FALL 2007

Computer Law

Course No. 9200 711 001	Th 6:30 - 9:30 p.m.	Room W-214
Professor Jay Dratler, Jr.	Room 231D (IP Alcove)	(330) 972-7972	dratler@uakron.edu, dratler@neo.rr.com

PRACTICE FINAL EXAMINATION

The following examination was given in 2004. Due to the passage of time, the course content and emphasis have changed considerably. The time for this examination was five hours, and the word limit 3,000 words. Also, we have not yet fixed a deadline for submitting your answers, so the deadline in the instructions below may be inaccurate. Please keep these points in mind as you review this examination.

Except for the deadline, the instructions for taking and submitting the examination have been updated. You may wish to prepare an e-mail list for submitting your answers in accordance with the instructions at the end of the examination.

Computer Law, Fall 2004

FINAL EXAMINATION

Instructions

University of Akron School of Law

1. E-mail at-home examination. This is an e-mail, at-home examination. Subject to the limitations stated below, you are free to take it at any time and place of your choosing.

2. Limitations. Your completion of this examination is subject to the following limitations:

a. Time-spent limitation: three hours.

b. Elapsed-time limitation: 36 hours.

midnight Friday, December 7, 2007,

c. Word limit: 2,500 words.

If you inadvertently exceed the word limit, it will be to your advantage to delete less important material and to keep more important material that is likely to garner you more points. (Most word-processing programs count words automatically; check “Properties” under “File” or consult your program’s “Help” screens.)

d. No Consultation.

e. No “canned” answers.

f. Honor system.

end

3. Materials. Because this is an at-home exam, you may use any written materials that you have on hand, provided they are: (1) published or (2) prepared by you. You may also use your computer to browse the Web, including the material posted for this course on the Law School’s Website. However, the questions have been designed so that the following materials should be sufficient: (1) the casebook, case supplement, and Website for this class (including any materials from it that you have downloaded, printed out and annotated), (2) any statutory supplement that you have used for this class (including your own, but no one else’s, annotations); and (3) an outline that you have prepared. I encourage you to make your outline short, both so it will be usable and so you will have an “overview” of the course.

4. Strategy for Answering the Questions.

a. Outlines.

b. Additional facts.

c. Organization.

d. Legal authority.

Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.

Grokster

e. Fact pattern questions: using IRAC.

Try to weave as many specific facts as possible into your analysis, make and evaluate arguments for both sides, and determine the relative importance of issues and arguments. Where alternative legal rules exist, you should state them and indicate which is the majority view, the current trend, or otherwise the better rule, and why. (Stating why one variant rule is better than another often involves policy.)

You will not have enough time or space to cover all issues or arguments in exhaustive detail. Therefore you should focus your discussion on the issues, rules, and arguments that are most important. Grading will be based in part on your judgments of relative importance and how specifically you address the stated facts. Analogies to and distinctions from precedent, if useful and relevant, will receive extra points.

f. Logical “Trees.”

If an issue clearly raised by the facts is easy to resolve, you may say so without extensive discussion, as long as you say why. You should not waste time and space elaborating “giveaway” issues. Where the issues are close or not clearly resolved, however, you should analyze them completely.

g. Policy.

5. Call of the Question. BE SURE TO READ THE CALL OF EACH QUESTION CAREFULLY AND TO ANSWER ONLY THE QUESTION(S) ASKED.

6. Submitting your Answers. Detailed instructions for submitting your answers appear at the end of the examination. Please follow them carefully.

Good luck!

QUESTION 1
(Two Hours)

A
Pintel Corp. (“Pintel”) is the world’s leading designer and manufacturer of integrated-circuit microprocessors. Its managers worry that microprocessors are getting so complex that expensive errors in their design, testing, fabrication and production are almost inevitable. Therefore management decides to form a special group of Pintel’s top scientists and engineers to address the problem of making microprocessor design and fabrication simpler.

The group consists of about two dozen of Pintel’s top scientists and engineers. It is called the “Small Group” because its primary goal is to make everything about microprocessors smaller, cheaper and simpler. Every member of the group has an employee confidentiality and invention-assignment agreement with Pintel, and most have worked for Pintel for ten years or more. The Small Group works in the utmost secrecy; no one inside Pintel but top management and the group’s members themselves even knows the group exists.

