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Microsoft's Appeal Brief in Microsoft v. Sun Microsystems (part 3).
Case No. 99-15046, U.S. Court of Appeals, 9th Circuit.
Date filed: January 13, 1999.
Source: Microsoft. This document has been edited for HTML, but not for content.

Due to the size of this brief, it is divided into three HTML pages:
Page 1.
    Table of Contents.
    Table of Authorities.
Page 2.
    I. Statement of Jurisdiction.
    II. Statement of the Issues.
    III. Statement of Facts.
    IV. Statement of the Facts.
    V. Summary of the Argument.
    VI. Standards of Review.
• Page 3 (this page).
    VII. Argument.
    VIII. Conclusion.


A.  The District Court Erred by Treating a Breach of Contract Action as One for Copyright Infringement.

1.  The District Court Erred by Applying a Copyright Preliminary Injunction Standard to Sun’s Claim that Microsoft Breached the TLDA and by Not Requiring Sun to Demonstrate Irreparable Injury.

Sun contended that Microsoft infringed Sun’s copyrights because Microsoft breached the TLDA by distributing Java products that do not pass Sun’s compatibility tests. E.R. 262. The district court treated Sun’s claim as one for copyright infringement and held that if Sun established a "reasonable likelihood of success" on the elements of a copyright claim, it was entitled to the copyright presumption of irreparable harm instead of requiring actual proof of harm. See Order (11/17/98) at 13:14-18; 25:13-14. The copyright standard also treats the defendant’s harm as "a minor consideration." See Order (11/17/98) at 25:17-19. Application of this preliminary injunction standard was erroneous. A claim for breach of a license agreement raises issues of contract, not copyright.

The district court should have employed the breach of contract preliminary injunction standard, which requires Sun to prove harm and also gives full consideration to harm to Microsoft. Because the district court presumed Sun’s harm and discounted any harm to Microsoft, it failed to make the necessary findings to support the grant of a preliminary injunction in a breach of contract case. Under the proper standard, Sun was required to prove either (1) a "strong chance" of success on the merits of a breach of contract claim, the absence of an adequate remedy at law, and the possibility of irreparable injury, or (2) that serious questions are raised and that the balance of hardships "tips sharply in its favor." See MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 516 (9th Cir. 1993). The district court’s failure to apply the proper preliminary injunction standard is reversible error of law reviewed de novo.See Sports Form, 686 F.2d at 752.

a.  The District Court Ignored the Well-Settled Rule that Precludes Sun from Treating Its Claim for Breach of Contract as a Claim for Copyright Infringement.

It is well-established that not every breach of a license agreement gives rise to a copyright infringement claim. "[A] case does not arise under the federal copyright laws … merely because the subject matter of the action involves or affects a copyright." Topolos v. Caldewey, 698 F.2d 991, 993 (9th Cir. 1983). This rule applies most directly to suits alleging breach of contract, which do not give rise to a copyright claim "simply because a copyright is the subject matter of the contract." Id. (citing T.B. Harms Co. v. Eliscu, 339 F.2d 823, 826 (2d Cir. 1964) (Friendly, J.)). To determine when a claim arises under the Copyright Act, "[c]ourts have directed inquiry to what they have variously described as the ‘primary and controlling purpose’ of the suit, the ‘principal issue,’ the ‘fundamental controversy,’ and the ‘gist’ or ‘essence’ of the plaintiff’s claim." Id.
The underlying reasoning of Topolos and related cases is that, when the focus of a claim is on the terms of a consensual agreement between the parties, the role of the court is to enforce the parties’ intent as expressed in their agreement, not solely to protect the copyright holder.

At the heart of Sun’s "Copyright Infringement" claim is a contention that the TLDA requires Microsoft to pass certain tests, and that Microsoft did not, in fact, pass the tests. E.R. 263-64. Sun’s claim is based on disputed interpretations of the contractual terms contained in sections 2.6(a)(iv) and 2.6(a)(vi) of the TLDA. See Order (11/17/98) at 14:24-15:2.

The district court’s finding that Microsoft breached these provisions of the TLDA does not transform what is fundamentally a contract claim into a copyright infringement claim. Only under limited circumstances could Sun assert that breach of the TLDA gives rise to a claim for copyright infringement: (1) if Microsoft breached a covenant that was so material that Sun had a right to and did rescind the TLDA, (2) if Microsoft breached a condition of the TLDA, or (3) if Microsoft acted "outside the scope" of the TLDA. See 3 Melville B. Nimmer & David Nimmer, Nimmer on Copyright  10.15[A], at 10-120 - 10-123 (1998).

Sun expressly disclaimed reliance in its copyright motion on a claim that Microsoft breached either a covenant in the TLDA or a condition to its license. E.R. 950 ("Sun’s Copyright Infringement Claim is Based on Microsoft’s Exceeding the Scope of Its License, Not on Breach of Contract."). Sun argued that Microsoft’s conduct is unlicensed activity. E.R. 263 (15:20-22). However, Microsoft’s conduct does not fall outside the activities described in the grant of Microsoft’s license contained in the "Distribution License to Technology" section of the TLDA. See TLDA  2.2.

b.  Sun Failed to Prove and the District Court Did Not Find the Necessary Predicates that Would Give Rise to a Copyright Claim Based on Microsoft’s Alleged Breach of a Covenant.

As a general rule, "if the [licensee’s] improper conduct constitutes a breach of a covenant undertaken by the licensee … and if such covenant constitutes an enforceable contractual obligation, then the licensor will have a cause of action for contract," not for copyright infringement. See 3 Nimmer on Copyright  10.15[A], at 10-120; Graham v. James, 144 F.3d 229, 236-37 (2d Cir. 1998) (quoting 3 Nimmer on Copyright  10.15[A], at 10-120).

Under contract law, a "covenant" is a promise that creates a legal duty in the promisor and a right in the promisee. See 3 Arthur Linton Corbin, Corbin on Contracts 633 (1960). The covenant at issue in this case is contained in section 2.6(a)(vi), which provides:

Licensee agrees that any new version of a Product that Licensee makes commercially available to the public after the most recent Compatibility Date shall only include the corresponding Compatible Implementation ….

TLDA  2.6(a)(vi) (emphasis added). The words "agrees" and "shall" are language of an affirmative obligation, signaling a contractual covenant.

