## Facts

- Data General Corporation (DG) designed and manufactured MV line computers and competed in the aftermarket for servicing DG computers.
- Grumman Systems Support Corporation (Grumman) was an independent service organization that serviced DG computers in competition with DG.
- DG developed MV/Advanced Diagnostic Executive System (ADEX), a diagnostic software program for DG MV computers, protected by copyright and containing protectable trade secret information.
- DG increasingly restricted access to ADEX; Grumman obtained and used ADEX without DG’s authorization to service DG computers.
- DG alleged Grumman acquired, duplicated, and used ADEX, constituting copyright infringement and trade secret misappropriation.
- DG had a small share of the primary minicomputer market but substantial power in the service aftermarket for DG computers (approximately 90%).
- In the district court, DG prevailed at trial; a jury found infringement and misappropriation and awarded $27,417,000 in damages.
- The district court dismissed Grumman’s Sherman Act § 2 defenses and counterclaims based on DG’s refusal to license ADEX.

## Issues

1. Whether DG’s unilateral refusal to license its copyrighted ADEX software to Grumman and other competitors could constitute unlawful maintenance of monopoly power under Sherman Act § 2 in the aftermarket for servicing DG computers.
2. Whether sufficient evidence supported the verdict that Grumman infringed DG’s ADEX copyrights through unauthorized acquisition, duplication, and use.
3. Whether sufficient evidence supported the verdict that Grumman misappropriated DG’s trade secrets associated with ADEX.
4. Whether alleged antitrust violations or “copyright misuse” barred DG’s copyright enforcement.
5. Whether the damages award was calculated and instructed correctly.

## Decision

- The First Circuit affirmed dismissal of Grumman’s antitrust defenses and counterclaims.
- The court held DG’s refusal to license ADEX, standing alone, did not constitute exclusionary conduct actionable under Sherman Act § 2.
- The court affirmed the jury’s verdict for DG on copyright infringement and trade secret misappropriation.
- The court rejected defenses premised on copyright misuse or antitrust illegality because DG’s conduct was not shown to violate § 2.
- The court reversed only on a minor aspect of the damages calculation and remanded for correction of that limited error.

## Legal Principles

- A copyright owner’s unilateral refusal to license a copyrighted work is presumptively lawful; antitrust liability under Sherman Act § 2 generally requires exclusionary or predatory conduct beyond the mere refusal to deal.
- Market power in a downstream or aftermarket does not, by itself, transform enforcement of exclusive copyright rights into monopolization absent additional anticompetitive conduct.
- Copyright infringement may be found where a defendant, without authorization, acquires, duplicates, and uses a protected computer program beyond any permissible access.
- Trade secret misappropriation may be established where confidential proprietary information is maintained with secrecy measures and is obtained or used by a competitor through improper means or in violation of confidentiality expectations.
- Copyright misuse defenses grounded in antitrust theories fail where the challenged licensing refusal is within the scope of copyright exclusivity and not shown to violate antitrust law.

## Conclusion

The First Circuit largely upheld DG’s judgment against Grumman for unauthorized use of ADEX, concluding that enforcing copyright exclusivity through a unilateral refusal to license did not, without more, establish Sherman Act § 2 monopolization, while affirming infringement and trade secret liability and remanding only to correct a limited damages-calculation error.


Data Gen. Corp. v. Grumman Sys. Support Corp., 36 F.3d 1147 (1st Cir. 1994)