For the first few months of work, the Small Group focuses on the mathematical operations that microprocessors do. Two of its members are brilliant mathematicians, and one of them has been with Pintel since the integrated-circuit “revolution” began. Aided by the insight of these two mathematicians, the group soon realizes that the typical “native instruction set” of a modern microprocessor (i.e., the set of instructions that the microprocessor can execute directly, without external programming) arises not out of logic or efficiency, but out of the history of the computer industry.

In this realization, the Small Group sees a great opportunity. It begins to analyze, from first principles, how to create the smallest and most efficient instruction set possible for a modern high-speed microprocessor.

B
After nearly a year of hard work, the Small Group makes a remarkable achievement. It reduces the instruction set needed for microprocessor operation to only 49 commands, as distinguished from the 150 to 200 commands commonly used today. Moreover, it does so without losing any vital functionality. Everything that any other microprocessor can do can be done using the Small Group’s reduced instruction set, either directly or with the aid of external programs (“microcode” programs) containing less than a half-dozen commands from the same reduced command set.

The Small Group achieves this breakthrough in two ways. First, in some cases it combines two functions into a single command. For example, for historical reasons, mathematical operations (such as adding two numbers together) and memory operations (such as storing the result in a particular location in random-access memory, or RAM) have usually been performed separately. Realizing that mathematical operations are seldom, if ever, performed without storing the result, the Small Group integrates memory storage into each mathematical operation, thereby eliminating a separate command for memory storage. Second, in some cases the Small Group is able to eliminate a separate command entirely, finding it infrequently used and capable of being performed by a combination of less than six other commands invoked by a microcode routine.

The Small Group’s work involves a number of delicate engineering and efficiency tradeoffs. Eliminating a particular command from the microprocessor’s “native” instruction set in favor of using a microcode routine to perform the same function involves delicate tradeoffs among manufacturing efficiency, microprocessor operating efficiency, and computer operating efficiency. Eliminating a command from the “native” instruction set makes it easier to design, manufacture and operate the microprocessor, but using a microcode routine as a substitute makes it harder and less efficient to run the computer to perform the eliminated function. Before eliminating any command from the microprocessor’s native instruction set, the Small Group makes a careful statistical study of the frequency of use and importance of the corresponding function. Only if the function is used sufficiently infrequently to justify the greater efficiency “burden” of implementing it in external microcode does the Small Group make the decision to eliminate it from the microprocessor’s “native” instruction set.

Each such decision, of course, is a matters of judgment and discretion. Not only does it involve evaluation of the frequency and importance of various computer operations today; it also involves “guesstimating” their frequency and importance tomorrow, as the computer software and hardware industries might develop. No one has ever undertaken such a difficult task of analysis and prediction before, and the work evokes numerous discussions and sometimes hot disputes among the members of the Small Group over the final instruction set. The Small Group calls its final set of 49 instructions the “Small Set.”

C
As its “work product,” the Small Group prepares two and only two tangible records. The first is a “Function List,” describing, in words alone and in abstract terms, each of the 49 functions performed by the Small Set. For example, Item 23 in the List reads as follows:

“Function 23 (Multiply and Store): Multiply the contents of Microprocessor Register A by the contents of Microprocessor Register B, and store the resulting product in the RAM location specified in the trailing half of the microprocessor command.” The Function List has 49 such entries, one for each command in the Small Set.

The Small Group’s second document is a special form of computer program. Over the years Pintel has developed a proprietary computer programming language designed to express the logic of microprocessor operations in a special form of source code. Along with this language, Pintel has developed a compiler program that translates this source code into actual, physical circuitry to be built on an integrated circuit. Pintel calls this language the “Fabrication Language” and the corresponding compiler program the “Fabrication Compiler.”

Although Pintel has registered the copyright in the Fabrication Compiler, it has never published it. Instead, Pintel has kept both the Fabrication Language and the Fabrication Compiler as a well-guarded trade secrets, protected by elaborate password measures and accessible only to Pintel engineers bound by nondisclosure agreements and having a “need to know.”

