UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK----------------------------------------------------------------X...
systems, to oil trading software platforms, securities portfolio management software,legal case management software, and v...
THE PERFORMANCE METRICS SOFTWARE        6.      In 2006 and early 2007, I realized that that no one in the e-discoveryindu...
graphical displays of individual as well as group performance. The Performance MetricsSoftware is written in the 16-bit .N...
12.      I obtained a U.S. Copyright Certificate of Registration for thePerformance Metrics Software (called “Legal Review...
17.     Third, ASI programmers are prohibited from working on ASI software,including the source code, outside the office. ...
solutions for accounts payable, general ledger, and certain other accounting functions.With the success of these first ini...
interface catapulted Peak to a leading position among staffing services. Because of thestrong promotional benefit of this ...
ASI would own all intellectual property rights in any software produced or provided inthe context of the parties’ relation...
of Client therein, Client agrees to assign and, upon its      creation, automatically assigns to ASI Systems the      owne...
34.     These Terms and Conditions were essential terms in the agreementbetween ASI and Peak. It was always my intention t...
ASI had provided extensive accounting software and other software to Peak, and thattherefore there was no possibility of c...
previously tried and failed to do in 1999. Peak sought to re-launch its efforts with a newe-discovery subsidiary, Defendan...
prospective clients. Numerous potential clients commented that they had never seen thiscapability offered by any e-discove...
the “PC Hunter Recruiting Management System,” a software package licensed by Peakfrom Micro J Systems. In late 2003, I pro...
ASI and Peak, including specifically the proceeds and term of the software license, Peakand I agreed to enter into an “All...
the buyer would have the option of either keeping the Staffing System or just taking the“pertinent data.” (Exhibit H ¶ e.)...
months as the discussions concerning the Staffing Management System Agreement, and Iprovided extra copies of the Terms & C...
56.     The relationship between Peak and ASI began to unravel in the spring andsummer of 2008.       57.     In May 2008,...
62.     Peak asked me, and I agreed, to maintain Peak’s data on ASI’s servers foranother three months, until September 200...
termination of the ASI-Peak relationship. Each law firm or other client that engages Peakto provide services including Per...
the software. This behavior suggested that Peak was trying to keep the user interface andother aspects of the Peak Review ...
73.     I believe it would be impossible for Peak to have independently created itsown Performance Metrics Software in the...
extraordinary growth and profit, Peak’s continued existence does not depend on thePerformance Metrics Software.           ...
Performance Metrics Software. The companies agreed to the Staffing ManagementSystem Agreement specifically because Peak wa...
82.     All of these allegations suggesting that Peak now owns the copyright orhas other rights to the Performance Metrics...
Executed Plaintiff Declaration
Upcoming SlideShare
Loading in...5
×

Executed Plaintiff Declaration

919
-1

Published on

THE PEAK ORGANIZATION, INC.,PEAK COUNSEL, INC, PEAK DISCOVERY, INC., RICHARD EICHENBERG, ARNOLD SCHLANGER,
MICHAEL DALEWITZ, and PHILIP GREENBERG, DEFENDANTS
COPYRIGHT INFRINGMENT

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
919
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Executed Plaintiff Declaration

  1. 1. UNITED STATES DISTRICT COURTSOUTHERN DISTRICT OF NEW YORK----------------------------------------------------------------XARGENTTO SYSTEMS, INC. and :NICK SANTINO, : : No.: 09 Civ. 2615 (LLS)(AJP) Plaintiffs, : : ECF Case -v.- : : DECLARATION OFTHE PEAK ORGANIZATION, INC., : NICK SANTINOPEAK COUNSEL, INC., PEAK : IN SUPPORT OFDISCOVERY, INC., RICHARD : PRELIMINARYEICHENBERG, ARNOLD SCHLANGER, : INJUNCTION ANDMICHAEL DALEWITZ, and PHILIP : EXPEDITED DISCOVERYGREENBERG, : : Defendants. :----------------------------------------------------------------X NICK SANTINO, under penalty of perjury, declares as follows: 1. I am the President and Founder of Argentto Systems, Inc. (“ASI”). As theowner of the copyright to the legal review metrics software at issue in this action (the“Performance Metrics Software”), I am also a Plaintiff. I make this declaration pursuantto 28 U.S.C. § 1746 in support of Plaintiffs’ application for a preliminary injunction andexpedited discovery. BACKGROUND 2. I have been an independent software developer and consultant since 1994.In 2001, as my business grew, I founded and incorporated ASI. ASI is a softwaredevelopment and consulting company that develops, customizes and provides computersoftware solutions to businesses ranging from law firms to investment banks to computermanufacturers. ASI offers a full suite of software programs, from accounting enterprise 1
  2. 2. systems, to oil trading software platforms, securities portfolio management software,legal case management software, and various interactive web applications. In addition,ASI provides information technology (“IT”) consulting and support services to its clients.Since its founding, ASI has employed approximately fifteen software programmers. 3. As a leading developer of software based on proven Microsofttechnologies, ASI has developed unique intellectual property unparalleled in its industry,including multi-company accounting software that permits entities with multiple businessunits to consolidate their general ledgers into a single database, investment portfoliomanagement software, and interactive web-based job posting software that integrates theneeds of job candidates, staffing services, and potential employers. Starting in 2002, Ihave applied for and/or obtained copyright registrations for these and other softwarepackages developed for licensing to clients. 4. Attached hereto as Exhibit A is a true and correct copy of ASI’s currentmarketing catalog, which ASI provides to current and prospective customers to describeand offer its software for licensing. The Performance Metrics Software at issue in thisaction appears on page 14 of the catalog. 5. As part of its customer relationships, ASI inevitably adapts its softwarepackages to the needs of a particular customer. That customization work, and ongoingsupport of the software once the customer has implemented it, constitutes a major portionof ASI’s workload and revenue generation. In any event, ASI does not permit itscustomers access to the proprietary source code for such software, to ensure the securityof ASI’s intellectual property. 2
