Software developer targets Fidelity with $100M suit
Edward Mason Journal Staff
In a case of David v. Goliath, FMR Corp., the parent company of mutual fund giant Fidelity Investments, has been named in a $100 million lawsuit, accused of stealing software developed by a person who later became one of its own employees.
John A. Davidson, the Fidelity employee, filed the suit in U.S. District Court in Boston, charging that FMR violated federal copyright law by copying and distributing software he developed but wasn't properly paid for - a claim common in the business world, experts said.
Reached by telephone, Davidson declined to discuss the lawsuit. His attorney, Jerrold G. Neeff, said it was a case of a small inventor having his creation stolen by a massive corporation. Based on the number of computers he believes use the software, as well as standard calculations for figuring copyright claims, Neeff said his client is owed $100 million.
FMR denied any wrongdoing. "Based on the information provided to us and our review, we've decided that this lawsuit is without merit," said Vincent Loporchio, a spokesman who, citing company policy on ongoing litigation, declined further comment.
According to court documents, in 1994 Davidson met with FMR executives to pitch software he claims to have developed to perform surveys, such as those for customer satisfaction. Davidson, then chief executive of his own company, Advanced Decision Management Inc. of South Natick, demonstrated the software that August.
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In November 1994, Fidelity paid $399 for a single copy of the survey software to test, according to an invoice Davidson's attorney supplied and plans to file in court. Neeff, the lawyer representing Davidson, said the invoice clearly warned that the software was protected by copyright laws and could only be installed on a single computer.
A company executive allegedly told Davidson that Fidelity senior management would have to assess the software before any more could be bought. But those purchases never happened. After putting him off, Davidson claimed, Fidelity eventually decided not to buy any more of his software. Loporchio would not comment on Davidson's account.
Without Fidelity as a customer, Davidson found it difficult to persuade other companies to buy his survey software, said Charles Roth, who was Advanced Decision Management's chief software architect. For some time, Roth said, Davidson had been wooing customers with the promise that Fidelity had expressed interest in his creation. Now there was nothing to show for it.
"It was catastrophic," Roth said. "We looked like turkeys."
With a potential client base decimated, Davidson all but gave up on his company. Although it remains a going concern, Neeff said, Davidson in 1997 took a job at Fidelity working as a software project manager. Not long after arriving there, he discovered what he claims in court documents was the software he developed installed "on multiple computers" at Fidelity.
"It's a classic story," said Andrew Beckerman-Radau, a professor in intellectual property law at Suffolk University Law School in Boston.
Inventors frequently hand over a product for testing by a company without proper guarantees it won't be misappropriated, Beckerman-Radau explained. Other times, they will sign away a copyright to get an invention before a company's executives in the naive hope it will be bought. Davidson's complaint, though, insists the copyright was in effect.
Asked why Davidson continues to work at Fidelity, Neeff said his client had been trying to settle the conflict without going to court. Those talks, he said, are ongoing. FMR's Loporchio declined to confirm whether the parties have discussed settlement.