Initially, Lasercomb filed an action against Holiday Steel for breach of contract, copyright infringement, misappropriation of trade secrets, fraud, unfair competition, and false designation of origin.

On appeal, based on a recognition of the similarity to patent misuse, the holding was reversed, deeming the language contained in the license agreement unreasonable.

Larry Holliday was the sole shareholder and president of Holiday Steel and Job Reynolds was a computer programmer for that company.

Steel rule die is used in a number of applications including the creation of creases, perforations, slits, and to cut and score paper and cardboard to be folded into cartons or boxes.

The object of dispute was a software program developed solely by Lasercomb that eased the production of steel rule die.

Once these actions were discovered by Lasercomb, it hastily copyrighted Interact and filed suit against Holiday Steel, Holliday, and Reynolds on March 7, 1986.

Holliday and Reynolds asserted that the language in Lasercomb's standard license agreement "restricts licensees from creating any of their own CAD/CAM die-making software….

"[1][2] Specifically, section D of the license states "Licensee agrees during the term of this agreement that it will not permit or suffer its directors, officers and employees, directly or indirectly, to write, develop, produce or sell computer assisted die making software.

At the time, the patent misuse analogy was not established and such a defense was limited to a single case; M. Witmark & Sons v. Jensen, 80 F. Supp.

It was determined that "since copyright and patent law serve parallel public interests, a ‘misuse' defense should apply to infringement actions brought to vindicate either right.