United States District Court, W.D. Wisconsin
OPINION & ORDER
D. PETERSON District Judge
a copyright infringement case involving computer software
used to run ATMs, which has been put to use primarily in
South America. Before the court is a motion to dismiss that
raises questions about the limits of protection afforded
under the United States Copyright Act. The first limit is
territorial: defendant WOCCU Services Group, Inc. (WSG)
contends that it cannot be liable for authorizing, from the
United States, infringement that itself occurred wholly
outside the United States. The second limit concerns
protectable subject matter: WSG contends that it does not
infringe because its software copies no more than
unprotectable ideas, processes, and functions from plaintiff
Datacarrier S.A.'s software. Finally, WSG contends that
the amended complaint fails to plausibly allege any direct
infringement in the United States. The bottom line is that
WSG contends that the amended complaint does not plausibly
allege any copyright infringement that would be actionable
under the Copyright Act.
court agrees with WSG on the territoriality issue. All agree
that infringement occurring wholly outside the United States
is not actionable under the Copyright Act. It is an open
question in the Seventh Circuit whether merely authorizing
such extraterritorial infringement is itself an actionable
act of domestic infringement. The weight of better reasoned
authority, including chiefly Subafilms, Ltd. v. MGM-Pathe
Communications Co., 24 F.3d 1088 (9th Cir. 1994), holds
that it is not. A minority of authorities leans the other
way, but the Subafilms approach is more consistent
with the fundamentally territorial approach to international
copyright law. National independence is harmonized through
treaties, but copyright enforcement is still, most
fundamentally, a nation-by-nation affair. To decide otherwise
would expand the purview of U.S. courts, and doing so would
introduce thorny conflict-of-laws problems.
court agrees with Datacarrier on the subject matter issue, at
least at the pleading stage. WSG is no doubt correct that
many aspects of Datacarrier's software are ideas and
functions, and in that sense Datacarrier is entitled only to
thin copyright protection. But even a thin copyright protects
against literal copying, and the amended complaint alleges at
least some of that. WSG may ultimately have a successful
defense on the merits, but at this point in the case the
amended complaint adequately alleges copying of protected
final issue is whether the amended complaint adequately
alleges acts of direct infringement in the United States.
Datacarrier alleges that WSG infringes by testing the
allegedly infringing software in the United States and by
maintaining an executable copy of the software in the United
States to provide support to its users in South America.
Datacarrier's theory is predicated on the notion that an
infringing copy is made whenever the infringing software is
run on a computer, a notion WSG does not challenge. The court
concludes that Datacarrier has adequately alleged domestic
acts of direct infringement.
court draws the following facts from the amended complaint,
Dkt. 28, construing the allegations “in the light most
favorable to [Datacarrier], accepting as true all
well-pleaded facts alleged, and drawing all possible
inferences in [its] favor.” Tamayo v.
Blagojevich, 526 F.3d 1074, 1081 (7th Cir. 2008).
Datacarrier S.A. is an Ecuadorian software company. The piece
of software at issue in this case-the TID Program-processes
financial transactions and manages ATM systems.
WOCCU Services Group, Inc. (WSG) is a Wisconsin corporation
that provides financial products and services to credit
unions outside of the United States. WSG holds ownership
interests in several Latin American and South American
companies that provide services to banking and credit unions,
which include support for ATM networks.
licensed its software, including the TID Program, to
Servicios Tecnologicos de Guatemala S.A. (ServiTech).
ServiTech, in turn, licensed the software to WSG. WSG
authorized its affiliates to use the Datacarrier software,
including the TID Program, in connection with ATMs operated
in South America and Latin America.
point, WSG grew dissatisfied with the Datacarrier software.
Programmers at WSG's Peruvian affiliate, which we shorten
to “Kuskanet, ” began developing an alternative
ATM software, called Entura. WSG operated and evaluated
Entura in Wisconsin and ultimately decided to replace
Datacarrier's TID Program with Entura. Kuskanet
transferred Entura to WSG, and WSG licensed the software to
its South American and Latin American affiliates.
licensing agreement with ServiTech, and thus its rights to
the Datacarrier TID Program, terminated on June 30, 2013.
Datacarrier registered its copyright to the TID Program in
the United States effective December 15, 2014.
in response to a complaint from Datacarrier, the Ecuadorian
government investigated similarities between the TID Program
and Entura. The report of the government experts is attached
to the amended complaint. Although the precise purpose and
findings of the report are not entirely clear, the report
concludes that there are similarities between the TID Program
and Entura. The programs use some of the same standards and
specifications, and Entura copied some of the variable names,
code, and databases in the TID Program.
court has subject matter jurisdiction over this case pursuant
to 28 ...