Williams v. Arndt

• Decision Date: 23 September 1985
• Docket Number: Civ. A. No. 83-3397-MA.
• Parties: Larry WILLIAMS, Plaintiff, v. George ARNDT and Harvard Investment Service, Inc., Defendants.
• Court: U.S. District Court — District of Massachusetts

626 F. Supp. 571

Larry WILLIAMS, Plaintiff, v. George ARNDT and Harvard Investment Service, Inc., Defendants.

Civ. A. No. 83-3397-MA.

United States District Court, D. Massachusetts.

September 23, 1985.

Michael Arthur Walsh, Esq., Choate, Hall & Stewart, Boston, Mass., for plaintiff.

Irving M. Kriegsman, Framingham, Mass., Alvin S. Nathanson, Nathanson & Goldberg, P.C., Boston, Mass., for defendants.

OPINION

MAZZONE, District Judge.

This is an action for copyright infringement under the Copyright Act of 1976, 17 U.S.C. § 101, et seq. The plaintiff is Larry Williams of Kalispell, Montana, an investment adviser and commodities trader. The defendants are George Arndt of Harvard, Massachusetts, a commodities trader and adviser, and Harvard Investment Service, Inc., a Massachusetts corporation. Arndt is the president and sole stockholder of Harvard Investment Service, Inc. Prior to forming Harvard Investment Service, Inc., Arndt did business under the name of Investors Micro Messenger. The complaint consists of 5 counts: Counts I and II charge copyright infringement by Arndt and Harvard Investment of a booklet called "Floor Trader's Manual." Counts III and IV charge copyright infringement by Arndt and Harvard Investment of a second booklet called "Floor Trader's Commodity Method." Count V charges unfair acts and practices and unfair competition in violation of M.G.L. c. 93A. The plaintiff seeks injunctive relief and money damages, including attorneys' fees and costs.

The defendants deny infringement and have filed a counterclaim. They allege the copyrights of both works are invalid and unenforceable and that the applications for certificates of registration were accomplished by fraud and misrepresentation. Further, the defendant, Arndt, alleges he was libelled when the plaintiff publicly accused him of copying the Floor Trader's system in the October, 1983 issue of Futures, a commodities trading magazine.

This Court has jurisdiction pursuant to 28 U.S.C. §§ 1332(a) and 1338(a). Venue is proper pursuant to 28 U.S.C. § 1400(a). The case was tried to the Court without jury. Pursuant to Fed.R.Civ.P. 52(a), I make the following findings and rulings.

I.

The plaintiff, Larry Williams, has been an active commodities trader for 15 years. He is the author of various books, articles and pamphlets on commodities trading. He has conducted various seminars at which his authored works have been distributed. These seminars have been given usually at four locations in the United States. The cost to attendees was $3,000 and they were required to sign a non-disclosure agreement. Similarly, Williams' written material on trading methods sold for about $1,000 and was also subject to a non-disclosure agreement.

In January or February, 1980, Williams began working on a specific, step-by-step method for trading in various commodities. By December, 1980, after spending an average of 6 hours a day on this project, Williams had completed his research and compilation of data and began to rough draft his results and conclusions in a manual form. He sent his rough draft to a printer, Crum's Instant Print, in Kalispell, Montana. Shortly thereafter, he received 10-15 copies from the printer. He kept one for his own file and sent a copy to about 10 of his more preferred customers who had ordered the booklet in response to a promotional flier Williams had limited to certain customers. The price was $2,000.

Williams, in reviewing this first printing, had noted that this first booklet, entitled the "Floor Trader's Method" (FTM) did not have a copyright mark or his name on it. It did not have a title on the cover, and it contained some errors, some typographical and some textual. Making some corrections, and telling the printer to place his name, a copyright mark, and title on the manual, Williams returned one copy to the printer.

An additional copy was sent to a past customer, Jerry L. Snider, a market trader who lived in Oklahoma. Snider had attended a seminar given by Williams in 1980, but had not been successful in trading commodities. He had received the promotional flier from Williams alerting previous customers to the imminent publication of the new method. Snider called Williams and told him he wanted either a refund of the seminar fee or a free copy of the new method. After confirming that Snider had been unsuccessful, although he felt Snider had not followed his method correctly, Williams agreed to send him a free copy on the condition that there would be no refund and Snider would not disclose the method. Accordingly, in late 1981, Williams sent Snider one of the unedited copies that had been received from the printer. As stated above, that copy did not contain any copyright mark. At this point in time, copies of the FTM were in the hands of 10 identified purchasers and Snider had a copy. In all, then, 11 copies were distributed. One copy had been sent to the printers for corrections, and Williams retained a copy.