The Fabrication Compiler does not directly translate the source code in the Fabrication Language into electron-beam movements or fabrication masks to make chips. The reason is that actual fabrication processes are always changing as the integrated-circuit industry advances. Instead, the Fabrication Compiler converts the logic of microprocessor operations, as expressed in the source code, into a sort of abstract spatial logic analogous to an electronic schematic diagram. The Fabrication Compiler then interfaces with a “shell program”—which must be modified for every change in the actual manufacturing process. This shell program converts the output of the Fabrication Compiler into the electron-beam movements or actual physical masks used to fabricate a chip that will perform the programmed functions.

The Small Group’s second “work product” record is thus a computer program written in Pintel’s proprietary Fabrication Language and describing the new reduced-instruction-set microprocessor, including all 49 native commands. That program, called the “Small Program,” contains all the abstract information needed to fabricate a microprocessor chip using the Small Set, as long as the shell program provides the mechanical rules for fabricating each transistor and other circuit needed to implement the command logic in a real integrated circuit.

With its work done, the Small Group is disbanded, and these two records are passed to a group of fabricating engineers. In less than two months, these engineers use the Small Program (written in the Fabrication Language) to create integrated-circuit fabrication masks for the new chip, install those masks in Pintel’s complex production machinery, and begin making microprocessors using the Small Set for sale. The new microprocessor is called the “Small Chip,” and it is a brilliant commercial success from the moment of its introduction to the marketplace.

D
By the time the first Small Chip appears on the market, Pintel’s lawyers also have done their work. First, they have filed a patent application claiming any “microprocessor, apparatus, system or process” using the Small Set. The first claim in this patent application covers the entire Small Set, and 49 following independent claims cover each of the 49 commands separately. For example, Claim 24 covers:

“A microprocessor, apparatus, system or process containing: (1) means for multiplying the contents of two or more storage registers together, and (2) means to store the resulting product in a specified memory location.”
None of the claims of Pintel’s patent application contains any limitation based upon how the operational logic is implemented, how the corresponding circuits are designed, or how those circuits are physically constructed.

Second, Pintel’s lawyers have registered the copyrights in the Function List and the Small Program as unpublished works maintained under trade secrecy. To protect the secrecy of these records, the lawyers submit only heavily redacted versions of the list and source code for deposit with the Library of Congress.

Finally, Pintel’s lawyers have registered the mask works used to construct the Small Chip under the Semiconductor Chip Act of 1984. The lawyers make sure that each and every Small Chip produced and sold by Pintel contains, visibly on its top side: (1) a notice of patent pending, (2) a copyright notice, (3) a notice of mask work protection, and (4) the mark “Pintel®”. (“Pintel” has been a registered trademark of Pintel since 1983).

E
DAMD Corp. is a long-time rival and fierce competitor of Pintel. As soon as Pintel’s Small Chip hits the market, DAMD’s managers understand that they had better create a similar product soon, or they will lose substantial market share.

DAMD immediately puts twelve engineers to work reverse-engineering Pintel’s Small Chip. These engineers buy 100 copies of genuine Pintel Small Chips on the open market and begin to test and analyze them.

One group of six engineers tries to determine the Small Chip’s instruction set by subjecting the chip to various logical tests. This work is tedious, but DAMD’s engineers create a special computer program to automate the testing process. After several weeks of testing, they are confident that they have discovered all but two of the 49 native command functions of the Small Chip. They are having great trouble, however, determining the other two; and they are not even certain that the total number of native commands is 49.

Meanwhile, the other group of six engineers has been dissecting and analyzing the physical structure and fabrication of the Small Chip. These engineers quickly discover that Pintel has used advanced, patented, and proprietary fabrication processes that DAMD can neither practically nor legally duplicate. They estimate that it would take at least a year for DAMD to come up with its own fabrication processes which it could use lawfully to make a compatible chip.

These engineers, however, have a better plan. The Small Chip’s native operations and functions seem so simple that they could be duplicated using so-called “programmable application-specific integrated circuits” or “PASICs” rather than custom-designed chips.

In essence, PASICs are complex, standard arrays of transistors and logic circuitry that can be programmed electronically after their manufacture by severing or closing internal connections among the various transistors and circuits on the chip. Neither Pintel nor DAMD makes PASICs; rather, they are made by several third-party manufacturers (mostly in Asia) from standard designs.

Nothing about PASICs is proprietary or IP-protected. They are just large standard arrays of circuitry, made using standard nonproprietary fabrication techniques, waiting to by physically programmed into something useful. Each PASIC manufacturer has its own proprietary programming language (and a corresponding computer compiling program) for automating the PASIC programming process.