  3. 3. THE PERFORMANCE METRICS SOFTWARE 6. In 2006 and early 2007, I realized that that no one in the e-discoveryindustry had been able to find a solution to the problem of quality control and efficiencymanagement in the context of litigation discovery document review. I decided todevelop, with the investment of considerable expense and programmer time, a unique andproprietary software system to analyze and chart the progress and performance of large-scale review of documents in the course of complex legal proceedings. This software,which no one in the e-discovery or document review industries had previously been ableto create, provides unprecedented control over the document review process in largelitigations. 7. Successful discovery management requires complex metrics, ormeasurement of the performance and efficiency of each document reviewer. ThePerformance Metrics Software enables supervisors to manage effectively the progress,accuracy, and efficiency of individual reviewers and the review team as a whole. Themetrics include: (1) documents per hours and averages; (2) pages per hours and averages;(3) hours logged by reviewers; (4) documents reviewed; (5) documents re-reviewed; (6)documents with no tags; (7) pages reviewed; (8) tags made; (9) tags at the first, secondand QC level; (10) additional tags added at the first-level review; (11) document reviewcosts at issue level. 8. The Performance Metrics Software (1) is platform agnostic, meaning itcan be used on any document review platform; (2) enables a user to manage multipleprojects simultaneously; (3) is web-based, so it is easy to use and secure; and (4) provides 3
  4. 4. graphical displays of individual as well as group performance. The Performance MetricsSoftware is written in the 16-bit .NET programming language. 9. With the Performance Metrics Software, supervisors can (1) access aconsolidated history of individual reviewer skills for use on future projects; (2) identifyunder-performing reviewers; (3) identify inaccurate coders; (4) share performance datawith the review team, providing an incentive to achieve; and (5) export data intospreadsheets for storage and internal use. 10. The implementation of these features was and is unprecedented in the e-discovery industry. An IT specialist at one top New York law firm, upon first viewingthe software, told me that that law firm had been trying for seven years, without success,to create this document review management and metrics functionality. Although it isbased on proven Microsoft technologies such as the SQL Server 2005 database softwareand the .NET programming language and framework in Microsoft Visual Studio, the userinterface, data algorithms, data tables, drivers, and database structure of the PerformanceMetrics Software consist of numerous original constituent elements. The PerformanceMetrics Software contains over 950,000 lines of software source code. Over 6,000 hoursof ASI programmer time, over a period of 28 months, were required to write thePerformance Metrics Software. 11. When the Performance Metrics Software was completed in late November2007, I sent a copyright application and the required fee to the U.S. Copyright Office, as Ihad done for other software ASI developed. Attached hereto as Exhibit B is a true andcorrect copy of the copyright application I submitted, along with a copy of the check andthe source code deposit that I sent to the U.S. Copyright Office with the application. 4
  5. 5. 12. I obtained a U.S. Copyright Certificate of Registration for thePerformance Metrics Software (called “Legal Review Metrics”), Registration NumberTX 6-901-797, effective December 3, 2007. A copy of this Certificate of Registration isattached hereto as Exhibit C. I exclusively licensed the Performance Metrics Software toASI, so that ASI could license it to clients. 13. I am not aware of any competing software package in the e-discoveryindustry. Our implementation of the Performance Metrics software is unique, and offersa huge competitive advantage to whoever markets it to prospective law firm and otherlegal clients.ASI’S EFFORTS TO PROTECT THE PERFORMANCE METRICS SOFTWARE TRADE SECRET 14. ASI maintains the confidentiality of its trade secrets, including itsproprietary source code, in many ways. 15. First, all ASI employees and contractors are required to sign strictconfidentiality, work for hire, and non-disclosure agreements. 16. Second, ASI’s programmers who develop, test, maintain and upgrade itssource code are the only individuals at ASI who have access to the source code throughpassword-protected computers. ASI provides each programmer with a user name andpassword without which the programmer cannot access the system on which the sourcecode resides. Only I have the password to directly access the server containing andrunning the Performance Metrics Software source code. 5
