A federal judge shocked the software industry Thursday, ruling that Ashton-Tate Corp.'s copyrights on its top-selling dBase line of personal computer programs are invalid because the company repeatedly failed to disclose the product's intellectual origins.
If the ruling is not overturned, it could cause chaos to Ashton-Tate's business by giving competitors full rights to copy the firm's primary product. But company executives and software industry analysts said they expect the ruling to be overturned on appeal.
The ruling doesn't necessarily threaten other firms' software products, analysts said. However, it does put all software publishers on notice to pay strict attention to the origins of the work they claim as their own.
In his ruling, U.S. District Judge Terry J. Hatter in Los Angeles said Ashton-Tate "knowingly and with an intent to deceive," failed to disclose that its dBase programs stemmed from a publicly available software program created at the Jet Propulsion Laboratory 1in Pasadena.
This "inequitable conduct," Hatter ruled, invalidated all the copyrights issued for the dBase programs, a series of database management software whose sales account for more than 60% of the Torrance-based company's annual revenue and have made the firm the nation's fourth-largest PC software publisher.
Ashton-Tate executives, clearly surprised by the ruling, vowed to fight it.
"We believe the court ruling is in error and we are confident that our copyrights are valid," said William P. Lyons, Ashton-Tate's chief executive. "There was no intention to mislead."
Lyons said the company did not disclose the Jet Propulsion Laboratory connection because the attorney who filed the original copyright application in 1983 was unaware of it. Subsequent copyright filings for new dBase programs, company officers said, were simply copied from the first.
Lyons maintained that the ruling would have little immediate impact on sales by the company, which has been battling--with some success--in recent months to recover from a series of blunders two years ago that caused losses of more than $50 million and severe erosion of its market share to hard-charging competitors.
Susan Nycum, a Palo Alto attorney specializing in intellectual property issues, said that, although other copyright holders have been similarly punished in the past, Hatter's ruling is the first time a judge has stripped a software publisher of its copyrights for failing to disclose the intellectual origins of its work.
"Yes, the ruling is sweeping," Nycum acknowledged. "But the lesson here is that people have to realize how serious it is to be incorrect in filing these copyright applications. Many times, software companies just don't research the origin of what they buy from outsiders and publish as their own."
Even if it is successfully appealed, Nycum said, the ruling will prompt software publishers to "make sure their own houses are in order."
The ruling resulted from a copyright infringement lawsuit filed two years ago by Ashton-Tate against two competitors for selling database management software that allegedly copied the "form of expression" and "novel look and feel" of dBase.
One of the defendants, Fox Software of Perrysburg, Ohio, asked that the suit be dismissed because Ashton-Tate had repeatedly failed to disclose on its copyright applications that dBase was derived from JPLDIS, a software program for managing huge databases on mainframe computers, developed at the Jet Propulsion Laboratory in the late 1970s.
Ashton-Tate bought the rights to the original dBase program in 1981 from C. Wayne Ratliff, a former JPL engineer, and developed the top-selling program from it. According to company lore, Ratliff originally wrote the program on his own time to collect, sort and manage the office football pool.
A JPL spokesman said Thursday that the original dBase program is "the same as JPLDIS, only modified for the personal computer."
Analysts agreed and said the fact was hardly a secret in the software industry. "Everyone knew that," said Jeffrey Tarter, publisher of Softletter, an industry newsletter in Boston.
"If they were trying to hide it, they did a damn poor job," added Richard Shaffer, an industry analyst in New York.
But Ashton-Tate executives said they did not tell the U.S. Copyright Office about the JPL connection until last month, after Fox raised the issue in the lawsuit. The company said it disclosed the information then to show Fox that the JPL connection would not matter to the Copyright Office.
"Our view is that JPLDIS is not an underlying work for dBase," said Stanley Witlow, Ashton-Tate's general counsel. "There was no intent to defraud."
Witlow said dBase does not contain any lines of code similar to JPLDIS. Further, he said, the original program was written for a mainframe computer, but dBase is strictly meant to be used on a personal computer.