T-904-84
International Business Machines Corporation and
IBM Canada Limited and IBM Canada Product
Distribution Incorporated (Plaintiffs)
v.
Ordinateurs Spirales Inc./Spirales Computers
Inc., Albert Cohen and Sylvain Abitbol (Defend-
ants)
Trial Division, Reed J.—Toronto, June 14 and 27,
1984.
Copyright — Computer programs — Application for inter
locutory injunction — Plaintiff selling throughout Canada
IBM Personal Computer — Alleged infringement of plaintiffs
copyright in computer program entitled "IBM Personal Com
puter Basis Input Output System-1.0" (BIOS) — BIOS pro
gram being series of instructions fulfilling role of taking
information into and out of operating portion of computer —
Defendant selling computer manufactured in Taiwan contain
ing copy of BIOS program — According to American Cyana-
mid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.) test applicable
is not demonstrating prima facie case of infringement but only
an arguable case or "that there is a serious question to be
tried" — Recent decisions holding computer programs to be
protected by copyright — Despite fact BIOS program embed
ded in chip permanently mounted in computer and designed
for IBM P.C., not classifiable as part of machine — Publish
ing of program in technical manual clearly reducing it to
material form — Fact not readable by human eye irrelevant —
Program within meaning of `literary work" — Withholding
injunction would open floodgates to infringing activity —
Plaintiff would lose business credibility — Copying being
blatant, appropriate to consider less stringent test of potential
damage than would otherwise be case — Copyright Act,
R.S.C. 1970, c. C-30, ss. 2, 4 (as am. by R.S.C. 1970 (2nd
Supp.), c. 4, s. 1).
The plaintiff sells throughout Canada and elsewhere a prod
uct called the IBM Personal Computer and also possesses a
copyright for a computer program entitled the "IBM Personal
Computer Basis Input Output System-1.0" (BIOS). The BIOS
program can be described as fulfilling the role of taking
information into and out of the operating portion of the
machine. Without it the computer will not work. The BIOS
program is "burned into" a chip which is mounted into the
IBM Personal Computer when it is manufactured and it is
intended to stay there permanently but can be removed if need
be. The plaintiff had also published a technical manual pertain
ing to the BIOS program. The defendant is selling through its
retail store a computer under the name COPAM INTELLIGENT
PC-301 manufactured in Taiwan which contains a copy of the
BIOS program. The plaintiff is seeking an interlocutory injunc-
tion to restrain the defendants from infringing their copyright
in the program. It is submitted by the defendants that no such
order should be granted because: (1) there is no prima facie
case of infringement and furthermore that computer programs
are not copyrightable; (2) the balance of convenience is in
favour of allowing the defendants to pursue their business until
the dispute is settled at trial; (3) it could not be shown that
irreparable harm would be likely to occur if the relief sought
was not granted.
Held, an interlocutory injunction should issue.
In cases of infringement, following the decision in American
Cyanamid Co. v. Ethicon Ltd., [1975] A.C. 396 (H.L.) the test
to be met is not that of a prima facie case but only an arguable
case or "that there is a serious question to be tried". The
question of copyrightability of computer programs has been
dealt with in decisions emanating from Commonwealth coun
tries with copyright statutes similar to our own. In fact, every
argument raised by the defendants as to the contention that
there is no copyright in a computer program is discussed in
these decisions. The starting point of the case at issue, section 4
of the Copyright Act, establishes that "copyright shall subsist
... in every original literary, dramatic, musical and artistic
work". The expression "literary work" as defined in section 2 of
the Act does not necessarily equate with "literature". Recent
decisions have made it clear that the language of statute law
governing copyright must be applied in a practical manner
consistent with the needs and concepts of the time. The conten
tion that a computer program must be in written or printed
form to be a literary work is dealt with in an unreported
decision of the Federal Court of Australia, Apple Computer
Inc. and Apple Computer Australia Pty. Limited v. Computer
Edge Pty. Limited et al. Fox J. stated that so long as something
is available in "writing", whether or not what is written
expresses a meaning in ordinary language is irrelevant. In the
present case the source code form of the computer program
being the expression of thought in an original manner, that is in
alpha numeric form, it is within the definition of "literary
work". Furthermore, the argument that the BIOS program is
embedded in a chip which is permanently mounted in the
computer making it part of the machine and therefore not a
"literary work" is not convincing. The permanent mounting is
for convenience only and it can be removed and replaced by
another if desired. The contention that the computer program is
not copyrightable because it cannot communicate to human
beings information or instruction or give enjoyment or pleasure
is contradicted by the fact that the BIOS program exists in
material form in the Technical Reference Manual for the IBM
Personal Computer. A written version of the program in its
object code manifestation is therefore available. The fact that
the reproduction cannot be read by the human eye is irrelevant.