Only if breach of a covenant is so material as to create a right of rescission in the grantor, and the grantor in fact rescinds the license agreement, can the grantor pursue a claim for copyright infringement. See Fosson v. Palace (Waterland), Ltd., 78 F.3d 1448, 1455 (9th Cir. 1996). Even if Sun were able to prove that Microsoft breached a covenant to pass Sun’s tests, Sun would not have a copyright infringement action unless Sun rescinded the contract. Sun has not rescinded the TLDA, but has instead collected $3.75 million a year in license and support fees from Microsoft during the pendency of its motion for preliminary injunction based on copyright infringement. E.R. 346, 349-50 ( 14, 30-31).

If the distinction between scope and covenant is ignored, then every covenant or condition in the TLDA could be read as a limitation on the affirmative grants under the license, and all breaches of such covenants or conditions would constitute actions outside the scope of the license.

c.  The District Court Erred as a Matter of Law by Treating the TLDA’s Covenants as Restrictions on the Scope of Microsoft’s License.

Sun attempted to characterize Microsoft’s obligations under section 2.6(a)(vi) as a limitation on the "scope" of Microsoft’s license so that Sun’s allegations would give rise to a claim for copyright infringement. E.R. 263. Sun’s argument, which the district court ultimately adopted (albeit without analysis or authority), ignores the TLDA’s express language and structure. See Order (11/17/98) at 14:13-15; 20:18-21:2.

1.  The Scope of Microsoft’s License Is Defined by Its Affirmative Grants and Sun’s Claim Does Not Relate to those Provisions.

Microsoft received a "perpetual and irrevocable (without regard to any termination or expiration of [the TLDA] except as provided in Section 11.2(b)), worldwide …" license to:

[m]ake, use, import, reproduce, license, rent, lease, offer to sell, sell or otherwise distribute to end users as part of a Product or an upgrade to a Product, the Technology and Derivative Works thereof in binary form.

TLDA  2.2(a)(iii). The license grant makes no mention of compatibility. The definitions of "Product," "Technology," and "Derivative Works" make no mention of compatibility. See TLDA  1.5 (defining "Derivative Works" to include any revision, modification, or translation that constitutes a derivative work under U.S. copyright law);  1.20 (defining "Products" to mean any of Microsoft’s products or services that incorporate "in whole or in part" Technology or Derivative Works);  1.25 (defining "Technology" to be specific Sun source code). Pursuant to these definitions, Microsoft has a license to modify Sun’s source code and create derivative works. See Order (11/17/98) at 20:18-21.

The scope of Microsoft’s license is defined by the affirmative grants contained in these provisions. See Fantastic Fakes, Inc. v. Pickwick Int’l, Inc., 661 F.2d 479, 484 (5th Cir. 1981); see also Cohen v. Paramount Pictures Corp., 845 F.2d 851 (9th Cir. 1988) (looking solely to the affirmative grants of a license agreement to determine the scope of the license); Cyrix Corp. v. Intel Corp., 77 F.3d 1381 (Fed. Cir. 1996) (reading together the affirmative grant provisions and the definitions of products referenced therein to determine "scope" of license); Mid-West Conveyor Co. v. Jervis B. Webb Co., 877 F. Supp. 552, 559 (D. Kan. 1995) ("The language critical to determining the breadth of the license was contained in the grant clause …."), aff’d, 92 F.3d 992 (10th Cir. 1996).

To determine the scope of Microsoft’s license, the district court should have examined only the affirmative grants of the TLDA, which are contained in section 2.2(a)(iii). Sun does not contend that Microsoft’s alleged conduct involved copying works that were outside the definition of "Technology." Moreover, there is no dispute that the conduct at issue consisted of using Derivative Works in Products. Accordingly, Sun has no basis for claiming that Microsoft acted outside the scope of the license grant.

2.  The Case Law Does Not Support the Court’s Analysis.

The district court’s reliance on S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 1087-88 (9th Cir. 1989), was misplaced. In S.O.S., the licensee (Payday) had obtained a license to use certain software developed by the licensor (S.O.S.) for processing payroll information. Payday’s one-page license agreement provided that "[t]his series of programs is the property of SOS, and PAYDAY is acquiring the right of use, SOS retains all rights of ownership." Id. at 1088. Unlike the TLDA, Payday’s license did not on its face give Payday the right to modify the software Payday licensed. See id. at 1084.

Payday employed two S.O.S. employees who "made an unauthorized entry into S.O.S.’s computer system by circumventing the password program" and then copied and modified the source code without the licensor’s permission. Id. The S.O.S. court, interpreting the affirmative license grant quoted above, held that the "right of use" granted to the licensee did not include the right to copy and modify the source code. See id. at 1088. The court therefore held that the licensee had acted outside the scope of the license. See id. at 1088-89. Microsoft, on the other hand, was unambiguously granted a license to modify and distribute Sun’s Technology. See TLDA  1.20, 1.50, 2.1, 2.2. For this reason, Sun’s allegations against Microsoft bear no similarity to S.O.S.’s claims that Payday was "surreptitious[ly] copying" and committing "software piracy" by acting outside the scope of its license. S.O.S., 886 F.2d at 1084, 1086 n.4.

The Fifth Circuit in Fantastic Fakes, Inc. v. Pickwick Int’l, Inc., 661 F.2d 479 (5th Cir. 1981), a case cited favorably in several Ninth Circuit opinions, rejected an argument that a covenant can be recast as an affirmative grant defining the "scope" of a license agreement. In Fantastic Fakes, the plaintiff entered into a licensing agreement authorizing the defendant to distribute certain of its copyrighted material. The plaintiff claimed that the defendant was infringing its copyright by distributing the material without affixing a proper copyright notice thereto, as required by the license agreement. Section 2 of the agreement, entitled "Grant of Rights," contained the following affirmative license grant:

"LICENSOR" hereby grants to "LICENSEE" a nontransferable, nonassignable and nonexclusive License for a period of 2 (TWO) years from the date hereof, to use the "ORIGINAL MASTER RECORDINGS" listed and identified on the schedule incorporated by reference herewith ….

Id. at 481. Section 2 further provided that the license was granted "subject to and in accordance with the following":

(b) "LICENSEE" shall cause to appear on all sound recordings, including cartridge tapes, produced from "ORIGINAL MASTER RECORDINGS" a copyright notice such that said notice appears on the surface of the copies of the recording or on the label or container, in such a manner and location as to give reasonable notice of the claim of copyright ….

Id. at 481-82. The Fantastic Fakes court did not find that section 2(b) limited the scope of the license, even though it appeared under the heading "Grant of Rights." See id. at 483-84. Rather, the court held that the notice requirement was a covenant, the breach of which "may support a claim of damages for breach of contract but will not disturb the remaining rights and obligations under the license including the authority to use the copyrighted material." Id.