  6. 6. 17. Third, ASI programmers are prohibited from working on ASI software,including the source code, outside the office. At the office, ASI programmers arepermitted access only to their own workstations and computers. 18. Fourth, ASI’s offices, including the servers on which its software sourcecode resides, are locked, secured, and protected by guard dog. 19. Finally, while ASI provides its actual and prospective customers andlicensees with access to its software user interfaces to view its form and functionality,and may offer limited access to underlying data to the extent the customer or licenseerequires such access for daily use, absolutely no one other than ASI’s own computerprogrammers has access to the source code embodying that software. 20. The Performance Metrics Software source code was always maintainedand run on servers belonging to ASI. Neither Peak nor any third party was everpermitted access to the source code for the Performance Metrics Software or any othersource code. THE RELATIONSHIP BETWEEN ASI AND PEAK 21. Frank Barone, Peak’s newly-hired controller, first contacted me to workwith Peak in 2002. Mr. Barone introduced me to Richard Eichenberg, Peak’s Presidentand Founder. Peak needed help with its accounting systems. Although Peak had been inexistence for decades, its accounting systems and other IT systems were in a shambles.For example, even though Peak had invested hundreds of thousands of dollars in itsaccounting systems over the years, it still did not have a means to write accounts-payablechecks to clients. 22. In June 2002, Peak engaged ASI to provide one of ASI’s existing software 6
  7. 7. solutions for accounts payable, general ledger, and certain other accounting functions.With the success of these first initiatives, Peak then requested that ASI provide softwarefor accounts receivable, payroll, and additional accounting functions. In January 2003,ASI provided a “live payroll” software system, finally bringing Peak’s payrollcapabilities into the 21st century. We consistently provided this software ahead ofschedule and under budget. 23. ASI’s accounting systems, including its innovative “multi-company”system permitting consolidation of the accounting for Peak’s multiple divisions, wereproprietary and unique. ASI ran the accounting software, and maintained the “datatables” for the underlying databases. Peak and ASI agreed that ASI would haveexclusive access and administrative control over the accounting server, which wasseparate from all of Peak’s existing network, and housed in a separate building. Withthat agreement, I installed the accounting database on that server. To the best of myknowledge, no one other than Frank Barone and me ever accessed that server, for thefollowing six years, until June 2008. 24. In the summer of 2003, I realized that Peak was still using paper time slipsand fax machines to keep track of the hours its temporary employees were working; thissystem caused Peak’s billing, accounting, and payroll functions to be slow, disconnected,and inefficient. I began developing a “beta” version of a web-based solution for timecardentry and approval. Despite Richard Eichenberg’s apprehension, I demonstrated the betasystem to him, and Peak ultimately adopted the use of this web-based solution as“PeakInteractive.net” in February 2004. The ability of Peak’s temporary employees, andtheir supervisors at client companies, to report and approve hours using a web-based 7
  8. 8. interface catapulted Peak to a leading position among staffing services. Because of thestrong promotional benefit of this innovative software solution, Richard and otherexecutives asked me to accompany Peak executives in sales calls to prospective clients.In numerous instances, I was aware that new staffing client companies cited Peak’s web-based timecard entry and approval system as the primary reason for their choosing Peakfor their staffing needs. THE AGREEMENTS BETWEEN ASI AND PEAK 25. ASI had an agreement with Peak with respect to the use and ownership ofall software licensed by ASI to Peak, including the Performance Metrics Software,throughout the companies’ relationship. This agreement is reflected in variousdocuments. 26. First, in late June 2002, when ASI began providing accounting and relatedsoftware to Peak, Peak and ASI entered into a Confidentiality Agreement designed toprotect Peak’s proprietary information, effective June 28, 2002. Attached hereto asExhibit D is a true and correct copy of this Confidentiality Agreement. This agreementspecifically stated that software copyrights did not constitute part of Peak’s ConfidentialInformation, and that “ASI Systems, Inc. will retain all software intellectual property andcopyrights.” See Exhibit D ¶ 1.A., III. 27. On or about November 20, 2003, ASI and Peak entered into aConfidentiality Agreement effective January 8, 2002, intended to replace the olderConfidentiality Agreement and to cover the entire period of the companies’ relationship.Attached hereto as Exhibit E is a true and correct copy of this Confidentiality Agreement.In this Confidentiality Agreement, the parties also expressly agreed and reaffirmed that 8
  9. 9. ASI would own all intellectual property rights in any software produced or provided inthe context of the parties’ relationship, as follows: III OWNERSHIP. As between The Peak Organization, Inc. and ASI Systems, Inc., all rights, titles, and interest, including copyright interests and any other intellectual property, in and to the Software produced or provided by ASI Systems, Inc. under this Agreement shall be the property of ASI Systems, Inc. To the extent of any interest of The Peak Organization, Inc. therein, The Peak Organization, Inc. agrees to assign and, upon its creation, automatically assigns to ASI Systems, Inc. the ownership of such Software, including copyright interests and any other intellectual property therein, without the necessity of any further consideration. (Exhibit E ¶ III) 28. In addition, as understood and intended by the parties, the agreement againspecifically stated and reaffirmed that software copyrights did not constitute part ofPeak’s Confidential Information. See Exhibit E ¶ I.A. 29. The agreement between Peak and ASI was also reflected in the “Termsand Conditions” printed on each and every invoice provided by ASI to Peak inconnection with its software sales, service and support, including the PerformanceMetrics Software. 30. Attached hereto as Exhibit F are the Terms & Conditions as they appearedon the back of each invoice sent by ASI to Peak. 31. Section 5.1 of the Terms and Conditions of the agreement between ASIand Peak provides: OWNERSHIP RIGHTS 5.1 Ownership. As between Client and ASI Systems, Inc., except as set forth below in this Section 6, all right, title, and interest, including copyright interests and any other intellectual property, in and to the Software produced or provided by ASI Systems under this Agreement shall be the property of ASI Systems, Inc.. To the extent of any interest 9
