IN THE UNITED STATES DISTRICT COURT FOR THE
`WESTERN DISTRICT OF MISSOURI
`WESTERN DIVISION
`
`))
`
`))
`
`) No. 04-0025-CV-W-SOW
`)
`
`))
`
`) O
`
`RDER
`
`OVERLAP, et al.,
`
`Plaintiffs,
`
`vs.
`
`CITIGROUP GLOBAL MARKETS, INC.,
`
`Defendants.
`
`Before the Court are defendant Citigroup Global Markets, Inc.’s Motion for Summary
`
`Judgment (Doc. # 68), plaintiff Overlap, Inc.’s Suggestions in Opposition, and defendant’s
`
`Reply. For the reasons stated below, defendant’s motion is denied.
`
`I. Background
`
`Defendant Smith Barney, Inc., n/k/a Citigroup Global Markets, Inc. (“CGMI”) moves for
`
`summary judgment on plaintiff Overlap, Inc.’s (“Overlap”) claims for unfair competition (Count
`
`II), copyright infringement (Count III), and trademark infringement (Count IV). CGMI moves
`
`for partial summary judgment as to breach of license (Count I). Specifically, Overlap alleges in
`
`Count I that its license was breached in two ways: (1) by allowing more than one person to
`
`access each licensed copy of the Overlap software; and (2) by disseminating reports generated by
`
`Overlap to persons who were not licensed users. CGMI seeks partial summary judgment as to
`
`the second of the two allegations and indicates that the first allegation must go to trial.
`
`Therefore, this Order will not include any discussion of the issue of whether more than one
`
`person was allowed to access each licensed copy of the Overlap software. As both sides agree
`
`that claim should be decided by a jury.
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 1 of 14
`
`

`
`The undisputed material facts relevant to the pending summary judgment motion are as
`
`follows: In the early 1990s, William Chennault, a Kansas City, Kansas Community College
`
`faculty member, created a software program that compares the stock holdings of mutual funds.
`
`Apparently, the computer program compares the holdings of separate mutual funds and
`
`determines their diversification. The Overlap software was first offered for sale on floppy disks
`
`in or around 1993 and has since been sold on CD-roms and offered as a web-based product. The
`
`Overlap software license has never been priced at more than $165.00. On or about March 12,
`
`1996, Overlap received a registered trademark in Class 9 for goods and services - mainly
`
`database management software - for use in the field of financial and investment analysis. On or
`
`about December 18, 2002, Overlap successfully registered its trademark “Overlap” with the State
`
`of Missouri.
`
`Kevin Fryer joined Overlap as a CEO in May 2000 and currently holds that position.
`
`Initially, the Capital Asset Management (“CAM”) branch of defendant CGMI purchased the CD
`
`version of the Overlap software in 1998. It is uncontroverted that in June 1998, Overlap was
`
`engaged in a discussion with defendant regarding pricing for multiple subscriptions. Overlap
`
`informed CGMI (then Smith Barney) that it had a pricing scheme for licensing the software
`
`enterprise-wide. In August 1998, Smith Barney was interested in a discount to purchase the
`
`Overlap software for all 12,000 of its brokers.
`
`After the September 11, 2001 disaster destroyed CAM’s principal offices at 7 World
`
`Trade Center, CAM purchased twenty-five licenses of the new web-based product being offered
`
`by plaintiff Overlap. All installations of the Overlap software on CGMI computers were genuine
`
`Overlap programs.
`
`2
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 2 of 14
`
`