DAMD’s engineers believes that the Small Chip’s functions are so simple that they can make compatible products using PASICs provided by a third party, Third, Inc. They quickly procure samples of Third’s PASICs and a license to use its programming language and compiler (the “Third Language”). Using the Third Language, they write the first draft of a program to implement all the 47 functions of the Small Chip that the other group of DAMD’s engineers has deciphered.

F
At about the same time, DAMD’s human-resources department receives a confidential resume from David, a worker in Pintel’s chip-fabrication department. David’s cover letter says that he wants to “better his position,” and his resume notes that he has worked at Pintel for fifteen years, most recently on fabricating the Small Chip. When DAMD’s top managers hear of this, they become so interested in David that, contrary to their usual practice, they sit in on his initial interview with DAMD.

During that interview, David reveals that: (1) he arrived at Pintel so early that he was never asked to sign a nondisclosure agreement; and (2) he has copies of Pintel’s Function List and the source code for the Small Program. After David describes what these are, DAMD hires him on the spot.

DAMD’s managers immediately assign David to work with both groups of DAMD’s engineers. David shows both groups copies of the Function List and the source code for the Small Program. The programming group immediately loads the source code for the Small Program into a handy computer. Since the group has no compiler for that source code, however, they can do little with it. The group, however, prints out six copies of the source code, one for each of the engineers in DAMD’s programming group to use. It also makes twelve copies of the Function List, one for each of the engineers working in the Small Chip reverse engineering group.

With the help of these documents, DAMD engineers in the function-operation group are able to discover the remaining two functions of the Small Set in short order. They are also able, for the first time, to determine with confidence that there are precisely 49 instructions in the Small Set. The source code for the Small Program is not much use for the engineers programming the PASICs, however, because the PASIC programming language is completely different from Pintel’s Fabrication Language and uses a different compiler. Yet both sets of DAMD engineers use the Function List and source code for the Small Program to verify that: (1) they have reproduced all the native functions of the Small Set; (2) they have duplicated them in the same way; and (3) there are no errors in the logic or manner in which the functions are implemented in the PASIC chips. The final “work product” of both groups is source code, written in Third’s proprietary PASIC programming language, for a compatible version of the Small Chip made using Third’s PASICs.

With this work done, DAMD’s engineers send their corrected PASIC source code off to Third’s fabrication plant in Asia. In less then two weeks, DAMD receives prototype PASIC chips and tests them. These tests reveal that 48 of the 49 functions work exactly as described in the Function List and the Small Program. The remaining function, however—the one least often used in practice—makes errors about 0.1% of the time.

Eager to get their “me too” product on the market, DAMD’s managers order 50,000 of the PASIC chips. On each chip is stamped the legend “DAMD Small Chip—Pintel Compatible.”

DAMD’s PASIC chips are twice as large physically as Pintel’s Small Chip. The DAMD chips, on the average, use three times as much electrical power as Pintel’s Small Chips and run at only one-third the speed. But because its expenses of development are production are much smaller than Pintel’s, DAMD is able to sell its chips at a price less than 50% of Pintel’s.

DAMD begins a massive advertising campaign touting its PASIC chips as “a cheaper but fully compatibly alternative.” DAMD’s Website reveals the differences in size, power consumption and operating speed. It even discusses the infrequent errors in the seldom-used 49th function. These points, however, appear only in fine print on the dense pages of DAMD’s technical documentation. The packaging and duplicate invoice for each shipment of DAMD’s PASIC chips refers users to this DAMD’s Website generally.
G
In less than two weeks, Pintel (whose patent has by now issued with all claims allowed) sues DAMD and, where appropriate, David. Among Pintel’s many claims are claims for infringement of Pintel’s patent, copyrights, mask works, and registered trademark “Pintel,” unfair competition, misappropriation of trade secrets and false advertising. Analyze these claims and all reasonable defenses to them, discussing them in their order of importance, i.e., the order in which they present serious threats of injunctive relief or substantial damages against DAMD. Be sure to identify the claim that you think offers Pintel the best chance for success. In discussing the patent claim, please assume novelty and nonobviousness, and do not discuss proper disclosure or infringement; i.e., concentrate on the validity of Pintel’s patent. In your discussion, briefly note any strategy or action that DAMD might take to improve its position in the litigation, and analyze the probable effect of that action if taken.

