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The following is an ASCII file from Lexis which is a copy of the original decision as
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                  1ST CASE of Level 1 printed in FULL format.

                    COMPUTER ASSOCIATES INTERNATIONAL, INC.,
            Plaintiff-Appellant-Cross-Appellee, -v.-  ALTAI,  INC.,
                      Defendant-Appellee-Cross-Appellant.

                          Docket Nos. 91-7893, 91-7935

             UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT

            1992 U.S. App. LEXIS 14305; 23 U.S.P.Q.2D (BNA) 1241; 92
                            Daily Journal DAR 10110


                           January 9, 1992, Argued
                             June 22, 1992, Decided

SUBSEQUENT HISTORY:   [*1]   As Amended June 26, 1992.

PRIOR HISTORY: Appeal from the judgment of the United States District Court for
the Eastern District of New York (Hon. George C. Pratt, United States Circuit
Judge, sitting by designation), entered on August 12, 1991, holding: (1)
Appellee's OSCAR 3.4 computer program infringed Appellant's copyrighted
CA-SCHEDULER program code; (2) Appellee's OSCAR 3.5 program did not infringe the
code or the non-literal structure of Appellant's copyrighted CA-SCHEDULER
program; and (3) Appellant's state law trade secret misappropriation claims were
preempted by the federal copyright act.

DISPOSITION: Judgment affirmed.

COUNSEL: STEPHEN D. KAHN, New York, New York (Stuart D. Levi, Beth K. Neelman,
Carol A. Motyka, Weil, Gotshal & Manges, New York, New York, Michael A. McElroy,
Computer Associates International, Inc., of counsel), for Plaintiff-Appellant,
Cross-Appellee.

SUSAN G. BRADEN, Washington D.C. (Christ M. Kacoy annakis, Anders Oshinshy,
Washington D.C., Stephen D. Susman, Susman Godfrey, Houston, Texas, of counsel),
for Defendant-Appellee, Cross-Appellant.

BRUCE A. LEHMAN, Swidler & Berlin, Washington D.C., filed a brief amicus curiae
on behalf of The Software Publishers Association.

PETER M.C. CHOY,   [*2]   Mountain View, California, filed a brief amicus curiae
on behalf of the American Committee For Interoperable Systems.

J. DAVID CABELLO, Houston, Texas; DAVID R. BRADFORD, Provo, Utah; ROBERT H.
KOHN, Scotts Valley, California, filed a brief amici curiae on behalf of Compaq
Computer Corporation; Novell, Inc.; and Borland International, Inc.

JUDGES: Before: ALTIMARI, MAHONEY and WALKER, Circuit Judges.

OPINIONBY: WALKER

OPINION: WALKER, Circuit Judge:

   In recent years, the growth of computer science has spawned a number of
challenging legal questions, particularly in the field of copyright law. As                                                                       PAGE    3
           1992 U.S. App. LEXIS 14305, *2; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

scientific knowledge advances, courts endeavor to keep pace, and sometimes--as
in the area of computer technology--they are required to venture into less than
familiar waters. This is not a new development, though. "From its beginning, the
law of copyright has developed in response to significant changes in
technology." Sony Corp. v. Universal City Studios, Inc., 464 U.S. 417, 430
(1984).

   Article I, section 8 of the Constitution authorizes Congress "to promote the
Progress of Science and useful Arts, by securing for limited Times to Authors
and Inventors the exclusive Right to their respective  [*3]   Writings and
Discoveries." The Supreme Court has stated that "the economic philosophy behind
the clause . . . is the conviction that encouragement of individual effort by
personal gain is the best way to advance public welfare." Mazer v. Stein, 347
U.S. 201, 219 (1954). The author's benefit, however, is clearly a "secondary"
consideration. See United States v. Paramount Pictures, Inc., 334 U.S. 131, 158
(1948). "The ultimate aim is, by this incentive, to stimulate artistic
creativity for the general public good." Twentieth Century Music Corp. v. Aiken,
422 U.S. 151, 156 (1975).

   Thus, the copyright law seeks to establish a delicate equilibrium. On the one
hand, it affords protection to authors as an incentive to create, and, on the
other, it must appropriately limit the extent of that protection so as to avoid
the effects of monopolistic stagnation. In applying the federal act to new types
of cases, courts must always keep this symmetry in mind. Id.

   Among other things, this case deals with the challenging question of whether
and to what extent the "non-literal" aspects of a computer program, that is,
those aspects that  [*4]   are not reduced to written code, are protected by
copyright. While a few other courts have already grappled with this issue, this
case is one of first impression in this circuit. As we shall discuss, we find
the results reached by other courts to be less than satisfactory. Drawing upon
long-standing doctrines of copyright law, we take an approach that we think
better addresses the practical difficulties embedded in these types of cases. In
so doing, we have kept in mind the necessary balance between creative incentive
and industrial competition.

   This appeal comes to us from the United States District Court for the Eastern
District of New York, the Honorable George C. Pratt, Circuit Judge, sitting by
designation. By Memorandum and Order entered August 12, 1991, Judge Pratt found
that defendant  Altai,  Inc.'s (" Altai" ), OSCAR 3.4 computer program had
infringed plaintiff Computer Associates' ("CA"), copyrighted computer program
entitled CA-SCHEDULER. Accordingly, the district court awarded CA $ 364,444 in
actual damages and apportioned profits.  Altai  has abandoned its appeal from
this award. With respect to CA's second claim for copyright infringement, Judge
Pratt found that  Altai's   [*5]   OSCAR 3.5 program was not substantially
similar to a portion of CA-SCHEDULER called ADAPTER, and thus denied relief.
Finally, the district court concluded that CA's state law trade secret
misappropriation claim against  Altai  had been preempted by the federal
copyright act. CA appealed from these findings.

   Because we are in full agreement with Judge Pratt's decision and in
substantial agreement with his careful reasoning, we affirm the judgment of the
district court in its entirety.                                                                       PAGE    4
           1992 U.S. App. LEXIS 14305, *5; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   BACKGROUND

   We assume familiarity with the facts set forth in the district court's
comprehensive and scholarly opinion. See Computer Associates Int'l, Inc. v.
 Altai,  Inc., 775 F. Supp. 544, 549-55 (E.D.N.Y. 1991). Thus, we summarize only
those facts necessary to resolve this appeal.

   I. COMPUTER PROGRAM DESIGN

   Certain elementary facts concerning the nature of computer programs are vital
to the following discussion. The Copyright Act defines a computer program as "a
set of statements or instructions to be used directly or indirectly in a
computer in order to bring about a certain result." 17 U.S.C. @ 101. In writing
these directions, the programmer works "from the general to the specific."
[*6]   Whelan Associates, Inc. v. Jaslow Dental Laboratory, Inc., 797 F.2d 1222,
1229 (3d Cir. 1986), cert. denied, 479 U.S. 1031 (1987). See generally, Steven
R. Englund, Note, Idea, Process, or Protected Expression?: Determining the Scope
of Copyright Protection of the Structure of Computer Programs, 88 MICH. L. REV.
866, 867-73 (1990) (hereinafter "Englund"); Peter S. Menell, An Analysis of the
Scope of Copyright Protection for Application Programs, 41 STAN. L. REV. 1045,
1051-57 (1989) (hereinafter "Menell"); Mark T. Kretschmer, Note, Copyright
Protection For Software Architecture: Just Say No!, 1988 COLUM. Bus. L. REV.
823, 824-27 (1988) (hereinafter "Kretschmer"); Peter G. Spivack, Comment, Does
Form Follow Function? The Idea/Expression Dichotomy In Copyright Protection of
Computer Software, 35 U.C.L.A. L. REV. 723, 729-31 (1988) (hereinafter
"Spivack").

   The first step in this procedure is to identify a program's ultimate function
or purpose. An example of such an ultimate purpose might be the creation and
maintenance of a business ledger. Once this goal has been achieved, a   [*7]
programmer breaks down or "decomposes" the program's ultimate function into
"simpler constituent problems or 'subtasks,' "Englund, at 870, which are also
known as subroutines or modules. See Spivack, at 729. In the context of a
business ledger program, a module or subroutine might be responsible for the
task of updating a list of outstanding accounts receivable. Sometimes, depending
upon the complexity of its task, a subroutine may be broken down further into
sub-subroutines.

   Having sufficiently decomposed the program's ultimate function into its
component elements, a programmer will then arrange the subroutines or modules
into what are known as organizational or flow charts. Flow charts map the
interactions between modules that achieve the program's end goal. See
Kretschmer, at 826.

   In order to accomplish these intra-program interactions, a programmer must
carefully design each module's parameter list. A parameter list, according to
the expert appointed and fully credited by the district court, Dr. Randall
Davis, is "the information sent to and received from a subroutine." See Report
of Dr. Randall Davis, at 12. The term "parameter list" refers to the form in
which information  [*8]   is passed between modules (e.g. for accounts
receivable, the designated time frame and particular customer identifying
number) and the information's actual content (e.g. 8/91-7/92; customer No. 3).
Id. With respect to form, interacting modules must share similar parameter lists
so that they are capable of exchanging information.                                                                       PAGE    5
           1992 U.S. App. LEXIS 14305, *8; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   "The functions of the modules in a program together with each module's
relationships to other modules constitute the 'structure' of the program."
Englund, at 871. Additionally, the term structure may include the category of
modules referred to as "macros." A macro is a single instruction that initiates
a sequence of operations or module interactions within the program. Very often
the user will accompany a macro with an instruction from the parameter list to
refine the instruction (e.g. current total of accounts receivable (macro), but
limited to those for 8/91 to 7/92 from customer No. 3 (parameters)).

   In fashioning the structure, a programmer will normally attempt to maximize
the program's speed, efficiency, as well as simplicity for user operation, while
taking into consideration certain externalities such as the memory constraints
of the computer upon  [*9]   which the program will be run. See id.; Kretschmer,
at 826; Menell, at 1052. "This stage of program design often requires the most
time and investment." Kretschmer, at 826.

   Once each necessary module has been identified, designed, and its
relationship to the other modules has been laid out conceptually, the resulting
program structure must be embodied in a written language that the computer can
read. This process is called "coding," and requires two steps. Whelan, 797 F.2d
at 1230. First, the programmer must transpose the program's structural
blue-print into a source code. This step has been described as "comparable to
the novelist Meshing out the broad outline of his plot by crafting from words
and sentences the paragraphs that convey the ideas." Kretschmer, at 826. The
source code may be written in any one of several computer languages, such as
COBAL, FORTRAN, BASIC, EDL, etc., depending upon the type of computer for which
the program is intended. Whelan, 797 F.2d at 1230. Once the source code has been
completed, the second step is to translate or "compile" it into object code.
Object code is the binary language comprised of zeros and  [*10]   ones through
which the computer directly receives its instructions. Id., at 1230-31; Englund,
at 868 & n.13.