`
`The original license language for the Overlap software provided as follows:
`
`This version of Overlap is licensed in a single use only environment. To obtain licensing
`for multiple use environments, including networks and multiple installations, call 1-800-
`OVERLAP. Do you accept all of the terms of the preceding License Agreement?
`
`Specifically, an individual had to agree to the terms of the license before the software could be
`
`used. In approximately August 2001, the Overlap software license was changed. The revised
`
`license read, in part:
`
`You may install and use one copy of the product on a single computer. This copy is to be
`used by only a single user and will be used to the benefit of said single user. If you wish
`to use the product for more users you will need an additional license for each user. You
`may not . . . use the product for the benefit of more than one licensed user.
`
`The Overlap license also provided that a user must reproduce any copyright or other noticed
`
`mark on the product on all copies made. Plaintiff asserts that no provision of the license
`
`permitted the software or its output to be used for the benefit of persons other than the licensed
`
`user. A “user” is not defined in the license agreement or any other Overlap documents.
`
`CGMI Wholesale Desk employees provided sales information and support to CGMI
`
`financial consultants. It is uncontroverted that the single version of the Overlap software used on
`
`the defendant’s CAM Help Desk was shared by members of the Wholesale Desk whose number
`
`ranged from 13 to 25 during the relevant period. It is also uncontroverted that in 2000 or 2001,
`
`CGMI loaded this single copy of the Overlap software onto the server for the sales help desk.
`
`The individuals who worked at the sales help desk used Overlap software to run Overlap reports
`
`for defendant’s financial advisors. It is clear from the record that Overlap reports were
`
`distributed among defendant’s financial consultants. These reports that were generated by the
`
`Overlap software were often titled “Overlap reports” and indicated that the source of the
`
`3
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 3 of 14
`
`

`
`information was “Overlap, Inc.” The sales desk employees had a specific drop-down menu in the
`
`call logs for requests for Overlap reports and information.
`
`Overlap analyses/reports were performed by Wholesale Desk employees who operated
`
`the program and then transmitted the reports internally to the financial consultants by fax or over
`
`the phone. Financial Consultants are brokers who would contact the CAM help desk for useful
`
`sales information that could be used to assist an investor client. CAM Sales Desk employees
`
`promoted CAM products for sale to investor clients.
`
`It is undisputed that the only version of Overlap registered with the United States
`
`Copyright Office is Version 5.0, dated March 13, 2002. CGMI alleges that there is no evidence
`
`that anything that was substantially similar to Overlap version 5.0 was used or copied by CGMI,
`
`and that Overlap denied as much on the copyright application. Overlap contends that the
`
`copyright registration for Overlap version 5.0 contained code for a CD-rom version of Overlap,
`
`the form of Overlap software Citigroup used before August 2001. Overlap raised the copyright
`
`violation claim that is the subject of this lawsuit in July 2005.
`
`The parties disagree as to the specific meaning of the word “overlap” and whether it is a
`
`“generic” term or not. CGMI insists that overlap simply means “to partially extend over,” and
`
`that the term continues to be used generically in the financial industry. Overlap disagrees of
`
`course and contends that after introduction of the Overlap software in 1993, the term “Overlap”
`
`acquired a new and distinct meaning and usage in the mutual fund industry.
`
`Mr. Chennault stated in his deposition that “the intent of the license agreement is for a
`
`single person to use Overlap on a single computer for that person’s benefit. If a help desk person
`
`uses Overlap for multiple brokers’ benefit, then it violates the license agreement.” It is
`
`4
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 4 of 14
`
`

`
`undisputed that the “benefit” language was not placed in the licensing agreement until 2001 in
`
`the new web-based license. Mr. Fryer, President and CEO of the company, stated that the intent
`
`of the original license and the new, web-based license was the same.
`
`At some point in late 2001, Overlap gained knowledge that defendant was using the
`
`Overlap software in violation of the license agreement. On or about November 20, 2001,
`
`Overlap sent a cease and desist letter to defendant.
`
`II. Standard
`
`A motion for summary judgment should be granted if, viewing the evidence in the light
`
`most favorable to the non-moving party, there is no genuine issue as to any material fact and the
`
`moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c); Rafos v. Outboard
`
`Marine Corp., 1 F.3d 707, 708 (8th Cir. 1993) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-
`
`23 (1986)). The moving party bears the burden of bringing forward sufficient evidence to
`
`establish that there are no genuine issues of material fact for trial and that the movant is entitled
`
`to summary judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A
`
`party opposing a properly supported motion for summary judgment may not rest upon the
`
`allegations contained in the pleadings, “but must set forth specific facts showing there is a
`
`genuine issue for trial.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
`
`In reviewing a motion for summary judgment, this Court must scrutinize the evidence in
`
`the light most favorable to the non-moving party, according the non-moving party the benefit of
`
`every factual inference and resolving any doubts as to the facts or existence of any material fact
`
`against the moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 158 (1970).
`
`5
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 5 of 14
`
`