QUESTION 2
(One Hour)

A
Playful Software, Inc. (“PS”) offers on-line software for complex, multi-player video games. Its Website is complicated and dense, containing product descriptions, on-line instructions, playing-strategy suggestions and on-line discussion forums for over forty video games. For each game, these features appear in no particular order; rather, the order varies from game to game, apparently because each game programmer designed the corresponding portion of the Website.

One of the PS’ Web pages is entitled “Legal Stuff.” It contains, in this order: (1) a privacy policy, (2) a disclaimer of warranty, (3) “License Terms,” (4) trademark notices, and (5), at the bottom, a legend in big letters saying “We don’t like all this legal mumbo-jumbo, but our lawyer told us to include it.” The “License Terms” include, among a dozen relatively common terms in end-user licensing agreements, the following clause:

“Licensee agrees not to try to: (a) decompile, disassemble, or otherwise reverse engineer the object or binary code for the Software; (b) modify the Software in any way; or (c) copy, transmit or distribute to anyone any result of any attempt to reverse engineer or modify the Software.” PS does not charge for downloading video games from its Website. Instead, it requests “donations” to the independent video programmers who write the games, referring users to their respective Websites. PS also advertises a wide variety of related products, from T-shirts, caps, mugs and pens to toy “ray guns,” action figures, etc. PS does not sell these items directly; rather, it links users to other Websites that sell them and receives a small commission (typically 2% to 5% of the sale price) for each referred sale.

B
PS’ most popular video game is called “War on Terror.” It is an astoundingly complex, visually rich and realistic simulation of terrorism and counter-terrorist activities, in which multiple players can act individually or collectively as terrorists or counter-terror agents (or as double-crossing dual agents). Although the game accommodates as few as two players (one terrorist and one defender), the “buzz” on the Web is that the game is most fun and most challenging when there are at least a dozen players, i.e., a half-dozen on each side.

PS’ Web Page for this game is one of the most dense and complex in PS’ entire Website. At the top is a huge, animated audiovisual scene of terrorists blasting their way into a nuclear power plant, hotly pursued by counter-terror agents. Below that are testimonials from several users, beginning with such praise as “Coolest game I ever played!!!! Here’s what we did . . .” Below five such encomiums is a big red button, centered horizontally on the page, reading “DOWNLOAD ‘WAR ON TERROR’ HERE.” Immediately below this button are the words (also centered horizontally on the page) “First Read the License, then Click Here.” These words, however, contain no link to the license. If the reader scrolls down past twenty paragraphs of game descriptions and strategy suggestions, and then past fifteen links to fan-group and discussion-group Websites, the following link appears at the bottom of the page: “Legal Stuff (Click Here for License Agreement).”

C
Diedre Darpa is a crack computer programmer, “undisconnectable” Web surfer, and video-game addict. After hearing about “War on Terror” from friends on the Web, she decides to try the game out. She quickly finds PS’ Website, locates the game on its deep page, scans the user testimonials, and hits the download button to begin the download process. Diedre sees the line “Legal Stuff (Click Here for License Agreement)” but does not scroll down further and so never sees the agreement or the link to it.

Although Diedre has a high-speed Internet connection, the game-software file is so big that it takes over an hour to download. The resulting file, of course, is in binary form. When Diedre tries to run it, she discovers that it runs only on the Windows XP operating system. As a matter of what she calls her “religion,” Diedre never runs any operating system other than Linux or Unix.

This fact is only a small impediment to someone of Diedre’s talent, however. Using a reverse-compiling program that she previously located on the Web (and has improved for her own use), Diedre reverse-compiles the game software into the C++ source code language. After making a few modifications to accommodate her Linux operating system, Diedre uses a standard Linux compiler (which she downloaded from the Web) to recompile the resulting C++ source code into a binary module capable of running on Linux.

D
Diedre’s next problem is the need for other players with whom to enjoy the game. She has about a dozen Web friends in her “Linux or Die!” support group, and she decides to send each of them the recompiled Linux-compatible game-software file. The file, however, is very large (over 40 gigabytes), and no e-mail service provider will accept it.