   After the coding is finished, the programmer will run the program on the
computer in order to find and correct any logical and syntactical errors. This
is known as "debugging" and, once done, the program is complete. See Kretschmer,
at 826-27.

   II. FACTS

   CA is a Delaware corporation, with its principal place of business in Garden
City, New York.  Altai  is a Texas corporation, doing business primarily in
Arlington, Texas. Both companies are in the computer software
industry--designing, developing and marketing various types of computer
programs.

   The subject of this litigation originates with one of CA's marketed programs
entitled CA-SCHEDULER. CA-SCHEDULER is a job scheduling program designed for IBM
mainframe computers. Its primary functions are straightforward: to create a
schedule specifying when the computer should run various tasks, and then to
control the computer as it executes the schedule. CA-SCHEDULER contains a
sub-program entitled ADAPTER, also developed by CA. ADAPTER is not an
independently marketed product of CA; it is a wholly integrated  [*11]
component of CA-SCHEDULER and has no capacity for independent use.                                                                       PAGE    6
           1992 U.S. App. LEXIS 14305, *11; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   Nevertheless, ADAPTER plays an extremely important role. It is an "operating
system compatibility component," which means, roughly speaking, it serves as a
translator. An "operating system" is itself a program that manages the resources
of the computer, allocating those resources to other programs as needed. The
IBM's System 370 family of computers, for which CA-SCHEDULER was created, is,
depending upon the computer's size, designed to contain one of three operating
systems: DOS/VSE, MVS, or CMS. As the district court noted, the general rule is
that "a program written for one operating system, e.g., DOS/VSE, will not,
without modification, run under another operating system such as MVS." Computer
Associates, 775 F. Supp. at 550. ADAPTER's function is to translate the language
of a given program into the particular language that the computer's own
operating system can understand.

   The district court succinctly outlined the manner in which ADAPTER works
within the context of the larger program. In order to enable CA-SCHEDULER to
function on different operating systems, CA divided the CA-SCHEDULER into
[*12]   two components:

--a first component that contains only the task-specific portions of the
program, independent of all operating system issues, and

--a second component that contains all the interconnections between the first
component and the operating system.

   In a program constructed in this way, whenever the first, task-specific,
component needs to ask the operating system for some resource through a "system
call", it calls the second component instead of calling the operating system
directly.

   The second component serves as an "interface" or "compatibility component"
between the task-specific portion of the program and the operating system. It
receives the request from the first component and translates it into the
appropriate system call that will be recognized by whatever operating system is
installed on the computer, e.g., DOS/VSE, MVS, or CMS. Since the first,
task-specific component calls the adapter component rather than the operating
system, the first component need not be customized to use any specific operating
system. The second interface component insures that all the system calls are
performed properly for the particular operating system in use.

Id. at 551.  [*13]   ADAPTER serves as the second, "common system interface"
component referred to above.

   A program like ADAPTER, which allows a computer user to change or use
multiple operating systems while maintaining the same software, is highly
desirable. It saves the user the costs, both in time and money, that otherwise
would be expended in purchasing new programs, modifying existing systems to run
them, and gaining familiarity with their operation. The benefits run both ways.
The increased compatibility afforded by an ADAPTER-like component, and its
resulting popularity among consumers, makes whatever software in which it is
incorporated significantly more marketable.

   Starting in 1982,  Altai  began marketing its own job scheduling program
entitled ZEKE. The original version of ZEKE was designed for use in conjunction
with a VSE operating system. By late 1983, in response to customer demand,                                                                       PAGE    7
           1992 U.S. App. LEXIS 14305, *13; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

 Altai  decided to rewrite ZEKE so that it could be run in conjunction with an
MVS operating system.

   At that time, James P. Williams ("Williams"), then an employee of  Altai  and
now its President, approached Claude F. Arney, III ("Arney"), a computer
programmer who worked for CA. Williams and Arney were longstanding  [*14]
friends, and had in fact been co-workers at CA for some time before Williams
left CA to work for  Altai's  predecessor. Williams wanted to recruit Arney to
assist  Altai  in designing an MVS version of ZEKE.

   At the time he first spoke with Arney, Williams was aware of both the
CA-SCHEDULER and ADAPTER programs. However, Williams was not involved in their
development and had never seen the codes of either program. When he asked Arney
to come work for  Altai,  Williams did not know that ADAPTER was a component of
CA-SCHEDULER.

   Arney, on the other hand, was intimately familiar with various aspects of
ADAPTER. While working for CA, he helped improve the VSE version of ADAPTER, and
was permitted to take home a copy of ADAPTER's source code. This apparently
developed into an irresistible habit, for when Arney left CA to work for  Altai
in January, 1984, he took with him copies of the source code for both the VSE
and MVS versions of ADAPTER. He did this in knowing violation of the CA employee
agreements that he had signed.

   Once at  Altai,  Arney and Williams discussed design possibilities for
adapting ZEKE to run on MVS operating systems. Williams, who had created the VSE
version of ZEKE, thought  [*15]   that approximately 30% of his original program
would have to be modified in order to accommodate MVS. Arney persuaded Williams
that the best way to make the needed modifications was to introduce a "common
system interface" component into ZEKE. He did not tell Williams that his idea
stemmed from his familiarity with ADAPTER. They decided to name this new
component-program OSCAR.

   Arney went to work creating OSCAR. No one at  Altai,  including Williams,
knew that he had the ADAPTER code, and no one knew that he was using it to
design OSCAR/VSE. In three months, Arney successfully completed the OSCAR/VSE
project. In an additional month he developed an OSCAR/MVS version. When the dust
finally settled, Arney had copied approximately 30% of OSCAR's code from CA's
ADAPTER program.

   The first generation of OSCAR programs was known as OSCAR 3.4. From 1985 to
August 1988,  Altai  used OSCAR 3.4 in its ZEKE product, as well as in programs
entitled ZACK and ZEBB. In late July 1988, CA first learned that  Altai  may
have appropriated parts of ADAPTER. After confirming its suspicions, CA secured
copyrights on its 2.1 and 7.0 versions of CA-SCHEDULER. CA then brought this
copyright and trade secret misappropriation  [*16]   action against  Altai.

   Apparently, it was upon receipt of the summons and complaint that  Altai
first learned that Arney had copied much of the OSCAR code from ADAPTER. After
Arney confirmed to Williams that CA's accusations of copying were true, Williams
immediately set out to survey the damage. Without ever looking at the ADAPTER
code himself, Williams learned from Arney exactly which sections of code Arney
had taken from ADAPTER.                                                                       PAGE    8
           1992 U.S. App. LEXIS 14305, *16; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   Upon advice of counsel, Williams initiated OSCAR's rewrite. The project's
goal was to save as much of OSCAR 3.4 as legitimately could be used, and to
excise those portions which had been copied from ADAPTER. Arney was entirely
excluded from the process, and his copy of the ADAPTER code was locked away.
Williams put eight other programmers on the project, none of whom had been
involved in any way in the development of OSCAR 3.4. Williams provided the
programmers with a description of the ZEKE operating system services so that
they could rewrite the appropriate code. The rewrite project took about six
months to complete and was finished in mid-November 1989. The resulting program
was entitled OSCAR 3.5.

   From that point on,  Altai  shipped only OSCAR 3.5 to  [*17]   its new
customers.  Altai  also shipped OSCAR 3.5 as a "free upgrade" to all customers
that had previously purchased OSCAR 3.4. While  Altai  and Williams acted
responsibly to correct what Arney had wrought, the damage was done. CA's lawsuit
remained.

   After CA originally instituted this action in the United States District
Court for the District of New Jersey, the parties stipulated its transfer in
March, 1989, to the Eastern District of New York where it was assigned to Judge
Jacob Mishler. On October 26, 1989, Judge Mishler transferred the case to Judge
Pratt who was sitting in the district court by designation. Judge Pratt
conducted a six day trial from March 28 through April 6, 1990. He entered
judgment on August 12, 1991, and this appeal followed.

   DISCUSSION

   While both parties originally appealed from different aspects of the district
court's judgment,  Altai  has now abandoned its appellate claims. In particular,
 Altai  has conceded liability for the copying of ADAPTER into OSCAR 3.4 and
raises no challenge to the award of $ 364,444 in damages on that score. Thus, we
address only CA's appeal from the district court's rulings that: (1)  Altai  was
not liable for copyright infringement  [*18]   in developing OSCAR 3.5; and (2)
in developing both OSCAR 3.4 and 3.5,  Altai  was not liable for
misappropriating CA's trade secrets.

   CA makes two arguments. First, CA contends that the district court applied an
erroneous method for determining whether there exists substantial similarity
between computer programs, and thus, erred in determining that OSCAR 3.5 did not
infringe the copyrights held on the different versions of its CA-SCHEDULER
program. CA asserts that the test applied by the district court failed to
account sufficiently for a computer program's non-literal elements. Second, CA
maintains that the district court erroneously concluded that its state law trade
secret claims bad been preempted by the federal copyright act, see 17 U.S.C @
301(a). We shall address each argument in turn.

   I. COPYRIGHT INFRINGEMENT

   In any suit for copyright infringement, the plaintiff must establish its
ownership of a valid copyright, and that the defendant copied the copyrighted
work. See Novelty Textile Mills, Inc. v. Joan Fabrics Corp., 558 F.2d 1090, 1092
(2d Cir. 1977); see also 3 Melville B. Nimmer & David Nimmer, Nimmer on
Copyright @ 13.01, at 13-4 (1991)   [*19]   (hereinafter "Nimmer"). The
plaintiff may prove defendant's copying either by direct evidence or, as is                                                                       PAGE    9
           1992 U.S. App. LEXIS 14305, *19; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

most often the case, by showing that (1) the defendant had access to the
plaintiff's copyrighted work and (2) that defendant's work is substantially
similar to the plaintiff's copyrightable material. See Walker v. Time Life
Films, Inc., 784 F.2d 44,48 (2d Cir.), cert. denied, 476 U.S. 1159 (1986).