The caselaw and blatant copying by defendants illustrate not
only an arguable but a prima facie case of infringement.
As to the question of balance of convenience and potential
damage, there are varying formulations of the potential
damage test to be applied when assessing the advisibility of
granting an interlocutory injunction. However, in a case of
infringement such as this where there is obvious copying, the
degree of harm required to be proved is not as high as that
required in other cases. Although the difference in size of the
parties makes it hard to conclude that IBM would suffer
irreparable harm if the injunction was not granted, the ensuing
floodgate effect could cause substantial harm to the plaintiff.
Numerous others could be tempted to import and sell comput
ers containing the copied BIOS program. Furthermore, the
defendants' accounting system and their precarious financial
state due to other similar lawsuits, indicate that damages may
not be an adequate remedy if they lost at trial. In infringement
cases where the copying is clear, interlocutory injunctions will
be granted without the necessity of establishing irreparable
harm or that damages would be inadequate.
CASES JUDICIALLY CONSIDERED
APPLIED:
American Cyanamid Co. v. Ethicon Ltd., [1975] A.C.
396 (H.L.); Apple Computer Inc. and Apple Computer
Australia Pty. Limited v. Computer Edge Pty. Limited et
al., unreported (Fed. Ct. Aust.); University of London
Press v. University Tutorial Press, [1916] 2 Ch. 601;
Apple Computer, Inc. v. Franklin Computer Corp., 219
USPQ 113 (3d Cir. 1983); Can. Admiral Corporation,
Ltd. v. Rediffusion, Inc. (1954), 20 C.P.R. 75 (Ex. Ct.);
Sega Enterprises Limited v. Richards and another,
[1983] F.S.R. 73 (U.K. H.C., Ch.D.); Northern Office
Microcomputers (Pty) Ltd. and others v. Rosenstein,
[1982] F.S.R. 124 (Sup. Ct. S. Afr.); Universal City
Studios, Inc. v. Zellers Inc., [1984] 1 F.C. 49; (1983), 73
C.P.R. (2d) 1 (T.D.).
CONSIDERED:
Hollinrake v. Truswell, [1894] 3 Ch. 420 (C.A.); Boosey
v. Whight, [1900] 1 Ch. 122 (C.A.).
REFERRED TO:
Spacefile Ltd. v. Smart Computing Systems Ltd. et al.
(1983), 75 C.P.R. (2d) 281 (Ont. H.C.); Apple Comput
er, Inc. v. Computermat Inc. et al. (1983), 75 C.P.R. (2d)
26 (Ont. H.C.); Nintendo of America, Inc. v. Coinex
Video Games Inc., [1983] 2 F.C. 189 (C.A.); (1982), 69
C.P.R. (2d) 122; Thrustcode Limited and another v.
W.W. Computing Limited, [1983] F.S.R. 502 (U.K.
H.C., Ch.D.); British Oxygen Co. v. Liquid Air, Ld.,
[1925] 1 Ch. 383; Exxon Corporation v. Exxon Insur
ance Consultants International Ltd., [1982] R.P.C. 69
(Eng. C.A.); Canusa Records Inc. et al. v. Blue Crest
Music, Inc. et al. (1976), 30 C.P.R. (2d) 11 (F.C.A.);
Yule, Inc. v. Atlantic Pizza Delight Franchise (1968) Ltd.
et al. (1977), 35 C.P.R. (2d) 273 (Ont. H.C.).
COUNSEL:
George E. Fisk and T. Gary O'Neill for
plaintiffs.
François Guay and Robert Brouillette for
defendants.
SOLICITORS:
Gowling & Henderson, Ottawa, for plaintiffs.
Lapointe Rosenstein, Montreal, for defend
ants.
The following are the reasons for order ren
dered in English by
REED J.: This is an application by the plaintiff
for an interlocutory injunction restraining the
defendants from infringing the plaintiff's copyright
in a computer program entitled the "IBM Personal
Computer Basis Input Output System-1.0"
(BIOS).
The plaintiff sells throughout Canada and else
where a product called the IBM Personal Comput
er. Computers process instructions only when they
are presented to them in machine language. This
machine language can be represented in numeric
form by a series of "1"s (the presence of a signal)
and "0"s (the absence of a signal)—binary nota
tion. Instructions can also be denoted in a more
compact form by using a system of hexadecimal
notation in which 16 characters are used (in this
case the numbers from 0 to 9 together with the
letters from A to F).
