United States District Court, D. Colorado
OPINION AND ORDER ON MOTION FOR EQUITABLE RELIEF,
MOTION FOR JUDGMENT AS A MATTER OF LAW, AND CLAIM FOR UNJUST
S. Krieger Chief United States District Judge.
MATTER comes before the Court on the Plaintiffs'
Motion for Equitable, Injunctive, and Declaratory Relief (#
116), the Defendants' response (# 120), and the
Plaintiffs' reply (#129); and the Defendants' Renewed
Motion for Judgment as a Matter of Law and Renewed Motion to
Dismiss (# 117), the Plaintiffs' Response (# 121), and
the Defendants' Reply (# 122). For the reasons that
follow, the motions are denied.
Court exercises jurisdiction pursuant to 28 U.S.C. §
Court assumes the reader's familiarity with the facts of
this case and the proceedings to date, and offers only a
cursory summary. The Plaintiffs, Mr. Williams and his
associated entity, LNL Publishing, are known for commodities
trading strategies. The Defendants, Genesis Financial
Technologies (“Genesis”) and its principals, Mr.
Larson and Mr. Kilman, are authors of a software program,
Trade Navigator, that assists in the analysis of commodities
undetermined time, Mr. Larson and Mr. Williams entered into
an oral contract by which Mr. Williams agreed to include his
commodities trading strategies in Trade Navigator and that he
would promote the software to students at trading seminars he
held. In exchange, Genesis would pay Mr. Williams a specified
share of profits derived from the sale of Trade Navigator to
his students. The parties abided by that agreement for
several years, but relations soured. In September 2012, Mr.
Williams informed the Defendants that he was terminating the
contract and demanded that the Defendants cease using his
strategies, name, and likeness. The Defendants continued to
use Mr. Williams' strategies and likeness (as set forth
herein), and this litigation ensued.
case proceeded to a jury trial on the following claims: (1)
breach of contract against Genesis and Mr. Larson, (2) breach
of contract against Mr. Kilman (relating to a separate
nondisclosure agreement), and (3) unjust enrichment against
Genesis and Mr. Larson. The jury returned a partial verdict
for the Plaintiffs. Specifically, it found that Mr. Larson
individually entered into the oral contract with Mr. Williams
and that Mr. Williams was entitled to $358, 277.50 for Mr.
Larson's breach of that contract. The jury found that Mr.
Williams was not entitled to any damages from Genesis for
breach of contract. The jury also found in favor of Mr.
Kilman on the contract claim against him. Rendering an
advisory verdict for the Court as to unjust enrichment, the
jury found that Genesis unjustly received a benefit at the
Plaintiffs' expense by continuing to use Mr.
Williams' strategies and likeness after September 2012.
The jury suggested that the Court award $400, 000 to Mr.
Williams and $1.5 million to LnL Publishing on this claim.
instant motions, the Plaintiffs request (#
116) that the Court to confirm the jury's
advisory verdict and award damages on the unjust enrichment
claim consistent with that verdict. They also request, as
equitable relief, an order enjoining the Defendants from
continuing to offer the Plaintiffs' trading strategies,
name, and likeness, and an order requiring the Defendants to
return such property to the Plaintiffs. The Defendants move
(# 117) for judgment as a matter of law on
the contract and unjust enrichment claims, arguing that there
is insufficient evidence to support a breach of contract
verdict against Mr. Larson and that the record does not
warrant any verdict for the Plaintiffs on the unjust
MOTION FOR JUDGMENT AS A MATTER OF LAW
Rule of Civil Procedure 50(b) states that after the Court has
submitted a claim to the jury, a party “may file a
renewed motion for judgment as a matter of law.” The
Court may allow judgment on the verdict or direct the entry
of judgment as a matter of law. Fed.R.Civ.P. 50(b)(1), (3).
In analyzing such a motion, courts should construe the record
evidence in the light most favorable to the nonmoving party.
Tyler v. RE/MAX Mtn. States Inc., 232 F.3d 808, 812
(10th Cir. 2000). Courts must not “weigh evidence,
judge witness credibility, or challenge the factual
conclusions of the jury.” Deters v. Equifax Credit
Info. Servs. Inc., 202 F.3d 1262, 1268 (10th Cir. 2000).
The Court may grant the motion only if the evidence points in
a single direction and is not susceptible to any reasonable
inferences that may support the nonmoving party's
position. Tyler, 232 F.3d at 812.
