APPLE COMPUTER, INC. v. FORMULA INTERN. INC., 725 F.2d 521 (9th Cir. 1984)
APPLE COMPUTER, INC., PLAINTIFF-APPELLEE, v. FORMULA INTERNATIONAL INC.,
United States Court of Appeals, Ninth Circuit.
Argued and Submitted January 11, 1984.
Decided February 8, 1984.
Lois W. Abraham, Brown & Bain, Palo Alto, Cal., for
Bruce G. Spicer, Law Offices of Thomas E. Schatzel, Santa
Clara, Cal., for defendant-appellant.
Appeal from the United States District Court for the Central
District of California.
Before ANDERSON, SKOPIL and FERGUSON, Circuit Judges.
FERGUSON, Circuit Judge:
 Formula International, Inc. (Formula) appeals from the district
court's grant of a preliminary injunction in favor of the
plaintiff, Apple Computer, Inc. (Apple). The injunction prohibits
Formula from copying computer programs having copyrights
registered to Apple, from importing, selling, distributing, or
advertising those copies, and from using the mark "Pineapple" or
any other mark or name confusingly similar to the trademarks used
by Apple. Because we find that the district court did not abuse
its discretion or rely on erroneous legal premises in issuing the
injunction, we affirm.
 Formula is a wholesaler and retailer of electronic parts and
electronic kits. In May 1982, Formula entered the computer
market, selling a computer kit under the trademark "Pineapple."
The computer was designed to be compatible with application
software written for the home computer manufactured by Apple, the
Apple II. Included within Formula's computer kit were two
computer programs embodied in semiconductor devices called ROM's
(Read Only Memory). Formula concedes for purposes of appeal that
the two programs are substantially similar to two programs for
which Apple has registered copyrights. Apple also introduced
evidence to show that Formula had sold copies of three other
programs for which Apple holds the copyright. These three
programs are not sold as part of a computer by either Apple or
Formula, but are distributed separately.
 The computer programs involved in this lawsuit are operating
systems programs, that is, programs that are designed to manage
the computer system. For example, one program translates
instructions written in a higher-level language that is more
understandable to the computer user into a lower-level object
code that the computer understands. As such, the programs are
distinguishable from application programs, which are programs
that directly interact with the computer user.
 Apple brought suit against Formula claiming copyright,
trademark, and patent infringement, as well as unfair
competition. Formula counterclaimed for antitrust violations and
unfair competition and sought declaratory relief as to the
validity of certain patents and copyrights. After a brief period
of discovery, Apple moved for a preliminary injunction based on
its copyright and trademark infringement claims, and on its
unfair competition claims. The district court granted the motion
on April 12, 1983, and the district court's opinion is reported
at 562 F.Supp. 775 (C.D.Cal. 1983).
 Standard of Review:
 To obtain a preliminary injunction, a party must show either
(1) a likelihood of success on the merits and the possibility of
irreparable injury, or (2) the existence of serious questions
going to the merits and the balance of hardships tipping in its
favor. Beltran v. Myers, 677 F.2d 1317, 1320 (9th Cir. 1982);
Aleknagik Natives Ltd. v. Andrus, 648 F.2d 496, 502 (9th
Cir. 1980). The district court held that Apple had shown a
likelihood of success on the merits of its copyright and
trademark infringement claims and significant irreparable harm.
562 F.Supp. at 783, 785. Our review of the district court at this
stage of the proceeding is very limited. See Sports Form, Inc.
v. United Press International, Inc., 686 F.2d 750, 752 (9th
Cir. 1982). The district court's grant of the preliminary
injunction must be affirmed unless the court abused its
discretion or based its decision on an erroneous legal standard
or on clearly erroneous findings of fact. Beltran v. Myers, 677
F.2d at 1319.
 I. DID THE DISTRICT COURT ERR IN PRELIMINARILY ENJOINING
FORMULA FROM COPYING, SELLING, AND DISTRIBUTING COMPUTER
PROGRAMS WITH COPYRIGHTS REGISTERED TO APPLE?
 A. Likelihood of success on the merits
 On the basis of the evidence before the district court, we
cannot conclude that the court erred in finding that Apple had
demonstrated a likelihood of success on the merits of its
copyright infringement claim. Under the Copyright Act, Apple's
certificates of copyright registration constitute prima facie
evidence of the validity of Apple's copyrights, 17 U.S.C. § 410(c),
and Formula has the burden of overcoming the presumption
of validity. Williams Electronics, Inc. v. Artic International,
Inc., 685 F.2d 870, 873 (3d Cir. 1982).
 Formula asserts that the district court erred in granting the
preliminary injunction by relying on the legal premise that the
Copyright Act, 17 U.S.C. § 101 et seq., extends protection to
all computer programs regardless of the function which those
programs perform. Formula contends that the computer programs
involved in this lawsuit, because they control the internal
operation of the computer, are only "ideas" or "processes," and
therefore, unlike application programs, they are not protected by
copyright. See 17 U.S.C. § 102(b) ("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.")