  10. 10. of Client therein, Client agrees to assign and, upon its creation, automatically assigns to ASI Systems the ownership of such Software, including copyright interests and any other intellectual property therein, without the necessity of any further consideration.32. Section 6.1 of the Terms and Conditions provides: RESPONSIBILITIES OF Client FOR SOFTWARE 6.1 Limitations on Use. Client may not use, copy, or modify the Software, or any copy, adaptation, transcription, or merged portion thereof, except as expressly authorized by ASI Systems hereunder. Clients rights may not be transferred except to a successor in interest of Clients entire business who assumes the obligations of this Agreement. No service bureau work, multiple-user license, or time-sharing arrangement is permitted. If Client uses, copies, or modifies the Software or transfers possession of any copy, adaptation, transcription, or merged portion of the Software to any other party in any way not expressly authorized hereunder, Clients license is automatically terminated.33. Section 7.1 and 7.2 of the Terms and Conditions provide: PROPRIETARY INFORMATION 7.1 Trade Secrets. Client acknowledges that in order to perform the services called for in this Agreement, it shall be necessary for ASI Systems to disclose to Client certain Trade Secrets that have been developed by ASI Systems at great expense and that have required considerable effort of skilled professionals. Client further acknowledges that the Software will of necessity incorporate such Trade Secrets. Client agrees that it shall not disclose, transfer, use, copy, or allow access to any such Trade Secrets to any employees or to any third parties, excepting those who have a need to know such Trade Secrets in order to give effect to Clients rights hereunder and who have bound themselves to respect and protect the confidentiality of such Trade Secrets. In no event shall Client disclose any such Trade Secrets to any competitors of ASI Systems, Inc.. 7.2 Scope of Restriction. As used herein, the term “Trade Secrets” shall mean any scientific or technical data, information, design, process, procedure, formula, or improvement that is commercially valuable to ASI Systems and not generally known in the industry. 10
  11. 11. 34. These Terms and Conditions were essential terms in the agreementbetween ASI and Peak. It was always my intention that ASI would keep control of thesoftware, to market and sell it to other clients. As set forth in the Terms and Conditionsand agreed between the companies, all intellectual property and proprietary trade secretrights to the Performance Metrics Software belonged to ASI, and Peak’s license to usethe software was expressly contingent on ASI’s authorization. 35. Peak was well aware of these Terms and Conditions and of the fact thatthey applied to the Performance Metrics Software, and all other software licensed by ASIto Peak, with the exception of the Staffing Management System software describedbelow. On several occasions, I sent an extra copy of the Terms and Conditions printed onASI’s invoices and set forth above to various Peak executives, including DefendantsRichard Eichenberg, Michael Dalewitz, and Philip Greenberg. 36. In fact, I specifically recall that, in late 2003 or early 2004, around thetime that the Staffing Management System Software Agreement described below wasbeing discussed, Richard Eichenberg noticed the Terms and Conditions printed on theback of an ASI invoice when he was in the process of paying it, and he telephoned meand asked me to email him a copy in a larger and darker font. I did so. Attached heretoas Exhibit G are the Terms and Conditions in the form that I sent to Mr. Eichenberg byemail. Later that day, Mr. Eichenberg telephoned me and expressed certain opinions andconcerns about the wording of the Terms and Conditions. I responded that these Termsand Conditions reflected the terms of the agreement between ASI and Peak, that Iunderstood that Peak had been abiding by the Terms and Conditions since the beginningof the relationship between our companies more than a year earlier, during which time 11
  12. 12. ASI had provided extensive accounting software and other software to Peak, and thattherefore there was no possibility of changing the Terms and Conditions of theAgreement with respect to future software licensing. Mr. Eichenberg assented to mystatements and accepted the Terms and Conditions. 37. In 2004, separately from the licensing of ASI’s software, Peak engagedASI in our consulting capacity to manage Peak’s entire network, including e-mail. Peakasked me to become an “outsourced CIO” (chief information officer). From that pointuntil June 2008, I helped Peak to administer its e-mail, network and enterprise servers,and I worked with Peak’s own personnel to solve issues relating to individualworkstations and peripherals. 38. In late 2005, I proposed that Peak should consolidate its job postingwebsite with ASI’s web-based staffing software, which allows potential job candidates topost availability and check listings, staffing companies to post listings and monitor needs,and potential client companies to post needs and check on job candidates. I pointed outthat incorporating a separate subsystem into the Peak website to perform these functionswould reduce costs, reduce errors and increase efficiency exponentially; ASI’s softwarewas capable of fulfilling exactly what Peak needed. Peak agreed to adopt ASI’s webinterface, which I intended to market to staffing companies, job websites such asMonster.com, and other, similar, customers. The web program became hugely popularwith Peak’s own employees, as well as Peak’s clients and staffing job candidates. THE LICENSING OF THE PERFORMANCE METRICS SOFTWARE 39. In 2006, Richard Eichenberg told me that his “dream” for Peak was tobecome successful in the rapidly growing e-discovery field, which, he told me; Peak had 12