After making the required corrections and editing, the printer delivered about 75 copies of the revised edition of the method to Williams. This edition was called "Floor Trader's Commodity Method" (FTCM) and contained the copyright mark on the front cover with Williams' name. Williams sent out a second advance notice of this method to his entire mailing list in June, 1981. It was generally the same notice that Snider and the other 10 customers had received. The distribution of these copies was limited to about 75 customers and these copies were distributed in November or December, 1981. The price for this edition was $3,000.

About this time, and after he had completed the floor trading manual, Williams began to develop a computer program for commodities trading which he called "Striker." He hired an experienced programmer to help him, James Stack, of Kalispell, Montana. Stack owned and operated his own investment research firm, Invest-Tech, and also had considerable experience in the commodities market.

Sometime in December, 1981, Snider, the trader from Oklahoma, called Williams. Snider told Williams he had made money using the FTM, but that he was losing his eyesight and would not be able to use the method much longer. Snider asked Williams for permission to computer program the method. Williams gave him permission on the condition he not disclose the method.

After receiving Williams' permission, Snider contacted the defendant, George Arndt, in December, 1981. He asked Arndt if he could write a program for Williams' method for an Apple II computer. Arndt told Snider he had heard of Williams but was not aware of his method. Snider assured Arndt the system worked. He sent a copy of FTM and some notes to Arndt with a check for $250. Arndt reviewed the manual and called Snider, telling him it looked like a good system and should be done right. He needed more time and more money for the task. Snider sent Arndt another $500. A few weeks later, Arndt again called Snider and said he was still having trouble finishing the program. He told Snider he had spent many hours on the program and requested another $750. Sometime before March 22, 1982 Snider received a floppy disk from Arndt. Snider then sent another $750 to Arndt on March 22, 1982.

Snider tried the program he received from Arndt, but it did not generate the same results as the FTM. He complained to Arndt that the program did not function properly. Arndt asked for more money to complete the job, but Snider refused, asking for his money back. Arndt declined to refund any money.

Sometime after he sent Arndt his last check on March 22, 1982, Snider learned that Arndt was selling the FTM computer program. Snider, annoyed because he had not received a usable program, called Arndt. He demanded to know what right Arndt had to sell the program which did not belong to him. Arndt told him he had checked with his attorney who had researched it and had advised him that Williams had failed to copyright the FTM.

Snider then called Williams and asked if the FTM was copyrighted. He told Williams that Arndt had told him that it was not copyrighted. This was not the only notice Williams received that the FTM was available in a computer program. At this time, Williams was working on the "Striker" program with James Stack. Stack had also taken on the task of responding to phone calls from customers who would call Williams on the "hot line" service Williams offered together with the FTM. Stack received a call from an irate purchaser of the FTM who complained that the floor traders method was being offered on a computer disk without any restriction on its distribution. Williams was engaged in a political campaign at this time and was away from the office a great deal of time during this period.

Stack called Arndt directly about the sale of the program. Arndt said he did not realize he was doing anything wrong because he believed the method was not copyrighted. Arndt asked Stack to talk to Williams about some arrangement which would allow Arndt to sell the program. Stack told Arndt he doubted Williams would do that. Arndt told Stack he would not sell the program without permission.

A short time later, with Stack present, Williams called Arndt. Using a speaker phone, and without identifying himself, Williams asked if he could buy the Larry Williams floor traders method. Arndt answered that it was not the Larry Williams floor traders method, but produced the same results. He offered to send further information.

In May, 1982, Arndt sent out a notice of his computer program. This notice was entitled "Floor Trader's System" and was underscored with "SOLD RECENTLY FOR $2,500 ON PAPER." The notice went on to state that Arndt had "PROGRAMMED the FLOOR TRADER'S System" and while it only took 8 hours to get the system running, it took over 150 hours to get it to "today's point." The notice said further "I offer the system to help you make $. The FLOOR TRADER WAS NOT COPYRIGHTED. No...