(emphasis added). Formula also points to the idea/expression
dichotomy recognized in case law, see, e.g., Baker v. Selden,
101 U.S. 99, 25 L.Ed. 841 (1879); Sid & Marty Krofft Television
Productions, Inc. v. McDonald's Corp., 562 F.2d 1157, 1163-64
(9th Cir. 1977), and contends that a computer program is protected
under the Copyright Act only if the program embodies expression
which is communicated to the user when the program is run on a
 Formula's position, however, is contrary to the language of the
Copyright Act, the legislative history of the Act, and the
existing case law concerning the copyrightability of computer
programs. An examination of the legislative history reveals that
Formula's arguments were considered and rejected by Congress when
copyright protection was extended to computer programs.
 In 1974, the National Commission on New Technological Uses of
Copyright Works (CONTU) was established by Congress to consider,
inter alia, to what extent computer programs should be
protected by copyright law. The CONTU Final Report recommended
that the copyright law be amended "to make it explicit that
computer programs, to the extent that they embody an author's
original creation, are proper subject matter of copyright."
National Commission on New Technological Uses of Copyrighted
Works, Final Report 1 (1979) [hereafter CONTU Report].
 Commissioner Hersey dissented from this recommendation, arguing
that "[t]he Act of 1976 should be amended to make it explicit
that copyright protection does not extend to a computer program
in the form in which it is capable of being used to control
computer operations." CONTU Report at 1. Hersey's dissent was
based on his belief, similar to the argument advanced by Formula,
that "[w]orks of authorship have always been intended to be
circulated to human beings and to be used by them - to be read,
heard, or seen, for either pleasurable or practical ends.
Computer programs, in their mature phase, are addressed to
machines." Id. at 28.
 Commissioner Nimmer, while concurring in the Commissioner's
opinion and recommendation, provided a possible line of
demarcation for computer programs to be considered in the future
if the Commission's recommendation proved to be too open-ended.
Nimmer suggested that it might be desirable to limit copyright
protection for software to those computer programs which produce
works which themselves qualify for copyright protection. CONTU
Report at 27.
 The majority of the Commission, however, expressly considered
and rejected both the Hersey and Nimmer positions:
It has been suggested by Vice-Chairman Nimmer in
his separate opinion that programs be copyrighted
only when their use leads to copyrighted output. . .
. This distinction is not consistent with the design
of the Act of 1976, which was clearly to protect all
works of authorship from the moment of their fixation
in any tangible medium of expression. Further, it
does not square with copyright practice past and
present, which recognizes copyright protection for a
work of authorship regardless of the uses to which it
may be put. The copyright status of the written
rules for a game or a system for the operation of a
machine is unaffected by the fact that those rules
direct the actions of those who play the game or
carry out the process. Nor has copyright been denied
to works simply because of their utilitarian aspects.
It follows, therefore, that there should likewise be
no distinction made between programs which are used
in the production of further copyrighted works and
those which are not.
. . . .
That the words of a program are used ultimately in
the implementation of a process should in no way
affect their copyrightability.
 CONTU Report at 21 (emphasis added) (footnote omitted).
 In 1980, Congress accepted the CONTU majority's recommended
statutory changes verbatim. See 17 U.S.C. §§ 101, 117. Among
other changes not relevant here, the Copyright Act was amended to
add the following definition of "computer program":
A "computer program" is 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 (emphasis added). As recommended by the CONTU
majority, the Act makes no distinction between the
copyrightability of those programs which directly interact with
the computer user and those which simply manage the computer
 Formula's reliance on the idea/expression dichotomy to argue
that computer programs are copyrightable only if they provide
expression to the computer user is misplaced. The distinction
between ideas and expression is intended to prohibit the
monopolization of an idea when there are a limited number of ways
to express that idea:
The "idea-expression identity" exception provides
that copyrighted language may be copied without
infringing when there is but a limited number of ways
to express a given idea. This rule is the logical
extension of the fundamental principle that copyright
cannot protect ideas. In the computer context this
means that when specific instructions, even though
previously copyrighted, are the only and essential
means of accomplishing a given task, their later use
by another will not amount to an infringement.
. . . .
When other language is available, programmers are
free to read copyrighted programs and use the ideas
embodied in them in preparing their own works.
 CONTU Report at 20 (footnotes omitted). See also Apple Computer,
Inc. v. Franklin Computer Corp., 714 F.2d 1240, 1253 (3d
Cir. 1983) ("We . . . thus focus on whether the idea is capable of
various modes of expression. If other programs can be written or
created which perform the same function as an Apple's operating
system program, then that program is an expression of the idea
and hence copyrightable."). As in Franklin, Apple "does not
seek to copyright the method which instructs the computer to
perform its operating functions but only the instructions
themselves." Id. at 1251. Apple introduced evidence that
numerous methods exist for writing the programs involved here,
and Formula does not contend to the contrary. 562 F.Supp. at 787.
Thus, Apple seeks to copyright only its particular set of
instructions, not the underlying computer process.