While a computer only follows instructions writ
ten in machine language, programs are usually
written in a language which uses words and
phrases closer to human language. This is more
easily intelligible to humans and consequently less
cumbersome to use. For example, MOV might be
the notation to denote an instruction to the com
puter to move data from one location to another.
Since the computer only responds to machine
language a computer program written in another
language must be translated. The language in
which the program is written is called the source
code and the language into which it is translated is
called the object code. Object code in many
instances, and in the jurisprudence, I notice, is
used as synonymous with machine language and I
will adopt that usage.
The computer can perform or execute an object
code instruction only if it is recorded in memory.
The computer's memory is typically composed of
semiconductor circuits known as chips. There are
two types of memory; ROM (Read Only Memory)
and RAM (Random Access Memory). Instruc
tions stored in ROM are permanent; they can only
be read by the computer not changed or rewritten
by it, and do not erase when the machine is turned
off. Instructions stored in RAM can be changed or
rewritten by the operator at any time and are
usually erased when the machine is turned off.
(There are other variations which for the present
purposes are not relevant.)
The BIOS computer program for the IBM Per
sonal Computer is recorded in ROM and it is that
series of instructions which can be described for
present purposes, in a general way, as fulfilling the
role of taking information into and out of the
operating portion of the computer. Without it the
computer will not work. That does not mean
another program could not be written to perform
the same function as the BIOS program, but there
must be some series of instructions written for this
purpose and placed in the computer.
Thus, the BIOS program is "burned into" or
embedded in a chip which is mounted into the
IBM Personal Computer when it is manufactured
and it is intended to stay there permanently. That
does not mean, however, that it cannot be removed
and replaced. It is perhaps not doing too much
conceptual violence to think of it as analogous to a
cassette tape in a tape recorder.
IBM published a listing of the source code and
object code of the IBM BIOS program, together
with other technical specifications in the Technical
Reference Manual for the IBM Personal Comput
er. This manual can be purchased by the general
public separately from the purchase of a computer.
IBM obtained a copyright for the published liter
ary work "IBM Personal Computer Basis Input
Output System-1.0" and holds a certificate of
registration No. 330496 for that work.
It is well known that the process of writing
computer programs is highly creative and individu
alistic. There are many different ways for the
author of a program to write that program, that is,
to choose the mode of expression and sequence of
the instructions within a program—to accomplish
a given result. It would, therefore, be extraordi
nary and highly improbable, to find that two pro
grammers not working together or having refer
ence to each other's work, had written programs to
accomplish anything more than the simplest result
in the same or even a substantially similar way.
The defendant, Spirales, is selling through its
retail store in Montreal, (and perhaps at other
locations) a computer under the name COPAM
INTELLIGENT PC-301 which is manufactured in
Taiwan and imported by the defendants into
Canada for sale here. From the affidavit evidence
before me it is clear that it contains a copy of the
BIOS program recorded in a read only memory.
The defendants argued, however, that an inter
locutory injunction should not be granted restrain
ing them from importing and selling this computer
because: (1) the plaintiff had not shown it had a
prima facie case—there was no copyright in a
computer program; (2) the balance of convenience
was in favour of allowing the defendants to contin
ue in business until the dispute is finally disposed
of at trial; and (3) it could not be shown that
irreparable harm could be likely to occur to the
plaintiff if the interlocutory injunction was not
granted.
Prima fade case—Copyright in a Computer
Program?
Counsel for the plaintiff argued that on the
basis of the decision in American Cyanamid Co. v.
Ethicon Ltd., [1975] A.C. 396 (H.L.), at page
407, the test he had to meet was not that of
demonstrating a prima facie case but only an
arguable case or "that there is a serious question
to be tried". This it was argued was clearly demon-
strated by the number of decisions, inside and
outside of Canada, which in recent years have held
computer programs to be protected by copyright.
Most of these decisions are at a trial court level.
Reference was made to decisions of the Ontario
High Court in Spacefile Ltd. v. Smart Computing
Systems Ltd. et al. (1983), 75 C.P.R. (2d) 281,
and in Apple Computer, Inc. v. Computermat Inc.
et al. (1983), 75 C.P.R. (2d) 26. Reference was
made to a decision of the Federal Court of Appeal
in Nintendo of America, Inc. v. Coinex Video
Games Inc., [1983] 2 F.C. 189; (1982), 69 C.P.R.
(2d) 122. These cases are of somewhat limited
value. The Spacefile case contains little analysis of
the issue; the Apple Computer case focussed on
the potential damage that might occur to the
plaintiff, refusing an interlocutory injunction but
requiring the defendants to file a bond into court;
and the Nintendo case can only be said to peri-
pherally relate to the issue.