   For the purpose of analysis, the district court assumed that  Altai  had
access to the ADAPTER code when creating OSCAR 3.5. See Computer Associates, 775
F. Supp. at 558. Thus, in determining whether  Altai  had unlawfully copied
protected aspects of CA's ADAPTER, the district court narrowed its focus of
inquiry to ascertaining whether  Altai's  OSCAR 3.5 was substantially similar to
ADAPTER. Because we approve Judge Pratt's conclusions regarding substantial
similarity, our analysis will proceed along the same assumption.

   As a general matter, and to varying degrees, copyright protection extends
beyond a literary work's strictly textual form to its non-literal components. As
we have said, "it is of course essential to any protection  [*20]   of literary
property . . . that the right cannot be limited literally to the text, else a
plagiarist would escape by immaterial variations." Nichols v. Universal Pictures
Co., 45 F.2d 119, 121 (2d Cir. 1930) (L. Hand, J.), cert. denied, 282 U.S. 902
(1931). Thus, where "the fundamental essence or structure of one work is
duplicated in another," 3 Nimmer, @ 13.03[A][1], at 13-24, courts have found
copyright infringement. See, e.g., Horgan v. Macmillan, 789 F.2d 157, 162 (2d
Cir. 1986) (recognizing that a book of photographs might infringe ballet
choreography); Twentieth Century-Fox Film Corp. v. MCA, Inc., 715 F.2d 1327,
1329 (9th Cir. 1983) (motion picture and television series); Sid & Marry Krofft
Television Productions, Inc. v. McDonald's Corp., 562 F.2d 1157, 1167 (9th Cir.
1977) (television commercial and television series); Sheldon v. Metro-Goldwyn
Pictures Corp., 81 F.2d 49,55 (2d Cir.), cert. denied, 298 U.S. 669 (1936) (play
and motion picture); accord Stewart v. Abend, 495 U.S. 207, 238 (1990)
(recognizing that motion  [*21]   picture may infringe copyright in book by
using its "unique setting, characters, plot, and sequence of events"). This
black letter proposition is the springboard for our discussion.

A. Copyright Protection for the Non-literal Elements of Computer Programs

   It is now well settled that the literal elements of computer programs, i.e.,
their source and object codes, are the subject of copyright protection. See
Whelan, 797 F.2d at 1233 (source and object code); CMS Software Design Sys.,
Inc. v. Info Designs, Inc., 785 F.2d 1246, 1249 (5th Cir. 1986) (source code);
Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1249 (3d Cir.
1983), cert. dismissed, 464 U.S. 1033 (1984) (source and object code); Williams
Electronics, Inc. v. Artic Int'l, Inc., 685 F.2d 870, 876-77 (3d Cir. 1982)
(object code). Here, as noted earlier,  Altai  admits having copied
approximately 30% of the OSCAR 3.4 program from CA's ADAPTER source code, and
does not challenge the district court's related finding of infringement.

   In this case, the hotly contested issues surround OSCAR 3.5. As recounted
[*22]   above, OSCAR 3.5 is the product of  Altai's  carefully orchestrated
rewrite of OSCAR 3.4. After the purge, none of the ADAPTER source code remained
in the 3.5 version; thus,  Altai  made sure that the literal elements of its
revamped OSCAR program were no longer substantially similar to the literal
elements of CA's ADAPTER.                                                                       PAGE   10
           1992 U.S. App. LEXIS 14305, *22; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   According to CA, the district court erroneously concluded that  Altai's
OSCAR 3.5 was not substantially similar to its own ADAPTER program. CA argues
that this occurred because the district court "committed legal error in
analyzing [its] claims of copyright infringement by failing to find that
copyright protects expression contained in the non-literal elements of computer
software." We disagree.

   CA argues that, despite  Altai's  rewrite of the OSCAR code, the resulting
program remained substantially similar to the structure of its ADAPTER program.
As discussed above, a program's structure includes its non-literal components
such as general flow charts as well as the more specific organization of
inter-modular relationships, parameter lists, and macros. In addition to these
aspects, CA contends that OSCAR 3.5 is also substantially similar to ADAPTER
with respect to  [*23]   the list of services that both ADAPTER and OSCAR obtain
from their respective operating systems. We must decide whether and to what
extent these elements of computer programs are protected by copyright law.

   The statutory terrain in this area has been well explored. See Lotus Dev.
Corp. v. Paperback Software Int'l, 740 F. Supp. 37, 47-51 (D. Mass. 1990); see
also Whelan, 797 F.2d at 1240-42; Englund, at 885-90; Spivack, at 731-37. The
Copyright Act affords protection to "original works of authorship fixed in any
tangible medium of expression." 17 U.S.C. @ 102(a). This broad category of
protected "works" includes "literary works," id., which are defined by the act
as works, other than audiovisual works, expressed in words, numbers, or other
verbal or numerical symbols or indicia, regardless of the nature of the material
objects, such as books, periodicals, manuscripts, phonorecords, film tapes,
disks, or cards, in which they are embodied. 17 U.S.C. @ 101.

           While computer programs are not specifically listed as part of
the above statutory definition, the legislative history leaves no doubt that
Congress intended them to be considered   [*24]   literary works. See H.R.Rep.
No. 1476, 94th Cong., 2d Sess. 54, reprinted in 1976 U.S.C.C.A.N. 5659,5667
(hereinafter "House Report"); Whelan, 797 F.2d at 1234; Apple Computer, 714 F.2d
at 1247.

   The syllogism that follows from the foregoing premises is a powerful one: if
the non-literal structures of literary works are protected by copyright; and if
computer programs are literary works, as we are told by the legislature; then
the non-literal structures of computer programs are protected by copyright. See
Whelan, 797 F.2d at 1234 ("By analogy to other literary works, it would thus
appear that the copyrights of computer programs can be infringed even absent
copying of the literal elements of the program."). We have no reservation in
joining the company See, e.g., Johnson Controls, Inc. v. Phoenix Control Sys.,
Inc., 886 F.2d 1173, 1175 (9th Cir. 1989); Lotus Dev. Corp., 740 F. Supp. at 54;
Digital Communications Assocs., Inc. v. Softklone Distrib. Corp., 659 F. Supp.
449, 455-56 (N.D.Ga. 1987); Q-Co Indus., Inc. v. Hoffman, 625 F. Supp. 608, 615
(S.D.N.Y. 1985);  [*25]   SAS Institute, Inc. v. S & H Computer Sys., Inc., 605
F. Supp. 816, 829-30 (M.D.Tenn. 1985). However, that conclusion does not end our
analysis. We must determine the scope of copyright protection that extends to a
computer program's non-literal structure.                                                                       PAGE   11
           1992 U.S. App. LEXIS 14305, *25; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   As a caveat, we note that our decision here does not control infringement
actions regarding categorically distinct works, such as certain types of screen
displays. These items represent products of computer programs, rather than the
programs themselves, and fall under the copyright rubric of audiovisual works.
If a computer audiovisual display is copyrighted separately as an audiovisual
work, apart from the literary work that generates it (i.e., the program), the
display may be protectable regardless of the underlying program's copyright
status. See Stern Electronics, Inc. v. Kaufman, 669 F.2d 852, 855 (2d Cir. 1982)
(explaining that an audiovisual works copyright, rather than a copyright on the
underlying program, extended greater protection to the sights and sounds
generated by a computer video game because the same audiovisual display could be
generated by different programs). Of course,   [*26]   the copyright protection
that these displays enjoy extends only so far as their expression is
protectable. Data East USA, Inc. v. Epyx, Inc., 862 F.2d 204, 209 (9th Cir.
1988). In this case, however, we are concerned not with a program's display, but
the program itself, and then with only its non-literal components. In
considering the copyrightability of these components, we must refer to venerable
doctrines of copyright law.

1) Idea vs. Expression Dichotomy

   It is a fundamental principle of copyright law that a copyright does not
protect an idea, but only the expression of the idea. See Baker v. Selden, 101
U.S. 99 (1879); Mazer v. Stein, 347 U.S. 201, 217 (1954). This axiom of common
law has been incorporated into the governing statute. Section 102(b) of the act
provides:

In no case does copyright protection for an original work of authorship extend
to any idea, procedure, process, system, method of operation, concept,
principle, or discovery, regardless of the form in which it is described,
explained, illustrated, or embodied in such work.

17 U.S.C. @ 102(b). See also House Report, at 5670 ("Copyright   [*27]   does
not preclude others from using ideas or information revealed by the author's
work.").

   Congress made no special exception for computer programs. To the contrary,
the legislative history explicitly states that copyright protects computer
programs only "to the extent that they incorporate authorship in programmer's
expression of original ideas, as distinguished from the ideas themselves." Id.
at 5667; see also id. at 5670 ("Section 102(b) is intended . . . to make clear
that the expression adopted by the programmer is the copyrightable element in a
computer program, and that the actual processes or methods embodied in the
program are not within the scope of copyright law.").

   Similarly, the National Commission on New Technological Uses of Copyrighted
Works ("CONTU") established by Congress to survey the issues generated by the
interrelationship of advancing technology and copyright law, see Pub.L. 93-573,
@ 201, 88 Stat.1873 (1974), recommended, inter alia, that the 1976 Copyright Act
"be amended . . . to make it explicit that computer programs, to the extent that
they embody the author's original creation, are proper subject matter for
copyright." See National  [*28]   Commission on New Technological Uses of
Copyrighted Works, Final Report 1 (1979) (hereinafter "CONTU Report"). To that
end, Congress adopted CONTU's suggestions and amended the Copyright Act by                                                                       PAGE   12
           1992 U.S. App. LEXIS 14305, *28; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

adding, among other things, a provision to 17 U.S.C. @ 101 which defined the
term "computer program." See Pub.L. No. 96-517, @ 10(a), 94 Stat. 3028 (1980).
CONTU also "concluded that the idea-expression distinction should be used to
determine which aspects of computer programs are copyrightable." Lotus Dev.
Corp., 740 F. Supp. at 54 (citing CONTU Report, at 44).

   Drawing the line between idea and expression is a tricky business. Judge
Learned Hand noted that "nobody has ever been able to fix that boundary, and
nobody ever can." Nichols, 45 F.2d at 121. Thirty years later his convictions
remained firm. "Obviously, no principle can be stated as to when an imitator has
gone beyond copying the 'idea,' and has borrowed its 'expression,' "Judge Hand
concluded. "Decisions must therefore inevitably be ad hoc." Peter Pan Fabrics,
Inc. v. Martin Weiner Corp., 274 F.2d 487,489 (2d Cir. 1960).