Larson moves for judgment as a matter of law in his favor on
the Plaintiffs' breach of contract claim against him. In
an abbreviated argument, he contends that the contract with
Mr. Williams, and all performance thereupon, was made by
Genesis (the entity), not Mr. Larson (the
individual). The Court finds that there was sufficient
evidence in the record to permit the jury to conclude that
the Plaintiffs made the contract with Mr. Larson,
individually. The date on which the contract was entered
into, and the existence or corporate form of Genesis at that
time, were matters that were significantly disputed by the
parties. Mr. Williams testified that the contract was formed
in “late '99, 2000, ” and made directly with
Mr. Larson. Mr. Larson testified that the agreement was
formed in 2002, and was made on behalf of a predecessor
entity of Genesis, although there was significant
cross-examination as to the particular nature of that
corporate entity at that time.
jury was free to consider and weigh the parties' various
testimony on these issues, and they appear to have credited
Mr. Williams' testimony. For purposes of this motion, the
Court must also draw all inferences in favor of the
Plaintiffs, and the Court finds that there was sufficient
evidence to justify the conclusion that Mr. Larson was a
party to the oral contract. The Court does not understand Mr.
Larson's motion to challenge the amount of the
jury's breach of contract verdict. Thus, the Court denies
Mr. Larson's motion for judgment as a matter of law on
the breach of contract claim against him and enters judgment
in favor of the Plaintiffs and against Mr. Larson in the
amount of $358, 277.50.
Plaintiffs' unjust enrichment claim is premised on
allegations that, after Mr. Williams terminated the
parties' oral contract in September 2012, Genesis
continued to benefit from the use of Mr. Williams's
intellectual property in Trade Navigator and from
Genesis' use of Mr. Williams' name and likeness in
its marketing. Genesis argues that: (i) as to Mr.
Williams' “libraries” of trading strategies,
the unjust enrichment claim is preempted by the Copyright
Act; and (ii) the Plaintiffs did not present enough evidence
to prove that Genesis enjoyed any particular benefit at the
Plaintiffs' expense. The Plaintiffs argue that the Court
should adopt the jury's advisory verdict on the unjust
enrichment claim in the amounts returned by the jury, and
also enter injunctive relief: (i) restraining the Defendants
from using any of the Plaintiffs' “personal
property/data, ” (ii) requiring the Defendants to
return various libraries to the Plaintiffs, and (iii) disable
certain Genesis employees' ability to use the libraries
in question. Because the Court acts as factfinder on the
equitable claim for unjust enrichment, it treats the
parties' motions on these issues as trial briefs, and
after considering all of the evidence presented at trial,
finds and concludes as follows.
unjust enrichment claim is governed by Colorado law. To prove
an unjust enrichment claim, a plaintiff must demonstrate
that: (1) the defendant received a benefit (2) at the
plaintiff's expense (3) under circumstances rendering it
unjust to allow the defendant to retain the benefit without
compensation. Robinson v. Colo. State Lottery Div.,
179 P.3d 998, 1007 (Colo. 2008). The Court understands the
Plaintiffs to argue that Genesis received three types
benefits at the Plaintiffs' expense after September 2012:
possession and use of the libraries themselves, receipt of
data fees from customers who used Trade Navigator with the
libraries enabled, and use of Mr. Williams name or likeness
to promote Trade Navigator.
Navigator is a software program that receives and displays
market data for a variety of commodities markets. Customers
purchase the Trade Navigator software from Genesis, and in
addition pay Genesis a monthly subscription fee in order to
have access to current market data. The monthly fees vary in
amount depending on the comprehensiveness of market data and
the speed by which it is delivered.
“library” is a package of indicators or
strategies that comprise “a grouping of technical
analysis” or techniques. Tr. 455:16-19. In other words,
they are one or more mathematical algorithms or formulas,
written in a programming language readable by Trade
Navigator, through which users can filter and analyze the raw
commodities market data. See Tr. 879:1-6. By all
appearances, the libraries in Trade Navigator are simply the
formulas themselves, unaccompanied by any interpretive or
explanatory material. To understand how to use and interpret
the results of Mr. Williams' libraries,  users had to attend Mr.