Cases decided outside of Canada, in Common
wealth countries having a copyright statute not too
dissimilar to our own, are more helpful in many
ways. See, for example, Sega Enterprises Limited
v. Richards and another, [1983] F.S.R. 73 (U.K.
H.C., Ch.D.); Thrustcode Limited and another v.
W.W. Computing Limited, [1983] F.S.R. 502
(U.K. H.C., Ch.D.); Northern Office Microcom
puters (Pty) Ltd. and others v. Rosenstein, [1982]
F.S.R. 124 (Sup. Ct. S. Afr.); and Apple Comput
er Inc. and Apple Computer Australia Pty. Lim
ited v. Computer Edge Pty. Limited et al. (an
unreported decision of the Federal Court of Aus-
tralia dated May 29, 1984 which I will hereinafter
refer to as Apple Computer (Australia). Reference
may also be made to Apple Computer, Inc. v.
Franklin Computer Corp., 219 USPQ 113 (3d Cir.
1983), hereinafter referred to as Apple Computer
(U.S.).
Perhaps more important than the quantity of
cases in these other jurisdictions is the fact that
practically every argument which the defendants
raised as support for the contention that there is no
copyright in a computer program is dealt with in
one or other of these decisions. I propose to review
them briefly in that regard.
The starting point is, of course, section 4 of the
Copyright Act, R.S.C. 1970, c. C-30 [as am. by
R.S.C. 1970 (2nd Supp.), c. 4, s. 1]:
4. (1) ... copyright shall subsist ... in every original liter
ary, dramatic, musical and artistic work ....
And "literary work" is defined in section 2 to
include "maps, charts, plans, tables, and compila
tions".
It is argued, first of all, that since the Copyright
Act sets up a monopoly right in the author of the
work it should be interpreted restrictively. I do not
think this is the case. I can find no authority for
that proposition. Indeed, I note the words of Fox J.
to the contrary in Apple Computer (Australia) at
page 20 of his decision:
There has I think long been a tendency (not invariably
observed) to apply the language of the statutory law governing
copyright in a practical manner, consistently with the needs of
the time, and the then current concepts.
And Lockhart J. at page 33 of his decision in the
same case:
Courts have generally construed copyright legislation mindful
of changes in ideas and advances in technology.
The second contention of counsel for the defend
ants was that in order to be a literary work the
work had to be in written or printed form and that
a computer program does not meet that test. This
argument is based on the decision in University of
London Press v. University Tutorial Press, [1916]
2 Ch. 601, at page 608:
In my view the words "literary work" cover work which is
expressed in print or writing, irrespective of the question wheth
er the quality or style is high. The word "literary" seems to be
used in a sense somewhat similar to the use of the word
"literature" in political or electioneering literature and refers to
written or printed matter.
Copyright Acts are not concerned with the originality of ideas,
but with the expression of thought, and, in the case of "literary
work" with the expression of thought in print or writing.
See also British Oxygen Co. v. Liquid Air, Ld.,
[1925] 1 Ch. 383, at pages 390-391.
The computer program in its source code form
at least, in my view, meets the test set out by these
decisions. They are the expression of thought in an
original form, in alpha numeric form. While both
cases seem to equate literary work with "litera-
ture" subsequent decisions have made it clear that
this is not the case.
It has long been held that, to qualify for copyright protection, it
is not necessary that what is written or recorded should express
a meaning in language. That is why copyright protection has
been accorded to a list of meaningless words used as a tele
graph code (Anderson (D.P.) & Co. Ltd. v. The Lieber Code
Co. [1917] 2 K.B. 469; Ager v. Collingridge (1886) 2 T.L.R.
291 and Ager v. P. & O. Steam Navigation Co. (1884) 26 Ch.
D. 637) and a system of shorthand (Pitman v. Hine (1884) 1
T.L.R. 39). [Northern Office Microcomputers (Pty) Ltd. and
others v. Rosenstein, [1982] F.S.R. 124 at pages 133-134 (Sup.
Ct. S. Afr.).]
And in Copinger and Skone James on Copyright,
12th ed. London, Sweet & Maxwell, 1980, para
graph 156 referred to in the Apple Computer
(Australia) case by Fox J. at page 19 of his
decision:
But so long as something in "writing" exists, it is sufficient, and
it is not necessary that what is written should express a
meaning in ordinary language. Thus there may be copyright in
a list of words used as a telegraph code, or in a catalogue of
type, or in a system of shorthand.
See also: Apple Computer (Australia) at page 23
of the decision of Fox J., and at page 29 of the
decision of Lockhart J.
It has not been argued in this case that a
computer program is an idea and therefore not
copyrightable in the sense that there might be a
merger of the idea and the expression of that idea.
