Engineering Dynamics v. Structural Software, Civ. A. No. 89-1655.
| Decision Date | 29 August 1991 |
| Docket Number | Civ. A. No. 89-1655. |
| Citation | 785 F. Supp. 576 |
| Court | U.S. District Court — Eastern District of Louisiana |
| Parties | ENGINEERING DYNAMICS, INC. v. STRUCTURAL SOFTWARE, INC. and S. Rao Guntur. |
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Harry Simms Hardin, III, Thomas K. Potter, III, Jones, Walker, Waechter, Poitevent, Carrère & Denègre, New Orleans, La., Roger L. Maxwell, Thomas L. Cantrell, Johnson & Gibbs, Dallas, Tex., for plaintiff.
Denya Guntur, Gary L. Bush, Al Harrison, Houston, Tex., for defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Plaintiff Engineering Dynamics, Inc. ("EDI") filed suit against defendants Structural Software, Inc. ("SSI") and S. Rao Guntur for copyright infringement, trade dress infringement, and unfair competition regarding computer software and accompanying manuals used by engineers to analyze structures. The matter was tried before the bench from March 7th to March 12th, 1991. The final post trial brief was filed in June 1991. After considering the post trial briefs and proposed findings of fact and conclusions of law submitted by the parties, the court makes the following findings and conclusions:
FINDINGS OF FACT
(1) Plaintiff EDI is a Louisiana corporation with its principal place of business in Louisiana. It creates, leases and updates structural analysis computer software, in particular a suite of programs called SACS. SACS was developed for use on a mainframe computer, but is now also compatible for use on a personal computer. (Angehr testimony, p. 40). The company's owners and officers are David Garland, Jim Angehr, and John Fowler.
(2) Defendant SSI is a Texas corporation with its principal place of business in Texas. It, too, creates and markets structural software and its main product is StruCAD*3D ("StruCAD")1. SSI is operated and 80% owned by S. Rao Guntur. StruCAD operates only on a personal computer. (Guntur testimony, p. 435).
(3) Both SACS III and StruCAD are computer programs designed to solve engineering problems incident to the analysis of structures and were created primarily for use by engineers designing offshore structures.
(4) During the late 1970s a company called Synercom, Inc., which marketed a program called STRAN, sued EDI for copyright infringement of its manuals and input formats. The court held that the input formats were "idea" rather than "expression," and thus uncopyrightable. It also ruled that the manuals were protected and that EDI had infringed them. Synercom Technology, Inc. v. University Computing Co., 462 F.Supp. 1003 (N.D.Tex.1978) ("Synercom"). Synercom and EDI subsequently entered into a stipulation or settlement agreement providing in part that a manual called SACS III, which was drafted by EDI to replace the infringing SACS II manual, did not violate Synercom's copyrights. (Px 392).
(5) In about 1986, defendants here, Guntur and SSI, purchased a program called SAP IV. Defendants used SACS III User's Guide, the Joint Can Design II and Seastate User's Manual to develop a new program from the SAP IV. The new program was compatible with personal computers. The user/engineer works with a personal computer in a process in which information is able to be put into the program via a number of screen displays. (Guntur testimony, p. 458-465).
(6) In contrast, SACS initially operated on a mainframe computer to which user/engineers had access through data service centers. Some time after StruCAD came on the market, SACS released a structural analysis program that could be used on a personal computer.
(7) SACS has been on the market since about 1975. (Fowler testimony, p. 299; Garland testimony, p. 90). SSI put its software product, StruCAD, on the market around 1986. StruCAD made structural analysis accessible on a personal computer before SACS had that capability. (Guntur testimony, p. 445). Both programs are accompanied by manuals which are comprised of pictures, diagrams, text, charts, illustrative examples, and flowcharts.
(8) EDI claims defendants infringed several of its manuals in the development and marketing of StruCAD, namely: the SACS III Users Guide, SACS IV User's Guide, Joint Can Design II, and Seastate User's Manual (collectively referred to as "the SACS manuals," "SACS III" or "SACS"). (Px 1, 2, 3, 4, 9, 245, 12, 14). EDI also claims that defendants infringed its copyright in the "user interface," which is comprised mainly of the input and output reports.
(9) The manuals included notice of copyright on their covers (Angehr testimony, pp. 77-78, Px 9, Px 245, Px 12, Px 14). EDI's contracts with users and data service centers contains provisions to protect EDI's proprietary rights. (Garland testimony, pp. 149-152; Dx 20, Dx 21, Dx 22, Dx 24).
(10) EDI registered the manuals with the United States Copyright Office shortly prior to filing this suit, in February, 1989. (Px 1-3), except SACS IV which was registered in July, 1990 (Px 4). Joint Can Design II, SACS III User's Guide, and Seastate User's Manual are copyrighted for the "entire text," and SACS IV is copyrighted for "new text." Px 1-4.