So Diedre next searches for help in file transmission. In short order, she locates the Website for “Dudley’s File Zapper.” This product, as Dudley’s Website itself states, is a high-speed peer-to-peer file sharing system which uses a custom-designed compression-decompression algorithm to send large files over the Internet quickly.

Dudley, however, is adamant about offering no help to users of his software. The download page of his Website contains the following paragraphs, in bright red type and very large lettering:

“WARNING TO USERS”

“I am a programming recluse, and I hate lawyers. I don’t want any legal trouble, and I don’t have time to help you. I wrote this software and tested it a couple of times, and it seems to work. I won’t say anything else about it. I certainly don’t guarantee that it is bug free or that it will work for you. In addition, I don’t provide any help, advice, suggestions, or hand-holding, far less any index of peer-to-peer files to share.

“So, if you download and use this software, you are ON YOUR OWN. If you encounter trouble, can’t get the software to work, or can’t find the files you want, don’t try to contact me; I won’t answer your messages. As far as I know, only expert programmers use this software, and they do so mostly to transfer large files of encrypted source code for programs on which they are working. If you don’t fall in that class or can’t use this software, don’t come sniveling to me. If you click the “DOWNLOAD” button, you agree to these terms and promise never to contact me about this software or its use.” Diedre, of course, doesn’t need any help. She clicks on the download button and downloads “Dudley’s File Zapper” to her computer’s hard drive. The downloaded program is again in binary code designed for the Windows XP operating system. So again Diedre has to go through the complex process of decompiling the binary code into C++ source code, making a few modifications to accommodate her Linux operating system, and recompiling the resulting source code into binary code for the Linux operating system.

After going through this process (which takes several days), Diedre decides to “tweak” Dudley. She manages to find his secret e-mail address, and she sends him an e-mail asking “Do you have a Linux version of Dudley’s File Zapper?” Within seconds, she receives an apparently automated reply, which consists only of the words “READ THE WARNING!!!” These words link to the page of Dudley’s Website on which Dudley’s warning appears.

E
Diedre chuckles at Dudley’s reply. Then she goes about arranging to play PS’ “War on Terror” with the dozen members of her “Linux or Die!” support group. First she sends them her modified Linux version of Dudley’s File Zapper in binary form—a file only 300 megabytes long.

After installing this binary file in his or her computer, each member of the group is then ready for efficient file sharing. Since all are expert programmers, and since each already knows all the others’ Internet Protocol (IP) addresses, each has no trouble configuring Dudley’s software to send and receive compressed files to and from the other members of the group.

Using this capability, Diedre transmits her modified, binary Linux version of PS’ War on Terror to two members of the group, and those two arrange to transfer the software to all the others. Each transfer is strictly peer to peer. That is, Dudley’s software sends the modified video-game software over the Internet directly from the sender’s computer to the receiver’s. Neither Dudley’s Website nor his computer system is involved, directly or indirectly, in any of these transmissions.

F
Diedre’s hardy group of “Linux or Die!” enthusiasts soon becomes virtual addicts of PS’ “War on Terror” video game. Each member of the group typically spends four or five hours per weekday, and up to twenty hours per day on weekends, playing the game with other members of the group.

The group becomes so enthused about the game that its members begin to describe their play sessions and strategy in discussion groups on PS’ Website. They make no secret of Diedre’s having converted the software to work on Linux. In fact, they brag about it.

After a few weeks, Diedre receives an e-mail warning from PS, saying that its lawyers are considering legal action against Diedre, Dudley and the members of Diedre’s group for what they have done. The warning message claims that PS owns and has registered the copyright in the video game.

Diedre has hired you to advise her, and she asks you to consider Dudley’s position also. Please write Diedre a memo advising her Diedre of all the claims that PS reasonably can bring against her, Dudley, and the members of her group. Be sure to consider all reasonable defenses and to advise Diedre of the probability of PS obtaining any substantial legal remedy if it brings suit.

QUESTION 3
(One Hour)

A
You represent an original equipment manufacturer of car radios, that is, AM and FM radios (which often include cassette and/or CD players as well) installed as original equipment in new vehicles. Your client makes over 70% of the radios installed in new vehicles made by General Motors and Ford, which together have over 60% of the new-vehicle market in the United States. Foreign or foreign-owned manufacturers account for the other 40% of the U.S. new-vehicle market, but your client supplies only 50% of the new radios installed in their vehicles.