  13. 13. previously tried and failed to do in 1999. Peak sought to re-launch its efforts with a newe-discovery subsidiary, Defendant Peak Discovery, Inc. Peak intended to sell its e-discovery services alongside the temporary legal staffing services offered by its existingsubsidiary Peak Counsel, Inc., and thereby increase revenues from both. 40. I began researching IT solutions in the document review and e-discoveryindustries, and realized that no one had ever created software to monitor the performanceof document review, to measure individual reviewers’ and teams’ accuracy, speed andefficiency. I saw that the significant variability in these areas was a major flaw in thecost-efficiency of the entire e-discovery and document review process. 41. ASI then independently embarked upon development of the PerformanceMetrics Software. When I demonstrated a “beta” version of the software to RichardEichenberg in early 2007, he was extremely enthusiastic. 42. In January 2008, without my prior knowledge or pre-approval, Peakannounced that it was offering the Performance Metrics Software as its “proprietarysoftware tool,” “Peak Review Metrics,” which formed the centerpiece of its e-discoveryand temporary legal document review services. Indeed, in Peak’s promotional materials,the “Performance and Accuracy Metrics” software was frequently listed as the mostimportant benefit of engaging Peak to provide document review and e-discovery services.Peak demonstrated the Performance Review Software at the annual American BarAssociation LegalTech event in February 2008, and utilized these demonstrations to gainnumerous new clients for Peak’s e-discovery and document review services. 43. Richard Eichenberg and other Peak executives repeatedly asked me toassist Peak in promoting the Performance Review Metrics software in sales calls to 13
  14. 14. prospective clients. Numerous potential clients commented that they had never seen thiscapability offered by any e-discovery or document review provider. The PerformanceMetrics Software gave Peak a unique edge in the e-discovery and document reviewmarkets, and Peak received numerous engagements based on potential clients’ interest inthe software’s capabilities. Based on statements made to me by Peak executives,salespeople and clients, I believe that clients retained Peak primarily because of theperformance metrics capability of the Performance Metrics Software that Peak nowclaims to own. 44. It was always understood and agreed between Peak and ASI that ASIwould be the sole and exclusive provider of support and data migration for thePerformance Metrics Software. It is a critical component of ASI’s business model toderive revenues from such service and support, and I would never have permitted Peak touse ASI’s software without such an agreement and understanding. THE STAFFING MANAGEMENT SYSTEM SOFTWARE AGREEMENT 45. I understand that Peak is now contending that the license terms of thePerformance Metrics Software, and indeed all software ever licensed by ASI to Peak,were governed by an “Alliance and Licensing Agreement Pertaining to StaffingManagement System” between the companies, dated December 17, 2003 (“the StaffingManagement System Agreement”). Any such argument totally contradicts the realities ofthe licensing agreements and the understanding that both the Defendants and I had of thecompanies’ relationship, as set forth below. 46. For many years, since the early 1990s and continuing at least through June2008, the computer software that Peak utilized to manage its staffing operations has been 14
  15. 15. the “PC Hunter Recruiting Management System,” a software package licensed by Peakfrom Micro J Systems. In late 2003, I proposed that Peak could adopt and assist in thedevelopment of a modified and customized version of ASI’s 32-bit desktop StaffingEnterprise System to replace or supplement PC Hunter. See ASI Catalog, Exhibit A at12. This software allows staffing specialists, recruiters, or human resources (“HR”)personnel to organize and categorize job candidates and existing employees byavailability, skills, education and work experience. In addition, companies can log joblistings and monitor needs for staffing, then cross-reference such listings or requests withthe candidates’ or employees’ files to fill these job needs. 47. With great skepticism, Peak agreed to explore utilizing this 32-bit desktopapplication, which I intended to market to staffing companies like Peak, or to HRdepartments of any large organizations wishing to search and categorize their ownemployees’ qualifications and skill sets. This Staffing Management System would permitsuch companies to manage employee profiles and search for specific skill sets,educational background, or experience among a database of employees, and match themwith specific client requests. When Peak resisted my proposals, I suggested that Peakcould participate in any income generated from licensing the Staffing Managementsoftware to third parties, and that Peak could have a perpetual license to use the software.In keeping with this, and unlike all other ASI software licensed to Peak, I agreed toprovide a copy of the Staffing Management software source code to an escrow agent, tobe released to Peak under certain conditions. 48. Because the contemplated Staffing Management System project was to begoverned by terms different from all the other projects, services and licenses between 15