 Further, Formula provides absolutely no authority for its
contention that the "expression" required in order for a computer
program to be eligible for copyright protection is expression
that must be communicated to the computer user when the program
is run on a computer. The Copyright Act extends protection to
"original works of authorship fixed in any tangible medium of
expression, now known or later developed, from which they can be
perceived, reproduced, or otherwise communicated, either directly
or with the aid of a machine or device." 17 U.S.C. § 102(a). The
computer program when written embodies expression; never has the
Copyright Act required that the expression be communicated to a
 B. Irreparable Harm
 Formula contends that Apple presented no evidence of harm to
Apple if Formula were allowed to continue distributing copies of
the programs to which Apple possesses the copyright during the
pendency of the lawsuit.
 A showing of a reasonable likelihood of success on the merits
in a copyright infringement claim raises a presumption of
irreparable harm. Apple Computer, Inc. v. Franklin Computer
Corp., 714 F.2d at 1254; Atari, Inc. v. North American Philips
Consumer Electronics Corp., 672 F.2d 607, 620 (7th Cir.). cert.
denied, 459 U.S. 880, 103 S.Ct. 176, 74 L.Ed.2d 145 (1982).
Further, Apple introduced evidence of the considerable time and
money that it had invested in the development of the computer
programs. "[T]he jeopardy to Apple's investment and competitive
position caused by [the defendant's] wholesale copying of many of
its key operating programs . . . satisf[ies] the requirement of
irreparable harm needed to support a preliminary injunction."
Apple Computer, Inc. v. Franklin Computer Corp., 714 F.2d at
 Formula contends that it will be irreparably harmed by the
injunction because the injunction will inhibit Formula's entry
into the computer market. At the time Formula filed its response
to Apple's motion for a preliminary injunction, however, it had
sold only 49 "Pineapple" computer kits. Further, Formula's
revenues from the sale of computer products constitute only a
small percentage of its total sales. 562 F.Supp. at 777.
 II. DID THE DISTRICT COURT ABUSE ITS DISCRETION IN
PRELIMINARILY ENJOINING FORMULA FROM USING THE TRADEMARK
"PINEAPPLE" ON ITS COMPUTER PRODUCTS?
 A. Likelihood of Success on the Merits
 Formula contends that the trial court abused its discretion in
preliminarily enjoining Formula from using the trademark
"Pineapple" because it failed to consider the eight factors set
forth in AMF v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th
Cir. 1979) in determining whether a likelihood of confusion of the
parties' trademarks existed. This argument, however, ignores that
at this stage of the proceeding, the trial court is not required
to consider all of those factors. In Miss Universe, Inc. v.
Flesher, 605 F.2d 1130 (9th Cir. 1979), this court stated that
"in granting a preliminary injunction, the parties will not have
had a full opportunity to either develop or present their cases
and the district court will have had only a brief opportunity to
consider the different factors relevant to the likelihood of
confusion determination." Id. at 1133. The appropriate time for
giving full consideration to the factors set out in AMF v.
Sleekcraft Boats is when the merits of the case are tried. Miss
Universe, Inc., 605 F.2d at 1133 n. 7. Therefore, appellate
review at this point is limited to whether the court applied the
appropriate legal standard relating to the issuance of this type
of injunction and whether there was any abuse of discretion by
the trial court. Id. at 1133-34.
 Formula does not contend that the trial court applied the wrong
legal standard in issuing the injunction. Further, we cannot say
that the trial court abused its discretion in concluding that the
use of the name "Pineapple" is confusingly similar to the Apple
trademark when used on related goods. Formula concedes that both
Apple and Formula sell similar products through similar marketing
channels and also that Formula intended to expand its product
line into assembled computers. Under these circumstances, it was
not a clear abuse of discretion for the trial court to conclude
that the addition of the prefix "Pine" to the trademark "Apple"
presented a likelihood of confusion. One of the possible effects
of the use of the prefix may be to suggest that the computer kits
are manufactured by licensees or subsidiaries of Apple. See
Goodyear Tire & Rubber Co. v. H. Rosenthal Co., 246 F.Supp. 724
 B. Irreparable Injury
 Once Apple demonstrated a likelihood of success on the merits
of its trademark infringement claim, the district court could
have reasonably concluded that continuing infringement would
result in loss of control over Apple's reputation and loss of
goodwill. See, e.g., Black Hills Jewelry Mfg. Co. v. Gold Rush,
Inc., 633 F.2d 746, 753 (8th Cir. 1980); St. Ives Lab., Inc. v.
Nature's Own Lab., 529 F.Supp. 347, 350 (C.D.Cal. 1981).
Formula, on the other hand, has only recently entered the
computer market and its computer sales constitute a minor
percentage of its total sales. Thus, it cannot be said that the
district court abused its discretion in concluding that
continuing infringement by Formula presented a possibility of
irreparable harm to Apple and that the balance of the hardships
tipped in Apple's favor.
 The district court did not abuse its discretion or rely on
erroneous legal premises in issuing the preliminary injunction.