   The essentially utilitarian nature  [*29]   of a computer program further
complicates the task of distilling its idea from its expression. See SAS
Institute, 605 F. Supp. at 829; cf. Englund, at 893. In order to describe both
computational processes and abstract ideas, its content "combines creative and
technical expression." See Spivack, at 755. The variations of expression found
in purely creative compositions, as opposed to those contained in utilitarian
works, are not directed towards practical application. For example, a narration
of Humpty Dumpty's demise, which would clearly be a creative composition, does
not serve the same ends as, say, a recipe for scrambled eggs--which is a more
process oriented text. Thus, compared to aesthetic works, computer programs
hover even more closely to the elusive boundary line described in @ 102(b).

   The doctrinal starting point in analyses of utilitarian works, is the seminal
case of Baker v. Selden, 101 U.S. 99 (1879). In Baker, the Supreme Court faced
the question of "whether the exclusive property in a system of bookkeeping can
be claimed, under the law of copyright, by means of a book in which that system
is explained?" Id. at 101.  [*30]   Selden had copyrighted a book that expounded
a particular method of bookkeeping. The book contained lined pages with headings
intended to illustrate the manner in which the system operated. Baker's
accounting publication included ledger sheets that employed "substantially the
same ruled lines and headings." Id. Selden's testator sued Baker for copyright
infringement on the theory that the ledger sheets were protected by Selden's
copyright.

   The Supreme Court found nothing copyrightable in Selden's bookkeeping system,
and rejected his infringement claim regarding the ledger sheets. The Court held
that:

The fact that the art described in the book by illustrations of lines and
figures which are reproduced in practice in the application of the art, makes no
difference. Those illustrations are the mere language employed by the author to
convey his ideas more clearly. Had he used words of description instead of
diagrams (which merely stand in the place of words), there could not be the
slightest doubt that others, applying the art to practical use, might lawfully
draw the lines and diagrams which were in the author's mind, and which he thus
described by words in his book.

   The copyright  [*31]   of a work on mathematical science cannot give to the
author an exclusive right to the methods of operation which he propounds, or to
the diagrams which he employs to explain them, so as to prevent an engineer                                                                       PAGE   13
           1992 U.S. App. LEXIS 14305, *31; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

from using them whenever occasion requires.

Id. at 103.

   To the extent that an accounting text and a computer program are both "a set
of statements or instructions . . . to bring about a certain result," 17 U.S.C.
@ 101, they are roughly analogous. In the former case, the processes are
ultimately conducted by human agency; in the latter, by electronic means. In
either case, as already stated, the processes themselves are not protectable.
But the holding in Baker goes farther. The Court concluded that those aspects of
a work, which "must necessarily be used as incident to" the idea, system or
process that the work describes, are also not copyrightable. 101 U.S. at 104.
Selden's ledger sheets, therefore, enjoyed no copyright protection because they
were "necessary incidents to" the system of accounting that he described. Id. at
103. From this reasoning, we conclude that those elements of a computer program
that are necessarily  [*32]   incidental to its function are similarly
unprotectable.

   While Baker v. Selden provides a sound analytical foundation, it offers scant
guidance on how to separate idea or process from expression, and moreover, on
how to further distinguish protectable expression from that expression which
"must necessarily be used as incident to" the work's underlying concept. In the
context of computer programs, the Third Circuit's noted decision in Whelan has,
thus far, been the most thoughtful attempt to accomplish these ends.

   The court in Whelan faced substantially the same problem as is presented by
this case. There, the defendant was accused of making off with the non-literal
structure of the plaintiff's copyrighted dental lab management program, and
employing it to create its own competitive version. In assessing whether there
had been an infringement, the court had to determine which aspects of the
programs involved were ideas, and which were expression. In separating the two,
the court settled upon the following conceptual approach:

The line between idea and expression may be drawn with reference to the end
sought to be achieved by the work in question. In other words, the   [*33]
purpose or function of a utilitarian work would be the work's idea, and
everything that is not necessary to that purpose or function would be part of
the expression of the idea. . . . Where there are various means of achieving the
desired purpose, then the particular means chosen is not necessary to the
purpose; hence, there is expression, not idea.

797 F.2d at 1236 (citations omitted). The "idea" of the program at issue in
Whelan was identified by the court as simply "the efficient management of a
dental laboratory." Id. at n.28.

   So far, in the courts, the Whelan rule has received a mixed reception. While
some decisions have adopted its reasoning, see, e.g., Bull HN Information Sys.,
Inc. v. American Express Bank, Ltd., 1990 Copyright Law Dec. (CCH) P 26,555 at
23,278 (S.D.N.Y. 1990); Dynamic Solutions, Inc. v. Planning & Control, Inc.,
1987 Copyright Law Dec. (CCH) P 26,062 at 20,912 (S.D.N.Y. 1987); Broderbund
Software Inc. v. Unison World, Inc., 648 F. Supp. 1127, 1133 (N.D.Cal. 1986),
others have rejected it. See Plains Cotton Co-op v. Goodpasture Computer
Service, Inc., 807 F.2d 1256, 1262 (5th  [*34]   Cir.), cert. denied, 484 U.S.
821 (1987); cf. Synercom Technology, Inc. v. University Computing Co., 462 F.                                                                       PAGE   14
           1992 U.S. App. LEXIS 14305, *34; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

Supp. 1003, 1014 (N.D.Tex. 1978) (concluding that order and sequence of data on
computer input formats were idea not expression).

   Whelan has fared even more poorly in the academic community, where its
standard for distinguishing idea from expression has been widely criticized for
being conceptually overbroad. See, e.g., Englund, at 881; Menell, at 1074, 1082;
Kretschmer, at 837-39; Spivack, at 747-55; Thomas M. Gage, Note, Whelan
Associates v. Jaslow Dental Laboratories: Copyright Protection for Computer
Software Structure--What's the Purpose?, 1987 Wis. L. REV. 859, 860-61 (1987).
The leading commentator in the field has stated that, "the crucial flaw in
[Whelan's] reasoning is that it assumes that only one 'idea,' in copyright law
terms, underlies any computer program, and that once a separable idea can be
identified, everything else must be expression." 3 Nimmer @ 13.03[F], at
13-62.34. This criticism focuses not upon the program's ultimate purpose but
upon the reality of its structural design. As we  [*35]   have already noted, a
computer program's ultimate function or purpose is the composite result of
interacting subroutines. Since each subroutine is itself a program, and thus,
may be said to have its own "idea," Whelan's general formulation that a
program's overall purpose equates with the program's idea is descriptively
inadequate.

   Accordingly, we think that Judge Pratt wisely declined to follow Whelan. See
Computer Associates, 775 F. Supp. at 558-60. In addition to noting the weakness
in the Whelan definition of "program-idea," mentioned above, Judge Pratt found
that Whelan's synonymous use of the terms "structure, sequence, and
organization," see Whelan, 797 F.2d at 1224 n.1, demonstrated a flawed
understanding of a computer program's method of operation. See Computer
Associates, 775 F. Supp. at 559-60 (discussing the distinction between a
program's "static structure" and "dynamic structure"). Rightly, the district
court found Whelan's rationale suspect because it is so closely tied to what can
now be seen--with the passage of time--as the opinion's somewhat outdated
appreciation of computer science.
   [*36]
2) Substantial Similarity Test for Computer Program Structure:
Abstraction-Filtration-Comparison

   We think that Whelan's approach to separating idea from expression in
computer programs relies too heavily on metaphysical distinctions and does not
place enough emphasis on practical considerations. Cf. Apple Computer, 714 F.2d
at 1253 (rejecting certain commercial constraints on programming as a helpful
means of distinguishing idea from expression because they did "not enter into
the somewhat metaphysical issue of whether particular ideas and expressions have
merged"). As the cases that we shall discuss demonstrate, a satisfactory answer
to this problem cannot be reached by resorting, a priori, to philosophical first
principals.

   As discussed herein, we think that district courts would be well-advised to
undertake a three-step procedure, based on the abstractions test utilized by the
district court, in order to determine whether the non-literal elements of two or
more computer programs are substantially similar. This approach breaks no new
ground; rather, it draws on such familiar copyright doctrines as merger, scenes
a faire, and public domain. In  [*37]   taking this approach, however, we are
cognizant that computer technology is a dynamic field which can quickly outpace
judicial decisionmaking. Thus, in cases where the technology in question does                                                                       PAGE   15
           1992 U.S. App. LEXIS 14305, *37; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

not allow for a literal application of the procedure we outline below, our
opinion should not be read to foreclose the district courts of our circuit from
utilizing a modified version.

   In ascertaining substantial similarity under this approach, a court would
first break down the allegedly infringed program into its constituent structural
parts. Then, by examining each of these parts for such things as incorporated
ideas, expression that is necessarily incidental to those ideas, and elements
that are taken from the public domain, a court would then be able to sift out
all non-protectable material. Left with a kernel, or possibly kernels, of
creative expression after following this process of elimination, the court's
last step would be to compare this material with the structure of an allegedly
infringing program. The result of this comparison will determine whether the
protectable elements of the programs at issue are substantially similar so as to
warrant a finding of infringement. It will  [*38]   be helpful to elaborate a
bit further.

   Step One: Abstraction

   As the district court appreciated, see Computer Associates, 775 F. Supp. at
560, the theoretic framework for analyzing substantial similarity expounded by
Learned Hand in the Nichols case is helpful in the present context. In Nichols,
we enunciated what has now become known as the "abstractions" test for
separating idea from expression:

Upon any work. . . a great number of patterns of increasing generality will fit
equally well, as more and more of the incident is left out. The last may perhaps
be no more than the most general statement of what the [work] is about, and at
times might consist only of its title; but there is a point in this series of
abstractions where they are no longer protected, since otherwise the [author]
could prevent the use of his "ideas," to which, apart from their expression, his
property is never extended.

Nichols, 45 F.2d at 121.

   While the abstractions test was originally applied in relation to literary
works such as novels and plays, it is adaptable to computer programs. In
contrast to the Whelan approach, the abstractions test "implicitly  [*39]
recognizes that any given work may consist of a mixture of numerous ideas and
expressions." 3 Nimmer @ 13.03[F] at 13-62.34-63.

