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MGE UPS Systems, Inc. v. GE Consumer and Industrial, Inc.

Fifth Circuit withdraws its July 2010 decision, reaches the same conclusions about plaintiff’s DMCA anti-circumvention claim, but provides different analysis for the DMCA claim.

On July 20, 2010, the Fifth Circuit, in a case of first impression in the circuit, affirmed dismissal of the plaintiff’s Digital Millennium Copyright Act claim and held that a defendant does not violate the DMCA’s anti-circumvention provision merely by bypassing a technological protection that restricts a user from viewing or using copyrighted software.

Subsequently, the court treated the petition for rehearing en banc as one for panel rehearing, granted the petition in part, withdrew its July opinion, and substituted a new decision on September 29, 2010.

Although the court reached the same conclusion in the new opinion and affirmed the district court’s grant of defendant’s motion to dismiss, it provided a different reasoning for holding that the plaintiff failed to show that the defendant’s employees circumvented the measures used to control access. “The issue, therefore, is not whether the technological measures that effectively controlled access to MGE’s software were circumvented at some point, but whether the actions of GE/PMI’s own representatives amounted to circumvention. The DMCA defines circumvention broadly to include not only disabling protections, but also avoiding or bypassing them. See 17 U.S.C. § 1201(a)(3)(A). We, however, do not construe ‘bypass’ or ‘avoid’ to encompass use of a copyrighted work subsequent to a circumvention merely because that use would have been subject to a technological measure that would have controlled access to the work, but for that circumvention. So broad a construction would extend the DMCA beyond its intended purposes to reach extensive conduct already well-regulated by existing copyright laws. MGE did not present any evidence showing that a GE/PMI representative altered the Pacret and Muguet software such that a dongle was not required to use the software; rather, employees simply used the software after the alteration was made. As such, the actions by GE/PMI employees did not amount to circumvention. Without proving GE/PMI actually circumvented the technology, MGE does not present a valid DMCA claim.”