Here, the district court improperly recast, without analysis or authority, a covenant contained in totally separate sections (TLDA  2.6(a)(vi)) as "limitations" on Microsoft’s rights under the affirmative grants in section 2.2(a)(iii). Order (11/17/98) at 14:20-15:2. This analysis was in error because there is no language in section 2.6(a)(vi) referring to the scope of Microsoft’s license and section 2.6(a)(vi) unambiguously refers to a covenant. See Fantastic Fakes, 661 F.2d at 484 (noting that "of the four requirements set forth in section 2 [of the license agreement], only two impose any obligation of performance upon defendant; the remaining provisions … are covenants by plaintiff Fantastic …. [I]t is unlikely that section 2, when read in its entirety, attempts to impose conditions solely upon defendant.").

3.  The District Court Erred by Recasting Microsoft’s Obligations in the TLDA as Scope Limitations.

The plain language of section 2.6(a)(vi), which begins, "Licensee agrees …," confirms that this section establishes a covenant that is independent of the license grant. See TLDA 2.6(a)(vi); see also Computer Assoc. Int’l, Inc. v. State St. Bank & Trust Co., 789 F. Supp. 470, 475 (D. Mass. 1992) (rejecting assertion of copyright infringement based on alleged violation of license agreement that provided that "Customer agrees to refrain from using the Equipment … for other customer-sites or customers on a service basis.").

The district court’s recurring use of the language of covenants to explain what it otherwise attempts to characterize as limitations on "scope" demonstrates the inconsistency of the district court’s analysis. See, e.g., Order (11/17/98) at 15:18-22 ("Microsoft’s compliance obligations"); see also E.R. 915 (referring to "Microsoft’s agreement" and "promise" to Sun regarding compatibility). As these examples demonstrate, Microsoft’s affirmative obligations cannot be construed as negative limitations on the scope of Microsoft’s license under the TLDA. The district court’s merging of the two nullifies the entire body of case law standing for the proposition that only breaches of conditions or severe breaches of covenants, resulting in rescission of the license, give rise to a claim for copyright infringement. See 3 Nimmer on Copyright, 10.15[A].

d.  The District Court Erred by Applying the Wrong Preliminary Injunction Standard and Denying Microsoft a Meaningful Balance of the Hardships.

Because Sun’s claim sounds in contract, the district court erred as a matter of law in treating the case as a copyright infringement claim, which allowed Sun to rely on a presumption of irreparable harm and heavily discounted the harm to Microsoft. The district court should have applied the standard applicable in a breach of contract case. At a minimum, under the proper standard, Sun would have to prove not only a "strong chance" of success on the merits of a breach of contract claim, but also the absence of an adequate remedy at law and the possibility of irreparable injury. See MAI Systems Corp. v. Peak Computer, Inc., 991 F.2d 511, 516 (9th Cir. 1993). Alternatively, Sun could show that serious questions are raised and that the balance of hardships "tips sharply in its favor." Id. Sun escaped these burdens because the district court incorrectly employed the copyright standard for granting preliminary injunctions, which presumes irreparable harm to Sun and seriously discounts the potential harm to Microsoft. See Cadence Design Systems, Inc. v. Avant! Corp., 125 F.3d 824, 828 (9th Cir. 1997). The "balance of hardships" engaged in by the district court was not a meaningful balance in this contract case.

It is well-established that "the enforcement of contracts by injunction is the exception rather than the rule." Ocean Spray Cranberries, Inc. v. PepsiCo, Inc., 160 F.3d 58, 61 (1st Cir. 1998). In contract claims, injunctive relief is only available "where monetary damages will not afford complete relief." Id.; see also American Cyanamid Co. v. U.S. Surgical Corp., 833 F. Supp. 92, 132 (D. Conn. 1992) ("Since market share is measured by sales, money damages are generally ascertainable for the loss of market share."), appeal dismissed, 9 F.3d 977 (Fed. Cir. 1993). Sun did not demonstrate that monetary damages cannot afford complete relief, and the district court made no such finding.

When viewed in its true light and stripped of the copyright presumptions, this is clearly not the type of case in which a preliminary injunction is appropriate. "It is a cardinal principle of equity jurisprudence that a preliminary injunction shall not issue in a doubtful case." Sierra Club v. Hickel, 433 F.2d 24, 33 (9th Cir. 1970), aff’d, 405 U.S. 727 (1972). The correctness of Sun’s proffered interpretations of the TLDA is doubtful and cannot be the basis for granting a preliminary injunction. Indeed, the district court found that Microsoft’s interpretation of the compiler compatibility covenant is consistent with the plain language of the TLDA. See Order (11/17/98) at 21:18-19.

"It is understandable why a party claiming copyright protection would prefer to ignore the contract dispute and assume the validity of the ownership of the copyright. The rules of obtaining a preliminary injunction are less onerous [in copyright cases] than in other cases." Video Trip Corp. v. Lightning Video, Inc., 866 F.2d 50, 52 (2d Cir. 1989). The "principal issue," the "fundamental controversy," and the "gist" or "essence" of this case, however, is contract, not copyright. See Topolos, 698 F.2d at 993. The district court erred as a matter of law in applying the copyright infringement standard, rather than the contract standard, and its preliminary injunction should be vacated.

e.  Even if the Copyright Standard Were the Appropriate Standard in this Case, the District Court Improperly Applied that Standard.

Even assuming that the copyright preliminary injunction standard applied to Sun’s claim for breach of the TLDA’s compatibility obligations, the district court erred in its application of that standard. Under that standard, Sun was required to demonstrate both ownership of a valid copyright and infringement to gain the benefit of a presumption of irreparable harm. See Micro Star v. Formgen, Inc., 154 F.3d 1107, 1109 (9th Cir. 1998). Registration of a copyright certificate creates a rebuttable presumption that the copyright is valid and owned by the plaintiff. See 17 U.S.C.  410(c). This presumption may be rebutted by "simply offer[ing] some evidence or proof to dispute or deny the plaintiff's prima facie case of infringement," including proof that the work is not original. Entertainment Research Group, Inc. v. Genesis Creative Group, Inc., 122 F.3d 1211, 1217 (9th Cir. 1997) (emphasis added); see also Brown Bag Software v. Symantec Corp., 960 F.2d 1465, 1474-75 (9th Cir. 1992) (evidence of features similar to prior programs plus statement that plaintiff was "inspired" by prior programs rebutted presumption of originality).