Williams' seminars. See Tr. 879:7-15.
obtained the right to use a given library by paying to attend
a seminar by Mr. Williams that explained the library in
question. The user could then download the library into their
personal copy of Trade Navigator, and Genesis would enable
their ability to use the library to review data. Tr. 423:1-2.
Once a user obtained permission to use a library, he or she
retained that right to continue to use it seemingly in
perpetuity (unless the customer left Trade Navigator for more
than 60 days and later returned, in which case Mr. Williams
would have to give his approval to reauthorize access for
that user), without the need to make any additional payments
to Mr. Williams or Trade Navigator. Tr. 423:8-25, 432:9-15.
It is clear that, after termination of the contract in
September 2012, Genesis continued to allow users who had been
enabled for Mr. Williams' libraries to continue to use
them. Tr. 143:12-22.
Plaintiffs argue that Genesis received a benefit at their
expense after September 2012 by continuing to enable Mr.
Williams' libraries to be used by Trade Navigator
customers. Such a benefit would be at the Plaintiffs'
expense only if the Plaintiffs have some continuing property
right to control the distribution and use of the libraries.
Property interests in intellectual property can arise in a
variety of ways: they may spring from a contractual agreement
covering the use of the intellectual property; they may be
protected by law, such as copyright or trademark law; or they
may receive common-law protection. It is undisputed that,
after September 2012, the parties had no contractual
agreement governing the use of the libraries, so the Court
turns to the copyright law and the common law to examine
whether those sources confer the Plaintiffs some property
right in the libraries.
Copyright and Copyright
argues that the Plaintiffs' unjust enrichment claim (at
least as it relates to Mr. Williams' libraries) is
preempted by the operation of the Copyright Act. The
Copyright Act preempts state-law causes of action if: (i) the
work at issue is within the subject matter of copyright, and
(ii) the rights granted under state law are equivalent to the
exclusive rights within the general scope of copyright.
Gates Rubber Co. v. Bando Chem. Indus. Ltd., 9 F.3d
823, 847 (10th Cir. 1993) (citing 17 U.S.C. §
301(a)-(b)). The general subject matter of copyright covers
“original works of authorship fixed in any tangible
medium of expression” from which they can be reproduced
or communicated. 17 U.S.C. § 102(a). Copyright
protection does not extend to an idea, “regardless of
the form in which it is described, explained, illustrated, or
embodied.” 17 U.S.C. § 102(a)-(b). Even if a work
contains un-copyrightable material, it may nevertheless fall
within the subject matter of copyright if it is fixed in a
copyrightable medium or if it contains copyrightable material
as well. See Forest Park Pictures v. Universal TV Network
Inc., 683 F.3d 424, 429 (2d Cir. 2012).
scope of exclusive copyright rights are: (1) to reproduce the
work, (2) to prepare derivative works, (3) to distribute
copies of the work, (4) to perform the work publicly, and (5)
to display the work publicly. 17 U.S.C. § 106. To
determine whether a common-law claim is preempted, the Court
must conduct a factual analysis as well as a legal analysis
of the required elements of the common-law claim. See
R.W. Beck Inc. v. E3 Consulting LLC, 577 F.3d 1133,
1147-48 (10th Cir. 2009). The Tenth Circuit uses the
“extra-element test” to determine whether a
state-law cause of action grants rights beyond the rights in
§ 106, resulting in a qualitatively different cause of
action. Gates Rubber, 9 F.3d at 847.
parties devote most of their argument to the similarity of
the unjust enrichment claim to the scope of rights under
§ 106, but they seem to agree that the libraries are not
copyrightable under § 102. Even though Mr. Williams
testified that he believed he had copyright-like control over
the libraries, the Plaintiffs have made their position on
copyright clear: the libraries, which are comprised of
formulas and algorithms resulting in indicators and
strategies, are not copyrightable. The Court agrees.
libraries are not covered by the subject matter of copyright
because they are ideas that are not fixed to a work of
tangible expression.See 17 U.S.C. § 102(a)-(b).
It is possible, and may even be likely, that the written
materials Mr. Williams circulates at his seminars, which
explain how the formulas in the libraries work and how to use
the libraries, come within the subject matter of copyright.
See Ex. 599. But such materials are not at issue in
this claim; the claim concerns only the libraries as they
interface with Trade Navigator. Accordingly, because the
libraries are not within the subject matter of copyright, the
Court rejects Genesis' argument that the doctrine of
Copyright Preemption precludes an unjust enrichment claim. In