`
`
`
`A. Count I: Breach of License
`
`III. Discussion
`
`As stated above, CGMI seeks partial summary judgment as to Count I. Specifically,
`
`defendant seeks summary judgment on plaintiff’s claim that its license was breached by
`
`defendant when it disseminated reports generated by Overlap. CGMI alleges that there is no
`
`evidence that it ever printed or disseminated reports other than as licensed by Overlap, even
`
`under Overlap’s interpretation of its license. Furthermore, it is CGMI’s interpretation of the
`
`license that it was permissible for licensed Overlap users to generate Overlap reports and
`
`disseminate these reports to unlicensed CGMI brokers. Overlap contends that the license at issue
`
`provided that all persons who had access to the software, including all of CGMI’s brokers, must
`
`be licensed. In this case, numerous CGMI brokers who received Overlap reports were
`
`unlicensed.
`
`The original license on the Overlap software indicated that “this version of Overlap is
`
`licensed in a single use only environment.” In 2001, this license was revised to read: “you may
`
`install and use one copy of the product on a single computer. This copy is to be used by only a
`
`single user and will be used to the benefit of said single user. If you wish to use the product for
`
`more users you will need an additional license for each user.” Overlap argued in its response that
`
`it was always Mr. Chennault’s intent that he wanted everyone reading the license to understand
`
`that it is meant for one person on one computer. Mr. Chennault testified that the intent of the
`
`license agreement from the beginning was for a single person to use Overlap on a single
`
`computer for that person’s benefit. CGMI takes issue with the relevance of Mr. Chennault’s
`
`6
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 6 of 14
`
`

`
`“intent” and contends that the drafters intent as to how the license should be interpreted is
`
`irrelevant.
`
`The basic issue before the Court discerns is: who is considered a “user” under the
`
`license? Overlap alleges that CGMI breached the pre-2001 and 2001 license every time a CGMI
`
`broker received an Overlap report or Overlap data from a CAM employee. CGMI argues that
`
`summary judgment is appropriate because the brokers who received the Overlap reports in this
`
`case were not “users” and the reports generated by the Overlap software were not regulated by
`
`the license agreement. It is CGMI’s position that the license at issue in this case does not
`
`prohibit this activity, and that “quite simply” these brokers did not “use” the software, rather they
`
`just received the output from the Overlap software. If the brokers that received the reports were
`
`“users” under either version of the license agreement, then that broker would have to have
`
`purchase his or her own individual Overlap software license to receive reports.
`
`Overlap disagrees with defendant’s assertion that the brokers were not “users.” Plaintiff
`
`argues that Mr. Chennault, the inventor of Overlap and author of the first license, intended
`
`“single use” to prohibit dissemination of the information or reports extracted from the program.
`
`Furthermore, Overlap relies on conversations Mr. Fryer had with representatives of CGMI. In
`
`these conversations, Mr. Fryer allegedly told representatives of CGMI that in order to
`
`disseminate reports, the recipient of the reports needed to be licensed. CGMI takes issue with the
`
`relevance of these two assertions by Overlap and argues that uncommunicated intent can never
`
`form the basis of a contract and that oral evidence to contradict or change the terms as written is
`
`prohibited. Mal Spinrad of St. Louis, Inc. v. Karman, Inc., 690 S.W.2d 460, 463 (Mo. App.
`
`1985); Pacific Carlton Dev., Inc. v. Barber, 98 S.W.3d 32 159, 165 (Mo. App. 2003).
`
`7
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 7 of 14
`
`