The evidence of the plaintiff that it was possible to
construct other programs to fulfil the same pur
pose within the IBM-P.C. was uncontradicted by
the defendants. A consideration of the issue is
found at page 124 of the Apple Computer (U.S.)
case. The United States Court of Appeals held
that if the idea is capable of various modes of
expression then the program is copyrightable.
If other programs can be written or created which perform the
same function as an Apple's operating system program, then
that program is an expression of the idea and hence copyright-
able. In essence, this inquiry is no different than that made to
determine whether the expression and idea have merged, which
has been stated to occur where there are no or few other ways
or expressing a particular idea.
The idea which may merge with the expression, thus making
the copyright unavailable, is the idea which is the subject of the
expression. The idea of one of the operating system programs
is, for example, how to translate source code into object code. If
other methods of expressing that idea are not foreclosed as a
practical matter, then there is no merger.
Counsel's third argument was that in its object
code form (i.e. embedded in the disc) the computer
program is merely a part of the machine and
cannot be classified as a "literary work". He
argued that the BIOS program can only be used in
the IBM-P.C. and that its sole purpose was to
make the computer function. Reliance was placed
on Hollinrake v. Truswell, [ 1894] 3 Ch. 420
(C.A.), at page 424, in which it was held that a
sleeve pattern imprinted with numbers was not
copyrightable:
They [the figures] are intended to be used, and can only be of
use, in connection with that upon which they are inscribed.
They are not merely directions for the use of the cardboard,
which is in truth a measuring apparatus, but they are a part of
that very apparatus itself, without which it cannot be used, and
except in connection with which they are absolutely useless.
I think it is clear, therefore, that what the Plaintiff has
sought to protect under the Act for the protection of literary
productions is not a literary production, but an apparatus for
the use of which certain words and figures must necessarily be
inscribed upon it.
Counsel's argument on this point also relies on
the decision in Boosey v. Whight, [1900] 1 Ch.
122 (C.A.) where rolls containing perforations for
use on a player piano were held not to be an
infringement of the copyright in the musical work
itself. They were held, at pages 123-124, not to be
"copies" of "sheets of music":
A sheet of music is treated in the Copyright Act as if it were a
book or sheet of letterpress. Any mode of copying such a thing,
whether by printing, writing, photography or by some other
method not yet invented would no doubt be copying. So,
perhaps, might a perforated sheet of paper to be sung or played
from in the same way as sheets of music are sung or played
from. But to play an instrument from a sheet of music which
appeals to the eye is one thing; to play an instrument with a
perforated sheet which itself forms part of the mechanism
which produces the music is quite another .... I regard the
defendants' perforated sheets as part of a mechanical contriv
ance for producing musical notes; and I cannot think that
manufacturers of musical instruments infringe any person's
copyright by so constructing their machines and appliances to
be used with them as to produce musical notes indicated on a
sheet of music.
Despite the fact the BIOS program is embedded
in a chip which is permanently mounted in the
computer at the time of its manufacture, and
despite the fact it is designed to control the func
tions of the IBM-P.C., I do not find the classifica
tion of it as part of the machine convincing. Its
permanent mounting within the machine is for
convenience only. It can be removed and another
replaced for it if desired. An analogy in my view
would be to the role of a cassette tape in a tape
recorder. Information is recorded on a tape in a
fashion analogous to information being embedded
in the chip—both operate in conjunction with the
respective machines for which they are designed
but are not part of the machine. I note the follow
ing quotation at page 122 of Apple Computer
(U.S.) case.
Programs should no more be considered machine parts than
videotapes should be considered parts of projectors or phono -
records parts of sound reproduction equipment.... That the
words of a program are used ultimately in the implementation
of a process should in no way affect their copyrightability.
The Hollinrake case raises another issue, how
ever, that is, perhaps, in many ways the most
difficult one. At page 428 of that case it is said:
Now, a literary work is intended to afford either information
and instruction, or pleasure, in the form of literary enjoyment.
The sleeve chart before us gives no information or instruction.
It does not add to the stock of human knowledge or give, and is
not designed to give, any instruction by way of description or
otherwise; and it certainly is not calculated to afford literary
enjoyment or pleasure.
See also Exxon Corporation v. Exxon Insurance
Consultants International Ltd., [1982] R.P.C. 69
(Eng. C.A.), at page 88.
Counsel for the defendants argued that the fatal
flaw in the plaintiff's claim that computer pro
grams are copyrightable is that it cannot be said
that they communicate to human beings either
information or instructions, or that they give
enjoyment or pleasure. That is, they are not
designed for communication between humans but
they are designed as instructions to the computer.
At least, in their object code form they are not
designed to be read by any person.