Sun’s evidence of infringement was a comparison between some source code files from Sun’s JDK and Microsoft’s product. E.R. 1121-24 ( 13-20). In preparing the materials, Deutsch noted third-party copyright notices in Sun’s code. E.R. 1045-46 (204:6-205:7). James Gosling, one of the originators of the Java programming language, admitted that "chunks" of program code in Sun’s product were authored by others. E.R. 1048-49 (34:25-35:25); E.R. 1045-46.

The district court erroneously concluded that Microsoft’s evidence did not constitute the minimal showing required to rebut the presumption of validity. See Order (11/17/98) at 14:8-12. Moreover, the district court misapplied the presumption. The district court, pointing to evidence that some of the source code in Microsoft’s product was probably source code that was delivered to Microsoft by Sun, assumed that Sun had met its burden to show copying of protected expression. Sun was required to prove that the portions it claimed were copied contained protected expression, not merely that it was copied. See Brown Bag, 960 F.2d at 1476 (analytic dissection is relevant to the ownership element of a copyright plaintiff’s claim); Feist Publications, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 348 (1991) ("[T]he mere fact that a work is copyrighted does not mean that every element of the work may be protected. Originality remains the sine qua non of copyright; accordingly, copyright protection may extend only to those components of a work that are original to the author.").

The district court should have analyzed Sun’s claim further. All Sun provided was the first step. "The district court was … obliged to identify similarities, determine their source, and decide which elements are protectable." Apple Computer, Inc. v. Microsoft Corp., 35 F.3d 1435, 1443 (9th Cir. 1994). "Public policy does not advocate the liberal issue of preliminary injunctions in copyright infringement actions." Nintendo of America, Inc. v. Lewis Galoob Toys, Inc., 16 F.3d 1032, 1038 (9th Cir. 1994) (emphasis in original). Before granting a broad injunction, the district court was required by law to find that the allegedly copied material is protected by Sun’s copyright.

B.  The TLDA Bars Sun from Obtaining Injunctive Relief in these Circumstances.

Even if injunctive relief would otherwise be an appropriate remedy for Sun’s contract-based claim, the district court erred as a matter of law in granting the preliminary injunction by failing to apply the TLDA’s limitation of remedies provision, which precludes injunctive relief in these circumstances. See TLDA  11.2(d). In its March 24th Order, over Microsoft’s strong objections, the court held that the limitation of remedies provision applied unless Sun could demonstrate the circumstances of section 11.2(b). See Order (3/24/98) at 9:3-11:2. While Sun was not completely foreclosed from seeking injunctive relief, it was limited to seeking injunctive relief in the circumstances of section 11.2(b). Section 11.2(b) requires that Sun demonstrate "willful and intentional" material breach of section 2.6. Even assuming this finding were correct, in its November 17th Order, the district court did not find Microsoft’s failure of Sun’s compatibility tests to be "willful."

1.  The District Court Erred in Interpreting the TLDA as Reserving to Sun the Right to Seek a Preliminary Injunction.

The TLDA precludes Sun from seeking a preliminary injunction for breach of any material term of the TLDA, as follows:

Except as expressly stated in this Section 11.2 and in Section 12.6, the parties agree that in the event that either party breaches any material term of this Agreement … the non-breaching party’s sole remedy shall be to seek monetary damages in a court of competent jurisdiction.

TLDA 11.2(d) (emphasis added). This provision, which applies to breach of any material term, establishes the general principle that a non-breaching party’s sole remedy is money damages. Section 11.2(d) is consistent with several other provisions in the TLDA, which also demonstrate that the parties intended money damages to be the exclusive remedy available. See TLDA  10.1(a) ("Each party’s liability to the other for claims relating to this Agreement, whether for breach or
in tort, shall be limited to the license fees paid by [Microsoft] for the Technology …."); id.  10.1(b) (referring to damages as "exclusive remedies"). "[A] clear and unambiguous contractual provision providing for an exclusive remedy for breach will be enforced." Fosson v. Palace (Waterland), Ltd., 78 F.3d 1448, 1455 (9th Cir. 1996) (citations omitted); see also Cognitest Corp. v. Riverside Publ’g Co., 107 F.3d 493 (7th Cir. 1997) (enforcing a limitation of remedies provision against a computer software manufacturer limiting recovery to $160,000 instead of the over $30 million it claimed in lost profits and out-of-pocket expenses).

In its March 24th Order, over Microsoft’s strong objections, the district court erroneously reasoned that the provisions of section 11.2(d) did not apply to Sun’s claims and concluded that Sun was therefore entitled to pursue injunctive relief if it could demonstrate the circumstances of section 11.2(b), which requires a "willful and intentional," "material" breach of section 2.6. See TLDA  11.2(b); Order (3/24/98) at 9:11-15. Having established the rules of the game in March, however, the district court failed to require that Sun follow these rules in Sun’s subsequent preliminary injunction motion. Sun did not prove and the district court did not find that a willful and intentional material breach of section 2.6 occurred.

2.  Even if Section 11.2(b) Permits Sun to Seek Injunctive Relief, the Court Failed to Make a Finding of Willfulness Necessary to Invoke Section 11.2(b).

In order to invoke section 11.2(b), Sun had to show, and the court had to find, not only that Microsoft materially breached the compatibility requirements of section 2.6, but also that such breach was willful. Sun presented no such evidence and the court’s opinion suggests that Microsoft’s alleged violation was not willful.

As a matter of interpretation, "willful" as used in the TLDA means more than mere intent. As a matter of law, a finding of "willfulness" involves more than simply finding that the party intended the action at issue. While Microsoft contests the formal application of copyright law to Sun’s claim for breach of a license agreement, "[i]n the copyright infringement context, ‘willful’ means acting ‘with knowledge that [one’s] conduct constitutes copyright infringement,’" Dolman v. Agee, 157 F.3d 708, 714 (9th Cir. 1998) (citations omitted); see also In re Riso, 978 F.2d 1151, 1154 (9th Cir. 1992) (willful breach of contract, which gives rise to exception from bankruptcy discharge, means a breach that is accompanied by malicious and tortious conduct).

In addition to these judicial interpretations of "willfulness," the TLDA clearly supports the notion that "willfulness" includes a specific mens rea requirement. Unlike any other provision in the TLDA, section 11.2(b) is limited to the actions of individual, high-ranking decision makers at Microsoft (namely "an officer, director, or General Manager of a product group"). See TLDA 11.2(b). The only reasonable inference to be drawn from the specific enumeration of these individuals is that the parties intended that the meaning of "willful" in section 11.2(d) refers to the scienter or mental state of an individual, high-ranking decision maker, not merely purposeful conduct by Microsoft as a corporation.