   As applied to computer programs, the abstractions test will comprise the
first step in the examination for substantial similarity. Initially, in a manner
that resembles reverse engineering on a theoretical plane, a court should
dissect the allegedly copied program's structure and isolate each level of
abstraction contained within it. This process begins with the code and ends with
an articulation of the program's ultimate function. Along the way, it is
necessary essentially to retrace and map each of the designer's steps--in the
opposite order in which they were taken during the program's creation. See
Background: Computer Program Design, supra.

   As an anatomical guide to this procedure, the following description is
helpful:
                                                                        PAGE   16
           1992 U.S. App. LEXIS 14305, *39; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

At the lowest level of abstraction, a computer program may be thought of in its
entirety as a set of individual instructions organized into a hierarchy of
modules. At a higher level of abstraction, the instructions in the lowest-level
modules may be replaced conceptually by the functions of those modules. At
progressively   [*40]   higher levels of abstraction, the functions of
higher-level modules conceptually replace the implementations of those modules
in terms of lower-level modules and instructions, until finally, one is left
with nothing but the ultimate function of the program. . . . A program has
structure at every level of abstraction at which it is viewed. At low levels of
abstraction, a program's structure may be quite complex; at the highest level it
is trivial.

Englund, at 897-98. Cf. Spivack, at 774.

   Step Two: Filtration

   Once the program's abstraction levels have been discovered, the substantial
similarity inquiry moves from the conceptual to the concrete. Professor Nimmer
suggests, and we endorse, a "successive filtering method" for separating
protectable expression from non-protectable material. See generally 3 Nimmer @
13.03[F]. This process entails examining the structural components at each level
of abstraction to determine whether their particular inclusion at that level was
"idea" or was dictated by considerations of efficiency, so as to be necessarily
incidental to that idea; required by factors external to the program itself; or
taken from the public domain and hence is nonprotectable  [*41]   expression.
See also Kretschmer, at 844-45 (arguing that program features dictated by market
externalities or efficiency concerns are unprotectable). The structure of any
given program may reflect some, all, or none of these considerations. Each case
requires its own fact specific investigation.

   Strictly speaking, this filtration serves "the purpose of defining the scope
of plaintiff's copyright." Brown Bag Software v. Symantec Corp., No. 89-16239,
slip op. 3719, 3738 (9th Cir. April 7, 1992) (endorsing "analytic dissection" of
computer programs in order to isolate protectable expression). By applying well
developed doctrines of copyright law, it may ultimately leave behind a "core of
protectable material." 3 Nimmer @ 13.03[F][5], at 13-72. Further explication of
this second step may be helpful.

(a) Elements Dictated by Efficiency

   The portion of Baker v. Selden, discussed earlier, which denies copyright
protection to expression necessarily incidental to the idea being expressed,
appears to be the cornerstone for what has developed into the doctrine of
merger. See Morrissey v. Proctor & Gamble Co., 379 F.2d 675, 678-79 (1st Cir.
1967) (relying  [*42]   on Baker for the proposition that expression embodying
the rules of a sweepstakes contest was inseparable from the idea of the contest
itself, and therefore were not protectable by copyright); see also Digital
Communications, 659 F. Supp. at 457. The doctrine's underlying principle is that
"when there is essentially only one way to express an idea, the idea and its
expression are inseparable and copyright is no bar to copying that expression."
Concrete Machinery Co. v. Classic Lawn Ornaments, Inc., 843 F.2d 600, 606 (1st
Cir. 1988). Under these circumstances, the expression is said to have "merged"
with the idea itself. In order not to confer a monopoly of the idea upon the
copyright owner, such expression should not be protected. See Herbert                                                                       PAGE   17
           1992 U.S. App. LEXIS 14305, *42; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

Rosenthal Jewelry Corp. v. Kalpakian, 446 F.2d 7387742 (9th Cir. 1971).

   CONTU recognized the applicability of the merger doctrine to computer
programs. In its report to Congress it stated that:

Copyrighted language may be copied without infringing when there is but a
limited number of ways to express a given idea. . . . In the computer context,
this means that when specific instructions,   [*43]   even though previously
copyrighted, are the only and essential means of accomplishing a given task,
their later use by another will not amount to infringement.

CONTU Report at 20. While this statement directly concerns only the application
of merger to program code, that is, the textual aspect of the program, it
reasonably suggests that the doctrine fits comfortably within the general
context of computer programs.

   Furthermore, when one considers the fact that programmers generally strive to
create programs "that meet the user's needs in the most efficient manner,"
Menell, at 1052, the applicability of the merger doctrine to computer programs
becomes compelling. In the context of computer program design, the concept of
efficiency is akin to deriving the most concise logical proof or formulating the
most succinct mathematical computation. Thus, the more efficient a set of
modules are, the more closely they approximate the idea or process embodied in
that particular aspect of the program's structure.

   While, hypothetically, there might be a myriad of ways in which a programmer
may effectuate certain functions within a program,--i.e., express the idea
embodied in a given subroutine--efficiency  [*44]   concerns may so narrow the
practical range of choice as to make only one or two forms of expression
workable options. See 3 Nimmer @ 13.03[F][2], at 13-63; see also Whelan, 797
F.2d at 1243 n.43 ("It is true that for certain tasks there are only a very
limited number of file structures available, and in such cases the structures
might not be copyrightable. . ."). Of course, not all program structure is
informed by efficiency concerns. See Menell, at 1052 (besides efficiency,
simplicity related to user accommodation has become a programming priority). It
follows that in order to determine whether the merger doctrine precludes
copyright protection to an aspect of a program's structure that is so oriented,
a court must inquire "whether the use of this particular set of modules is
necessary efficiently to implement that part of the program's process" being
implemented. Englund, at 902. If the answer is yes, then the expression
represented by the programmer's choice of a specific module or group of modules
has merged with their underlying idea and is unprotected. Id. at 902-03.

   Another justification for linking structural economy with the application of
[*45]   the merger doctrine stems from a program's essentially utilitarian
nature and the competitive forces that exist in the software marketplace. See
Kretschmer, at 842. Working in tandem, these factors give rise to a problem of
proof which merger helps to eliminate.

   Efficiency is an industry-wide goal. Since, as we have already noted, there
may be only a limited number of efficient implementations for any given program
task, it is quite possible that multiple programmers, working independently,
will design the identical method employed in the allegedly infringed work. Of
course, if this is the case, there is no copyright infringement. See Roth                                                                       PAGE   18
           1992 U.S. App. LEXIS 14305, *45; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

Greeting Cards v. United Card Co., 429 F.2d 1106, 1110 (9th Cir. 1970); Sheldon,
81 F.2d at 54.

   Under these circumstances, the fact that two programs contain the same
efficient structure may as likely lead to an inference of independent creation
as it does to one of copying. See 3 Nimmer @ 13.03[F][2], at 13-65; cf. Herbert
Rosenthal Jewelry Corp., 446 F.2d at 741 (evidence of independent creation may
stem from defendant's standing as a designer of previous similar works). Thus,
since  [*46]   evidence of similarly efficient structure is not particularly
probative of copying, it should be disregarded in the overall substantial
similarity analysis. See 3 Nimmer @ 13.03[F][2], at 13-65.

   We find support for applying the merger doctrine in cases that have already
addressed the question of substantial similarity in the context of computer
program structure. Most recently, in Lotus Dev. Corp., 740 F. Supp. at 66, the
district court had before it a claim of copyright infringement relating to the
structure of a computer spreadsheet program. The court observed that "the basic
spreadsheet screen display that resembles a rotated 'L'. . ., if not present in
every expression of such a program, is present in most expressions." Id.
Similarly, the court found that "an essential detail present in most if not all
expressions of an electronic spreadsheet--is the designation of a particular key
that, when pressed, will invoke the menu command system." Id. Applying the
merger doctrine, the court denied copyright protection to both program elements.

   In Manufacturers Technologies, Inc. v. Cams, Inc., 706 F. Supp. 984, 995-99
(D. Conn. 1989), the  [*47]   infringement claims stemmed from various alleged
program similarities "as indicated in their screen displays." Id. at 990.
Stressing efficiency concerns in the context of a merger analysis, the court
determined that the program's method of allowing the user to navigate within the
screen displays was not protectable because, in part, "the process or manner of
navigating internally on any specific screen displays . . . is limited in the
number of ways it may be simply achieved to facilitate user comfort." Id. at
995. The court also found that expression contained in various screen displays
(in the form of alphabetical and numerical columns), was not the proper subject
of copyright protection because it was "necessarily incident to the ideas"
embodied in the displays. Id. at 996, 998. Cf. Digital Communications, 659 F.
Supp. at 460 (finding no merger and affording copyright protection to program's
status screen display because "modes of expression chosen . . . are clearly not
necessary to the idea of the status screen").

   We agree with the approach taken in these decisions, and conclude that
application of  [*48]   the merger doctrine in this setting is an effective way
to eliminate non-protectable expression contained in computer programs.

(b) Elements Dictated By External Factors

   We have stated that where "it is virtually impossible to write about a
particular historical era or fictional theme without employing certain 'stock'
or standard literary devices," such expression is not copyrightable. Hoehling v.
Universal City Studios, Inc., 618 F.2d 972, 979 (2d Cir.), cert. denied, 449
U.S. 841 (1980). For example, the Hoehling case was an infringement suit
stemming from several works on the Hindenberg disaster. There we concluded that
similarities in representations of German beer halls, scenes depicting German
greetings such as "Heil Hitler," or the singing of certain German songs would                                                                       PAGE   19
           1992 U.S. App. LEXIS 14305, *48; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

not lead to a finding of infringement because they were "'indispensable, or at
least standard, in the treatment of'" life in Nazi Germany. Id. (quoting
Alexander v. Haley, 460 F. Supp. 40, 45 (S.D.N.Y. 1978)). This is known as the
scenes a faire doctrine, and like "merger," it has its analogous application to
computer programs.   [*49]   Cf. Data East USA, 862 F.2d at 208 (applying scenes
a faire to a home computer video game).

   Professor Nimmer points out that "in many instances it is virtually
impossible to write a program to perform particular functions in a specific
computing environment without employing standard techniques." 3 Nimmer @
13.03[F][3], at 13-65. This is a result of the fact that a programmer's freedom
of design choice is often circumscribed by extrinsic considerations such as (1)
the mechanical specifications of the computer on which a particular program is
intended to run; (2) compatibility requirements of other programs with which a
program is designed to operate in conjunction; (3) computer manufacturers'
design standards; (4) demands of the industry being serviced; and (5) widely
accepted programming practices within the computer industry. Id. at 13-66-71.