Your client is in a race with another company, X Company, to produce a new product feature for car radios. In essence, this feature would allow car-radio users to download and play MP3 musical files from the Internet. Downloading could occur while the car is parked or idling near any publicly available “Fire Wire” source of Internet access. For example, consumers in the parking lot of a coffee shop or Internet café with Fire Wire access could use this feature to download MP3 files and play them through the car’s radio.

Both your client and its rival, X Company, have announced products of this kind in the trade press. Your client’s product would have no computer terminal and would access only legitimate, for-pay downloading sites, such as Apple’s and Microsoft’s licensed music downloading sites. That product would operate very simply, with push buttons for each accessible site, a one-line LED display for titles and artists’ names, and a speech-recognition system that would allows users, by speaking into a built-in microphone, to say or spell the titles or names of desired songs or their artists. The rival’s announced product would be a bit more complex: it would include a small computer screen and a miniature keyboard, (about the size used in some personal assistants or advanced cell phones), and it would permit more general access to the Internet. Unlike your client’s product, X Company’s announced product would allow downloading of MP3 files not just from authorized distributing sites, but from any Internet location, including file-sharing sites. It could even be configured (although perhaps only by sophisticated users) to allow MP3 files to be received through peer-to-peer file-sharing arrangements.

Your client is concerned that X Company will offer its product to rival manufacturers of car radios, and that both car manufacturers and consumers may prefer car radios with X Company’s add-on product to your client’s own car radios. Your client is considering three options: (1) incorporating its own MP3-downloading product physically into its own car radios and selling only radios with that product integrated physically into them; (2) offering its own downloading product separately, as an add-on option for original equipment (i.e., as an option for customers ordering new cars with radios installed to order separately, for a separate price) and as an aftermarket add-on that consumers could have installed in used cars with existing radios; and (3) attempting to get car makers such as General Motors and Ford to agree in writing to use your client’s add on exclusively, and not to install X Company’s add-on as original equipment in any new vehicle.

Each option has business advantages and disadvantages. The first option would probably preclude most consumers from adding X Company’s product later (as their radio would already have a downloading capability, although a more limited one). Yet the first option would also make your client’s radios more expensive, and some consumers might not want the added feature. The second option would be easy to implement but would put your client’s radio add-ons in direct competition with X Company’s add-ons, with their greater utility. The third option would attempt to reserve the market for major American car manufacturers for your client exclusively. Before agreeing to exclusivity, however, those manufacturers would probably insist upon substantial price concessions that would reduce your client’s profits from both the radios and the add-ons.

Before deciding which option to take, you client has asked whether there are any legal considerations that should be considered. Please write a memo so advising your client and (taking business considerations also into account) suggest what option might be the most attractive considering both business and legal risk.

B
Mary Walker is a skilled computer programmer. She has B.S. and M.S. degrees in computer science from a prestigious university. She has worked for five years in a well-known health maintenance organization, writing software to systematize and automate the creation, handling, storage and use of medical records.

Now Mary would like to work on her own, as a consultant. She has excellent written recommendations from her professors and her employer. All of them say that she has outstanding programming skills, an original mind, and good “people skills.”

Mary’s immediate goal is to work as a consultant for others, developing original software or customizing others’ software for clients. Eventually, as her business expands, she would like to start her own software consulting company. If an opportunity arises, she might focus on a particular area of software development, such as medical records, and eventually might turn her company into a software development and marketing firm.

Mary, however, has little business experience and no knowledge of the law. She has asked you to advise her on what a person in her position with her plans should know about relevant law. Please write a memo outlining and explaining the five most important legal issues (related to the material for this course!) that Mary should understand and what she should generally do about them. Your memo will be graded on: (1) your choice of issues and their importance from a practical and business perspective; (2) the accuracy of your explanation and the practicality of your advice (i.e., what Mary should do to anticipate and avoid legal problems); and (3) how well you explain the issues to a person having no knowledge of the law.

QUESTION 4
(One Hour)

“Compatibility is Holy Grail of the computer industry. For good and valid business reasons, vendors of new computer software and hardware want to make their products work as easily as possible with others’ existing products. Users also want compatible products for obvious reasons, including so-called ‘network effects’ and the ‘lock-in’ effect of training and familiarity.”