  16. 16. ASI and Peak, including specifically the proceeds and term of the software license, Peakand I agreed to enter into an “Alliance and Licensing Agreement Pertaining to StaffingManagement System” (the “Staffing Management System Agreement”), which I signedin December 2003, and which Richard Eichenberg signed in early January 2004. A trueand correct copy of the Staffing Management System Agreement is attached hereto asExhibit H. 49. The Staffing Management System Software was very different from thePerformance Metrics Software ASI would later license to Peak. The StaffingManagement Software was written in 32-bit VBA computer code and was intended tointerface with ASI’s accounting and billing software, which Peak had already licensedand which was also written in 32-bit VBA code. By contrast, the Performance MetricsSoftware was written in 16-bit .NET code atop a SQL Server 2005 database, and wasintended to be “platform-agnostic.” If Peak had adopted it, the Staffing ManagementSystem Software would have been designed to encompass Peak’s entire recruiting andplacement business, for temporary workers and potential permanent hires. ThePerformance Metrics Software does not relate to staffing, recruiting or placementsystems. Instead, it is narrowly focused on providing detailed reports on documentreviewers’ performance in large e-discovery litigation, and is primarily designed tobenefit law firms. 50. The Staffing Management System would have generated data belonging toPeak, including the job candidates’ profiles, the clients’ staffing needs, and so on. TheStaffing Management System Agreement itself addresses this issue by providing that, ifPeak were to sell one of its divisions that had licensed the Staffing Management System, 16
  17. 17. the buyer would have the option of either keeping the Staffing System or just taking the“pertinent data.” (Exhibit H ¶ e.) The Performance Metrics Software does not generatedata belonging to Peak’s divisions, but instead reports reviewer performance informationto law firms and other Peak clients based on those clients’ data. 51. ASI even invoiced Peak for the Staffing Management System softwareproject and for the Performance Metrics Software project on separate invoices, evenwhen work was performed on both projects in the same day. (In fact, ASI provided atleast six different categories of invoices for various separate projects in the same timeperiods.) 52. Unfortunately, despite the promise of mutual gain for both ASI and Peakfrom the Staffing Management System Agreement, the software was never completedbefore the termination of the relationship between ASI and Peak, and only existed in“beta” demonstration format. Although the project was never completed, in 2004 Iprovided a disk containing “beta” Staffing Management System software source code toPeak’s attorney as the “escrow” referenced in the Staffing Management SystemAgreement. This was the only time I voluntarily provided Peak with source code for anyASI software. In any event, as far as I know, Peak still uses PC Hunter RecruitingManagement System for its staffing management system needs. 53. Peak clearly understood that the Staffing Management System Agreementwas designed to cover only the Staffing Management System project software. TheTerms and Conditions continued to be printed on every invoice I sent to Peak. Also, myexchange with Mr. Eichenberg concerning the Terms and Conditions of our agreementwith respect to all other software, set forth in Paragraph 34 above, took place in the same 17
  18. 18. months as the discussions concerning the Staffing Management System Agreement, and Iprovided extra copies of the Terms & Conditions to various Peak executives, reaffirmingtheir applicability to software licensed by ASI to Peak, on several occasions after theexecution of the Staffing Management System Agreement. THE THEFT OF ASI’S SOFTWARE AND TERMINATION OF THE RELATIONSHIP BETWEEN ASI AND PEAK 54. As part of my duties as outside CIO, I also acted as a “Chief SecurityOfficer” for Peak. Peak began to have many problems with certain Peak executives whodid not comply with proper email security practices and web usage. I undertook toinvestigate these problems. In the course of my investigation, I came across an emailfrom James Bandes, who was then Executive Director of Peak Off-Site, Inc. (thepredecessor of Defendant Peak Discovery, Inc.), to Richard Eichenberg on November 27,2007. In that email, Bandes suggested, “There are many developers out there that couldreverse engineer what [Santino] has written especially if you have the source code andeven if you dont it can be done.” Because of this direct threat to ASI’s and myintellectual property, I copied the text of this email and saved it. A true and correct copyof this document is attached hereto as Exhibit I. 55. I promptly contacted Richard Eichenberg and Michael Dalewitz, informedthem that I had seen Mr. Bandes’s communication, stated my objections to hissuggestion, and emphatically reminded them of ASI’s copyright and other intellectualproperty and trade secret rights under the companies’ agreements. I later sent Mr.Dalewitz a copy of the Terms and Conditions printed on ASI’s invoices and pointed outthe provisions prohibiting the course of conduct that Mr. Bandes had suggested. 18
  19. 19. 56. The relationship between Peak and ASI began to unravel in the spring andsummer of 2008. 57. In May 2008, I was working on a project late in the evening at Peak.When he left the office in the evening, I accidentally left behind a flashlight, ascrewdriver, and a CD case with several CD-ROMs containing, among other files, thesource code for the Performance Metrics Software. 58. The next day, the items were not where I left them. When I inquired aboutthe location of my property, the flashlight and screwdriver were returned to me, but theCD case was not. I made numerous inquiries, but the CD case and the CD-ROMs withinwere never returned. 59. Shortly thereafter, in June 2008, Peak purported to terminate ASI’sservices, and I was removed from my position as “outsourced CIO.” With thistermination, consistent with the terms and conditions of the agreements between ASI andPeak, all licenses of ASI software to Peak, including the Performance Metrics Software,were terminated. 60. At the time of the termination, Peak owed ASI $30,000 in fees forconsulting and network administration services. 61. After the termination, I mailed all of Peak’s web information and imagesto Richard Eichenberg and his counsel. I did this without being asked by anyone,because I wanted to make sure that Peak had the images, text and information containedin its website that I believed belonged to Peak. Peak’s current website, at peakorg.com,contains the images, text and information that I provided at that time, although it is nolonger interactive and utilizes a different underlying web design. 19