`
`CGMI contends that the interpretation of the words “user” and “use” is a question of law
`
`for the court to determine. “Whether a contract is ambiguous is a question of law.” Young
`
`Dental Mfg. v. Engineered Products, Inc., 838 S.W.2d 154, 155 (Mo. App. 1992). The Young
`
`case involved a contract dispute where the parties disagreed about the meaning of the contractual
`
`term “scrapped.” Id. If the contract is ambiguous, the ambiguity must be resolved by a jury. Id.
`
`In Young, plaintiff could not show that the term “scrapped” had more than one reasonable
`
`meaning and therefore the Court found that the term was unambiguous. Id. at 158.
`
`In this case, the Court finds that the terms “user” and “use,” within the context of this
`
`license agreement, are ambiguous and their meaning must be resolved by a jury. CGMI has
`
`presented to the Court evidence that Overlap’s own expert, Jeffrey Van Myers, represented to
`
`CGMI in his deposition that it was free to disseminate Overlap reports to unlicensed individuals.
`
`Overlap strongly disagrees, asserting that Mr. Myers’ words were taken out of context. All of
`
`this extrinsic evidence may be presented to a jury in order to determine the meaning of the
`
`Overlap licenses. After a contract is determined to be ambiguous, extrinsic evidence may be
`
`admissible to resolve that ambiguity. Young, 838 S.W.2d at 157. “In a case where the parties
`
`disagree as to the meaning and effect of the contract, and parol evidence is required, a motion for
`
`summary judgment based on interpretation of the contract should be denied.” MECO Sys., Inc.
`
`v. Dancing Bear Entm’t, Inc., 948 S.W.2d 185, 191 (Mo. App. 1997). Therefore, defendant’s
`
`motion for summary judgment on plaintiff’s claim that its license was breached by defendant
`
`when it disseminated reports generated by Overlap is denied.
`
`8
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 8 of 14
`
`

`
`B. Count II & IV: Unfair Competition & Trademark Infringement
`
`The Court will address both the unfair competition and trademark infringement claims
`
`together. Defendant’s brief states that Overlap’s trademark claim must fail for the same reason it
`
`has no unfair competition claim, and plaintiff’s responses to both counts are identical. “[T]he
`
`same facts which support a suit for trademark infringement support a suit for unfair
`
`competition.” Gilbert/Robinson, Inc. v. Carrie Beverage-Missouri, Inc., 758 F. Supp. 512, 527
`
`(E.D. Mo. 1991).
`
`Defendant seeks summary judgment on plaintiff’s claim that CGMI’s alleged use of non-
`
`genuine Overlap reports constituted unfair competition under Rev. Stat. Mo. § 417.056 and
`
`diluted the marks. Specifically, CGMI argues that the Overlap reports defendant provided to its
`
`unlicensed brokers were genuine Overlap reports and that Overlap’s trademark is generic and not
`
`distinctive. Overlap responds that CGMI has no evidence that before Mr. Chennault invented the
`
`Overlap software, the word “overlap” had any specific meaning in the financial industry.
`
`At the outset, it is important to determine whether the term “overlap” is capable of
`
`receiving trademark protection. It is only after this determination is made that the Court can go
`
`on to the next step in determining whether a trademark infringement occurred. In determining
`
`whether a work is capable of trademark protection, the Court must first determine in which of
`
`four categories the term falls: (1) generic; (2) descriptive; (3) suggestive; or (4) arbitrary or
`
`fanciful. WSM, Inc. v. Hilton, 724 F.2d 1320, 1325 (8th Cir. 1984). The categorization of a
`
`particular term is an issue of fact. Id. at 1326.
`
`Defendant CGMI argues that the word “overlap” is a generic term and is broadly used in
`
`9
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 9 of 14
`
`