The district court did not find that Microsoft’s alleged failure to satisfy the compatibility requirements of the TLDA was anything more than conduct based on Microsoft’s good faith understanding of the requirements of section 2.6(a)(vi). Indeed, the court framed its inquiry as whether Microsoft exceeded the scope of the TLDA, not whether Microsoft willfully exceeded the scope of the TLDA. See Order (11/17/98) at 14:24-25. Several points in the court’s reasoning suggest that the court regarded the contract issues as a good faith dispute over the meaning of certain terms, not a willful violation of the TLDA.
See Order (11/17/98) at 23:21-24 ("Sun’s contention … is somewhat difficult to reconcile with Microsoft’s expressly granted ability to add new functionality to its implementation of Java …."); see also id. at 3 n.2. Because Microsoft acted based on its good faith understanding of the relevant contract terms, Microsoft’s actions were not "willful." Absent a finding of willfulness, Sun’s claims fall under the general principle in 11.2(d) that money damages is the sole remedy for breaches of the TLDA and the court’s grant of a preliminary injunction was improper.

C.  The District Court Improperly Extended the Preliminary Injunction to Prohibit Independent Development that by Definition Cannot Constitute Copyright Infringement.

The preliminary injunction is based on the court’s preliminary conclusion that Sun had shown a likelihood of success in its claims of copyright infringement. However, the district court’s order enjoined Microsoft from offering its customers independently developed Java technology, either as a standalone product or in a developer tool product. See Order (11/17/98) at 29:16-30:9; 30:21-22. Independently developed products that are not derived from Sun’s copyrighted material cannot, by definition, constitute copyright infringement. See 17 U.S.C.  501. The district court’s order is also inconsistent with the TLDA’s explicit confirmation of Microsoft’s right to develop and distribute such independent technology without necessity of a license from Sun. TLDA  8.2. Accordingly, the court’s extension of the preliminary injunction to independently developed technology was improper.

It is axiomatic that independently developed works not developed based on "copying" cannot constitute copyright infringement. See John Shepard Wiley, Jr., Copyright at the School of Patent, 58 U. Chi. L. Rev. 119, 158 (1991) ("Defendants who have obtained their text elsewhere or through independent creation win - period."); Fred Fisher, Inc. v. Dillingham, 298 F. 145, 147 (S.D.N.Y. 1924) (L. Hand, J.) ("[T]he law imposes no prohibition upon those who, without copying, independently arrive at the precise combination of words or notes which have been copyrighted."); see also 4 Nimmer on Copyright  13.01[B], 13.03[F][5] (1998). Under this well-settled principle, Microsoft’s distribution of independent technology, which does not even contain Sun’s copyrighted program code, simply cannot infringe Sun’s copyright.

Section H of the district court’s order prohibits Microsoft from including new language enhancements or compiler directives in Microsoft’s Java software development tools. See Order (11/17/98) at 30:21-22. If enforced as written, these restrictions on the development and distribution of independently developed Java technology limit Microsoft’s plans for future developer tools which its customers want and which make no use of Sun’s intellectual property. See E.R. S-65 ( 4-5).

The breadth of the district court’s order also exceeds Sun’s request for preliminary injunctive relief. Distribution of independent technology by Microsoft was simply never raised in Sun’s motions. In fact, Sun argued:

Sun only seeks an injunction prohibiting Microsoft from distributing incompatible versions of Microsoft’s products which copy Sun’s JDK computer program. Microsoft would remain free to distribute IE 4.0, SDKJ 2.0 and 3.0, Visual J++ 6.0 and Windows 98 by either (1) modifying the products so they pass the JDK 1.1 a test suite for compatibility, or (2) removing all JAVA Technology from the products.

E.R. 265 (emphasis added).

The TLDA expressly confirms Microsoft’s right to acquire or develop and distribute independent Java technology:

Independent Development. Except as provided in Section 5.7, notwithstanding any other provision
of this Agreement, Licensee shall have no obligation to market, sell, license or otherwise distribute the Technology or Derivative works thereof … nothing in this Agreement shall be construed as restricting Licensee’s ability to acquire, license, develop, manufacture or distribute technology that is similar to the Technology and performs the same or similar functions as the Technology, or to market and distribute such similar technology in addition to, or in lieu of, the Technology

TLDA  8.2 (boldface emphasis added). Plainly, the parties understood and confirmed Microsoft’s right to independently create and distribute Java technology, even if it were to compete with Sun’s products.

Microsoft’s right to publish its independent software is protected by the First Amendment. See Bernstein v. U.S. Dept. of State, 922 F. Supp. 1426, 1435-36 (N.D. Cal. 1996). The district court’s order improperly restrains this right. Moreover, the district court’s order effectively allows Sun to misuse its copyrights to prohibit competing products where Sun’s intellectual property is not infringed. This result is directly contrary to the purpose of the Copyright Act. Cf. Practice Mgt. Info. Corp. v. American Med. Ass’n., 121 F.3d 516, 520 (9th Cir. 1997); see also Lasercomb America, Inc. v. Reynolds, 911 F.2d 970, 976 (4th Cir. 1990). For these reasons, the overbroad language of the district court’s preliminary injunction order should be vacated.

D.  The District Court Exceeded its Injunctive Power by Improperly Enjoining Past Conduct Without Any Showing of Imminent Harm or Probability of Recurrence.

The district court enjoined Microsoft from: (1) "conditioning the right to use the ‘Designed for Windows 95(98)/NT’ logo on the exclusive distribution of Microsoft’s virtual machine"; (2) "conditioning any license to any Microsoft product on exclusive use or distribution of Microsoft’s Java virtual machine"; and (3) "advertising any product that contains, implements or emulates the Java Technology as the ‘official’ Java reference implementation …." Order (11/17/98) at 30:11-19 (emphasis added). The district court’s ruling on Sun’s unfair competition motion constitutes reversible error, both because it is based on a misstatement of uncontroverted fact and because it improperly enjoins past conduct without any showing of imminent harm or probable recurrence.

The district court’s erroneous factual premise is that Microsoft conditioned use of its "Designed for Windows 95(98)/NT" logo on the application’s exclusive use of Microsoft’s Virtual Machine. See Order (11/17/98) at 28:8-10. In fact, Microsoft presented undisputed evidence contrary to this factual premise. The Windows 95(98)/NT logo program states, contrary to the district court’s finding:

To qualify for the Logo, a Java application, when running on a Windows PC, must use and re-distribute the Microsoft Win32 virtual machine for Java.

