Koontz v. Jaffarian

• Decision Date: 14 May 1985
• Docket Number: Civ. A. No. 84-551-A.
• Citation: 617 F. Supp. 1108
• Parties: Dennis W. KOONTZ, et al., Plaintiffs, v. Richard JAFFARIAN, et al., Defendants.
• Court: U.S. District Court — Eastern District of Virginia

617 F. Supp. 1108

Dennis W. KOONTZ, et al., Plaintiffs, v. Richard JAFFARIAN, et al., Defendants.

Civ. A. No. 84-551-A.

United States District Court, E.D. Virginia, Alexandria Division.

May 14, 1985.

COPYRIGHT MATERIAL OMITTED

David A. Blumenthal and Peter G. Mack, Alexandria, Va., for plaintiffs.

Theodore A. Breiner and Alfred W. Breiner, Alexandria, Va., for defendants.

MEMORANDUM OPINION

BRYAN, District Judge.

This is a copyright infringement, trade secret misappropriation and unfair competition action which probably would never have occurred but for the modern computer. It evolves from an electrical estimating labor manual used by electrical contractors and estimators to prepare bids on contracts for the construction of projects such as office buildings, schools and hospitals. Each manual contains a comprehensive data compilation of labor units—a tabulation of over 57,000 entries showing the amount of labor hours necessary to install the multitude of electrical items used in nearly every type of construction project.

Sample pages of the plaintiff's manuals are attached as Appendices B and C.

The plaintiff, Dennis W. Koontz (Koontz),¹ who has been in the electrical estimating business for 25-30 years, began working on a manual in 1962. In 1968 his manual (PX 1-A) was published. A copy-right for it was registered in the United States copyright office (PX A-2). That copyright is not at issue in this case. In 1974 an update of the 1968 manual was published by Koontz. It was in two volumes (PX A-3A, 3-B). A registration for a copyright on this publication was had on March 11, 1974 (PX A-4).

Prior to 1975 Koontz would use the manual in this way: he would "take off" the electrical requirements from a set of plans and then go through his manual and assign code numbers, page numbers, and quantities necessary to estimate the job. Koontz then gave the information to his secretary to do the computations and come up with an estimate. The figures thus reached would be allocated by percentage to certain code designations (PX F-6) and compared with tables developed in the past to determine whether the percentages were out of line with what experience had shown was the usual percentage. If they were, the estimate would be reexamined. Forms and instructions for these various steps were included in the manual.

In 1975 Koontz discussed with Hewlett-Packard Company (H-P), a seller of computer hardware, the possibility of computerization of the steps necessary to come up with an estimate from the manual. This was advantageous to H-P because it gave H-P a software program to use in selling its hardware. It was advantageous to Koontz since it was an opportunity to sell manuals without much cost to him or his corporation, plaintiff Master Service Corporation, through the extensive marketing system of H-P. The discussions resulted in a February 1, 1976 agreement between Koontz and H-P (PX A-23). In it Koontz agreed to provide H-P with the mathematical algorithms and assistance necessary to develop a computerized version of Koontz's electrical estimating system and H-P agreed to create a software program so that the information Koontz had formerly given to his secretary when preparing an estimate could be used as input for a computer. H-P agreed to pay Koontz a $3,000 fee. Koontz agreed to supply the manuals (PCP-5) which were in turn to be supplied by H-P to each H-P customer who purchased H-P's hardware and electrical software package. H-P agreed to pay Koontz $250.00 per manual supplied to a customer. By this time Koontz had updated and revised his two volume 1974 manual, producing a one volume 1975 version (PX A-7A),² and developing and adding such things as labor code and material code designations, as shown on the samples, Appendices B and C.

