Data General Corp. v. Digidyne Corp. Et Al.

Background

A computer maker created and sold a central processing unit called NOVA and a copyrighted operating system called RDOS. The maker’s license barred customers from using RDOS with other processors. Customers sued, saying this licensing practice unlawfully forced them to buy the NOVA hardware along with the software. A jury found for the customers, the district court overturned that verdict, and the Ninth Circuit reinstated the jury verdict.

Reasoning

The main question was whether the company’s practice of tying its copyrighted software to its hardware amounted to an illegal tie-in that used market power to force purchases. The Ninth Circuit treated the tie as illegal per se because it viewed RDOS as uniquely desirable to many buyers. The district court had taken a broader view of the market and found no evidence of power to coerce buyers. The Supreme Court chose not to review the case, so it did not resolve which view is correct.

Real world impact

Because the high court denied review, the Ninth Circuit’s ruling stands for now in that region. The case touches on common industry practices where hardware and software are bundled, and the appeals court’s view could influence similar disputes in the computer industry. The matter could still be revisited in another case, so the issue is not finally settled nationwide.

Dissents or concurrances

Justice White, joined by Justice Blackmun, dissented from the denial of review and would have granted review to clarify important antitrust questions about market power, locked-in customers, and the effect of copyright on competition.