   Courts have already considered some of these factors in denying copyright
protection to various elements of computer programs. In the Plains Cotton case,
the Fifth Circuit refused to reverse the district court's denial of a
preliminary injunction against an alleged program infringer because, in part,
"many of  [*50]   the similarities between the . . . programs [were] dictated by
the externalities of the cotton market." 807 F.2d at 1262.

   In Manufacturers Technologies, the district court noted that the program's
method of screen navigation "is influenced by the type of hardware that the
software is designed to be used on." 706 F. Supp. at 995. Because, in part, "the
functioning of the hardware package impacted and constrained the type of
navigational tools used in plaintiff's screen displays," the court denied
copyright protection to that aspect of the program. Cf. Data East USA, 862 F.2d
at 209 (reversing a district court's finding of audiovisual work infringement
because, inter alia, "the use of the Commodore computer for a karate game
intended for home consumption is subject to various constraints inherent in the
use of that computer").

   Finally, the district court in Q-Co Industries rested its holding on what,
perhaps, most closely approximates a traditional scenes a faire rationale.
There, the court denied copyright protection to four program modules employed in
a teleprompter program. This decision was ultimately based upon  [*51]   the
court's finding that "the same modules would be an inherent part of any
prompting program." 625 F. Supp. at 616.

   Building upon this existing case law, we conclude that a court must also
examine the structural content of an allegedly infringed program for elements
that might have been dictated by external factors.

(c) Elements taken From the Public Domain

   Closely related to the non-protectability of scenes a faire, is material
found in the public domain. Such material is free for the taking and cannot be
appropriated by a single author even though it is included in a copyrighted
work. See E.F. Johnson Co. v. Uniden Corp. of America, 623 F. Supp. 1485, 1499
(D. Minn. 1985); see also Sheldon, 81 F.2d at 54. We see no reason to make an                                                                       PAGE   20
           1992 U.S. App. LEXIS 14305, *51; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

exception to this rule for elements of a computer program that have entered the
public domain by virtue of freely accessible program exchanges and the like. See
3 Nimmer @ 13.03[F][4]; see also Brown Bag Software, slip op. at 3732 (affirming
the district court's finding that "'plaintiffs may not claim copyright
protection of an . . . expression that is, if not standard, then  [*52]
commonplace in the computer software industry.'"). Thus, a court must also
filter out this material from the allegedly infringed program before it makes
the final inquiry in its substantial similarity analysis.

   Step Three: Comparison

   The third and final step of the test for substantial similarity that we
believe appropriate for non-literal program components entails a comparison.
Once a court has sifted out all elements of the allegedly infringed program
which are "ideas" or are dictated by efficiency or external factors, or taken
from the public domain, there may remain a core of protectable expression. In
terms of a work's copyright value, this is the golden nugget. See Brown Bag
Software, slip op. at 3738. At this point, the court's substantial similarity
inquiry focuses on whether the defendant copied any aspect of this protected
expression, as well as an assessment of the copied portion's relative importance
with respect to the plaintiff's overall program. See 3 Nimmer @ 13.03[F][5];
Data East USA, 862 F.2d at 208 ("To determine whether similarities result from
unprotectable expression, analytic dissection of similarities may be performed.
If  [*53]   . . . all similarities in expression arise from use of common ideas,
then no substantial similarity can be found.")

3) Policy Considerations

   We are satisfied that the three step approach we have just outlined not only
comports with, but advances the constitutional policies underlying the Copyright
Act. Since any method that tries to distinguish idea from expression ultimately
impacts on the scope of copyright protection afforded to a particular type of
work, "the line [it draws] must be a pragmatic one, which also keeps in
consideration 'the preservation of the balance between competition and
protection.'" Apple Computer, 714 F.2d at 1253 (citation omitted).

   CA and some amici argue against the type of approach that we have set forth
on the grounds that it will be a disincentive for future computer program
research and development. At bottom, they claim that if programmers are not
guaranteed broad copyright protection for their work, they will not invest the
extensive time, energy and funds required to design and improve program
structures. While they have a point, their argument cannot carry the day. The
interest of the copyright law is not in simply  [*54]   conferring a monopoly on
industrious persons, but in advancing the public welfare through rewarding
artistic creativity, in a manner that permits the free use and development of
non-protectable ideas and processes.

   In this respect, our conclusion is informed by Justice Stewart's concise
discussion of the principles that correctly govern the adaptation of the
copyright law to new circumstances. In Twentieth Century Music Corp. v. Aiken,
he wrote:

   The limited scope of the copyright holder's statutory monopoly, like the
limited copyright duration required by the Constitution, reflects a balance of                                                                       PAGE   21
           1992 U.S. App. LEXIS 14305, *54; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

competing claims upon the public interest: Creative work is to be encouraged and
rewarded, but private motivation must ultimately serve the cause of promoting
broad public availability of literature, music, and the other arts.

   The immediate effect of our copyright law is to secure a fair return for an
"author's" creative labor. But the ultimate aim is, by this incentive, to
stimulate artistic creativity for the general public good. . . . When
technological change has rendered its literal terms ambiguous, the Copyright Act
must be construed in light of this basic purpose.

422 U.S. 151, 156 (1975)  [*55]   (citations and footnotes omitted).

   Recently, the Supreme Court has emphatically reiterated that "the primary
objective of copyright is not to reward the labor of authors. . . ." Feist
Publications, Inc. v. Rural Telephone Service Co., 111 S. Ct. 1282, 1290 (1991)
(emphasis added). While the Feist decision deals primarily with the
copyrightability of purely factual compilations, its underlying tenets apply to
much of the work involved in computer programming. Feist put to rest the "sweat
of the brow" doctrine in copyright law. Id. at 1295. The rationale of that
doctrine "was that copyright was a reward for the hard work that went into
compiling facts." Id. at 1291. The Court flatly rejected this justification for
extending copyright protection, noting that it "eschewed the most fundamental
axiom of copyright law--that no one may copyright facts or ideas." Id.

   Feist teaches that substantial effort alone cannot confer copyright status on
an otherwise uncopyrightable work. As we have discussed, despite the fact that
significant labor and expense often goes into computer program flow-charting and
debugging,   [*56]   that process does not always result in inherently
protectable expression. Thus, Feist implicitly undercuts the Whelan rationale,
"which allowed copyright protection beyond the literal computer code . . . [in
order to] provide the proper incentive for programmers by protecting their most
valuable efforts." Whelan, 797 F.2d at 1237 (footnote omitted). We note that
Whelan was decided prior to Feist when the "sweat of the brow" doctrine still
had vitality. In view of the Supreme Court's recent holding, however, we must
reject the legal basis of CA's disincentive argument.

   Furthermore, we are unpersuaded that the test we approve today will lead to
the dire consequences for the computer program industry that plaintiff and some
amici predict. To the contrary, serious students of the industry have been
highly critical of the sweeping scope of copyright protection engendered by the
Whelan rule, in that it "enables first comers to 'lock up' basic programming
techniques as implemented in programs to perform particular tasks." Menell, at
1087; see also Spivack, at 765 (Whelan "results in an inhibition of creation by
virtue of the copyright   [*57]   owner's quasi-monopoly power").

   To be frank, the exact contours of copyright protection for non-literal
program structure are not completely clear. We trust that as future cases are
decided, those limits will become better defined. Indeed, it may well be that
the Copyright Act serves as a relatively weak barrier against public access to
the theoretical interstices behind a program's source and object codes. This
results from the hybrid nature of a computer program, which, while it is
literary expression, is also a highly functional, utilitarian component in the
larger process of computing.                                                                       PAGE   22
           1992 U.S. App. LEXIS 14305, *57; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   Generally, we think that copyright registration--with its indiscriminating
availability--is not ideally suited to deal with the highly dynamic technology
of computer science. Thus far, many of the decisions in this area reflect the
courts' attempt to fit the proverbial square peg in a round hole. The district
court, see Computer Associates, 775 F. Supp. at 560, and at least one
commentator have suggested that patent registration, with its exacting up-front
novelty and non-obviousness requirements, might be the more appropriate rubric
of protection for intellectual property of  [*58]   this kind. See Randell M.
Whitmeyer, Comment, A Plea for Due Processes: Defining the Proper Scope of
Patent Protection for Computer Software, 85 NW. U. L. REV. 1103, 1123-25 (1991);
see also Lotus Dev. Corp. v. Borland Int'l, Inc., 788 F. Supp. 78,     (D. Mass.
1992) (discussing the potentially supplemental relationship between patent and
copyright protection in the context of computer programs). In any event, now
that more than 12 years have passed since CONTU issued its final report, the
resolution of this specific issue could benefit from further legislative
investigation--perhaps a CONTU II.

   In the meantime, Congress has made clear that computer programs are literary
works entitled to copyright protection. Of course, we shall abide by these
instructions, but in so doing we must not impair the overall integrity of
copyright law. While incentive based arguments in favor of broad copyright
protection are perhaps attractive from a pure policy perspective, see Lotus Dev.
Corp., 740 F. Supp. at 58, ultimately, they have a corrosive effect on certain
fundamental tenets of copyright doctrine. If the test we have outlined  [*59]
results in narrowing the scope of protection, as we expect it will, that result
flows from applying, in accordance with Congressional intent, long-standing
principles of copyright law to computer programs. Of course, our decision is
also informed by our concern that these fundamental principles remain
undistorted.

B. The District Court Decision

   We turn now to our review of the district court's decision in this particular
case. At the outset, we must address CA's claim that the district court erred by
relying too heavily on the court appointed expert's "personal opinions on the
factual and legal issues before the court."

1) Use of Expert Evidence in Determining Substantial Similarity Between Computer
Programs

   Pursuant to Fed.R.Evid. 706, and with the consent of both  Altai  and CA,
Judge Pratt appointed and relied upon Dr. Randall Davis of the Massachusetts
Institute of Technology as the court's own expert witness on the issue of
substantial similarity. Dr. Davis submitted a comprehensive written report that
analyzed the various aspects of the computer programs at issue and evaluated the
parties' expert evidence. At trial, Dr. Davis was extensively cross-examined by
both  [*60]   CA and  Altai.

