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Lotus Prevails in Protecting its 1-2-3 User Interface

July 1990

As predicted in our January 1990 issue, a federal district court judge in Massachusetts ruled that the user interface of Paperback Software’s spreadsheet program, “VP-Planner,” infringed Lotus’ copyright in Lotus 1-2-3.

Judge Keeton’s June 28, 1990, decision was an unqualified victory for Lotus, and is a landmark in the development of software copyright law.

General Observations. Before describing the decision in detail, some general observations should be made. First, Judge Keeton followed traditional copyright law principles in deciding this case. In this respect the decision is consistent with most of the other software copyright decisions of the 1980’s, and contributes to a rapidly growing body of software copyright law. Second, unlike many earlier software copyright cases, Paperback’s position was not tainted by unsavory business practices which might have motivated the Court to rule against it based on the facts, rather than purely legal principles. Finally, the case was litigated by highly competent attorneys on both sides, and it appears that neither side spared any expense. This is in contrast to some earlier software cases, where the parties’ unwillingness or inability to invest in their legal position may have prevented the courts from being presented with arguments that would lead to valid legal precedents for the software industry.

Paperback’s Central Defense Rejected. Unlike most copyright cases, Paperback did not deny that it had copied the 1-2-3 user interface (the usual crux of a copyright case); in fact, the Court described that copying as “overwhelming and pervasive.” The only issue before Judge Keeton was whether the 1-2-3 interface was protected by copyright.

The heart of Paperback’s defense was that it copied only an unprotectible “idea,” not a protected “expression.” Paperback argued that copyright protects only the “literal” aspects of a program — its source and object code — and nothing more. Judge Keeton rejected this argument, and held that “the menu structure, taken as a whole — including the choice of menu terms, the structure and order of those terms, their presentation on the screen, and the long prompts,” are protected by copyright law. The judge found that copyright law protected the structure, sequence and organization of the 1-2-3 command system, notwithstanding the fact that some of the specific command terms may be obvious or even necessary to a spreadsheet program.

The Court did find some elements of 1-2-3 to “merge with the idea of an electronic spreadsheet,” and therefore not to be copyrightable. However, the unprotected elements of the 1-2-3 user interface identified by the Court were extremely limited: the two-line moving cursor menu, the rotated “L” screen display, the designation of the “/” key to invoke the menu command system, and the use of the mathematical symbol keys to perform math functions.

The Court rejected Paperback’s argument that compatibility with 1-2-3 was necessary to achieve commercial success in the spreadsheet market, noting that Microsoft Excel has achieved great success without copying 1-2-3. Similarly, the Judge rejected the argument that copying the 1-2-3 menu structure was necessary to achieve “macro compatibility,” which enables the user of a program to store (or automate) a sequence of commands to the program for future reuse. The judge noted that Paperback could have implemented a different interface and utilized a macro conversion capability, as the authors of Excel had done. However, most significantly, the Court held that even if menu and macro compatibility had been necessary to commercial success, this fact would not override the rights of authors to the limited monopoly which is granted by federal copyright law in the expression embodied in their works.

Policy Issues. Judge Keeton devoted 22 pages of his opinion to what he called a “Postscript On The Nature Of Decision Making In This Case.” Among other things, in this part of his opinion he discussed Paperback’s policy argument that copyright protection should be limited to source and object code, so that software developers would have legal “bright-line certainty”. As Judge Keeton put it, “software developers would like to know what they may and what they must not copy.” However, the Court observed that the “yearning for certainty” and “hard-and-fast rules” are simply impossible to provide in the context of copyright law – each case must be decided on its own peculiar facts and circumstances.

The Court also considered the arguments that had been advanced to it in opposition to, and in support of, broad protection of user interfaces. Paperback’s expert witnesses had argued that broad protection would have a chilling effect on software development and advancement, while Lotus claimed that broad protection has been a spur to the tremendous growth and success of the U.S. software industry. Judge Keeton concluded that he “must disregard Paperback’s experts’ predictions of doom for the computer programming industry if copyright is extended to the user interface . . . Rather, this legal issue must be resolved in such a way as to extend copyright protection, clearly and unequivocally, to those nonliteral elements of computer programs that embody original expression.”

The Court also rejected Paperback’s argument that a holding in favor of Lotus would frustrate the “OTSOG Principle” — the practice on the part of all scientists, including software developers, to build on the discoveries of their predecessors, or to stand “On The Shoulders Of Giants.” The Judge noted that “the metaphorical ‘shoulders of giants’ on which successors may legally stand are not as broad as defendants contend. The legally relevant shoulders of programming giants are their ideas — and do not extend to all of their expressions. The encouragement of innovation requires no more.”

Finally, the Court rejected Paperback’s policy argument that 1-2-3’s menu structure cannot be protected by copyright because it has become a de facto industry standard for all electronic spreadsheets. Not only does the existence of Excel defeat this argument, the Court noted, but there is no principle in copyright law that holds that where a work is so successful as to establish itself as a “standard,” it loses the protection of the copyright laws by virtue of that accomplishment.

TLB Comment : It is very likely that the district court’s decision in Lotus v. Paperback will be appealed to the Court of Appeals for the First Circuit in Boston. It is likely to be at least a year before the Court of Appeals decision is rendered. We predict that the Court of Appeals will uphold Judge Keeton’s decision in favor of Lotus. We also believe that this decision, perhaps more than any case to date, will spur copyright litigation in the software industry. In fact, only four days after Judge Keeton issued his decision Lotus filed suit against Borland and The Santa Cruz Operation, alleging that spreadsheet products owned by these companies infringed Lotus’ copyright in 1-2-3.