`
`the English language. CGMI maintains that a word this generic is not afforded trademark
`
`protection. See Best Buy Warehouse v. Best Buy Co., Inc., 920 F.2d 536 (8th Cir. 1990).
`
`Whether a term is generic is determined by actual common usage. WSM, Inc., 724 F.2d at 1327.
`
` If this Court determines that “overlap” is generic, then it must grant summary judgment on these
`
`Counts because the term would not be afforded trademark protection.
`
`Overlap argues that the term “overlap” is suggestive or even descriptive and is therefore
`
`entitled to broad protection. Suggestive marks are “entitled to broad trademark protection
`
`without establishing secondary meaning.” General Mills, Inc. v. Kellogg Co., 824 F.2d 622, 625
`
`(8th Cir. 1987).
`
`Both Mr. Chennault and Mr. Myers testified that the term “overlap” was suggestive of the
`
`analysis performed by the proprietary algorithm that Mr. Chennault created. Regardless, the
`
`Court finds that evidence has been put forth by Overlap that creates a genuine issue of material
`
`fact as to whether the term “overlap” is generic or not. For instance, Overlap argues that if
`
`defendant were correct that the word “overlap” is generic, a listener would need to understand
`
`automatically that the mark not only refers to a software program, but to a software program used
`
`by financial analysts to help diversify their clients’ portfolios.
`
`Next, the Court must examine whether there is any genuine issue of material fact as to
`
`whether trademark infringement occurred. CGMI argues that even if “overlap” is afforded
`
`trademark protection, summary judgment is still appropriate because there was no confusion as
`
`to the source of Overlap reports. The Missouri Unfair Competition Act parallels the federal
`
`trademark statute in that it requires plaintiff to prove that the alleged offending use “is likely to
`
`cause confusion or mistake or to deceive as to the source or origin of such goods or services.”
`
`10
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 10 of 14
`
`

`
`Mo. Rev. Stat. § 417.056. Specifically, CGMI asserts that plaintiff has no evidence that CGMI
`
`sent anyone a report which purported to be an Overlap report which was not, in fact, an Overlap
`
`report and that all Overlap reports indicated that the source of the information for the report was
`
`Overlap, Inc. Accordingly, since only genuine Overlap reports are at issue in this case, there can
`
`be no confusion.
`
`The Court finds that Overlap has come forth with sufficient evidence to create a genuine
`
`issue of material fact as to whether CGMI’s use of the trademark created a likelihood of
`
`confusion. Specifically, there is some evidence that when requests for Overlap reports were
`
`made to defendant, it provided reports generated by Morningstar software rather than Overlap.
`
`The Court has noted defendant’s argument that the specific Overlap reports that were generated
`
`were always credited with the “Overlap” trademark (even if a Morningstar report was requested)
`
`and that therefore there could have been no confusion as to the origin of Overlap’s products or
`
`services or affiliation. But the Court finds that there is a possibility of confusion in this instance.
`
`Overlap as the non-moving party has met their burden and come forward with facts showing that
`
`there is a genuine issue of material fact for trial. Therefore, defendant’s motion for summary
`
`judgment on plaintiff’s unfair competition and trademark infringement claims is denied.
`
`C. Count III: Copyright Infringement
`
`Finally, CGMI seeks summary judgment on plaintiff’s copyright claim because the claim
`
`is time-barred. Specifically, defendant argues that federal copyright statutes establish that a civil
`
`action must be “commenced within three years after the claim accrued.” 17 U.S.C. § 507(b).
`
`Defendant asserts that it stopped using the Overlap software in November 2001 and Overlap did
`
`not file its copyright claim until July 2005, beyond the three year time limitation. Further, even if
`
`11
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 11 of 14
`
`

