DSC Communications Corp. v. Pulse Communications, Inc.

DSC Communications Corporation (DSC) (plaintiff) manufactured software that telephone companies used in conjunction with DSC interface cards to provide telephone service. Functionally, each time a telephone company turned on a DSC interface card, it copied DSC’s software onto the card. DSC signed agreements with the telephone companies permitting them to use the software. The agreements prohibited the telephone companies from transferring the software, disclosing any information about the software, and using the software on any hardware besides hardware provided by DSC. Pulse Communications, Inc. (Pulsecom) (defendant) created compatible interface cards that telephone companies could use in the same way with DSC’s software. DSC sued Pulsecom for contributory copyright infringement, arguing that each time a telephone company turned on a Pulsecom interface card, it copied DSC’s software onto that interface card, which was an infringing act because Pulsecom did not have a right to the copyrighted software. DSC argued that Pulsecom assisted the telephone companies in this infringing act. Pulsecom moved for judgment as a matter of law. The district court granted the motion, finding that the telephone companies were owners of the DSC software and thus qualified for a software exception in the Copyright Act. Under the exception, an owner of a copy of computer software did not commit copyright infringement by copying the software if the copy was used solely as an essential step in actually using the software. DSC appealed.