Avtec Systems, Inc. v. Peiffer
21 F.3d 568 (4th Cir. 1994)

  • Peiffer was hired by Avtec to write computer programs involving satellite orbits. He came up with the idea for a new program and wrote it up into a beta version (aka the ".309 version").
  • Peiffer later worked form home, on his own time, and upgraded the program into the "2.05 version."
    • Peiffer secretly sold the 2.05 version to a competitor (Kisak-Kisak), who then sold it to clients and gave Peiffer lots of money.
  • When Avtec found out about this, they registered a copyright on the .309 version, and sued Peiffer and Kisak for misappropriate of a trade secret. Peiffer countersued for copyright infringement.
    • Avtec argued that Peiffer wrote the 2.05 version while employed at Avtec, therefore it was a work for hire, and Avtec owned it.
    • Peiffer argued that 2.05 version was not created within the scope of his employment, and so it was not work for hire.
  • The Trial Court found for Peiffer on the copyright claim, and Avtec on the trade secrets claim.
    • Basically, the Court found that since the 2.05 version was written on his own time, it belonged to Peiffer. However, he made it using the .309 version, which was Avtec's trade secret.
  • The Appellate Court vacated both decisions.
    • The Appellate Court looked to Community for Creative Non-Violence v. Reid (490 U.S. 730 (1989)), which said that there were a number of factors that needed to be weighed to determine if someone was an employee.
      • See also Restatement (second) of Agency 228, which said that a servant's conduct is within the scope of employment only if:
        • It is of the kind that he is employed to perform
        • It occurs substantial with the authorized time and space limits
        • It is actuated at leas in part, by a purpose to serve the master.
    • The Court found that the program "was work of the type for which Peiffer was hired," but that Peiffer "created the program outside the time and space constraints of his employer," and was not "motivated by a purpose to serve Avtec."