A.I. Root Co. v. Computer Dynamics, Inc.

Management Assistance, Inc. (MAI) (defendant) manufactured computer equipment and software. MAI’s software included BOSS software, over which MAI had a copyright. MAI had numerous dealers for its products, including Computer Dynamics, Inc. (CDI) (defendant). But MAI’s share of the computer market was very small—only about 2-4 percent. A. I. Root Company (Root) (plaintiff) purchased MAI computers from CDI. When Root decided it wanted to upgrade its computers and software, it rejected CDI’s offer of a new MAI computer and instead bought another type of computer from a third-party company. But the new computer needed MAI’s BOSS software to operate, and the software in the new computer needed to be reconfigured. Root approached CDI to reconfigure the BOSS software. CDI said it would do so, but only if Root signed a licensing agreement agreeing to use only MAI’s computer hardware with the software and also agreeing to buy CDI’s programming services every time it bought a new computer. Root refused and instead bought an IBM computer with different software. Root bought suit in federal district court against MAI and CDI, alleging that MAI and CDI had engaged in an illegal tying arrangement. Although conceding that MAI’s market share of 2-4 percent was very small, Root argued that the fact the BOSS software was copyrighted was sufficient to establish the necessary market power to prove the tying arrangement. Root argued that having a copyright or patent establishes market power. The district court disagreed and granted summary judgment for MAI and CDI. Root appealed.