   The well-established general rule in this circuit has been to limit the use
of expert opinion in determining whether works at issue are substantially
similar. As a threshold matter, expert testimony may be used to assist the fact
finder in ascertaining whether the defendant had copied any part of the
plaintiff's work. See Arnstein v. Porter, 154 F.2d 464, 468 (2d Cir. 1946). To
this end, "the two works are to be compared in their entirety . . . [and] in                                                                       PAGE   23
           1992 U.S. App. LEXIS 14305, *60; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

making such comparison resort may properly be made to expert analysis. . . ." 3
Nimmer @ 13.03[E][2], at 13-62.16.

   However, once some amount of copying has been established, it remains solely
for the trier of fact to determine whether the copying was "illicit," that is to
say, whether the "defendant took from plaintiff's works so much of what is
pleasing to [lay observers] who comprise the audience for whom such [works are]
composed, that defendant wrongfully appropriated something which belongs to the
plaintiff." Arnstein, 154 F.2d at 473. Since the test for illicit copying is
based upon the response of ordinary lay observers, expert testimony is thus
"irrelevant" and not permitted.   [*61]   Id. at 468, 473. We have subsequently
described this method of inquiry as "merely an alternative way of formulating
the issue of substantial similarity." Ideal Toy Corp. v. Fab-Lu Ltd. (Inc.), 360
F.2d 1021, 1023 n.2 (2d Cir. 1966).

   Historically, Arnstein's ordinary observer standard had its roots in "an
attempt to apply the 'reasonable person' doctrine as found in other areas of the
law to copyright." 3 Nimmer @ 13.03[E][2], at 13-62.10-11. That approach may
well have served its purpose when the material under scrutiny was limited to art
forms readily comprehensible and generally familiar to the average lay person.
However, in considering the extension of the rule to the present case, we are
reminded of Holmes' admonition that, "the life of the law has not been logic: it
has been experience." O.W. Holmes, Jr., THE COMMON LAW 1 (1881).

   Thus, in deciding the limits to which expert opinion may be employed in
ascertaining the substantial similarity of computer programs, we cannot
disregard the highly complicated and technical subject matter at the heart of
these claims. Rather, we recognize the reality that computer programs are likely
to  [*62]   be somewhat impenetrable by lay observers--whether they be judges or
juries--and, thus, seem to fall outside the category of works contemplated by
those who engineered the Arnstein test. Cf. Dawson v. Hinshaw Music Inc., 905
F.2d 731, 737 (4th Cir.), cert. denied, 111 S. Ct. 511 (1990) ("departure from
the lay characterization is warranted only where the intended audience possesses
'specialized expertise'"). As Judge Pratt correctly observed:

   In the context of computer programs, many of the familiar tests of similarity
prove to be inadequate, for they were developed historically in the context of
artistic and literary, rather than utilitarian, works.

Computer Associates, 775 F. Supp. at 558.

   In making its finding on substantial similarity with respect to computer
programs, we believe that the trier of fact need not be limited by the
strictures of its own lay perspective. See Dawson, 905 F.2d at 735; Whelan, 797
F.2d at 1233; Broderbund, 648 F. Supp. at 1136 (stating in dictum: "an
integrated test involving expert testimony and analytic dissection may well
[*63]   be the wave of the future in this area"); Brown Bag Software, slip op.
at 3743-44 (Sneed, J., concurring); see also 3 Nimmer @ 13.03[E][4]; but see
Brown Bag Software, slip op. at 3736-37 (applying the "ordinary reasonable
person" standard in substantial similarity test for computer programs). Rather,
we leave it to the discretion of the district court to decide to what extent, if
any, expert opinion, regarding the highly technical nature of computer programs,
is warranted in a given case.                                                                       PAGE   24
           1992 U.S. App. LEXIS 14305, *63; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   In so holding, we do not intend to disturb the traditional role of lay
observers in judging substantial similarity in copyright cases that involve the
aesthetic arts, such as music, visual works or literature.

   In this case, Dr. Davis' opinion was instrumental in dismantling the
intricacies of computer science so that the court could formulate and apply an
appropriate rule of law. While Dr. Davis' report and testimony undoubtedly shed
valuable light on the subject matter of the litigation, Judge Pratt remained, in
the final analysis, the trier of fact. The district court's use of the expert's
assistance, in the context of this case, was entirely appropriate.

2) Evidentiary Analysis  [*64]

   The district court had to determine whether  Altai's  OSCAR 3.5 program was
substantially similar to CA's ADAPTER. We note that Judge Pratt's method of
analysis effectively served as a road map for our own, with one exception--Judge
Pratt filtered out the non-copyrightable aspects of OSCAR 3.5 rather than those
found in ADAPTER, the allegedly infringed program. We think that our
approach--i.e., filtering out the unprotected aspects of an allegedly infringed
program and then comparing the end product to the structure of the suspect
program--is preferable, and therefore believe that district courts should
proceed in this manner in future cases.

   We opt for this strategy because, in some cases, the defendant's program
structure might contain protectable expression and/or other elements that are
not found in the plaintiff's program. Since it is extraneous to the allegedly
copied work, this material would have no bearing on any potential substantial
similarity between the two programs. Thus, its filtration would be wasteful and
unnecessarily time consuming. Furthermore, by focusing the analysis on the
infringing rather than on the infringed material, a court may mistakenly place
too little  [*65]   emphasis on a quantitatively small misappropriation which
is, in reality, a qualitatively vital aspect of the plaintiff's protectable
expression.

   The fact that the district court's analysis proceeded in the reverse order,
however, had no material impact on the outcome of this case. Since Judge Pratt
determined that OSCAR effectively contained no protectable expression
whatsoever, the most serious charge that can be levelled against him is that he
was overly thorough in his examination.

   The district court took the first step in the analysis set forth in this
opinion when it separated the program by levels of abstraction. The district
court stated:

   As applied to computer software programs, this abstractions test would
progress in order of "increasing generality" from object code, to source code,
to parameter lists, to services required, to general outline. In discussing the
particular similarities, therefore, we shall focus on these levels.

Computer Associates, 775 F. Supp. at 560. While the facts of a different case
might require that a district court draw a more particularized blueprint of a
program's overall structure, this description is a workable one   [*66]   for
the case at hand.                                                                       PAGE   25
           1992 U.S. App. LEXIS 14305, *66; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   Moving to the district court's evaluation of OSCAR 3.5's structural
components, we agree with Judge Pratt's systematic exclusion of non-protectable
expression. With respect to code, the district court Observed that after the
rewrite of OSCAR 3.4 to OSCAR 3.5, "there remained virtually no lines of code
that were identical to ADAPTER." Id. at 561. Accordingly, the court found that
the code "presented no similarity at all." Id. at 562.

   Next, Judge Pratt addressed the issue of similarity between the two programs'
parameter lists and macros. He concluded that, viewing the conflicting evidence
most favorably to CA, it demonstrated that "only a few of the lists and macros
were similar to protected elements in ADAPTER; the others were either in the
public domain or dictated by the functional demands of the program." Id. As
discussed above, functional elements and elements taken from the public domain
do not qualify for copyright protection. With respect to the few remaining
parameter lists and macros, the district court could reasonably conclude that
they did not warrant a finding of infringement given their relative contribution
[*67]   to the overall program. See Warner Bros., Inc. v. American Broadcasting
Cos., Inc., 720 F.2d 231, 242 (2d Cir. 1983) (discussing de minimis exception
which allows for literal copying of a small and usually insignificant portion of
the plaintiff's work); 3 Nimmer @ 13.03[F][5], at 13-74. In any event, the
district court reasonably found that, for lack of persuasive evidence, CA failed
to meet its burden of proof on whether the macros and parameter lists at issue
were substantially similar. See Computer Associates, 775 F. Supp. at 562.

   The district court also found that the overlap exhibited between the list of
services required for both ADAPTER and OSCAR 3.5 was "determined by the demands
of the operating system and of the applications program to which it [was] to be
linked through ADAPTER or OSCAR." Id. In other words, this aspect of the
program's structure was dictated by the nature of other programs with which it
was designed to interact and, thus, is not protected by copyright.

   Finally, in his infringement analysis, Judge Pratt accorded no weight to the
similarities between the two programs' organizational charts, "because [the
[*68]   charts were] so simple and obvious to anyone exposed to the operation of
the programs." Id. CA argues that the district court's action in this regard "is
not consistent with copyright law"--that "obvious" expression is protected, and
that the district court erroneously failed to realize this. However, to say that
elements of a work are "obvious," in the manner in which the district court used
the word, is to say that they "follow naturally from the work's theme rather
than from the author's creativity." 3 Nimmer @ 13.03[F][3], at 13-65. This is
but one formulation of the scenes a faire doctrine, which we have already
endorsed as a means of weeding out unprotectable expression.

   CA argues, at some length, that many of the district court's factual
conclusions regarding the creative nature of its program's components are simply
wrong. Of course, we are limited in our review of factual findings to setting
aside only those that we determine are clearly erroneous. See Fed. R. Civ. P.
52. Upon a thorough review of the voluminous record in this case, which is
comprised of conflicting testimony and other highly technical evidence, we
discern no error on the part of Judge Pratt,   [*69]   let alone clear error.

   Since we accept Judge Pratt's factual conclusions and the results of his
legal analysis, we affirm his dismissal of CA's copyright infringement claim
based upon OSCAR 3.5. We emphasize that, like all copyright infringement                                                                       PAGE   26
           1992 U.S. App. LEXIS 14305, *69; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

cases, those that involve computer programs are highly fact specific. The amount
of protection due structural elements, in any given case, will vary according to
the protectable expression found to exist within the program at issue.

   II. TRADE SECRET PREEMPTION

   As part of its claim for relief, CA alleged that  Altai  had misappropriated
the trade secrets contained in its ADAPTER program. Prior to trial, while the
proceedings were still before Judge Mishler,  Altai  moved for summary judgment
on CA's trade secret misappropriation claim.  Altai  argued that section 301 of
the Copyright Act had preempted CA's state law cause of action as it applied in
this case. Judge Mishler denied  Altai's  motion, reasoning that "the elements
of the tort of appropriation of trade secrets through the breach of contract or
confidence by an employee are not the same as the elements of a claim of
copyright infringement." Computer Associates, 775 F. Supp. at 563.  [*70]

   The parties later addressed the preemption issue again, both in pre- and
post-trial briefs. Having had "the benefit of a full development of the facts of
the case as developed at trial," id., Judge Pratt reconsidered Judge Mishler's
earlier ruling and reversed it. In so doing, CA contends that the district court
misinterpreted the basis of its trade secret claims and, therefore, must be
reversed. We disagree.

