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COGNOTEC SERVS. v. MORGAN GUAR. TRUST CO.

August 3, 1994

COGNOTEC SERVICES LTD., Plaintiff,
v.
MORGAN GUARANTY TRUST COMPANY OF NEW YORK and its subsidiary J.P. MORGAN & CO., INCORPORATED, and JOHN DOE 1 through JOHN DOE 5, Defendants.


DUFFY


The opinion of the court was delivered by: DUFFY

KEVIN THOMAS DUFFY, D.J.:

 Plaintiff Cognotec Services Ltd., ("Cognotec") commenced this action alleging that Morgan Guaranty Trust Company of New York ("Morgan"): (1) infringed Cognotec's copyright of a computer program named "AutoDealing"; (2) committed acts of unfair trade as prohibited by § 43(a) of the Lanham Act, 15 U.S.C. § 1125(a); (3) breached a confidentiality agreement entered into by the parties during negotiations for the licensing of AutoDealing; and (4) were unjustly enriched by Cognotec's expertise and effort regarding AutoDealing.

 THE AMENDED COMPLAINT1

 Between 1989 and 1990, Cognotec developed and created a computer software program named "AutoDealing." The main function of this program is to enable a bank to offer automated foreign exchange service to its currency trading customers. (Am. Compl. P 6). The AutoDealing program was copyrighted in the United Kingdom and has been registered in the United States. (Am. Compl. PP 7-10).

 Morgan contacted Cognotec in 1992 to discuss licensing AutoDealing. (Am. Compl. P 12). The parties held a series of detailed discussions and demonstrations of the program during which Morgan was given detailed product and program information. Morgan was also able to observe the program in operation. (Am. Compl. PP 13-16). Cognotec claims that Morgan represented that it expected to fully license AutoDealing from Cognotec during the summer of 1992. (Am. Compl. P 14). Prior to any licensing, however, Morgan requested more information about the program. (Am. Compl. P 16). Cognotec agreed to supply this information but only if a confidentiality agreement was executed.

 Such an agreement was fully negotiated and executed by the parties on June 29, 1992. (Am. Compl. PP 17-18). After which, Cognotec supplied Morgan with over four hundred pages of information and analysis as well as details of the AutoDealing program. All of these documents were marked "Confidential." (Am. Compl. PP 19-20). In addition, Cognotec provided Morgan a draft of the proposed license agreement. (Am. Compl. P 21). Upon Morgan's request, Cognotec also provided assistance by answering questions regarding the implementation of this program for use by Morgan. (Am. Compl. P 22). Subject to the negotiation and execution of the final points of a licensing contract, AutoDealing's programmers specifications were made available to Morgan on October 26, 1992. (Am. Compl. PP 30-36).

 On November 10, 1992, Morgan advised Cognotec that it would not execute a licensing contract but would instead seek bids from other software developers for a program that would service its currency trading customers. (Am. Compl. P 38-39). As part of this effort, Cognotec issued a document entitled "Foreign Exchange Automated Negotiation System (FANS) Requirement Definition," dated November 18, 1992 to at least four software development companies (hereinafter the "FANS Requirement"). (Am. Compl. P 40). Cognotec alleges that the FANS Requirement contains more than one hundred infringements of AutoDealing's core functions. (Am. Compl. P 46).

 Shortly after the issuing of the FANS Requirement, Cognotec made a "best and final offer," but this offer was rejected. (Am. Compl. PP 42-43). Moreover, Cognotec alleges that, based on the FANS Requirement, the software program that Morgan has developed copies AutoDealing, thereby infringing on Cognotec's copyright.

 DISCUSSION

 (1) Copyright Infringement

 The crux of Cognotec's copyright claim is that Morgan became privy to protected information about AutoDealing. It then alleges that Morgan created the FANS Requirement, which describes what Morgan expects of a computer program to service its currency customers. The FANS Requirement allegedly contained protected information about AutoDealing and its structure. More importantly, Morgan issued it to other software development companies, who helped Morgan develop a computer program that copies AutoDealing.

 In all suits for copyright infringement, the plaintiff must establish its ownership of a valid copyright work and that the defendant copied the copyrighted work. See Hasbro Bradley, Inc. v. Sparkle Toys, Inc., 780 F.2d 189, 192 (2d Cir. 1985); Novelty Textile Mills, Inc. v. Joan Fabrics Corp., 558 F.2d 1090, 1092 (2d Cir. 1977). The plaintiff may prove defendants's copying either by direct evidence or by showing (1) that the defendant had access to the plaintiff's copyrighted work and (2) that the defendant's work is substantially similar to the plaintiff's copyrighted material. Walker v. Time Life Films, Inc., 784 F.2d 44, 48 (2d Cir.), cert. ...


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