The court in that case said:
Computer programs pose unique problems for the application of the "idea/expression distinction" that determines the extent of copyright protection. To the extent that there are many possible ways of accomplishing a given task or fulfilling a particular market demand, the programmer's choice of program structure and design may be highly creative and idiosyncratic. However, computer programs are, in essence, utilitarian articles -- articles that accomplish tasks. As such, they contain many logical, structural, and visual display elements that are dictated by external factors such as compatibility requirements and industry demands... In some circumstances, even the exact set of commands used by the programmer is deemed functional rather than creative for the purposes of copyright. When specific instructions, even though previously copyrighted, are the only and essential means of accomplishing a given task, their later use by another will not amount to infringement.
Hmm, I am not so sure I like all of that. Program code serves two purposes. For one thing it is functional, and for another (and actually for the most part) it has a human readable structure.
I think you have missunderstood what the judges meant. The fact the computer programs are functional doesn't take away their copyrightabillity. But copyright only protects the creative expression and then the form of these expressisions are dictated by external factors such as in the courts words "compatibility requirements and industry demands" they are not creative expression and thus not copyrightable. Not that fact that the court said "functional" and not "is not a creative expression" is AFAICS largely irrelevant. But I think I can see what you are after, I you have an "optimal" compiler every computer program that are functionally equivivalent will be reduced to the same binary form. However that doesn't rob the source code from copyright, just the binary form. Anyway, regardless of whether optimal compilers possible, it still doesn't make copyright of computer programs meaningless, since you really want to be able to change the computer program and an optimal representation of it is not very easy to change. :-) So the creative expression of the source code is really useful and thus promotes progress, so it really should be and indeed is protectable.