E.R. 1117 ( 7.5). Thus the Windows 95(98)/NT logo program did not preclude any software developer from supporting more than one virtual machine; it simply required that Microsoft’s virtual machine was also included. Sun offered no countervailing evidence to suggest that the plain meaning of these terms did not accurately reflect Microsoft’s practice or to suggest that Microsoft intended to make these terms exclusive in the future. Furthermore, it is uncontroverted that no Java developer even bothered to submit an application for certification under the program, and the program is being discontinued for lack of interest. E.R. 1056-57, 1059-60 (139:14-140:4; 240:11-241:18); E.R. 523-24 (68:19-69:12). In light of the clear, express terms of the Windows 95(98)/NT logo program, and the absence of any countervailing evidence, the district court’s factual finding was clearly erroneous. See Aschelman v. Wawrzaszek, 111 F.3d 674, 678 (9th Cir. 1997) (factual finding is clearly erroneous where no evidence supports it).

The district court’s ruling was legally erroneous because it granted relief not authorized. California Business & Professions Code section 17203 grants courts discretion to enjoin unfair competitive practices: "Any person who engages, has engaged, or proposed to engage in unfair competition may be enjoined …." Under this provision, the court has discretion whether to enter an injunction based on past acts of unfair competition. See Olsen v. Breeze, Inc., 48 Cal. App. 4th 608, 620 (1996) (affirming lower court’s decision not to enter an injunction). Nevertheless, this discretion is limited. "Injunctive relief under sections 17203 and 17535 cannot be used … to enjoin an event which has already transpired; a showing of threatened future harm or continuing violation is required." People v. Toomey, 157 Cal. App. 3d 1, 20 (1984). The reason for this limitation is that "[i]njunctive relief has no application to wrongs which have been completed, absent a showing that past violations will probably recur." Id. (internal citations and footnote omitted). Sun made no showing that the complained of practices would probably recur, nor did the court make a finding that Sun or the public would be irreparably harmed without the entry of an injunction. In fact, the record contains evidence of only two licenses containing the provision in question, one of which was unsigned and the other of which was no longer in effect at the time of the hearing. E.R. 1111-14; E.R. 1054-55 (40-41).

The district court also enjoined Microsoft from referring to its Java implementation as the "official Java reference implementation" rather than as the "Java reference implementation" or "Reference Implementation VM" as it is designated in section 1.10 of the TLDA. Order (11/17/98) at 30:18-20; E.R. 905-33. There was no evidence supporting a conclusion of unfair competition and no evidence of any irreparable harm from this minor language difference and, therefore, a preliminary injunction was unwarranted.

For these reasons, the district court’s order on Sun’s unfair competition claim is an abuse of the district court’s discretion and should be overturned.

E.  The District Court Erred in Interpreting Microsoft’s Products as Being in Breach of the TLDA.

1.  The District Court Erred in Finding that Microsoft’s Java Compiler Violates the Compatibility Provisions of the TLDA.

Section 2.6(b)(iv) of the TLDA requires that Microsoft’s compiler "shall include a mode which a Tool Customer may use to permit such Product to pass the Java Language Test Suite that accompanied the Significant Upgrade." TLDA  2.6(b)(iv). The district court found that Microsoft’s compiler did, in fact, have a mode that passed Sun’s Java Language Test Suite. See Order (11/17/98) at 20:11-13.

Nevertheless, the district court enjoined Microsoft from "[i]ncorporating any additional Microsoft keyword extensions or compiler directives into its Java software tools." Order (11/17/98) at 30:21-22; see also id. at 29:24-30:9. At issue are Java compilers that Microsoft includes in its software development tools. The district court’s injunction was based upon a conclusion that Microsoft had a license to modify Sun’s technology but that Microsoft’s license to distribute its modifications is limited to products which passed "Sun’s relevant test suite." See Order (11/17/98) at 20:19-21:2. The district court concluded that section 2.6(b)(iv) only allowed Microsoft to include in its compiler modes that compiled earlier versions of the Java language. Order (11/17/98) at 22:6-9.

In the district court’s analysis, the meaning of section 2.6(b)(iv) was "dispositive." See Order (11/17/98) at 20:18. The district court had agreed that Microsoft’s compilers had a mode that passed Sun’s Java Language Test Suite. See Order (11/17/98) at 20:11-13. Microsoft argued that having such a mode was all that was required of it. E.R. 996. The district court found that the literal language of section 2.6(b)(iv) could support Microsoft’s interpretation. See Order (11/17/98) at 21:18-19.

a.  The District Court Erred in Adding a Term to the TLDA Based on Extrinsic Evidence.

The district court erroneously found that the language of section 2.(b)(iv) supports Sun’s interpretation that Microsoft’s compilers must pass Sun’s tests in any mode, not just a mode. See Order (11/17/98) at 21:18-19. Neither section 2.6(b)(iv) nor any other section of the TLDA addresses any compiler modes beyond the one mode required by section 2.6(b)(iv). The court based its decision on "the context in which section 2.6(b)(iv) appears in the TLDA" and the Java Language Specification. See Order (11/17/98) at 21:21-23. The district court erroneously determined that section 2.6(b)(iv) only allows Microsoft "to include in its compiler modes that compile code for earlier versions of the Java Technology …." See Order (11/17/98) at 22:8-10.

There is no language in the TLDA which addresses compatibility of Microsoft’s compilers in any mode except the one mode required by section 2.6(b)(iv). Sun and Microsoft agreed that the TLDA was a complete agreement with respect to its subject matter. TLDA  12.3. Although under California law extrinsic evidence may be considered by a court to aid in interpretation of a contract, see Pacific Gas & Electric Co. v. G.W. Thomas Drayage & Rigging Co., 442 P.2d 641, 645-46 (Cal. 1968), extrinsic evidence is not admissible to add to or change the terms of a written contract. See A. Kemp Fisheries, Inc. v. Castle & Cooke, Inc., 852 F.2d 493, 495 (9th Cir. 1988). Therefore, the district court’s conclusion that Microsoft’s compilers must pass Sun’s tests in all modes, not just the one required mode, was improperly based on extrinsic evidence. The district court’s reliance on the Java Language Specification was misplaced because Microsoft’s sole duty was to pass the Java Language Test Suite, not to comply with every statement in the Java Language Specification. See TLDA  2.6(b)(iv).

b.  The Only "Test" Failed by Microsoft’s Compilers in Enhanced Mode is Not a Test at All, Just a Description.