A response to this argument is found in the
Apple Computer (Australia) case, at page 32 of
the decision of Lockhart J.:
Emphasis was placed by counsel for the respondents upon the
fact that the function or purpose of a copyright programme is
to control the sequence of operations carried out by a computer.
Whilst it is true that this is the function and purpose of a
computer programme, in my opinion it does not deprive it of
protection by copyright law. Copyright is essentially concerned
with the expression of ideas in composition or language rather
than with the function or purpose of those ideas.
And per Sheppard J. at page 11 of this decision:
The learned primary Judge, relying principally upon Hollin-
rake v. Trusswell [sic] [1894] 3 Ch. 420 and Exxon Corpora
tion v. Exxon Insurance Consultants International Limited
[1982] R.P.C. 69, expressed the view that for relevant purposes
a literary work was something which was intended to afford
either information or instruction or pleasure in the form of
literary enjoyment. I agree with the other members of the
Court in thinking that this cannot be an exhaustive statement
or definition of what a literary work is. The purported defini
tion seems to contemplate that there must be an intention to
make available the work for the information, instruction or
literary pleasure of others. The words come from the judgment
of Davey L.J. in the Hollinrake case (see p. 428). The case was
decided before the United Kingdom Act of 1911 came into
force. That Act applied in Australia-See Copyright Act 1912.
Until the United Kingdom Act of 1911 there was no statutory
copyright in unpublished works; see Copinger and Skone James
on Copyright, 12th Ed. ("Copinger") para. 51. Under the
present Australian Act, copyright subsists in unpublished works
by reason of the operation of sub-sec. 32(1); see also s. 29.
It seems to me that many instances could be given of literary
works in which copyright subsists but which are not embraced
with Davey L.J.'s definition. I instance a diary kept for one's
personal use or pleasure recording, perhaps, some period of
ones life or a series of related events. As it is written, there may
be no intention of publishing it so that it is not, at that time, for
the information, instruction or pleasure of anyone but the
writer ....
I would note also that the plaintiff has published
the BIOS program in both source code and the
object code (hexadecimal notation) in the techni
cal manual. This is not a case where there is no
written version of the program in its object code
manifestation.
One last point needs to be dealt with. Counsel
for the defendants argued that even if the BIOS
program was properly copyrightable, that copy
right should be confined to the manual itself. Thus
while the program might be copyrightable as it
appears in the technical manual, copyright should
not extend to the machine language embedded or
"burned" in the chip. He argued that "1"s and
"0"s in binary notation, in the chip are electrical
signals not the numbers themselves. He argued
that the manual itself had not been copied. Evi
dence was not given as to exactly how the BIOS
program had been copied but I am given to under
stand that it could have been copied directly from
the BIOS chip, (without any recourse at all to the
manual) or it could have been reproduced relying
on the instructions in the manual. The method is
really not significant.
In support of this argument reference was made
to Boosey v. Whight (supra) and to Canusa
Records Inc. et al. v. Blue Crest Music, Inc. et al.
(1976), 30 C.P.R. (2d) 11 (F.C.A.).
Also in Can. Admiral Corporation, Ltd. v.
Rediffusion, Inc. (1954), 20 C.P.R. 75 (Ex. Ct.) at
page 86 the Court said:
... for copyright to subsist in a "work" it must be expressed to
some extent at least in some material form, capable of identifi
cation and having a more or less permanent endurance. All the
works included in the definitions of "artistic work" and "liter-
ary work" ... have a material existence; "musical work" ...
must be printed, reduced to writing or otherwise graphically
produced or reproduced.
See also Apple Computer (Australia) case at page
14 of Sheppard J.'s decision (dissenting in this
respect):
In my opinion the programmes in object code are not literary
works. Fixed as they are in the ROMS, they are unable to be
seen in that code. True it is, someone could write them out so as
to show them symbolically in binary notation or hexadecimal
notation. The computer itself can show them symbolically in
hexadecimal notation. But all of that is irrelevant. The impor
tant point is that it is only the machine itself, that is, the
microprocessor which can "understand" or "see" and thus deal
with the object code ....
... if what is alleged to constitute a literary work (here the
programmes in object code) cannot be seen even with the aid of
the screening or printing devices attached to the computer, they
cannot in my opinion, amount to a literary work....
The BIOS program has clearly been reduced to
material form—in the published technical manual.