`
`plaintiff’s copyright claim is found not to be time barred, CGMI argues that summary judgment
`
`is still appropriate because plaintiff cannot show the basic elements of copyright infringement.
`
`a. Plaintiff’s claim is not time-barred
`
`CGMI argues that plaintiff’s claim is untimely because it stopped using Overlap software
`
`in November 2001 and Overlap did not file its copyright claim until July 2005. Yet, plaintiff has
`
`come forward with evidence, namely correspondence between a CGMI employee and Overlap on
`
`June 20, 2005, indicating that the CGMI employee used the Overlap software, and had
`
`continuously used the Overlap software for the entire past year. This is enough for plaintiff to
`
`survive summary judgment on defendant’s argument that plaintiff’s copyright claim is time-
`
`barred.
`
`b. Copyright claim
`
`The crux of defendant CGMI’s argument is that plaintiff only registered version 5.0 of its
`
`software with the United States Copyright Office on March 13, 2002, after CGMI ceased using
`
`the Overlap software. CGMI alleges that it ceased using the Overlap software in November 2001
`
`before any version of Overlap software was copyrighted. CGMI argues that the Certificate of
`
`Registration for version 5.0, indicated by its silence that version 5.0 is not based on any
`
`preexisting works or works. The authority for such an argument is not indicated.
`
`17 U.S.C. § 501 requires that a plaintiff in a copyright infringement action show that a
`
`substantial copy of the registered work was used by the defendant. To establish copyright
`
`infringement plaintiff must prove: (1) ownership of valid copyright; and (2) copying of
`
`constituent elements of the work that are original. Fiest Publishing v. Rural Telephone Serv.,
`
`499 U.S. 340, 360 (1991). Copyright registration is a prerequisite to a valid claim of copyright
`
`12
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 12 of 14
`
`

`
`infringement. Olan Mills v. Linn Photo Co., 23 F.3d 1345, 1349 (8th Cir. 1994).
`
`What CGMI fails to recognize is that Overlap has presented evidence, including
`
`testimony of Mr. Myers, that CGMI used both the CD version (pre-9/11) and the web-based
`
`versions (post-9/11) of the Overlap software. Based on Mr. Myer’s review of the of the software
`
`code registered in 2002 with the copyright office, the registration was consistent with the CD
`
`version of the software (or a “substantial copy”), which CGMI heavily used. Apparently plaintiff
`
`is arguing that the same computer “code” that CGMI used prior to 2002 was included in the
`
`version 5.0, and that the copyright registration is based on Overlap’s preexisting works that were
`
`used by defendant prior to its registration. Regardless, Overlap has come forth with evidence to
`
`indicate that defendant CGMI was using the Overlap software into the year 2005 (post-
`
`registration). Defendant argues that what remains missing from the evidence that Overlap has
`
`produced is any proof that any computer owned or controlled by CGMI, or any of CGMI’s
`
`employees or agents, contained software with the content of version 5.0 (the registered version),
`
`or any proof that anyone copied any version of 5.0. Of course if Overlap failed to provide some
`
`proof concerning all elements of a copyright claim, then summary judgment would be
`
`appropriate, but that is not the case here. Therefore, defendant’s motion for summary judgment
`
`on plaintiff’s copyright claim is denied.
`
`IV. Conclusion
`
`For the reasons stated above, it is hereby
`
`ORDERED that defendant Citigroup Global Markets, Inc.’s Motion for Summary
`
`13
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 13 of 14
`
`

`
`Judgment (Doc. # 68) is denied. This case will proceed to trial on the April docket.
`
`Dated: 2-28-06
`
`/s/Scott O. Wright
`SCOTT O. WRIGHT
`Senior United States District Judge
`
`14
`
`Case 4:04-cv-00025-SOW Document 77 Filed 02/28/06 Page 14 of 14