Amdocs and T-Jat go to arbitration on copycat suit

"There is a basis here on which the plaintiff alleges that there is misappropriation of intellectual property or an exceeding of the license given. If true, the damages can be gargantuan, and I am putting it on record," said US District Court for the Southern District of New York Judge Paul Engelmayer in the suit brought by T-Jat Systems (2006) Ltd., a developer of mobile software solutions, against Amdocs Ltd. (NYSE: DOX).

Judge Engelmayer said, "Effective immediately, the court enjoins Amdocs from violating any provision of its agreements with T-Jat intended to protect T-Jat's proprietary interests, copyright interests, or trade secrets of any kind."

T-Jat CEO Gideon Drori co-founded the company in 2006. It licensed its propriety Unified Contact List (UCL) technology to Amdocs. T-Jat claims, "Amdocs misappropriated T-Jat's proprietary technology and used it to develop a copycat product - the Unified Communications Solutions (UCS). Amdocs UCS copies the UCL's code, system architecture and functionality in violation of the license agreement non-disclosure agreement, and infringes upon T-Jat's copyrights and trade secrets."

T-Jat's UCL technology arranges contact lists in a mobile phone, including from emails, social networks, eliminating duplications. In 2010, Singapore Telecommunications Ltd. (SingTel) (SGX: T48; ASX: SGT) expressed an interest in buying T-Jat's product, initially through Australian subsidiary Optus. As usual in deals with a small company, the large customer sought to work with a third party to carry out the integration, which is where Amdocs entered the picture, as it already had ties with SingTel.

According to the documents that T-Jat filed with the US court, SingTel decided to turn the project into a strategic initiative for the entire group as part of another project that it was already working on with Amdocs. T-Jat licensed its UCL technology to Amdocs for use in five SingTel subsidiaries in the Asia-Pacific region. T-Jat claimed that Amdocs transferred T-Jat's technology to SingTel without placing any restrictions on SingTel's use of it, and that SingTel transferred the UCL technology to a subsidiary, SingTel Factory pte Ltd., which is knowingly distributing the technology to customers worldwide in a mobile app, LoopMe.

"T-Jat's evidence is, at this stage, necessarily largely circumstantial, but that does not make it unpersuasive," said Judge Engelmayer in a hearing in September. Although he did not rule out that Amdocs developed the UCS "wholly on its own steam, completely independent of the similar technology of the entity T-Jat", he said, "There is substantial circumstantial basis to credit T-Jat's claim that Amdocs' technology was built, at least in part, based on copying or improperly borrowing from T-Jat's similar but more sophisticated UCL system."

Judge Engelmayer added, "Based on the limited evidence presented, T-Jat has established a likelihood of success on the merits that the UCS system was patterned, at least in part, on T-Jat's product… "Because T-Jat is likely to succeed in its claim that Amdocs breached the non-disclosure agreement, it follows that it is likely to succeed on the merits of its trade secret claim."

Although Judge Engelmayer found T-Jat's evidence and theory of irreparable injury are credible," and that, "If T-Jat's flagship technology is appropriated or substantially appropriated by a competitor or otherwise loosed on the marketplace, T-Jat's business would dry up," he nevertheless decided, "it would be difficult to calculate the injury to T-Jat in monetary terms."

He concluded that there was insufficient evidence at this stage for a judgment, and sent the parties to arbitration, which could decide that Amdocs should compensate T-Jat. There is no indication at this time what the size of the compensation might be. The judge noted, however, "The court thus agrees with T-Jat that 'a monetary judgment after a two-year arbitration will not adequately compensate for the annihilation of this petitioner.'"

Amdocs said in response, "This is a groundless suit, and we are confident that this will be made clear when Amdocs presents its position as part of the legal proceedings. In any case, this is not an issue that will have material consequences to the company's business."

Amdocs has not yet filed its statement of response to T-Jat's claims. When the case goes to arbitration, Judge Engelmayer said that, to some degree, in the hearing and in view of the timetable, Amdocs could not have filed its own counter-evidence, which was one reason why no decision was made. Amdocs has made no statement to the New York Stock Exchange about the lawsuit, which fits the company's claim that the case has no material effect on its business.

Published by Globes [online], Israel business news - www.globes-online.com - on October 8, 2013