Apple Inc. v. Corellium, Inc.

CourtCourt of Appeals for the Eleventh Circuit
DecidedMay 8, 2023
Docket21-12835
StatusUnpublished

This text of Apple Inc. v. Corellium, Inc. (Apple Inc. v. Corellium, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eleventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Apple Inc. v. Corellium, Inc., (11th Cir. 2023).

Opinion

USCA11 Case: 21-12835 Document: 102-1 Date Filed: 05/08/2023 Page: 1 of 38

[DO NOT PUBLISH] In the United States Court of Appeals For the Eleventh Circuit

____________________

No. 21-12835 ____________________

APPLE INC., Plaintiff-Counter Defendant-Appellant, versus CORELLIUM, INC.,

Defendant-Counter Claimant-Appellee.

Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 9:19-cv-81160-RS ____________________ USCA11 Case: 21-12835 Document: 102-1 Date Filed: 05/08/2023 Page: 2 of 38

2 Opinion of the Court 21-12835

Before BRANCH and LUCK, Circuit Judges, and SANDS, * District Judge. PER CURIAM: This is a copyright case. Apple Inc. owns copyrights for iOS—the operating system that the company uses for devices like iPhones, iPads, and iPod Touches—and for some of that operating system’s icons and wallpapers. Corellium, Inc. is a technology company. It created a virtualization software—basically a virtual phone—that can run various operating systems (like Android and iOS). The virtualization software includes tools that enable secu- rity researchers to gain deeper insights into these operating sys- tems. Looking to stop Corellium from selling its product, Apple sued Corellium alleging copyright infringement. The district court granted summary judgment for Corellium on Apple’s three copyright claims: (1) direct infringement of iOS (count one), (2) direct infringement of Apple’s icons and wallpapers (count two), and (3) contributory infringement (count three). As to count one, the district court found that Corellium was not liable for copying iOS because Corellium was shielded by the fair use doc- trine. As to counts two and three, the district court entered sum- mary judgment for Corellium without separately addressing those claims.

* Honorable W. Louis Sands, United States District Judge for the Middle Dis- trict of Georgia, sitting by designation. USCA11 Case: 21-12835 Document: 102-1 Date Filed: 05/08/2023 Page: 3 of 38

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We agree in part. The U.S. Constitution enshrines the pur- pose of copyright: “to promote the progress of science and useful arts.” U.S. Const. art. I, § 8, cl. 8 (cleaned up). The Copyright Act achieves this “utilitarian goal” by protecting a creator’s rights in its original creation while also allowing others to make fair use of the original by creatively building on it. Cambridge Univ. Press v. Pat- ton, 769 F.3d 1232, 1238 (11th Cir. 2014). As to count one, we agree that Corellium is shielded by the fair use doctrine. First, Corellium’s virtualization software is trans- formative—it furthers scientific progress by allowing security re- search into important operating systems. Second, iOS is functional operating software that falls outside copyright’s core. Third, Co- rellium didn’t overhelp itself to Apple’s software. And fourth, Co- rellium’s product does not substantially harm the market for iOS or iOS derivatives—so Apple’s own incentive to innovate remains strong. As to counts two and three, we remand for the district court to independently consider those claims in the first instance. FACTUAL BACKGROUND The iPhone Apple introduced the iPhone in 2007. The iPhone was one of the world’s first smartphones and remains one of the most pop- ular consumer electronic devices in the world. The iPhone’s oper- ating system—the software that manages the phone’s basic func- tions—is called “iOS.” iOS runs the built-in applications, or “apps,” that come with the iPhone (like mail, maps, and music). It also USCA11 Case: 21-12835 Document: 102-1 Date Filed: 05/08/2023 Page: 4 of 38

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runs the phone’s graphical user interface (the virtual display iPhone users have become familiar with). Here’s what that display looks like:

Apple has sold more than two billion iOS devices. Those devices include iPhones, iPads (until 2019), and iPod Touches. To improve its product, Apple periodically releases new ver- sions of iOS. When it does, Apple registers each successive version with the U.S. Copyright Office. Apple has also secured separate copyright registrations for its graphic icons and background wall- papers. With each new iOS, Apple bundles its update into what’s known as an IPSW file (basically a zip file). Apple then makes that IPSW file available to the public for free. While anyone can down- load the software for free, Apple has made it somewhat difficult to use iOS on non-Apple devices. Beyond consumer products, Apple also offers some services to developers and researchers. First, Apple offers a program called USCA11 Case: 21-12835 Document: 102-1 Date Filed: 05/08/2023 Page: 5 of 38

21-12835 Opinion of the Court 5

“iOS Simulator,” which “allows app developers to create and test iOS apps” on a “virtual iOS device.” Second, Apple has announced what it calls the “iOS Security Research Device Program.” Through this program, Apple plans to provide custom iPhones to “legitimate security researchers” in exchange for a contractual commitment to “find and report bugs to Apple.” Third, Apple is developing Xcode Cloud, a program that will allow developers “to remotely access” iOS via “physical devices in an Apple device farm” to help with building and testing apps. Xcode Cloud “is not specif- ically designed for security research” but it can be used “to test iOS for bugs.” Corellium Corellium was founded in 2017. It created a virtualization software—CORSEC—that emulates various operating systems like Android, iOS, and Linux. Virtualization is the ability to run software on hardware that the software is not ordinarily able to run on. So, while iOS, for example, is designed to run on Apple devices, CORSEC (the virtualization software) simulates on non-Apple hardware an environment that can run the iOS operating system (the software being virtualized). In effect, CORSEC “enables users to create a virtual iPhone.” Corellium’s founders each testified that “[t]he purpose of [CORSEC was] to create a good environment for security research- ers to do their work.” One founder, for instance, described CORSEC as a “security research platform for mobile devices.” An- other said that “the purpose[] that Corellium was built for . . . was USCA11 Case: 21-12835 Document: 102-1 Date Filed: 05/08/2023 Page: 6 of 38

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. . . security research.” Apple itself offered to purchase Corellium for about $23 million and “discussed several potential uses” for CORSEC, including “security testing” and “security research.” The parties couldn’t agree on a price and so talks fell apart. Apple has recognized that CORSEC “can be used for security testing, re- search, and development.” Corellium sells two versions of its product. The first is a “cloud” version, which is available over the internet. The second is an “on-site” version, where customers receive a physical server that is then installed at the customer’s chosen location. The cloud version ranges from $575 to $6,000 per month for a subscription. The on-site version costs thousands—even hundreds of thou- sands—of dollars. The on-site version’s premium edition has a base price of $300,000 and requires customers to pay an additional $25,000 to $50,000 per server on top of that. Corellium has sold about twenty on-site accounts and twenty-one cloud accounts. How does CORSEC work? It starts with Apple’s publicly available IPSW file. CORSEC customers can obtain the IPSW file by manually downloading it or through a Corellium program that automatically downloads the IPSW file from Apple’s servers.

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Apple Inc. v. Corellium, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/apple-inc-v-corellium-inc-ca11-2023.