The district court concluded that Microsoft’s compilers were unlicensed because they "fail Sun’s Compiler Output Requirement test as contemplated by the TLDA." Order (11/17/98) at 23:13-15. It was error for the district court to find the "Compiler Output Requirement" to be a test contemplated by the TLDA. Sun could not point to a test in its Java Language Test Suite that was failed because of Microsoft’s keywords and compiler directives. Instead, Sun pointed to a statement in the documentation for its Java Test Suite, christened it the "Compiler Output Requirement," and called it a test. See E.R. 435-39 ( 4-14).

The term "Java Language Test Suite" as defined in the TLDA cannot be construed to include a written statement in Sun’s documentation. Java Language Tests are defined as tests which validate compliance with the Java Language Specification. TLDA  1.13. Sun’s "Compiler Output Requirement" does not "validate" that a Java compiler complies with the Java Language Specification. See TLDA  1.13. It simply purports to require that the compiler output be consistent with Sun’s Virtual Machine implementation.

The so-called Compiler Output Requirement is also inconsistent with other provisions of the TLDA. Section 2.9(f) provides that if Sun wishes Microsoft to implement an interface to its Java Virtual Machine that cannot be adequately expressed in tests, it can consult with Microsoft and seek Microsoft’s agreement. However, if Sun can use documentation statements to force conformance to any requirements it chooses, this provision is meaningless since Sun can simply avoid the difficulty of expressing it in a test by making it a documentation "requirement."

Because Microsoft’s compiler does not fail any Sun test in the Java Language Test Suites, and further because the Compiler Output Requirement is not a test as defined in the TLDA which Microsoft is required to pass, the preliminary injunction should be reversed.

2.  The District Court Erred in Concluding That Microsoft’s Compatibility Obligations Under the TLDA Require Microsoft to Support JNI.

To find that Microsoft infringed Sun’s copyrights, the district court interpreted the compatibility provisions of the TLDA to require that Microsoft products comply with Sun’s specification for the "Java Native Interface" ("JNI"). See Order (11/17/98) at 15:4-19:25. In doing so, the district court ignored the express provisions of the TLDA.

a.  JNI is Not About the Java Language.

The Java Native Interface is not used by programmers writing in the Java programming language. JNI enables a developer to write a program in a language other than Java, called "native code," which can be connected later to a Java program. E.R. 389 ( 40); E.R. 340-41 ( 12, 13). The use of JNI does not enhance cross-platform compatibility. Id. JNI is unrelated to the "write once, run anywhere" proposition promoted by Sun. E.R. 369-70 ( 49); E.R. 340-41 ( 12, 13). A program that is partially written in native code and partially in Java will only run on one platform because native code is "platform-dependent." See Order (11/17/98) at 6:19-23; E.R. 340 ( 12). JNI does not appear in any of the Documentation mentioned in the TLDA. E.R. 389 ( 39); E.R. 727-28 (272:1-273:14).

b.  The JAVA Test Suites Are About Java Language Based Compatibility.

The compatibility addressed by the TLDA is "compatibility among JAVA language based products," not native language based compatibility. TLDA Preamble (first "Whereas") (emphasis supplied). "JNI is not a Java programming interface, it is a native programming interface intended to be used by programmers developing native code programs." E.R.  379 ( 5).

Under the terms of the TLDA, Microsoft is obligated to pass certain Java Test Suites in order to ensure that Microsoft’s licensed products are compatible with certain defined specifications. See TLDA  1.15, 2.6(a)(iv). The "Java Test Suites" are defined as "Sun’s publicly available test suites for validating that products which interpret Java bytecodes comply with the Sun specification of the AAPI as of the date of the test suites." TLDA  1.15.

The AAPI or Applet Application Programming Interface is defined in section 1.1 of the TLDA. Section 1.1 of the TLDA provides, in relevant part:

"Applet Application Programming Interface" or "AAPI" means (a) the public application programming interface to the Java Applet Environment (JAE) reflected in the Technology as identified in Exhibit A ….

TLDA  1.1 (emphasis added). Exhibit A is entitled "Description of Technology and Documentation." The TLDA contains no definition for the term "public application programming interface."

The district court erroneously interpreted section 1.1(a) of the TLDA broadly to include any type of public application programming interface, irrespective of the purpose of the public application programming interface or the programmers to whom it is targeted. See Order (11/17/98) at 7:10-14. JNI is a "native programming interface." See E.R. 389 ( 40). To read section 1.1(a) to include any public application programming interface to the Runtime Interpreter leads to an arbitrary and unconstrained result. E.R. 390-91 ( 47).

The district court found that Microsoft is obligated to pass tests relating to JNI, even though JNI is not mentioned or referred to in the Java Virtual Machine Specification, Java Language Specifications, or the Java API Specification, E.R. 389 ( 39), and is not necessary to the functionality of a Java virtual machine. See Order (11/17/98) at 18:19-23; E.R. 390-91 ( 47). In so ruling, the court ignored the fundamental premise of the TLDA, e.g., that it is an agreement about Java, not native languages. The district court erroneously rejected Microsoft’s reasonable interpretation of section 1.1(a) that was consistent with the goals of the agreement and the usage of the terms in connection with Java at the time the agreement was signed.

c.  The TLDA Does Not Permit Sun to Add to the Public Application Programming Interfaces Identified in Section 1.1(a).

JNI was not present in the Technology when the TLDA was signed. See Order (11/17/98) at 15:13-15. The TLDA permits Sun to modify the AAPI by adding additional Java APIs (i.e., additional Java classes). TLDA  1.1(d). It does not permit Sun to expand the interfaces identified in section 1.1(a) beyond those in the Technology identified on Exhibit A to the TLDA (i.e., on the date the TLDA was signed), and thereby gain the right to test for new non-Java interfaces such as JNI.

The district court erred in interpreting section 1.1 of the TLDA to allow upgrades to the public application programming interface to the Java Applet Environment, stating that "Microsoft’s asserted interpretation overlooks the language at the end of section 1.1 which reasonably appears to contemplate modifications and upgrades to the AAPI." Order (11/17/98) at 18:25-27. The district court incompletely quoted TLDA section 1.1 in stating that "‘AAPI’ means (a) the public application programming interface to the Java Applet Environment (JAE) reflected in the Technology as identified in Exhibit A … as modified by Sun during the term of this agreement." Id. at 18:27-19:3 (emphasis added). The court’s use of the ellipsis in this provision obscures the key point that the "as modified" language appears, not within subsection (a), but within subsection (d) (which lists "the OEM Java API Specifications" as part of the AAPI), and applies only to subsection (d).

