the jury to determine
ownership of the software code in this case.
But federal
copyright law governs only ownership of a copyright in software
code, not ownership of the code itself.
We therefore conclude
that federal copyright law is irrelevant to a determination of
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ownership of the software code -- the property at issue in this
case.
The underlying human-readable “source code” and computerreadable “object code” of computer software are each eligible
for copyright protection as a “literary work” under federal
copyright law.
17 U.S.C. § 102(a) (2006); e.g., Apple Computer,
Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1249 (3d Cir.
1983).
The owner of a copyright2 in a literary work enjoys
certain exclusive rights, such as the right to reproduce copies
of a work, prepare derivative works, distribute copies of a
work, and display the work publicly.
17 U.S.C. § 106.
Ownership of a copyright, however, “is distinct from
ownership of any material object in which the work is embodied.”
Id. § 202.
This rule applies to the copy in which the work is
first fixed.3
See id.; Sundeman v. Seajay Soc'y, Inc., 142 F.3d
194, 197 n.1 (4th Cir. 1998) (noting the distinction between a
2
Ownership of a copyright in a work ordinarily vests
automatically in the author of the work. 17 U.S.C. § 201(a).
In the case of a work made for hire, however, “the employer or
other person for whom the work was prepared is considered the
author” of the work. Id. § 201(b). Registration of a copyright
is not a condition of copyright protection. Id. § 408(a).
Registration constitutes prima facie evidence of copyright
ownership, but this presumption may be dispelled by evidence to
the contrary. Id. § 410(c); see Gaste v. Kaiserman, 863 F.2d
1061, 1065 (2d Cir. 1988).
3
Software code loaded onto an electronic memory device meets the
requirement of “fixation” under federal copyright law. Apple
Computer, 714 F.2d at 1249.
8
plaintiff’s claim for return of the original manuscript of a
novel and a claim for copyright infringement after defendants
made copies of the novel).
In this case, as the court of appeals recognized, Steward
Software alleged that Kopcho stole the source code and object
code that constituted the software.
This claim, however, does
not raise any factual question regarding the ownership of a
copyright in the software code.
Holonyx wrote the code and
saved it in electronic memory.
The code saved in electronic
memory is a material embodiment of the work, in fact the
original embodiment.
This original embodiment was the
“software” that Steward Software claimed was stolen.
That is,
Steward Software contended that it owned the original embodiment
of the software code and that, by refusing to hand over the
code, Kopcho committed civil theft.
Federal copyright law does
not govern ownership of an original embodiment of a work, such
as the software code in this case, and it is therefore
irrelevant to Kopcho’s defense.
Steward Software’s claim for theft of the software code is
no different from a claim for theft of any other literary work.
In the case of a novel, for example, a writer prepares an
original manuscript of the work.
If another person exercises
control over that manuscript under circumstances constituting
civil theft under Colorado law, he or she would be liable for
9
theft of the manuscript no matter who owned the exclusive rights
under federal copyright law to reproduce, distribute, or
publicly display copies of the novel.
See, e.g., Sundeman, 142
F.3d at 197-204 (plaintiff maintained separate actions for
return of original manuscript of novel under state law and
copyright infringement under federal law).
In this case, Steward Software alleged that Kopcho
committed civil theft of the code, which was saved to electronic
memory.
Accordingly, Kopcho would be liable for civil theft
under Colorado law no matter who owned the exclusive rights
under federal copyright law to reproduce, distribute, or
publicly display copies of the code.
Copyright ownership under
federal law is therefore irrelevant to Kopcho’s affirmative
defense against civil theft under Colorado law.
The trial court
is obligated to instruct the jury only on the law applicable to
the case.
Because federal copyright law is not applicable to
this case, the trial court correctly refused Kopcho’s tendered
instruction on federal copyright law.
C.
Civil Theft of a Copyright in Software
Having determined that federal copyright law does not
govern ownership of the software code, the only way federal
copyright law could be relevant to this case is if the parties
disputed ownership of a copyright in the code.
Contrary to the
opinion of the court of appeals, however, the record reveals
10
that Steward Software did not argue at trial that Kopcho had
stolen a copyright in the software.4
Although the complaint
included “associated intellectual property rights” in “the
Property” that Steward Software claimed Kopcho had stolen,
Steward Software pursued no such theory at trial.
Rather,
Steward Software’s owner testified that Kopcho had stolen the
“software.”
Also, Steward Software’s attorney argued only that
Kopcho had stolen the software, not a copyright in the software.
The only evidence produced by Steward Software that related
to copyright was the copyright registration that Kopcho had
filed.
The record reveals, however, that Steward Software did
not introduce the copyright registration to prove that, by
filing the registration, Kopcho had stolen a copyright.
To the
contrary, Steward Software argued that publicly disclosing the
code, as an attachment to the registration, was a violation of
the nondisclosure agreement and a violation of Kopcho’s
fiduciary duties.
In addition, Steward Software introduced the copyright
registration because Kopcho’s filing of the registration tends
to prove that he intended to permanently deprive Steward
Software of the code.
Steward Software elicited testimony from
Kopcho that, by filing the registration, he claimed ownership of
4
We express no opinion on whether a person could commit civil
theft of a copyright under Colorado law.
11
the software.
This claim of ownership tends to prove that
Kopcho intended to permanently deprive Steward Software of the
code, instead of retaining it temporarily while the parties
resolved their disagreement.
Moreover, experts testified at trial that software
companies generally copyright software and then license it to a
customer.
The copyright registration therefore tends to prove
that Kopcho intended to sell copies of the software to customers
in the future.
This evidence is relevant to prove that Kopcho
did not intend to retain the software temporarily, but rather
that he intended to keep the code permanently in order to resell
copies of it.
Because no claim existed in this case for civil theft,
under Colorado law, of a copyright in the software code,
ownership of the copyright was not at issue.
Because the trial
court is obligated to instruct the jury only on the law
applicable to the case, and ownership of a copyright under
federal law was not at issue here, the trial court correctly
declined to instruct the jury on federal copyright law.
IV.
Conclusion
Federal copyright law was not relevant to Steward
Software’s claim for civil theft of the original embodiment of
the software’s source code and object code.
Moreover, Steward
Software did not claim that Kopcho stole any copyright in the
12
software.
Federal copyright law is therefore not applicable to
any claim asserted by Steward Software in this case.
Because it
was only obligated to instruct the jury on the law applicable to
the case, the trial court properly declined to instruct the jury
on principles of federal copyright law.
We therefore reverse
that portion of the court of appeals’ judgment that required a
new trial on civil theft.
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