## Facts

- Harold L. Bowers (HLB Technology) developed and sold a CAD-related software product and obtained U.S. Patent No. 4,933,514 covering a template used with CAD systems.
- Bowers distributed the software subject to a shrink-wrap license that, among other terms, prohibited reverse engineering.
- Baystate Technologies obtained and used the software and later marketed a competing product with similar features.
- Bowers sued Baystate in federal court for patent infringement, copyright infringement, and breach of contract based on violation of the shrink-wrap license.
- After trial, a jury found for Bowers on patent infringement, copyright infringement, and breach of contract, and rejected Baystate’s patent-invalidity defense.
- The jury awarded separate damages for the claims; the district court removed the copyright damages as duplicative of the contract damages.
- Baystate appealed and Bowers cross-appealed; on rehearing, the Federal Circuit issued a revised panel opinion that became the operative decision.

## Issues

1. Whether a shrink-wrap license term prohibiting reverse engineering is enforceable under state contract law or is preempted by federal copyright law.
2. Whether, under the proper construction of the patent claims, substantial evidence supported the jury’s patent-infringement verdict.
3. Whether the district court abused its discretion by eliminating the separate copyright damages as duplicative of the contract damages.

## Decision

- The court affirmed the verdict that Baystate breached the shrink-wrap license, holding the no–reverse-engineering restriction enforceable and not preempted by copyright law.
- The court reversed the patent-infringement verdict, concluding that no reasonable jury could find infringement under the correct claim construction.
- The court affirmed the district court’s modification of the damages award, upholding removal of copyright damages as duplicative of contract damages.

## Legal Principles

- Contract claims based on voluntary agreements concerning software use are not preempted by federal copyright law merely because the subject matter relates to copyrighted works.
- A contract right that binds only the contracting parties is generally not “equivalent” to copyright’s exclusive rights against the public and therefore does not fall within copyright preemption.
- Parties may agree by contract to restrict conduct (including reverse engineering) that might otherwise be permitted under default copyright rules.
- A patent-infringement verdict cannot stand where, after proper claim construction, the accused product lacks required claim elements such that no reasonable jury could find infringement.
- Trial courts may prevent double recovery by adjusting damages to avoid duplicative awards for the same injury across overlapping theories.

## Conclusion

The Federal Circuit enforced a shrink-wrap license’s prohibition on reverse engineering as a matter of state contract law, found no copyright preemption because the obligation ran only between the parties, reversed the patent-infringement judgment on claim-construction grounds, and upheld the district court’s elimination of duplicative copyright damages.


Bowers v. Baystate Techs., Inc., 320 F.3d 1317 (Fed. Cir. 2003)