A. General Law of Copyright Preemption Regarding Trade Secrets and Computer
Programs

   Congress carefully designed the statutory framework for federal copyright
preemption. In order to insure that the enforcement of these rights remains
solely within the federal domain, section 301(a) of the Copyright Act expressly
preempts,

all legal or equitable rights that are equivalent to any of the exclusive rights
within the general scope of copyright as specified by section 106 in works of
authorship that are fixed in a tangible medium of expression and come within the
subject matter of copyright as specified by sections 102 and 103.

17 U.S.C. @ 301(a). This sweeping displacement of state law is limited somewhat
by section 301(b), which, in relevant part, provides that  [*71]
 nothing in this title annuls or limits any rights or remedies under the common
law or statutes of any State with respect to . . . activities violating legal or
equitable rights that are not equivalent to any of the exclusive rights within
the general scope of copyright as specified by section 106. . . .
17 U.S.C. @ 301(b)(3).

   In turn, section 106 affords a copyright owner the exclusive right to (1)
reproduce the copyrighted work; (2) prepare derivative works; (3) distribute
copies of the work by sale or otherwise; and, with respect to certain artistic
works, (4) perform the work publicly; and (5) display the work publicly. See 17
U.S.C. @ 106(1)-(5).

   We have construed these interlocking provisions to mean that any right under
state law, which is violated by the same single act that would infringe one of                                                                       PAGE   27
           1992 U.S. App. LEXIS 14305, *71; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

the exclusive rights granted pursuant to the federal copyright act, is preempted
by section 301. See Harper & Row Publishers, Inc. v. Nation Enterprises, 723
F.2d 195, 200 (2d Cir. 1983), rev'd on other grounds, 471 U.S. 539 (1985).
However, when a violation of state law requires action "beyond mere reproduction
or the like," the state  [*72]   law right is not equivalent to the one
established under the federal act and, thus, is not preempted. Id.

   It is clear that, as a general matter, section 301 was not intended to
preempt state trade secret law. The legislative history behind this provision
makes clear that "the evolving common law rights of . . . trade secrets . . .
would remain unaffected as long as the causes of action contain elements, such
as . . . a breach of trust or confidentiality, that are different in kind from
copyright infringement." House Report, at 5748. Nor was the term
"misappropriation" considered "necessarily synonymous with copyright
infringement" so as to serve as the talisman of preemption. Id. As one treatise
writer has stated, "attention must be paid in each case to determine what
plaintiff seeks to protect, the theories in which the matter is thought to be
protected and the rights sought to be enforced." 1 R. Milgrim, Milgrim on Trade
Secrets @ 2.06A[3], at 2-150.

   Indeed, trade secret law remains a "uniquely valuable" weapon in the
defensive arsenal of computer programmers. See id. at @ 2.06A[5][c], at 2-172.4.
Precisely because trade secret law covers the discovery of ideas,   [*73]
processes, and systems--explicitly precluded from coverage under copyright
law--courts and commentators alike have considered it to be a necessary and
integral part of the intellectual property protection extended to computer
programs. See id.; Integrated Cash Management Servs., Inc. v. Digital
Transactions, Inc., 920 F.2d 171, 172 (2d Cir. 1990) (while plaintiff withdrew
copyright infringement claim for misappropriation of computer program, relief
for theft of trade secret sustained); Healthcare Affiliated Servs., Inc. v.
Lippany, 701 F. Supp. 1142, 1152-55 (W.D.Pa. 1988) (denying copyright claim but
finding trade secret violation); Q-Co Industries, 625 F. Supp. at 616-18 (same);
Menell, at 1077-78; Kretschmer, at 847-49.

   We have no doubt that, in the appropriate copyright case involving computer
programs, a trade secret claim may remain either a viable alternative or
supplementary cause of action. However, this is not such a case.

B. Preemption in this Case

   Judge Pratt carefully tailored his preemption analysis to the specific facts
of this case. See Computer Associates, 775 F. Supp. at 563. In   [*74]
identifying the theory behind CA's trade secret claim, he paid particular
attention to CA's second amended complaint. The relevant allegations read as
follows:

   P 57. By reason of the facts stated in paragraph 39 and by copying from
CA-SCHEDULER into ZEKE, ZACK and ZEBB the various elements stated in paragraphs
39-51, 54 and 55, defendant  Altai  has infringed [CA's] copyright in
CA-SCHEDULER.

   * * *                                                                       PAGE   28
           1992 U.S. App. LEXIS 14305, *74; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

   P 73. Defendant's incorporation into its ZEKE, ZACK and ZEBB programs of the
various elements contained in the ADAPTER component of [CA's] CA-SCHEDULER
program as set out in paragraphs 39-51, 54 and 55 constitutes the willful
misappropriation of the proprietary property and trade secrets of plaintiff
[CA].

   From the pleadings, Judge Pratt concluded that the very same act, i.e.,
 Altai's  copying of various elements of CA's program, was the basis for both
CA's infringement and trade secret claims. See id. at 564. Had Judge Pratt
simply stopped there and ruled that CA's trade secret claim was preempted, we
would have serious concerns about the propriety of the district court's action.
Pleadings should not be so narrowly construed so as to deprive a plaintiff of a
cause of  [*75]   action, where a broader, yet reasonable, construction would
sustain the claim. The terms "incorporation" and "misappropriation" found in
paragraph 73 above, when taken together, might suggest an act of a different
nature than the infringement pled in paragraph 53. House Report, at 5748
("Misappropriation is not necessarily synonymous with copyright infringement").
Thus, in a different case, preemption based upon such a facial reading of a
complaint might not be justified.

   However, Judge Pratt specifically found that "the gravamen of CA's trade
secrets claim as proved at trial is that  Altai,  without authorization, copied
ADAPTER into its ZEKE, ZACK and ZEBB programs." Computer Associates, 775 F.
Supp. at 564 (emphasis added). Thus, the district court went beyond the
pleadings and, in reaching its preemption decision, took note of the case's
factual environment. The scope of its analysis buttressed the district court's
conclusion "that one act constituted both copyright infringement and
misappropriation of trade secrets." Id. at 565. Accordingly, we agree with Judge
Pratt that CA's trade secret claims are preempted. See Harper & Row, 723 F.2d at
200.  [*76]

   CA argues at some length that the district court misinterpreted the
theoretical basis of its trade secret claims. Relying heavily upon section 757
of the Restatement of Torts, CA contends that  Altai  was liable for the
wrongful acquisition of its ADAPTER trade secrets. Generally, this liability
arises when a defendant "learns the secret from a third person with notice of
the fact that it was a secret and the third person's disclosure of it was
otherwise a breach of his duty to the other. . . ." Restatement of Torts, @
757(c) (1939). The notice required to trigger liability can be actual or
constructive. See id. at comment 1; Metallurgical Indus., Inc. v. Fourtek, Inc.,
790 F.2d 1195, 1203 (5th Cir. 1986); Rohm and Haas Co. v. Adco Chemical Co., 689
F.2d 424,431 (3d Cir. 1982).

   It is undisputed that when Arney stole and used the ADAPTER code in designing
OSCAR 3.4 he breached his confidentiality agreement with CA. However, Arney was
not a named defendant in this action. CA argues that by virtue of Williams'
close relationship with Arney, and the former's general familiarity with CA's
programs (having once been employed by CA himself),   [*77]   Williams had
constructive notice of Arney's breach of trust. Accordingly, CA argues that, at
the very least, Williams and CA are vicariously liable for Arney's trade secret
violation.

   The district court explicitly recognized that a trade secret claim premised
upon a wrongful acquisition theory would survive a preemption analysis. See                                                                       PAGE   29
           1992 U.S. App. LEXIS 14305, *77; 23 U.S.P.Q.2D (BNA) 1241;
                           92 Daily Journal DAR 10110

Computer Associates, 775 F. Supp. at 565. Furthermore, to the extent that the
district court might not have focused directly on CA's theory of vicarious
liability, we conclude that, in the context of this case, such an oversight
would have been inconsequential.

   First, Judge Pratt determined that the facts established at trial were
offered to prove a theory of misappropriation by copying, not by acquisition. We
cannot say that this determination is clearly erroneous. Thus, whether CA could
have proved a wrongful acquisition claim on a constructive notice theory is of
no moment.

   Second, even assuming that the facts adduced at trial did support a theory of
wrongful acquisition, CA acknowledges, since the theory was not pled, that the
issue then resolves to whether the district court should have allowed it to
conform its pleadings to  [*78]   the proof. See Fed. R. Civ. P. 15(b). We have
held that such action is left to "the sound discretion of the trial court, . . .
and may be reversed only if we conclude that the court abused its discretion."
Grand Light & Supply Co. v. Honeywell, Inc., 771 F.2d 672, 680 (2d Cir. 1985)
(citations omitted). The major concern here is that an opposing party may be
prejudiced in its evidentiary strategy if the court allows the other side to
assert a new claim after the close of trial. Id. "The purpose of Rule 15(b) is
to allow the pleadings to conform to issues actually tried, not to extend the
pleadings to introduce issues inferentially suggested by incidental evidence in
the record." Browning Debenture Holders' Committee v. DASA Corp., 560 F.2d 1078,
1086 (2d Cir. 1977).

   Given the inferential nature of CA's wrongful acquisition theory, and the
ambiguity, as reflected in the record, with which CA put forward its theory
during the proceedings, we cannot say that the district court abused its
discretion in ultimately holding CA to its pleadings. Accordingly, we affirm the
district court's determination that CA's trade secret claims are preempted
[*79]   by section 301 of the Copyright Act.

   CONCLUSION

   In adopting the above three step analysis for substantial similarity between
the non-literal elements of computer programs we seek to insure two things: (1)
that programmers may receive appropriate copyright protection for innovative
utilitarian works containing expression; and (2) that non-protectable technical
expression remains in the public domain for others to use freely as building
blocks in their own work. At first blush, it may seem counterintuitive that
someone who has benefited to some degree from illicitly obtained material can
emerge from an infringement suit relatively unscathed. However, so long as the
appropriated material consists of non-protectable expression, "this result is
neither unfair nor unfortunate. It is the means by which copyright advances the
progress of science and art." Feist, 111 S. Ct. at 1290.

   Furthermore, while trade secret law may well be an appropriate means by which
to secure compensation for software espionage, we conclude that, in order to
avoid preemption, it must be employed in a manner that does not encroach upon
the exclusive domain of the federal copyright act.

   Accordingly,   [*80]   we affirm the judgment of the district court in all
respects.