Therefore the requirement of the Can. Admiral
Corporation, Ltd. v. Rediffusion, Inc. case (supra)
has been complied with. Does the fact that it
cannot be read by the human eye in its reproduced
state matter? I think not. I note that in Sega
Enterprises Limited v. Richards and another,
[1983] F.S.R. 73, at page 75, the U.K. High Court
(Chancery Division) had no problem with this
issue and classified the machine language program
as a reproduction or adaptation of the program in
written form. Section 3 of the Canadian Copyright
Act vests in the owner of the copyright the sole
right to "reproduce the work ... in any material
form whatever". Goulding J. in the Sega case said:
... I am clearly of opinion that copyright under the provisions
relating to literary works in the Copyright Act 1956 subsists in
the assembly code program of the game "Frogger". The
machine code program derived from it by the operation of part
of the system of the computer called the assembler is to be
regarded, I think, as either a reproduction or an adaptation of
the assembly code program ....
In Northern Office Microcomputers (Ply) Ltd.
and others v. Rosenstein, [1982] F.S.R. 124 (Sup.
Ct. S. Afr.) at page 134, it was said:
As for the floppy discs, once the instructions to the computer
have been recorded upon them, I think one can say rightly that
the instructions have been reduced to material form.
And in the Apple Computer (Australia) case,
Fox J. at page 24 of his decision said:
The subject matter is not the chips but the code. The code is
embedded in the chips, in the sense that it is in their compo
nents that the electric charges are to be found, arranged
according to the code. Infringement in the present case involves
the reproduction in "a material form" of an adaptation of a
work....
While the better view would seem to be that the
"chip" version of the code is a reproduction in
material form, Lockhart J. at pages 34-37 of his
judgment in the Apple Computer (Australia) case
treated the reproduction of the program as a trans
lation. At page 37:
When in written form the two programmes in object code
presently relevant are humanly intelligible. In my opinion they
answer the description of translations of the source code from
which they are derived. Many object codes are, however, found
only in machine readable form; (i.e. they cannot be reproduced
in visible form) but I would not regard this fact as necessarily
disqualifying those codes from being described as translations
of the source codes from which they originated.
The object codes in suit are interpretations or transforma
tions or transliterations from one language to another. They are
translations for presently relevant purposes.
In the light of all this jurisprudence I think the
plaintiff has demonstrated not only an arguable
case but a prima fade case. This is especially so
when taken together with the fact that the copying
is blatant, indeed, essentially admitted.
Balance of Convenience—Potential Damage
I propose to treat the issues of balance of conve
nience and potential damage together since the
evidence relating to them is inter-related.
The defendants' business is that of importing,
distributing and selling microcomputers, related
accessories and various other electronic equipment.
The defendants appear to have a network capable
of selling across Canada. The computers in ques
tion are manufactured in Taiwan and imported
here. They are sold for $2,500 to $1,750 less than
the IBM-P.C. The defendant Spirales has little
staff—three employees besides the two individuals
named as defendants in this case. There is no
doubt that if an interlocutory injunction is not
granted the defendant will attempt to expand its
business to the greatest extent possible. How
extensive it could become is speculative. It is clear
it could not rival IBM in size.
The defendants claim that the launching of the
lawsuit and the imposing of the interim injunction
with its attendant publicity has already led to a
drop in sales of almost 70%. Accordingly, it is
argued that granting an interlocutory injunction
would cause them severe harm. It seems more
likely, however, that this recent drop in sales has
been the result of a suit commenced against Spi-
rales by Orange Micro Inc. for alleged breach of
copyright in another computer program, and the
indirect result of a suit brought by Apple Comput
er Inc. against one of Spirales' customers for
alleged infringement of a program relating to the
Apple II computer. These products constitute a
much larger proportion of the defendants' present
business than the COPAM computer.
There is a conflict in the evidence as to the
number of COPAM computers the defendant Spi-
rales sold before the plaintiff commenced proceed
ings against it. I think it is likely that few were
sold. The defendant argues that the number is nine
(two of these being sold unknowingly to repre
sentatives of IBM). If this is the case then the
defendant has not really yet commenced business
in the product.
The defendants argue that an assessment of the
balance of convenience is not something which
need be considered, unless it can be proven that
the plaintiff will suffer irreparable damage if an
interlocutory injunction does not issue.
The jurisprudence contains varying formulations
of the test, respecting potential damage, to be
applied in assessing whether an interlocutory
injunction should be granted. In some cases the
test is expressed as being one of irreparable
damage; See Apple Computer, Inc. v. Computer-
mat Inc. et al. (1983), 75 C.P.R. (2d) 26 (Ont.
H.C.). In the American Cyanamid case (supra),
the test is expressed as whether or not damages
would be an adequate remedy. In Yule, Inc. v.
Atlantic Pizza Delight Franchise (1968) Ltd. et al.
(1977), 35 C.P.R. (2d) 273 the Ontario High
Court asked whether there was threatened harm to
the applicant which might not be adequately com
pensated by way of damages.
