Koontz v. Jaffarian

• Decision Date: 31 March 1986
• Docket Number: No. 85-1765,85-1765
• Citation: 787 F.2d 906
• Parties: , 229 U.S.P.Q. 381, 1986 Copr.L.Dec. P 25,919 Dennis W. KOONTZ, Master Service Corp., and Jean M. Koontz, Appellees, v. Richard JAFFARIAN and Richard Jaffarian Associates, Inc., Appellants, and G. Labbie Ltd., Glen Labbie, and G.L. Systems, Ltd., Defendants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 906

787 F.2d 906

54 USLW 2571, 229 U.S.P.Q. 381, 1986

Copr.L.Dec. P 25,919

Dennis W. KOONTZ, Master Service Corp., and Jean M. Koontz, Appellees, v. Richard JAFFARIAN and Richard Jaffarian Associates, Inc., Appellants and G. Labbie Ltd., Glen Labbie, and G.L. Systems, Ltd., Defendants.

No. 85-1765.

United States Court of Appeals Fourth Circuit.

Argued Jan. 8, 1986.

Decided March 31, 1986.

A.W. Breiner (Theodore A. Breiner, Breiner & Breiner, Alexandria, Va., on brief), for appellants.

David A. Blumenthal (Peter G. Mack, Schwartz, Jeffery, Schwaab, Mack, Blumenthal & Evans, P.C., Alexandria, Va., on brief), for appellees.

Before WINTER, Chief Judge, and SPROUSE and CHAPMAN, Circuit Judges.

SPROUSE, Circuit Judge:

Richard Jaffarian and Richard Jaffarian Associates, Inc. (Jaffarian) appeal from the district court's judgment awarding damages and injunctive relief to Dennis W. Koontz and his wholly-owned Master Service Corporation (Koontz) for copyright infringement. Koontz prepared and copyrighted a manual containing a compilation of data for estimating bids for electrical construction contracts. In conjunction with others, he later transferred the data compilation onto computer tapes not containing a notice of copyright. Jaffarian admittedly took Koontz's data from the computer tapes and used it to prepare his own electrical estimating manual. Jaffarian contends, however, that Koontz did not own the data compilation on the computer tapes and that the district court erred in extending copyright protection to the tapes under the "unit publication" rule. We affirm.

The district court's findings of fact were detailed and cogent. Koontz v. Jaffarian, 617 F.Supp. 1108 (E.D.Va.1985). They provide the background against which we uphold the validity of the "unit publication" rule and agree that Koontz's copyright has been infringed. Koontz has been in the business of preparing estimates for electrical contractors for twenty-five to thirty years--providing the contractors with approximate costs for materials and labor on proposed construction jobs. There are numerous manuals available to assist in preparing such estimates, but in 1962, Koontz began creating his own. His first manual was published in 1968 and is not involved in this controversy. Koontz published an updated version of the manual in 1974. It was in two volumes, and its copyright was registered in the same year.

The heart of Koontz's manual is a comprehensive data compilation of labor units--a listing of over 57,000 items used in electrical construction showing the price of each item and amount of time necessary to install it. Prior to 1976, Koontz prepared estimates with his manual by hand. Using the construction plans, he would first determine the various materials needed to complete the job. He would then go through his manual and assign code numbers, page numbers, and quantities for each item. Koontz gave this information to his secretary, who added up the cost and labor hours listed in the manual for each item to come up with a final estimate.

In February 1976, Koontz entered into an agreement with Hewlett-Packard Company (H-P) to develop a computerized version of his electrical estimating system. Koontz agreed to provide H-P with the mathematical algorithms and the data compilation used to prepare estimates. H-P agreed to develop a computer program so that the information Koontz had formerly given to his secretary could be entered into a computer which would then calculate the final estimate. Koontz also agreed to supply H-P with his manuals, which H-P would in turn supply to each customer who purchased the electrical estimating package. By this time, Koontz had updated and revised his two volume 1974 manual, producing a one volume 1975 version, known as the MCP-5. H-P agreed to pay Koontz a $3,000 fee, plus $250 for every manual supplied to a customer.

Koontz worked with an H-P programmer and provided the procedural, step-by-step information needed to write the electrical estimating computer program. The program and significant portions of the data compilation from Koontz's 1975 manual were then stored on magnetic tape. The program and the data compilation as stored together on the tape made up what is referred to as the electrical estimating "software." With this software and Koontz's manual, a customer could obtain an estimate using an H-P computer (the "hardware") in the same way Koontz had obtained estimates by hand. After determining the various items needed for a job, the customer would look up each item in Koontz's manual. The customer would then enter the code number, page number, and quantity of each item into the computer. The computer would perform the calculations previously done by Koontz's secretary and print out the final estimate.

H-P marketed this product as an electrical estimating package which included Koontz's 1975 MCP-5 manual, the magnetic tapes containing the program and the data compilation, and an instruction book written by H-P. Although Koontz's 1975 MCP-5 manual contained a copyright notice, there was no copyright notice on the magnetic tapes or in the program or the data compilation stored on the tapes. Koontz registered a copyright in the 1975 MCP-5 manual and in the data compilation stored on the magnetic tapes together as a "unit publication" on November 8, 1984. ¹

Koontz and H-P terminated their relationship in 1977 after attempts to market the electrical estimating package were largely unsuccessful. Koontz then formed a joint venture with Glen Labbie to improve the package. After Labbie obtained a master copy of the electrical estimating software from H-P, Koontz and Labbie made improvements in the program. In addition, Koontz updated the data compilation contained in the software with current price and labor information. Koontz and Labbie sold this updated software together with Koontz's MCP-5 manual as an improved electrical estimating package. In 1979, Koontz again updated the software data compilation. He also published another updated version of his accompanying manual, the 1979 MCP-5. Like his 1975 manual, Koontz's 1979 MCP-5 manual contained a valid copyright notice. The software, however, still failed to include a separate copyright notice. Koontz registered a copyright on the 1979 MCP-5 manual and the updated software together as a "unit publication" on November 2, 1984. ²

Jaffarian performed electrical estimating work for Koontz from 1975 to 1976. He worked for Koontz again from 1978 to 1979, during which time he met Labbie. After terminating their relationships with Koontz, Jaffarian and Labbie began working together in 1982 to create an electrical estimating package to compete with Koontz's package. Labbie supplied Jaffarian with a copy of the electrical estimating software as updated by Labbie and Koontz in 1979. Jaffarian admits that he used his computer to print out the data compilation supplied by Koontz and stored in the software. Jaffarian then used this computer-generated data compilation to develop his own manual. There was also testimony, which Jaffarian denied, that he copied directly from the data base contained in Koontz's 1975 MCP-5 manual while preparing his own manual. When Jaffarian finally published his manual, it contained a data base substantially similar to the one in Koontz's MCP-5 manual.

Koontz brought this action in the district court against Jaffarian and Labbie ³ for...