Section 1.1 in full reads:

1.1 "Applet Application Programming Interface" or "AAPI" means (a) the public application programming interface to the Java Applet Environment (JAE) reflected in the Technology as identified in Exhibit A, (b) the bytecode specification in the Documentation entitled "OEM Java Virtual Machine Specification," (c) the Java language specification in the Documentation entitled "OEM Java Language Specification" and (d) the OEM Java API Specification, as modified by SUN during the term of
this Agreement.

See TLDA  1.1.

Sun and Microsoft agree that a Java API is a public application programming interface. E.R. 390 ( 44); E.R. 69A-70. Interpreting the clause "as modified by Sun during the course of this Agreement" to modify both sections 1.1(a) and 1.1(d), would permit both 1.1(a) and 1.1(d) to be modified during the term of the agreement and would make section 1.1(d) superfluous. Adding a Java API through section 1.1(d) would automatically add a public application programming interface to section 1.1(a). On the other hand, adding a Java API to section 1.1(a) would automatically add a Java API to section 1.1(d). Section 1.1(d) is not superfluous if the "as modified" clause applies only to section 1.1(d). Then additions to the AAPI are clearly constrained to be new Java classes, i.e., Supplemental Java Classes, which Microsoft has sole discretion to determine whether to include in its products. See TLDA  2.7(a). The result reflects the basic understanding the parties reached at the beginning of their negotiation, which is reflected in their letter of intent: Sun enhancements to the AAPI after the date of the final agreement would be included in Microsoft’s products at Microsoft’s sole discretion. E.R. 1093.

An interpretation which makes language superfluous is contrary to fundamental principles of law that are to be used in interpreting contracts. "Courts must interpret contractual language in a manner which gives force and effect to every provision, and not in a way which renders some clauses nugatory, inoperative or meaningless." City of Atascadero v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 68 Cal. App. 4th 445, 448 (1998). "A cardinal rule of contract interpretation requires that an interpretation which gives meaning to all parts of a contract will be preferred to one which leaves a portion of it useless, inoperative, meaningless or superfluous." Muniz v. United States, 972 F.2d 1304, 1320 (Fed. Cir. 1992). Because there is only one reasonable interpretation of this provision - the interpretation that makes section 1.1(d) not superfluous - the "as modified clause" is unambiguous and applies only to section 1.1(d). See Oceanside 84, Ltd. v. Fidelity Fed. Bank, 56 Cal. App. 4th 1441, 1448 (1997). The district court therefore committed clear error in its interpretation of section 1.1 to require Microsoft products to pass the compatibility tests for JNI.

d.  The Java Reference Implementation Provisions of the TLDA Do Not Support the District Court’s Findings Concerning JNI.

The district court erroneously interpreted the provisions of section 2.9, which concern the Java Reference Implementation, in finding that Sun can test for JNI. The district court cited section 2.9(b) of the TLDA, which requires that Microsoft’s runtime interpreter "includes the necessary Source Code to implement the functionality of the Java Runtime Interpreter," as support for its decision. See Order (11/17/98) at 16:8-10. The district court erred in relying on section 2.9(b) for this proposition, because JNI is not required to implement the functionality of the Java Runtime Interpreter. "A Java program that declares native methods compiles to exactly the same bytecodes irrespective of whether the native methods will be connected to the program using JNI or some other native methods interface." E.R. 389 ( 40). The Java Virtual Machine Specification does not require any particular native interfaces. Compare E.R. 390-91, with E.R. S-11 - S-112 ( 14, 16); E.R. 727-28. The Java Runtime Interpreter, which by definition merely implements the Java Virtual Machine Specification, did not include JNI when the TLDA was executed. See Order (11/17/98) at 6:16-18. Any native interface, including the one originally delivered by Microsoft to Sun when it gave Sun the Java Reference Implementation, satisfies section 2.9(b).

Finally, the district court also noted that "[s]ection 2.9(f) also contemplates Sun’s testing of the interfaces to the ‘Reference Implementation VM’" to bolster its holding that Sun could test for JNI. Order (11/17/98) at 16:12-14. Nothing in section 2.9(f) permits Sun to go beyond the AAPI in its testing. To the contrary, section 2.9(f) makes clear that beyond the AAPI, Sun may only request that Microsoft modify the implementation and/or interfaces to the Reference Implementation VM, and Microsoft "may decline to implement Sun’s requested modification(s)." TLDA at  2.9(f). If Sun were free to test for the presence of Sun-created native interfaces, section 2.9(f) would not grant Microsoft the discretion to disregard Sun’s recommendations to changes to Microsoft’s interfaces.

The provisions of section 2.9 cited by the district court do not support a contract interpretation that the parties agreed that Sun can test for native interfaces. To the contrary, those provisions unambiguously show that Microsoft has exclusive control over the native interfaces Microsoft incorporates into its products, and that Sun may not require that those products be compatible with JNI.


For the foregoing reasons, the district court’s November 17th Order should be vacated.

Dated: January 13, 1999 Respectfully submitted,



Barbara A. Caulfield

Attorneys for Defendant and Appellant


Pursuant to Ninth Circuit Rule 28-2.6, Appellant Microsoft Corporation states that it is unaware of any related cases pending in this Court.


Pursuant to Ninth Circuit Rule 32(e)(3), I certify that the opening brief is proportionately spaced, has a typeface of fourteen points, and contains 13,416 words.

Dated: January 13, 1999



Barbara A. Caulfield

Attorneys for Defendant and Appellant


Declaration of Service by Federal Express

I, Robert Brown, declare:

I am over the age of eighteen years and not a party to the above-entitled cause. My place of employment and business address is Orrick, Herrington & Sutcliffe LLP, 400 Sansome Street, San Francisco, California 94111.

On January 13, 1998, I served the following documents: (1) Brief of Appellant (two copies); (2) Excerpts of Record (Volumes I through VI) (one copy); and (3) Excerpts of Record Under Seal (one copy) by causing to be delivered true and copies to a Federal Express Agent in San Francisco, California, delivery prepaid by shipper for overnight delivery, addressed as follows:

Lloyd R. Day, Jr., Esq.
Vernon M. Winters, Esq.
David J. Estrada, Esq.
Day Casebeer Madrid Winters &
Batchelder LLP
20400 Stevens Creek Boulevard, 7th Floor
Cupertino, California 95014
Janet L. Cullum, Esq.
Paul J. Laveroni, Esq.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306-2155

I declare under penalty of perjury under the laws of the United States that the foregoing is true and correct.

Executed at San Francisco, California, this 13th day of January 1999.

Robert Brown


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