Koontz worked with a H-P programmer, Ray Wells, and gave Wells the procedural, step-by-step information needed for the writing by Wells of an electrical estimating program, designed to operate on the hardware H-P desired to market. The program, including significant portions of data taken from the 1975 manual (the data compilation), was transferred to and stored on magnetic tape. With the program and data compilation on tape, estimates could be obtained by a customer electrically in the same way Koontz had obtained estimates manually. However, it was still necessary to use the manual since the tapes' storage capacity was limited and the information contained on them was referenced by code numbers and abbreviated descriptions (as opposed to full) not known to the average estimator. The code numbers also appeared in the manual, along with catalog numbers, descriptions and drawings of the item itself, and were the key which enabled the contractor to do a complete estimate. A customer could input the code numbers from the manual and the computer would look up the corresponding labor units and price and print out the result. The deposition testimony of Ronald Schwitzer, a defendants' witness, while perhaps indicating that he does not need a manual because he has memorized most of what is in one, does not persuade the court that the data base need not be used in conjunction with a manual. A computer can print out, with the exceptions just noted, an entire data compilation from the manual (PX A-7C) although such a printout was not intended as nor could it serve as a substitute for the manual. The data compilation printout is part of what is referred to as the electrical estimating software. That software also includes the electrical estimating program which is the set of instructions to the computer to enable it to perform certain electrical estimating tasks by using the stored data compilation and other input data taken from the manual by the customer to produce the estimate. It is this software which the defendants used, which they say is not copyrightable and which they say was provided without restriction to H-P and through H-P to the defendants. The plaintiff does not assert that the program is copyrightable, only the data compilation.

Copyright

The 1974 manual³ was registered within five years of its first publication. Such a registration is consequently prima facie evidence of the validity of the copyright. 17 U.S.C. § 410(c).⁴ The 1975 and 1979 manuals were not registered until 1984, and the weight to be accorded those registrations is discretionary with the court. Id.

The court has no difficulty in finding that the 1974 copyright, even without the aid of the statutory presumption, is valid. The manual was original with Koontz, its author. It is true that there were other manuals in the field, principally the NECA (National Electric Contractors Association) manual. But Koontz's manual differs substantially from the NECA manual, and certainly is not copied from it. The same is true of the 1975 and 1979 manuals, which were Koontz updates, revisions and improvement. As to the copyrightability of the subject matter of the data compilation portions of the manuals, there can be no question that while facts or data are not themselves copyrightable, compilations of those facts or data can be. Under the 1909 Act which governs the 1974 and 1975 manuals, such compilations were protected former 17 U.S.C. § 7. And of course the 1976 Act, which governs the 1979 manual, also provides protection for compilations, 17 U.S.C. § 103(a). Indeed, the court does not understand the defendants to contest the copyrightability of the manuals. The tapes and the data on those tapes, however, contained no copyright notice, and the issue raised by the defendants is that, without a copyright notice, the copyright did not extend to the data stored on the tapes which, defendants assert, were therefore injected into the public domain. This defense does not apply to the 1974 manual because that was not computerized, and there is no data base or tape related to it. The defendant also contends that the agreement with H-P constituted a transfer to H-P without restriction of the software, including the data stored on the tapes.

The court rejects both assertions. As to the lack of copyright notice on the software, plaintiff asserts that the manual and the tapes or disks on which were stored the data base and program were registered as a unit publication. While there is no statutory recognition of a unit publication doctrine, the courts have in certain instances ruled that affixation of the copyright notice to one element of a publication containing various elements gives copyright protection to all elements of the publication. The rule has been confined to situations where the elements are integral or essential parts of one another. Lydiard-Peterson Co. v. Woodman, 204 Fed. 921 (8th Cir.1913); Patterson v. Century Productions, 93 F.2d 489, 493 (2nd Cir. 1937). The rule has been enunciated not just with respect to physically connectable elements, but has been applied where the notice was attached only to instruction sheets. Monogram Models, Inc. v. Indertro Motive Corporation, 492 F.2d 1281 (6th Cir.1974); Data Cash Systems, Inc. v. JS & A Group, Inc., 628 F.2d 1038, 1041 (7th Cir.1980) (dicta). It is appropriate to apply the rule here. The software, hardware and a manual were always sold, and intended to be sold as a unit. While the manual could be sold separately, the software, including the tapes, were not sold without a manual. Indeed, while there is a conflict in the evidence on this, the court finds that the average customer could not use the software without a manual. The manual was, for all intents and purposes, the instruction sheet for the use of the software.

The purpose of copyright notice, as highlighted by 17 U.S.C. § 405(b), is to protect innocent infringers. Uneeda Doll Co. v. Goldfarb Novelty Co., 373 F.2d 851 (2nd Cir.1967); Shapiro, Bernstein & Co. v. Jerry Vogel Music Co., 161 F.2d 406, 409 (2nd Cir.1946). Moger v. WHDH, Inc., 194 F.Supp. 605, 606 (D.Mass., 1961). These defendants were...