  20. 20. 62. Peak asked me, and I agreed, to maintain Peak’s data on ASI’s servers foranother three months, until September 2008, so that Peak could utilize new contractors toextract its accounting, payroll and other data from the ASI databases. 63. In September 2008, when ASI’s accounting system and web interfacewere replaced by another system and Peak’s contractors were no longer accessing theASI databases; I closed down Peak’s access to ASI’s servers. Peak still owed ASI$21,004 in fees. 64. In the summer and fall of 2008, Peak repeatedly requested and demandedthat I provide the source code for ASI’s proprietary software. I refused to give up ASI’sand my intellectual property and proprietary trade secrets. 65. In August 2008, Defendant Michael Dalewitz, the head of Defendant PeakDiscovery, Inc., told me that he and Peak viewed the Performance Metrics Softwareproject as terminated and that Peak no longer wished to use the Performance MetricsSoftware. 66. After the termination of the Peak-ASI relationship, Peak replaced its ASIaccounting software with other software packages. Similarly, without the right to use theASI software, Peak replaced the interactive web site, “PeakInteractive.Net,” and beganutilizing a system from TempWorks for time card entry. As I mentioned above, the“peakorg.com” web site now runs with non-interactive HTML pages. These changes arenot surprising, because ASI strictly controlled access to its source code, and Peak lackedsuch source code after Peak terminated the relationship. 67. In stark contrast, as I have now learned, Peak has continued to use,distribute, market, and promote the Performance Review Software, since before the 20
  21. 21. termination of the ASI-Peak relationship. Each law firm or other client that engages Peakto provide services including Performance Metrics receives its own exclusive applicationof the Performance Metrics Software user interface. The user interface screens containedin the promotional materials distributed by Peak are virtually identical to ASI’sPerformance Metrics Software, with minor modifications. These modifications anddistributions of my software are entirely without my authorization. In other words, theonly software package that Peak has continued to use is the software for which Peak hadillicitly acquired the source code. 68. Although I believe that numerous individuals have participated in themisappropriation and infringement of the Performance Review Metrics software,including Defendants Arnold Schlanger and Michael Dalewitz, as indicated more fullybelow, I believe that Defendant Richard Eichenberg has been chiefly responsible, andthat he has taken an active and direct role both in his dealings with me and in the choiceto misappropriate the software. PEAK’S INFRINGEMENT AND MISAPPROPRIATION 69. In the first week of February 2009, the American Bar Association held itsannual LegalTech convention in New York City. Peak had made a surpriseannouncement of the Performance Metrics Software at the LegalTech convention oneyear earlier. 70. Later that month, I learned from a friend who attended the LegalTechconference that Peak had been promoting the “Peak Review Metrics” software usingpaper handouts and a slide show at the LegalTech conference itself. If prospective clientsshowed interest in the software, Peak would then schedule “private demonstrations” of 21
  22. 22. the software. This behavior suggested that Peak was trying to keep the user interface andother aspects of the Peak Review Metrics software from being revealed to the public and,more importantly, ASI and me. 71. In the month since the LegalTech show, Peak and its e-discoverysubsidiary, Defendant Peak Discovery, Inc., has more openly promoted the “Peak ReviewMetrics” software on its website and in brochures. True and correct copies of materials Idownloaded from the Internet from Peak Discovery concerning Performance Metrics areattached hereto as Exhibit J. For example, through an acquaintance, I learned of apresentation prepared by Defendant Michael Dalewitz to promote Peak Discovery topotential customers. I understand that this presentation may be the “slide show” that wasused at the LegalTech conference. I reviewed and downloaded the presentation, whichwas available on the Internet, and noted that on the page entitled “About Us,” the topelement of the “pyramid” of qualities describing the company, and thus the mostimportant and prominent element, was “Performance and Accuracy Metrics Software.”A true and correct copy of screenshots of the presentation, downloaded from the websiteslideshare.com, is attached hereto as Exhibit K. 72. I believe that Defendant Arnold Schlanger, who is Michael Dalewitz’sfather-in-law, is also intimately involved in the misuse of the Performance MetricsSoftware to enhance Peak’s revenues. Mr. Schlanger is in charge of Peak Counsel, Inc.,the provider of temporary legal personnel, which benefits directly whenever Peak gets anew engagement from a law firm to provide document review services; thoseengagements, in turn, depend in large part on the fact that Defendant Peak Discoveryoffers Performance Review Metrics as part of its e-discovery services. 22
  23. 23. 73. I believe it would be impossible for Peak to have independently created itsown Performance Metrics Software in the months since ASI’s relationship with Peakterminated. It would take a team of programmers many months, at great cost, to write aprogram capable of the Performance Metrics Software functions, whether they wereworking “from scratch” or through “reverse engineering.” The Performance MetricsSoftware remains unique in the industry. 74. Therefore, I believe that the Defendants are continuing to infringe ASI’sand my valuable intellectual property, and to misappropriate ASI’s and my proprietarytrade secrets, in the Performance Metrics Software. 75. As a result of Defendants’ infringement and misappropriation, ASI isbeing substantially harmed. ASI seeks customers to whom we can provide software andservices. We benefit from favorable publicity – such as the favorable reception beinggiven to the Performance Metrics Software – and Peak’s false representations that it ownsor has the rights to this otherwise unique software seriously undermines any true claimASI might make as to the uniqueness or originality of the Performance Metrics Software. 76. Peak’s infringing use of the Performance Metrics Software directlycompetes with ASI’s efforts to market the software to potential customers. See ExhibitA. It also deprives ASI of the profits that would be gained from licensing the software.This is particularly damaging to ASI because ASI is a relatively small company withrelatively fewer sources of income. Having been deprived of the benefits of possibly ourmost unique software, ASI has nearly been driven out of business. By contrast, Peak has13 different divisions offering various temporary staffing and permanent employmentservices. Although the Performance Metrics Software has clearly helped Peak achieve 23