(11) The copyright applications do not reveal the derivation of SACS III from SACS II, nor do they discuss the Synercom litigation.
(12) In part due to their common ancestry in Synercom's STRAN computer program, the text and diagrams in the StruCAD manual are substantially similar to those in the SACS manual, to the point of being nearly identical. (Px 203-Px 210; Guntur testimony 431-2; 436-7). The more than coincidental similarity of the two manuals is further evidenced by the reproduction of engineering errors in the SACS manual and in the StruCAD manual. (Px 165, Garland testimony, pp. 171-2, 175).
(13) Some elements of SACS's design derive from Synercom's product STRAN. Synercom, 462 F.Supp. at 1012. However, EDI redesigned the SACS manual in such a way to be no longer infringing on STRAN. As a result of that redrafting, the SACS III Manual was reviewed by Synercom itself for infringement, and is thus a new, independent, and original work.
(14) The key difference between SACS and StruCAD is that StruCAD was first to introduce a structural analysis program to the offshore market which can be used on a personal computer.
(15) The SACS manuals and user interface reflect a continuously evolving product; EDI has expended considerable time, energy, and financial resources on improving their product. The result has been a look and feel of SACS which some engineers recognize and associate with EDI.
(16) SACS and StruCAD have user interfaces which are substantially similar. In contrast, other computer programs in the relevant market, ASAS, DAMS, STRUDL, NASTRAN, ANSYS, SESAM, STARDYNE, OSCAR, SAP 81, and SPACE IV employ user interfaces different from SACS and StruCAD. (Px 44, Px 45, Px 41, Dx 37, Dx 38, Dx 40, Px 42, Px 43, Px 46).
(17) Given the relatively insular and sophisticated nature of the offshore engineering community (the apparent main users of SACS and StruCAD) they are not prone to confuse the two software products. (Fowler testimony, pp. 319-320).
(18) In 1989, defendants attempted to register with the Louisiana Secretary of State to use EDI's corporate name for their own purposes. (Px 100, Px 101, Guntur testimony, 397-400). Defendants also obtained the assistance of third party employee Mahendra Vora who had experience with elements SACS to develop those same elements for StruCAD. (Fowler testimony, pp. 307-319).
(19) By late 1986 EDI and StruCAD were directly competing for clients (Guntur Dep. testimony (Px 146), p. 61-62). This early version of StruCAD had formats "very, very close" to SACS's formats. (Guntur testimony, p. 437).
(20) StruCAD was designed to work on a personal computer. (Guntur testimony, p. 435). EDI began to lease a version of SACS which was compatible with a personal computer in 1987. (Garland testimony, p. 142). Engineer/users could recognize the SACS user interface and there was convincing testimony that users are likely to confuse SACS and StruCAD. (Gehring testimony, pp. 333-4 and 336; Guntur testimony, 429-430, 432).
(21) There is a possibility of confusion between SACS and StruCAD. Taking into account the sophisticated market of engineers in the offshore marketplace, and SSI's marketing of a structural analysis program compatible with a personal computer prior to EDI's release of a version of SACS that was compatible with a personal computer, the facts suggest but do not make conclusive that defendants were "passing off" their product, StruCAD, for the competition, SACS.
(22) Plaintiff demonstrated at trial that its gross profits in the years from 1984 to 1989 were as follows: $769,563 in 1984; $1,001,425 in 1985; $543,968 in 1986; $560,439 in 1987; $568,505 in 1988; and $731,743 in 1989. (Px 216-221).
(1) This court has jurisdiction over this action pursuant to 15 U.S.C. § 1121 and 28 U.S.C. §§ 1331 and 1338 in that this civil action arises under the Lanham Trademark Act of 1946, as amended, 15 U.S.C. § 1051 et seq. and the Copyright Act of 1976, as amended, 17 U.S.C. § 101 et seq. The court has jurisdiction of the state unfair competition claims pursuant to 28 U.S.C. § 1338(b) and jurisdiction of the remaining claims under the doctrine of pendant jurisdiction. The court also has jurisdiction under 28 U.S.C. § 1332, and venue is proper pursuant to 28 U.S.C. § 1391(b) and (c) and 28 U.S.C. § 1400(a).
(2) To succeed in its claim for copyright infringement, plaintiff must show that (1) it had ownership of a valid copyright and (2) the defendants infringed that copyright by copying the protected material. Miller v. Universal City Studios, Inc., 650 F.2d 1365, 1375 (5th Cir.1981).
(3) On January 1, 1978, the 1976 Copyright Act became effective and replaced the prior 1909 Copyright Act. Because the first publication of...
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