MAI Systems Corporation v. Peak Computer, Inc.

MAI Systems Corporation (MAI) (plaintiff) manufactured computers and operating-system software used to operate the computers. MAI provided software licenses to its customers to allow the customers to use the operating-system software; this use included loading the operating system into the computer’s temporary random-access memory (RAM) each time the computer was turned on. The MAI software licenses prohibited use or copying of MAI software by third parties. Peak Computer, Incorporated (Peak) (defendant) was a computer-servicing company that serviced MAI computers for customers, which sometimes required a Peak employee to turn on a customer’s computer and thus load the MAI operating-system software into the computer’s RAM. The loading of the software into the computer’s RAM would allow the Peak employee to see the error log and diagnose the problem. MAI filed suit against Peak for copyright infringement, alleging that Peak’s use of MAI software in the process of servicing customers’ computers infringed MAI’s copyright. Specifically, MAI argued that Peak made a fixed copy of MAI’s copyrighted software—within the meaning of the Copyright Act of 1976—when it turned on a customer’s computer, which necessarily loaded the MAI operating-system software into the computer’s RAM. Peak argued that the alleged copy of MAI software loaded into the RAM was not fixed within the meaning of the act and therefore that Peak had not violated the act. The district court granted summary judgment in MAI’s favor, holding that the transfer of computer software from a storage medium to a computer’s RAM constituted a fixed copy of the software within the meaning of the act. Peak appealed.