  24. 24. extraordinary growth and profit, Peak’s continued existence does not depend on thePerformance Metrics Software. PEAK’S STATE COURT COMPLAINT 77. Earlier this month, when I had already retained counsel to prepare to filethis lawsuit and application for preliminary injunction, I received a call from someonewishing to assist ASI in connection with an action that had apparently been filed by Peakagainst ASI in the New York State Supreme Court for New York County. I had not beenaware of the lawsuit filed by Peak, and I had not been served with any papers. As a resultof learning about Peak’s state court action (the “State Court Action”), I instructed mycounsel to file a notice of removal of that complaint to this Court. 78. As we will show at the appropriate time, Peak’s allegations in the StateCourt Action are utterly meritless. But the allegations also show that Peak really has nodefense to this action whatsoever. A true and correct copy of Peak’s Verified Complaintin the State Court Action is attached hereto as Exhibit L. 79. The State Court Action makes clear that Peak has copied the PerformanceMetrics Software in violation of copyright law and ASI’s and my other rights. Under theterms of ASI’s agreement with Peak, Peak’s usage of the Performance Metrics Softwareis a clear-cut act of infringement and misappropriation of our trade secrets. 80. Peak seems to be claiming (Exhibit L ¶¶ 10-14) that all software licensedby ASI to Peak, including the accounting software and the Performance MetricsSoftware, was covered by the Staffing Management System Agreement. But as Peakwell knows, for the reasons set forth above in Paragraphs 39 to 53, the StaffingManagement System software project was different from, and not related to, the 24
  25. 25. Performance Metrics Software. The companies agreed to the Staffing ManagementSystem Agreement specifically because Peak was not sure it wanted ASI’s StaffingManagement System software and it would only invest in the development of theenhanced Staffing Management System software on terms different from the normallicensing relationship between ASI and Peak. As indicated above, the StaffingManagement System project did not progress beyond the “beta” stage. I provided the“escrow” copy of the software source code called for under the Staffing ManagementSystem Agreement, and I was never asked to provide any additional “escrow” depositsuntil I read Peak’s Complaint. (Exhibit L ¶ 35.) Also, Peak’s Complaint seems tosuggest that the Staffing Management System Agreement was intended to coveraccounting software based on Peak’s UA software license; UA is an accounting softwareprogram that has nothing to do with the Performance Metrics Software. 81. At the same time, the Complaint itself appears to recognize that thePerformance Metrics Software was not part of the Staffing Management SystemAgreement, because it alleges, “In addition, Peak also retained Argentto as a work forhire to develop the PPM software.” (Exhibit L ¶ 13.) That actually contradicts theexpress wording of the Staffing Management Systems agreement, in which Peak agreesthat ASI “shall be entitled to any claim for intellectual property and copyrights relating toany enhancements to software adapted for use pursuant to this agreement . . . ” (ExhibitH). Of course, neither ASI nor Peak ever contemplated that the Performance ReviewSoftware was to be a “work for hire.” It was always understood that ASI owned thecopyright to the software – as Peak actually admits elsewhere in its Complaint. (ExhibitL ¶ 11.) 25
  26. 26. 82. All of these allegations suggesting that Peak now owns the copyright orhas other rights to the Performance Metrics Software, to the extent that I can understandthem, are completely false. I have always ensured that ASI owns all of its intellectualproperty and proprietary trade secrets free and clear. Every ASI customer understandsthis, because, among other reasons, our invoice “Terms and Conditions” make this crystalclear, as set forth above. Also, I know that as an independent contractor under thecopyright laws, ASI’s work is not presumed to be “work for hire.” ASI owns what itwrites and develops, and ASI controls the use of its software closely, frequently byhosting it ourselves for clients’ use. When the relationship terminates, the client’s licenseterminates. 83. In any event, every invoice I ever sent Peak in connection with thePerformance Metrics Software contained the Terms & Conditions set forth above. Onvarious occasions, I sent the Terms & Conditions to Richard Eichenberg, PhilipGreenberg, Michael Dalewitz, and others, to reaffirm their commitment to followingthose terms. My conversation with Richard Eichenberg, during the period when theStaffing Management System Agreement was being considered to cover that specialproject, confirmed Peak’s understanding of our agreement with respect to all othersoftware and services. 84. For all these reasons, the Staffing Management System Agreement hadnothing to do with the Performance Metrics Software. Peak knows that there is noexcuse for its conduct, and this effort to fabricate an excuse flies in the face of what bothI and the Defendants all know to be true. Instead, in my eyes, by filing this complaint, all 26

×