In the present case it is hard to conclude that
the plaintiff would suffer irreparable harm from
the actions of the defendant [Spirales] alone, if an
injunction were not granted. This flows from one
factor only—the comparative size of the two
protagonists. At the same time IBM might directly
suffer substantial harm, not from the direct activi-
ties of the defendant but because of the encourage
ment withholding an injunction would give to
many others to enter into the field of importing
and selling the computers containing the program
in which the plaintiff holds a certificate of copy-
right—a floodgates effect. Counsel for the plaintiff
graphically described this as "death by 1000 cuts".
I have no doubt that withholding an injunction
would open the floodgates to extensive activity by
others. (Evidence was given that the computers are
flown in from Taiwan and can be delivered to
Montreal from there in a matter of three or four
days.)
In addition, the plaintiff argued that extensive
damage would be visited upon its dealers through
out the country. A paragraph of an affidavit in
support of the plaintiff's claim, in this regard,
describes the dealership arrangements as follows:
IBM Canada Ltd. has recruited over 120 dealers for the
IBM PC. Almost all of these dealers are Canadian individuals
or companies. The smallest of the dealers have invested on the
order of $250,000. Canadian in obtaining inventory, training
staff, and setting up the necessary facilities for the carrying on
of a dealership. The larger dealers in Canada have invested
approximately $800,000. per store. Typically, a small dealer
will have three employees (who may be owners or co-owners in
many cases) and a large dealership will have 15-20 employees
per store.
As noted above, the defendants sell the COPAM
computer for considerably less than the price at
which the IBM-P.C. is sold. I have no doubt that
the plaintiffs dealers would suffer considerable
loss if active trade in imported COPAM computers
developed. The plaintiff would certainly suffer loss
of business credibility if the confidence of their
dealers was undermined. See: Spacefile Ltd. v.
Smart Computing Systems Ltd. et al. (1983), 75
C.P.R. (2d) 281 (Ont. H.C.) for a decision in
which this was taken into account. To quote the
words of Mr. Justice Walsh in Universal City
Studios, Inc. v. Zellers Inc., [1984] 1 F.C. 49 [at
page 61]; (1983), 73 C.P.R. (2d) 1 (T.D.) [at page
10], the interests of the plaintiff here:
... exceeds a mere monetary interest which can be compensat
ed by payment of damages or an accounting of profits ....
There is additional evidence to indicate that
damages might very likely not prove an adequate
remedy if the defendants lost at trial. There is
evidence that the defendants' system of accounting
is not adequate; customers are requested to make
their purchases in cash; sales records and bank
records do not appear to be well kept. Accordingly,
the plaintiff fears that it would never be able to
prove its damages, given the defendants' inade
quate accounting procedures. It is true, of course,
that inadequate procedures in the past do not
mean that they will necessarily continue in the
future, but the plaintiff argues that without some
one to police such matters there would be no
adequate safeguards. In addition, the plaintiff
fears that the defendants are likely to be unable to
pay damages if they were to ultimately lose at
trial. As noted above, they are being sued by
others for alleged copyright infringement and with
respect to products which comprise a larger pro
portion of their business than does the COPAM
computer. There is at least some possibility that
the defendants may go out of business before final
resolution of the action.
In any event, I am not convinced that the degree
of harm required to be proved in a case such as
this, where there had been blatant copying, is as
high as that required in other cases of interlocuto
ry injunction. Counsel for the plaintiff argued that
the irreparable harm test was appropriate to pat
ents because it was easy to inadvertently infringe a
patent right. Thus, the courts are slow to grant
interlocutory injunctions in patent cases. He
argued, however, that copying could not take place
inadvertently and therefore the courts were more
willing to grant interlocutory injunctions in copy
right infringement actions when the copying was
very clear, without requiring irreparable harm or a
finding that damages would not be adequate. I
accept this reasoning. It accords with my interpre
tation of the jurisprudence. It may be that the
courts in such cases are doing no more than taking
into account equitable considerations such as the
bona fides or male fides of the party, as they have
always done in granting equitable remedies. But,
in any event, in copyright infringement cases it
seems to me, when the copying is blatant, it is
appropriate to consider a less stringent test of
potential damage, than would otherwise be the
case. Refer: Universal City Studios, Inc. v. Zellers
Inc., [1984] 1 F.C. 49; (1983), 73 C.P.R. (2d) 1
(T.D.), at page 10 and Apple Computer (U.S.)
case at pages 124-125.
Accordingly, in all the circumstances of this
case, it is my view that an interlocutory injunction
should issue as requested by the plaintiff.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.