“Compatible products promote the development of standards and efficient networking of users. They help new users learn and accommodate to existing computer products, and they help introduce new hardware and software to the industry and to consumer markets. It exaggerates little to say that compatibility is usually the means by which the computer industry advances.”

“Unfortunately, the law doesn’t treat compatibility with the same respect as do economics and business. Instead, the law often prevents hardware and software developers from offering products that are compatible with existing hardware and software. From Franklin’s cheap clones of Apple Computer’s unpatented machines, through ProCom’s substitutes for Compaq’s disk drives, to Borland’s improvements on Lotus’ spreadsheets, the law has stymied competitors’ attempts to achieve compatibility with existing standards for new, better, or cheaper products at every turn.”

per se

Write an essay analyzing and/or criticizing this passage. Be sure to address all aspects of the passage, including: (1) its underlying assumptions about the law and its effect (including its “take” on decided cases); (2) its implied prediction of consequences—that failure to permit “compatibility” broadly will impair innovation and reduce consumer welfare; and (3) its judgments as to what is good policy and what is practically doable. Your grade will depend not upon your point of view (or upon whether your agree with the passage), but upon how carefully and specifically you support and document your analysis, with reference to the statutes, cases and statutory and constitutional policies that we have studied and the underlying factual trends that they reveal. The more specific and focused your analysis, the better your grade will be.

END OF EXAMINATION
INSTRUCTIONS FOR SUBMITTING YOUR ANSWERS APPEAR BELOW

INSTRUCTIONS FOR SUBMITTING YOUR ANSWERS
Please take all of the following steps in submitting your answers, before the deadline for submission:

1. Include honor-code statement. Make sure that your honor-code statement appears at the end of your answer file. (Your examination number and e-mail header will constitute your signature under Ohio’s Uniform Electronic Transactions Act.)

2. Include your examination ID number. Type your examination ID number at the end of your answer file and double-check it. To avoid accidental breach of anonymity, make sure that your answer file contains no other identifying information.

3. Spell-check and finalize. Spell-check your answer file and make any necessary changes. Check the total number of words and modify as necessary.

4. Save your answer file with the anonymous ID. Save your answer file on your hard drive, with your honor-code statement and examination ID number at the end of the file. When you save your file, use the file name “2007 Copyright Exam” and no other. (If you use another file name, your anonymity may be compromised.)

5. Save your file in a commonly used, compatible format. Some word-processing formats have compatibility problems. If you have experienced problems exchanging files with others in the past, please use a file format that you know is common and widely compatible. If necessary, save your answer file in Rich Text Format. (Use the “Save As” feature of your Word Processor; then click on the down arrow to the right of the “File Type” field in the “Save As” dialogue box and select “Rich Text Format (RTF)” or another widely compatible option. Be sure to verify that this option appears in the “File Type” field before you click the “Save” button. Then check to see that a file with the name “2007 Copyright Exam” and a “.doc” or “.rtf” file extension appears in your file folder. You may have to click on “View” : “Details” to see the file extension.)

6. Attach your answer file to an e-mail message. Send your answer file, in a compatible format, as an e-mail attachment to your message, not as part of the message itself. The “Subject” line for your e-mail message should be “2007 Copyright Exam,” and the text of the message should read “Attached are my answers.” Please double-check that your answers appear as an attached file, not embedded in your e-mail message.

(I will use your e-mail cover messages only to check that everyone has submitted answers. I will not grade any exam until an assistant has “anonymized” the answers by separating the attached files from the e-mail messages and sending the attachments to me with no identifying information other than the examination ID number included in each file at the end.)

7. Submit your answers by e-mail. Send your cover message, with your answer file attached, to all of the following addresses:

dratler@neo.rr.com

dratler@uakron.edu

abthong@yahoo.com

mrh5@uakron.edu

(If you have not already prepared an address list in response to the test message, please cut and paste each address from this list into your e-mail program’s “address” or “TO” field to avoid tying errors; then double-check all addresses and punctuation.)

8. Print and retain a paper copy of your answer file. Immediately after sending your e-mail message, print out a copy of your answers and staple the pages together. Then sign and date your answers and record the exact time of your printout on the title page. (If there is an e-mail mixup, this paper copy will serve to demonstrate what you wrote and when, in accordance with the honor system.)
HAVE A GOOD WINTER BREAK!